The Pennsylvania Manufacturers' Association [Reprint 2016 ed.] 9781512808445

Table of contents :
Preface
Contents
Part One: The History of the Pennsylvania Manufacturers’ Association, Its Organizational Development and Membership
Part Two: The Leadership of the PMA
Part Three: The PMA’s Policies toward Legislation–State and National
Part Four: Access: Those Political Institutions to which Access is Desired in order to Accomplish Legislative Goals
Part Five: Methods used by the PMA to Accomplish its Legislative Goals and Conclusions
Appendix
Bibliography
Index

Citation preview

The Pennsylvania Manufacturers' Association

The Pennsylvania Manufacturers9 Association by J . ROFFE W I K E

PHILADELPHIA

University of Pennsylvania Press

© i960 by the Trustees of the University of Pennsylvania

Published in Great Britain, India, and Pakistan by the Oxford University Press London, Bombay, and Karachi

Library of Congress Catalog Card Number: 60-15805

Printed in Great Britain by W . & J . Mackay & Co. Ltd, Chatham

Preface D u r i n g the past several years, an i m p o r t a n t contribution to the study o f g o v e r n m e n t and politics w a s a v o l u m e b y D a v i d T r u m a n entitled The Governmental

B.

Process. In this study o f political

interest g r o u p s and the process o f g o v e r n m e n t in the U n i t e d States, D r . T r u m a n m a d e the f o l l o w i n g pertinent observations regarding this particular area o f political study. R e f e r r i n g to the various m o n o g r a p h s that h a v e been done in the past u p o n particular interest g r o u p s and the techniques they h a v e used, T r u m a n c o m m e n t e d : T h e various treatments, whether journalistic or academic, o f n o n party groups have one limitation in c o m m o n . T h e y have not developed

nor have been based upon a consistent conception of the role of interest groups in the political process. Y e t without some w o r k i n g conception o f the political role of interest groups, their functions, and the w a y s in w h i c h their p o w e r s arc exorcised, w e shall not be able adequately to understand the nature o f the political process. 1

Further, regarding associations, a h i g h l y d e v e l o p e d f o r m

of

political interest g r o u p , D r . T r u m a n o b s e r v e d : " A n y g r o u p — m a y f u n c t i o n f r o m time to time as an interest g r o u p . T h e r e is one t y p e o f g r o u p w h i c h almost invariably operates as an interest g r o u p , that has b e c o m e o f such importance in o u r culture that it deserves special treatment. This m a y be called the association." 2 T h e Pennsylvania Manufacturers' Association, f o u n d e d in 1 9 0 9 , is t h e largest g r o u p o f its kind in the U n i t e d States. T h e P M A b e g a n as a small g r o u p o f textile manufacturers a r o u n d a single d y n a m i c leader, M r . J o s e p h R . G r u n d y , a w o o l e n g o o d s m a n u f a c t u r e r and, at 1

D a v i d B . Truman, The Governmental Preface, p. viii. 1

Ibid., p. 39.

Process ( N e w Y o r k : K n o p f , 1 9 5 1 ) ,

6

Preface

the same time, the Republican leader of Bucks County w h o adhered to the leadership of the last great Republican "boss" of Pennsylvania, Senator Boies Penrose. The P M A is today an association of some eight thousand members with a large staff of professional managers and administrators headed by James Malone, Jr., w h o has been a professional politician. The P M A has t w o large and successful insurance companies affiliated with it: The Pennsylvania Manufacturers' Association Casualty Insurance Company and the Pennsylvania Manufacturers' Association Fire Insurance Company. The PMA has been and is a major political force in Pennsylvania today, especially in the Republican party. It is the purpose of this study to analyze the development of the P M A in order to ascertain the important factors that have contributed to the success of the P M A as a functioning association as well as those factors that have limited its success. In analyzing the development of the PMA, use was made of the conception of the political interest group and association in the governmental process that Dr. Truman presents in The Governmental Process. In the first chapter the founding of the PMA will be examined in order to find the important factors that were involved in this event and these will be compared with those factors regarded as important by Dr. T r u m a n in the founding of associations that are political interest groups. The second, third, and fourth chapters will be concerned with the organizational development of the PMA and its membership, and again the T r u m a n definitions and conclusions as to the internal development of associations will be utilized. The special economic and political philosophy of the P M A leaders, especially Grundy and the late G. Mason Owlett, will be the subject of the fifth chapter. This subject is given separate consideration because these ideas are essentially the basis of the P M A . It is the interest upon which the PMA has been built as a political interest group. The legislative policies of the P M A are dealt with in chapters six

Preface

7

through nine. These policies will be discussed under topical headings : taxation, workmen's compensation, w a g e and hour legislation, general labor legislation, unemployment

compensation,

stream

pollution, and other miscellaneous legislation. A separate chapter, number ten, is devoted solely to P M A national legislative policies. The points of access in the Pennsylvania state government in w h i c h such an association as the P M A w o u l d be interested in order to effectuate their policies are the subject o f the eleventh chapter. Chapters twelve, thirteen, and fourteen are concerned w i t h the methods used by the P M A to accomplish its purposes as an association. The analysis o f P M A methods will be aimed at finding c o n sistent patterns o f action and policy employed b y the P M A leaders in the political realm o f governmental institutions and political organizations.

T h e fifteenth chapter contains a summary

and

analysis o f P M A ' s methods to accomplish its legislative goals. T h e final chapter is devoted to conclusions. T h e important source material has come f r o m the Pennsylvania Manufacturers' Association itself. T h e Minute Books o f all annual meetings and all Executive C o m m i t t e e meetings f r o m 1909 constitute the most important

source

material.

Other

important

material f r o m the P M A included the Legislative Bulletins f r o m 1917 to the present, the Monthly Bulletins for the same period, and m e m o randa f r o m the P M A files on various pertinent subjects. Newspapers, including the New York Times, The Philadelphia Inquirer, and the n o w extinct Philadelphia Public Ledger, Evening Public Ledger, and Philadelphia Record, from 1920 to the present, along w i t h magazine articles covering the same period, provided excellent sources for the political activities o f the P M A leaders, especially M r . G r u n d y and M r . Owlett, as well as for the general historical background. Official state publications such as the Pennsylvania Manual, and the History of Bills in the Pennsylvania General Assembly provided factual material regarding the state government o f Pennsylvania and the passage o f bills through the Senate and House o f Representatives o f the General Assembly.

Facts concerning

the functioning o f

the

legislative

Prcfacc

8

committees came largely from the study made for Johns Hopkins University by C . E. Winslow. Much highly pertinent information regarding the tax situation in Pennsylvania came from the report o f the T a x Study Committee of 1953. Some of the most valuable information regarding the past and present functioning of the P M A and the personal motivations o f P M A leaders came f r o m personal interviews with Mr. Joseph R . Grundy; the late G. Mason Owlett; Mr. John Seeton, secretary of the P M A ; Mr. Harry Engell, secretary of the P M A insurance companies; Mr. Thomas P. O'Neil, public relations director of the P M A ; Mr. L e w Hotchkiss of the unemployment compensation division, and M r . Stanley Atkiss of the P M A insurance companies. Other special information was supplied by two undergraduate theses done for Princeton University and one for Williams College. The first, by Mr. Edward N . Owlett entitled " T h e Pennsylvania Manufacturers' Association: A Study of Business in Government," was especially useful in supplying information regarding the P M A insurance companies and the means by which Mr. Owlett's father, G. Mason Owlett, handled a legislative problem involving a P M A affiliate, the Pennsylvania Bakers' Association, in 1949. T h e second, " T h e Grundy Movement in Pennsylvania" by Mr. Bruce Brumbaugh, provided excellent newspaper sources for the political activities of M r . Grundy and the late G. Mason Owlett as well as a plausible analysis, based upon personal interviews, of the FineOwlctt relationships following the 1950 Republican primary. The third thesis, that by Mr. Samuel Humes on " T h e Republican Party in Pennsylvania," also provided a source of information on the historical background for the political activities and relationships of the P M A and the Republican party of Pennsylvania. T o provide the theoretical conception of interest groups and associations in the governmental process, Dr. Truman's book, The Governmental Process provides the main foundation. However, the works of t w o men w h o more or less fathered this subject and upon which much of the Truman work is based were also used. They were,

Preface

9

of course, Arthur Bentley's The Process of Government

and E .

Pendleton Herring's The Politics of Democracy. Since this study is concerned not with the P M A alone— merely as an isolated political phenomenon—but with the development of a political interest group as part of the governmental process, it is influenced by the theoretical framework devised by Dr. Truman for studying this process. It is hoped that this examination of such a significant group as the P M A will in some w a y add to a further understanding of the dynamics of the American governmental process. J.R.W.

Acknowledgments I wish first to express my deep gratitude to Professor G. Edward Janosik of the Political Scicnce Department of the University of Pennsylvania for his very able guidance and advice in making this study. I also wish to thank those at the P M A office in Philadelphia w h o helped to provide much of the information upon which this study is based. I am much indebted to the late G. Mason Owlett, former president of the P M A , who granted me so much of his time in interviews and w h o made it possible for me to see all of the printed or written data f r o m the files of the P M A and its affiliated insurance companies. M y thanks also go to the P M A secretary, Mr. John H. Seeton, w h o supplied information regarding the organization and functioning of the P M A and to M r . Thomas P. O'Neil, director of public relations for the P M A , w h o arranged for me to see the Legislative Bulletins and the Monthly Bulletins and w h o granted me several very informative interviews. Others at the P M A office who assisted me with interviews and information and w h o receive my thanks include Mr. Harry M. Engell, secretary of the insurance

IO

Acknowledgments

companies, and Mr. Lew Hotchkiss. A special word of thanks must also go to Miss Dorsey, secretary to the late G. Mason Owlett, who was of great help during the months I spent in the PMA offices. I especially thank Mr. Joseph R. Grundy for granting me the privilege of interviewing him, and for his candor during that interview. I am indebted to two gentlemen, who unfortunately have died since this study was begun in 1953. One is Professor Charles Rohlfing, former chairman of the Political Science Department of the University of Pennsylvania, who gave much valuable advice and encouragement. The other is Ivan E. Garver of Roaring Spring, Pennsylvania, a member of the Board of Governors of the P M A until his death, who made possible my introduction to G. Mason Owlett and the other PMA leaders. Professor Philip S.Jacob, also of the University of Pennsylvania, receives my thanks for his interest and invaluable advice regarding the methodology used in approaching the subject of this study. J.R.W.

Contents Preface

5

PART ONE : THE HISTORY OF THE PENNSYLVANIA MANUFACTURERS* ASSOCIATION, ITS ORGANIZATIONAL DEVELOPMENT AND MEMBERSHIP

13

I. The Founding of the Pennsylvania Manufacturers' Association II. The Development of the Organization of the P M A

15 24

III. Membership and Finances

48

IV. The PMA Today

59

PART T W O : THE LEADERSHIP OF THE PMA

V. The Political and Economic Philosophy of the PMA's Leaders

77

79

PART THREE: THE PMA'S POLICIES TOWARD LEGISLATION—STATE AND NATIONAL

105

VI. Policies of the P M A toward Taxation Legislation in Pennsylvania

107

VII. Policies of the P M A toward Workmen's Compensation Legislation in Pennsylvania

117

VIII. Policies of the P M A toward General Wage and Hour Legislation

133

IX. Policies of the P M A toward Other Legislation of Interest to Manufacturers

141

X . The P M A and National Legislation

157

Contents

12

PART FOUR: A C C E S S : THOSE POLITICAL INSTITUTIONS TO WHICH ACCESS IS DESIRED IN ORDER TO ACCOMPLISH LEGISLATIVE GOALS

177

XI. The Pennsylvania State Government, the Republican Party, and the Democratic Party PART FIVE: METHODS

USED BY THE PMA TO A C C O M P U S H

179 ITS

LEGISLATIVE GOALS A N D CONCLUSION

207

XII. The Methods used by the P M A to Gain Access to the Republican Party in Pennsylvania and to Pennsylvania Legislators and Governors XIII. The Methods Used by the P M A to Favor and Oppose Legislation and Its Specific Lobbying Methods

209 252

XIV. The Methods Used by the P M A to Influence National Legislation X V . A Summary and Analysis of all the P M A ' s Methods to Accomplish Its Legislative Goals XVI. Conclusions: P M A Success or Failure and Its Future

267 282 301

Appendix

317

Bibliography

339

Index

349

PART O N E The History of the Pennsylvania Manufacturers' Association, its Organizational Development and Membership

I The Founding of the Pennsylvania Manufacturers Association THE B A C K G R O U N D

FOR T H E F O R M A T I O N

OF T H B

PMA

T h e era immediately preceding 1900, that is, from 1870 to 1900, had been one of great industrial growth for the nation and, in particular, for Pennsylvania. While the manufacture of iron and steel was the most important single industry in the state, diversity in manufactures nevertheless significantly characterized Pennsylvania industry in 1900. 1 The textile industry was second to steel in importance and, in 1900, was of sufficient size to enable Pennsylvania to rank second in the nation in textile production. 2 The effect of this growth in the social and political realm is well known. The interests of the workingman, or industrial laborer, began to emerge as a group interest distinct from the interests of the employermanufacturer. This growing distinction manifested itself, during the period of growth in the nineteenth century, in the formation of various associations that represented these increasingly distinct interests. Labor unions were formed encompassing workers in a particular industry, although the movement toward national labor unions was begun in 1886 with the formation of the American Federation of Labor. 3 In that year employers' associations were also 1 In 1900, there were 291 mills in operation, employing 1 5 . 1 per cent o f the w a g e earners and producing 23.7 per cent of the total value of manufacturers in the state. Sylvester K . Stevens, Pennsylvania Titan of Industry ( N e w Y o r k : Lewis Historical Publishing Co., 1948), p. 320. 8 Ibid., p. 324. 8 Clarence E. Bonnett, Employers' Associations in the United States ( N e w Y o r k : Macmillan, 1922), pp. 2 1 - 2 2 .

i6

The Pennsylvania Manufacturers' Association

formed to counter the strength of the Knights of Labor and other smaller labor associations and unions that were fomenting strikes at that time. 1 Most of these employers' associations were national in scope in that they included as members most or all of the manufacturers in a certain industry. 2 They are distinct from employers' associations formed after 1900, such as the National Association of Manufacturers, in that they countered a specific labor union in a specific industry or were concerned mainly with the negotiation of labor contracts in a certain industrial field. 3 As a further result of the industrial growth, there were social ills related to the conditions surrounding the employment of labor. A reform movement developed in the late nineteenth century to rectify these ills. The reform movement became strong at the state level where it concentrated upon legislation. Politically, this movement was termed the Progressive movement. It was a middle-class movement and it split the middle class. Regarding the Progressives, Cochran and Miller write in The Age of Enterprise: Truly conservative, they opposed equally the collectivism of great trusts and the collectivism of trade unions; and they shared a profound belief in free capitalism, equal economic opportunity, fair trade practices, and the protection of property. Inheritors of the victory of the English Parliament over the Stuart kings, they insisted also upon the supremacy of laws over men or institutions, and they had a naive belief in the efficacy of legislation to achieve their ends.4

The attempt to legislate reforms sundered this conservative middle class. As long as the legislation was aimed at curbing the 1 Ibid., pp. 2 1 - 2 5 . See Truman, op. cit., pp. 67 and 69 (regarding the formation of the A F of L : "Effectiveness in ordering relationships of skilled workers, however, provided a stimulus to activity on the part of employers' groups.") and p. 82. 'Examples of such early associations: The General Managers' Association composed of 24 railroads in 1886; and the Stove Founders' National Defense Association in 1886. Bonnett, op. cit., pp. 2 1 - 2 2 . s Ibid., pp. 22-24, on negotiatory associations. Also Truman, op. cit., p. 81. * Thomas S. Cochran and William Miller, The Age of Enterprise (New York: Macmillan, 1942), pp. 274-75.

The Founding of the Pennsylvania Manufacturers' Association

17

power of the great trusts, unity prevailed, but the reform of social ills to placate the workers and their trade union representatives met with natural hostility from those members of the middle class who regarded such reforms as endangering or destroying their livelihood. Since the welfare of the populace was regarded in this period as an exclusive realm for state legislation rather than federal, the Progressives began and concentrated their work at the state level. The small manufacturer was the target at this legislative level and not the great manufacturing corporations or the great utilities, railroads, or institutions of finance; consequently, he could expect and did receive little if any aid from these larger and more powerful groups at the state level. 1 In Pennsylvania, specifically, another factor in this period must be considered. After 1900, Pennsylvania industry began to decline relative to the industrial growth of the rest of the states. It is quite evident that under such circumstances small manufacturers in Pennsylvania after 1900 would be primarily interested, as a group, in the maintenance and protection of their economic position gained during the last half of the nineteenth century. During the period of the turn of the century and afterward, several significant forces were regarded by this small manufacturer as undermining his position. These were, of course, the Progressives, labor groups, and the competition from the growing industries of other states, not to mention foreign competition through imports. Manufacturers of all sizes had, before 1900, banded together as a group drawn together by a similar interest and purpose. Associations had been formed, 2 but now, after 1900, they became aggressive or belligerent with regard to labor and related legislative matters. 3 The Legislative Scene at Harrisburg. It was not until after 1913 that the Progressive movement was sufficiently strong politically to 1 3

Ibid., pp. 273-84.

The N.A.M. was organized at a convention in Cincinnati in January, 1895. Bennet, op. cit., p. 301. 3 Ibid., pp. 298-302; Cochran and Miller, op. cit., pp. 281-84; Truman, op. (it., pp. 77-84.

18

T h e Pennsylvania Manufacturers' Association

push through the General Assembly of Pennsylvania any reform legislation. Before this, however, civic groups, women's groups, and "do-gooders" 1 in general were to be found in Harrisburg. Among these groups was the National Child Labor Committee, interested in reducing the hours of child labor and generally improving their working conditions. 2 Other reforms, sponsored by interested groups at Harrisburg, concerned women's hours of labor, employees' compensation, increased employer's liability, and the taxation of corporations. 3 The State Political Situation. The year of the founding o f the Pennsylvania Manufacturers' Association, 1909, was during the Penrose era, a period of political domination by Senator Boies Penrose. Penrose succeeded to the leadership of the Pennsylvania Republican party and thus to the leadership of Pennsylvania politics upon the death of Matthew Quay in 1904. In 1909, Penrose commanded the political loyalty of the entire state, including the newlyarrived Vare brothers of Philadelphia. In his

autobiography,

William S. Vare, the youngest and last of the three Vare brothers, acknowledges Penrose's leadership in Philadelphia in 1909. 4 The other important Penrose lieutenants in Philadelphia were James P. McNichol, described as the "boss of Philadelphia," 5 and Israel Durham.* Pittsburgh was in a transition period between the MageeFlynn machine that dominated that city's politics from 1882 to 1902, and the organization of M a x Leslie which came to power in 1910. Penrose's leadership like that of his predecessor, Matthew Quay, was recognized by the two great cities of Pennsylvania, Philadelphia and Pittsburgh. However, his real strength lay between these two metropolitan areas in the rural districts. In one of these rural districts, 1

Interview with M r . Joseph R . Grundy, M a y 1 2 , 1 9 5 3 . New York Times, J u l y 27, 1 9 1 3 , Section VII, p. 1. * Minute Book o f the Pennsylvania Manufacturers' Association, I, 28. 4 William S. Vare, My Forty Years in Politics (Philadelphia: Roland Swain C o . , 1 9 3 3 ) . P- 1 5 1 . s New York T i m « , January 19, 1 9 1 3 , pp. 1 - 2 . * Robert D . B o w d e n , Boies Penrose: Symbol of an Era. ( N e w Y o r k : Greenberg, 1 9 3 7 ) pp. 9 1 and 1 1 6 . 2

T h e Founding of the Pennsylvania Manufacturers' Association

19

Bucks County, the Republican leader was M r . Joseph R . Grundy, a woolen manufacturer w h o had taken over his father's woolen manufacturing business following the latter's death in 1893. 1 O f Mr. Joseph R . Grundy and the development of the Republican party in Bucks County, Edward W . Hocker writes in eastern Pennsylvania:

South-

" T h e rise of the Republican party's power

[in Bucks County] was due in no small degree to Joseph

R.

