the social agenda of the minneapolis citizens alliance

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A UNION AGAINST UNIONS

A NETWORK OF SPIES

A Social Agenda for an Open Shop City

THE SUPPRESSION OF LABOR UNIONS and political radi-

cals absorbed most of the CA's energy during the open-shop drive of the early

1920s. At the same time, Minneapolis business leaders were also forced to

grapple with the social problems that clouded the radiant success of their em-

pire. The long hours worked by children in the nation's mills and, later, the

massive unemployment and poverty of the Great Depression provoked radicals

and reformists inside state and federal governments and on the floors of the

nation's factories. Although the Roosevelt administration's New Deal pro

grams alleviated the pressure for local private action, they were repugnant to

Citizens Alliance members, who believed in an America based on indi-

vidual freedom and private property.

They were also, of course, a threat to private capital's domination of Amer-

ican life. As National Association of Manufacturers' (NAM) counsel James A.

Emery observed, "Those who analyze and reflect will find lurking beneath a

touching sentiment a determined endeavor to obtain a grant of power from

the people, revolutionary in its effect upon their private life and government,

and entirely unnecessary to accomplish an object which all desire." The first

defense of the NAM, the Minnesota Employers' Association, and the CA was to

convince the public that problems such as child labor were not really problems

at all. During the Depression, when unemployment and poverty finally be -

came undeniable, the country's conservative business elite faced a difficult

choice: the overwhelming expense of private charity and new self-help orga-

nizations, or the much cheaper but un-American scourge of public relief. (

Ironically one of the first postwar challenges to American industry's dom-

ination of the nation's work force was ignited in May 1922, when, for the sec-

ond time, the United States Supreme Court struck down a congressional at-

tempt to regulate child labor. Realizing the futility of federal legislation, a large

collection of national social, civic, religious, and labor groups joined to write

and advocate an amendment to the Constitution giving Congress the "power

to limit, regulate, and prohibit the labor of persons under eighteen years of

age." On April 26, 1924, the House adopted the resolution by an overwhelm-

A Social Agenda 245 (TO TOP)

ing vote of 297 to 69. A little over a month later, the Senate sent the amend-

ment to the states for ratification on a 61-to-23 vote. (2)

With the support of both the Republican and Democratic parties and a fa-

vorable reaction from the nation's press, adoption of the amendment seemed

assured. The National League of Women Voters (LWV), the American Federa-

tion of Labor (AFL), the American Federation of Teachers, the National Edu

cation Association (NEA), the National Child Labor Committee, the General As-

sembly of the Presbyterian Church, and a host of other national organizations

joined the crusade to save the 400,000 children under fourteen years of age

who worked in the factories, mills, mines, and canneries of the nation. (3)

Leaders of the League of Women Voters mistakenly assumed that "the or-

ganizations financially interested in cheap child labor, were in despair." On the

contrary, defeat of the amendment became the NAM's primary objective for

1924. At its annual convention, the NAM passed a resolution disapproving "of

this revolutionary grant of power to the Congress as repugnant to our tradi-

tional conception of local responsibility and self government." The amend-

ment, "under the guise of protecting childhood, would authorize by necessary

implication the control of all the minor life of the nation, the mode of its train-

ing and education, the duties of its parents and guardians and substitute the

bureaucratic regulation of remote, expensive, and irresponsible authority. " (4)

To counterbalance the widespread support for the bill's passage, the NAM

organized the National Committee for the Rejection of the 20th Amendment.

A member of the NAM's law department acted as secretary for the temporary

Rejection Committee, which quickly became the propaganda headquarters for

anti-amendment groups. MEA director James H. Ellison was chosen to repre-

sent Minnesota on the national committee. Following the NAM's lead, the Na -

tional Founders' Association passed an identical resolution. Southern textile

interests and the United States Chamber of Commerce quickly joined the

NAM's campaign. (5)

The NAM propaganda campaign against the "so-called Child-labor amend-

ment" was led by NAM general counsel James A. Emery. An examination of the

amendment written by Emery and distributed by the NAM served as the ideo-

logical core of the attack. Emery claimed that the amendment proposed "a

revolutionary transformation of the traditional relationship and respective

function of local and federal government and the primary control of parents

over the training and occupation of their children." The amendment was also

completely unnecessary: According to Emery, only 77,485 children were em-

ployed in agriculture outside their home farm, and only 49,104 children from

age ten to thirteen were in non-agricultural employment: "Can it be con-

tended that the employment of 126,590 children out of 12,502,582 demand

246 A Social Agenda (TO TOP)

the grant of power to Congress which is sought? ... There is no evidence that

the employment is other than intermittent, is dangerous to health or morals,

or to the extent that such is the fact, it will not be corrected by the states with

the rapidity which has characterized their progress in dealing with this sub-

ject. " These arguments, however, were unlikely to strike a chord of fear into

the hearts of the American public. (6)

In agricultural regions across the country, but particularly in the South,

children under eighteen were employed in fieldwork, many of them on their

parents' farms. Emery argued that the language of the amendment and the

publications of the National Child Labor Committee exposed the legislation's

true purpose: To regulate and restrict the right of parents to the labor of their

children on their own farms. The

NAM,

the National Committee for the Rejec-

tion of the 20th Amendment, and the Southern Textile Bulletin flooded the

country with propaganda designed to convince farmers that the amendment

was aimed at their children. The Manufacturers' Record warned that the

amendment would prohibit farm children from "driving the cows to pasture,

or hoeing the vegetables, or doing any work of that character, even for their

own parents." Although proponents of the amendment, such as the Min-

nesota League of Women Voters president Marguerite Wells, claimed that

" There is not the slightest ground for such fears," the campaign had a devas-

tating impact. Farm organizations and farm journals apparently accepted the

NAM's

warning with few reservations, adding their voices to the growing sen-

timent against the amendment. (7)

