Steel Seizure Case

United States 1952

Synopsis

On 8 April 1952 President Harry Truman ordered Secretary of Commerce Charles Sawyer to seize control of the U.S. steel industry to avert a strike that, Truman believed, would threaten the nation's security during the Korean conflict. The steel industry immediately brought suit in federal district court. The litigation culminated in Youngstown Sheet and Tube Co. v. Sawyer (1952), a landmark case in which the U.S. Supreme Court ruled that the president's action was unconstitutional. In the wake of the Court's decision, the steel industry was returned to private hands and the steelworkers walked off their jobs for nearly eight weeks. Youngstown Sheet and Tube and the events before and after it are generally referred to collectively as the Steel Seizure Case.

Timeline

• 1932: Charles A. Lindbergh's baby son is kidnapped and killed, a crime for which Bruno Hauptmann will be charged in 1934, convicted in 1935, and executed in 1936.
• 1937: Stalin uses carefully staged show trials in Moscow to eliminate all rivals for leadership. These party purges, however, are only a small part of the death toll now being exacted in a country undergoing forced industrialization, much of it by means of slave labor.
• 1942: Signing of the Declaration of the United Nations in Washington, D.C.
• 1945: On 7 May, Germany surrenders to the Allied powers. Later in the summer, the new U.S. president, Harry Truman, joins Churchill and Stalin at Potsdam to discuss the reconstruction of Germany. (Churchill is replaced in mid-conference by Clement Attlee as Labour wins control of the British Parliament.)
• 1947: Establishment of the Marshall Plan to assist European nations in recovering from the war.
• 1949: Soviets conduct their first successful atomic test. This heightens growing cold war tensions, not least because the sudden acquisition of nuclear capabilities suggests that American spies are passing secrets.
• 1952: Among the cultural landmarks of the year are the film High Noon and the book The Invisible Man by Ralph Ellison.
• 1952: George Jorgenson travels to Copenhagen and returns as Christine Jorgenson. (This is not the first sex-change operation; however, it is the first to attract widespread attention.)
• 1955: Signing of the Warsaw Pact by the Soviet Union and its satellites in Eastern Europe.
• 1957: Soviets launch Sputnik, the world's first artificial satellite. This spawns a space race between the two superpowers.
• 1962: As the Soviets begin a missile buildup in Cuba, for a few tense days in October it appears that World War III is imminent. President Kennedy calls for a Cuban blockade, forcing the Soviets to back down and ultimately diffusing the crisis.
• 1967: Racial violence sweeps America's cities, as Harlem, Detroit, Birmingham, and other towns erupt with riots.

Event and Its Context

The Dispute

The steel seizure dispute pitted the United Steelworkers of America against the entire steel industry. The United Steel-workers represented about 1.1 million members, about 650,000 of them engaged in the basic steel industry at an average hourly wage of $1.88. The steel industry comprised 253 companies that made about 2.1 million tons of steel a week, or 109 million tons per year. About 650,000 stockholders received $320 million in dividends in 1951 out of after-tax industry profits of $690 million.

The controversy began in December 1951 when the union asked for a wage increase in its 1952 contract. Management responded that it could not grant the wage increase unless the government raised the ceiling on steel prices. These and other prices were set by the government to curb inflationary pressures after World War II—a time when both labor and industry sought to make up for lost ground after the wage and price controls imposed during the war. These pressures were increasing as a result of the Korean conflict, but the executive branch was determined to check them. Under the president was the Office of Defense Mobilization, which in turn encompassed the Economic Stabilization Agency (ESA), whose mandate was to control inflation. To carry out its mandate, the ESA directed the activities of two wage and price control agencies: the Wage Stabilization Board (WSB) and the Office of Price Stabilization (OPS).

In March 1952 the WSB, after protracted negotiations with the steelworkers' union and management, worked out a package that would have granted the union a wage increase of 17.5 cents an hour in three steps through June 1953, plus 5.1 cents per hour in fringe benefits—a proposal the union accepted. Management, however, rejected it, arguing that the government had breached its own wage control line, thereby setting a precedent for other unions, which would demand similar wage increases, further increasing the cost of making steel. The steel industry argued that it would have to increase the price of steel by $12 over the average price of $110 per ton: $6 would offset the direct wage increase, and $6 would be needed to pay for increased costs that would come about as suppliers raised prices in response to their unions' wage demands.

