American Plan

United States 1918-1925

Synopsis

During World War I, Progressive Era labor reforms reached a peak with the establishment of the War Labor Board (WLB) and President Woodrow Wilson's support for collective bargaining. At war's end, however, employers reasserted their power to dismantle the WLB and begin a new round of attacks on organized labor. Using the Red Scare and Palmer Raids as evidence that labor unions were radical and un-American, employers declared that a workplace free from unions—the "open shop"—was the best way to ensure the country's stability and prosperity. To keep an open shop in the 1920s, employers undertook a series of measures that came to be known as the American Plan. In various combinations the American Plan incorporated scientific and personnel management, welfare measures, and outright repression to control the work place, increase productivity, and prevent unionization.

Timeline

• 1908: Ford Motor Company introduces the Model T.
• 1913: In New York and Boston, striking garment workers win a pay raise and shorter hours.
• 1918: Influenza, carried to the furthest corners by returning soldiers, spreads throughout the globe. Over the next two years, it will kill nearly 20 million people—more than the war itself.
• 1919: With the formation of the Third International (Comintern), the Bolshevik government of Russia establishes its control over communist movements worldwide.
• 1920: In the United States, the U.S. Department of Justice launches a campaign to track down and deport communists, anarchists, and other radicals, as well as those suspecting of being left-leaning revolutionaries. Raids are also used for the purpose of rooting out and deporting illegal aliens.
• 1921: In a controversial U.S. case, Italian-born anarchists Nicola Sacco and Bartolomeo Vanzetti are tried and convicted of armed robbery and murder. Despite numerous protests from around the world, they will be executed six years later.
• 1922: Published this year James Joyce's novel Ulysses and T. S. Eliot's poem The Waste Land will transform literature and inaugurate the era of modernism.
• 1923: Notable musical works of the year include George Gershwin's Rhapsody in Blue and various songs by Bessie Smith and Jelly Roll Morton.
• 1924: In the United States, Secretary of the Interior Albert B. Fall, along with oil company executives Harry Sinclair and Edward L. Doheny, is charged with conspiracy and bribery in making fraudulent leases of U.S. Navy oil reserves at Teapot Dome, Wyoming. The resulting Teapot Dome scandal clouds the administration of President Warren G. Harding.
• 1925: In Tennessee, John T. Scopes is fined for teaching evolution in a public school. There follows a highly publicized trial at which famed attorney Clarence Darrow represents the defense, while the aging Democratic populist William Jennings Bryan argues for the state. The "Scopes Monkey Trial" symbolizes a widening divisions between rural and urban America, and though the court decides in favor of the state, it is clear that the historical tide is turning against the old agrarian order symbolized by Bryan.
• 1930: Naval disarmament treaty is signed by the United States, Great Britain, France, Italy, and Japan.
• 1935: Second phase of New Deal begins with the introduction of social security, farm assistance, and housing and tax reform.

Event and Its Context

American workers enjoyed boom times during World War I. The demand for war materiel, coupled with the labor shortage induced by the curtailment of immigration from Europe, led to higher wages in most industries. It also gave workers more bargaining power with their employers, and many joined labor unions to implement this power. Membership in the American Federation of Labor jumped from 2 to 3.2 million between 1914 and 1918. For most of the new members, many of whom were immigrants, it was the first time they had joined the ranks of organized labor.

The federal bureaucracy had already expanded before the war to help ease labor tensions in the country. In March 1913 a reluctant, lame-duck President William Howard Taft established the Department of Labor as he turned over power to Woodrow Wilson, who was elected as a standard-bearer of Progressive era reform. In its initial incarnation, the Department of Labor comprised the Bureau of Labor Statistics, Bureau of Immigration, Bureau of Naturalization, and Children's Bureau. The Bureau of Immigration also served as a de facto employment agency for immigrants seeking work; it found work for 280,000 of them in 1917. After the U.S. entered World War I on 5 April of that year, the agency focused most of its efforts on stabilizing the work force and avoiding strikes that would delay war production.