Grundy, of Bristol, who, for many years, exercised dominant sway in the party's management in the county and also in the State." 2 Prior to 1904, Mr. Grundy's political activities outside of Bucks County were confined to visiting Senator Matthew Quay, and later, Boies Penrose after he became senator in 1897, 3 about tariff matters, especially the tariff on wool imports. 4 He was regarded after 1904, when Penrose "officially" succeeded Matthew Quay as the state Republican leader, as the "Penrose leader of Bucks C o u n t y . " 5 He also realized at this time that state legislation was becoming increasingly important not only as a potential hindrance to the continued growth of Pennsylvania manufacturing but also as a possible destructive weapon against its continued prosperity.® The textile industry, in which Mr. Grundy was interested, was especially vulnerable not only from foreign competition through imports but also because this industry employed a large number of female and juvenile workers. It became, consequently, an obvious target for Progressive reform legislation. In 1908, M r . Grundy consulted Senator Penrose in Washington 1

Special mimeograph from P M A files on M r . G r u n d y . J . Bennett Nolan, Southeastern Pennsylvania, A History of the Counties of Berks, Bucks, Chester, Delaware, Montgomery, Philadelphia, and Schuylkill, chapter on Bucks C o u n t y b y E d w a r d W . Hocker (Philadelphia: Lewis Historical Publishing C o . , 1943), p. 400. 3 Walter Davenport, Power and Glory ( N e w Y o r k : G . P. Putnam, 1 9 3 1 ) , p. 1 1 7 . 4 Interview with M r . Grundy, M a y 1 2 , 1 9 5 3 . * Philadelphia Bulletin, February 8, 1 9 1 7 , p. 3. * Interview with M r . Grundy, M a y 12, 1 9 5 3 . 2

20

T h e Pennsylvania Manufacturers' Association

about the advisability of forming an association of manufacturers in Pennsylvania to protect and promote their common interests. Senator Penrose considered Mr. Grundy's proposal a sound one and suggested that he contact state Senator John Scott, a Penrose lieutenant in Harrisburg. Mr. Grundy discussed his idea with Senator Scott, and the latter encouraged him to start such an association.1 THE FOUNDING

OF T H E P E N N S Y L V A N I A

MANUFACTURERS*

ASSOCIATION

On October 19, 1909, at the Hotel Senate in Harrisburg, Mr. Joseph R. Grundy presided over a meeting. Attending this meeting were: Mr. Joseph R. Rambo, of Rambo and Regar, a textile manufacturing concern in Norristown; Mr. Edward A. Soleliac of the Adelaide Silk Mills in Allentown; Mr. J . M. Harris of the Tilt Silk Mills in Pottsville; Mr. Mitchell Stead of Philadelphia; and Mr. Harry J. Shoemaker ofDoylestown who acted as secretary.2 It was agreed at this meeting to form an unincorporated association, and it was "unanimously agreed that the Chairman, Joseph R. Grundy, should call a meeting at a time and place he shall select, and for each one present to notify others who may be interested in order that they might attend if they saw proper." 3 The second meeting in 1909 was on December 7, at the Manufacturers' Club in Philadelphia. In addition to those present at the first meeting were: Mr. Ray Hinrod, representing the Erie Manufacturers' Association; Mr. George W . Aubrey, Esq.; and Mr. E. A. Soleliac (who attended the first meeting), representing the Lehigh County Manufacturers' Association; Mr. J . M. Harris, "a silk manufacturer"; 4 and Mr. Otto Eisenlohr, "segar [sic] manufacturer." Other groups represented were "the Turkish Towel 1

Telephone interview with M r . Grundy, December 1 3 , 1 9 5 3 . Minute Book of the Pennsylvania Manufacturers' Association, I, 16. Ibid., p. 16 (written by Harry J . Shoemaker, secretary). 4 Ibid., p. 1 7 . M r . Harris owned the Tilt Silk Mills, Pottsville. Stevens, op. cit.. Ill, 555. 2

3

The Founding of the Pennsylvania Manufacturers' Association

21

Manufacturers' Association," "the Upholsterers' Association," "the Worsted Spinners' Association," "the Montgomery County Manufacturers' Association," "the Hosiery Manufacturers' Association," "the Shirt Manufacturers' Association," "and several others." 1 At the direction of those present the chairman, Mr. Grundy, was directed to appoint an executive committee to serve until the first annual meeting in January, 1910. M r . Grundy appointed Messrs. John P. W o o d (woolen manufacturer of Philadelphia), 2 J . S. Rambo, E. A. Soleliac, Ray Hinrod, J . M . Harris, and H. B . Tyson (Quaker City Shirt Manufacturing Co., Norristown), who are considered the official founders, along with Mr. Grundy, of the Pennsylvania Manufacturers' Association. T H E A R T I C L E S OF A G R E E M E N T

The Articles of Agreement set forth the purpose of the Pennsylvania Manufacturers' Association and provide its basic organizational structure. 3 Section II stated that "the objects of this Association shall be to advance and protect the interest of its members." 4 T w o classes of membership are mentioned in Section III: individuals, firms and corporations directly engaged in manufacturing in Pennsylvania, and trade and local associations representing Pennsylvania manufacturing industries. 5 N e w members (Section IV) must be approved by the majority of the Executive Committee and were to be required to sign the Articles and pay required dues. The Executive Committee elected all important officers, the president, one vice-president, one treasurer, 6 and the committee was elected for one year " o r such time thereafter as their successors are duly chosen and signify their acceptance of the office." 7 Seven members 1

Ibid., pp. 1 7 - 1 8 . See Appendix, note 1 . a Only the significant sections w i l l be presented here; the complete Articles of Agreement will be found in the Appendix, note 2. 4 Minute Book, I, 3-4. 5 Ibid. 6 Messrs. Grundy, W o o d , and Rambo, respectively. 7 Minute Book, 1, 5-6 (italics added). 2

22

T h e Pennsylvania Manufacturers' Association

of the association whose dues were paid up at the annual meeting would constitute a quorum, and the election of the Executive Committee was to be conducted "as the meeting saw fit."1 Section VI provided: "The entire management and control of the Association, including filling vacancies, adopting rules, policies, etc., not inconsistent with these articles of agreement, shall be vested in the Executive Committee, who shall appoint and fix the compensation of all employees and discharge the same at will." 4 As for dues, those members who were Class I members—that is, with direct membership—paid according to the number of employees including officers,3 and those in Class II with indirect membership were to pay the amount agreed upon by the Executive Committee of the Pennsylvania Manufacturers' Association and the affiliated trade or local association. SUMMARY

The industrial development in the nineteenth century had created the manufacturer-employer and the worker-employee. Their interests became separated because of low wages, long working hours, bad working conditions, and the development of a labor leadership to replace or at least compete with the former employer leadership. Inevitably, these tensions resulted in the establishment of separate interest groups with different goals. From these interest groups came formal associations: employees' and employers'. In Pennsylvania, a great industrial state, the interests of certain manufacturers, specifically the textile manufacturers, were more uniquely congenial not only because of similar geographical location but also because certain aspects of their industry were under legislative attack by reform elements. Emerging from this clash of interests was the Pennsylvania Manufacturers' Association, a group committed 1

Ibid. Ibid. 3 Ibid., p. 7. The dues were to be ten cents per employee based upon an average of four pay rolls for the preceding year. 2

The Founding of the Pennsylvania Manufacturers' Association

23 1

significantly to protecting the interests of its members. Its initial members were primarily textile manufacturers and representatives of small business. Aside from having a congeniality based upon geography and a common enemy, so to speak, these members had another common characteristic. They were interested not in dynamic industrial development but in protecting an old and entrenched economic interest and the general economic and political system that had created it.

1 Members of the PMA could be termed an interest group—"a group that, on the basis of one or more shared attitudes, makes certain claims upon other groups in the society for the establishment and maintenance, or enhancement of forms of behavior that are implied by the shared attitudes." (Truman, op. cit.) These PMA members were also a political interest group because they make claims upon institutions of government. (Truman, op. cit., p. 37.) In other words, certain Pennsylvania manufacturers, bound together by a common interest, acted to influence the Pennsylvania state government in order to promote and protect that interest. The PMA, the association formed by this political interest group of manufacturers to promote their interests, especially by influencing the legislation emanating from the state capitol, also fits Dr. Truman's definition of an "association." It grows out of "tangent relations" that are established by a certain number of people, in this case, Pennsylvania manufacturers, who interact regularly with another group (in this case, employees) on that basis. Employee leaders acted with state legislators to pass legislation adversely affecting manufacturers. This created a "disturbance" in the relationship between the manufacturers and their employees. In creating the PMA, they created a means presumably to restore an equilibrium in employer-employee relationships by acting upon the state legislators to prevent the passage of the adverse legislation. (Truman, op. cit., pp. 40-41.)

2 The Development of the Organization of the PMA THE EARLY

ORGANIZATION

Internal Leadership and Cohesion. By their very nature, all associations develop an organization which is both a structure for administering and carrying out the desired activities. This organization is also the personnel who fit into this structure to manage and direct the activities of the association.1 The administrative organization established by the Articles of Agreement provided a corporate type of management for the Association. Final authority, not only for setting up the organization of the Association but for decisions as to Association policies, rested with the Executive Committee. Within this Committee the greatest authority rested with its president and founder, Mr. Joseph R. Grundy. It was he who was directed to appoint the first Executive Committee, and this Committee was unanimously elected at the First Annual Adjourned Meeting, January 24, 191o. 2 While all members had voting rights3 based upon the amount of dues paid, the principle of executive leadership appears to have been firmly established in the first meetings of the Association. Executive leadership like the "corporate" type of leadership is a form of that centralized control which is "characteristic of modern large-scale business organizations."4 Executive leadership in the case 1

Truman, op. cit., p. 8. Minute Book, minutes of meeting of January 24, 1910, I, 24. 3 Ibid., p. 7. Sections VII and VIII of the Articles of Agreement provided that "voting strength shall be based upon the amount of dues paid" at the rate of one vote per dollar paid. 4 Truman, op. cit., p. 135. 2

The Development o f the Organization o f the P M A

25

of the Pennsylvania Manufacturers' Association is distinguished from corporate leadership, as is found in a group like the Chamber of Commerce of the United States. In the P M A , leadership and direction were exercised by one person, Mr. Grundy, with the willing approval o f a small executive committee that he appointed. The Chamber of Commerce is governed by a large board of directors (about fifty) that elects the officers and an executive committee from among its membership. 1 This executive leadership in the PMA was established by the recognition of Mr. Grundy's personal leadership, by the powers of direction tendered to him, and by the provision for the indirect election of officers, that is, by the Executive Committee rather than by the majority of members of the Association.2 Even the election of the members of the Executive Committee was treated somewhat vaguely by the provision in Section VII o f the Articles o f Agreement which stated that such election shall be conducted as the "meeting shall see fit." The quorum provisions of the Articles of Agreement further strengthened this executive control over the organization of the Association. Seven members, "in good standing," 3 shall constitute a quorum at a meeting o f the entire membership of the Association. 4 Aside from annual meetings, special meetings o f the entire Association could be called by a majority vote, that is four votes of the Executive Committee and five days' notice. 5 The greatest power that the members' votes had over this established executive leadership was through Section XI of the Articles of Agreement which provided that amendments could be made to the Articles o f Agreement by a majority o f votes cast at any meeting of the Association, "providing ten days notice is given to the members of the proposed change." 6 1 2 3 4 6 6

Ibid., p. 135. Section V o f the Articles o f Agreement. Minute Book, I, 6. (Good standing meant having paid yearly dues.) Article VII o f Articles o f Agreement. Minute Book, I, 7. Ibid., p. 8.

26

The Pennsylvania Manufacturers' Association

First Problems of Internal Cohesion.

Centralized control o f the

administrative organization of any association automatically implies the existence of an "active minority": that small group that actually directs the organization and, presumably, the association as a whole. O f such active minorities, Roberto Michels wrote in Political Parties: " T h e appearance of oligarchical phenomena in the very bosom of the revolutionary parties is a conclusive proof of the existence of immanent oligarchical tendencies in every kind of human organization which strives for the attainment of definite ends."1 The function of this active minority is twofold: It seeks to direct the association, the organization of which it controls ; and it generally seeks to maintain itself in control of the association. The latter function may, of course, not require any special effort if the first function, that of successfully exercising leadership, is carried out properly. David Truman in The Governmental Process provides an excellent definition of leadership within an interest group: " . . . a leader can be viewed as an individual w h o initiates most of those actions—verbal or otherwise—to which the others in the group respond." 2 Since the aim of a leader is to elicit such voluntary response, he must seek to promote cohesion within the group; otherwise, he will be faced with competing leaderships. These can destroy the effectiveness of an association that has political interests, whose very nature requires much greater unity of purpose than other groups. 3 While this active minority can and does exercise leadership, in the case of the P M A the early years saw leadership exercised by one man. At best, it could be said that the active minority in the Pennsylvania Manufacturers' Association, specifically the Executive Committee, exercised leadership over the Association

1 Roberto Michels, Political Parties: A Sociological Study of the Oligarchical Tendencies of Modem Democracy (Glencoe, Illinois: The Free Press, 1949); translated by Eden and Cedar Paul (London: Jarrold & Sons, 1915), p. 14 (italics added). 2 Truman, op. cit., p. 189. *Ibid., p. 167.

The Development of the Organization of the P M A

27

as a whole because it followed the leadership of one man, Mr. Joseph R. Grundy. In the early years of the Association, there were examples of lack of internal cohesiveness. The first two annual meetings had to be postponed because there was no quorum present; and yet apparently the PMA membership included ninety-four individual members and three affiliated local manufacturers' associations at that time. 1 At the Executive Committee meeting on January 23, 1 9 1 1 , several withdrawals were announced, among them Otto Eisenlohr & Bro., one of the first members of the Association. It was decided that Mr. Grundy would see Mr. Eisenlohr "to try to have them remain in the Association and pay their required dues." 2 In both of these instances, the exercise of personal leadership by Mr. Grundy promoted cohesion. It was this personal leadership, largely a result of Mr. Grundy's personality and his "legislative" activities in Harrisburg, that held the early organization together and promoted its expansion. Witness two significant statements from two separate meetings: . . . the thanks of the committee [Executive Committee] was unanimously extended to the President [Mr. Grundy] for his earnest, able, and effective w o r k during the last session of the Legislature. 8 The right of free speech is not confined to any one class, and the timidity shown by manufacturers, as a whole, in this respect, is one of the most lamentable features of the political situation today. 4

Dynamic personal leadership was the outstanding characteristic of the early organization. It was necessary to establish a firm group cohesion in the face of apparent lethargy on the part of present and potential group members. 1 Minute Book, Second Annual Adjourned Meeting (January 23, 1 9 1 1 ) , I, 27-29. i Ibid., Executive Committee meeting (January 23, 1911), p. 33. 3 Ibid., eleventh Executive Committee meeting, (July 19, 1913), p. 93. 4 Ibid., address by Mr. Grundy, Fifth Annual Meeting (January 12, 1914), p. 108.

28

The Pennsylvania Manufacturers' Association

T h e only

recorded example of distinct internal

dissension

occurred in 1 9 1 5 . A Mr. E d w i n Powell of the Powell Knitting C o . at the Sixth Annual Meeting, as new business at the meeting, presented " a matter of criticism of the action of certain people which was carefully listened to and referred to the Executive Committee." 1 At the meeting of the Executive Committee following the Annual Meeting, Mr. Powell presented his formal complaint. The C o m mittee requested detailed information from him and referred the matter to the "Local Council." 2 The very vagueness with which this matter was recorded would seem to signify either that the Executive Committee did not consider the matter of great importance or that they wished to underplay it. Amendments to the Articles of Agreement. At the Fourth Annual Meeting of the Association, January 13, 1 9 1 3 , amendments to the Articles of Agreement were announced. Section III was changed so that applicants for membership had to be approved not by a majority of the Executive Committee but "by the Executive Committee."3 The Executive Committee was expanded to fifteen members. Five would be considered a quorum of the Executive Committee, and seven members would be a quorum at the annual meetings. A majority of quorum of the Executive Committee could call meetings of the Association on five days' notice. 4 The election of the Executive Committee remained as before: " . . . as the meeting shall see fit." The Executive Committee of seven was re-elected by the meeting, and they (the committee) were to elect eight new members to serve until the next general election. 6 The form of organization established by these amendments, a form that has remained largely the same to the present, could be termed "republican." The members were technically able to elect 1 2

Ibid., Sixth Annual Meeting (January 1 1 , 1915), p. 168. Ibid., fourteenth Executive Committee meeting, (January 1 1 , 1915), p.

169.

3

Ibid., Fourth Annual Meeting (January 13, 1913), p. 83. * Ibid., Fourth Annual Meeting (January 13, 1913), pp. 85-86. 5 Ibid., Fourth Annual Meeting (January 13, 1913), p. 88.

29

The Development of the Organization of the P M A

any persons they chose to serve on the Executive Committee. This Committee in turn elected the officers whose authority, along with that of the Executive Committee, was virtually absolute over the organization of the Association. Executive leadership, however, remained the important organizational characteristic of the Association and M r . Grundy continued to dominate that leadership. EXPANDING

THE O R G A N I Z A T I O N

ORGANIZING

LOCAL

OF T H E

MANUFACTURER

S

ASSOCIATION: ASSOCIATIONS

At the third meeting of the Committee on July 3 1 , 1 9 1 1 , Mr. Grundy in his report stressed the necessity of expanding the organization in order to have representation f r o m and in every county in the state, " f o r the obvious reason of being better able to reach the attention of every legislator in Pennsylvania." 1 At the Third Annual Meeting of the Association in 1912, Mr. Grundy, in his report, reiterated in more specific terms the purpose of the Association. It was formed to "prevent, as far as possible, vicious, unfair, and unwarranted legislation in our State affecting the employment of labour." 2 He further stated that in order to prevent the growth of further "unharmoniousness" between the manufacturer and the state legislature, the attention of more businessmen must be called to the legislative dangers that confront them. The most economical way for them to look after their own interests was to join the Pennsylvania Manufacturers' Association. 3 Again, at the Fourth Annual Meeting in 1 9 1 3 , Mr. Grundy emphasized the importance of having as members of the Association men of prominence and influence in their communities. 4 This would greatly facilitate the work of the organization in accomplishing its "legislative" purposes by enabling the organization, through the local members of prominence, to reach the legislators. At the 1

Ibid., third Executive Committee meeting (July 3 1 , 1 9 1 1 ) , p. 36. Ibid., Third Annual Meeting, President Grundy's report, p. 46 (italics added). 2

• Ibid. 4

Ibid., Fourth Annual Meeting (January 1 3 , 1 9 1 3 ) , p. 72.

The Pennsylvania Manufacturers' Association

3°

eleventh meeting of the Executive Committee in July of 1913, after the close of the legislative session of 1913, Mr. Grundy again stressed the need for expansion in order to carry out the Association's purposes: "The usefulness of our association is dependent largely on the character and numerical strength of its members, and in the ability to reach the reasoning mind of every senator and member of the Legislature through their own constituents."1 After his experience with the 1913 General Assembly, Mr. Grundy realized that: " . . . in some counties we were without sufficient strength of making any serious impression on the lawmakers from those counties."2 By 1917, every county was represented,3 and Mr. Grundy was especially pleased because the organization then included "better county organizations."4 He emphasized particularly the expansion of the organization into the Pittsburgh area, giving the Association the affiliated membership of the Employers' Association of Pittsburgh, thereby improving the strength of the PMA in an area where its strength "had never been commensurate with the industrial importance of the district."8 Up to this point (1917), the Association had expanded by the inclusion of new members and by the affiliation with it of existing local manufacturers' or employers' associations, such as the aforementioned Pittsburgh Employers' Association and the Montgomery County Manufacturers' Association,6 and trade associations such as the Worsted Spinners' Association. In 1917, a new method of expansion was mentioned for the first time—that is, the founding, under the impetus and direction of the Pennsylvania Manufacturers' Association, of local manufacturers' associations 1

Ibid., eleventh Executive Committee meeting (July 19, 1913), p. 98. Ibid. 3 Ibid., Eighth Annual Meeting, Secretary's report (January 8 , 1 9 1 7 ) , p. 201. 4 Ibid., Mr. Grundy's report, p. 198. 6 Ibid., Eighth Annual Meeting, p. 195. • The affiliated local and trade associations will be discussed under the heading "membership" in Chapter III. 2

The Development of the Organization of the P M A

31

in every county where there were enough manufacturers to do so. Mr. Grundy's reason for this was that "the work done by local units . . . has been much more effective than when there is no such local organization in the community." 1 By 1919, a Lycoming County Manufacturers' Association had been formed by the Pennsylvania Manufacturers' Association; and the local representative of the Pennsylvania Manufacturers' Association Casualty Insurance Co. 2 was chosen as secretary of the new Association.3 For reasons not given in the Minute Book, the formation of a Mercer County Manufacturers' Association was not considered advisable at the time.4 At the same meeting (July 25, 1919) at which these matters were discussed, the advisability of including the Anthracite Coal Operators in the Manufacturers' Association of Lackawanna County (then being formed) was considered, and it was decided that: "Owing to certain local conditions it has been thought advisable to postpone for the present such affiliations."5 In his report, Secretary Shoemaker also stated that it had been proposed that a new association be formed to include several counties in north-central Pennsylvania.6 He further explained the reasons for this new policy of the Association: The value of strong county associations in Pennsylvania cannot be overestimated in weighing the effect of such associations upon public opinion, and the ease with which cooperative effort can be obtained from all manufacturers in the State through the county organizations makes us feel that county associations should be perfected in the remaining counties.' W e confidently rely upon continued cordiality on the part of our 1 Minute Book, eighteenth Executive Committee meeting (July 20, 1917), I, 209. 2 See below, p. 37. 3 Minute Book, twenty-second Executive Committee meeting, secretary's report (July 25,1919), 1,232. 4 Ibid. 6 Ibid. * Ibid., p. 233. ' Ibid, (italics added).