The pivotal contest would be fought in Massachusetts, a state with strong

child-labor laws of its own, where seventeen groups led by the League of

Women Voters had prepared the way for a decisive victory. The league, how

ever, had vastly underestimated the

NAM

and its local allies at Associated In

dustries of Massachusetts, and the strength of Emery's most effective argu-

ment. The

NAM

claimed that the amendment was "socialistic in its origin,

philosophy and associations.... Every Bolshevik, every extreme Communist

and Socialist in the U. S., is back of the measure." The proposed Twentieth

Amendment was a "communistic, bolshevistic scheme, and a lot of good peo-

ple, misled, are accepting it, not knowing the evil consequences which will re-

sult and the sinister purpose back of the measure." (

The head of Associated Industries of Massachusetts, who also served on

the

NAM's

Committee for the Rejection of the 20th Amendment, formed the

Citizens' Committee to Protect Our Homes and Children, to disseminate vast

quantities of anti-Communist propaganda across the state. With the substan-

tial aid of the Roman Catholic clergy, the amendment was overwhelming re-

jected on November 4, 1924. The

NAM

had conducted an amazingly effective

A Social Agenda 247 (TO TOP)

educational campaign, which would have far-reaching consequences in the

campaign for ratification of the child-labor amendment. (9)

Ten days after the Massachusetts victory, representatives of thirty-one state

employer and manufacturer organizations met at the Hotel Astor in New York

for the semiannual conference of the National Industrial Council (NIC). MEA

general manager A. V Williams and CA president Briggs listened respectfully

as Emery, general counsel of both the NIC

and the NAM, urged business leaders

across the country to contact their state legislators on the proposed Twentieth

Amendment. Of more practical benefit, the manager of the Associated Indus-

tries of Massachusetts reported in detail on the campaign to defeat the amend-

ment in his state. (

10)

At the next MEA board of directors'meeting, Otis Briggs and A. V Williams

reported back with a plan of action for defeating the child-labor amendment

in Minnesota. After the report, Briggs, Ellison, MEA President Charles B. Mills,

and Will 0. Washburn were appointed to a committee to handle the MEA'S

campaign against the amendment. At the annual meeting on December 2,

1924, Williams read the amendment and discussed the far-reaching danger

inherent in its ratification. It was the unanimous opinion of those present that

The Amendment was objectionable in every particular and should be opposed

by the Association." (

The MEA'S special committee served as the state's anti-amendment distrib-

ution center, responsible for circulating propaganda throughout the state to

district organizations, the daily press, the Farm Bureau, and the legislature.

The Minneapolis journal supported the sentiments of Utah's Senator William

H. King that the amendment was "a scheme to destroy the State, our form of

government and to introduce the worst form of communism into American

institutions." League of Women Voters President Wells wrote her local chair

woman that the league was swamped by the sudden flood of bitter propaganda

against ratification of the child-labor amendment. The CA took an active role

in the campaign, financing the appearance of an NAM lecturer in the Twin

Cities and dedicating two issues of its monthly bulletin to the battle. (

12)

While the CA continued to hammer away with Emery's arguments, partic-

ularly communism, Briggs took a more philosophical tack. He recalled "most

vividly the genuine thrill of joy, happiness and pride which possessed his soul

when, at the age of five, he was sufficiently educated to count up to six and

could help his grandfather plant corn.... The very foundation of this nation

is built upon countless numbers of its people who learned the habit of work

long before they were eighteen .... The heritage of the American child has

been the right to do things himself ... To deny a child the right to work is to

stifle and thwart all ambition and incentive to become a useful citizen," said

248 A Social Agenda (TO TOP)

Briggs. The amendment also posed a serious threat to society as a whole.

"Ninety-nine times out of a hundred, the boy who has not learned to work be-

fore he is eighteen years old increases the idlers and street corner loafers,

thieves and other criminals, and goes straight to perdition.... Which will you

have-your children in the Devil's Workshop or in the Industrial Workshop?

It is up to You to decide!" (13)

Despite an impressive campaign by the Minnesota League of Women Vot-

ers and the Minnesota Joint Ratification Committee for the Child-labor

Amendment, the

MEA'S

propaganda gradually altered perceptions across the

state. On December 31, 1924, the Minnesota Farm Bureau Federation de-

nounced the amendment as "un-American, a blow at agriculture and funda-

mentally wrong." Rural Minnesota was slowly leaning against ratification. On

February 18, 192 5, however, after a spirited public hearing before joint Sen-

ate and House committees, the House Public Welfare Committee sent the

amendment to the floor on a ten-to-seven vote. (

The Minneapolis Journal, however, still considered defeat of the amend-

ment inevitable: "Minnesota, it may be said without fear of contradiction,

stands strongly against the amendment." Behind the scenes, Stillwater attor-

ney R. G. Thoreen effectively lobbied for the

MEA.

On February 27, the public

galleries of the legislature filled with applauding citizens, proponents and op-

ponents of the bill debated heatedly for four hours before passing an amended

resolution to reject the federal amendment by a sixty-eight-to-fifty-six vote.

Of the sixty-eight legislators who voted to reject, only six came from Min-

neapolis, St. Paul, or Duluth. joined by six country Farmer-Labor Party mem-

bers, the conservative and agricultural forces had doomed Minnesota's

attempt to ratify the child-labor amendment. There is little doubt that the

MEA

had played a crucial role. (15)

The Minnesota and Massachusetts experience was repeated across the

country with only Arizona, Arkansas, California, and Wisconsin ratifying the

amendment in 1924-1925. The battle in Minnesota, however, was not over.

Although the House's vote had doomed the amendment for 1925, Attorney

General Clifford L. Hilton ruled that failure to ratify was not final. Hilton

added that, in fact, any future legislature could reopen the question and

ratify amendment. Opponents of the amendment, infuriated by Hilton's ruling,

pushed for a Senate vote to reject so that the state could certify to Washington

that Minnesota had rejected the amendment. Senator George H. Sullivan, who

had led the MEA's

fight in the Senate, offered a resolution to reject the amend-

ment and demanded a vote. The Minneapolis journal supported Sullivan's res-

olution, suggesting that "such action would probably be final, so far as Min -

nesota is concerned." (

A Social Agenda 249 (TO TOP)

