Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #883 The Times They Have A’ Changed: JFK and the Steel Crisis of 1962

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. The new drive is a 32-gigabyte drive that is current as of the programs and articles posted by late spring of 2015. The new drive (available for a tax-deductible contribution of $65.00 or more) is complete through the late spring of 2015.

WFMU-FM is podcasting For The Record–You can subscribe to the podcast HERE.

You can subscribe to e-mail alerts from Spitfirelist.com HERE

You can subscribe to RSS feed from Spitfirelist.com HERE.

You can subscribe to the comments made on programs and posts–an excellent source of information in, and of, itself HERE.

This program was recorded in one, 60-minute segment

Introduction: In past discussion of President Kennedy’s assassination, we’ve examined JFK’s ultimately lethal conflicts with the intelligence community, the military and the overlapping entity we’ve termed “the Underground Reich.” As we pass from 2015 into 2016, another of the dramatic clashes which ultimately sealed Kennedy’s fate serves to illustrate just how different contemporary political reality is from JFK’s administration.

In particular, the “steel crisis” of 1962 dramatizes the extent to which our political establishment has embraced reflexive corporatism, in contrast to Kennedy’s singular rejection of the pre-eminence of business as the ultimate arbiter of political reality.

In the spring of 1962, JFK struck what he thought was a binding agreement between the large steel manufacturers and the steelworkers union. Kennedy prevailed on the union rank and file to accept a modest new contract, sacrificing many of their demands. In turn, the large steel companies would forgo inflationary price increases.

To his surprise and shock, JFK was presented with a press release by Roger Blough, the chairman of U.S. Steel, the country’s largest manufacturer of that strategic metal. Bethlehem and other large steel companies followed suit.

In response to the impending 3.5 percent across the board price increase, Kennedy manifested his outrage by:

  • Switching defense contracts to smaller firms that had not increased prices.
  • Having the Department of Justice and the FBI conduct thorough investigations and rigorous scrutiny of the professional dealings of Big Steel and its executives–expense accounts, travels and personal records.
  • Giving a public address excoriating the actions of Big Steel.
  • Threatening an all-out war on Big Steel, including anti-trust and IRS investigations.
  • Recounting his father’s admonition that “all businessmen are sons-of-bitches.” The New York Times reported his remark.
  • Relating to steelworkers union chief David McDonald  that “you’ve been screwed and I’ve been screwed.”
  • Sending his lawyer Clark Clifford to negotiate with Big Steel.

Ultimately, Kennedy prevailed and Big Steel rolled back their proposed price increase. The victory was costly, however, and Kennedy was viewed as a de-facto communist and both he and his brother were the focal point of lethal enmity by big business.

Program Highlights Include: 

  • An ominous, unsigned editorial in Henry Luce’s Fortune magazine that foreshadowed Kennedy’s murder with a direct reference to Shakespeare’s recounting of Julius Caesar’s assassination.
  • The participation by other powerful business interests in United States Steel’s board of directors, the group that decided upon the price increase.
  • Attacks by other media outlets on JFK’s administration as being “quasi Soviet” in its outlook.
  • Characterizations of Robert Kennedy as “ruthless” because of his dogged pursuit of Big Steel.
  • The role of Kennedy’s father Joseph Kennedy (Senior) as Franklin Delano Roosevelt’s head of the Securities and Exchange Commission.
  • Joseph Kennedy’s crackdown on the financial industry, which earned him the enmity of the titans of Wall Street.
  • A recounting of Eisenhower’s famous address warning about the influence of “the military industrial complex” in American life. (The steel industry was a major part of that complex.)
  • Discussion of some of the creation of the disinformation concerning “Oswald the communist.”
  • The role of Dulles law firm Sullivan & Cromwell in the formation of U.S. Steel.

1. As a prelude to discussion of JFK and the steel crisis, we recount President Eisenhower’s famous address warning about what he termed “the military industrial complex”–a term that has become famous in the years since Ike minted it. Note that the steel industry is a major part of that “complex.”

JFK and the Unspeakable: Why He Died and Why It Matters by James W. Douglass; Touchstone Books [SC]; Copyright 2008 by James W. Douglas; ISBN 978-1-4391-9388-4; pp. 136-137.