The Pennsylvania Manufacturers' Association membership in participating

in local associations which we may propose to

organize for their benefit and

protection.1

As for the problem of the existence in a county of several sizable cities which would include within them many diverse manufacturers, Secretary Shoemaker stated the Association's policy: ". . . we believe it may be desirable to form two or more city associations in the same county, where the interests are so diverse so as to assure the success o f such local associations." 2 ESTABLISHING A PUBLICITY BUREAU AND

POLITICAL

DEPARTMENT

The formation of the county or local associations was a means of expanding the Association, thereby strengthening it so that it could better carry out its purposes. As a further means of strengthening the Association, a Publicity Bureau was established at Harrisburg. 3 In order to promote the Association's purposes in this field, a Political Department was formed as part of the administrative organization of the Association. 4 Publications. T w o important publications were started in 1917. They are first mentioned at the meeting of the Executive Committee on July 20, 1 9 1 7 , as having been sent out during the legislative session of the General Assembly of 1917.® One was the Monthly Bulletin and the other, the Legislative Bulletin. The early Monthly Bulletin contained speeches of Mr. Grundy before various groups, information concerning particular lobbies in Harrisburg, statements of policy upon pending legislation, upon domestic politics, labor unions and their leaders, upon foreign policy, and advice to those carrying workmen's compensation insurance with the Pennsylvania 1

Ibid., p. 234 (italics added). Ibid., p. 233 (italics added). 3 Ibid., Executive Committee meeting (July 19, 1913), p. 96. 4 Ibid., Executive Committee meeting (January 10, 1916), p. 193. The formation of a "Political Department" was discussed, and it was agreed that "President Grundy should take care of forming such a department." 6 Ibid., Executive Committee meeting (July 20, 1917), p. 209. 1

The Development of the Organization of the PMA

33 1

Manufacturers' Association Casualty Insurance Company. Foreign trade and foreign competition and the necessity of a high protective tariff were mentioned in some way in almost every Monthly Bulletin. The Legislative Bulletin, published only during the legislative session of the General Assembly, listed all legislation that the leaders of the Association considered of potential importance to the Association members. In the early Bulletins, the Association leaders were quite outspoken regarding legislation which they felt must be opposed. One bill, for example, was preceded by the phrase, capitalized: "A Pernicious Bill." 2 Other bills, after a brief description of their nature, would be followed by a paragraph in which the reasons for the Association's opposition to the measure was presented. An early example of this was the comment on House Bill #357 ( I 9 I 9) which required every Pennsylvania corporation to register with the Bureau of Statistics in the Department of Labor and Industry, the amount of capitalization, bonded indebtedness, gross income, gross expenditures and how such were proportioned between labor, capital, taxes, etc., and all names and addresses of stockholders. Regarding this bill, the Legislative Bulletin of February 20, 1919, stated: "The above bill goes just a little further into the inquisitional realm and it will not be welcomed by corporations already required to make all necessary returns to the national and state governments. The burden of filling out these blanks is already a large one and should not be increased." 3 The Legislative Bulletins also listed the dates and times of committee hearings on important bills, and members were urged to attend and testify against the proposed legislation. In one of the very early Bulletins, the statement appeared: "Consult at once with your State Senator and Representative about bills in which you are interested. If you write to this office [The Association's Publicity 1 The Monthly Bulletins will be used as important sources for P M A policy upon various matters in later chapters. 2 P M A : Legislative Bulletin, No. 15, May 22, 1919, p. 3. 3 P M A : Legislative Bulletin, No. 3, February 20, 1919, p. 1.

P.M.A.-B

The Pennsylvania Manufacturers' Association

34

Bureau in Haxrisburg] concerning action, please give your reasons in detail." 1 In a later Bulletin it was stated, perhaps in answer to possible criticism f r o m within or without the Association: "The

Legislative

Bulletin has not attempted to comment or advise, but to chronicle and present each week the status of bills so that members could have a knowledge upon which to base such action as deemed best." 2 Y e t such statements as the following are found in these early Bulletins: Special attention is called to the following House bills now on the calendar. They are all indefensible at the present time. Talk them over with your members of the General Assembly, both Senators and Representatives, before it is too late. 3 The law should not be so amended at this time, if ever. Manufacturers are carrying unusual burdens n o w in the w a y of Federal taxation, abnormal wages and high cost of material. Even in normal times such a tax would be unjust as it would prevent new capital from coming into the State and drive capital out. Neighboring states with the manufacturers o f which w e compete, have no such tax. 4

Both of these publications could be termed devices of internal propaganda, or internal publicity. David B . Truman in Governmental

The

Process defines such propaganda or publicity as:

" . . . a major means, sometimes the only one that group leaders use, to develop those consistent responses of members to leaders' actions, responses that are the basis of leadership." 6 Such internal publicity is useful, not only to strengthen the position of the active minority but also as a means of promoting internal group cohesion by stressing and appealing to the common group interest. The early Monthly Bulletins with their emphasis on Mr. Grundy's speeches, beliefs, and activities served as a means of 1

P M A : Legislative P M A : Legislative P M A : Legislative 4 P M A : Legislative * Truman, op. cit.,

2

8

Bulletin, No. 4, April 6, 1 9 1 7 , p. 1. Bulletin, No. 15, June 22, 1 9 1 7 , p. 1 (italics added). Bulletin, No. 11, May 24, 1 9 1 7 , p. 1 (italics added). Bulletin, No. 7, March 20, 1 9 1 7 , p. 3 (italics added). p. 195 (italics added).

The Development of the Organization of the P M A

35

opinion leadership. It was a vehicle to present Mr. Grundy's personal views and actions directly to the P M A members. It also served to show members what was being done for them by Mr. Grundy and the Executive Committee. The Legislative Bulletin, on the other hand, seemed to be more of an appeal to their common interests and as a means of rallying members' opposition to proposed legislation. THE I N S U R A N C E

COMPANIES

At the meeting of the Executive Committee on June 25, 1915, a special subcommittee was formed for the purpose of founding a casualty insurance company that would handle workmen's compensation insurance.1 This subcommittee, consisting of Messrs. Grundy, John P. Wood, Nathan T. Folwell, John Fisher, Joseph S. Rambo, Robert Biddle, George C. Hetzel, H. W . Moore, H. H. Bosworth, Walter Linn, and Harry J . Shoemaker met on August 13, 1915, August 27, 1915, and October 25, 1915. 2 On November 3, 1915, the charter for the company was granted.9 The first annual meeting of the Pennsylvania Manufacturers' Association Casualty Insurance Company was held on January 10, 1916. 4 At this meeting Mr. Grundy, president of the new company, stated the reasons for its founding : The organization of the insurance company was prompted not so much by a desire to save money for ourselves as by our appreciation of what it would mean to the manufacturers of this State if the insurance administration of our compensation law were to pass altogether from our hands. W e have learned from sad experience that our State government at Harrisburg is not overly sympathetic or quick of hearing where our protests are concerned. The establishment of the insurance company is only 1

common

Minute Book, sixteenth Executive Committee meeting (June 2 j , 1915), 1,178. 2 Pennsylvania Manufacturers' Association Casualty Insurance Co., Minute Book, I, 1. 3 Ibid., p. 18. 4 Ibid., p. 47.

36

The Pennsylvania Manufacturers' Association prudence since the manufacturers of Pennsylvania are the most liberal taxpayers in the State and are called upon to pay most of the compensation premiums in the State. 1

The Articles of Agreement of the Pennsylvania Manufacturers' Association Fire Insurance Co. were approved on August 6, 1919, and the first annual meeting was held on January 12, 1920. 2 The president of the company was M r . Grundy and the board of directors included some of the same men who were directors of the Casualty Insurance Company, many of w h o m were also members of the Executive Committee of the Pennsylvania Manufacturers' Association. Regardless of whether there is specific written evidence of such intent, the founding of these two insurance companies served to strengthen the Association by its expansion into a definite economic field. In effect, it added another mutual interest for P M A members. These new activities could also serve to attract new members into the Association since, with both companies, stockholders had to be members of the Association, 3 and only Association members were insured for workmen's compensation benefits. 4 STRUCTURAL AND ADMINISTRATIVE RELATIONS CHANGES,

AND

1920-1953

B y 1920, the P M A had become a functioning association of some four thousand members, with representation in almost every county in the state. Since the establishment of leadership and cohesion in such an association as the P M A is not a permanent condition, it is important to observe the development and changes in the leader1 Ibid., First Annual Meeting, President Grundy's report, pp. 47-48 (italics added). 2 Pennsylvania Manufacturers' Association Fire Insurance Co., Minute Book, p. 1. 8 P M A Cas. Ins. Co., Minute Book, I, Article I, Section I of By-Laws, p. 7 1 ; and P M A Fire Ins. Co., Minute Book, I, Article I, Section I of By-Laws, p. 9. 4 Interview with Mr. Harry M . Engell, secretary of the insurance companies, October 30, 1953.

The Development of the Organization of the P M A

37

ship and in administration of the Association and how continuing group cohesion was maintained and promoted. The formation of local manufacturers' associations was intended, as has been disclosed earlier, as a means of expanding the Association. Such expansion would serve to strengthen the Association by broadening its influence throughout the state thereby making its legislative work much easier.1 In Mr. Grundy's words: "There is no Senator or Representative that our members cannot reach and talk with over every weekend, and it is largely by this very legitimate and most effective influence that we should protect ourselves from hostile legislation." 2 Successful operation of an association's services, especially if they are legislative, promotes group cohesion.3 Members will feel increasingly bound to the group or association when their common interests are effectively promoted or protected, and the position of the leadership that successfully carries out these association functions is greatly enhanced. The formation of the insurance companies, especially the Casualty Insurance Company as discussed above, served as an excellent means of expanding and strengthening the Association. Similarly, the organizational structure of the Association, i.e., the local associations and the branch offices in the state, served not only to strengthen the Association by promoting its influence, but also as a potential means of promoting the development of the insurance companies. In 1921, there were offices of the insurance companies and the Association in each metropolitan district in the state and in all important regional cities.4 The work of the Casualty Insurance Company was managed either by a special manager hired from the area by the P M A or, more generally, by the secretary of the local 1

Minute Book, I, 233. Ibid., Twelfth Annual Meeting, President Grundy's address (January 10, 1921), p. 255. 3 Truman, op. cit., pp. 2 0 - 3 5 . 4 Minute Book, Twelfth Annual Meeting (January io, 1921), I, 2 5 4 - 5 . The cities included Pittsburgh, Erie, Wilkes-Barre, York, Lancaster, Harrisburg, Norristown, Easton, Allentown, Reading, Chester, Williamsport, Beaver Falls, Warren, Ridgway, Waynesboro, Stroudsburg, and Scranton. 2

38

The Pennsylvania Manufacturers' Association

manufacturers' association affiliated with the PMA. Generally, this local association had also been formed by the P M A . 1 In two cases, the Erie Manufacturers' Association and the York Manufacturers' Association, the secretaries, Messrs. Ray Hinrod and Robert E. Gephart respectively, not only managed the local insurance work but were members of the PMA Executive Committee. In Ridgway, the insurance business was managed by the Hon. John M. Flynn of the Manufacturers' Association of Elk County and a member of the House of Representatives of Pennsylvania.2 Changes in Financial Responsibility. The first significant change in the financial responsibility of the Association occurred in 1927 with the change in the treasurership. At the meeting of the Executive Committee on February 17, 1927, it was proposed that the treasurer of the two insurance companies become treasurer of the Association. The reason given for the proposal was "to do away with duplications of accounts and unnecessary correspondence caused by the Treasurer's Accounts and bank deposits being kept in Norristown." 3 The treasurer of the Association, Joseph Rambo, one of the original members of the Association, opposed the move, but he was overruled by the majority of the Executive Committee. Rambo was replaced by Harry C. Lawrence, who acted as treasurer of the companies and the Association.4 After February 25, 1927, Rambo's name no longer appeared as a member of the Executive Committee. The consolidation of treasurerships served to centralize further the administration of the Association and to link the Association and the affiliated insurance companies more closely. At the Executive Committee meeting of September 29, 1936, new powers were given to Lawrence. As treasurer, he was 1 Ibid., 2 5 4 - 5 ; also P M A Cas. Ins. Co., Minute Book, First Annual Meeting President Grundy's report (January 1 0 , 1 9 1 6 ) , p. 48. 2 Ibid. 3 Minute Book, thirty-fifth Executive Committee meeting (February 17, 1927), I, 325. 4 Ibid., thirty-sixth Executive Committee meeting (February 25, 1927),

P- 337-

The Development of the Organization of the PMA

39

empowered to open and maintain an account in the name of the P M A and was authorized to endorse all checks.1 He was, in effect, given almost the complete financial responsibility for the Association. Lawrence had succeeded Joseph Rambo as treasurer for the Association, and was Treasurer also of the insurance companies. Before this, while Rambo officially was treasurer of the Association, Mr. Gundy had complete discretionary power over the financial affairs of the Association. While the P M A funds were kept in the Norristown bank under Rambo's name because the Association was unincorporated, the power over the use of those funds in running the Association was with Mr. Grundy. While nothing was mentioned concerning this power prior to 1918, at the nineteenth meeting of the Executive Committee on January 18, 1918, Justus H. Schwacke motioned that "the matter of compensation for the officers and employees of the Association" be left "in the hands of the President with power to act." 4 The Committee so agreed. The increasing of the powers of Mr. Lawrence over the finances of both the P M A and its insurance companies marked a trend toward more professional administration. Before, financial management had been left to Joseph Rambo and Mr. Grundy who had acted more or less as amateur managers. At the Executive Committee meeting of February 27, 1940, the Articles of Agreement were amended to increase the number of vicepresidents of the Association from three to four. Section V was amended to increase the number of the Executive Committee from fifteen to eighteen, of which five would be a quorum. It could elect the president, four vice-presidents, an assistant to the president, a treasurer, and appoint a secretary for the Association.3 The 1

Ibid., fifty-second Executive Committee meeting (September 29, 1936),

p . 430.

2 Ibid., nineteenth meeting of the Executive Committee (January 18, 1918), p. 213. 3 Ibid., fifty-sixth Executive Committee meeting (February 27, 1940), p. 470.

The Pennsylvania Manufacturers' Association

4°

Committee also voted to allow checks to be given out under the signatures of any two of the following: the chairman of the E x ecutive Committee, the president, the vice-presidents, the secretary, or the treasurer. While these changes removed financial control from the almost exclusive jurisdiction of the treasurer, such control still rested absolutely in the hands of the Executive Committee and the Association officers. At the Executive Committee meeting following the Thirtyninth Annual Meeting in 1948, it was resolved that the Association's president and vice-presidents be empowered " t o sell, assign, and transfer all shares, bonds, loans and insurance policies" belonging to the P M A and for such purposes was "authorized to make and execute all releases attested by the Secretary or Treasurer." Again, the financial powers of the Association's 1 officers were expanded in 1951. At this time, the Executive Committee voted to authorize the officers of the Association to vote the capital stock of the P M A Fire Insurance Company. 2 In 1952, one member of the Association's Board of Governors, 3 Mr. J . Lee Bausher, president of Infants Socks, Inc., of Reading, was made assistant to the treasurer, Mr. James E . Shade, and empowered to sign checks for the Association. 4 While these moves did not spread financial responsibility and control outside of the Executive Committee, or Board of Governors, they did increase the financial powers of individual board members and officers of the Association. This tended to create a "shared" or oligarchical leadership rather than to perpetuate the leadership o f one man. It is of import to observe that these later changes took place after Mr. Grundy's resignation as chairman of the Executive Committee in 1948. As further evidence of the trend toward shared leadership are the amendments to the Articles of Agreement made in 1 9 5 1 . The 1

Ibid., Executive Committee meeting (February 24, 1948), II, 27. Ibid., special meeting of Executive Committee (January 23, 1951), II, 54. 1 Formerly the Executive Committee (changed in 1951). 4 Minute Book, Board of Governors meeting (November 25, 1952), II, 74. 2

T h e Development of the Organization of the P M A

41

Executive Committee was changed to a Board of Governors. Article V was amended to read: " T h e Board of Governors shall consist of twenty-one members of the Association

[formerly

eighteen] and its treasurer and secretary, five of w h o m shall constitute a quorum. Said Board shall elect one of its members as Chairman, President, Assistant to the President, four as VicePresidents, and shall appoint a Treasurer and Secretary." 1 In addition to these changes, the Board of Governors held monthly meetings from this time on. The enlargement of the Board of Governors would seem to signify an interest on the part of the Association leaders to include more Association members in the actual directing and administering of the Association. The quorum of five provision would, of course, allow the president, the treasurer, the secretary, and two vicepresidents or another Board member to conduct the business of the Association at the monthly meetings. With this in mind, the most probable reason for the expansion of the Board of Governors becomes apparent. B y expanding the Board of Governors to include the treasurer and the secretary, both of w h o m were to be appointed, they could be included as part of the necessary quorum of five. N o doubt this would greatly facilitate the conduct of the Association's business at the monthly meetings by eliminating the necessity of calling in a great number of Board members in order to have a quorum.

Nevertheless,

these changes

made

the

Association's

management or administration, financial and otherwise, more into the pattern of a business corporation with a general policy-making board of directors and a management of "professional administrators" or "managers" who conduct most of the corporation's business. Changes in Leadership. The P M A has had four official leaders since its founding. Mr. Grundy remained president of the P M A until 1930. 1

Ibid., Forty-second Annual Meeting (February 27, 1 9 5 1 ) , II, 57 (italics added). It is noted that the vote at the meeting on these amendments was not unanimous although the opposition vote was quite small.

The Pennsylvania Manufacturers' Association

42

A t the Twenty-first Annual Meeting o f the Association, it was announced that M r . G r u n d y had resigned as president o f the Association and f r o m the Executive Committee since he had been appointed United States senator f r o m Pennsylvania. 1 J . W . Rawle, a member o f the Executive Committee, was elected president o f the Association. R a w l e remained president only until

1932.

He was succeeded by J o h n M . Flynn, and M r . Grundy became chairman o f the Executive Committee. 4 J . W . R a w l e remained on the Executive Committee until his death in 1934 when he was replaced by Henry S. B r o m l e y o f the North American Lace C o . in Philadelphia. 3 While the nominal leadership had changed, the real leader o f the Association was always M r . Grundy, and this leadership

was

exercised through the Executive Committee, the members o f which had been appointed b y M r . Grundy. This Executive Committee had, by this time, become virtually self-perpetuating. W h i l e the Articles o f Agreement provided that "the election o f the Executive Committee shall be conducted as the meeting shall see fit," such elections were held at the annual meeting by a system o f elected tellers. These were elected, sworn in, and notarized, and all nominations were sent to them in advance o f the meeting and were voted upon by secret ballot. Nominations actually could be made by Association members f o r new Executive Committee members. In practice, the former Executive Committee was always re-elected, generally unanimously, and new members, w h o were always replacements, were usually announced at meetings o f the Executive Committee and elected officially at the next annual meeting. There is no evidence of any new member having been nominated f r o m the floor o f the annual meeting. One interesting example o f this virtual self-perpetuation and M r . 1 1

387.

3

Ibid., Twenty-first Annual Meeting (February 17, 1930), p. 96. Ibid., forty-fifth Executive Committee meeting (February 28, 1933), p. Ibid., Twenty-sixth Annual Meeting (February 26, 1935), p. 417.

The Development of the Organization of the P M A

43

Grundy's continued leadership and direction was the appointment of John M. Flynn to the Executive Committee. In 1930, the Executive Committee did not include Flynn, nor Mr. Grundy who was then Senator Grundy. The 1932 Executive Committee, however, included not only Mr. Grundy but also Flynn, and a J . C. Budding and M. J . Beach were no longer listed. There is no evidence of any of this having taken place as a result of an election at an annual meeting. Flynn had obviously been chosen by Mr. Grundy to succeed J . W . Rawle and he had been appointed to the Executive Committee so that, in accordance with the Articles of Agreement, he could be elected president of the Association.1 The same method was used with Mr. Flynn's successor, G. Mason Owlett. Owlett, a lawyer, was appointed to the Executive Committee as general counsel in 1940.2 After the amendments to the Articles of Agreement discussed above (February 27, 1940), Mr. Owlett was elected a vice-president of the Association by the Executive Committee. 3 It was also at this time that the new treasurer, Mr. James E. Shade, was appointed and authorized to open an account at the Corn Exchange Bank in Philadelphia, and power given to draw checks on this account was extended to the four vicepresidents of the Association.4 At the annual meeting on February 23, 1943, Owlett spoke as president of the PMA, having been elected previously by the Executive Committee. 5 It is clear from these changes in leadership of the P M A that each new president was obviously the hand-picked choice of Mr. Grundy. It is also interesting to note that amendments were made to the Articles of 1 Ibid., p. 4. The Articles of Agreement specified that the officers of the Association be elected by the Executive Committeefrom among its members. 1 Ibid., Thirty-first Annual Meeting (February 27, 1940), p. 462. 3 Ibid., Fifty-sixth Executive Committee meeting (February 27, 1940), p. 470. The amendments increased the number of vice-presidents from three to four, apparently to make way for Owlett. 4 See above, p. 40. s At none of the preceding Executive Committee meetings is there mention of any actual election having been held at any of the meetings. The same procedure was followed with Rawle and Flynn.