100% Americanism

Most employers greatly resented the intrusion of the government into labor relations and complained that the WLB actually spurred workers to undertake frivolous strikes in the hope of a favorable settlement. When World War I ended on 11 November 1918, the WLB was almost immediately abolished under heavy lobbying by business interests, including the National Association of Manufacturers. In the absence of a government mediation service, however, a surge of strikes by some 4.1 million workers took place in 1919. Among the most serious actions were a general strike in Seattle in February 1919 and strikes in the textile, mining, and steel industries. All of them were crushed by employers, often with the assistance of state and local police forces.

As powerful as the outright force against the strikes was the publicity directed at the strikers and their leaders. The media labeled them radical agitators. Although much of the antilabor propaganda was hysterical in its tone, the propaganda also developed a sophisticated message that described all strikes as un-American. This message, which demanded "100% Americanism," linked the current labor unrest with the country's fight against subversives during the war. President Wilson himself, after all, had argued for passage of the Espionage Act of 1917, a law that set forth broad definitions of treason and antiwar activities. The law was later amended to include more drastic penalties under the Sedition Act of 1918. The acts prompted the arrests of approximately 1,500 individuals for opposing the draft, criticizing U.S. policies, and speaking out against the war.

The pattern of antilabor activity continued with the Palmer Raids of 1919-1920. After anarchists sent bombs to government and business leaders in April and May 1919, and another series of bombs exploded in eight American cities on 2 June, Attorney General A. Mitchell Palmer ordered a roundup of suspected communists and anarchists. The roundup began in November 1919 and lasted until March of the following year. An estimated 6,000 suspects were taken into custody in the Palmer Raids and hundreds of noncitizens were deported, even if they had no criminal record. The raids also precipitated an outpouring of vigilante violence against labor unions and other organizations that were perceived to favor a radical agenda. The orgy of arrests ended only when Palmer predicted unrest for May Day 1920 that failed to materialized.

Scientific Management and Personnel Management

Although Palmer faded from the scene, he had accomplished much of what employers were seeking after World War I. Not only were labor unions branded as radical and un-American in the eyes of much of the public, but a cadre of labor leaders had been arrested and deported as well. Now that most employers had "open shops" that were free from unions, they wanted to maintain the status quo. Over time their efforts to keep an open shop through scientific and personnel management, welfare measures, and outright repression would become known as the "American Plan." The term was first used by the National Association of Manufacturers and the national body of the Chamber of Commerce in 1921 and was soon widely used in the business community.

One crucial aspect of labor relations that was linked to the American Plan was scientific management studies to better control better the work place and increase productivity. The most extensive and widely publicized series of studies took place at Western Electric's (WE) Hawthorne Works in Cicero, Illinois, between 1924 and 1933. Previous scientific management studies that had been pioneered by Frederick Winslow Taylor had emphasized the routinization of tasks to increase efficiency. In contrast, the Hawthorne Plant experiments identified a more complex set of variables that was equally important in improving productivity. The most important conclusion of the experiments pointed to the social interaction among workers and between workers and managers as a significant factor in productivity levels. When worker satisfaction was improved through active participation in structuring the work environment, productivity levels also increased, even if work conditions were worsened.

In an April 1928 study conducted by George Elton Mayo, a research group set up a set of 13 experiments with five women assembly-line workers. Altering the lighting of the work room, rest periods, and the length of the working day and week, the researchers found no specific correlation between the changes and level of productivity, which increased a total of 46 percent over the five years of the subsequent studies. From these observations, the researchers concluded that factors such as increased participation by employees in managing the work place were more important than incentive pay schemes or physical conditions in improving productivity. WE implemented this conclusion by conducting over 10,300 interviews with its employees to discuss their opinions about their work environment in the hope of spurring company-wide productivity increases.

Welfare Capitalism

The Hawthorne Works was also known for its welfare capitalism measures, which provided workers with fringe benefits for free or at reduced costs. Like programs implemented by other large employers, WE's programs in the Hawthorne Works were designed to foster satisfaction and company loyalty among its work force. In addition to offering medical care on site, group insurance at reduced rates, a stock ownership plan, and educational courses after working hours, WE sponsored numerous sports teams and social programs for its employees. WE started a vacation plan as well. During the 1920s other employers widely copied these welfare capitalism measures. U.S. Steel, International Harvester, and the Swift and Armour meat packing firms employed similar lists of programs. Outside of the factory gates, many companies also sponsored charity drives to benefit local YMCAs, churches, and other community organizations. In all, about 5 percent of employers implemented welfare capitalism programs to gain the loyalty of their work force.