. . . . The political context of Kennedy’s assassination was described best by the president who preceded him.

On January 17, 1961, three days before JFK was inaugurated as President, Dwight D. Eisenhower in his farewell address warned of a new threat to freedom from within the United States. In response to a threat from without, Eisenhower said, “We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

“This conjunction of an immense military establishment and large arms industry is new in the American experience. The total influence–economic, political, even spiritual–is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

“We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted.”

Eisenhower himself never used the power of his presidency to challenge this new threat to democracy. He simply identified it in a memorable way when he felt he was about to leave office. He thereby passed on the possibility of resisting it to his successor.

In Kennedy’s short presidency, the military-industrial complex actually increased its profits and power. JFK’s initial call to develop a military response to the Soviet Union and its allies that would be “more flexible” than the Eisenhower policy of mutual assured destruction expanded the Pentagon’s contracts with U.S. corporations. Yet in the summer of 1963, the leaders of the military-industrial complex could see storm clouds on their horizon. After JFK’s American University address and his quick signing of the Test Ban Treaty with Khruschev, corporate power holders saw the distinct prospect in the not distant future of a settlement in the Cold War between the United States and the Soviet Union. Both Kennedy and Khruschev were prepared to shift their war of conflicting ideologies to more peaceful fronts. Kennedy wanted a complete ban on the testing of nuclear weapons, then mutual steps in nuclear disarmament. He saw a willing partner in Khrushcev, who wanted to ease the huge burden of arms expenditures on the Soviet economy. In that direction of U.S.–Soviet disarmament lay the diminished power of a corporate military system that for years had controlled the United States government. In his turn toward peace, Kennedy was beginning to undermine the dominant power structure that Eisenhower had finally identified and warned against so strongly as he left the White House.

2. In past discussion of President Kennedy’s assassination, we’ve examined JFK’s ultimately lethal conflicts with the intelligence community, the military and the overlapping entity we’ve termed “the Underground Reich.” As we pass from 2015 into 2016, another of the dramatic clashes which ultimately sealed Kennedy’s fate serves to illustrate just how different contemporary political reality is from JFK’s administration.

In particular, the “steel crisis” of 1962 dramatizes the  extent to which our political establishment has embraced reflexive corporatism, in contrast to Kennedy’s singular rejection of the pre-eminence of business as the ultimate arbiter of political reality.

JFK and the Unspeakable: Why He Died and Why It Matters by James W. Douglas; Touchstone Books [SC]; Copyright 2008 by James W. Douglas; ISBN 978-1-4391-9388-4; pp. 137-142.

. . . . In 1962, Kennedy had already profoundly key elements of the military industrial complex in the steel crisis. The coflict arose from JFK’s preoccupation with steel prices, whose rise he believed “quickly drove up the price of everything else.” The president therefore brokered a contract, signed on April 6, 1962, in which the United Steelworkers union accepted a modest settlement from the United States Steel Company, with the understanding that the company would help keep inflation down by not raising steel prices. Kennedy phoned identical statements of appreciation to union headquarters and the company managers, congratulating each for having reached an agreement that was “obviously non-inflationary.” When he finished the calls, he told adviser Ted Sorensen that the union members “cheered and applauded their own sacrifice,” whereas the company representatives were “ice-cold” to him. It was a foretaste of the future.

On April 19, 1962, Roger Blough, chairman of U.S. Steel, asked to meet with Kennedy. At 5:45 p.m., seated next to JFK, Blough said, “Perhaps the easiest way I can explain the purpose of my visit . . .,” and handed Kennedy four mimeographed pages. Blough knew the press release in the president’s hands was being passed out simultaneously to the media by other U.S. Steel representatives. It stated that U.S. Steel, “effective at 12:01 A.M. tomorrow, will raise the price fo the company’s steel products by an average of about 3.5 percent . . . ”

Kennedy read the statement, recognizing immediately that he and the steelworkers had been double-crossed by U.S. Steel. He looked up at Blough and said, “You’ve made a terrible mistake.”

After Blough departed, Kennedy shared the bad news with a group of his advisers. They had never seen him so angry. he said, “My father always told me that all businessmen were sons-of-bitches, but I never believed it until now.” The corporate world never forgot it.
He phoned steelworkers union president David McDonald and said, “Dave, you’ve been screwed and I’ve been screwed.”