For its part, the government argued that the wage package would merely allow the wages of steelworkers to catch up with those of workers in other industries—$1.98 for autoworkers and $2.24 for coal miners, for example. Further, the government maintained that the steel industry could pay the increase out of its profits. Under OPS rules, an industry was not entitled to a price increase unless its profits fell to 85 percent of its best three years from 1946 through 1949; the steel industry's profits were nearly double that, having risen from about $11 per ton in 1947-1949 to over $19 in 1952. The $12 price increase, less the $4-5 per ton cost of the wage settlement, would leave the industry with a profit of $26 or $27 per ton. In his speech announcing the seizure on 8 April 1952, Truman, who believed that the union's demands were reasonable, called management's position "about the most outrageous thing I ever heard of . . . they want to double their money on the deal."

The Political Climate

The political climate in early 1952 was a difficult one, both for the president and for the nation. Loo}ing over every presidential decision was the Korean conflict, which was about to enter its third year and had cost the nation 128,000 casualties. Peace talks at Panmunjom were stalemated; alarming reports of communist troop buildups were circulated; riots plagued communist prisoner of war camps. On the domestic front, the war unsettled the American economy, led to an unpopular draft, produced uneven wage and price controls, and fueled inflation. Both the American public and the nation's allies opposed expansion of the war effort.

Truman faced political opposition everywhere he turned. Senator Joseph McCarthy charged that the government, the universities, and the media were "honeycombed with Communists," and the conviction of Julius and Ethel Rosenberg for passing atomic secrets to the Soviets was upheld on appeal. Truman, despite his exemplary record of opposing communist expansion, faced a barrage of charges that the Democratic administration was "soft on communism." In 1952 a coalition of Republicans and southern Democrats in Congress opposed more of the president's legislative proposals than they had in any previous year, while at the same time leveling charges of tax fraud and influence peddling against members of the administration. Frustrated, the president announced in March 1952 that he would not seek reelection.

Battle lines were drawn on the economic front as well. Truman, the haberdasher from Missouri, the "Little Warrior," was at heart prolabor, although some of his actions did not seem to have the interests of labor at heart. Early in his administration, in 1946 in particular, he was concerned about postwar inflation, so he opposed the wage demands of the unions and even threatened to draft striking railroad workers that year. As the election of 1948 approached, one of Truman's most important constituents—the nation's unions and their workers—were bolting from the Democratic camp.

Truman rebuilt his bridges to labor, though, by his opposition to the Labor Management Relations Act of 1947, generally referred to as the Taft-Hartley Act after its congressional sponsors. The act was designed to roll back some of the gains made by labor during the New Deal administration of Truman's predecessor, Franklin D. Roosevelt. The act made closed shops illegal and outlawed secondary boycotts. It allowed states to pass right-to-work laws, enabling them to regulate the number of union shops. It gave the president the power to order an 80-day cooling-off period to halt any strike that threatened the nation's security or safety. It required unions to register and file financial reports, and it required union leaders to take an oath that they were not communists. Truman believed that the bill was punitive, so he vetoed it, but the Republican-controlled 80th Congress overrode his veto. The Taft-Hartley Act drew the labor unions into the political process, and their members overwhelmingly voted for Truman in his 1948 upset victory over Thomas Dewey.

All of these tensions—war, the economy, politics—led to widespread labor unrest in 1952. That year more strikes occurred than in any year since 1946, with over a half million workers in coal, construction, oil, and other industries walking off their jobs. Labor and management each laid the blame for the nation's stalemate in Korea—and the blood of American troops—at the other's doorstep. In this context, a strike loomed in the nation's most strategic industry, steel.

On 3 April, Philip Murray, president of the United Steel-workers of America, sent a note to the presidents of the steel companies, saying, "You are hereby notified that since a mutually satisfactory agreement has not been reached . . . a strike has been called at the plant of your company . . . effective 12:01 A.M., April 9, 1952." In light of this announcement, the White House had three possible courses of action. One was to invoke the Taft-Hartley law's provision for an 80-day cooling-off period—in effect, an injunction—against the union. Truman, however, was reluctant to take this step, for the union had already deferred its strike for more than three months at the government's request. Additionally, he did not want to alienate Murray, his political ally, by invoking a provision of a law that he, Truman, had vigorously opposed and, in fact, whose repeal he had urged in his 1948 presidential campaign. The second course was to grant some kind of price concession to the industry, perhaps in the $5.50 to $6.50 a ton range.