The Pennsylvania Manufacturers' Association

44

A g r e e m e n t to a c c o m m o d a t e the election o f these n e w officers. T h e E x e c u t i v e C o m m i t t e e , under M r . G r u n d y ' s direction, w a s not o n l y self-perpetuating

but

apparently

always

agreed

to

select

Mr.

G r u n d y ' s hand-picked candidates f o r P M A presidency. C o l . Millard D . B r o w n was announced as chairman o f the E x e c u t i v e C o m m i t t e e at the T h i r t y - e i g h t h A n n u a l M e e t i n g February 25, 1 9 4 7 , 1 to replace M r . G r u n d y w h o retired.

on Col.

B r o w n had been a m e m b e r o f the E x e c u t i v e C o m m i t t e e and w a s chairman o f the board o f the Continental Mills o f Philadelphia and president, at that time, o f the Philadelphia Textile Institute and o f the U n i o n League C l u b o f Philadelphia. 2 External

Relationships.

T h e development o f the P M A ' s

external

relations w i t h other similar associations or institutions, political o r otherwise, o n the national level, has been s l o w bccause the leaders have regarded the development o f such external relationships as o f distinctly secondary importance. T h e first effort to e x p a n d the organization o f the P M A so that it could a c c o m m o d a t e itself to external g r o u p relations c a m e f r o m within the P M A itself in 1924. A t the meeting o f the E x e c u t i v e C o m m i t t e e o n J a n u a r y 4, 1 9 2 4 , a M r . D a n a Jones, in a letter dated J a n u a r y 2, 1924, suggested that the organization o f the Association be expanded to include a division to handle national legislative affairs. Jones further proposed that one man be selected to take o v e r the legislative w o r k and another to direct the w o r k o f the insurance companies, and that the secretary act as a general manager o f all activities. U n d e r the secretary w o u l d be three divisions: one to c o v e r w o r k that could be handled directly b y the Association through the secretaries o f the local associations (e.g., to and f r o m the local secretaries—bulletins, surveys, labor rates, f a c t o r y laws, fire insurance, etc.); the second to c o v e r w o r k pertaining to the m e m b e r s directly (e.g., bulletins, publicity, safety, legal advice, other direct services); and the third to c o v e r relations 1

Minute Book, Thirty-eighth Annual Meeting (February 25, 1947), II, 17. P M A ; Report of the Proceedings, Thirty-eighth Annual Meeting, Mr. Owlett's address, p. 15. 2

The Development of the Organization of the P M A

45

with outside associations (e.g., to and from outside associations, bulletins, conferences, National Association of Manufacturers, the National Industrial Council, etc.). 1 Mr. Grundy turned down Mr. Jones's suggested changes becausc he felt that that which had been accomplished by the Association had been done by following its then present policy. That policy— of retaining the same internal organization and by limiting its activities to state legislative matters—had been successful in that " n o legislation contrary to the interests of industry had been enacted since 1915, while in other states the reverse was the case." 2 The expansion of the organization's activities to the national legislative scene would probably not have served to promote the effectiveness or cohesiveness of the Association. In fact, if greater cohesiveness would have resulted, it would have been almost accidental. One of the most important factors producing a common interest among the Association members was the fact that all were manufacturers in Pennsylvania, and in most cases were in competition with manufacturers in other states. Consequently, much of the "legislative" activities of the Association was in trying to prevent legislation that would burden these Pennsylvania manufacturers economically, and thereby place them in an unfavorable competitive position with manufacturers in other states. The group cohesiveness would probably not have been promoted by an extension of the Association's activities to the national legislative scene for two important reasons. The first is that the members of the Association consisted solely of Pennsylvania manufacturers w h o did not even represent a very large percentage of the industrial wealth of the state. T o have been effective on the national scene, more diverse membership would have been needed and a much larger source of funds would have been required. Second, because Pennsylvania manufacturers were concerned with competition from 1

Minute Book, thirty-first Executive Committee meeting (January 4, 1924), PP- 290-93. 2 Ibid., p. 265.

The Pennsylvania Manufacturers' Association

46

other states, federal legislation would not have been o f such great importance to them because such legislation could not harmfully affect their competitive position vis-a-vis other manufacturers, since such legislation affected all manufacturers. 1 U p to 1925, the P M A had not related itself organizationally national politics or to any national business association.

4

meeting o f the Executive Committee on February 27,

to

A t the 1925,

membership in the National Industrial Council was discussed and approved. 3 The National Industrial Council, organized in 1907, is a subsidiary of the National Association of Manufacturers; it is, in fact, the "legislative and political department" o f the N A M . 4 Expansion

of the Association s Services. The final type o f organiza-

tional development to be considered is the expansion of the Association's services. B y 1920, the Legislative Bulletin and the Monthly Bulletin had been started as had the t w o insurance companies. A t the meeting o f the Executive Committee on January 4, 1924, a matter pertaining to the activities of the Association and the expansion thereof was discussed. It was proposed that the activities o f the Association should be extended and that " m o r e attention should be given to the Annual Meeting with a view to a larger attendance in order that that which the Association had done might be made k n o w n to the membership." 6 These suggestions were made by t w o members o f the Executive Committee.' Like the other services of the P M A , this would definitely be a method o f promoting group cohesion not only through promoting more interest in the Association by attracting greater attendance to 1

See Chapter 10 for a specific discussion of the PMA official attitude toward national legislation. * Mr. Grundy's individual activities on the national political scene did not directly involve the PMA. s Minute Book, thirty-second Executive Committee meeting (February 27, 1935). P-313. 4 Bonnett, op. cit., p. 372. s Minute Book, thirty-first Executive Committee meeting (January 4, 1924), p. 289. • These members were not identified by name in the minutes of the meeting.

The Development of the Organization of the PMA

47

the annual meeting, but also in using such meetings to advertise, so to speak, the successful work done by the leaders of the Association on the membership's behalf. Such a technique, as also the two PMA publications, could be considered internal propaganda or publicity. 1 In 1947, the PMA leaders voted to take over the Employers' Advisory Council to give the Association membership the benefit of its services.2 In 1949, the Executive Committee approved the establishment of the Unemployment Compensation Division in the organization of the Association.3 Expanding the Association's services for its members would seemingly serve to increase the value of the Association to its present members and possibly to attract new members because of these services. SUMMARY

The significant factors in the development of the administrative organization of the PMA from 1909 to 1953 were its leadership and its services. Its leadership remained highly centralized up to the resignation of Mr. Grundy as chairman of the Executive Committee. After that time, authority over policy and the general administering of the Association became more collective in that it was exercised by several members of the Executive Committee. This centralized leadership was apparently accepted without question by the Association members. The expansion of the Association's services increased its attractiveness to present and potential members. This was especially true of the insurance companies.

1 2 8

Truman, op. cit., p. 195. Minute Book, Executive Committee meeting (November 25, 1947), II, 24. Ibid., Executive Committee meeting(July 26, 1949), II, 45.

3 Membership and Finances EARLY

MEMBERSHIP

^ 3 e t w e e n 1909 and 1920 the membership of the Pennsylvania Manufacturers' Association increased to include 4,621 members. The individual membership numbered 2,229 and 2,392 were members by virtue of their belonging to an affiliated trade or local association, of which there were sixteen and fourteen respectively. 1 A m o n g the trade associations were the Cloth Manufacturers' Association, the Shirt Manufacturers' Association, and the Worsted Spinners Association, all of which had been members since 1 9 1 1 . 2 The Metal Manufacturers' Association of Philadelphia joined in 1 9 1 2 , 3 and the State Launderers' Association in 1913. 4 The Hosiery Manufacturers' Association, listed as an original affiliated member of the Association at the second meeting of the Association (December 7, 1909), apparently failed to materialize although the firms that would have been members of such a trade association remained or became members of the P M A . The Women's Garment Manufacturers' Association joined the P M A in 1914;® the Women's Wear Association joined in 1915 along with the Builders Exchange of Philadelphia. 8 The Philadelphia Bakers' Association joined in 1917. 7 1 Minute Book, Eleventh Annual Meeting, Secretary's report (January 12, 1920, p. 2 4 1 . 1 Ibid., Second Annual Meeting, Secretary's report (January 2 3 , 1 9 1 1 ) , p. 27. 3 Ibid., eighth Executive Committee meeting (November 1 1 , 1912), p. 68. 4 Ibid., Eleventh Executive Committee Meeting (July 19, 1 9 1 3 ) , p. 93. William F. Long, president of the Launderers' Association, was made a member of the P M A Executive Committee in 1 9 1 3 . 6 Ibid., Fifth Annual Meeting, Secretary's report (January 1 2 , 1914), p. 1 2 7 . 6 Ibid., Sixth Annual Meeting, Secretary's report (January i r , 1915), p. 162. ' Ibid., Eighth Annual Meeting, Secretary's report (January 8, 1917), p. 201.

Membership and Finances

49

B y 1920, the local associations included the Montgomery County Manufacturers' Association (1912), the Manufacturers' Association of Erie (1912), the Manufacturers' Association of Y o r k (1914), the Pittsburgh Manufacturers' Association,* the Manufacturers' Association of Beaver County (1912), the Manufacturers' Association of Delaware County (1914), the Manufacturers' Association of Lancaster County (1915), the Germantown Manufacturers' Association,* the Lycoming County Manufacturers' Association,* the Northampton

Manufacturers' Association,*

the Manufacturers'

Association of Luzerne County (1916), the Manufacturers' Association of Lackawanna County (1916), the Manufacturers' Association of Elk

County (1919),* and the Waynesboro

Manufacturers'

Association (1920). The Lehigh County Manufacturers' Association, which had been one of the original members of the P M A , was disbanded in 1 9 1 7 . 1 Increases and Withdrawals. The largest increases in membership occurred during the years 1 9 1 4 - 1 5 and 1 9 1 7 - 1 9 . An explanation for this increase, aside from the Association's organizing activities, especially in forming new local associations, might be the interest manufacturers probably had in such an association as the P M A after the legislative sessions of 1913 and 1917. 2 The largest number of withdrawals occurred in 1 9 1 6 - 1 7 , and 1 9 1 8 - 1 9 . The explanation given for the withdrawal in 1 9 1 4 - 1 5 of some eighty-six members was attributed to "failures, hard times, and going out of business." 3 Those withdrawals in 1 9 1 8 - 1 9 ,

two

hundred and thirty-one in number, consisted "principally of those who discontinued business or declined to pay their dues, and were * Indicates associations no longer functioning: T h e L y c o m i n g C o . M f g r s . Ass'n. is n o w the West Branch M f g r s . Ass'n.; the M f g r s . Ass'n. of Northampton is now the Mfgrs. Ass'n. of Monroe C o . ; and the M f g r s . Assn. of Elk C o is n o w the Mfgrs. Ass'n o f Northwestern Pennsylvania. 1

Ibid. See below, Chapters 7, 8, and 1 2 . 3 Minnie Book, Sixth Annual Meeting, Secretary's Report (January 1 9 1 5 ) , p. 162. 2

n,

50

The Pennsylvania Manufacturers' Association

mostly small concerns." 1 A further reason might have been: "It frequently happens that those connected with local and trade organizations become dissatisfied with the organizations to which they belong and in that way may discontinue their membership in this Association." 2 The withdrawals in 1919-20 were caused, the secretary believed, by some members going out of business or having been consolidated with other companies. 3 Geographic and Interest Representation. As for the representational aspects of the Association, geographically, the P M A included members from every county in Pennsylvania by 1 9 1 7 * In relation to the state industrial worth, the P M A represented in 1915 five hundred million dollars ($500,000,000) worth of Pennsylvania industry and two hundred and fifty-two thousand (252,000) workers, "more than the combined membership of all the labor unions in the state." 6 The value of the industries of the state at this time was two billion, seven hundred and fifty million dollars ($2,750,000,000); thus the Association represented about 1 8 % of this total industrial worth but over 2 5 % of the state's industrial workers.' The early membership, especially as exemplified by the Executive Committee, 7 was more completely representative of the Pennsylvania textile industry, which centered around Philadelphia and vicinity, than any other. The bulk of these and other Association members was small businesses employing under five hundred people, and generally under one hundred. The small industry generally owned and operated by the founder or his direct heirs in the small town typified, in its early years, the average member of the P M A . 1

Ibid., Tenth Annual Meeting, Secretary's report (January 13,1919), p. 222. » Ibid. * Ibid., Eleventh Annual Meeting, Secretary's report (January 12, 1920), p. 240. 4 Ibid., Eighth Annual Meeting, Secretary's report (January 8, 1917), p. 201. 5 Ibid., Sixth Annual Meeting, President Grundy's report (January 11, I9I5).PP-153-54'Ibid., p. 153. 7 See Appendix, note 1.

Membership and Finances

51 Membership Statistics

Year

Total

1920

4621

928

180

1921

5303

1017

New

Members

Members

Dropped

1922

5887

856

335 22 J

1923

6561

1062

352

1924

7158

1029

432

1925

7332

831

657

1926

7550

531

1927

7636

749 625

1928

7462

507

539 681

1929

7632

592

422

1930

7658

497

471

1931

7710

1932

7610

569 376

517 476

1933

7090

831

I35I

1934

6990

483

583

1935

7197

43°

1936

7008

547 649

1937 1938

6827

352

533

6850

478

6977

548

455 421

748

1939 1940

7003

379

1941

7014

1942

7426

478 726

1943 1944

7429

297

314 294

7326

265

368

1945 1946

7341

335 222

320 224

7957

438 606

7987 8118

352

257 322

453

310

1947 1948 1949 1950 1951 1952

7391 7605

8747 8858

1953

8816

1954

9062

353 467

172

934

335

355 430

244 472

T h e Pennsylvania Manufacturers' Association

52

MEMBERSHIP

I92O-I953

The membership statistics for the number of new members taken into the P M A and those w h o withdrew between 1920 and 1953 show certain significant facts regarding P M A membership development. First, there has been a general tendency for the number of new members taken into the P M A each year to decline. The peak year of 1924 when 1,029

n e w

members appeared on the rolls has never

been repeated, and the successive " p e a k " years, 1933 (831), 1936 (649), 1939 (548), 1942 (726), 1948 (606), and 1953 (430), demonstrate this gradual but fairly continuous decline (except for 1942). Second, on the other hand there appears also to be a general decline in the number of members that withdraw each year. From a peak in 1925 of 657, there was a great increase in withdrawals in the next and highest peak in 1933, at the height of the Depression when the P M A lost 1,351 members in a year, 1932-33. The succeeding peak years, 1936 (748), 1941 (467), 1944 (368), 1949 (322), and 1953 (472), show a steady decline, at least until 1953. It is of interest to note that the number of withdrawals for 1953 is the highest since the recession year of 1936-37. This might explain w h y Mr. Seeton stressed the "selling" of the P M A to more new members in his address to the organization members in 1953. 1 Third, there have been six years (1932, 1933, 1934, 1936, 1937, 1953) when the number of members that withdrew from the P M A exceeded the number of new members. Most of these years were during the early thirties when depressed economic conditions caused many businesses to fail and when f e w new businesses were started. The years 1936 and 1937 saw an economic recession which could explain the loss in membership. That this situation did not repeat itself until 1953 is important. Since economic conditions for the year 1952-53 were good, the reasons for so many withdrawals in relation to new members must be found elsewhere. Again this situa1

See below, pp. 7 1 - 7 5 in Chapter 4.

Membership and Finances

53

tion may explain Mr. Seeton's speech to the organization members in 1953. He stressed the fact that the P M A faced competition from other associations w h o were appealing to businessmen and manufacturers. The statistics on total membership show additional facts regarding the development of P M A membership. First, a declinc in total membership first occurred in 1928 (net loss: 164 members). This may have prompted Mr. Grundy to emphasize, at the Twentieth Annual Meeting in 1929, the need for increasing the size of the local associations and to announce that an official of the P M A would be appointed " t o visit the different localities and to organize new associations and to strengthen existing ones." 1 N o mention had been made of expanding the Association through the formation of new local manufacturers' associations since 1919. Total membership declined gradually during the Depression period from 1931 to 1934 and then declined again during the recession period of 1936 and 1937. Since 1939, however, there has been a slow but fairly steady increase in total membership. Since 1939, each year has shown an increase in total membership, except for 1944 (a decrease from 1943 of 103) and 1953 (a decline of 42). Second, since 1920, there has been almost a doubling in the total membership of the P M A , from 4,621 in 1920 to 8,816 in 1953. AMENDMENTS

TO A R T I C L E S

OF A G R E E M E N T ,

I94I

In 1949 important amendments were made to the Articles of Agreement regarding membership. Section III was amended to allow in Class I membership not only individuals, firms, and corporations directly engaged in manufacturing in Pennsylvania but also "such others as may be approved by the Executive Committee." 2 It 1 Minute Book, Twentieth Annual Meeting, M r . Grundy's address (February 18, 1929), I, 359. 2 Ibid., special meeting of a subcommittee of the Executive Committee (January 29, 1949), II, 30.

The Pennsylvania Manufacturers' Association

54

was also provided that all members of trade or local associations that are affiliated with the P M A shall automatically become members themselves of the PMA. Section IV was amended to require approval for membership only from the secretary of the Association (and upon payment of the required dues) instead of by the Executive Committee as formerly stipulated.1 These amendments allowed the PMA to accept as members trade associations of industries that could not be classified as being "directly engaged in manufacturing." Such trade associations as the Anthracite Institute and the Associated Petroleum Industries of Pennsylvania thus appeared on the PMA rolls after 1949.* These amendments also brought the parent association, the PMA, closer to those members who belonged to the PMA's local manufacturers' associations by giving them membership in the P M A itself. The amendment to Section IV of the Articles of Agreement significantly gave the secretary of the Association, a professional administrator, the power of approval of new members, thereby removing it from the Board of Governors or Executive Committee. N o doubt this was done to facilitate greater speed and efficiency in accepting new members. Since the PMA secretary was in charge of obtaining new members, it would certainly expedite matters by making his sole approval sufficient for acceptance. It is significant, however, that this power was removed from the Board of Governors of the PMA and given to a professional administrator and manager. It was another step in the PMA's becoming managed more and more in the manner of a modern business corporation. PRESENT

MEMBERSHIP

T w o characteristics of PMA membership have continued since its founding. First, it has remained primarily an association of small 1

Ibid. * Special mimeograph from P M A files listing local manufacturers' associations. See Appendix, note 2.

Membership and Finances

55

businessmen. From the beginning, the small manufacturer, employing less than one hundred workers, has always been in the majority in the PMA. Second, the textile industry has always been well represented, if not predominant in the PMA. The breweries, metal and paper industries, however, have always been represented, and the large steel producers such as the United States Steel Co. and Bethlehem Steel Co. are recent members. The glass and pottery industries have always been associated with the PMA. With the exception of the steel producers, most of these industries have tended to be made up of a large number of small producers. These businesses have also tended to be highly competitive and to be affected especially by foreign competition. Again, with the exception of steel, none of these enterprises were in expanding fields of industrial production. The policy of the Association today is to have a balanced representation of Pennsylvania manufacturing industries and to maintain a balance of representation on the Board of Governors. Admittedly, the Association has insufficient representation from the oil industry, the utilities, and the food industry of Pennsylvania.1 It should be noted here also that the Sun Oil Company and subsidiaries are members of the PMA, but none of the Mellon family enterprises (e.g., Gulf Oil or Alcoa) are members. The Association is interested in expanding its membership although there would probably be very few local associations formed in the future. Only two areas are likely to see the formation of a local manufacturers' association under the aegis of the P M A : Bucks County (because of the new United States Steel plant) and Philadelphia.8 There are two significant aspects to the post-World War II expansion of PMA membership. First, larger corporations became members, and second, the representation was expanded to include the more dynamic enterprises such as steel, chemicals, and machinery. The membership of the Board of Governors reflects this 1 2

Personal interview with Mr. John H. Seeton, October 30, 19J3. Ibid,

The Pennsylvania Manufacturers' Association

56

change. In 1920, the Board consisted mostly of men engaged in the textile business. In 1954, the Board, while chaired by a textile manufacturer, included such men as F. Otto Haas, chemical manufacturer (Rohm and Haas); H. Thomas Hallowell, Jr., steel manufacturer (Standard Pressed Steel Co.); and Willard F. Rockwell machinery manufacturer (Rockwell Manufacturing Co.). 1 The trade associations also reflcct this extension of the P M A into the newer industrial fields. 2 Some of the more recent members include The Iron League of Philadelphia and Vicinity (joined in 1950), The Associated Petroleum Industries of Pennsylvania (joined 1952), and the Steel Boiler Institute, Inc. (joined 1953). It appears that some of these newer, larger concerns joined because of the P M A ' s new services: the Employers' Advisory Division and the Unemployment Compensation Division. Others became P M A members because of the personal influence of either Mr. Seeton or Mason Owlett. 3 In 1949, a statistical breakdown of the membership of the Association was made prior to the raising of the dues. In the memo presented to the Executive Committee, Mr. Seeton, the secretary of the Association stated: " W e believe that the middle-sized and large members gain the most from our services [Mr. Seeton was not particularly referring to 'legislative' services here] and, therefore, should pay their share." 4 The membership as of November 1 1 , 1949, was 8,538. There were 4,192 direct members, constituting 49.10 per cent of the total, 1,705 members from local manufacturers' associations (19.97 per cent), and 1,300 members from the trade associations (15.22 per cent). There were some 1,341 members through direct members 1

For complete list of Board members, see Appendix, note 3. For complete list of trade associations, see Appendix, note 4. 3 Personal interview with G. Mason Owlett, October 1 9 , 1 9 5 3 . The United States Steel Corporation's membership was due to Owlett's personal influence. See Appendix, note 5. 4 Memo (mimeographed) from John H. Seeton, secretary of the P M A to all Executive Committee members, p. 1. 2

Membership and Finances

57

(officers of businesses that had direct memberships) w h o pay no dues.1 O f the direct members, 2,868 or 68.4 per cent employed $0 people or less, 541 members or 12.9 per cent employed between 50 and 100 people, 662 members or 15.7 per cent employed between 100 and 500 people, 72 members or 1.7 per cent employed 500 to 1,000 people, 32 members or .7 per cent employed 1,000 to 2,000 people, 7 members or .16 per cent employed 2,000 to 3,000 people, and 12 members or .28 per cent employed over 3,000 people. 2 Although the exact present figures are unavailable, the percentages have not fluctuated a great deal in all probability although the rise in dues from 1950 (when the P M A increased its dues) to 1953 would signify more of an increase in general employment (since dues are based upon the number of employees) rather than any great increase in members that could be called medium or large businesses. While large and medium-sized corporations have become P M A members, numerically the small businessman is still dominant in the P M A . It is this small businessman w h o has in the past paid the bulk of the dues to the P M A which probably prompted Mr. Seeton's remark about the middle and large-sized members not paying their share. The increase in dues does have the effect o f heightening the importance, financially,

o f these middle-sized and large members to

the P M A . FINANCES

The P M A receives now and always has received its income from the annual dues and from investments made with past dues' income. Originally the dues were calculated as ten cents per employee, but the new increase put the rate at fifteen. The minimum was $5.00, now $10.00 per member yearly and the maximum was $300, now $500 yearly. The trade and local associations paid dues agreed upon by them and the P M A . These trade and local associations received dues from their o w n members according to their own separate dues' 1 2

Ibid., p. 2. Ibid.

