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__The True Story Of How One Man Shut Down American Commerce To Avoid Paying His Workers A Fair Wage


by Ian Millhiser | September 1, 2014 at 9:20 am
Chapter 1? I'm Sorry. I found it Fascinating and sounding much Too Familiar for Comfort. . .

Note: The following is adapted from the author’s forthcoming book, Injustices: The Supreme Court’s Nearly Unbroken History of Comforting the Comfortable and Afflicting the Afflicted.

In 1894, Chicago was the Midwest’s gateway to the rest of the United States. Twenty-four different railroad lines centered or terminated in Chicago, covering the nation in over forty thousand miles of rail. Farmers, merchants, craftsmen and factories hoping to bring their goods to the rest of the nation — and potentially, to the rest of the world — had to first bring those goods to Chicago to begin their journey down one of the city’s many rail lines. Without Chicago’s railroads, much of the country lost its access to the nation’s commerce and was essentially plunged back into a pre-industrial economy.

On May 11, 1894, a strike began just outside of Chicago in a company town run by one of the wealthiest Americans who has ever lived. By the strike’s bloody end, up to a quarter of a million workers joined together in solidarity with the strikers. Two federal judges, working in close collusion with federal officials who were themselves very much in league with Chicago’s railroad executives, would place the full power of the federal judiciary on the side of union-busters. President Grover Cleveland, acting on the advice of the railroad attorney he placed at the head of the Justice Department, would eventually send federal troops to Chicago. At the height of the conflict, Harper’s Magazine claimed that the nation was “fighting for its own existence just as truly as in suppressing the great rebellion” of the Confederacy.

And all of this happened because of two decisions made by just one man, George Mortimer Pullman, founder of the Pullman Palace Car Company. The first was the decision of Pullman and his company to cut its payrolls by nearly 40 percent, even as he increased the stock dividends his company paid to himself and its other shareholders. The second was Pullman’s utter refusal to deal with the union that represented his workers. In an America with no modern labor laws requiring management to come to the bargaining table with their workers, Pullman’s workers had no option other than a strike. And that strike would eventually escalate into a conflict that brought Chicago — and the nation’s entire economy — to its knees.

A Long Time To Spend On A Train

The Pullman Palace Car Company made train cars that offered passengers an almost comic degree of opulence. One early Pullman sleeper featured chandeliers, marble washbasins and a black walnut interior. Pullman’s dinning cars offered steak, oysters and a choice of wines. By the 1870s, a train equipped with a full complement of Pullman cars included a barber shop, multiple libraries, a smoking room and a fully functional organ for passengers who wanted to entertain themselves by playing music.

Though this level of sumptuousness would be absurd on today’s train, Pullman tapped into a very real need felt by the travelers of his age. Although railroads had reduced the amount of time necessary to travel from the America’s east coast to its west from 118 days to just over six days, a week is still a very long time to spend on a train with nothing more to do than to stare out the window. George Pullman’s genius was his understanding that men and women who’d already invested days of their life into a trip would happily pay a bit more to make that trip bearable. And, indeed, travelers lined up to board his ultra-luxurious train cars. Pullman amassed a fortune estimated at $34 billion in 2006 dollars.

The Baron Outside Chicago

Pullman lived a life that was even more luxurious than the world his customers would briefly inhabit when they stepped onto his trains. At a cost of as much as $12 million in modern dollars, Pullman built a mansion in Chicago near many of the city’s other titans of business. There, surrounded by marble and teak paneling, Pullman and his wife would host gigantic parties. When his daughter made her debut to Chicago’s high society, a thousand guests greeted her at the Pullman home. After vacationing in Long Branch, New Jersey with President Ulysses S. Grant and his wife Julia, the Pullman’s built a second mansion in this beach community.

Pullman did not only hunger for wealth, however. He also craved dominion over the workers he employed. A passenger on Pullman sleeping car would encounter two employees: an African American porter to service their needs and a white conductor to ensure that they complied with Pullman’s rules, such as a rule requiring them to remove their boots before climbing into bed. Though Pullman viewed this decision to employ black porters as a great service to freedmen who might otherwise be trapped in backbreaking agricultural labor, the Pullman Company’s generosity only extended so far. At one point, white conductors earned nearly three times as much as the black porters who worked alongside them.

Both porters and conductors were required to comply with their own detailed rule books. To ensure compliance with the rules, Pullman employed an array of undercover “spotters,” who would travel the rails seeking messy washbasins or conductors sneaking a beer while on duty. Workers caught breaking the rules were fined.