Truman, however, believed that only a third course of action was open to him—seizure. In his view, Taft-Hartley was designed to settle peacetime labor problems. Wartime labor disputes came under the purview of the Defense Production Act of 1950, which said that it was "the intent of Congress, in order to provide for effective price and wage stabilization . . . and to maintain uninterrupted production, that there be effective procedures for the settlement of labor disputes affecting national defense." Secretary of Commerce Sawyer reported to the president that a shutdown of the steel industry would curtail ship and airplane production and inhibit the nation's ability to make good on its promises to provide allies with war material under the Mutual Defense Assistance Program; Oscar Chapman, secretary of the interior, noted that a steel shutdown would lead to disruption in the oil, gas, coal, and electric industries, all of which relied on steel. All of this, Truman believed, would give succor to the Soviets, who might be tempted to launch further aggression in the belief that U.S. war-making capacity was debilitated.

A Constitutional Crisis

Truman believed in a strong presidency. In a speech on 8 May 1954, he stated that the powers of the president "which are not explicitly written into the Constitution are the powers which no President can pass on to his successor. They go only to him who can take and use them. . . . For it is through the use of these great powers that leadership arises." These views, however, flew in the face of the Constitution's separation of powers among the executive, the legislature, and the judiciary. Specifically, Article II of the Constitution states, "The executive Power shall be vested in a President" and that "he shall take Care that the Laws be faithfully executed." Further, Article II identifies the president as the "Commander in Chief of the Army and Navy of the United States." Truman interpreted these provisions to give him broad inherent powers, including the power to seize the steel industry.

Over the doubts of some members of his administration about the legality of seizure, Truman made his own announcement in a speech delivered at 10:30 P.M. on 8 April—that under Executive Order 10340 the government would "take possession" of the steel mills and keep them operating. Prepared for this step, the companies appeared at 11:30 the next morning in the Federal District Court for the District of Columbia, where Judge Alexander Holtzoff denied the companies' motion for a temporary injunction. On 10 April four of the companies applied to District Judge David A. Pine to schedule a hearing on the matter as soon as possible. Pine obliged, and after hearing arguments, ruled on 29 April that the president's action was devoid of legal justification and issued a preliminary injunction. The union called an immediate strike. The government then filed an application in the U.S. Court of Appeals for the District of Columbia to stay the injunction, and after a hearing on 30 April, the court granted the stay. With a little bit of breathing room, the government then applied to the U.S. Supreme Court for a writ of certiorari, which the Court granted on 3 May. Given the urgency of the matter, oral arguments before the Court were scheduled for 12 May, giving the government a little over a week to prepare its 175-page brief.

The essence of the government's brief was, first, that the district court had erred in granting injunctive relief; second, that it had erred in reaching and deciding the constitutional issues on a motion for a temporary injunction; and third and most important, that the president had the constitutional authority to take possession of the plaintiffs' steel mills to avert an imminent nationwide halt in steel production. The brief argued that it was not necessary to find a specific clause in the Constitution that gave the president this authority; rather, a reading of history shows that the president had always had such authority, derived inherently from the grants of power in Article II of the Constitution taken together. Lincoln, for example, had seized the rail and telegraph lines between Washington and Annapolis during the Civil War; Woodrow Wilson had seized the Smith and Wesson Company for failing to comply with an order of the National War Labor Board during World War I; and Franklin Roosevelt, on at least a dozen occasions, had seized companies threatened by strikes that would weaken the national defense.

The core of the industry's response in its brief was that the president did not have the power to seize private property when Congress had provided a remedy—the Taft-Hartley Act—for dealing with precisely the kind of situation presented in this case. The industry did not dispute that the government has the authority to seize private property in certain circumstances. Its contention was that in this case the wrong branch of government—the executive rather than the legislature—had done so: "The taking of private property by an officer of the United States for public use, without being authorized, expressly or by necessary implication, to do so by some act of Congress, is not the act of the Government."