The Pennsylvania Manufacturers' Association

58

schedules. In the case of the local associations, membership dues are considerably higher than those of the PMA. 1 In fact, the dues of the P M A are quite below the average dues charged by state manufacturers' associations.2 Dues' income rose from $4,059.50® in 1 9 1 1 to over $45,000* in 1926. This reflected not only an increase in membership but also an increase in the number of employees. The dues dropped during the thirties (1932—$35,000) reflecting a loss of employees as well as a loss of members. It was not until 1943 that the dues again reached amounts comparable to those received in the late twenties. In 1953, with the increase in effect, dues totaled $100,269.71. 5 During the thirties, disbursements, the cost of operating the Association, were frequendy higher than the dues collected. Today, the amount of disbursements is about the same as it was during the thirties, amounting to less than half of the present dues.* SUMMARY

While the PMA's membership has grown, along with its dues and cost of operations, its membership still possesses certain characteristics and has acquired some new ones. Its members continue to consist mostly of the small businessman who has under one hundred employees and it is still he who pays a sizable part of the operating bill for the PMA. Nevertheless, the PMA leaders have shown an increased interest in obtaining larger corporations and more middle-sized businesses as PMA members. It is these members who apparendy benefit most from the PMA services and it is also these members that represent the dynamic industries in the state and nation, as well as considerable financial power. 1

See Appendix, note 6. The average noted by Mr. Seeton in the above-mentioned memo on dues, for 30 associations: $25.00 yearly minimum and $600.00 yearly maximum. 3 Minute Book, Executive Committee meeting (September 5, 1911), I, 42. 4 Ibid., Eighteenth Annual Meeting (February 21, 1927), I, 330. 6 Ibid., Forty-fourth Annual Meeting (February 24, 1953), I, 80. • Salaries of the top P M A officers are not listed in the Minute Books and thus are not part of the total disbursements. See Appendix, note 7. 2

4 The PMA Today THE

ORGANIZATION:

CORPORATE

MANAGEMENT

AND

LEADERSHIP

The

organization o f the P M A remains today largely as it was

founded. T h e administration o f the organization was placed in the hands o f the small Executive Committee of seven members which has n o w been expanded into the Board of Governors o f twenty-one. Practice over the years has been for all policy-making o f the Association to be made and carried out by a very small number o f men, namely, those on the Executive Committee. A s the Association became more firmly established, the actual running o f the organization was turned over to men w h o were not manufacturers. T o d a y the actual business o f the Association, in other words, the administering o f the organization, is done by men w h o might be termed "professional managers." T h e y are men whose j o b it is to administer or manage an organization. Mr. John H. Seeton, for example, the secretary o f the P M A , is not a manufacturer, but a professional administrator. He is, in effect, the general manager o f the organization o f the Association. He keeps in close contact with the affiliated local and trade associations and handles all membership matters, especially the obtaining o f new members. 1 Others today in charge o f administering the organization o f the Association w o u l d include the treasurer, Mr. James E. Shade, and M r . Thomas P. O ' N e i l w h o is in charge o f public relations and the legislative activities o f the Association. Mr. O ' N e i l was formerly the political editor o f The Philadelphia Evening Bulletin.2

In overall

charge o f administration and policy-making is the Association 1 2

Personal interview with Mr. Seeton, October 30, 1953. Personal interview with Mr. Thomas P. O ' N e i l , October 30, 1953.

6o

The Pennsylvania Manufacturers' Association

president, formerly G. Mason Owlett, and presently Mr. James Malone, Jr. The P M A , thus, while not a business corporation, has the centralized control characteristic of a corporate organization. In that there are yearly elections for the Board of Governors held at the annual meetings, and since members participate in policy-making through this Board of Governors—as their representatives—-which elects the officers of the P M A , the Association's formal structure has certain qualities of the "democratic mold." 1 David Truman in The Governmental Process noted that it was characteristic of most groups such as the P M A to be organized formally along "democratic" lines. They also employed such devices as the "periodic election of key officials, broad participation by the membership in the group's policy-making, either directly or through a system of elected representatives, written constitutions," and less frequently, the referendum. There is certainly no referendum used by the P M A but members are encouraged to inform the officials of the Association of their views on certain legislative matters called to their attention through the Legislative

Bulletin.

The "democratic mold," minus the referendum, is present, but, within the mold, the actual managing of the P M A is more akin to that of a corporation than that of a democratic government. Authority is centralized and professionalized, and the elections at the annual meetings—as with those held by corporations—take more the form of a ratification by the members of past and probable P M A policy. In addition to its corporate structure, the other significant aspect of the Association's organization is its leadership. Much of the Association's work has been guided by one man, Mr. Grundy, its founder, to whom in the early years was delegated most of the administrative and all of the legislative work of the Association. The administrative work was turned over to others after his resigna1

Truman, op. cit., p. 129.

The PMA Today

61

tion in 1930. W h i l e much o f the legislative w o r k was no longer personally carried on by him after that time, the men w h o followed him as presidents o f the Association and, undoubtedly, most o f the members themselves still regard him as mentor and guide on all important policy matters. 1 As with industrial corporations, the president o f the Association formulates and conducts the policies o f the Association with the advice and consent of the Executive Committee or the B o a r d o f Governors. 2 Since the P M A is not a business corporation f r o m which the members have a specific economic benefit, such as a dividend, but an association that is a political interest group, a different type o f leadership must be exerted by the president of such an association. It is not enough that he formulate and carry out satisfactory and successful policies or that he be a good administrator. He must primarily

promote

cohesiveness

among

the

members

of

the

Association. In other words, he must hold the Association together and promote that willing following among the members that denotes successful leadership. THE P M A ' s

SERVICES

Publications—the Monthly Bulletins and the Legislative Bulletins. T h e Monthly Bulletins,

started in 1 9 1 7 under the editorship o f Walter

Linn, a publicist, have appeared monthly since that time. These Bulletins frequendy reflected the business philosophy o f Mr. Grundy and have, in general, presented to the members o f the Association the leaders' views on business in general, labor unions, national politics, foreign policy, and especially foreign trade and the protective tariff. Often, the Bulletins contained explanations o f the Association's position on certain legislation pending in the General Assembly. During the N e w Deal period, these Bulletins were devoted almost 1

Personal interview with G. Mason Owlett, December 13, 1953. Personal interviews with Mr. Thomas P. O'Neil and G. Mason Owlett, December 17, 1953. 2

62

The Pennsylvania Manufacturers' Association

solely to the explanation of individual national and state legislation acts that would especially effect manufacturers. Beginning with the presidency of G. Mason Owlett and the Second World War and the conclusion of most of the N e w Deal legislation, the Bulletins devoted much space to sharp criticism of N e w Deal policies. The postwar period brought a revived interest in the tariff and a call to businessmen to interest themselves actively in politics in order to survive. 1 These Monthly Bulletins may justifiably be termed a vehicle for internal publicity as they were started as part of the Publicity Bureau of the Association. Regarding the advisability of establishing such a Bureau, Mr. Grundy stated: We should consider the matter of taking the public into our confidence, in other words, to cater a little to newspaper publicity by occasionally permitting to be published some advance practice adopted by some of our manufacturers showing the interest we have in the welfare of our employees, this by way of contrast to the false and scurrilous articles that have, in the recent past, been so numerously published against the manufacturers whereby we were put in a false light before the public.2 The material in the Bulletins is of such a nature as to "develop those consistent responses to leaders' actions" that are the foundation of leadership." There is, however, no evidence of the necessary intent to persuade as has been emphasized as the key factor in a recent definition of propaganda: "Propaganda is any attempt to persuade persons to accept a certain point of view or to take a certain action. The genesis of propaganda is intent."4 At best, the only intent that might be surmised is to reinforce certain beliefs and attitudes that are ostensibly the basis for the actions taken by P M A leaders. The Legislative Bulletins, since 1917, have been published during 1

Monthly Bulletin, June, 1945, p. 1. Minute Book, Executive Committee meeting, President Grundy's report (July 19,1913).!. 98-99. * Truman, op. cit., p. 195. 1 Lincoln Harter and John Sullivan, Propaganda Handbook (Philadelphia: Twentieth Century Co., 1953), p. 1. 2

The P M A Today

63

each legislative session of the Pennsylvania General Assembly. Perhaps the most significant change that has taken place with the Legislative Bulletins is the elimination of such vehement comments as evidenced in the statements quoted above in Chapter II. In fact, there has been a gradual elimination of specific comments in the Legislative Bulletins that would signify definite approval or disapproval of proposed legislation. The fact that a bill is mentioned in the Bulletin signifies that the P M A has taken an interest in it—and this "interest" is usually negative. The

Employer's

Advisory

Division.

The

Employer's

Advisory

Division became a part of the P M A ' s services on November 25, 1947, when the Association voted to absorb the Employer's Advisory Council. 1 This Council had been formed in 1945 by Henry A . Reninger, a manufacturer and a member of the Executive Committee of the Association, as an aid to employers w h o were involved in labor disputes that were being heard before regional War Labor Boards. They supplied employers with "factual information" and "advisory assistance." 2 Although the Council was supported entirely by voluntary contributions, the P M A , "having been instrumental in organizing and conducting the Employer's Advisory Council," contributed very generously to its financial upkeep. 3 Even these contributions were apparently insufficient to maintain the Council, because, when it was absorbed by the P M A , it was on the verge of ceasing to function owing to lack of sufficient financial support. 4 The Advisory Council supplies P M A members with all necessary advice regarding labor relations f r o m the time the unionization occurs to the making of a contract with the union. Individual contracts are analyzed and copies of all members' contracts are kept on 1

Minute Book, Executive Committee meeting (November 25, 1917), II, 23. Personal interview with Mr. John H. Seeton, October 30, 1953. s Minute Book, Executive Committee meeting (May 27, 1947), II, 20. The Association contributed $2,000 in 1946 (see p. 15 of Minute Book) and $3,000 in 1947 (see p. 20 of Minute Book). * Ibid., Executive Committee meeting (November 25 1947), II, 23. 2

64

T h e Pennsylvania Manufacturers' Association

file, thereby enabling the Advisory Council to make comparisons that would be impossible for the individual employer. The Advisory Council is also able to conduct and publish surveys on such matters as unskilled labor wage rates and fringe practices (both done in 1951). 1 Information regarding arbitrators in a certain area is supplied, based upon their answers to a questionnaire sent out to them and upon the opinions of employers who have used their services. 2 The Advisory Division also analyzes all federal and state laws effecting labor, keeping the Association members informed of all recent government and court rulings concerning labor laws. 3 Important liaison work is carried on by the Advisory Division with governmental agencies and other employer groups. The Advisory Division became affiliated in 1950 with the Philadelphia small business liaison group of procurement agencies of the federal government and has submitted statements before congressional committees regarding proposed legislation. 4 The Advisory Division is directed by Dr. Earl L. Knight and Mrs. Katherine G. Parsons. Dr. Knight, a former professor of economics at Lehigh University, has served as an economist for the National W a r Labor Board and as consultant for the industry members of the National Wage Stabilization Board. 5 Mrs. Parsons, a former attorney for the War Labor Board in Washington, served "on loan" f r o m the P M A as technical assistant to the industry members of the National Wage Stabilization Board in Washington in 1951. 9 The Unemployment Compensation Division. The formation of the Unemployment Compensation Division, which was first discussed at the Executive Committee meeting of June 30, 1949, 7 was approved P M A : Report of the Proceedings, Forty-third Annual M e e t i n g (February 26, 1952), p. 37. 2 Personal interview w i t h M r , J o h n H . Seeton, O c t o b e r 30, 1953. 8 For examples of releases of the Advisory Division, see A p p e n d i x , n o t e 1. 1 P M A : Report of Proceedings, Forty-second A n n u a l M e e t i n g (February 27, 1951). P- 355 Ibid., Forty-third Annual Meeting (February 26, 1952), p. 37. • Ibid. 7 Minute Book, Executive C o m m i t t e e meeting (June 30, 1949), II, 35. 1

The P M A Today

65

at the Executive Committee meeting o f J u l y 26, 1949. 1 In formally announcing its formation, President O w l e t t stated its purpose and function : The Pennsylvania Unemployment Compensation Law is progressively becoming more complex. While providing a more equitable basis for determining contribution rates, the 1949 amendments to the law make it more important than ever that employers be thoroughly familiar with the provisions of the law in order to protect their interests. T o this end, the Association is organizing an Unemployment C o m pensation Division, the function of which will be to prepare and distribute to employers a series of bulletins advising of and explaining : 1. Amendments to the Pennsylvania Unemployment Compensation Law. 2. Changes in the rules and regulations of the Bureau of E m p l o y ment and Unemployment Compensation. 3. Policy decisions, new forms, and instructions issued by the Bureau of Employ ment and Unemployment. 4. Important decisions of the Unemployment Compensation Board of Review and of the courts relating to the Pennsylvania Unemployment Compensation Law. 5. Other information of which an employer should have knowledge in order to protect his interests. The Association, of course, will continue to follow any proposed legislation relating to Unemployment Compensation and to sponsor such legislation as may be in the interests of its members.2 Since its formation, the Unemployment Compensation Division has issued over ten releases on developments in unemployment compensation, 3 and has actively participated with other interested groups in successfully sponsoring amendments to the Pennsylvania U n e m p l o y m e n t Compensation L a w . 4 The Insurance 1

Companies.

T h e P M A Casualty Insurance C o m p a n y

Ibid., Executive Committee meeting (July 26, 1949), II, 45. P M A : Report of the Proceedings, Forty-first Annual Meeting (February 28, 1950), p. 30 (italics added). 3 For examples of Division's releases, see Appendix, note 2. 4 For fuller discussion, see Chapter 9. a

P.M.A.-C

66

The Pennsylvania Manufacturers' Association

began business on December 20, 1915. 1 The company was chartered as a stock participating company with capital stock valued at $250,000 and a subscribed surplus of $125,000. Since the stock dividend was fixed at 6 per cent of the value of the initial capital investment, the stockholders, while guaranteed an annual return, had no opportunity to share in any of the distributed profits. Thus these could be distributed to the policyholders in much the same manner as a mutual company, thereby enhancing the attractiveness of the Casualty Company's insurance policies. The capital was increased in 1936 to $300,000 by the sale of additional stock (par $100) at $ 1 5 0 per share2 and again in 1948 to $700,000, pardy by the declaration of a stock dividend of 50 per cent and partly by issuing 3,000 shares of new stock at $100 par, all of which was purchased by the then current stockholders.8 Directors are officially elected by the stockholders, who must be P M A members, and only stockholders or members of firms or officers of corporations holding stock may serve as directors. Company officers are elected by the Board of Directors.4 Actually, the officials of the P M A direct the two companies. The PMA's Board of Governors is the board of directors of the insurance companies and most of the officers are the same. Harry M. Engell is secretary of the two insurance companies but holds no position in the P M A itself.5 James E. Shade is treasurer for both the P M A and the insurance companies, and Col. Millard D. Brown held until his death, the position of chairman of the board of both the P M A and the insurance companies. The insurance companies therefore are controlled by the Association through interlocking directorships. At the lower levels, the organization of the insurance companies is completely interlocked Owlett, op. cit., p. 19. P M A Cas. Ins. Co., Minute Book, First Annual Meeting (January 10, 1916), p. 48. 3 P.M. A . : Report of the Proceedings, Fortieth Annual Meeting (February 22, 1949). P- 254 P M A Cas. Ins. Co., Minute Book, By-Laws, pp. 7 1 - 7 5 . ' Personal interviews with Mr. Thomas P. O'Ncil and G. Mason Owlett, December 1 7 , 1 9 5 3 . 1

2

The P M A Today

67

with the Association's organization. In each regional office of the Association1 is a complete insurance office that is headed in all but two by the secretary of the local manufacturers' association affiliated with the PMA. 2 This organizational arrangement greatly reduces the cost of the insurance companies by eliminating the payment of brokerage fees or commissions to agents. All insurance is secured by PMA regional representatives, a policy established early in the life of the Casualty Company by Mr. Grundy. 3 The PMA Fire Insurance Company was chartered on August 6, 1919. It has the same board of directors and officers as the Association itself and the Casualty Insurance Company. The Fire Insurance Company was capitalized originally at $100,000 with stock selling for $100 par4 with a 6 per cent dividend. This was increased to $300,000 in 1948 with the issuance of 2,000 shares of new stock (par $100) which was "distributed to the stockholders of record through their exercise of preemptive rights."5 The Casualty Insurance Company issues policies covering workmen's compensation, automobile liability, and contractors' contingent liability,6 and the Fire Insurance Company covers fire and theft on automobiles.7 While the largest number of policies issued by the Casualty Insurance Company is automobile insurance, the largest amount in premiums is obtained from workmen's compensation insurance policies. There are about six to seven thousand policies out covering workmen's compensation, and these policies are limited to P M A members.8 Auto (some 30,000 1

See Appendix, note 3 for list of offices. Interview with M r . John H. Seeton, October 30, 1 9 5 3 . 3 P M A Cas. Ins. C o . , Minute Book, meeting of Organizing C o m m i t t e e o f P M A (December 16, 1 9 1 5 ) , p. 35. M r . G r u n d y stated that it was agreed, " w h e r e v e r practicable, the Secretaries of the local associations are to assist in the matter of getting insurance f r o m our members." 4 P M A Fire Ins. C o . , Minute Book, p. 2. 6 P M A : Report of the Proceedings, Fortieth Annual Meeting (February 22, 1949), p. 29. 6 P M A Cas. Ins. C o . , Minute Book, p. 86. 7-8 p e r s o n a l interview with Harry Engell, secretary of the insurance 2

companies, October 3 0 , 1 9 5 3 .

