The Company Town by Hardy Green Page B

constituted half of the population. In 1925, the victorious mayoral candidate Floyd Williams was backed by both the corporation and another increasingly powerful force, the Ku Klux Klan.
    Judge Gary also took a keen interest in city affairs and during his occasional visits had many words of advice for Gary’s political and economic leaders. He would tour the city with his wife and bask in the way his name was featured in many institutions’ titles, including the imposing new Gary National Bank Building. In 1927, though, Gary died, a victim of the heart troubles that had plagued him for some years. 26
    In 1932, Myron Taylor, a tall, stern-faced, and equally formal gentleman of patrician ancestry, took over as chairman and CEO of U.S. Steel after serving for several years as part of a ruling triumvirate that included J. P. Morgan and financier George F. Baker. Although Gary and Taylor were both lawyers, their business careers differed greatly, mirroring the changing times. Judge Gary had risen as a skilled merger-and-acquisitions man, but Taylor’s specialty was in helping streamline and rationalize operations at long-established companies, including textile firms in Lowell
and Newburyport, Massachusetts. With the onset of the Great Depression, Taylor brought in younger managers who encouraged innovation in finance, production, and employee relations.
    In 1934, U.S. Steel’s Chicago-area plants, including the Gary Works, turned out as much steel as was generated in all of Germany, the world’s number-two steelmaking country. But behind that startling statistic lay an unhappy reality: Many U.S. Steel plants were obsolete and expensive to run. The company’s managerial approach was antique, as centralized as the Vatican, and practically oblivious to such essential matters as cost accounting and technical innovation. Taylor responded by closing some obsolete facilities and forcing a merger of the corporation’s two big subsidiaries, Carnegie Steel and Illinois Steel (which included the Gary Works), forming Carnegie-Illinois, but he also pioneered a change in employee relations. At first this involved developing a company union, an organization Judge Gary had shown no interest in. But following the 1933 National Industrial Recovery Act with its pro-labor Section 7(a), Taylor brought in a leading exponent of employee-representation plans, Arthur H. Young of the Rockefeller-subsidized Industrial Relations Counselors Inc., to produce such a plan for U.S. Steel. “Word has been passed around that company unions will suffice in meeting the requirements of 7a,” reported industry trade journal Steel . Questioned by a U.S. Senate committee, Young strongly advocated for the U.S. Steel program: “The works council plan is a supplement to the Golden Rule as given to us by the Carpenter of Nazareth,” he declared.
    The company-union approach backfired. Under John L. Lewis, the new industrial-union umbrella organization, the Congress of Industrial Organizations, placed a priority on steelworker unionization, turning the task over to its Steel Worker Organizing Committee (SWOC). And SWOC adopted the crafty approach of encouraging militants to take over employee-representation plans. Many aggressive union leaders emerged within the supposedly tame groups, including at the Gary Works. By the end of 1936, it was evident that the company unions were either dysfunctional or surprisingly confrontational.
    Moreover, the Depression and Franklin Roosevelt’s New Deal had prompted a new union mobilization nationally—most notably in auto
production, which witnessed sensational sit-down strikes in Flint, Michigan. Taylor saw that the unionization of steel was probably inevitable, and after a series of private meetings with Lewis came to terms. By March 1937, Carnegie-Illinois had signed a tentative pact with SWOC that recognized the union as the bargaining agent for the company’s workers and granted