On April 14, the Senate followed the House lead, passing a resolution of

rejection by thirty-six to twenty-eight. Despite this resounding defeat, how-

ever, the Minnesota League of Women Voters resolved to continue its fight to

save "young children from unsuitable labor." Eight years later, on December

14, 1933, the Minnesota legislature finally ratified the child-labor amend-

ment. Although the MEA attempt to bury the issue in 1925 had failed, the

NAM's national campaign had damaged the amendment beyond repair. The

proposed child-labor amendment never became a part of the United States

Constitution. (

The programs of President Roosevelt's New Deal, however, presented a

more difficult challenge for the NAM. The National Industrial Recovery Act

(NIRA), passed in June 1933, mandated the development of codes of fair com-

petition for all branches of industry. Child labor became one of the main tar-

gets of the National Recovery Administration (NRA), set up to implement the

NIRA. On July 9, the cotton textile mills, long a stronghold of child labor, ac-

cepted a code provision establishing a minimum working age of sixteen. Two

weeks later, President Roosevelt expanded the code to other manufacturing

industries. With a stroke of a pen, 100,000 children were removed from in-

dustry shops. In May of 1935, however, the Supreme Court unanimously

found the NRA to be unconstitutional on the grounds that Congress overex-

tended its authority over interstate commerce and had set up an administra-

tive authority without specifying its powers. (

The NAM's respite from child-labor regulation, however, was brief, By 1938,

the Supreme Court had ruled the National Labor Relations Act, which recog-

nized the right of employees to organize unions, was constitutional, expand-

ing its interpretation of interstate commerce and opening the door for federal

child-labor legislation. The Fair Labor Standards Act, passed in June 1938,

prohibited the interstate shipment of goods made in shops and factories in

which children under sixteen worked. The NAM denounced the new law as "a

step in the direction of communism, bolshevism and Nazism." Although the

act was a significant defeat for the NAM, it did not have the impact of a child

labor amendment. In fact, only 25 percent of children working in non-agri-

cultural occupations would be protected.

In 1933, however the Minneapolis business community faced the far

greater economic and 'Rocia Ppro "ems Wof the Great Depression. By 1932, 86

percent of the state's manufacturers were reporting operating loses. In Min-

neapolis, the number of factories decreased by nearly 2 5 percent between

1929 and 1933, while the value of retail goods sold dropped 45 percent. The

effect of the economic collapse on the state's workers was dramatic. By

1933, the state's unemployment level had risen to 23.4 percent, while in

250 A Social Agenda (TO TOP)

Hennepin County an estimated 68,500 were jobless. At the same time, Min-

neapolis wages fell 2 7 percent and, as many plants went on part-time sched-

ules, the workweek dropped below forty hours for over 45 percent of the

city's workers. (

In the unstable and low-paying garment industry, unemployment for

women workers reached over 65 percent. Fortunately for the

CA

, the city's food

industries were not hit as hard. Leading financial backers of the

CA,

including

Franklin M. Crosby, Charles S. Pillsbury, James Ford Bell, Jr., Harry A. Bullis,

George D. Dayton, and Joseph Chapman still managed to increase their wealth.

The mass of unemployed men, women, and children were not so fortunate.

They were forced for their very survival to rely on the inadequate resources of

private charity and the city's small, understaffed relief department.( 20)

The problem of poverty had challenged the resources and conscience of

Minneapolis's business leaders for over a half-century. In December 1884,

George A. Brackett, George A. Pillsbury, and others like them who had

"moulded the business, religious and philanthropic destiny of Minneapolis"

met to establish an organization "to study, relieve and prevent poverty, and to

reestablish families in independence and strength." Brackett, a former mayor,

a leading miller, and a prominent member of the Minneapolis Business Union,

first proposed the establishment of Associated Charities and presided over the

growing institution for eleven years. The new organization pledged to dimin-

ish pauperism through encouraging thrift, self-reliance, industry, and better

modes of life through friendly sympathy, advice, and employment. By 1909,

Associated Charities had serviced 2,411 cases and given $16,793.19 in relief.

It had established a visiting nurse committee, a medical inspection depart-

ment, an anti-tuberculosis committee, children's camps, and a legal aid de-

partment. While the groundwork had been laid for future philanthropic work,

Associated Charities also worked to arouse the social conscience of the city's

business leaders. (21)

As the city grew, of course, the difficulty of financing and coordinating the

work of providing charity taxed the capacities of Associated Charities. In

1915, the

CCA

organized the Council of Social Agencies to handle raising the

rapidly expanding Community Fund, which by 1929 had reached

$1,196,426, and to distribute this money to the sixty-five member social

agencies. Associated Charities, now the Family Welfare Association, received

the largest share of over $ 170,000. The Salvation Army, Union City Mission,

Visiting Nurse Association, Infant Welfare Society, Children's Protective Soci-

ety, Maternity Hospital, and the

YWCA

each received more than $40,000. (22)

The job of raising the Community Fund fell to First National Bank Presi-

dent Lyman E. Wakefield and a finance committee of twenty-four prominent

A Social Agenda 251 (TO TOP)

leaders of the CA and the CCA, including CA treasurer Charles B. Mills. Public

ity for the 1933 campaign was handled by Merrill Hutchinson, president of

the Minnesota Law and Order League. Ironically, financial control of the city's

social agencies charged with relieving poverty were in the hands of the open

shop employers of the CA.( 23)

The form of Minneapolis relief policies during the unemployment crisis

would inevitably be shaped by the philanthropic leaders of the CA. In the fall of

1921, the city faced a crisis of unemployed, homeless men. While private

charities publicly accepted responsibility for the city's homeless, they had a

very different attitude toward the unemployed. The CA tried to deny the very

existence of the problem. When the city attempted to relieve the crisis, the CA

argued against appropriations for the aid of the unemployed homeless, op-

posed procuring jobs for the registered unemployed, and insisted that work re-

lief be paid depressed wages. The Council of Social Agencies advocated a work

test for all unemployed relief recipients, either manufactured work on a rock

pile or temporary jobs arranged through an unemployment bureau: "With

out an adequate work test any city would be flooded with the undesirable type

of dependent men and those who make their living by looking for work and

failing to find it." Associated Charities' handling of the crisis reflected the

views of its financiers. Applications from the unemployed were referred to the

city relief department. Associated Charities refused to assume the financial

burden of the unemployed and argued that simple unemployment was not

properly within its field anyway. (24)

