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Exploiting the North-South Differential: Corporate Power, Southern Politics, and the Decline of Organized Labor After World War II


DOI: 10.2307/25095621

“Exploiting the North-South Differential: Corporate Power, Southern Politics, and the Decline of Organized Labor After World War II.” The Journal of American History (2008): 1–26. Print.

p.2: When Smith officials decided to relocate their operations, they chose from a multitude of strategies that companies pursued in the early postwar years. As historians have demonstrated, the early post–World War II period was marked by what Howell John Harris has called a “managerial counteroffensive” against the labor movement’s advance. Corporate leaders inaugurated or resuscitated programs of welfare capitalism meant to restore employees’ loyalty, aggressively promoted a political agenda designed to restrict labor’s power (resulting in such federal legislation as the Taft-Hartley Act of 1947), launched vigorous public relations campaigns to sell the U.S. public on the advantages of “free enterprise,” and fought hard at the bargaining table to contain unions’ authority on the shop floor. And some employers sought to escape or erode union power by moving from place to place. -- Highlighted apr 27, 2014

p.3: As the Smith case demonstrates, capital flight across North-South boundaries enabled corporate leaders to reassert their authority and autonomy vis-à-vis labor in the postwar years. The Smith story illuminates broad trends in postwar corporate decision making, union responses, and industrial policy in the North, the South, and the nation. -- Highlighted apr 27, 2014

p.3: While some northern employers were drawn south by proximity to markets and raw materials, most were lured by cheap and plentiful labor, an anti-union climate, and cooperative civic leaders eager to defend employers’ interests as their own. -- Highlighted apr 27, 2014

p.3: By exploiting the North-South differential, individual businessmen realized significant savings in wages, taxes, and other costs. Capital migration strengthened anti-unionism in southern communities, enabling company executives to replicate probusiness conditions that no longer existed at established sites. Migration also diminished the power of northern unionism, both by reducing the size and strength of the unionized work force and by compelling deindustrializing communities to compete with business-friendly locales. As a result, capital flight contributed to the decline of the U.S. labor movement nationwide. -- Highlighted apr 27, 2014

p.3: Capital flight, moreover, helps explain the development of new political alliances af- ter World War II. Northern businessmen’s capacity to exploit regional distinctions rested heavily on collaboration with the southern elite. -- Highlighted apr 27, 2014

p.3: Anxious to retain their power in the region, they escalated efforts to woo northern capital while devising new political strategies to preserve Jim Crow. Their goal—to ensure the South’s independence from federal encroachment—was embraced by northern employers who hoped to prosper from southern sovereignty. The shared interests of northernbased corporate migrants and the southern elite were advanced in the political realm by an emerging coalition of business-oriented Republicans and southern Democrats who joined hands to preserve the North-South differential in the name of company profitability, southern economic development, and states’ rights. -- Highlighted apr 27, 2014

p.3: The study of capital flight complicates conventional narratives of postwar economic, political, and social change. Some scholars have treated capital migration as a relatively recent phenomenon, situating its origins in the 1970s and 1980s, when U.S. corporations first faced serious competitive pressure from overseas. Recently historians have begun to trace the earlier origins of the process; examining a range of industries and time periods, they have shown how domestic capital flight intersected with labor activism, unions’ response to ongoing plant closings, community dynamics, racial conflict, and industrial policy debates. -- Highlighted apr 27, 2014

p.4: During the 1930s and early 1940s, workers and their unions posed a real threat to corporate control in both the economic and political arenas. Domestic capital flight helped U.S. businessmen resist that challenge in the early Cold War era, ultimately restoring their authority in the workplace and forging a political realignment that allowed business interests to guide regional and national policy alike. -- Highlighted apr 27, 2014

p.4: Labor, however, was not so easy to control. In the late 1930s, thousands of Yonkers workers were swept up in a massive wave of organizing under the banner of the Congress of Industrial Organizations (cio). During World War II, they asserted labor’s role in the defense effort and consolidated union gains. -- Highlighted apr 27, 2014

p.4: The simultaneous expansion of the population of middle-class professionals in Yonkers placed additional demands on city hall. Yonkers industrialists —- long accustomed to privileged treatment at the local level, such as Smith’s arrangement to obtain city water at a below-cost rate -- were forced to compete with other constituencies for political power and community support. -- Highlighted apr 27, 2014

