A Family Business: 1902 - 1947

Let all steelworkers in the Calumet Area observe the Wisconsin Steel case closely. The leaders get their marching orders from the ballot box and that’s it. The man in the overalls is … the cock of the walk.¹

The Wisconsin Steel mill, in Southeast Chicago, was welcomed as a boon to its South Deering neighborhood.² It had been only a lucky seven years since another steel mill, on the same site, had closed its gates and left 1,300 workers jobless. The new mill’s opening initiated a period of economic growth in South Deering, previously known as Irondale, that would soon make South Chicago a center of heavy industry. A local newspaper hailed this growth:

With the change in the name of the old suburb of Irondale has come one of the most remarkable real estate booms that has ever occurred in the Calumet region … From 10 o’clock Saturday until noon Monday, one real estate concern sold 17 lots on Commercial Avenue between 101st and 103rd Streets … Years ago Irondale was one of the most prosperous portions of South Chicago. One by one its manufacturing plants moved away, and for several years Irondale was known as a decayed suburb. Hundreds of residents moved elsewhere and scarcely anyone came to replace them. Within the past few years, however, new industries have come to the place, more people have moved there … New life has been instilled. The change in the name … was made so suddenly and completely that the name of Irondale is rapidly becoming obsolete and South Deering is now sailing forward into prosperity.³

The history of Wisconsin Steel is inextricably linked with that of its longtime parent company, International Harvester. Founded on the strength of Cyrus H. McCormick’s invention of the mechanical reaper, International Harvester arose from a merger of farm equipment manufacturers in 1902. The new corporation dominated the farm equipment market, accounting for upwards of 80% of domestic production. Sales approached $75 million. And although the McCormick family held only a minority of stock, they controlled management: McCormicks served as chief executives until 1951.⁴

Wisconsin Steel owed its existence entirely to Harvester’s need for a secure supply of steel immune from the machinations of the U.S. Steel-led price-fixing oligopoly. Steel, in 1902, was a precious metal controlled by a precious few. With the advent of the giant United States Steel Corporation in 1901, 65% of domestic steel production was in the hands of one producer. Additionally, Judge Gary, U.S. Steel’s first president, initiated a system of price collusion among nearly all domestic steel producers that produced a cohesive steel trust. This oligoploy did not hesitate to raise prices as high as it dared. Manufacturers such as Harvester, for whom steel was a principal factor of production, were at the mercy of U.S. Steel for both steel price and supply.⁵

Harvester grew by leaps and bounds: by 1917 it was the United States’ seventh-largest company. Foreign sales grew five times over and Harvester opened plants in Canada, Sweden, and Germany. Harvester continuously expanded its product line both through acquisition of existing companies and also by manufacturing its own inventions and innovations. Harvester’s flagship was clearly its line of farm tractors.⁶

Crisis struck in 1918 when Ford Motor Company caught Harvester with its pants down. With its assenbly-line production and a quality design, Ford was able to offer a comparable tractor for less. Briefly, Ford held a greater market share in tractors; briefly, that is, because Harvester fought back with dogged determination. The company initiated a campaign to regain the number one position that included competitions in which the two companies’ tractors went head-to-head; Harvester’s embrace of Ford’s production techniques; and a new line of tractors sharply distinguished from Ford’s. Harvester’s 1922 introduction of the Farmall tractor was the culmination of an effort that propelled them securely into first place - and, by 1927, propelled Ford out of the tractor business.⁷

This type of growth, which continued unabated until 1929, was heavily dependent on Wisconsin Steel. So, Harvester treated its steel division very well. The company wasted no time in establishing itself as a benificent force in South Deering. In 1903, Harvester not only brought gas and electric service to South Deering, but also paved some streets. Local churches were supplied with free electricity and coal. By 1910, the company had initiated bonus, stock purchase, and pension plans for mill employees. The eight-hour day and time-and-a-half overtime pay were established in 1918.⁸

The relationship between labor and management during this period was a cooperative one. Unlike the large independent mills, workers struck for the first time only in 1947. The McCormick family labored to foster an atmosphere of mutual concern and loyalty between labor and management. Harvester issued the following statement to mill workers in 1912:

There was a period in the industrial development of this country when employers gave little or no attention to the physical or moral welfare of their employes … Many employers have come to realize that they owe more than the wages, and that their employes are entitled to clean, light, sanitary, and safe places in which to work, to compensation when disabled, and to provision for old age. A careful business man sees that his property is maintained in excellent condition … Welfare work, so-called, is simply applying the same business principals to his employes that he applies to the rest of the business.⁹

These admirable intentions would serve the mill workers well for some time. But this generous paternalism benefited Harvester, too. Healthy, wealthy, and happy steel workers meant quality, secure, and uninterrupted steel supplies. The price of coal for a few churches was certainly less than that of being at the mercy of the steel oligopoly.

With this in mind, Harvester president Harold McCormick established the Works Council in 1919. Although the Works Council, its membership drawn equally from the ranks of labor and management, spent much of its time sponsoring gardening contests and other social activities, it also facilitated labor-management cooperation. Throughout its eighteen year life it fulfilled many of the same functions as a labor union.¹⁰ Yet it did so without the antagonism that has generally accompanied union-management relations. Of course, it also did so under management’s heavy hand. While a company-commissioned history of the plant portrayed the Works Council as an idyllic forum in which both management and labor got a fair hearing¹¹, it seems fair to acknowledge, as others have argued, that management’s veto power over the Works Council seriously undermines this version.¹² Numerous failed attempts to certify a national American Federation of Labor (AFL) union at the mill attest either to workers’ satisfaction with their plight or to the effectiveness of Harvester’s virulent anti-unionism. More likely it is the case that Harvester’s benificence - and slightly above-average wages¹³ -induced the requisite cooperation. Faced with the alternative of joblessness, workers probably saw nothing worth rocking the boat over.