The next morning U.S. Steel was joined in its price increase by Bethlehem Steel, the second largest company, and soon after by four others. In response, Kennedy mustered every resource he could to force the steel companies to roll back their prices. He began at the Defense Department.
Defense contracts were critical to “Big Steel,” an industry that embodied the intertwined influence with the Pentagon that Eisenhower had warned against. Defense Secretary McNamara told the President that the combined impact in defense costs from the raise in steel prices would be a billion dollars. Kennedy ordered him to start shifting steel purchases at once to the smaller companies that had not yet joined in the raise. McNamara announced that a steel-plate order previously divided between U.S. Steel and Lukens Steel, a tiny steel company that had not raised prices, would now go entirely to Lukens. Walter Heller, who chaired the President’s Council of Economic Advisers, “calcculated that the government used so much steel that it could shift as much as 9 percent of the industry’s total business away from the six companies that had announced price rises to six that were still holding back.” The president even ordered the Defense Department to take its steel business overseas, if that were necessary to keep defense contracts away from U.S. Steel and its cohorts. Big Steel executives saw that Kennedy meant business, their business–and that substantial Cold War profits were already being drained away from them.

Attorney General Robert Kennedy moved quickly to convene a federal grand jury to investigate price fixing in Big Steel’s corporate network. He looked into the steel companies’ possible violation of anti-trust laws, and investigation his Anti-Trust Division had actually begun before the steel crisis. He now ordered the FBI to move on the steel executives with speed and thoroughness. As RFK said later in an interview, “We were going to go for broke: their expense accounts and where they’d been and what they were doing. I picked up all their records and I told the FBI to interview them all–march into their offices the next day. We weren’t going to go slowly. I said to have them done all over the country. All of them were hit with meetings the next morning by agents. All of them were subpoenaed for their company records.”

Steel executives suddenly found themselves being treated as if they were enemies of the people. The President then stated that they were precisely that. He opened his April 11 press conference by saying:

“Simultaneous and identical actions of United States Steel and other leading steel corporations increasing steel prices by some $6 a ton constitute a wholly unjustifiable and irresponsible defiance of the public interest . . . . the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives whose pursuit of privagte power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 18.5 million Americans.”

Reporters gasped at the intensity of Kennedy’s attack on Big Steel. After describing trhe ways in which steel executives had defied the public interest, JFK concluded with an ironic reference to his inaugural address:

“Some time ago I asked each American to consider what he could do for his country and I asked the steel companies. In the last 24 hours, we had their answer.

On April 12, Kennedy sent his lawyer, Clark Clifford to serve as a mediator with U.S. Steel The steel executives, feeling the heat from the White House, proposed a compromise. Clifford phoned the president to say, “Blough and his people want to know what you would say if they announce a partial rollback of the price increases, say 50 percent?”

“I wouldn’t say a damn thing,” Kennedy replied. “It’s the whole way.”

Clifford was instructed to say that “if U.S. Steel persisted, the President would use every tool available to turn the decision around.” That included especially switching more defense contracts away from them to more affordable companies. There was no compromise.

Clifford reported back to the steel heads that “the President was already setting in motion to use the full power of the Presidency to divert contracts from U.S. Steel and the other companies,” adding that “he still had several actions in reserve, including tax audits, antitrust investigations, and a thorough probe of market practices.” The president was prepared to wage a domestic war against Big Steel’s price increase.

On April 13, 1962, Big Steel’s executives surrendered. The first company to yield was Bethlehem Steel, another major defense contractor. The reason, reported back to the White House, was that “Bethlehem had gotten wind that it was to excluded from bidding on the construction of three naval vessels the following week and decided to take quick action.” Bethlehem was followed soon by the giant, U.S. Steel. The president’s offensive backed by overwhelming public support, had been too much for them. All six steel companies rescinded the entire price raise that their point man, Roger Blough, had conveyed to JFK as an accomplished fact three days before.