68

The Pennsylvania Manufacturers' Association

policies) and other insurance may be obtained by non-members. 1 The insurance companies have several effects upon the Association as a political interest group. They serve to increase the Association's services especially in the line of workmen's compensation insurance where only P M A members may be insured by the Casualty Company. This situation gives the insured members several advantages over the self-insurers or those insured by other companies. In the first place, all rates of compensation and premium rates are uniform as they are prescribed by the state, but the jointstock nature of the P M A insurance companies enables them to pay dividends to their policyholders which indirectly act to give policyholders the advantage of lower premiums. In 1952, for example, 28 per cent of the earned premiums of the Casualty Company were returned in dividends to the policyholders, and about 41 per cent were turned back in policyholder dividends by the Fire Insurance Company. 2 The second advantage is the fact that since the insurance companies, especially the Casualty Company, are, in reality, subsidiaries of the Association, it is more likely that workmen's compensation rates will be kept down, or at least will fluctuate according to the political strength and success of the Association in influencing the policies and legislation of the state government. Another important effect these companies have upon the Association is to give the P M A , as an Association that to all intents and purposes runs and controls an economic enterprise, a specific economic stake in certain legislation. Its leaders would be doubly concerned with economic legislation—«specially that pertaining to workmen's compensation—not only to protect its members' interests but to guard those of its insurance companies. The result of these "effects" will be seen in the position the P M A has and does take on specific legislation, especially in the field of workmen's compensation, which will be discussed in Chapter 7. 1

Ibid. P M A : Report of the Proceedings, Forty-second Annual Meeting (February 27, 1951). PP- 40-4I2

69

The P M A Today

A third effect is m o r e in the nature o f a potential advantage to an association as the P M A w h i c h — i n D a v i d T r u m a n ' s terms—is a political interest g r o u p . 1 As an important aide to cohesion in the Association by increasing its services and thus its value to its m e m bers, the effect o f the insurance companies is obvious. T h e r e is, h o w e v e r , the advantage o f having the insurance companies as a potential instrument f o r the P M A leadership to use as a bargaining w e a p o n to promote agreement a m o n g its members on political activities through the familiar practice o f reciprocal favors. In other words, a company insured b y the P M A m a y have a particularly difficult insurance settlement problem. T h e P M A Casualty Insurance C o m p a n y could offer to settle the problem to help out the c o m p a n y in question. In return f o r this f a v o r , the P M A could expect the owners of the concern to assist them, financially or otherwise, in their political or legislative w o r k . Finally, the insurance companies provide the P M A with a certain amount of financial strength. T h e P M A itself operates on a c o m paratively small budget f o r an association o f its size and importance. 2 Actually, it operates and manages t w o large companies

whose

budgets run into the millions of dollars annually.

THE PMA AND THE NAM T h e P M A is related, organizationally, to the N A M through its membership in the N A M adjunct, the National Industrial Council. 3 T h e P M A is also a m e m b e r o f the N A M ' s Industrial Health and Safety C o m m i t t e e and the P M A ' s representative, M r . J o h n

M.

Seeton, is chairman o f the N A M ' s Subcommittee on Accident Prevention. 4 T h e P M A represents the N I C on the A d v i s o r y Council on Federal Reports, " w h o s e function is to advise the of

the B u d g e t 1

in

simplifying

and

improving

or

Bureau

eliminating

See Chapter 1 and Truman, op. cit., pp. 33, 37. See Chapter 3. 3 P M A : Report of the Proceedings, Forty-third Annual Meeting (February 26, 1952), p. 38. 4 Minute Book, Forty-fourth Annual Meeting (February 24, 1953), II, 78. 2

70

T h e Pennsylvania Manufacturers' Association

questionnaires and reporting procedures o f the federal agencies." 1 T h e organizational relationship the P M A

maintains with the

N A M provides the means by w h i c h the P M A takes an active stand on national legislation. Since the National Industrial Council handles the "legislative" activities o f the N A M , it is appropriate that the P M A should play an active role on the various co-ordinating c o m mittees o f the Council. 2 T h e N A M has been desirous o f closer co-operation with the P M A . A t the E x e c u t i v e C o m m i t t e e meeting o f October 17, 1950, Frederick H . Klein, president o f O r r and S e m b o w e r , Inc.

of

Reading, Pennsylvania, 3 requested that the P M A appoint a special committee to meet with an N A M committee to " i n f o r m it o f its thinking and plans on various issues, and to i n f o r m the N A M c o m mittee h o w a state manufacturers' association can better co-operate with N A M and h o w N A M can better co-operate with a state manufacturers'

association."*

The

Executive

Committee

agreed

to

appoint a special committee to consider the nature o f the facts and issues " w i t h which the P M A should publicly take a stand with the NAM."5 W h i l e m a n y P M A members are also members o f the N A M , it does not really represent a competitive interest group. If anything, the loyalties o f those w h o are members o f both associations m a y be stronger to the P M A because o f its localized nature. This w o u l d seem to make the P M A ' s activities o f m o r e specific and thus i m m e 1 P M A : Report of the Proceedings, Forty-third Annual Meeting (February 28, 1952). P- 38- See Appendix, note 4, for more specific information on P M A and N I C committees. 3 Minute Book, op. cit., Executive Committee meeting (October 1 7 , 1950), II, 52 (italics added). 1 M r . Klein was a member of the board of directors of both the M a n u f a c turers' Association of Berks C o u n t y , a P M A affiliate, and of the N A M , the regional vice-president o f the N A M and chairman of the N A M ' s InterAssociation Relations Advisory Committee, whose function is to co-ordinate the w o r k of the N A M with the N I C groups. 5 Minute Book, op. cit., II, 52. Sec Chapter 10 as to legislation upon which P M A joins N A M in publicly taking a stand.

The P M A Today

71

diate import to Pennsylvania manufacturers than w o u l d those o f NAM. THE P E N N S Y L V A N I A SERVICE

MANUFACTURERS'

ORGANIZATION

AND

A

ASSOCIATION:

A

PROMOTIONAL

ORGANIZATION

In 1950, M r . J o h n H . Seeton, secretary o f the P M A , in an address to the members and officers o f the organization of the Association, stressed the " s e l l i n g " o f the Association as a service organization. Noting that M r . G r u n d y "realized the need f o r a State m a n u f a c turers' association to act as a voice as a spokesman f o r i n d u s t r y , " 1 M r . Secton went on to stress the g r o w t h o f the Association and the expansion o f its activities and services. H e emphasized the trade and local associations—"We realize that our strength lies with our affiliated local and trade associations."—and the P M A ' s

continuing

interest in expanding their organization to include m o r e o f the latter: " . . . w e are presently driving to have active organizations of this type [trade associations] affiliate with P M A w h i c h will mean more members, more manufacturers thinking the way we think, the way we believe, the way we have learned to believe through our close association with

PMA."2

In commenting on the successful development o f the P M A , M r . Seeton gave full credit f o r this to the "progressive and far-sighted leadership" o f the P M A w h i c h not only created the P M A ' s services, especially its insurance companies, but also created a "political organization to insure responsible and fair legislation." 3 M r . Seeton concluded b y calling upon the organization m e m bers of the association to " s e l l " the Association b y stressing the services it provides. Greater membership in the Association means not only greater insurance sales f o r the affiliated companies but 1 Address b y M r . J o h n H . Seeton b e f o r e the Association, 1 9 5 0 ( m i m e o graph), p. 1. a Ibid., p. 3 (italics added). 3 Ibid., p. 2.

The Pennsylvania Manufacturers' Association

72

greater strength for the Association: " W e k n o w that many employers do not k n o w of the services of your Employers' Advisory Division. Tell them! Y o u are missing a sound bet if you do not inform them. If a prospect uses your Employers' Advisory Division, w e follow-up and usually obtain a membership. This, as stated before, means more members, more employers, more people thinking the way we think, the way Pennsylvania

Manufacturers' Association

1

thinksI"

What began as an association formed under the leadership of Mr. Grundy, businessman and politician, has now become an established entity. It now has a well-functioning organization

employing

people w h o are not manufacturers but w h o are professional administrators or managers, professional experts and specialists of various types, and organizational or "bureaucratic functionaries" (filing clerks, typists, etc.). As has been observed above, this Association, because it also directs and is therefore responsible for two insurance companies, has a definite and direct interest and stake in the commercial and general business life of the state. While this enterprise is offered as a service to Association members to aid, as Mr. Seeton said, in "selling" the Association to prospective members, the members and leaders of the administrative organization now have a natural interest in perpetuating and expanding the Association in much the same way their counterparts in a business corporation would because it is, after all, their livelihood. In a later speech (October 22, 1953), M r . Seeton said, before the organization workers and officers, that since the period of economic boom was coming to a close, and since the N e w Deal was over, employers were becoming reluctant to support organizations like the PMA.

Therefore, the Association was entering into a new era of

organizational operation: " W e need to analyze our organizations, both State and local, as to structure and as to program. W e need to compare our organizations with other organizations that are calling upon the same business executives for support. We need retrospectively 1

Ibid., p. 8 (italics added).

The P M A Today

73 1

to determine whether or not organizations

as they now operate, are needed

2

in the pattern of our economy.

In c o m m e n t i n g on what a manufacturers' association can do better than similar associations such as trade associations,

Mr.

Seeton said the f o r m e r could handle matters o f a general nature such as legislation effecting all classifications o f businesses (workmen's compensation,

unemployment

compensation,

labor

relations,

taxation) better than could the trade associations. Therefore, the P M A must develop this special field o f legislative activity in w h i c h they excell " i f w e are to get our share o f the competitive organization (association) dollar." 3 M r . Secton w e n t on to analyze w h y people j o i n e d associations and w h y they did not, and proposed w a y s o f contacting n e w m e m bers. 4 T h e P M A , he concluded, is a promotional organization; theref o r e : " . . . w e must keep on the m o v e — k e e p astir—command the attention of those for whom and with whom we work. Dramatize our approach to problems, and i f w e can effectively do this we need not fear the lack of financial support. B u t w e must be able to deliver and w e must be able to present that w h i c h is delivered in a packagc acceptable to those from whom we are demanding support."6

All associa-

tions, h o w e v e r , arc motivated by some purpose. T h e purpose o f the Association f o r w h i c h the organization under discussion operates was " t o advance and protect the interest o f its m e m b e r s . " ® M r . G r u n d y , its founder, stated that one o f the purposes in founding the PMA

was

to prevent

"as

far as possible vicious, unfair and

unwarranted legislation in our State, affecting the e m p l o y m e n t o f

1 T o maintain uniformity in the meaning of terms, "organization" here should be read as "association." 2 John H . Secton, " T h e Value of a State Manufacturers' Association" (address before P M A organization members and officers [mimeograph], October 22, 1953), p. 2 (italics added). 3 Ibid., p. 3. 4 Sec Appendix, note 5. 5 Secton, op. cit., p. 9. 6 Minute Book, Scction II of the Articles o f Agreement, I, 3.

T h e Pennsylvania Manufacturers' Association

74

labor." 1 A t another time, Mr. Grundy phrased the purpose differently: " W e organized primarily for the purpose of safeguarding industrial interests at the State Capitol against the ill-advised, reckless, and in some cases, almost criminal legislation that is biennially introduced." 8 The P M A is a service organization and a promotional organization. It is a service organization because a great part of its organization is staffed with people whose function is to provide services for the members of the Association. Such are the publications of the Association, the Employer's Advisory Council, the Unemployment Compensation Division, the insurance companies, and especially the legislative services. It is a promotional organization because the organization administrators know that they must strengthen the Association by " p r o moting" it, e.g., by obtaining new members for it, in order that the Association may best carry out its purpose of protecting the interests of its members. It is a promotional organization also because the organization members and leaders are apparently aware that unless they promote themselves as a successful administrative organization, the Association members, present and potential, those whose interests as a group prompted the founding of the Association and its accompanying organization, may turn to another similar association whose organization is more effective and successful. It is of course possible, as Mr. Seeton mentioned, that many members would decide that associations like the P M A are not needed at all in the present pattern of our economy. Some of these manufacturers might feel that with present favorable business conditions, both economically and politically, there is little need for the effort and expense of maintaining such an association as the P M A . They may believe, in other words, that the initial cause for such a 1

46.

Ibid., Third Annual Meeting, M r . G r u n d y ' s report (January 8, 1 9 1 2 ) , p.

2 Ibid., Fifth Annual Meeting, M r . Grundy's report (January 12, 1 9 1 4 ) , p. 106 (italics added).

The PMA Today

75

group as the PMA has disappeared and that no new ones of sufficient importance have arisen that they cannot take care of by themselves. Therefore, the organization members have a second purpose in their promotional work—that of making members, present and potential, aware of the continuing need for associations like the PMA, or, if necessary, and if possible, of creating the need by their actions or by whatever means at their disposal. In the organizational development of the PMA as an association representing the interest group of Pennsylvania manufacturers, a new interest group has been seen to emerge—that of the members of the administrative organization itself.

PART T W O The Leadership of the PMA

5 The Political and Economic Philosophy of the PMA's Leaders I t is assumed that a necessary criterion for the existence of any political interest group and, most especially, the formation of any association, is leadership. Leaders not only guide and make policy, but they must provide the necessary cohesiveness to hold the group or association together. The so-called active minority 1 exerts leadership in any group. 2 In the case of the P M A , there has always been an active minority —a small group of leaders—in charge of the Association. In fact, the P M A was founded by a small group of businessmen, mostly textile manufacturers, who constituted such an active minority within the interest group of Pennsylvania manufacturers. Today, the Board of Governors, the officers of the Association, and the top administrators of the organization of the Association may be said to comprise the active minority of the P M A . LEADERSHIP

IN THE

PMA

The real leadership of the P M A has been exercised by one man, its founder, Mr. Joseph R. Grundy. It has been Mr. Grundy who has initiated most of those actions to which the others in the Association responded. 3 Following Mr. Grundy's precedent, leadership has been exerted by other Association presidents, however, to a lesser degree. Leadership of the Association today is concentrated largely in the hands of its president, formerly the late G. Mason Owlett and 1 2 3

T r u m a n , op. cit., pp. 1 6 - 1 7 . Ibid., pp. 1 3 9 - 5 5 . Ibid., p. 189. T r u m a n ' s v e r y concise definition o f a leader.

8o

T h e Pennsylvania Manufacturers' Association

presently, M r . James Malone, J r . Owlett recognized, however, as do most o f the P M A members, the continuing leadership o f M r . G r u n d y not only symbolically, but, on important policy decisions, M r . Grundy's leadership was recognized actually. 1 There was some evidence of a tendency in recent years to share the leadership of the Association with members o f the B o a r d o f Governors. 2 Certainly the enlarging o f the B o a r d and the spreading o f the financial control o f the Association over a larger number of members of the Board o f Governors would appear to be an attempt to turn the administration, and possibly, the leadership o f the Association away f r o m one man and to share it with the group o f outstanding members w h o comprise the Board of Governors. In actuality this has not completely been the case. Owlett admittedly was responsible for all policy-making (with the solicited advice o f M r . Grundy on certain important matters), but he w o r k e d closely with certain very active members o f the Board o f Governors, especially the four vice-presidents and the late C o l . B r o w n , the f o r m e r Board chairman. The Board as a whole was rarely asked to discuss or decide any of the official policies of the P M A or its actions. 3 A n interesting recent example of " p o l i c y " consultation was the w a y in which the decision was made as to what stand the P M A w o u l d take vis-a-vis the Pennsylvania political situation in 1950. A special committee of five was appointed by the Board of Governors (then called the Executive Committee) at a special meeting o f that b o d y " t o study current Pennsylvania trends." 4 Owlett and C o l . B r o w n were ex-officio members of this committee. This advisory committee 5 met on J u l y 1 1 , 1950, August 18, 1950, and on September 1 2 , 1950. A t the August meeting, all members o f the c o m 1 2 3 4

Personal interview with G. Mason Owlett, October 19, 1 9 5 3 . See Chapter II. Personal interview with a Board member. Minute Book, special meeting of the Executive Committee (June 27, 1950),

H, 476 See Appendix, note 1, for list of members.

T h e Political and Economic Philosophy of the P M A ' s Leaders

81

mittee were requested to submit their ideas to Mason Owlett as to what type of action the P M A and/or Senator Owlett should take concerning the November election." 1 While the Association's position regarding the 1950 Pennsylvania political situation is well known, 2 the Minute Book shows no evidence of the matter being discussed before the whole Executive Committee after the advisory committee was appointed. There is, of course, a very plausible explanation for this centralized policy-making. The majority of the members of the Board of Governors did and do not attend the Board meetings. Consequently, like any business corporation, that is owned by a large number of people, directed officially by certain large owners or by prominent businessmen, but actually managed by organization administrators, policy decisions must be made every day. This is done in the case of P M A by the officers of the Association and the organization managers. Since the Board of Governors does not meet everyday and usually without many of its twenty-one members when it does meet, there must exist a kind of tacit understanding between the officers and the organization leaders on one hand and the Board members and Association members on the other. The former lead and the latter willingly follow. Obviously, much of the willingness to follow has resulted from the type of leaders the P M A has had. Therefore, several important reasons for the continuance of the P M A as a cohesive association for more than forty-five years will be found in an examination of these leaders, their backgrounds, and personal political and economic attitudes and beliefs. Mr. Joseph

Ridgeway

Grundy.

It is important to consider Mr.

Grundy's political activities and maneuvers during his lifetime; but what is more important is to ascertain the motivations and ideas—or philosophy—behind Mr. Grundy's activities. There will be no attempt made to decide whether Mr. Grundy was motivated more by desire for personal political gain as an end in itself or by a personal 1 2

Minute Book, Advisory Committee meeting (August 18, 1950), II, 49. See Chapter 12.

82

The Pennsylvania Manufacturers' Association

philosophy which he felt could be successfully effected only through political influence. T w o important facts will be considered and discussed; these are: Mr. Grundy has been and still is an important political leader actually and symbolically in Pennsylvania politics; Mr. Grundy has a definite economic, political, and social philosophy that he has reiterated before the public and he has been and is followed by people in his state who apparently agree with those ideas. Mr. Joseph Ridgeway Grundy was born in Camden, New Jersey, on January 13, 1863. Mr. Grundy's father, William Hulme Grundy, was a pioneer woolen textile manufacturer, having been one of the founders of Grundy Brothers and Campion, a textile firm in Bristol, Pennsylvania.1 Mr. Grundy went to work in his father's mills and took over the business at his father's death in 1893, becoming sole owner of the business, known as W m . H. Grundy & Co., in 1900.2 Mr. Grundy's interest in politics and community affairs began early. As a young man, he acted as a poll "watcher." In 1891, he was elected to the borough council in Bristol and entered the town council in 1905. 3 He was a delegate to the Philadelphia Republican convention that nominated McKinley, whom Grundy favored, and, in 1908, he was a delegate to the Chicago convention that nominated Taft, whom he also supported.4 He was a political ally of Senator Boies Penrose and is credited with having persuaded Senator Penrose to run for the Senate in 1914, at the first popular senatorial election. In his biography of Penrose, Robert Bowden states: B e f o r e he [Penrose] could announce his w i t h d r a w a l f r o m the race, 1 Edward W . Hocker, " B u c k s C o u n t y , " Southeastern Pennsylvania: A History of the Counties of Berks, Bucks, Chester, Delaware, Montgomery, Philadelphia, Schuylkill, ed. b y Nolan J . Bennett (Philadelphia: Lewis Historical Publishing, Inc., 1943), I, 400. 2 From a special mimeograph on M r . G r u n d y f r o m the files of the P M A . 3 Ibid. 4 " W h o is Joseph R . G r u n d y ? " issued by the Republican Committee f o r Joseph R . G r u n d y for United States Senator, 1930, p. 1 .

T h e Political and Economic Philosophy of the P M A ' s Leaders

83

however, Joseph R. Grundy, President of the Pennsylvania Manufacturers' Association and high priest of the high tariff shoguns, went into action to keep Penrose in the race. Grundy told Penrose that the interests of the State demanded his continuance in the Senate and that they [PMA] were lined up solidly for him. Penrose feared the verdict of the popular vote and held back, but the eloquence of the corporations, speaking through the Manufacturers' Association, overcame that fear, and Penrose entered the race.1 Mr. Grundy attended the famous conference at the Blackstone Hotel in Chicago during the Republican Convention of 1920 and is presumed to have been most influential in the nomination of Warren G. Harding for the presidency.® He was also highly influential in having Andrew Mellon appointed as secretary of the treasury. 3 Mr. Grundy was always interested in the tariff. His father before him went to Washington to support the McKinley tariff, especially on wool schedules.4 Joseph Grundy followed his father's lead and fought for the tariff, carrying his fight to its most spectacular peak with his enormous influence in the writing of the tariff plank in the 1928 Republican party platform and the writing of the resultant tariff itself: the famous Smoot-Hawley Tariff of 1929-30. 5 In 1930, after serving only a year as senator appointee of Governor Fisher to fill the unexpired term of William S. Vare, whose seat was denied him by the Senate, Mr. Grundy ran for the Republican nomination for United States senator from Pennsylvania. He was defeated by James Davis and never again attempted to run for a public political office. As a member of the community town council of Bristol, he 1 Robert D . B o w d e n , Boies Penrose: Symbol berg, Inc.), p. 228. 2 Personal interview with M r . Joseph R . Appendix, note 2. 3 Ibid. * Ibid. 6 " W h o is Joseph R. G r u n d y ? " op. cit., p. Years of Public Life (Durham, N o r t h Carolina: p. 2 3 2 .

of at 1 Era ( N e w Y o r k : GreenGrundy, M a y

12,

1 9 5 3 . See

2 ; and Daniel C . Roper, Fifty Duke University Press, 1 9 4 1 ) ,

The Pennsylvania Manufacturers' Association

84

contributed a great deal to the betterment o f the t o w n . It w a s t h r o u g h his efforts that the t o w n obtained its o w n public w a t e r w o r k s and s e w e r a g e system. H e w a s greatly instrumental in the erection o f the m u n i c i p a l building in 1 9 2 8 and in the purchasing o f n e w fire e q u i p m e n t . It has been said that he spent m o r e than $ 5 0 0 , 0 0 0 o f his o w n f u n d s f o r such public i m p r o v e m e n t s . 1 T h e basic assumption u n d e r l y i n g M r . G r u n d y ' s e c o n o m i c and political beliefs w a s that m a n u f a c t u r i n g is the " v e r y f o u n d a t i o n o f civilization."2 A t the E i g h t h A n n u a l M e e t i n g o f the Association, he stated: " M a n u f a c t u r i n g is the K e y s t o n e o f the K e y s t o n e State. H o w true that

is!