As his empire grew, Pullman fixated on a quest to socially engineer the perfect workforce. The culmination of his quest was a town he built on 3,400 acres of land a short train ride from Chicago, a town where his workers could live together in the shadow of the factories where they built Pullman’s magnificent train cars. He named this town after himself — Pullman, Illinois.

George Pullman loathed saloons and alcoholism, not out of sympathy for the ruined workers who dragged their way into his factories after yet another night of drinking, but because such men were frequently absent and were poor workers when they did show up. For this reason, the only bar in the town he named for himself was in the grand hotel where he would entertain leading businessmen and politicians. Instead of drinking, Pullman expected his workers to entertain themselves at a library stocked with hand-selected books, at a theater featuring plays screened by the company, or at the park and athletic field built for residents’ use. Pullman charged rents to his workers that were high enough to return a profit, though they were less than the cost of similar housing in Chicago—or at least, they started out that way.

Pullman’s town, with its brick homes, wide streets, green lawns and ubiquitous shade trees, was by all accounts beautiful. As Harper’s described it in 1885, “[w]hat is seen in a walk or drive through the streets is so pleasing to the eye that a woman’s first exclamation is certain to be, ‘Perfectly lovely!’ It is indeed a sight as rare as it is delightful. What might have been taken for a wealthy suburban town is given up to busy workers, who literally earn their bread in the sweat of their brow.”

And yet, for all its beauty, the town was still a mechanism to ensure his dominion over his workers. Though Pullman employees were technically under no obligation to reside in the company town, promotions were often only available to workers residing in company housing, and workers who lived elsewhere were the first to be laid off in difficult economic times. Every square inch of land in Pullman was owned by the company — workers had no option to buy their own homes — and leases permitted the company to evict a resident on just ten days notice. Thus, a worker who displeased their bosses could wind up homeless almost as quickly as they were rendered jobless.

Pullman, Illinois’ layout also reinforced a rigid hierarchy. The residential portion began at Florence Boulevard, named for Pullman’s daughter, where a dozen and a half homes housed corporate executives. Beyond the town’s most expensive residences laid hundreds of two to five family row houses for skilled workers. At the outskirts, Pullman built tenements for unskilled laborers. And overlooking all of this was the Florence Hotel, built at the beginning of Florence Boulevard, where Pullman himself could watch over his domain from a suite built for his use.

It was the closest thing that has ever existed to an American barony, with George Mortimer Pullman ensconced as its lord and master. As Harper’s warned,

the idea of Pullman is un-American. It is a nearer approach than anything the writer has seen to what appears to be the ideal of the great German Chancellor. It is not the American ideal. It is benevolent, well-wishing feudalism, which desires the happiness of the people, but in such way as shall please the authorities. One can not avoid thinking of the late Czar of Russia, Alexander II., to whom the welfare of his subjects was truly a matter of concern. He wanted them to be happy, but desired their happiness to proceed from him, in whom everything should centre.

And yet, the town of Pullman thrived for many years, until an economic depression hit in 1893 and Baron Pullman decided to insulate himself and his fellow executives from that depression — even as he visited hardship after hardship upon his workers.

The Birth Of Modern Unions

Pullman’s grand antagonist after this depression struck was Eugene Debs, a former Democratic state lawmaker from Indiana who would eventually become one of America’s great radicals. Long before Debs embraced socialism and made five presidential runs on the Socialist Party ticket — the first of which he made in 1900 — Debs was a much more moderate union official who published a magazine on behalf of the Brotherhood of Locomotive Firemen while residing in Terre Haute, Indiana.

The Brotherhood was typical of many of the highly exclusive trade unions common in the years after the Civil War. Small, and limited to workers engaged in a very specific line of work, the Brotherhood recruited less through a promise of high wages achieved by solidarity and more because it offered members a low-cost insurance plan. For much of its history, the Brotherhood also discouraged conflicts between its members and management. “We do not believe in violence and strikes as means by which wages are to be regulated,” Debs wrote in the union’s Locomotive Firemen Magazine in 1883, “but that all differences must be settled by mutual understanding arrived at by calm reasoning.”

In reality, however, the union’s desire to maintain good relations with management may have stemmed from the fact that it was too insignificant to stand toe-to-toe with the railroad barons if a real conflict ever arose. In 1888, the Brotherhood actually did attempt to strike a Chicago railroad, acting in partnership with another union representing railroad engineers. What both unions discovered was that the railroad could quite easily fire every single striking fireman and engineer and replace them with scabs.