p.6: Eager to lure northern investment, southern boosters urged manufacturers to exploit the North-South gap. Because so much southern industry was labor-intensive, southern employers benefited enormously from the low wages and poor working conditions in their region. In the early and mid-1930s, southern Democrats fought successfully to preserve regional wage disparities in many industry codes developed under the National Recovery Administration, as well as in federal work relief, effectively limiting the New Deal’s power to aid workers in the South. Southern businessmen and public officials also launched a vicious campaign against unionism in southern industry, crushing southern participation in the general strike of four hundred thousand textile workers in 1934. -- Highlighted apr 27, 2014

p.6: Southern leaders deployed the regional differential as a depression-era tool for attracting northern plants. According to Governor White, “lowered manufacturing costs” were the leading incentive for employers to choose Mississippi. -- Highlighted apr 27, 2014

p.7: In urban centers such as Greenville (whose population was over 56 percent black), black women worked as domestic servants, while black men found hard, dirty, and often hazardous employment in cotton gins, cotton compresses, and lumber mills. In the late 1930s Delta planters moved swiftly to suppress incipient union activity among sharecroppers and tenants. The South’s congressional leaders fought alongside Republicans to block passage of the Fair Labor Standards Act of 1938, which provided for minimum hourly wages and overtime pay. Failing to stop the legislation, they succeeded in exempting agricultural and domestic work from it, demonstrating the New Deal’s limited effectiveness in protecting labor and civil rights. -- Highlighted apr 27, 2014

p.8: As the war neared its end, planters, still committed to a cotton kingdom built on black labor, expressed cautious support for seasonal industry based on farm products; such industry, they reasoned, would provide short-term employment when black workers were not occupied with the cotton crop. When the plan proved ineffective as a retention strategy, planters turned to technology to begin reducing their reliance on black labor and even tempered their historic resistance to black out-migration. -- Highlighted apr 27, 2014

p.8: Industrialization, however, threatened to undermine prevailing structures of economic and racial control. As industry headed south, northern-based unions followed. -- Highlighted apr 27, 2014

p.8: The threat was made more palpable by initiatives to promote civil rights. In 1947 the President’s Committee on Civil Rights —- responding to agitation by civil rights groups that had been building since the early 1940s —- recommended federal antilynching legislation, abolition of the poll tax, desegregation of the armed forces, and the establishment of a permanent Fair Employment Practices Commission (fepc) to combat racial discrimina- tion in employment. President Harry S. Truman endorsed the fepc and other civil rights initiatives in February 1948. In July of that year Democratic National Convention delegates adopted a party platform with a strong civil rights plank. -- Highlighted apr 27, 2014

p.9: The southern elite worked feverishly to contain those threats. In 1947 Congress approved Taft-Hartley, which imposed a host of restrictions on unions and contained the infamous right-to-work clause. -- Highlighted apr 27, 2014

p.9-10: The southern elite’s struggles to control labor and race relations were entangled with efforts to lure northern plants. In the early postwar years, changing economic and racial conditions in the South helped motivate the region’s leaders to pursue industrial development. In the face of external threats to “free enterprise” and white supremacy, they hoped that an expanded industrial base would lead to greater economic autonomy and increase the likelihood of keeping their cherished social order intact. -- Highlighted apr 27, 2014

p.10: Courting northern investment, while clearly a strategy to preserve white supremacy, also allowed southern boosters to demonstrate their commitment to private enterprise and to forge links with northerners who shared their antipathy toward federal control. -- Highlighted apr 27, 2014

p.12: Once they snared northern industry, southern businessmen and planters took pains to keep unions at bay. While they had long understood the importance of labor control, the pursuit of northern capital pushed them to refine their skills. In Mississippi, BAWI set the standard. BAWI contracts guaranteed a surplus labor pool: at least one and a half available workers within a twenty-five-mile radius of the plant site for each operative position a firm expected to fill. Alexander Smith’s BAWI agreement further assured that Greenville would not recruit other industries that would interfere with Smith’s labor needs, and it promised police protection in the event of labor disputes. Local chamber of commerce leaders offered to establish screening committees to investigate job applicants’ views on “various matters regarding unions, communism, etc.,” thereby preventing the employment of “all types of undesirable elements or groups.” -- Highlighted apr 27, 2014