There were significant variations in welfare capitalist measures, however. Whereas urban industrial workers were quick to voice resentment over any program that smacked of paternalism, welfare measures in southern textile towns constantly reminded workers of their employers' power. In contrast to industrial communities in the North, where workers sought out their own housing, textile workers typically lived in company-built and -owned housing. Although living in company housing usually saved workers about half the rent they would pay for private housing, it put them at the mercy of their employer, who would eject them if they stopped working. Unlike workers' children in the North, who attended public or parochial schools, children of mill workers in the South often attended schools set up by the mill company. Even after states passed compulsory school attendance laws in the mid-1910s, mill schools were grossly inferior and almost always led students into mill work. Workers in the smaller company towns also experienced the dubious benefit of shopping at stores run by their employers. Although the company stores would willingly extend credit to gainfully employed workers, reformers charged that the device was another means to keep workers subservient to their employers.

Each of these factors of the American Plan changed with the onset of the Great Depression in 1929, with most welfare capitalism measures coming to an abrupt halt as employers faced bankruptcy. After the initial crash, some employers conducted food and clothing drives and lent out parcels of empty land for their employees to grow vegetables. Other companies staggered work schedules so that every employee could work at least a few hours each week. By 1932, however, even these efforts could not sustain workers as other private sources of relief had all but disappeared. With the election of President Franklin D. Roosevelt in 1932, workers began a pivotal reorientation of their loyalties and expectations toward the federal government for assistance. After the upswing in labor unionization in the mid-1930s, many unions also began offering their own recreational and social activities for their members and the community at large. Although corporations continued to use scientific management to study the workplace, by World War II they had been outflanked in the battle for worker loyalty byboth labor unions and the federal government.

Key Players

Mayo, George Elton (1880-1949): After working as a professor of philosophy in Australia, Mayo came to the United States in 1922. He became one of the leading exponents on industrial relations theory and joined the Hawthorne Experiments in 1928. The experiments sealed his reputation and he worked the final years of his career in England.

Palmer, Alexander Mitchell (1872-1936): Palmer practiced law after 1893 and worked as a banker before winning a seat from Pennsylvania in the U.S. House of Representatives in 1909. He served in the House until 1915 when he joined the administration of President Woodrow Wilson. He became attorney general in March 1919 and served through 1921, when Wilson's term expired. Palmer returned to his private law practice after he left office.

Taylor, Frederick Winslow (1856-1915): An inventor and industrial manager, Taylor became the best known industrial engineer of his era. In his most famous work, The Principles of Scientific Management, published in 1911, Taylor argued that management had to assert full control of the work place to increase productivity.

See also: American Federation of Labor; National War Labor Board.

Bibliography

Books

Brandes, Stuart. American Welfare Capitalism, 1880-1940.Chicago: University of Chicago Press, 1976.

Brody, David. "The Rise and Decline of Welfare Capitalism." In Workers in Industrial America: Essays on the Twentieth-Century Struggle. New York: Oxford University Press, 1993.

Cohen, Lizabeth. Making a New Deal:Industrial Workers in Chicago, 1919-1939. Cambridge: Cambridge University Press, 1990.

Fones-Wolf, Elizabeth A. Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-1960.Urbana: University of Illinois Press, 1994.

Gillespie, Richard. Manufacturing Knowledge: A History of the Hawthorne Experiments. Cambridge: Cambridge University Press, 1991.

Hall, Jacquelyn Dowd, James Leloudis, Robert Korstad, Mary Murphy, Lu Ann Jones, and Christopher B. Daly. Like a Family: The Making of a Southern Cotton Mill World. New York: W. W. Norton and Company, 1987.

Schatz, Ronald W. The Electrical Workers: A History of Labor at General Electric and Westinghouse, 1923-1960. Urbana: University of Illinois Press, 1983.

Trahair, Richard C. S. The Humanist Temper: The Life and Work of Elton Mayo. New Brunswick, NJ: Transaction Books, 1984.

Waring, Stephen P. Taylorism Transformed: Scientific Management Theory since 1945. Chapel Hill: University of North Carolina Press, 1991.

—Timothy G. Borden