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Dwight Macdonald

Sparks in the News

(9 December 1939)

From Socialist Appeal, Vol. III No. 92, 9 December 1939, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Franklin D. Roosevelt, Union Buster

As the Appeal has pointed out editorially, the recent announcement of Assistant Attorney General Thurman Arnold that the Department of Justice is preparing to prosecute trade unions under the anti-trust laws, is a frontal attack on the American labor movement. This is the first time in several decades that the Department of Justice has dared thus to pervert the anti-trust laws. It marks a new high point in the War Deal’s current offensive against workers’ organizations. First the trial of scores of WPA strikers in Minneapolis, then the Sioux City frame-up of teamsters’ union officials, carefully staged by FBI agents, and now, after this skirmishing, comes the full-dress legal onslaught.

Epstein on Arnold

In the N.Y. Times for November 26, there is a lengthy communication which thoroughly exposes the reactionary nature of Attorney General Arnold’s proposal. It carries especial weight because it is signed not by a radical, not by a trade unionist, but by the Solicitor General of the State of New York, Henry Epstein.

“One must read and reread Mr. Arnold’s letter several times before its terrific impact on the development of a bill of rights for American trade unions can be fully appreciated,” writes Mr. Epstein. “Sugar coat it how you may, it remains a throwback to the Danbury Hatter’s Duplex Printing cases.”

Here I might parenthetically interject that the editors of that great liberal organ, The New Republic, didn’t get below the sugar-coating. Believe it or not, in the issue of November 29, they editorially approve Arnold’s letter, complacently remarking: “We think sensible people will agree with Mr. Arnold’s plan of attack.”

Solicitor General Epstein’s letter destroys completely the legal alibi for Arnold’s plan. He points out that Congress in 1916 made a special point of including in the Clayton Act sections 6 and 20, expressly exempting unions from the operation of the anti-trust laws. He also shows in detail how almost any trade union activity could be legally attacked under Arnold’s interpretation of the anti-trust laws.

“This warning of Mr. Arnold’s,” he concludes, “gives evidence of some careful planning. Scarcely hidden, however, is its actual threat to labor unions and their only effective weapons. The danger lies in the fact that labor cannot know when its acts will run into criminal prosecution, to say nothing of civil damage suits.

“The warning is equally applicable to AFL and CIO. Here is an issue on which they can unite, to combine forces and prevent the nullification of labor’s gains through distortion and misapplication of anti-trust laws. They have not long to wait.”

This Peculiar Boom

Since the Reichswehr crossed the Polish frontier on September 1, American industrial production has increased 20 per cent, which is very nearly the largest increase in such a short period ever recorded. The steel industry, backbone of our industrial system, is now operating at around 92 per cent of capacity. Between July and November of this year, the number of blast furnaces in operation increased from 40 per cent of the total in existence to 80 per cent – a more rapid rise than took place even during the last war.

Steel’s prosperity has spread to all the other sectors of our economic system. Third quarter earnings of the big corporations are way above those for the same period of last year. Even the railroads are making money these days. As for such industries as airplane building (which now has almost $200,000,000 worth of new contracts for planes on its books) and naval shipbuilding (where the War Deal recently, without any publicity, gave up competitive bidding and restored the old “cost-plus-10%” system which produced such scandals in the last war) – these especially favored sectors are coining money right and left.

But there is something phoney about this boom, just as there is something phoney about this war. This is shown by the peculiar action of the stock market in the last two months. In the opening weeks of the war, there was a wild rise in stock prices. Then this hectic boom slowed down, stopped, and for many weeks now the stock market has been hanging in the doldrums – no great activity, prices fluctuating back and forth without getting anywhere. The N.Y. Times average of stock prices, which shot up to 114 in the opening days of the war, has now declined to 110. A month or so ago, when the corporations were reporting huge earnings for the quarter, the Dow- Jones index of industrial stocks stood at 156. Its reaction to these reports has been to decline slowly to a present level of 151.

This odd behavior of the stock market seems to have two main causes. (1) Wall Street, which looks beneath the surface in such matters, knows that there has not been enough of a rise in domestic consumption to support the rise in production and earnings. (2) Therefore, unless the war becomes “serious” and large orders from the Allies flood the American market, the industrial boom will collapse in the next few months. At present, this boom is as phoney as the war – since it is based on the expectation of huge war orders and not on any large amount of actual orders.

Will the War Solve Unemployment?

Recent propaganda from Washington has spread wide the impression that the present war boom in industry is giving jobs at a rapid rate to the nation’s jobless. In a few months, one gathers, the huge total of the unemployed will have been whittled down to “reasonable” proportions.

This is – propaganda. The fact is that already the 1929 level of production has been passed, and there are still at least ten million unemployed workers. And even if the war boom reaches heights which at present seem unlikely, even then there will be no important decrease in the total of unemployed. Howard Hunter, a WPA official, recently estimated that even if our exports to Europe increased by $1,000,000,000 in the next year, which would mean a 100% increase, this would employ only 600,000 more American workers – which is about the net increase (after deaths, etc., have been allowed for) in the country’s labor force every year. If exports to South America were similarly increased, another 600,000 workers might find jobs. Add in another million who would be employed because of the internal expansion that would probably accompany such a rise in foreign trade, and you still have reduced the unemployed only to 8,000,000. “We should have done with the will o’ the wisp notion that a war boom is going to wipe out unemployment,” Hunter concludes.

Politicians who talk about the tremendous effect a war boom would have on unemployment are really thinking – the more sophisticated among them, at least – in terms not of a neutral America selling goods to the Allies, but of an America that is itself in the war as a belligerent. When they speak of the labor shortage in the last war, they are really talking about the period after we had gone in, when we were feeding and equipping an army of four million men and had extended unlimited credits to the Allies.

All this talk about a war boom solving the unemployment problem, therefore, is no more and no less than propaganda to ease the working class into the war.

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