As would be his attitude after the Cuban Missile Crisis, Kennedy, as  Sorensen said, “permitted no gloating by any administration spokesman and no talk of retribution.” He was especially gracious toward Roger Blough, whom he subsequently invited often to the White House for consultations. When asked by a reporter at a press conference about his “rather harsh statement about businessmen,” JFK revised his infamous s.o.b. remark. He said that his father, a businessman himself, had meant only “the steel men” with whom he had been “involved when he was a member of the Roosevelt administration in the 1937 strike.”

This explanation would not win the hearts of business leaders. As they knew, JFK’s father, Joseph P. Kennedy, Sr., while a businessman himself, had also been President Franklin D. Roosevelt’s first chairman of the Securities and Exchange Commission (SEC). As a former Wall Street insider who knew the system, the senior Kennedy had cracked down on Wall Street profiteers. Some of the financial titans of the thirties regarded JFK’s father as a class traitor, “the Judas of Wall Street,” for his work on behalf of FDR. It was in the light of Joseph Kennedy’s fight to initiate government controls over Wall Street, and the opposition  he encountered, that he made his all-businessmen-are-s.o.b.’s remark to JFK.

That opinion of his father, President Kennedy told the press, “I found appropriate that evening [when] we had not been treated altogether with frankness . . . But that’s past, that’s past. Now we’re working together, I hope.”

It was a vain hope. John and Robert Kennedy had become notorious in the ranks of big business. JFK’s strategy of withdrawing defense contracts and RFK’s aggressive investigating tactics toward men of power were seen as unforgivable sins by the corporate world. As a result of the president’s uncompromising stand against the steel industry–and implicitly any corporation that chose to defy his authority–a bitter gap opened up between Kennedy and big business, whose most powerful elements coincided with the military-industrial complex.

The depth of corporate hostility toward Kennedy after the steel crisis can be seen by an unsigned editorial in Fortune, media czar Henry Luce’s magazine for the most fortunate. The editors of Fortune knew the decision to raise steel prices had been made by the executive committee of U.S. Steel’s board of directors. It included top-level officers from other huge financial institutions, such as the Morgan Guaranty Trust Company, the First National City Bank of New York, the Prudential Insurance Company, the Ford Foundation, and AT & T. When Roger Blough handed U.S. Steel’s provocative press release to the President, he did so on behalf of not only U.S. Steel but also these other financial giants in the United States. The Fortune editorial therefore posed an intriguing question: Why did the financial interests behind U.S. Steel announce the price increase in such a way as to deliberately “provoke the President of the U.S. into a vitriolic and demagogic assault?”

With the authority of an insider’s knowledge that it denied having, Fortune answered its own question: “There is a theory–unsupported by any direct evidence–that Blough was acting as a ‘business statesman’ rather than as a businessman judging his market.” According to “this theory,” Kennedy’s prior appeal to steel executives not to raise prices, leading to the contract settlement between the company and the union, had “poised over the industry a threat of ‘jawbone control’ of prices. For the sake of his company, the industry, and the nation, Blough sought a way to break through the bland ‘harmony’ that has recently prevailed between government and business.”

In plainer language, the president was acting too much like a President, rather than just another officeholder beholden to the powers that be. U.S. Steel on behalf of still higher financial interests therefore taunted Kennedy so as to present him with a dilemma: he either had to accept the price hike and lose credibility, or react as he did with power to roll back the increase and thereby unite the business world against him. His unswerving activist response then served to confirm the worst fears of corporate America:

“That the threat of ‘jawbone control’ was no mere bugaboo was borne out by the tone of President Kennedy’s reaction and the threats of general business harassment by government that followed the ‘affront.’”

Thus the steel crisis, in Fortune’s view, threatened to propel an activist, anti-business president toward a fate like that of Julius Caesar. As Shakespeare had it, Caesar was warned of his coming assassination by a soothsayer: “Beware the ides of March.” Fortune gave Kennedy a deadly warning of its own by the title of its editorial “Steel: The Ides of April.”

Robert Kennedy’s Justice Department continued its anti-trust investigation into the steel companies. U.S. Steel and seven other companies were eventually forced to pay maximum fines in 1965 for their price-fixing activities between 1955 and 1961. The steel crisis defined John and Robert Kennedy as Wall Street enemies. The president was seen as a state dictator. As the Wall Street Journal put it in the week after Big Steel surrendered to the Kennedys, “The Government set the price. And it did this by the pressure of fear–by naked power, by threats, by agents of the state security police.” U.S. News and World Report gave prominence in its April 30, 1962 issue an anti-Kennedy article on “Planned Economy” that suggested the president was acting like a Soviet commissar.