The strength of this relationship was tested in September 1919 when the AFL sponsored a nationwide steel strike. Chief among the union’s demands was an eight-hour day for steelworkers. Wisconsin Steel workers, of course, already enjoyed not only the eight-hour day, but also higher than average wages. Yet they chose to join the 15,000 steelworkers who were striking the large independent South Chicago mills, among them U.S. Steel’s South Works.¹⁴

The decision to idle the mill was not made solely by the workers. Indeed, the company accepted the decision of the Works Council, which issued the following statement:

Acting upon the recommendation of the employe representatives, the Works Council considered the advisability of closing down the plant. The sentiment of the majority of the council was that while probably ninety percent of the employes of the plant were on duty this morning, in consideration of the fact that some of the plants in the districts were practically closed down, and because of the nation wide extent of the strike, and the consequent possibility of violence and interference with any plans to continue operating, it was deemed advisable, as a measure of public and personal safety, to close down as soon as possible until such time as the Works Council recommends the resumption of operation.¹⁵

As the strike dragged on, however, International Harvester became impatient. But reopening the mill proved more difficult than closing it. Worker representatives hampered management efforts to rescind the Works Council’s closing order.¹⁶ Three weeks after the shutdown, a Works Council decision to open the mill convinced only 60% of the workforce to return. This, however, was much better than the independent Insterstate mill which tried to reopen the same day. Wisconsin Steel was able to resume most of its operations; Insterstate met with complete failure.¹⁷

Disappointing returns over the next three days prompted the Works Council to issue an ultimatum. Management claimed that it had more applicants than unfilled jobs and that new hires would replace any who had not reported for work within a week after the reopening.¹⁸ The passing of a week found 75% of the workforce back at work.¹⁹ But company announcements over the next two weeks revealed that, in fact, the late arrival of workers was tolerated.²⁰ The mill regained full attendance again only gradually and Harvester chose not to execute its threats.

A 1937 Supreme Court case proved to be the end of the Works Council. Under the National Labor Relations Act, the court considered the Works Council a company-dominated union, the likes of which had been outlawed by the 1935 legislation. The demise of the Works Council created a vacuum which two groups had for a year already been competing to fill.²¹

The Steel Workers Organizing Committee (SWOC) of the AFL (later, the United Steel Workers of America) failed to meet Harvester demands that it prove the support of a majority of mill workers. The independent Progressive Steel Workers Union (PSWU), however, succeeded where the national union had failed. Recognized by International Harvester without an election - an independent auditing firm compared PSWU membership card signatures against company records to verify the majority - it had been a scant two months since the demise of the Works Council.²²

Independent unions were a favorite of Harvester. Its huge operations provided fertile ground for union organizers in the late 1930s. Harvester entered the fray among competing unions with its support of independent unions. Despite their success, or perhaps because of it, the National Labor Relations Board (NLRB) ruled that Harvester’s independent unions were company-dominated and, therefore, illegal. Wisconsin Steel was the only Harvester division to stay independent.²³

Harvester’s labor relations changed drastically after 1937. One retired executive commented:

In 1937, I went to Europe. When I returned in November 1941, I found that the relationship with labor had changed from something frankly paternalistic to one where each party regarded itself as an adversary of the other.²⁴

However, the peace continued at Wisconsin Steel after 1937 despite the loss of the Works Council. While the United Steel Workers of America (USWA) struck the rest of the steel industry in 1937, 1941, and 1946 the PSWU continued work each time under an interim contract. Each time Harvester matched whatever concessions the USWA won.²⁵

Although Harvester grew larger in the postwar period, these early years marked its ascendancy. Never again would everything go quite as well as it did in these early years. During the postwar period International Harvester watched, unawares, as the seeds of its eventual decline were sown. Labor relations deteriorated. Market share came under fire from competitors. As management lost touch with the business, disastrous investment decisions resulted. After World War II, International Harvester gradually ceased to be the family business from which it sprang.

1. Daily Calumet, 10 July 1953, as quoted in Bulanda, p. 62 [↩]
2. The mill was located at 106th Street and Torrence Avenue. [↩]
3. Daily Calumet, 27 July 1903, p. 1. [↩]
4. Crain’s Chicago Business, Vol 5 No 45, 8 November 1982, p. 23-4 [↩]
5. Walter Adams, The Structure of American Industry, p. 72-3 [↩]
6. ccb 5:45 p. 24 [↩]
7. CCB 5:45, p. 24 [↩]
8. Bulanda, p. 19, 55-9 [↩]
9. Bulanda, p. 57 [↩]
10. ccb 5:45 p. 27-8 [↩]
11. Bulanda, p.57-60 [↩]
12. CCB 5:45, p. 27 [↩]
13. Bulanda, p. 59 [↩]
14. Daily Calumet, 2 October 1919, p. 1 [↩]
15. Daily Calumet, 23 September 1919, p. 1 [↩]
16. Daily Calumet, 7 October 1919 [↩]
17. Daily Calumet, 13 October 1919, p. 1 [↩]
18. Daily Calumet, 16 October 1919, p. 1 [↩]
19. Daily Calumet, 21 October 1919, p. 1 [↩]
20. Daily Calumet 23, 25, 27 October, 1919 and 3 November, 1919 [↩]
21. CCB 5:45, p. 28-9 [↩]
22. Daily Calumet, 18 May 1937, p. 1 [↩]
23. ccb:5:45 p. 27 [↩]
24. ccb 5:45 p. 27 [↩]
25. Bulanda, p. 60 [↩]