Debs’ insight was that workers could not hope to extract concessions from management so long as they were organized by narrowly defined trades into small, atomized unions. In 1893, he formed the American Railway Union (ARU), which welcomed any white person employed in the railways, regardless of their specific occupation, and permitted any ten of these workers to join together as a local union. (The ARU’s policy of racial exclusion may have been a reaction to the demise of the Knights of Labor, an experiment with highly inclusive unionism that flamed out in part due to internal racial tensions.) Within a year, Debs’ new union boasted 150,000 members and it won a major victory against the Great Northern Railroad — forcing executives from that railroad to undo most of the wage cuts they sought to impose upon workers.

Debs, in other words, was arguably the father of a new model for unionism, where workers would join together based on industry rather than based on their specific job description. And this model held far more promise for workers than the old-line unions that were far too exclusive to be effective.

When the Depression Came

When the depression hit in 1893, wage cuts and layoffs were inevitable at the Pullman Company. Unemployment more than tripled between 1892 and 1894, and it remained above ten percent for five years. It the midst of an massive economic downturn, which understandably diminished demand for luxurious train cars, it was reasonable for George Pullman to ask his workers to bear some of the costs of keeping his company viable.

What Pullman did instead, however, was shield himself, his fellow investors and the company’s management from the impact of the depression, while simultaneously forcing his workers into destitution. Between 1893 and 1894, the Pullman Company cut its seven million dollars in payroll expenses by nearly 40 percent, yet it actually increased the dividends paid to George Pullman and the company’s other shareholders. Similarly, as a federal inquiry into the Pullman Company later discovered, “none of the salaries of the officers, managers, or superintendents were reduced.”

Pullman shut down an entire factory in Detroit, laying off 800 workers in the process. Within his personal barony in Chicago, workers who previously earned $40 a car for putting a decorating finish on the outside of a Pullman sleeper had their pay cut to just $18. Foundrymen and blacksmiths had their work cut in half. When a group of women workers complained that they received just $3 per week in wages, a foreman reportedly told them that “If you cannot live upon the pay you are getting, go out and hustle for more. Why should we wonder that houses of prostitution find no difficulty in procuring inmates?”

Yet Pullman continued to charge full rents to workers in his company town. At the height of the depression, Pullman’s rents were as much as 25 percent higher those in Chicago other nearby towns. One woman claimed that, after her father’s death, the company charged her for his unpaid rent and docked her pay until these debts were paid. Another worker testified that he’d “seen men with families of eight or nine children to support crying” after receiving their paychecks because “they only got 3 or 4 cents after paying their rent.” According to testimony during the federal inquiry into Pullman, workers lacking sufficient pay to cover both rent and sustenance would “drop down by the side of a car when they were working for want of food.” Tenants, however, dared not leave the town of Pullman due to the company’s practice of denying work to employees who lived elsewhere — a Pullman employee who moved to cheaper housing risked the same fate as Pullman’s workers in Detroit.

When union representatives met with Pullman’s management to demand that their wages be restored — or, alternatively, that Pullman allow a neutral board of arbitrators to resolve this dispute between labor and management — the company refused. Initially, Pullman claimed that his company could not afford to pay higher wages, but this claim was dubious at best. As the federal inquiry into his company determined, the Pullman Company benefited greatly from continuous operation of its factories, even if it was temporarily doing so at a loss. The company suffered these loses so “that its plant might not rust, that its competitors might not invade its territory, that it might keep its cars in repair, that it might be ready for resumption when business revived with a live plant and competent help, and that its revenue from its tenements might continue.” A lengthy strike endangered these goals far more than restoring some share of the workers’ wages.

The true reason for Pullman’s unwillingness to bargain was later revealed by one of the railroad car baron’s lieutenants. According to Thomas Wickes, the Pullman Company’s second vice president, “the policy of the company” was to refuse to bargain with unions over wages, lest they “force us to pay any wages which they saw fit.” When asked if it was fair to instead require workers to accept whatever wages the company deemed fit, Wickes was unsympathetic—”but then it is a man’s privilege to go to work somewhere else.”

The Baron Is Unmoved

The strike began on May 11, 1894, one day after Pullman fired three of the union’s leaders. It also began peacefully. The local union posted three hundred men to guard Pullman’s factories to ensure that they were not vandalized, and the town of Pullman itself even remained free of violence after much of the rest of the nation descended into bedlam. Meanwhile, Pullman’s offices swelled with dignitaries begging him to agree to arbitration. The Civil Federation of Chicago, a group of prominent businessmen throughout the city, twice urged Pullman to make peace with his workers. Detroit’s Republican Mayor Hazel Pingree joined Chicago’s Democratic Mayor John Patrick in asking Pullman to arbitrate. The two men claimed to speak on behalf of fifty other large city mayors.