Attorney General Robert Kennedy became a symbol of “ruthless power” to the business titans he treated so brusquely, whose corporations he then found in violation of the law. Media controlled by the same interests adopted the characterization of RFK as ruthless until his murder six years later.

As John Kennedy became persona non grata to the economic elite of the United States, his popularity increased elsewhere. He said on May 8, 1962, to a warmly welcoming convention of the United Auto Workers:

“Last week, after speaking to the Chamber of Commerce and the resident of the American Medical Association, I began to wonder how I got elected. And now I remember.

“I said to the Chamber that I thought I was the second choice for President of a majority of the Chamber; anyone else was first choice.”

John Kennedy, the son of a rich man who had fought Wall Street in the Roosevelt administration, was beginning to sound like a class heretic himself. He told the U.A.W.: “Harry Truman once said there are 14 or 15 million Americans who have the resources to have representatives in Washington to protect their interests, and that the interests of the great mass of other people, the hundred and fifty or sixty million is the responsibility of the President of the United States. And I propose to fulfill it.”

After the steel crisis, President Kennedy felt so much hostility from the leaders of big business that he finally gave up trying to curry their support. He told advisers Sorensen, O’Donnell, and Schlesinger, “I understand better every day why Roosevelt, ho started out such a mild fellow, ended u so ferociously anti-business. It is hard as hell to be friendly with people who keep trying to cut your legs off.” If Fortune’s editors were right in seeing a deliberate provocation of Kennedy, the instigators had succeeded in alienating the business elite from the President and vice versa.

JFK joked about what his corporate enemies would do to him, if they only had the chance. A year after the steel crisis, he learned before giving a speech in New York that elsewhere in the same hotel “the steel industry was presenting Dwight D. Eisenhower with its annual public service award.”

“I was their man of the year last year,” said the President to his audience. “They wanted to come down to the White House to give me their award, but the Secret Service wouldn’t let them do it.”

For the dark humor to work, Kennedy and his audience had to assume a Secret Service committed to shielding the President. However as Secret Service Abraham Bolden had learned before he left the White House detail, the S.S. agents around Kennedy were joking in a more sinister direction–that they would step out of the way if an assassin aimed a shot at the President. In Dallas the Secret Service would step out of the way not just individually, but collectively. . . .

3. Supplementing discussion of the steel crisis, the program concludes with partial delineation of the “painting of Oswald ‘red’–the creation of a phony communist cover for the patsy-to-be.

JFK and the Unspeakable: Why He Died and Why It Matters by James W. Douglas; Touchstone Books [SC]; Copyright 2008 by James W. Douglas; ISBN 978-1-4391-9388-4; pp. 142-146.

In his deepening alienation from the CIA, the Pentagon, and big business, John Kennedy was moving consciously beyond the point of no return. Kennedy knew well the complicity that existed among the Cold War’s corporate elite, Pentagon planners, and the heads of “intelligence agencies.” He was no stranger to the way systemic power worked in and behind his national security state. But he still kept acting for “the interests of the great mass of other people”–and as his brother Robert put it, to prevent “the specter of the death of the children of this country and around the world.” That put him more and more deeply in conflict with those who controlled the system. . . .

4. Supplementing the on-air discussion, we present an account of the role of Dulles law firm Sullivan & Cromwell in the formation of U.S. Steel.

The Brothers: John Foster Dulls, Allen Dulles, and Their Secret World War by Stephen Kinzer; St. Martin Griffin [SC]; Copyright 2013 by Stephen Kinzer; ISBN 978-1-250-05312-1; p. 18.

 . . . . Seven years later, with the financier J.P. Morgan as its client, it wove twenty-one steelmakers into the National Tube Company and then, in 1891, merged National Tube with seven other companies to create U.S. Steel, capitalized at more than one billion dollars, an astounding sum at that time. . . .

 

Discussion

No comments for “FTR #883 The Times They Have A’ Changed: JFK and the Steel Crisis of 1962”

Post a comment