State contests confirmed the swing away from the New Deal and the widespread fear of the power of labor. The Republicans made major advances in several large states, including New York, where Governor Thomas E. Dewey, considered a likely Republican standard-bearer in 1948, won reelection with a plurality of 680,000 votes. Nebraska, South Dakota, and Arizona passed constitutional amendments outlawing closed shop contracts (agreements that required employers to hire only union members). A tectonic political shift seemed to have occurred.
At least that was what many Republicans and business lobbyists believed. Frustrated by long years of Democratic control, they saw in the new Congress a long-awaited opportunity to begin dismantling, or at least diminishing, the legal and institutional structures of the New Deal. The changes they managed to effect turned out to be modest, but they did almost entirely impede Truman’s own legislative program, which included proposals to expand the federal role in housing, health security, education, and the protection of civil rights and to initiate new large-scale public works programs.
The first step the Republicans took when the 80th Congress convened in January 1947 was largely symbolic, kicking the corpse of their dead tormentor, FDR, by passing a constitutional amendment limiting presidents to two terms in office. (After state ratification, it took effect in 1951 as the Twenty-Second Amendment.) Congress then tried to weaken the Interstate Commerce Act, remove some workers from Social Security coverage, and reduce federal income taxes. The following year it tried to force the sale of Indian lands and exempt some common carriers from antitrust laws.
Truman vetoed thirty-two bills in 1947 and forty-three the following year in an attempt to stymie Congress. In some cases he succeeded in stopping Republican initiatives, while in others, such as the Social Security measure, he only postponed them. In 1947 he twice blocked tax reduction bills, but the following year Congress overrode his veto and succeeded in lowering taxes and requiring married couples to file joint returns.
The latter provision responded to an inequity among states: married couples, with one partner earning substantially more income than the other, could reapportion their income on their separate tax returns to lower their federal taxes if they lived in a community property state, but not if they lived elsewhere. The joint return provision eliminated this interstate disparity, but did so by forcing two-earner couples to pay more taxes than they would if they were unmarried and filed separate returns. The “marriage penalty” created a disincentive for wives to work, in line with a general trend in the immediate postwar years to encourage women to stay at home, reversing the wartime government message.
The most important piece of domestic legislation to come out of the 80th Congress was the 1947 Taft-Hartley Act, a substantial revision of federal labor law, passed over Truman’s veto. For many business leaders and some of their political allies, labor law revision had long been a top priority. The 1946 strike wave reinforced their sense that the Wagner Act had given too much power to workers and their unions. Much of the public agreed, disgusted with the disruptions and price hikes associated with strikes; a public opinion poll taken after the 1946 election found that two-thirds of those questioned favored legal changes to control unions.
The National Association of Manufacturers heavily promoted a set of principles that congressional Republicans and southern Democrats drew on in hammering out the new law. In a host of ways, the Taft-Hartley Act moved the balance of power away from unions toward employers. The act outlawed sympathy strikes, mass picketing, secondary boycotts, and closed shops and gave employers the right to sue unions for broken contracts and damages due to strikes. The president could forestall a strike or lockout that he believed would create a national emergency by obtaining an injunction making it illegal during a sixty-day “cooling off” period. Reflecting the growing power of anticommunism, the law took aim at radical labor leaders by requiring union officers to file affidavits swearing that they were not members of the Communist Party. If they refused, their unions would be denied recognition by the National Labor Relations Board (NLRB)—the federal agency set up by the Wagner Act to supervise labor relations—and banned from NLRB-supervised elections to pick collective bargaining agents.
Besides weakening existing unions, Taft-Hartley made it more difficult for the labor movement to grow beyond its established geographic and industrial strongholds. While the Wagner Act gave only workers a say in deciding if an establishment would have a union, Taft-Hartley allowed employers a voice as well, permitting them to express their opinion for or against a union, a right that over time proved effective in retarding union growth. The law also banned the unionization of supervisors and foremen, blocking a movement that had gained momentum during World War II. During the decades after the war, as the number of white-collar and service workers with some supervisory responsibilities swelled, Taft-Hartley effectively placed them off-limits to unionization. Finally, Taft-Hartley gave states the option of outlawing union shop contracts (which required employees to belong to a union to keep their jobs). Eleven states—seven in the South, four in the Midwest—immediately took up the option.
Increasing union organization in the South was a top labor movement priority when World War II ended. Besides boosting overall membership, labor hoped to halt a growing trend among northern manufacturers to relocate production southward, or at least keep such shifts from undermining wage rates and union power in the North. Equally important, unions saw southern organizing as a political strategy, a step toward liberalizing southern politics and weakening the congressional bloc of Republicans and conservative Democrats. In 1946, the CIO launched “Operation Dixie,” a well-funded campaign that put 250 organizers in the field. The AFL quickly responded with a southern organizing drive of its own.