Pullman, however, was unmoved. Baron Pullman remained one of the wealthiest and most powerful men in the nation, while his workers now had even less money thanks to their decision to strike. If this balance of power remained in place much longer, it was unlikely that the men and women who lived in Pullman, Illinois could outlast the town’s namesake.

In June, however, at the American Railway Union’s convention, the national union voted to get involved. The Pullman Strike occurred nearly half a century before President Franklin Roosevelt signed the National Labor Relations Act, which created the modern legal framework preventing management from refusing to bargain with their workers’ union. Without any way to force Pullman to the negotiating table, the ARU had just two weapons in its arsenal. The first was the strike, where Pullman’s own workers refused to work until their boss agreed to negotiate. By the time the union’s national delegates met at their convention, however, it was clear that the strike on its own was unlikely to move George Pullman.

The second tactic was a boycott, which called upon workers who were not employed by the Pullman Company to refuse to deal with it until Pullman agreed to bargain. Under the terms of the boycott that the national union agreed to during its convention, ARU workers refused to handle Pullman cars or to assist in the passage of any train that contained a Pullman car. Eventually, they hoped, railroads would be forced to disconnect these cars from their trains, and George Pullman would discover that American commerce could continue just fine without him — unless, of course, he agreed to negotiate with his workers.

This strategy, however, did not account for the General Managers’ Association.

The Full Might of the United States Government

The Managers’ Association included all 24 of the railroads centering in or terminating at Chicago. In the previous year, this Association had enabled the executives of each of these 24 companies to work together in implementing system-wide wage cuts to their workers — thus giving the lie to Wickes’ claim that “it is a man’s privilege,” who does not like the wages paid by one employer “to go to work somewhere else.” At least in Chicago’s rail lines, nearly all workers were paid according to the “Chicago scale” for wages, and the low wages mandated by this pay scale were themselves maintained by collusion among the city’s many railroad companies.

The Managers also quickly realized the threat presented by Debs’ new union. Individual workers, and their decrepit brotherhoods, were impotent in the face of a united railroad industry and its threat that every worker who strikes can be replaced by a scab. But Debs’ American Railway Union was an entirely different animal. With its tens of thousands of members, spread out throughout the industry and capable of shutting the engines of American transit down, the ARU presented the Managers with something they’d never faced before — an organization that could stare a railroad baron directly in the eye and force him to blink.

If the union’s strategy was to surgically extract the Pullman Company from the nation’s railways, the Managers would ensure that the boycott was as disruptive as possible. The Managers intentionally manipulated their own schedules and let the blame fall upon the union. They gratuitously attached Pullman cars to freight trains and to short distance lines, thus forcing the boycotters to stop those trains and take the blame for halting commerce. And they specifically targeted mail trains for this tactic, thus ensuring that Debs’ union would disrupt the federal government’s central function of delivering the mail.

Rather than simply plucking Pullman’s train cars out of the channels of American commerce, the Managers ensured that Chicago’s all-important railroad hub would grind to a virtual standstill. Yet the farmers and businessmen who relied on Chicago’s railroads to bring their goods to market had little opportunity to learn about the Managers’ backroom tactics. What they saw were legions of unionized workers standing between them and the money they needed to feed their own families. The cover of Harper’s Magazine, the same Harper’s that once described Pullman as a feudal lord, soon depicted Debs as a sulking king, sitting atop a halted bridge while all of Chicago’s industry laid dormant behind him.

The Managers also had a close ally at the highest reaches of the Cleveland Administration. Attorney General Richard Olney was a leading railroad attorney who’d twice turned down appointments to the Massachusetts Supreme Judicial Court in favor of the railroad clients that paid for his Boston mansion. Though Olney accepted President Cleveland’s appointment to lead the Justice Department, he did so only after the President agreed that Olney could also remain in private practice. Yet, rather than treating Olney’s advice as suspect because of his obvious conflict of interest, Cleveland viewed Olney’s railroad ties as something that gave him insight into how to handle the strike.

Indeed, it is difficult to exaggerate the degree of collusion between the Managers and the federal government once the boycott began. The federal government appointed 3,600 United States deputy marshals who were hand-selected and paid by the Managers, and placed them under the direct control of the railroads. Cleveland eventually deployed federal troops to Chicago, against the strenuous protests of Illinois Governor John Altgeld and those of the soldiers’ commander, General Nelson Miles, in order to break up the boycott. While Miles’ forces occupied Chicago, the general set up his headquarters in the Pullman Building and met regularly with a representative from the General Managers’ Association.