The Supreme Court's Ruling

The Supreme Court voted quickly on the case, in a conference on 16 May. It did not render its decision, though, until 2 June, when, by a vote of 6 to 3, the Court rejected the government's position and affirmed the judgment of the district court. Justice Hugo Black delivered the opinion of the Court, writing, "There is no statute that expressly authorizes the President to take possession of property as he did here. Nor is there any act of Congress . . . from which such a power can fairly be implied." He went on to say that "the power of Congress to adopt such public policies as those proclaimed by the [executive] order is beyond question. . . . The Constitution does not subject this lawmaking power of Congress to presidential or military supervision or control."

Thus, Youngstown Sheet and Tube Co. v. Sawyer entered into the annals of landmark Supreme Court cases bearing on the balance of power among the branches of the U.S. government, a balance that had been upset by the steady accretions to executive power during the Great Depression of the 1930s, the war years of the 1940s, and the early cold war years of the late 1940s and early 1950s. Constitutional scholars point out, how-ever, that the case was not definitive. Seven justices issued separate opinions, the decision of the majority did not appeal to an authoritative precedent, many of the justices relied on dissenting opinions from previous cases in arriving at their conclusions, and the Court generally disregarded the facts showing that the president was acting in an emergency.

The Aftermath

The Supreme Court's decision triggered an immediate strike that shut down the steel industry for 53 days. In the weeks that followed, Congress debated a number of proposals for legislation to end the strike, but passed none of them. On 26 June the House voted to request the president to invoke the Taft-Hartley Act, but the president refused, praising the union and charging that the steel industry was engaged in a conspiracy against the public interest. On 14 July the Chrysler Corporation shut down all of its assembly lines, and steel shortages forced the army to shut down its shell-making plant—the nation's largest—in St. Louis. Finally, on 24 July the White House announced that a settlement had been reached granting the union a 16-cent hourly wage increase and fringe benefits amounting to 5.4 cents per hour. The companies won a $5.20 per ton price increase.

Key Players

Black, Hugo (1886-1971): Black was born in Harlan, Alabama, and began his career as a lawyer, police court judge, and county prosecutor. He was elected to the U.S. Senate in 1927 and became an active supporter of Franklin Roosevelt's New Deal legislation. Roosevelt rewarded him with an appointment to the Supreme Court in 1937, where he served until 1971. Despite his brief membership in the Ku Klux Klan as a youth, he was a vigorous champion of civil rights.

Murray, Philip (1886-1952): Murray was born in Scotland, where he worked as a coal miner before immigrating to the United States in 1902. He rose through the ranks of the United Mine Workers and served as the union's vice president from 1920 to 1941. With John L. Lewis he founded the Committee of Industrial Organizations (CIO) in 1935. Murray succeeded Lewis as its president, an office he held from 1940 to 1952.

Sawyer, Charles (1887-1979): Sawyer was born in Cincinnati, Ohio. He was lieutenant governor of Ohio from 1933 to 1935 and ran unsuccessfully for governor in 1938. From 1944 to 1945 he served as both U.S. ambassador to Belgium and U.S. minister to Luxembourg. In 1948 he was appointed secretary of the U.S. Commerce Department, where he served until 1953. Today, Sawyer is perhaps most remembered for having proclaimed the first National Secretaries' Week (1-7 June 1952).

Truman, Harry S (1884-1972): Born in Lamar, Missouri, Truman, after running a clothing store in Kansas City, began his political career in a succession of county offices, including that of presiding judge on the county court. He was elected to the U.S. Senate in 1935, where he served until he became Franklin Roosevelt's new vice president in 1944. On Roosevelt's death in 1945, Truman became the nation's 33rd president.

See also: Taft-Hartley Act; United Steelworkers of America.

Bibliography

Books

Marcus, Maeva. Truman and the Steel Seizure Case: The Limits of Presidential Power. New York: Columbia University Press, 1977.

Westin, Alan F. The Anatomy of a Constitutional Law Case.New York: Macmillan, 1958.

Other

"Steel Seizure (A): Supplement." Case Studies in Public Policy Management. Harvard University, John F. Kennedy School of Government [cited 15 October 2002]. <www.ksgcase.harvard.edu/case.htm?PID=309>.

Youngstown Sheet and Tube Company v. Sawyer. 343 U.S. 579 (1952).

—Michael J. O'Neal