Operation Dixie had some early success among workers at branch plants of northern companies and among largely black tobacco, cotton-press, and timber workers. (The AFL also made gains among African Americans, whom, unlike the CIO, it placed in segregated locals.) But the CIO failed badly at its main target, textile manufacturing, the most important southern industry, in the face of fierce opposition from employers, police, and ministers; the rejection by white workers of the group’s support of racial equality; and the policy of many textile firms of raising wages to near union rates.
The southern drives already were flagging by the time Taft-Hartley passed. The new law made substantial gains so unlikely that the AFL abandoned its effort. The CIO kept at it at a reduced level until 1953. That year, an estimated 17 percent of nonagricultural workers in the South belonged to a union, roughly half the national percentage and about the same level as when Operation Dixie had begun. With “right-to-work” laws banning union shops in place in a majority of southern states, the uneven regional pattern of union power had become institutionalized.
By the time Congress recessed in June 1948, the large political issues facing the nation when the war ended had been at least partially resolved. The structure of the GI Bill, the end of wartime economic controls, the gutting of the Full Employment Act, the 1946 election returns, and the work of the 80th Congress all seemed to indicate that political and intellectual momentum had shifted away from support for expanded state function toward a more limited notion of the role of government in welfare provision and economic regulation. Wartime rhetoric of rights and freedom and black protest brought new attention to racial inequality, but social and legal practices remained largely unchanged. In the economic arena, the struggle over price controls showed that consumers would not emerge with much power as an organized constituency. Labor proved durable even in clashes with the most powerful corporations, but its structural and moral ascent that began in the mid-1930s came to a halt with the public backlash against strike disruptions, its failure to increase unionization in the South, and the legal restraints of Taft-Hartley. Business, feeling beleaguered by organized labor and liberal government policies, proved effective in containi
ng labor and promoting conservative ideas and politicians. With Truman widely given little chance for winning reelection, a new era of Republican rule, more limited government, and laissez-faire economics seemed likely. But events took a different turn, partly because of the unexpectedly effective reelection campaign undertaken by the president, and partly because of rapidly unfolding international developments that profoundly affected every aspect of American life.
CHAPTER 2
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Cold War
World War II radically altered the relationship between the United States and the rest of the world. Prior to the war, international issues had engaged the United States episodically. After it, they loomed large at all times. Politically and psychologically, life within the United States became less isolated from the world beyond its borders. Foreign policy became a driving force in determining both the nature of government and the character of economic development. The contours of that policy, for decades to come, became set during the years immediately after World War II, as American leaders debated the role the country should take abroad and the wartime alliance with the Soviet Union turned to antagonism.
The American Century
In early 1941, Life magazine publisher Henry R. Luce, in a highly influential editorial, “The American Century,” argued that Americans “have failed to play their part as a world power—a failure which has had disastrous consequences for themselves and all mankind.” Long before then, the United States had emerged as the world’s leading economy. In 1938, it produced well over a quarter of the world’s manufactured goods. But a huge domestic market, a rich endowment of raw materials, and generations of capital accumulation allowed the United States to achieve its great wealth and productive power with only modest engagement outside its borders. On the eve of the Great Depression, the country exported just 8 percent of its manufacturing output. In 1937, Britain and Germany each sold more manufactured goods abroad than did the United States.
American businesses and government leaders had looked abroad for markets, raw materials, and investment opportunities since the late nineteenth century, believing that the country needed to expand internationally to maintain growth, prosperity, and internal harmony. However, as a latecomer with deep ambivalence about colonialism, the United States had obtained only a small overseas empire. The British, French, Portuguese, and Belgian empires dwarfed U.S. holdings, which were more on par with those of the Netherlands, Italy, and prewar Japan. Instead of colonization, investment in areas outside formal U.S. control became the preferred route for the globalization of American capital. By 1930, the United States accounted for over a third of the foreign investment by leading capital-exporting countries, topped only by the United Kingdom.
America’s diplomacy and military might lagged behind its economic power. The Senate rejection of the League of Nations and an inward economic and political turn during the Depression reflected isolationist tendencies—or at least skepticism about formal international commitments—among politicians and the general public. So did the very modest size of the country’s armed services, which fell after World War I to under a quarter million officers and men. While the East Coast financial community looked abroad for profits, and leaders in the South, a commodity-exporting region, long had been internationalist, much of the country remained protectionist, fearful of overseas entanglements, and culturally hostile to foreign places and people. Even a year after the outbreak of World War II in Europe, isolationist sentiment remained very strong, cutting across the political spectrum and class lines.
The war changed the context for American thinking about its outward relations. By the time it ended, American economic leadership had grown into supremacy without precedent in modern history. To some extent, the gap between the United States and all other countries reflected the pattern of destruction of the conflict itself. The other major powers all suffered from some combination of massive loss of life, extensive physical destruction, economic exhaustion from the demands of military production, and disruption of trade with colonies and hinterlands. By contrast, the United States suffered no significant damage to its industrial infrastructure and comparatively few casualties—405,000 military deaths, versus roughly 400,000 for Britain (with a much smaller population), 4 million for Germany, 2 million for China, 1.5 million for Japan, and 8 million for the Soviet Union (where as many as 16 million civilians died from war-related causes).