A decade later, the archaic system of private charity was once again over-

whelmed. By the fall of 1930, the number of unemployed seeking aid from

the Family Welfare Association was rising at an alarming pace. In early Jan-

uary of 1932, with public and private relief agencies serving more than

5,000 families, the

Minneapolis Tribune

still maintained that private charity

could meet the community's needs. A month later, the Council of Social

Agencies asked the city to take over the support of 2,600 families. The Com-

munity Fund agencies would now help only families with children under six -

teen where the major problem wasnot unemployment. Federal, state, and

city governments would now assume the responsibility of providing food,

shelter, and clothing for the destitute unemployed. While private agencies had

provided 54.3 percent of the city's relief in 1928, by 1935 their share had

plummeted to 6.9 percent. The withdrawal of private charity from unem-

ployment relief had a dramatic effect on city and charity budgets. The Family

Welfare Association's allocation of funds dropped from $600,000 to

$300,000 in 1938, while the city was forced to issue two million dollars in

bonds to cover direct relief in 1932. (25)

252 A Social Agenda (TO TOP)

As the city's leading employers and taxpayers, the business community ex-

pected public relief to meet the work ethic standards of the

CA

at the least pos-

sible cost. With the city issuing over two million dollars in bonds, the

CA

and

the

CCA

pressed for a work requirement to make sure "the taxpayers would be

getting something constructive and valuable for their relief fund expended"

and an "immediate reduction of salaries and wages comparable to that which

business generally found necessary to maintain its existence." Without a pay

cut for city workers, the

CA's

conservative allies on the Board of Estimation and

Taxation would block the issuance of city bonds to support relief. To appease

the city's bankers, homeless men were frequently required to work on private

property to receive their thirty cents per day. The

CA

quickly realized that pub-

lic relief, if issued to strikers, might undermine its efforts to break union-led

strikes and therefore endanger the open shop. During the Strutwear strike of

1935-36, the

CA

lobbied to stop relief payments to all striking workers. A

battle of attrition could be more easily won if the enemy did not receive gov-

ernment support. (26)

Relieved of the financial burden of supporting the unemployed, Commu-

nity Fund agencies could now concentrate their resources on their efforts to

take "the family off the relief line, build up its morale, and bring it back to ulti-

mate independence." In an old building at 712 Fourth Avenue South, the

Family Welfare Association put the

CA's

work ethic philosophy into practice.

Two-hundred-and-fifty men and women came to "712" to "renew their

trades, talents and abilities" and, of course, to earn their relief payments. In a

building entirely remodeled by work relief, shoes were repaired, Red Cross

cloth was sewn into garments, and government boxes were made into chairs.

From 712, woodcutting crews went out to cut wood for the poor and drivers

provided transportation for public and private social workers. In its first three

years of operation, the work relief program baked 145,000 loaves of bread,

salvaged material from 125 boxcars, and canned produce from municipal gar-

dens. The economical program allowed $150,000 Community Fund dollars

to do "double or triple duty" in 1933. The Community Fund publicized the

program's outstanding advantages: "There is no blow to the pride in accept

ing aid which is paid for in service. A man who goes out to do a day's work for

a day's wage has none of the rankling consciousness of accepting alms." (

Unemployment could also be combated by increasing the city's industrial

job base. In 1925, the Industrial Department of the

CCA

had been split off into

a supposedly separate institution, the Minneapolis Industrial Committee (MIC).

Led by retired

CCA

President Arthur R. Rogers and

CCA

board member Alfred C.

Godward, the MIC mission focused on selling the benefits of relocating busi-

nesses in Minneapolis. MIC publications touted a "Three-Billion Dollar Market,"

A Social Agenda 253 (TO TOP)

with one million people within fifty miles, abundant raw materials, an exten-

sive railroad center, power facilities, excellent educational and park systems,

and efficient and reliable labor at reasonable wages. MIC publication, Facts about

Mnneapolis, proclaimed: "Industrially, Minneapolis is open shop, being one of

the leading open shop cities in the U. S. The nationality of the people, the work-

ing conditions, and training facilities provided, have made for efficient labor giv-

ing high production per worker at reasonable wages. It is because of these facts

that Minneapolis is unusually free from labor disturbances." (28)

From January 1 to October 1, 1930, mic chairman Rogers claimed to

have brought seventeen new manufacturing industries and thirty-five

wholesale, retail, and distributing organizations into the city, creating 984

new jobs with a total payroll of $1,314,200. In addition, Godward initiated

a campaign for Minneapolis businesses to reemploy as many laid-off em-

ployees as possible. An MIC survey reported that nearly 1,000 workers had

been rehired. Although Minneapolis newspapers applauded the MIC's efforts,

they had little impact on the city's rising unemployment or the growing lines

of the hungry (29)

There was, however, another way to fight hunger. On May 19, 1931,

CCA

president Benjamin B. Sheffield called a conference to form an emergency gar-

den program. Working in close cooperation with President Herbert Hoover's

Emergency Commission in the Matter of Unemployment, the Emergency Gar-

den Committee, which included George D. Dayton and Charles C. Webber, set

out to alleviate the hunger of the unemployed. With the vast resources of the

Minneapolis business community behind the program, $4370 was proudly

collected. A fifty-three-acre plot at Nicollet Avenue and Sixty-first Street

was plowed by Minneapolis Moline Power Implement Company and harrowed by

Deere and Webber Company. (30)

