Reason Must Be Substituted for Force Summary

To defeat the Axis powers in World War II, the United States needed the full cooperation of all its citizens. To bring people together in this way, the federal government established programs that curtailed the traditionally free market and instead imposed regulations on manufacturing industries that produced goods vital to the war effort.

Meanwhile, the organized labor movement, which had seen a decline in popularity from the early twentieth century, boomed during the war. The increased need for manufactured goods and raw materials meant more factory jobs and more opportunities for unions to grow their influence. Union leaders saw a great potential for power and opportunity to define the climate of postwar industry, but corporate leaders had different ideas. In 1945, Charles E. Wilson, president of the automobile manufacturer General Motors, gave a speech, scant weeks after the end of World War II, in which he encouraged industry leaders to reject the alleged aggression, coercion, and Communist influences of unions.

The US organized labor movement grew significantly during the early part of the twentieth century, but declined in the early 1930s. By 1933, union membership numbered around three million, down from five million about ten years prior. Unions initially struggled to organize workers in rapidly growing mass production industries such as steel, textiles, mining, and automobile manufacturing. But the New Deal and pro-union policies of President Franklin D. Roosevelt's administration paved the way for a resurgence of labor organization. The National Industrial Recovery Act of 1933 authorized collective bargaining, and the National Labor Relations Act of 1935 (or Wagner Act) required employers to bargain in good faith with unions supported by the majority of their employees.

Around the same time, two of the biggest unions in the United States—the American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO)—aggressively expanded their membership and influence across the country. The CIO in particular largely focused on organizing unskilled workers and factories in modern industries.

World War II brought significant growth in manufacturing jobs, and a corresponding growth in union membership: by the end of the war, about 14.5 million workers—about 35 percent of the nation's employees—belonged to a union. However, the postwar climate proved to be difficult for the manufacturing industry. The decreased need for goods and raw materials related to the war effort brought significant layoffs, which led to walkouts and strikes across the country in 1945 and 1946. Fearing the power unions held to bring their facilities to a halt, many companies initially gave in to union demands.

On October 5, 1945, Charles E. Wilson, president of General Motors (GM), gave a speech during a luncheon of the Chicago Executives' Club. His speech discussed the direction the United States should take with respect to free markets following the end of World War II. Wilson and GM had a significant stake in how the people, the government, and the labor unions addressed this issue in both the near and long terms. Many of GM's suppliers had been shut down due to union strikes, and at the time of Wilson's speech, a strike vote was about to take place that had the potential to close GM's plants as well. Wilson noted that GM had finally returned to making cars after the government-imposed hiatus to produce goods for the war and its operations were already threatened by union action. America, he said, must decide whether to continue the government control established during the war and pursue a path of socialism, or to return to a free capitalist society.

Charles Erwin Wilson was born in Minerva, Ohio, on July 18, 1890. He graduated from the Carnegie Institute of Technology in 1909 as an electrical engineer and went to work for the Westinghouse Electric and Manufacturing Company. In April 1919, Wilson became chief engineer of the Remy Electric Company, a subsidiary of GM. He was promoted through the ranks of management, and in 1929 was named assistant to the president of GM. By May 1929, Wilson was made a vice president; in 1939, he became the executive vice president.

Wilson was appointed acting president of GM on June 18, 1940, and officially elected as the company's tenth president on January 6, 1941. He managed GM throughout the United States' involvement World War II and oversaw operations as the company shifted from manufacturing automobiles to manufacturing aircraft on orders from the federal government, and back again.

Wilson resigned his presidency at GM to become the US secretary of defense under President Dwight D. Eisenhower in January 1953. He served in that position until October 1957, when he resigned from office and rejoined GM as a director. Wilson remained an active associate of GM and its subsidiaries until his death on September 26, 1961.

Mr. Stone, Members of the Chicago Executive's Club and guests: It is a pleasure to be here today. Of course, there are some representatives of Chicago over in Detroit today, and I wouldn't have minded too much seeing them perform. Since I promised to come over here, I thought I might try to call a few balls and strikes myself today. I have really taken a rather ambitious subject to talk to you men about—“America Arrives at the Fork in the Road.”

The worst war in history has been over for a few weeks. Our fighting men have crushed our enemies with the huge quantities of weapons produced by American industry. A peace-loving and freedom-loving nation has successfully met the challenge of all-out war. But that is behind us. The aftermath of the war is now our problem.