Transport,

commerce,

merchantry,

banking,

mining,

agriculture, the professions, the arts and education itself w o u l d c o m e t u m b l i n g d o w n in ruins about o u r ears i f that keystone o f a p p r o x i mately $4,000,000,000 w o r t h o f industries w e r e to be w i t h d r a w n f r o m o u r arch t o m o r r o w . " 3 F r o m m a n u f a c t u r i n g c a m e w a g e s that w e r e the

purchasing

p o w e r that m a k e the e c o n o m y function. T h e s e w a g e s must not be e n d a n g e r e d ; anything done to h a m p e r o r endanger the success o f m a n u f a c t u r i n g businesses endangers w a g e s and upsets the entire e c o n o m y because " i f the source o f w a g e s be i m p o v e r i s h e d , the flow o f w a g e s must be d i m i n i s h e d . " 4 W i t h this basic assumption in mind, M r . G r u n d y ' s actions in the legislative realm and his v i e w s on " s o c i a l " legislation in general b e c o m e m o r e understandable. T h e manufacturer, in M r . G r u n d y ' s eyes, w a s not o n l y the c o m m u n i t y ' s most i m p o r t a n t citizen becausc o f the significance o f his enterprise but he also should be the c o m m u n i t y ' s most responsible citizen. H e was, in short, the natural c o m m u n i t y leader. In discussing this in an address in 1949, M r . G r u n d y stated: " T h e benefit to the 1

2

Ibid.

Minute Book, Eighth Annual Meeting, Mr. Grundy's address (January 8, 1917), I, 198. 3 Ibid., pp. 198-99* Minute Book, Sixth Annual Meeting, Mr. Grundy's address (January 11, 1915). I. 53 (italics added).

T h e Political and E c o n o m i c P h i l o s o p h y o f the P M A ' s Leaders

85

communities o f these wages, sales and expenditures o f the business had such a great effect upon the g r o w t h o f the communities that the employer was looked upon as a great benefactor." 1 It must be remembered, to better understand Mr.

Grundy's

position, that during M r . Grundy's y o u t h and early manhood the local businessman usually was the most prominent member o f the community. He was most respected and, in many cases, he was the community leader. This situation was partially produced b y the fact that the communities were small, the businesses were small, and the local manufacturer o w n e d and personally ran his o w n business. If he had not founded it himself, his father or grandfather had, and he continued the family tradition. Generally, the number o f employees was not large so that the owner-manager k n e w all o f them personally. There was no feeling o f separateness or particular classconsciousness. 2 If anything, although Mr. Grundy abhors the word, a paternalism did exist between the owner on one hand and his employees 011 the other. This paternalism was o f a nature that enabled the employer to k n o w what was in the best interests o f his employees; their best interests were synonymous w i t h his. " . . . for w h o is in a better position to j u d g e the effect upon labor o f vicious, drastic or impractical legislation than the man w h o hires the labor and w h o k n o w s what legislation will impair his ability to hire it?" 3 As for his views on labor, he respected industrial w o r k — t h a t is, the manual and mental labor required b y the developments o f the Industrial Revolution. He regarded these abilities as o f infinitely greater importance than "education" or "culture," per se. In an address on the subject o f education in 1917, Mr. Grundy said: . . .

w e m u s t h a v e s o m e t h i n g m o r e than c u l t u r e i f w e are t o retain o u r

national e f f i c i e n c y . 1 J. R . G r u n d y , address b e f o r e the U n i o n League C l u b o f Philadelphia ( m i m e o g r a p h c o p y ) , N o v e m b e r , 1949, p. 1. 2 Part o f the a b o v e paragraph is based u p o n a personal i n t e r v i e w w i t h M r . G r u n d y , M a y 12, 1953. 3 Minute Book, S i x t h A n n u a l M e e t i n g , M r . G r u n d y ' s address (January 11,

1915). I. 1 54-

T h e Pennsylvania Manufacturers' Association

86

. . . while our schools do not give us good spellers, good writers and good figurers, they do teach countless thousands to despise industry.1 He advocated that young workers be allowed to w o r k and not be compelled to take time from their employment to attend special continuation schools. These schools did not give the young worker a useful education, and he suffered f r o m the loss of time from his employment "where he might at least be learning the trade which is to support him and to make him an independent citizen."2

M r . Grundy

concluded with the following practical advice: "Let us train our children to work. There will always be enough for gentlemen's jobs. The state could get along without a lawyer, or an author, or a teacher, or an artist if it had to, but it must be the strong-armed, strong-backed toilers w h o keep the wheels of industry turning." 3 He regarded all men w h o worked as individuals, and he assumed they also regarded themselves as independent individuals. In 1916, in discussing child labor laws, Mr. Grundy said: "Those who sponsor laws like this [The Child Labor Law—nine-hour day] are no friend of the honest toiler who prized independence above any amount of state aid." 4 In calling upon Association members to fight what he considered harmful and unnecessary reforms, Mr. Grundy stated: " W e need in this defense the help of each one of us and of other businessmen, as well as the help of the real working people. This aid from our intelligent labor w e surely ought to have, and w e think it can be readily obtained if the matter is discussed with them in a proper spirit, for certainly the interest of every working man must be identical with that ojhis

employer."5

' P M A : Monthly Bulletin, March, 1 9 1 7 , p. 2. Address of M r . Grundy before the Swarthmore club of Philadelphia, February 24, 1 9 1 1 . 2 Ibid. 3 Ibid. 4 Minute Book, Seventh Annual Meeting, M r . Grundy's address (January 10, 1 9 1 6 ) , I, 1 8 1 . 5 Minute Book, Fourth Annual Meeting, M r . Grundy's address ( J a n u a r y 13, 1 9 1 3 ) . I. 78 (italics added).

The Political and Economic Philosophy of the P M A ' s Leaders

87

Because of his concepts of work and workingmen, M r . Grundy was naturally not enthusiastic about labour unions. He stated in 1914, however, that the "Association [ P M A ] has no quarrel with organized labor as such" 1 and that the difficulty was not the labor unions but with the labor "agitator." With the profiteer must be included the labor agitator " w h o in his country's peril [during World W a r I] fomented discontent and discord and persuaded many an unwilling workman to jeopardize his country and his country's needs." 2 Mr. Grundy concluded that: " . . . if we have no laws to deal with this class, such laws should be enacted. There is no need for these undesirables. There is no workman or set of workmen today who cannot obtain a hearing and justice. More than that no man should have or want." 3 The laboring man could organize but he needed no leader, Mr. Grundy felt, other than himself and his employer with w h o m he shared a congenial interest. In 1921 he observed: In guarding the interests o f the consumer w e guard the interests o f our employees and finally our o w n w e l f a r e in keeping the cost o f p r o duction l o w in order to keep demand f o r the product high. It is therefore incumbent upon us as an organization, representing the most important industrial interests o f the state, to assume the responsibility that is so apparent. It might be asked w h y manufacturers assume the position o f being the guardians o f the State's w e l f a r e . W h o , I ask, could be more warranted in this assumption ? W h o pays freight bills that g i v e our railroads their necessary income? W h o gives our banks their deposits and savings?

Mr. Grundy believed that "the purchasing power of employees determined the prosperity of every town." 4 Manufacturing was the basis of our civilization because from this activity come wages with 1

Ibid., Fifth Annual Meeting, M r . Grundy's address (January 12, 1914), I, 1 1 2 . 2 J . R . Grundy, Editorial, Monthly Bulletin, J u l y , 1 9 1 8 , p. 2. 3 Ibid. 4 Minute Book, T w e l f t h Annual Meeting, M r . Grundy's address (January 10, 1921), p. 255.

The Pennsylvania Manufacturers' Association

88

which to buy goods as well as the goods to buy. " T h e wages paid, the largest paid on earth, both individual and total, are the basis of Pennsylvania's glory. These wages make possible the advantages of our cities and towns and boroughs. They make possible our homes, our schools, our streets and parks." 1 Manufacturing and its resultant wages then were the basis also of prosperity in Pennsylvania. It therefore was in the interest of the state as a whole to maintain the manufacturing concerns in order to attract more to come to the state. The P M A was founded by Mr. Grundy to do this very thing. It was intended to produce a favorable climate for present and potential industries. Mr. Grundy knew that behind the successful running of any manufacturing enterprise stands the great impetus of profits. " W e shall do what w e can to disabuse men's minds of the hallucination all too common in recent years that there can be enterprise without reward, investment without hope, and pay without profit." 2 Thus, there must be profits in order to have wages. Since wages are an allimportant item in the cost of production, they must be kept balanced with other cost factors in order to provide the necessary profits. Wages, according to Mr. Grundy, should depend upon worth, and high wages were advocated in P M A publications. W i t h but few, if any, exceptions employers oflabor today realize the value of paying the highest wages possible—for wages arc the purchasing power without which w e can neither progress nor prosper. Everyone could be employed at an average o f five dollars per day and more. 3

But there are undoubtedly employers " w h o object to giving ten hours' pay for eight hours' work, or full pay for 60 per cent or 70 per cent efficiency." 4 Worth meant production, and, to Mr. Grundy, 1

Ibid., Fifteenth Annual Meeting, Mr. Grundy's address (January 14, 1924), p. 306. 2 Ibid., Sixth Annual Meeting, Mr. Grundy's address (January 1 1 , 1915), P- 1533 P M A : Monthly Bulletin, March, 1921, p. 1. 4 P M A : Monthly Bulletin, August, 1920, p. 1.

The Political and Economic Philosophy of the P M A ' s Leaders

greater production was the basis o f economic stability

89

. . the

present efficiency of labor, which has reduced production to less than 60 per cent o f normal, is the primary cause o f high prices and . . . only through increased production can the present cost o f living be reduced." 1 W h i l e high wages and the resulting purchasing power

were

considered

desirable,

constantly

increasing

wages

w o u l d , as M r . G r u n d y saw it, either eliminate profits and thus the incentive f o r manufacturers to exist, or w o u l d produce inflation and an ensuing economic instability unless production was v e r y high. W i t h all the aforementioned beliefs and assumptions, it is understandable h o w M r . G r u n d y , w i t h complete sincerity, could state: " W e [the P M A ] could not be accused o f selfishness because w e were, so to speak, the advocates for all the State and for all the people of the State."2 M r . G r u n d y , today, adheres to most o f his early economic and political beliefs. H e recognizes that many changes have taken place. He finds it regrettable, f o r example, that the small business has been sold to a larger concern and the small entrepreneur—the c o m m u n i t y leader w h o k n e w all his employees—has been replaced by professional managers and labor leaders. M r . G r u n d y also laments the fact that the large manufacturers make financial contributions to both political parties. H e also finds it greatly disappointing to hear prominent businessmen advocating a l o w tariff. 3 M r . G r u n d y recognizes the changes that have taken place but he does not applaud them nor does he agree with most of w h a t he considers the motivating ideas and assumptions behind them.

Mr.

G r u n d y remains the voice o f the nineteenth century, o f the ideas and ideals, the values and assumptions o f the M c K i n l e y era in the United States. T h e essential truth they had then they have n o w , attested to, 1 Minute Book, Eleventh Annual Meeting (January 12, 1920), I, 244. Resolution introduced by Mr. Grundy and passed by the Association members. 2 Ibid., Fourteenth Annual Meeting, Mr. Grundy's address (January 8, 1923), p. 283. 3 Mr. Grundy's views and activities on the tariff will be discussed in Chapter 14.

The Pennsylvania Manufacturers' Association

90

M r . Grundy believes, by the success o f those men whose lives were guided by those ideals and values and by the great industrial growth o f the United States during that era. 1 N o better illustration o f M r . Grundy's present attitudes exists than his address before the U n i o n League C l u b o f Philadelphia in N o v e m b e r o f 1949. Here he noted the fact that employees were once in sympathy with the political ideals o f their employers. B u t n o w , M r . Grundy fmds the relationship between employer and his employees "dramatically opposed to the conditions which existed when our great industries were in the making."2

Employees, M r . Grundy

found, were organized into selfish groups "under the leadership o f arrogant and dictatorial bosses w h o endeavor to instill into the minds o f the workers that their employer is their worst e n e m y . " 3 M r . Grundy concluded by calling f o r a restoration o f the old relationship between employer and employee. T h e workers must understand that the success o f respective businesses that employ them is the basis o f their profitable employment by the owners or managers o f those businesses.4 J . W. Rawle. James W . R a w l e was elected president o f the Association on February

17,

1930, by the Exeuctive

Committee. 6

He was, at that time, a vice-president o f J . B . Brill & C o . , manufacturers o f streetcars. R a w l e started his business career at the age o f nineteen with the Bethlehem Steel C o . and rose to the position of assistant to the president of the corporation.® In 1906, he became an assistant manager o f J . B . Brill & C o . , and by 1930 he was vicepresident and a director o f that corporation and a director of the Chamber of C o m m e r c e o f Philadelphia. 7 R a w l e was president 1

Mr. Grundy's present views were obtained by a personal interview, May 12, 1953. 2 J. R. Grundy, address before Union League Club of Philadelphia (mimeograph), November, 1949, pp. 1-3. 3 Ibid. 4 Ibid. 5 Minute Book, Executive Committee meeting (February 17, 1930), I, 367. 6 Personal interview with Mr. T. P. O'Neil, March 11, 1954. 7 Ibid.

91

T h e Political and E c o n o m i c Philosophy o f the P M A ' s Leaders

of the Association only until February 23, 1 9 3 2 ; he died in 1934. Because he was the nominal leader of the P M A for such a short time, there was little that was distinctive about his leadership. He expressed, in his addresses to two annual meetings, the attitudes of many businessmen in the United States—especially those who adhered to the Republican party—on the depression and recovery. "Legislative tinkering" must be prevented: " . . . curtailed volume of production and consequent increase of overhead per unit and the existence of the keenest of competition from all parts of the world are ample problems. The situation should not be made worse by the additions of statutory burdens." 1 Unemployment,

Rawle

believed, could not be solved

by

curtailing the hours of employment: "In this period of depression, I believe every working man is more concerned with the opportunity to work than in the enactment of statutes restricting the hours of employment." 2 The government, state and federal, must stimulate industrial recovery but this could not be done, Rawle believed, by "unneccessary regulatory measures" or "extravagant schemes of charity with public moneys." 3 John M. Flynn. John M. Flynn became president of the P M A in 1933. He had been a member of the P M A and the secretary of the Manufacturers' Association of Elk County, later known as the Manufacturers' Association of Northwestern Pennsylvania, and in charge of the insurance w o r k of the casualty and fire companies. 4 At the time he became president of the Association, he was the oldest member of the House of Representatives of the General Assembly at Harrisburg, in which he represented Elk County. He was also the vice-president and general manager of the Russel Snow Plow Co. and a director of the Elk County National Bank in 1 Minute Book, T w e n t y - t h i r d Annual Meeting, M r . Rawle's (February 23, 1932), 1, 3732 Ibid., p. 372. 3 Ibid., p. 373. 4 Ibid., T w e l f t h A n n u a l Meeting (January 20, 1921), p. 255.

address

T h e Pennsylvania Manufacturers' Association

92

Ridgway, Pennsylvania. 1 In addition, Flynn had been a lifelong Democrat. 2 Flynn had been very active in politics; he was, in fact, what Mr. Grundy often urged the Association members to become—the businessman in politics. He had worked closely with Mr. Grundy and Chester W . Hill, M r . Grundy's assistant in Harrisburg, and in 1923 received a vote of thanks f r o m the Executive Committee of the Association for his "legislative w o r k . " 3 He did not, however, become a member of the Executive Committee until 1932, a year before he was elected president of the Association. This fact would seem to allow the conclusion that Flynn was not merely elected by the Executive Committee as one of its members, as required by the Articles of Agreement, but that he was hand-picked by Mr. Grundy as a successor because of his special leadership abilities. Flynn had the difficult task o f guiding and leading the Association during the early Depression years, the N e w Deal period of President Roosevelt, and at the state level, Governor Earle's administration. N o t only this, but he had to replace Mr. Grundy as the active head of the Association. The leadership that M r . Grundy had exerted had been done as a man—as a unique personality, determined yet mild-mannered—and as a symbol of certain economic and political ideas and values. The two were inseparable. As far as the Association was concerned, Mr. Grundy's leadership was exerted in many ways, through his legislative activities for the benefit of Association members, through his political prestige, and perhaps most effectively through the one personal contact that he had with all the members of the Association —his address at the annual meetings. While the Monthly Bulletins faithfully and accurately reflected his thinking upon all subjects, it was his personal address to the members of the Association that served as a superb vehicle for the exercise of Mr. Grundy's personal leadership. 1 2 3

P M A : Monthly Bulletin, March, 1 9 3 2 , p. 3. Philadelphia Bulletin, February 25, 1 9 3 2 , p. 5. Minute Book, Executive Committee meeting (July 20, 1 9 2 3 ) , I, 288.

T h e Political and Economic Philosophy of the P M A ' s Leaders

93

Flynn, following Mr. Grundy as president of the P M A , had this vehicle at his disposal. However, at the first meeting to which he

spoke

as president

of

the

Association,

he

confined

his

statements to discussing specific legislation proposed at Harrisburg that would reflect the N e w Deal legislation in Washington and which must be opposed. Any new services by the state government would require higher taxes, most of which would have to be paid by the corporations doing business in the state.1 It was not Flynn, but Mr. Grundy, speaking as chairman of the Executive Committee at the same meeting, who propounded the interpretation of the N e w Deal that was the basis for the attitudes of the P M A toward the N e w Deal and all N e w Deal legislation at the state level and nationally. It is most appalling to contemplate the changed attitude o f g o v e r n ment, and, of a large part o f the public t o w a r d the industry which been the outstanding factor in our whole national

has

development.2

Those o f us whose memories go back over a f e w years can easily remember that period o f industrial encouragement when a man who came into a town to invest his money in a manufacturing a valued and useful citizen.

He created employment

was invited to join in philanthropic sought and his help given

enterprise

and other civic activities,

in practically

was welcomed

and purchasing

power,

and his advice

every field oj business and civic

as he was

activity.3

Today, Mr. Grundy, observed, the situation has changed: N o t o n l y are industrialists, individually and as a class pictured and treated as criminals and a menace . . . they are surrounded b y

re-

strictions.

At the same time, and under another phase of the program, the government is handing out to other groups billions of dollars in outright gratuities. 1

Ibid.,

Twenty-fourth Annual Meeting, Flynn's address (February 28,

1933). P- 3892 Ibid., Twenty-fourth Annual Meeting, M r . Grundy's address (February 28, 1 9 3 3 ) . P- 4033 Ibid., p. 404 (italics added).

The Pennsylvania Manufacturers' Association

94

Mr. Grundy believes this situation had been brought about largely by "malicious misrepresentations and manoeverings of those in public life who hesitate at nothing in their hid for the support of the uninformed."1 In the subsequent meetings during the N e w Deal period, following the initial Grundy line, Flynn continued to stress the "martyred" situation of manufacturers and businessmen in general. . . . this industry, which the high priests of the N e w Deal have called every name and subjected to every handicap, hurt and hindrance that crackpots could think up—this industry, which they ask the public to believe is operated by human buzzards and financial gangsters—has made its continuing and constructive contribution to recovery by incurring a deficit greater than that which the New Deal has largely dissipated in boondoggling projects or in entering into competition with private enterprise.2

He attacked specific state legislation to show its harm to Pennsylvania industry. He also attacked the N e w Deal program in general to show that, in 1936, the situation had little improved since 1932 as far as unemployment and relief were concerned (unemployed: 1932 1 0 - 1 1 million; 1936—10 million; relief; 1 9 3 2 — 1 5 J million; 1936 —2o£ million), 3 and that with public expenditures and the national debt, the situation was worse. In 1940, an election year, Flynn took his most extreme position against the N e w Deal: " . . . every major move that the President has made during the last several weeks has been an obvious part of a palpable plan to use the European situation and his own foreign policies, to divert public attention from the vital issues which face the people of this country."* Also in 1940 he became the first P M A leader or official spokesman to praise the Republican party at a P M A 1

Ibid. Ibid., Twenty-seventh Annual Meeting, Flynn's address (February 25, 1936), 1,427. 2

9 4

Ibid., pp. 426-27.

Ibid., Thirty-first Annual Meeting, Mr. Flynn's address (February 27, 1940), p. 463 (italics added).