The Family Welfare Association screened applicants and assigned 90-by-

90 foot plots where the needy families planted potatoes, corn, peas, beans,

tomatoes, and other vegetables. Seeds, tools, fertilizers, and insecticides were

furnished by the committee. A group canning factory was set up on the side in

tents donated by Hoigaard's. The eighty-one families without home facilities

canned 5,135 jars with stoves and gas donated by NW Blaugas Company. The

Park Board, the Board of Education, and the Minneapolis Real Estate Board

joined the numerous industrial benefactors offering support for the self-help

program that was "vastly better than outright doles which may tend to un-

dermine self respect and the will to work." (

The Emergency Garden Committee, however, did "not claim that its plan is

a panacea for the unemployment problem." The garden plan was merely a

stopgap measure "until the only adequate solution is reached-jobs for those

254 A Social Agenda (TO TOP)

who are willing and able to work." While the seeds sprouted in South Min-

neapolis, the

CA

unveiled'A Practical Plan of Unemployment Relief" The city's

open-shop employers proposed job-a-week clubs to be organized immediately

in the various neighborhoods to furnish odd jobs to unemployed heads of fam-

ily. Each member would give a worker a few hours of work each week at a forty

cents per hour minimum wage. The

CA

listed possible jobs: mowing lawns,

beating rugs, scrubbing garages, washing windows, and so on. The

CA

Free

Employment Bureau would be available to register and assign jobs. To jump

start the "plan of relief," the

CA

recruited luncheon and service clubs to spon -

sor it. The

CA's

promotional pamphlet pointed out that if 500 members fur-

nished three hours a week, a weekly payroll of $600 would be created. Faced

with the massive unemployment of the Great Depression, the

CA

plan called

for "aggressive and vigorous action." (

Ironically, in addition to trumpeting the benefits of capitalism, the Min-

neapolis Industrial Committee also supported the medieval barter and scrip

economy created by the Reverend George H. Mecklenburg, pastor of the large

downtown Wesley Methodist Church. For two years, Mecklenburg had carried

on relief work through his church, only to be overwhelmed by the sheer

weight of the starving people as the city's unemployment mounted. During

the summer of 1932, after intensive study of medieval barter economies,

Mecklenburg devised a plan for organizing the unemployed for self-help, using

scrip money as the medium of exchange. Although Mecklenburg's primitive

economic concept violated the basic capitalistic tenets of the business com-

munity, his fundamental belief in the value of work agreed closely with the

moral precepts of the

CA.

The reverend wrote: "No family can live in idleness

two years on city relief and maintain self respect and the proper attitude to so

ciety." Mecklenburg's new organization, the Organized Unemployed, Inc.

(OUI), would be based on a fundamental philosophy of "Work. No charity. No

dole. Productive, creative, respectable work. (33)

In mid-July 1932, Mecklenburg called a meeting to gather support from

executives and leaders of men." Two weeks later, The Organized Unemployed,

Inc., was launched. The group's headquarters and most of its activities took

place in the vacant Girls' Vocational High School at Fourth Avenue South and

Eleventh Street, which was donated by the Board of Education. In the base

ment, hundreds of barrels of sauerkraut were canned, shoes and furniture re-

paired, toys constructed, and cereal milled. On the main floor, a staff of forty

served 1,400 meals per day in the cafeteria, while 1, 500 customers shopped

for clothes and canned fruits and vegetables. Upstairs, fifty to sixty people man

ufactured women's, men's, and children's clothing. (

A Social Agenda 255 (TO TOP)

The most "spectacular activity," however, took place beyond headquarters.

Four hundred men worked on thirty crews cut over 5,000 cords of wood. The

wood was then transported into the city in donated trucks, cut into one-foot

lengths, and delivered to as many as 100 families a day. The workers were paid

and purchased the various goods with scrip printed by the organization. The

bank i ust inside the Grant street doors handled $ 500, 000 in denominations

from five cents to ten dollars. Each day, $4,000 in scrip was paid out in salaries

and could be used in the cafeteria or stores. In a matter of months, Mecklen-

burg had created an extraordinary new economy and given hope to hundreds

of desperate families. (35)

The Organized Unemployed publicly claimed that 3,700 officers and lead -

ers throughout the city aided over 7,000 families. In fact, the organization had

only one leader, the Reverend Mecklenburg, who feared that the "unreliable"

element among the unemployed might take over his project. At scrip wages of

twenty-five cents per hour, fewer than 300 families received enough income

to stay offrelief. Speculation in scrip devalued it and led to shortages of staples

in the Organized Unemployed stores. When outside businesses accepted scrip

and began attempting to pay their workers with it, the Central Labor Union

complained that the OUI was "breaking down wage scales and conditions and

lowering living standards to a point where honest toil brings only the reward

of the barest existence or even less." The United States Bureau of Labor con-

cluded: "There are dangerous elements in this situation." The Bureau's report,

of course, was excellent news from the perspective of the

CA,

aiding their cam-

paign to lower the city's wages. (

The OUI's publicity had also proudly proclaimed its ability to be self-sup-

porting. They would not ask the public for "something for nothing.... There

will be no tag days or cash raising drives. Our members are not charity cases. "

Two months after the organization was industriously created, it was in finan-

cial trouble. Mecklenburg was forced to appeal to the

CCA

for financial aid.

Funding was quickly arranged through the Minneapolis Industrial Commit-

tee. The cash would ultimately come from the same funding channels as for

the

CCA

and the

CA.

The MIC's 1932 budget of $ 100,000 came from twenty in-

dustrial groups. The Minneapolis Clearing House, representing the city's

banks, contributed $ 5,000. Mecklenburg, in return for contributions totaling

$6,000, would have to accept the advice and counsel of theMIC. Four months

later, realizing that the cash drain would continue indefinitely, the MIC advised

that the OUI be liquidated. Mecklenburg refused, and by July 1 was again re-

questing aid. It was clear that the self-supporting, self-help institution was be

coming a relief operation funded by the

MIC. (37)

256 A Social Agenda (TO TOP)

After consulting with its financial supporters, the MIC reluctantly supplied

The OUI with another cash donation "so as to permit the organization to real-

ize on their investment in growing crops." The business group also supported

The OUI application for $30,000 in federal funds, arguing that "the services

given by this organization in maintaining the morale of the unemployed and

in giving relief service requiring a cash subsidy of only about 20 percent have

justified its existence." (38)

The OUI financial problems, however, did little to reassure its benefactors.

To receive continued local support and federal aid, the mic took control of the

organization's administrative operations. CCA director Godward acted simul-

taneously as MIC executive-engineer and special treasurer of the OUI. As fed-

eral funds began to pour in, however, the business community quickly relin-

quished the financial burden of self-help. By midsummer of 1934, the OUI had

essentially become a state work-relief project that still relied on scrip and

barter to justify its survival. A year later, the federal government disbanded the

conservative experiment. The CCA and CA were free to pursue cheaper and sim-

pler solutions to the continuing problem of unemployment and poverty. (39)