War is terribly wasteful in blood and treasure. This one was especially so. It was not prosperity, even though to some it may have seemed to be and the immediate aftermath of such a war cannot be prosperity either. The clean up, the mopping up, the reconversion to peacetime activities still require hard work, patience, understanding and some sacrifice on the part of all of us.

About a year and one-half ago six Swedes, prominent in business and Government, made a special visit to this country. They came to Detroit and visited with us as part of their trip. Swedes have a long history as a democratic people—about 500 years—although their traditions and procedures are somewhat different than those of Anglo-Saxons. It was a most interesting visit. They could all speak English, although with a Minneapolis accent, and we seemed to understand each other quite well.

They were interested not only in the course of the war but in the degree of inflation that existed in our country, in the wage-price level, and in the post-war situation that was likely to exist.

I asked them about their country and the degree of inflation—how they had handled prices and wages. They said, “We have agreements with our unions that wages will go up half as fast as the cost of living.” I said, “How did you happen to work that out?” They said, “We knew that we could not arm Sweden to defend itself and pay for all the extra costs of being a neutral while the world was on fin and at the same time raise our standard of living.” I said, “Of course, that was very true, but how did you persuade the workmen that it was so?” They said, “Oh! Because they are Swedes first, and unionists second.”

During the conversation with these same Swedish gentlemen, I happened to say that there is a danger of foreign: people not understanding Americans. Americans have almost dual personalities. At one time we all seemed to be idealists, at another time we seemed to be hard-headed realists—almost to the point where we would sell wooden nutmegs. Unless foreigners understand this, they may think we are inconsistent and unreliable. One of the Swedes said, “Oh, yes, we understand. That is what makes Americans so interesting and fascinating. That is really why we are here.”

The Need of Sound Policies

The truth is, of course, that most Americans realize that important decisions, important policies must be morally and ethically sound, must respect the rights of individuals, but at the same time that they must be economically sound and practical and must be for the good of all the people.

If it had been considered politically expedient to do so, we could have paid for the full cost of the war as it progressed. We did not stock pile materials and munitions before the war. No one outside our country supplied us with the materials of war. We lived on what we had left over after the war effort, but the fact that we financed less than one-half of the cost of the war by taxation and more than half by the sale of Government bonds has created the problem of inflation.

As a result, the war to some has looked like prosperity. Perhaps for them it has been. But if that it so, they should realize that they got the breaks as compared to millions of other Americans. Even such synthetic and artificial prosperity could not have continued if the war had lasted much longer. And now, American industry and business cannot follow the example of Government and spend twice what it takes in. For industry and producers generally, money does not grow on trees, nor does it come from printing presses. Their money comes from customers; and to be healthy and even to continue to exist, a business must take in more than it spends. We cannot solve this postwar problem by juggling with the value of money. Only hard work, jobs, and efficient production and distribution will solve it. The current and wartime spending and the longer hours and work at higher wages during the war have created a postwar problem. During the last few days a tune has been running through my mind which came out of World War I—I am not going to attempt to sing it to you—but it goes like this, “How're You Going to Keep ‘Em Down on the Farm After They've Seen Paree?”

Which Road to Travel?

We face an even bigger problem as a result of the war. During the war we accepted the draft, the hard work, the high taxes, restriction of business and of job opportunities, the rationing, all of the regimentation, the dictatorship, if I may call it that, required to focus the whole nation's effort on the single objective of winning the war. Now we face the reorganization of all our activities for peacetime living. The big question is which road will we take? Are we going back to a free system, regulated by competition,—to our American conception of the State being the servant of the people? Or are we going to try, or are we going to accept, a big change in our institutions? Are we going to go in for Government planning and an American version of collectivism somewhere between communism and fascism? Are we going to continue and increase the power of the Federal Government? Are we, the people, going to be servants of the State instead of the State the servant of the people?

If I thought the people of our country would be happier, if I thought they would be more prosperous, if I thought they would make more progress as human beings, in some form of socialistic state, then I would be a socialist—but I am sure they would not.

