Jim Douglass: How Kennedy Took On the Steel Industry (Part 2)

The most important book for any American to read is JFK and the Unspeakable: Who Killed Him and Why it Matters by James D. Douglass.

Douglass’ investigation into the secret papers finally released during the Clinton era begin to uncover a deadly “family pattern” of behavior in the highest levels of political power. Now, Douglass has written an important article for Tikkun magazine that looks at how the pattern is being repeated again between President Obama, Gen. Petraeus, and Afghanistan.

Below is Part 2: How Kennedy Took On the Steel Industry

The steel crisis was JFK’s second step toward freedom.

On April 10, 1962, U.S. Steel chairman Roger Blough informed President Kennedy that Blough’s company was raising steel prices by 3.5 percent — breaking an agreement to control inflation that the president had just brokered between U.S. Steel and the United Steelworkers. U.S. Steel was joined publicly in the price hike by five other companies already in collusion with it. JFK was furious at being double-crossed. He said to his staff, in a sentence Wall Street would not forget: “My father always told me that all businessmen were sons of bitches, but I never believed it until now.”

President Kennedy and Attorney General Robert Kennedy launched an all-out domestic war to force the heads of the six colluding companies to cancel their price increase. The Justice Department raided Big Steel’s corporate offices. Robert Kennedy subpoenaed the steel executives’ personal and company records. The Kennedys were going for broke. Most ominously for Big Steel, the president ordered the Defense Department to market its steel business overseas, so as to take huge profits out of the hands of U.S. Steel and its cohorts, at the heart of the military-industrial complex. Faced by the fact that the Kennedys meant business — their business — the steel heads surrendered quickly, rescinding their price raise.

However, they accomplished a more sinister purpose. A Fortune magazine editorial stated with an insider’s knowledge that U.S. Steel’s decision to raise prices, made by a board of directors composed of the financial elite of the country, was designed to present the president with a dilemma: either accept the price hike and lose credibility or push back and unite the business world against him, as he did. Fortune publisher Henry Luce, the most powerful media magnate in the world, was behind the editorial. Drawing on Shakespeare’s prediction by the soothsayer of Julius Caesar’s assassination, “Beware the ides of March,” the Luce editorial’s title warned Kennedy of the fate he was tempting by his stand against imperial power: “Steel: The Ides of April.”

The powers that be had to be more than a little angry to be threatening the president so boldly. An American parable was in the making. As Kennedy turned heretically toward peace after the Cuban Missile Crisis, the parable of the president and the powers would be played out until it climaxed a year later on a sunny street in Dallas. Then it would be up to us to open our ears and hear.–James Douglass, from JFK, Obama, and the Unspeakable

2 thoughts on “Jim Douglass: How Kennedy Took On the Steel Industry (Part 2)”

  1. Franz, Thanks for this wonderful first person insight into a bit of American history that is still greatly influencing today’s American economics, the “Rust Belt,” labor organizing, and the dance of presidents and business.

  2. James Douglass’ recap of the steel controversy of 1962 is one of the many highlights of his book, I thought.

    A bit of background from an old steelworker:

    In 1959 a monster strike caught the whole of the US labor movement off-balance and unprepared. A neophyte union chief called the strike of ’59 in part only out of jealousy (the autoworkers were doing better at the time!) In the meantime steel industry managers were appealing the Eisenhower administration to invoke the “back to work” clause in Taft-Hartley while at the same time they went out the “back door” and opened business to foreign suppliers.

    Despite months of bitterness, and the arbitrating skills of Richard Nixon who was currying favor with labor in anticipation of his run for the presidency the following year, the union essentially muffed it. From then on, the REAL effect of ’59 was that industry leaders began to open up the US market to foreign steelmakers.

    The point obviously was that the steelworkers could never essentially strike again. While the amount of foreign steel in America was still small, it was also made at rates far cheaper than what was possible domestically. Do remember that no matter how small the dollar amounts might sound, the American steelworker was one of the highest paid workers in the world in 1962.

    Kennedy had enough information to know the industrial junta was just testing him. Naomi Klein would many years later dub it Shock Doctrine. But either way Kennedy knew that he was expected to roll over for capital like Ike had before him, and he wasn’t about to.

    The rest of course you know. But the juxtaposition of the frightened rabbit lords of industry running to Eisenhower and the provisions of the Taft-Hartley act contrasts nicely with the hard and unified front the held up for Kennnedy when they raised the rates three years after the big strike.

    The US steel industry was nurtured by government contracts for defense and infrastructure, and paid it back with sullen contempt and greed. For awhile Americans had a President on their side. A short while, and a long time ago.

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