Governor Olson, on the other hand, believed that only massive govern-

ment intervention could ensure a stable economy and alleviate unemploy-

Ment. Led by the governor and the Farmer-Labor Party, an intensive

campaign was mounted to push an unemployment insurance program

through the 1933 legislature. Olson's legislation, substantially written by

University of Minnesota professors, called for an annual tax of 4 percent on

employer payrolls and was estimated to cost the state's employers one million

dollars a month. With enough legislators authoring the bill to make passage

possible in both the Senate and the House, the MEA and CA faced a serious

threat. Governor Olson reminded them that "industry, as such, being con-

cerned largely with the sole motive of profit, has concerned itself little with

the welfare of its workers.... It now remains for the state to do what indus-

tries failed to do.... This proposal is an attempt, whether wisely or not, to

patch up the so called capitalist system-to prevent the substitution of so-

cialization of industry." As if this were not enough of a warning, the gover-

nor added: "If employers are not willing to take such steps-then inevitably

some other system will have to be substituted. (

The MEA board of directors immediately passed a resolution authorizing

opposition to any unemployment insurance legislation. Anticipating the prob-

lem three years earlier, MEA secretary A.V. Williams had sat on a committee of

the National Industrial Council investigating unemployment insurance. The

NAM then produced a report, in December 1933, for use in the 1933 legisla -

tive battles in twenty-five states. The NAM concluded that unemployment in-

A Social Agenda 257 (TO TOP)

surance would facilitate the "ultimate socialistic control of life and industry."

The National Metal Trades Association distributed a leaflet arguing that un-

employment insurance would benefit only "the inefficient, the drifters, and the

unemployable." Such legislation was the "entering wedge" of socialism that

"threatens to transform a virile, self reliant, hard-working people into a nation

of dependents without initiative, enterprise, or desire to provide for them-

selves." The leaflet went on: "Embracing visionary promises of case ... may

well be the beginning to the downfall of our civilization." The

MEA

hired

lawyer R. G. Thoreen for $2,000 to lead the business community's lobby at the

1933 legislative session. (41)

The

CA

played an important role in the "program of opposition." In the crit-

ical period when the legislature was considering the bill, the

CA

provided sub-

stantial funds from its own treasury to fund the efforts of the

MEA.

Letters from

the influential industrialists on the

CA's

board of directors poured into the

offices of state legislators and the governor. James Struthers of the Strutwear

Knitting Company warned that the effect of the law's extra tax burden "would

be to eliminate industries from this state." The president of Crown Iron Works

Company wrote that his industry had "sustained heavy losses each of these

years and should further burdens be placed on our shoulders, the only alter-

native would be to close our doors." In an open letter to manufacturers and all

other employers of labor, the president of the Toro Manufacturing Company,

John S. Clapper, warned that passage of the measure "will surely wreck the en-

tire economic structure of our institutions in this state." The burdens of un-

employment insurance would force Toro to eliminate 20 percent of its em-

ployees or be forced to liquidate. In his impassioned appeal, Clapper added,

"There has never been a time in the history of this state that business of all

kinds was in such jeopardy as at present, and [it] needs the full and unquali-

fied support of our legislature and governmental department to' prevent fail-

ure resulting in untold misery." (42)

Clapper led a Minneapolis manufacturers'committee in a parade of oppo-

sition before the House committee considering the bill. They claimed that ex -

ecutives had already taken severe salary cuts and could not absorb any further

burdens. Others argued that passage should be delayed until better economic

conditions would ease the financial burden of establishing a reserve. Governor

Olson retorted that waiting and doing nothing was analogous to waiting dur-

ing a plague "until we're all dead" before attempting to vaccinate the sick.

Despite amendments that split the contributions for unemployment insurance

between employers and employees, the supposedly progressive House killed

the bill sixty-eight to fifty-four. Infuriated, Olson stepped up his campaign to

pressure the legislature. From the Capitol steps, he told a crowd of the

258 A Social Agenda (TO TOP)

unemployed: "The present system of local government would go right down

to hell" if the state did not act. When the Senate restored the original bill and

left it to die, the CA claimed a major role in the bitter fight. They were well

aware, however, that the victory was only a temporary respite from the on-

slaught of the New Deal . (43)

CA

Secretary Jack Schroeder's opinion, the extremely radical "Farmer

Labor administration made an unemployment law inevitable." The

CA

imme-

diately began studying other plans and collecting documents "so as to be pre-

pared in the event of an emergency, to introduce a Bill that can be supported

by the employers, rather than to take that which we are bound to get, and

which will not be to our liking." In a January 16 letter to the secretary of the

NAM, Schroeder apologized for the

CA's

position: "We wish to explain that it is

not the intention of this organization to start agitation ahead of everybody

else for Unemployment Insurance." While the CA held meetings to discuss its

options, Chairman Strong attended the annual meetings of the National In-

dustrial Council and the NAM, where he gathered extensive information to aid

Minnesota employers in the coming fight. Although the CA had absolutely no

desire for unemployment insurance, it was faced with the stark reality of Min-

nesota. politics. (44)

After completing their study, however, CA members decided that the mate-

rial could be more effectively presented by the MEA, which represented em-

ployers across the entire state. At the December 19, 1934, MEA board of di-

rectors meeting, Strong and CA director Willis C. Helm of the Russell-Miller

Milling Company argued at length that a bill should be prepared "so that the

proponents of that type of legislation could not say that the employers were

not giving the matter consideration." A committee of ten chaired by CA direc-

tor J. C. Buckbee of the Bureau of Engraving was created to consider the ques-

tion. Material gathered by the CA and the MEA'S legal counsel, R. G. Thoreen,

would guide the committee in preparing an unemployment insurance bill fa-

vorable to employers. CA Secretary Schroeder and field agent Paul J. Ocken

would continue to be closely involved in the process . (45)

The committee quickly produced a bill for the 1935 legislature that ac-

knowledged that "unemployment has become an urgent public problem, na-

tion wide in scope." In its declaration of public policy, the bill supported a lim-

ited reserve fund to alleviate the distress of unemployment and advocated an

employer contribution, although the bill pointed out that employers were al-

ready taxed for public relief and substantially supported private charity. To

help stabilize employment, employers and employees would make equal

contributions of 1.5 percent. To spread the financial burden to as many em-

ployers as possible, the bill would affect any employer with four or more em-

A Social Agenda 259 (TO TOP)

ployees. Benefits were restricted to a maximum of ten dollars per week after a

four-week waiting period. To help mitigate the effect of unemployment insur-

ance on the open shop, strikers were disqualified .(46)