During the war, industrial production in the United States soared. When combat ended, it was making half of the world’s manufactured goods. In 1947, American workers produced 57 percent of the world’s steel, 43 percent of its electricity, 62 percent of its oil, and 80 percent of its automobiles. Three years later, the United States’ GNP in absolute terms more than tripled that of the runner-up, the Soviet Union, while per capita it nearly doubled second-ranking Great Britain. Such gaps put the country in an economic class all by itself.
Militarily, too, the United States made a vast leap forward. When the war ended, it had the greatest war-making capacity in human history. With over twelve million men and women in uniform, it lagged behind only the Soviet Union in the size of its ground forces. In every other regard, including naval power, airpower, and a monopoly on atomic weapons, it had clear military superiority. The American military presence stretched around the world, from China, occupied Japan, and islands dotting the Pacific to the Caribbean, where the United States had obtained new bases from Britain to add to its existing ones in Cuba, Puerto Rico, and the Virgin Islands, to Iceland and Europe, where GIs could be found as far east as Austria.
Diplomatic clout grew alongside military power. In the negotiations and international institutions that shaped the postwar world, four and sometimes five “great powers” played the leading roles—the United States, the Soviet Union, Britain, France, and sometimes China. However, France and China had far less say than the “Big Three,” and within that group, Britain stood below the Soviet Union and the United States.
The United States rapidly demobilized its armed services after the war. Popular sentiment wanted the troops home quickly, a feeling understandably shared by the GIs themselves. In late 1945 and early 1946, coincident with the height of the strike wave, tens of thousands of soldiers and sailors in Manila, Guam, Honolulu, Paris, Frankfurt, and London held demonstrations and mass meetings demanding repatriation, while families in the states formed hundreds of “Bring Back Daddy” clubs. In the face of political pressure, Truman accelerated demobilization. His desire to move toward a balanced budget kept him shrinking the military until, in June 1947, it had only one and a half million men and women. Defense spending as a percentage of total federal expenditures fell from 83 percent in 1945 to 38 percent in 1947.
But the decision to lower troop strength did not reflect a consensus for a return to prewar levels of international engagement. To the contrary, from the earliest days of the war on, within the military, among key foreign policy makers, and among influential public figures, a determination developed to expand America’s diplomatic, economic, and military presence throughout the world, especially in Europe and Asia. This internationalist orientation reflected long-standing concerns as well as shared reactions to recent events.
Many economists, politicians, businessmen, and opinion makers believed that obstacles to international trade had exacerbated the Great Depression. Looking to the end of the war, they worried that the termination of military production and the demobilization of millions of servicemen would bring a return of mass unemployment. Fearing that the United States had saturated its domestic market for goods and capital, they looked abroad for sales and investment opportunities that would prevent a return to prewar economic stagnation. In 1944 congressional testimony, Assistant Secretary of State Dean Acheson bluntly said, “So far as I know, no group which has studied the problem . . . has ever believed that our domestic markets could absorb our entire production under our present system. . . . We c
annot have full employment and prosperity in the United States without the foreign markets.”
For Acheson and others, World War II presented an opportunity to reshape the international economic order. In “The American Century,” Henry Luce argued that the United States now had “to accept wholeheartedly our duty and our opportunity as the most powerful and vital nation in the world and in consequence to exert upon the world the full impact of our influence, for such purposes as we see fit.” To preserve its freedom and prosperity, Luce contended, the United States had to shape “the world-environment in which she lives.” That meant promoting what he called “a system of free economic enterprise” globally. Luce envisioned a new kind of imperialism that did not seek control of particular territory—“dear old Danzig or dear old Dong Dang”—but the creation of a world economic, political, and moral system centered on the United States.
Luce’s bellicose nationalism and equation of unrestrained capitalism with moral rectitude rubbed many New Dealers the wrong way. They too linked future American prosperity to growing trade but envisioned breaking down international economic barriers as part of a campaign for greater social justice. In 1942, Vice President Henry Wallace repudiated Luce in a speech in which he said, “Some have spoken of the ‘American Century,’ but I say that the century on which we are entering—the century which will come of this war—can and must be the century of the common man.” Rather than imposing its might on the world’s peoples, the vice president called on the United States to work with forces abroad advocating social change, taking the lead in a people’s revolution in which a humanitarian capitalism, acting through multinational development agencies, would uplift the living standards of the world’s poor. Deeply critical of Luce, Wallace nonetheless shared his internationalism, seeing the war as a prelude to a new global order, which the United States had an obligation to help shape.
American Empire Page 8
