Business & Finance: Story of a Story

One day last March in the Pittsburgh offices of the biggest steel-producing unit in the world, Chairman Philip Murray of the Steel Workers Organizing Committee and President Benjamin Franklin Fairless of Carnegie-Illinois Steel Corp. sat down to seal an historic industrial treaty. The broad outlines of the treaty between Steel and Labor had already been settled by the negotiators’ respective superiors, John Llewellyn Lewis for Labor and Myron Charles Taylor for Steel (TIME, March 15). After the first talk Philip Murray declared: “This is unquestionably the greatest story in the history of the American Labor Movement.”

Until last week the full story behind that story had not been told. In its May issue FORTUNE cut through the maze of rumor and legend and revealed, without betraying its sources, the chain of events leading up to the settlement which averted a major industrial war. Branded as “pure hokum,” along with the idea that the House of Morgan had forced the settlement, were reports that the burly labor leader and the patrician steelmaster had been brought together by 1) Manhattan’s First National Bank, 2) President Thomas Moses of H. C. Frick Coke Co. (a U. S. Steel subsidiary),

3) Madam Secretary of Labor Perkins,

4) Mrs. Myron C. Taylor. Without attempting to evaluate them the magazine declared that the only two rumors that could not be summarily dismissed were that the settlement had been hastened by 1) Franklin D. Roosevelt or 2) Walter Runciman of Britain’s Board of Trade, who was in the U. S. at the time and might have hinted that rearmament orders would be withheld until U. S. steelmasters could assure continuous delivery.

FORTUNE found that the real story dates back to last June, when Steelman Taylor sailed for Europe “in a peculiarly philosophic mood.” Just before he sailed he had opposed, though not strongly enough to stop it, the manifesto published in paid advertisements last summer by the American Iron & Steel Institute declaring war on John L. Lewis. It was evident to Mr. Taylor that Steel’s traditional “blood and brimstone” labor policies were thoroughly outmoded. Yet “to give in to Labor spinelessly meant to lose control over the business one had been hired to manage. To fight Labor adamantly meant, for a long time, no business at all.”

In the calm seclusion of his Florentine villa, Mr. Taylor ruminated upon alternatives. Finally he wrote, tore up, wrote and rewrote a memorandum embodying a new labor policy for Steel. Says FORTUNE: “Whether by coincidence or design, the statement is exactly 100 words long, and these 100 words represent a summer’s work. But they packed more dynamite than any 100 words ever written by a U. S. industrialist.” The Taylor formula for industrial peace:

“The Company recognizes the right of its employes to bargain collectively through representatives freely chosen by them without dictation, coercion, or intimidation in any form or from any source. It will negotiate and contract with the representatives of any group of its employes so chosen and with any organization as the representative of its members, subject to the recognition of the principle that the right to work is not dependent on membership or nonmembership in any organization and subject to the right of every employe freely to bargain in such manner and through such representatives, if any, as he chooses.”

With this formula in his pocket Mr. Taylor returned to the U. S. last September. Among his own directors he found support as well ‘as opposition to his plan. Outside the reaction was cooler. It was about this time that a movement got underway, led by General Motors and a few of the steel independents, to form a “united front” of big industry against the C. I. O. drive. Attending one of the “united front” meetings and being told that the time had come for a labor-capital showdown, Mr. Taylor arose to announce that he would have nothing to do with the scheme. And his feeling was so strong that the United Front soon fell apart.

Meantime in Washington’s Hotel Mayflower one day last January Mr. & Mrs. Taylor entered the big dining room to find seated directly in their path Pennsylvania’s Senator Guffey lunching with John L. Lewis. Mr. Taylor bowed, and after having seated his wife returned to chat pleasantly with the two laborites. To the Mayflower’s politically sophisticated lunchers this act itself was a shocker. Greater was the shock when Messrs. Guffey & Lewis, having finished their meal, strolled over to Mr. Taylor’s table, Mr. Lewis meeting Mrs. Taylor for the first time. Senator Guffey hurried on but John L. Lewis sat down for 20 minutes. Before he left Mr. Lewis remarked that he would like to see Mr. Taylor sometime and Mr. Taylor suggested the next day with his Mayflower suite as the least conspicuous rendezvous.

During the next few weeks without rousing the suspicions of even crack Washington correspondents. Mr. Lewis frequently slipped away to the Mayflower, trudging the floor of the steelmaster’s suite, Taylor sitting thoughtfully in an armchair.

Interrupted by the motor strike, the Taylor-Lewis conversations were resumed the next month in Manhattan while Mr. Lewis was dealing with the coal operators. Again Mr. Lewis managed to dodge newshawks, presumably slipping into the Taylor mansion at No. 16 East 70th St. As a diplomatist Mr. Taylor had to paint for Mr. Lewis a terrifying picture of his board of directors, the men who must in the end accept or reject the settlement. To his board Mr. Taylor was painting an equally terrifying picture of Mr. Lewis and what he could do to the steel industry now that it was heading into a boom. Moreover, there was at least a reasonable doubt as to whether the steel industry could win a strike if it came.

Having maneuvered Mr. Lewis and his directors into willingness to compromise, Mr. Taylor was then beset from another quarter. Some independent steelmen got wind of the Taylor-Lewis meetings, went to see Mr. Taylor. Apprised of the conversations, the independents argued heatedly for a wage boost instead of recognition. Mr. Taylor thought that wages were not the real issue and a wage increase could be avoided if recognition were granted. In this he was wrong. But confused by Big Steel’s sudden refusal to play with them, the independents did nothing about their own scheme. In the time thus gained Mr. Taylor had to work fast, for a wage boost originating outside would have undone his secret diplomacy. Within a week the independents, who “would rather be damned than give in to the Left,” were receiving reports from their spies that Steelman Fairless and Labor-man Murray were about to sit down to bargain. The independents were incredulous. Just before the bargaining began, U. S. Steel’s President Irvin called up all the independents in person to break the news officially. In terrific agitation the independents started to criss-cross the country with long-distance calls and within less than two hours after the end of the first bargaining conference no less than five independents, led by Ernest Tener Weir’s National Steel Corp., had announced wage raises. But U. S. Steel had beaten them to the draw.