Although the 1935 legislature failed to pass an unemployment insurance

bill, the pressure increased dramatically when Congress enacted the Social

Security Act on August 13. Under the landmark federal legislation, employ-

ers of over eight employees would have to pay a federal unemployment fund

tax of 1 percent of wages in 1936, 2 percent in 1937, and 3 percent in 1938

and after. A tax credit of up to 90 percent, however, would be available to em-

ployers in states with an acceptable state law. Thoreen and the MEA worked

feverishly to present a new bill to a special session of the Minnesota legisla-

ture on December 4, 1935. In hopes of avoiding the harsher provisions of the

federal act, Senate File 9 allowed employees to pay only half as much as the

employers and raised the maximum benefit to $12-50 per week. The Senate

quickly struck out employee payments and raised coverage to employers with

eight employees, putting the bill in line with federal standards. The MEA con-

sidered these amendments "detrimental to employers, particularly members

of this association." Sixty-five telegrams were sent out to important connec-

tions throughout the state, withdrawing the MEA's support and urging mem-

bers to pressure their senators. The Senate voted the bill down thirty-seven to

twenty-nine. (47)

A year later, after the death of Governor Olson from cancer, newly sworn

in Governor Hjalmar Petersen called another special session. With a Decem-

ber 31, 1936, federal deadline facing the states, a compromise bill was quickly

passed, and Minnesota's unemployment insurance bill became effective on De-

cember 23, 1936. The law declared that "economic insecurity due to unem-

ployment is a serious menace to the health, morals, and welfare of the people

of this state." The MEA's determined campaign, first to reject unemployment

insurance and then to make employees pay half of the fund, had failed. Em-

ployers alone would contribute at slightly below the federal standards. Bene-

fits had been hiked upwards to a fifteen-dollar weekly maximum. (48)

The benefit regulations were also a direct threat to the CA's open shop poli-

cies: the eligible unemployed could not be forced to break strikes by taking jobs

vacated by strikers. Of equal importance, strikers could receive unemployment

benefits. The inclusion after the first year of all employers of one or more em-

ployees represented the MEA'S only substantial victory In the MEA's annual re-

port in the fall of 1937, President H. E. Wade meekly informed members that

the MEA "did give very helpful service to the Committees of the Legislature in

charge of the preparation of that legislation and aided in enacting the present

unemployment compensation act." (49)

260 A Social Agenda (TO TOP)

For Minnesota employers, the bad news emanating from Washington con-

tinued to mount in 1937, when the United States Supreme Court reversed an

earlier decision and validated minimum wage laws for adults. Minnesota's first

minimum wage law was passed in 1913 to protect the health of women and

minor workers. A 1914 commission established a nine-dollar-per-week mini-

mum for mercantile, office, waitress, and hairdressing occupations in the

state's major cities. In 192 3, however, the minimum wage law of the District

of Columbia was declared unconstitutional by the United States Supreme

Court on grounds of denial of the right of contract.

MEA

attorneys reported to

the board of directors that "There was no question but what the minimum

wage law of Minnesota could be successfully attacked on the same grounds."

The

MEA

executive committee delayed any action until after the 1925 legisla-

ture. On June 8, 1925, however, the Minnesota attorney general wrote to the

Industrial Commission that "it would not be possible for the state to enforce a

minimum wage law in the case of women over 18 years of age." For the next

twelve years, the state's minimum wage law would be enforced only for girls

under eighteen and boys under twenty-one. (

On April 16, 193 7, the Minnesota attorney general informed the Industrial

Commission that, because of the recent Supreme Court decision, it was now

its duty to enforce the entire minimum wage law. Wage order No. 12, promul-

gated in 1920, set the minimum wage rate for adult women in the large cities

at twelve dollars per week. Recognizing the inadequacy of seventeen-year-old

standards, the Industrial Commission asked the Minnesota Employers' Asso-

ciation and the Minnesota State Federation of Labor to each select five mem-

bers for an advisory board to set new minimum wages. The

MEA

selected

William E. Parmeter of the Dayton Company and representatives from the

Minnesota Canners' Association, the Minnesota Hotel and Restaurant Asso-

ciation, Minnesota Mining and Manufacturing Company (3m), and West Pub

lishing Company." (51)

The advisory board gathered extensive material from the United States De-

partment of Labor and the Department of Agriculture. Of particular value

was a study of the budgets of 175 women making less that twenty dollars per

week. In a series of fourteen meetings, the board considered expenses: lodg -

ing, board, clothing, and lesser but important expenses for laundry recreation,

insurance, and so on, and finally arrived at a figure of fifteen dollars per week

minimum wage. Before acting on the recommendations, the Industrial Com-

mission solicited critical briefs from state employers.

(52)

On April 9, 19 3 8,

MEA

President Wade asked the Industrial Commission to

postpone action "until something like normal conditions in business, indus-

trial and labor would be restored." Wade argued that "the economic situation

A Social Agenda 261

(TO TOP)

and business outlook is worse than it was at the depth of the Depression in

1932.... Unfortunately many industries have found it necessary to release

large numbers of men and women from service. Naturally this decreases pur-

chasing power and seriously affects our whole economic and industrial situa-

tion." The Depression in 193 8 had rendered the advisory board's recommen-

dations obsolete. Wade claimed that living costs were actually less than in

192 1: "When conditions improve it will be time for the Industrial Commission

to exercise its function under the minimum wage law." Wade added that these

reservations did not "indicate that the

MEA

opposes reasonable wages for em-

ployees." The

MEA'S

objections and a public hearing two days later had little

effect on the Industrial Commission. Minimum Wage Order 13 was adopted on

April 25, 1938.

53)

The

MEA'S

complicity in establishing new minimum wage standards had

enraged many

CA

members and even members of its own executive commit-

tee. Munsingwear Secretary-Treasurer Charles L. Pillsbury, a

CA

director who

received the highest taxable income in the state in 1938, wrote

MEA

secretary

Williams: "The order is so obviously unfair and discriminatory that, in our

opinion, the

MEA

should have openly and vigorously opposed it while it had the

opportunity before [it was] officially proclaimed." Pillsbury particularly ob-

jected to the variance of rates for cities of different sizes. Munsingwear and

fourteen other employers in the needlework industry, Mostly

AI

(the former

Citizens Alliance) members, joined with employers in the laundry, restaurant,

and telegraph industries to sue the Minnesota Industrial Commission and stop

the implementation of Order 13.