Once federal troops arrived in Chicago, the strike fell apart as spectacularly as one would expect. Though the federal inquiry blamed the first wave of violence on “hoodlums, women, a low class of foreigners, and recruits from the criminal classes,” and not on the strikers or the union itself, Miles’ soldiers inflamed what had previously been a peaceful dispute into chaos. What began with isolated individuals hurling rocks at the soldiers escalated into mobs setting fire to railroad cars. As many as ten thousand men tore through the Chicago stockyards, where they faced cavalry and bayonets. Buildings left over from the World’s Fair were set ablaze.

The workers of Pullman had believed they were in a fight against one of the nation’s wealthiest men. They learned too late that they were actually matched against the combined might of Chicago’s railroad industry, the Justice Department, and the United States military. When the strike finally broke, Pullman blacklisted the union’s leaders and ordered his workers to leave the American Railway Union. The Managers’ plan had succeeded completely. The union was utterly defeated.

An Epilogue As Important As The Story Itself

The entire nation suffered because George Pullman would not bargain with his workforce. The bulk of this suffering, moreover, cannot be laid at the feet of the striking workers or the union that supported them. Pullman’s workers chose to strike, but the Pullman Company made the decision to slash wages and increase dividends. The union chose to boycott, but it was the Managers’ decision to intentionally disrupt their own train lines in order to turn the public against the union. The first stone was cast, not by a striking worker, but by a nameless thug—and that stone was met by bayonets ordered onto the scene by the President of the United States himself. The workers and their union resorted to disruptive tactics only because they had nothing else to fall back on. And with each escalation, management met them with overwhelming, even deadly, force.

All of this would have been prevented if the United States had a law, like the National Labor Relations Act that President Roosevelt would sign 42 years after the Pullman Strike, that required Pullman to deal openly with his workers’ union. But this was not the lesson the Supreme Court of the United States took from the strike. To the contrary, they learned the opposite lesson. The epilogue to the Pullman Strike, which played out in the Supreme Court, was at least as significant a defeat for American workers as Pullman’s victory over the American Railway Union.

In the final days of the strike, Eugene Debs was jailed for defying a federal court order requiring his union to stand down and effectively give up its First Amendment rights. In order to obtain this order in the first place, Attorney General Olney’s handpicked lieutenant, a railroad attorney named Edwin Walker, worked closely with two judges — one of the judges had recently delivered a speech claiming that a single national union could “destroy the basis on which business in the long run can be successful and debase the man” — to craft an order that would give the Managers’ a total victory over the ARU if the union complied with it. After Debs defied the order, he was tossed in jail for contempt of court, where he shared a cell with five men, six mattresses laden with bed bugs, and numerous rats who would wander freely throughout the jail.

Debs would eventually seek his freedom in the Supreme Court of the United States, but he would not have it. To the contrary, the Court’s decision in In re Debs asserted a truly breathtaking vision of the judiciary’s own power to shut down labor’s attempts to force negotiations with management. In essence, the Court’s opinion established that federal courts could issue sweeping anti-union injunctions with nationwide implications upon their own authority, regardless of whether elected officials had actually given them that power. In the coming decades, the courts would become the arch-enemies of labor. By the 1920s, after watching an entire generation of judges’ efforts to thwart the labor movement, American Federation of Labor President Samuel Gompers warned that “[t]hose who seek to retain the injunction evil and to expand it are doing the greatest disservice to our system of jurisprudence, and in fact to our system of democratic government.”

The Debs decision, moreover, was the harbinger of an era when the justices frequently treated laws intended to protect workers from rapacious employers as unAmerican and unconstitutional. In the years following Debs, the Court struck down laws intended to prevent employers from overworking their employees and laws guaranteeing workers’ right to organize and form unions. They declared the minimum wage to be an affront to the Constitution. And they doomed a generation of young laborers to a childhood toiling in coal mines and cotton mills. Few institutions inflicted more suffering on more Americans than the Supreme Court of the United States, and American workers bore much of the brunt of this suffering.

Before the sun rose on that century, however, the Court’s decision in Debs revealed just how unsympathetic the justices of its era were to the cause of labor. When the Pullman strike came to an end, Eugene Debs went to jail. The local union leaders were blacklisted. And Pullman’s remaining workers returned at the same meager wages that triggered the strike. Meanwhile, the railroad barons went back to their mansions, where they remained among the wealthiest and most powerful men in the nation.

And the Supreme Court said this was right. The Court’s decision in Debs was unanimous.

http://thinkprogress.org/justice/2014/09/01/3477726/the-true-story-of-how-one-man-shut-down-american-commerce-to-avoid-paying-his-workers-a-fair-wage/