When I was a boy I lived in Ohio near a communist settlement called Zoar. It was about three miles from where I lived. It had been started by some Germans in 1817. The community had everything in common. To a great degree they substituted their communism for religion. For a time they seemed to prosper, but their leader (the so-called King of Zoar) passed on. The zeal of the founders was not inherited by the second and third generation. They tried to operate the society with a committee. There was constant bickering and the more ambitious tried to leave and take their share of the property, but they were not allowed to. Incidentally, it is much easier to get into a fascist or communist state than it is to get out. I understand that the World's Fair in Chicago in 1893 was indirectly responsible for the final dissolution of their society. Their committee of three came to the World's Fair. The others said, “Why didn't we all go—you must have spent our money.” They tried to explain they had made the trip in the interests of all the members but they didn't get away with it. They then put the problem up to the Supreme Court of the United States which ruled that if all of the members agreed to dissolve then the property could be divided among the members. After several more years of bickering that is what was finally done. My father explained to me why communism would not work in our country. I could see some of the reasons why it would not even as a boy, so I never went through the stage that some young men do where in their impatience to make progress in a competitive society they develop socialistic ideas. Recently along with the rest of you I have seen state socialism developed on a tremendous and terrible scale. We have witnessed the tragic end of such a socialistic state as it developed into a monstrous Frankenstein that destroyed the wealth, debased the spirit of a great nation, and finally devoured its own masters.

Political Trends

It would be well for all of us to look at the matter squarely and to realize that any form of collectivism or state socialism must lead inevitably to dictatorship and the loss of individual liberty.

History and reason clearly prove that there is no way to operate a socialistic society or an economy based on socialism without dictatorship.

In such a society the negative incentives of fear and coercion replace the positive incentives of hope and ambition

The necessary regimentation of collectivism ultimately stifles the spiritual and material progress of the individual as well as the people as a whole.

Contrary to the American system where competition, free speech, and the free press forced the correction of mistakes made by individuals and groups, the collective system does not have within it the power to automatically correct its own mistakes. This is a very important point. But the dictators make you suffer with their mistakes and like it.

Collectivism—A Step Backward

The idea of collectivism or state socialism is thousands of years old but it was given a new impetus by Marx and others about one hundred years ago. Marxism, with its materialistic concepts, was and is directly opposed to the new liberal philosophy of the western world. In direct contrast to Marxism, our philosophy of government is based on the concepts of individual rights, and freedom from political tyranny and all other forms of arbitrary interference with personal conduct. This liberal western philosophy is derived from the fundamental doctrines of Christianity. That is why, as collectivism develops, religious liberty is progressively curtailed. That has been the history all over the world. This is so importantly true, that in my opinion, a republic or a representative democracy will ultimately fail, unless a majority of its citizens truly believe in and practice the Christian principles of respect for the rights of others, self-discipline and moral restraint.

Any step toward adopting collectivism or state socialism is a great step backward, not merely to the horse and buggy days, but I fear to the elephants of the Hannibals and the chariots of the Caesars.

So I am still not a socialist. But I do recognize that our American system can be improved; that the problems created by this age of machines, by our big urban populations, by the great dependence we have on each other for the necessities of our daily lives must be dealt with realistically. The solutions for them, however, can and should be found within the principles of our Western civilization and not by the adoption of reactionary ideas coming from East of the Rhine.

Labor Unions too face a fork in the road. There is a provision in the Constitution of the United States that guarantees the right of citizens to petition the Government for the redress of grievances. This basic human right was recognized and expanded by Congress when it passed the National Labor Relations Act to promote industrial peace and guarantee workmen the right to present their grievances, and collectively bargain regarding them. Unfortunately, Congress did not spell out the obligations and responsibility that go with this right and power.

Demands Rule of Reason

The monopolistic power of Unions is now being used as a tool of aggression to promote industrial strife, rather than to safeguard the rights and equities of workmen. The public interest is being completely overlooked. The idea that a few thousand truck drivers can shut off the gasoline supply of the people; that a few thousand elevator operators can keep hundreds of thousands of New Yorkers from getting to their work; that the stockholders and management of a big utility company and their employees, could engage in economic warfare and shut off the power and light of one of our big cities certainly cannot be tolerated in our modern society. The rule of reason must be substituted for the rule of force, especially when the public interest is at stake. Sound procedures for solving such problems must be worked out without jeopardizing the fundamental rights and responsibilities of all parties involved.

So, unions too must now decide which way they are going to go. Will they continue to try to substitute force and coercion for the rule of reason and respect for the rights of others? Or will they take a constructive position in our free competitive society?

Producing Ability Questioned

Incidentally our automobile plants are about ready to go. We would like to have been better prepared for peace but the war requirements for men and material did not make this possible. We made a few cars of each of our makes this week, but the plants of many of our important suppliers are closed by strikes. We will soon run out of necessary parts.