CA

attorney Levy, hired by Munsingwear,

Strutwear Knitting, and others, argued that they had been denied their Four-

teenth Amendment right to due process of law. Leaving nothing to chance,

Levy continued to solicit campaign contributions from his clients for the four

incumbent district court judges not hearing the case while the case was still

being deliberated. (

The Hennepin County District Court found that the advisory board held

no public hearings, that no material evidence was presented at the single pub-

lic hearing held by the Industrial Commission, and that employers were not

afforded a full opportunity to present their case. On August 2 7, 1938, the

court found that Order 13 would cause the plaintiffs "substantial injury" and

issued a temporary injunction. Two months later, Levy wrote Munsingwear

to report that the Industrial Commission had admitted the invalidity of Order

13. Until a new order could be promulgated, Order 12 was once again in

effect. Levy's victory, however was short-lived. Minimum wage Order 15, es-

sentially the same as Order 13, was quickly adopted and went into effect

March 1, 1939. (55)

262 A Social Agenda (TO TOP)

One of the primary objections of the business community to Farmer-Labor

social legislation, of course, was the threat of new taxes to pay for them. Early

in 1923, several members of the Real Estate Board of Minneapolis claimed that

"the manner for spending public money" threatened the prosperity of the city

and county. Assisted by important business leaders, they organized the Tax-

payers'Association on May 26, 1924, to "reduce taxes, to keep public bonded

debt within bounds and to stop wasteful and unnecessary expenditure of pub-

lic funds." Two years later, the local group was expanded to form a statewide

coalition, the Minnesota Taxpayers'Association (MTA). Minneapolis would pro-

vide 37 percent of the $ 10,000 budget, over half of the 1 00-member advisory

board, and the executive secretary, H. J. Miller. From its inception, the MTA

would appear before the legislature to oppose the enactment of any new taxes

that would not permanently replace a current tax. "Unemployment and finan-

cial Depression are children of deadening taxation and unwise public and pri-

vate spending," according to the MTA. By the late 1930s, the MTA had affiliates

in eighty counties, a membership of 52,000, and, more importantly, was

backed by the major financial and industrial interests of the CA. (

56)

The ultimate challenge to the MTA came when then-Representative Hjal-

mar Petersen introduced a statutory income tax bill on January 19, 1933. The

proposed income tax allowed a $ 1, 000 exemption for individuals and busi-

nesses and a graduated rate of 1 percent to 5 percent for all net income over

$ 10,000. Businesses would be allowed a credit for business expenses up to 15

percent of their net incomes. CA and MTA members lobbied for the adoption of

a competing bill that would require that income tax revenues be used for real

estate tax relief The Minneapolis journal claimed that the people of the state

had rejected a constitutional amendment in the previous election because it

was a "free spending scheme" similar to Petersen's income tax bill. "The peo-

ple of the state should realize that their wishes are being thwarted and their

mandates defied," the Journal warned. (57)

Resolutions from the local groups associated with the MTA flooded the Capi-

tol demanding that the income tax must provide permanent real estate tax re-

lief. CA Director Clapper of the Toro Manufacturing Company brought Wis-

consin Taxpayers' Alliance officials to testify before the legislature: "The tax

will become just another tax.... The revenue will be squandered in new

spending .... The property owners will receive little or no benefit in the way of

relief from their tax burdens" unless safeguards were enacted. Despite re-

peated protests by proponents of the statutory income tax, the journal contin-

ued to hammer at the proposed law as just another "tax spending bill." (58)

In more prosperous times, the anti-income tax movement might have pre

vailed. In the early spring of 1933, however, the state and the nation were in

A Social Agenda 263 (TO TOP)

a state of crisis. President Roosevelt spoke of the "nameless, unreasoning, un-

justified terror" that gripped the nation and then declared a national bank hol -

iday to save the financial structure of the economy from collapse. On March

25, 1933, the House passed the statutory income tax by a vote of 104 to ll,

after amending it to allocate the funds to school districts. On April 12, Gover-

nor Olson addressed the Minnesota Bonus Expeditionary Force and warned

that if the legislature did not pass relief bills, he would declare martial law and

confiscate private wealth. Hours later, under intense pressure, the Senate voted

forty-nine to seventeen in favor of the income tax. (

In the first year, the Minnesota income tax collected $1,805,542. Because

a majority of the state's large incomes came from Minneapolis and St. Paul,

the Twin Cities contributed 73 percent of the total. Leading backers of the

CA,

such as John S. Pillsbury, Robert F. Pack, James E Bell, Sr., and James E Bell,

Jr.; all with substantial incomes, were now forced to pay the bill for the

social sequences of the Depression. MTA supporter Charles Pillsbury was hit with a

$9,096 bill. Forty-five percent of the income tax receipts came directly from

corporations. The businesses of

CA

members paid a substantial portion of the

state's corporate income tax. The Dayton Company, for example, paid

$44,279 in 1935, while companies such as Munsingwear Corporation, Deere

and Webber Company, and Minneapolis Honeywell Regulator Company paid

over $ 10, 000 each. It was clear both on the profit sheets and in the pocket

books of

CA

members that the

MTA, MEA,

and

CA

had failed to protect their

interests. (60)

Despite its inability to forestall the income tax, the

MTA

was not disbanded.

With the organization of the Minneapolis Civic Council in 1938, the

MTA

be-

came formally aligned with the

CCA

and the

CA

(which became the

AI

in 1937).

With an enlarged budget (about 40 percent of

AI's

budget), the

MTA

would

continue to lobby to prevent increased taxation, stop new bond issues, and

lower property taxes. The

MTA'S

first priority in 1939 was to lower the cost of

relief by transferring the administration and financing of relief to local gov-

ernments.

MTA

publications argued that only local officials could successfully

segregate those in distress from those capable of partial or complete self support.

Unfortunately, with seemingly unlimited federal and state funds, local offi-

cials had very little motivation to curtail their relief programs. Despite an im-

proving economy, the costs of relief continued to grow. The social policies of

The

CA

and the

CCA

and the financial policies of the

MTA

were simply two sides

of the same coin. The overarching umbrella of the Civic Council had now

brought the three allied business institutions together. (61)

(TO TOP)

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