p.12: Industrial promoters also ensured that new industry was compatible with prevailing racial and gender norms. While demand for black workers diminished in the late 1940s and early 1950s, planters still required seasonal labor to plant, chop, and pick the cotton crop. Thus, when Delta boosters assessed local labor markets for industrial prospects, they canvassed the population by race and sex. -- Highlighted apr 27, 2014

p.13: The firm hired no black women until the mid-1960s, when forced to do so by civil rights activists. According to the recollections of Greenville Mills’ first plant manager, Herbert J. “Jack” Potts, a transplant from Yonkers, the firm expected that widespread factory employment of white women would increase demand for domestic servants. “The idea,” he explained, “was that ... if we didn’t employ blacks directly, indirectly we would employ a great deal, because the people coming to work at Greenville Mills would then hire blacks to look after their family while they were working.” -- Highlighted apr 27, 2014

p.14: While white male employees enjoyed opportunities for promotion, for example, black men had no chance of advancement. Indeed, Robert Lang, a black Greenville Mills employee, recalled that over a fifteen-year period, he and a black co-worker trained eleven white men for supervisory positions that they themselves were qualified to fill. More than increasing the psychological reward for whiteness, transplanted northern industry, like its southern counterpart, conferred material benefits on white workers that black people were denied. Transplanted industry also elevated white factory workers to positions of authority over black people. -- Highlighted apr 27, 2014

p.16: When forced to choose their battles, many white southern union members placed the defense of racial inequality ahead of prolabor goals. -- Highlighted apr 27, 2014

p.16: Under such circumstances, postwar efforts to unionize southern workers had little chance to succeed. As Barbara S. Griffith and other scholars have shown, there were many reasons for failure; intense employer resistance, racial divisions, and fierce anticommunism each played a role. -- Highlighted apr 27, 2014

p.17-18: At times northern unionists’ stunning lack of solidarity with their southern counterparts also betrayed their northern focus—during the Yonkers strike, workers carried placards that declared: “Greenville for Coolie Wages, Not Us” and “Exploit the South, Not Us.” Such sentiments could not have won many southern converts to the union cause. -- Highlighted apr 27, 2014

p.19-20: For years probusiness southerners had been erecting barriers so powerful that employees, when they did unionize, found the going very tough. As elsewhere, workers who favored union representation often faced employer intransigence at the bargaining table; more than two years after Mosow employees voted to unionize, they still had no con- tract. -- Highlighted apr 27, 2014

p.24: Southerners, in close collaboration with national business leaders and Republican politicians, resisted efforts to raise standards on a national scale. The Georgia Department of Labor official Marion Williamson opposed the federal plan to extend unemployment benefits, insisting that such matters were best left “in the hands of those closest to the people and most familiar with employment conditions, wage patterns, and the general economy in the individual states.” -- Highlighted apr 27, 2014

p.25: As the North-South differential persisted, northern unionists and their supporters came under growing pressure to bring their own standards into line with those in the South. In New York businessmen complained that state-mandated benefits to workers were so costly that employers might be driven from the state. -- Highlighted apr 27, 2014

p.26: As the Smith case suggests, capital flight from the North to the South helped alter the balance of power between management and labor in the postwar years. It reinforced the commonality of interests between northern-based employers and southern boosters, who wielded their collective authority to keep southern unionism at bay. This process diluted the labor movement’s economic influence in the North and nationally, rendering unionists powerless to close the North-South gap. As a result the South’s acquisition of industry, theoretically a route to economic progress, in fact perpetuated low living standards for working people and inequality based on race. In the North, meanwhile, the loss of manufacturing caused severe economic dislocations, leaving communities vulnerable to corporate demands that they sink to southern standards as well. -- Highlighted apr 27, 2014

p.26: These economic changes were bound up with the emergence of new political configurations in the postwar years. After the war, as corporate leaders considered strategies for maximizing profit, labor conditions figured prominently in the decisions they made. -- Highlighted apr 27, 2014

p.26: The history of capital flight exposes the tensions and contradictions that characterized corporate-community relations in the postwar years. During the New Deal era, many Americans grew critical of business practices that seemed incompatible with workers’ and communities’ economic interests. By the 1950s, however, corporate leaders and their political allies had revived the notion that the behavior of private employers —- since it presumably served a broader public interest -— ought to be free of government regulation and control. Central to the revival were southern boosters who, by promoting private industry in the name of community well-being, sought to preserve their own power in the face of racial and economic change. -- Highlighted apr 27, 2014