The threat has been made that following the strike vote, which is to be taken October 24th, all General Motors plants will be closed and General Motors and its employees made a victim of the union's new labor blockade policy. Our current problems are not only how much will cars cost and then what they will sell for but whether we will be able to produce any cars at all for many months.

Critical Situation Ahead

And so today America arrives at the fork in the road. Perhaps we would have faced this same fork sometime in the future even though there had been no war. As I have said, the ideologies of our Western civilization and those of collectivism or state socialism are in important conflict. The necessary regimentation of the war effort has brought us to that fork now.

Three generations ago our forefathers decided we could not continue as a nation half slave and half free. We now face another critical situation—this generation will have to decide which way we are to go. We will find that we cannot continue as a nation half collectivist and half free.

Charles E. Wilson states that World War II ended several weeks prior, but the cleanup of its aftermath has just begun. This effort will require “hard work, patience, understanding and some sacrifice” on everyone's part, and the nation has reached a “fork in the road” where the future must be decided. He observes that during the war, Americans accepted a great deal of government intervention, including higher taxes, the draft, regulation of jobs and manufacturing, rations, and even the “dictatorship” of focusing the entire nation's efforts on winning the war. But as society reorganizes itself for peacetime life, Americans must decide which direction they will pursue. In particular, he asks whether the United States will return to a free market system regulated by competition, or continue to accept increased federal government regulation of business and life.

Wilson concludes that Americans will not be happy as “servants of the State.” Instead, he argues, the government should be the servant of the people. He recalls his childhood experience growing up in Ohio near a Communist settlement called Zoar and describes how that society unraveled after its original leader died and its second-generation leaders could not agree on how to share the community's wealth. Wilson cites this as an example of why Communism cannot work in the United States. He then draws parallels to the recent war, explaining that it was an example of socialism's failure on the national scale.

Based on his experiences, Wilson states that “any form of collectivism or state socialism must lead inevitably to dictatorship and the loss of individual liberty.” He asserts his support for a “liberal western philosophy” based on political freedom, individual rights, and no interference with personal conduct, concepts he sees as in direct opposition to Marxism. Wilson claims the Western system of government is derived from the principles of Christianity, while collectivism curtails religious freedom.

Finally, Wilson directly discusses labor unions, claiming that they are being used “as a tool of aggression to promote industrial strife, rather than to safeguard the rights and equities of workmen.” He asserts that strikes are an unfair form of coercion and go against the public interest, with the potential to disrupt the lives of millions of people through economic warfare. Wilson admits that society can find ways to improve in the face of increased industrialization, but argues that such advances should be achieved with reason rather than force. Unions, too, must decide how to proceed for the future: continue their coercive ways or “take a constructive position in our free competitive society.”

The tone of Wilson's speech reflects the concerns of business executives during the post-World War II period, particularly those in the manufacturing sector. Fearful of the significant power labor unions possessed to cause a complete business shutdown, many executives sought ways to turn public opinion against organized labor. Union opponents equated labor unions with socialism, drawing on the villainous image of German National Socialism and fear of the rising power of Communism in the Soviet Union. After the defeat of the Nazis in World War II, Communists quickly became the main enemy of the United States, and the conflict between capitalism and Communism (and, by association, socialism) was a defining feature of the postwar era, leading directly to the Cold War.

Wilson's anti-Communist and anti-union position is unsurprising, given that GM stood to lose money if labor unions gained influence. Walkouts and strikes were taking place all over the country, and GM could be next to face the pressure of collective bargaining under threat of strike. Wilson's speech was delivered to a group of fellow business executives in similar positions. The theme of business owners in conflict with employees over wages, rights, and regulation has always been at the core of the labor movement.

By 1947, public opinion had largely turned against unions once again, due in part to rhetoric such as Wilson's speech. Organized labor also lost federal government support; the Taft-Hartley Act, enacted over presidential veto in June 1947, amended the pro-labor Wagner Act of 1935 in a way that severely restricted union activity. Employers became increasingly hostile toward union organizers, and there were reports of employees being threatened, intimidated, and beaten for communicating with union representatives.

As the public and government took increasingly anti-union stances, the unions themselves turned against one another. The Taft-Hartley Act contained provisions requiring union leaders to sign anti-Communist affidavits, and each union used these provisions to challenge rival unions whose leaders refused to sign the pledges. Larger unions, such as the CIO and AFL, even engaged in “red baiting” within their own ranks, expelling member unions believed to have strong ties to Communists. Combined with the shift of American workers from manufacturing to office jobs, these factors led to downturns in union membership and influence during the postwar years.

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