T h e Political and Economic Philosophy of the P M A ' s Leaders

95

Meeting, breaking Mr. Grundy's "official non-partisanship" precedent, when he stated that he and his fellow P M A members were "intimately and freshly aware of the incomparable benefits of sound Republican policies over those of the New

Deal."1

In his two final addresses to the Association as its president, Flynn seemed to alter his ideas. He no longer tried to "martyrize" the manufacturer, nor did he continue to attack the N e w Deal; instead, he pointed to legislative benefits brought about in Pennsylvania by manufacturers' support, moral and financial: Pennsylvania has always been a pioneer in such statutory enactments as w o u l d bring to its people the benefits so w i d e l y heralded as a national p r o g r a m o f Social Security. It placed upon its statute books years a g o an O l d A g e Pension System, assistance to mothers and dependent children, and those handicapped b y blindness. 2 Sincc most o f the m o n e y for this care came through taxes, it can be fairly said that industry

while

engaged

in the creation

e m p l o y m e n t o f its citizens, contributed heavily to the benefits I have

of wealth

through our State

and the government

mentioned.3

He also stressed the important role of the "industrial a r m y " during the war (1942) and that the particular type of insurance issued by the Association's companies was an "essential part" of the war effort. 4 This was so because o f the insurance companies' "stress on safety measures to cut down a rising accident rate caused largely by new and inexperienced workers." 5 The fact that Mr. Flynn's period of leadership terminated on a much more positive note than it began is of significance in relation to the later P M A leadership. G. Mason Owlett. G. Mason Owlett was appointed to the Executive 1

Ibid. Flynn failed to add that these old age pensions were opposed b y M r . Grundy and the P M A . See Chapter 9, p. 1 5 2 . 3 Minute Book, Thirty-second Annual Meeting, Flynn's address (February 25, 1 9 4 1 ) , I. 475 (italics added). 4 Ibid., Thirty-third Annual Meeting (February 24, 1942), p. 484. 5 Ibid. 3

96

T h e Pennsylvania Manufacturers' Association

Committee as general counsel of the Association in 1940, 1 and was elected to the presidency of the Association in 1943. 2 Owlett had been a state senator from 1932 to 1940 and a prominent Pennsylvania lawyer. He was a senior member of "what has been the leading law firm in Northern Pennsylvania for three quarters of a century." 3 In 1938, he became the Republican leader of the state Senate and was responsible for putting Governor James's legislative program through that body. 4 He was chairman of the governor's commission investigating sweatshops in 1933, and he handled the hearings of the investigation in a manner that was most favorable to the management interests involved. (This was especially significant in the face of concerted effort on the part of Mrs. Gifford Pinchot, the governor's wife and a member of the committee, and Dr. Stephen Rauschenbush of the Department of Welfare to present evidence that would discredit many important businesses in the state, notably in the textile industry.)5 This brought him to the attention of Mr. Grundy. 6 In the business field, Owlett held several important positions. He was a vice-president of the Putnam Oil Co. of Covington, Pennsylvania; a vice-president of the Tioga County Savings and Trust Co. of Wellsboro, Pennsylvania; the secretary-treasurer of the Highland Milk Condensing Co., Elkland, Pennsylvania; a director of the Merchants Limited, of New Y o r k ; the secretary and a director of the White Water River Lumber Co. of Asheville, North Carolina; and a director of the Wellsboro Electric Co. and the Hubbel Realty Co. of Buffalo, N e w York. 7 Owlett revived the type of positive 1

Ibid., Thirty-first Annual Meeting (February 27, 1940), p. 462. Ibid., Thirty-fourth Annual Meeting (February 2 3 , 1943), p. 493. ( N o record of any actual election.) s P M A : Monthly Bulletin, February, 1940, p. 3. 4 Ibid. 6 Personal interview with O w l e t t , October 1 3 , 1 9 5 3 . Also see New York Times, J u l y 10, 1 9 3 3 , p. 9. 9 Personal interview with Owlett, op. cit. 1 P M A : Monthly Bulletin, December 1, 1 9 4 2 , p. 7. 2

The Political and Economic Philosophy o f the P M A ' s Leaders

97

leadership so long exercised by Mr. Grundy. In his first address to the Association, Owlett expressed his great regret that many people had forgotten the qualities that had built up the Pennsylvania industrial empire. This he blamed upon the Depression and the fact that during the last ten years "every demagogue, every opportunist, every crackpot, was able to picture the doers and the builders as those to blame for their plight." 1 The P M A , during this period, was "a voice crying out in the wilderness," for "many industrialists seemed to lose the faith and failed openly to oppose the fallacies being preached." 2 He concluded by citing aims for the Association. The first was to support the war effort; the second was to "oppose at all times all schemes and plans which destroy individual initiative and free enterprise"; 3 and thirdly and finally to "represent the most enlightened thought of business in Pennsylvania to the end that not only business itself, but the people as a whole, may prosper, which can only come from our own free efforts." 4 The close similarity between Owlett's views on these subjects and Mr. Grundy's is striking. He shared with Mr. Grundy the belief that business or manufacturing was the basis of the American way of life from which all other economic activities and benefits flowed:

". . . if business is to prosper, if our resources are to be

developed, if good wages are to be paid, in fact, if all people are to live their o w n independent, unfettered lives . . . the kind oj governmental

we must first create

climate under which private enterprise can live

and flourish."5 Positive leadership may be defined as the encouraging o f action based upon a definite belief or set o f beliefs. It is opposed to negative leadership in that it goes beyond criticism of the opposing beliefs and systems o f various groups and proposes definite beliefs and actions based upon those beliefs. Minute Book, Thirty-fourth Annual Meeting, Owlett's address (February 23, 1943). I. 494-952 Ibid. 8 Ibid. * Ibid. 5 Ibid., Thirty-fifth Annual Meeting, Owlett's address (February 22, 1944) (italics added). 1

P.M.A.-D

98

T h e Pennsylvania Manufacturers' Association

Owlett also re-emphasized the original intent of the PMA to preserve the present industries in Pennsylvania and to attract new ones. He stressed this basic purpose of Mr. Grundy especially after the war. He noted, in 1947, that from 1930-40, while other sections of the country had attracted new enterprises and increased population, Pennsylvania had not. 1 New industry must be attracted and the old industry allowed to prosper if Pennsylvania is to flourish. Like Mr. Grundy, Owlett believed that "people cannot long flourish unless business prospers." 2 W e are c o n v i n c e d that the welfare of Pennsylvania

and its people is

inherent in its industries. . . . w e k n o w that the individual right to work at good wages, the underlying fundamental

of our whole concept of democracy, is

dependent u p o n the ability of an industry to operate at a reasonable profit, to d e v e l o p a n d e x p a n d , a n d thus p r o v i d e steady employment for our p e o p l e . 3

Again the close similarity to Mr. Grundy's views can be observed in Owlett's statements on the value of production as the only panacea for inflation. Since "wealth can only be created by production," "increasing the total physical production will help prevent an inflationary crisis."4 Physical goods are thereby brought into closer balance with money supply, and the closing of the gap is accomplished thereby instead of by raising prices.5 On labor, also, Owlett shared Mr. Grundy's views. . . . w h a t w e w a n t in Pennsylvania, as I see it, is an opportunity f o r those who are willing

and competent to take care of themselves and their

families without outside help or interference. W e a l w a y s h a v e a n d a l w a y s will t a k e care o f the sick, the m a i m e d , and the physically a n d m e n t a l l y h a n d i c a p p e d . 8 1 PMA: Report of the Proceedings, Thirty-eighth Annual Meeting, O w l e t t ' s address (February 25, 1947). P- 32 Ibid., Thirty-ninth Annual Meeting, Owlett's address (February 24, 1948), p. 4 (italics added). 3 Ibid. 4 Ibid. 5 Ibid. 6 Ibid.

99

The Political and Economic Philosophy of the P M A ' s Leaders

Like M r . G r u n d y , O w l e t t did not dispute labor's

right

to

organize. Labor, he believed, had the right to organize and bargain collectively as to wages, hours, and w o r k i n g conditions. 1

"Self

seeking labor leaders," h o w e v e r , w h o w o u l d "socialize the country and make g o v e r n m e n t the absolute e m p l o y e r o f all, are not the friends of l a b o r . " Such " c r a f t y and mercenary leaders" delude and mislead labor. T h e y sponsor p o w e r f u l propaganda agencies whose aim is to "destroy confidence in private m a n a g e m e n t . " 2 Speaking f o r the P M A , O w l e t t stated: W e are not out to penalize the rank and file of labor for the excesses of irresponsible

leaders.

W c shall continue . . .

to differentiate between decent honest

men and women and their intelligent

and constructive

working

leaders on one hand,

and arrogant, parasitic racketeers posing as labor leaders on the other.3

Owlett had contempt f o r most of the economic and political philosophy of the N e w Deal and the leaders responsible f o r that philosophy and its application: Political morons, w h o couldn't find their w a y out o f a revolving door, have sat in j u d g m e n t and rendered decisions affecting all industry. If w e are to survive as a nation, w c must exterminate the crackpots and political gangsters n o w living o f f the people . . . W e must exterminate the

fleecy-minded

cloud-dwellcrs w h o say that w e must not be

concerned with the public debt because w e o w e it to ourselves. 4

T h e N e w Deal's greatest fault, M r . O w l e t t believed, was to pit employee against e m p l o y e r as class against class. In one o f his addresses before the Association, he noted that a son o f a Pennsylvania manufacturer and the son o f a unionized employee had been killed in the w a r , and he asked: " W h y then should w e , as citizens, 1

Ibid., Owlett's address (February 22, 1944), II, 4 - 5 Ibid, (italics added). 3 P M A : Report of the Proceedings, Thirty-eighth Annua] Meeting, Owlett's address (Fcbrury 25, 1947), p. 4 (italics added). 4 Minute Book, Thirty-fifth Annual Meeting, Owlett's address (February 22, 1944). II, 42

T h e P e n n s y l v a n i a M a n u f a c t u r e r s ' Association

IOO

permit a small, vociferous minority group to teach the union father that his interests are antagonistic to the man w h o happened to be running the plant in which he is e m p l o y e d ; " Mr. Owlett was convinced that the political future of the N e w Deal party "lies in trying to convince those t w o fathers that they are enemies and rivals." 1 The great political issue in the United States was,

Owlett

felt, between democracy and "state socialism," because the N e w Deal's political and economic programs for postwar reconstruction were drawn directly " f r o m the preachings of Karl Marx and Nikolai Lenin." This "disaster-bound communistic trend o f the N e w Deal" had to be stopped. 2 Owlett did have definite views as to the role that government should play. Whether this view reflects a recognition of the influence of N e w Deal general social philosophy or not is difficult to surmise. The fact, however, that this philosophy, or at least the party that professed it, had been successful at the polls for four national elections undoubtedly made some impression on Owlett. He believed that a "partnership" between labor and industry existed but there was no room for government in this partnership: Government should be the "vigilant protector of both industry and labor" and not "the oppressor of one and the protagonist of the other." Owlett approved "enlightened government

regu-

lation," but he resented the "stifling interference of bungling bureaucracy." 3 Owlett's ideal, apparently, was the first Republican administration under President Lincoln. Social and economic advancements took place at this time that had not been equalled since then, Owlett believed. Labor's right to bargain collectively was established at that time and "the principle was adopted that it is a public obligation to see that the hand of government must be extended to 1

Ibid.,

Thirty-sixth

Annual

Meeting,

1 9 4 5 ) , PP- 3 0 4 2 Ibid. 3 P M A : Report of the Proceedings, address ( F e b r u a r y 2 5 , 1 9 4 7 ) , p . 4 .

Owlett's

address

(February

27,

Thirty-eighth Annual Meeting, Owlett's

T h e Political and E c o n o m i c P h i l o s o p h y o f the P M A ' s Leaders

shelter and help those that are destitute." 1

ioi

Owlett maintained,

however, that all such "social gains" should be "paid for by the generations that enjoyed them," and not as advocated, by the N e w Deal, through deficit financing. 2 Owlett thought that there were several things businessmen must do to promote their o w n interests and to counter influences that opposed them. First, in order "to create the kind of governmental climate under which private enterprise can live and flourish," businessmen must take an active interest in politics and government: "Businessmen should take an active part in politics. . . . Government . . . is the biggest kind of big business. W e certainly should have something to say about how it is conducted. If we fail to take an active interest in government, I insist w e have no right to complain." 3 Owlett regarded such participating in political affairs as a right and a duty: Other groups had their "political action committees, as is their right." Businessmen, therefore, should have theirs.4 One concrete way of participating in politics was to support a political party. The P M A had always been declared non-partisan by Mr. Grundy, but Owlett, while not officially committing the Association, publicly called for support of the Republican party: "It is becoming more and more clear to every one that there is only one effective medium for the restoration of traditional American

liberties

and methods, and that medium is the Republican Party." 5 1 Ibid., Forty-first A n n u a l M e e t i n g , O w l e t t ' s address (February 28, 1950). It should b e admitted that O w l e t t ' s interpretation o f the L i n c o l n administration and the role o f l a b o r at that time w o u l d b e disputed b y m a n y historians and sociologists. T h i s does n o t alter the fact that O w l e t t stated w h a t he believed to be true. 2 ibid. 9 Ibid., F o r t y - t h i r d A n n u a l M e e t i n g , O w l e t t ' s address (February 24, 1952), p . 4. 4 Ibid. 6 Minute Book, T h i r t y - s i x t h A n n u a l M e e t i n g , O w l e t t ' s address (February 27, 1945), II, 2 ( o f printed c o p y o f speech). (Italics added). F r o m that time to the present, the annual m e e t i n g s h a v e b e e n addressed b y p r o m i n e n t Republican leaders and o n e c o n s e r v a t i v e D e m o c r a t , Senator H a r r y B y r d o f Virginia.

102

T h e Pennsylvania Manufacturers' Association

T h e second w a y f o r businessmen to p r o m o t e their interests is to re-educate laboring people to re-establish a c o m m u n i t y of interest between them and their employers: " A m e r i c a n w o r k i n g men must be taught that the overlords

of labor—money-hungry,

dues-

chasing opportunists—are interested only in a kind o f government which encourages their acquisitive tendencies at the expense of labor and i n d u s t r y . " 1 American employers must take their employees into their confidence. T h e y must "institute a broad and cohesive program of political education" in offices and plants to " s h o w their employees the ominous realities and dangers of bureaucratic g o v e r n m e n t . " Industry must thus act " t o direct the thought o f labor along constructive co-operative lines." T h e y must set up departments to study legislation and its effect upon all trade and c o m m e r c e and show this information to their employees: Industry, therefore, through its legislative and political education departments could show workers " h o w the field o f personal opportunity is being limited and restricted by the N e w Deal's assumption o f questionable a u t h o r i t y . " 2 SUMMARY

Leadership o f the P M A has been the continuing leadership of M r . G r u n d y . Other leaders have f o l l o w e d him but their philosophies, political and economic, have been closely akin to his, and, as Herman L o w e points out in Robert Allen's anthology on state governments, M r . G r u n d y "professes to be in semi-retirement but the P M A makes no important political decision without his O K . " 3 There are three important reasons f o r the success o f M r . Grundy's continuing leadership. T h e first is the intangible quality called personality—a mildness and charm combined w i t h frankness and a strong will. T h e second is the fact that M r . G r u n d y has been a leader 1 Ibid., pp. 3 - 4 (of printed address). Thirty-fifth Annual Meeting, Owlett's address (February 22, 1944) (italics added). 2 Ibid. 3 Herman A . L o w e , "Pennsylvania: Bossed C o r n u c o p i a , " Our Sovereign State, b y Robert S. Allen ( N e w Y o r k : Vanguard, 1949), p. 1 1 2 . Verified also by interview with Mason Owlett,

The Political and Economic Philosophy of the PMA's Leaders

103

o f considerable i m p o r t in state and national party politics. A t one time he w a s a great p o w e r in the national R e p u b l i c a n p a r t y . 1 H e remains t o d a y a political p o w e r in Pennsylvania, even if he is m o r e o f a symbol n o w than an active political figure. T h e third reason is that M r . G r u n d y ' s e c o n o m i c and political v i e w s are v e r y m u c h alive t o d a y ; they still attract a sympathetic f o l l o w i n g . These v i e w s w e r e expressed in virtually the same l a n g u a g e b y the P M A ' s late president, G . M a s o n O w l e t t . T h e influence o f the N e w D e a l philosophy can be detected only in the emphasis M r . O w l e t t placed u p o n the social benefits b r o u g h t about and paid f o r b y industry, especially through taxes. In fundamentals, h o w e v e r , they remain the same, rooted in the laissez faire capitalism o f the nineteenth century w h i c h animated the

industrial

development

of

the

United

States

during

the

M c K i n l e y era. It is a p h i l o s o p h y that is not specifically anti-labor. L a b o r , rather, is regarded as a g r o u p o f individuals w h o constitute a large f a c t o r in the cost o f p r o d u c t i o n and, at the same time, are recipients o f wages, the purchasing p o w e r o f w h i c h makes the e c o n o m y run. B u t the basis a l w a y s is production, and behind this the industry itself and its cardinal m o t i v a t i n g f o r c e — p r o f i t s . T h e great e n e m y thus is not labor but g o v e r n m e n t and labor leaders w h o interfere w i t h " n a t u r a l "

e c o n o m i c forces. G o v e r n m e n t , in M r .

G r u n d y ' s eyes, should either be " f r i e n d l y " o r indifferent. W i t h the values, ideas, and assumptions that m o t i v a t e d

the

leadership o f the P M A in m i n d , the policies o f the Association tow a r d specific state legislation w i l l be understandable.

1

Sec Chapter

PART THREE The PMA's Policies toward Legislation—State and National

6 Policies of the P M A towards Taxation Legislation in Pennsylvania T a x a t i o n , probably, has been the most important field of legislative interest for the P M A . Taxation is o f such importance that the P M A leaders act immediately to prevent harmful tax changes before consulting the P M A membership 1 to gain their approval. This is done because the subject of taxes is one upon which all P M A members are equally interested. It is probably the most cohesive interest the P M A has and thus can bring to bear application of the P M A ' s most forceful energies. CAPITAL

STOCK

TAX

T h e most important type o f tax that could be levied by the state and that has consumed much o f the Association's preventive efforts has been the capital stock tax. Before 1885, a tax, k n o w n as the capital stock tax, had been levied by the state upon the capital stock of all corporations engaged in manufacturing in Pennsylvania. In the legislative session o f the General Assembly in 1885, this law was amended to exempt

the capital stock o f such manu-

facturing concerns. This action was prompted by the concern over the loss of industry f r o m Pennsylvania and the small amount o f new industry that was then coming in. Between 1870 and 1880, there had been a 16 per cent decrease in the number o f manufacturing establishments. 2 From 1880 to 1900, a 108.9 per cent capital investment increase took place in manufacturing industries. 3 1 2 3

Personal i n t e r v i e w w i t h M r . John H . Seeton, O c t o b e r 30, 1953. Stevens, op. cit., p. 310. Ibid.

io8

The Pennsylvania Manufacturers' Association

While it is impossible to judge whether the capital stock tax exemption was the most influential factor in producing this increase, it was obviously a most influential factor along with several others such as the increase in transportation facilities.1 It is also important to note that Mr. Grundy personally considered the capital stock tax exemption as the most influential factor in promoting Pennsylvania's industrial development at that time.2 The Association successfully opposed the removal of capital stock tax exemption on manufacturing corporations until the Democratic administration in 193 5.® Before this, other businesses had been brought under the exemption with the active support of the PMA. In 1927, co-operative agricultural associations were exempted if they had no capital stock and were not conducted for profit, 4 and breweries and laundries were exempted.8 The latter two industries were members of the PMA, the breweries through individual membership and the laundries through the affiliation of their trade association, the Pennsylvania Laundryowners' Association, Inc. The capital stock tax exemption has not been restored. Although bills enacting its restoration have been passed, the actual restoration date has always been postponed. In 1939, the P M A backed a bill which called for the restoration of the exemption. It was passed; but it was vetoed by Governor James, the Republican governor who succeeded George Earle and whose election was supported by the Association. During the administration of Governor Martin, however, two bills favored by the P M A were passed on this subject. One proposed to restore the capital stock tax exemption at the end of the war, and 1

Ibid. Personal interview with M r . Joseph R. Grundy, M a y 12, 1953. 3 The rate was 5 mills per dollar on the capital stock o f a corporation engaged in manufacturing in Pennsylvania (Act $86, 1935). Laws of Pennsylvania (1935). PP- 1 8 4 - 9 0 . 4 Laws of Pennsylvania (1927), Act 5385, pp. 7 4 1 - 4 2 . 5 Ibid., Act »387, pp. 7 4 2 - 4 7 . 2

Policies of the P M A toward Taxation Legislation in Pennsylvania

109

the other exempted from the tax that part of a corporation's capital that was invested in tangible property outside the state.1 During the succeeding administrations of Governors Duff and Fine, the Association, albeit with great reluctance, accepted the postponement of the capital stock tax exemption. While the Association's leaders wished to have the capital stock tax exemption restored, they accepted the fact that it was needed to supply necessary revenue and that it would have to remain, at least for the time being or until the state's tax program is completely revised and a substitute source found for the required revenue.2 C O R P O R A T E NET I N C O M E

TAX

Another tax that the Association has opposed over a long period of time is the corporate net income tax, although the Association leaders today consider this tax much fairer in principle than the capital stock tax. 3 Thus, in 1923, when there was great pressure to impose a capital stock tax upon corporations engaged in manufacturing, the P M A accepted the Pinchot administration's emergency tax program which included a corporate net income tax of .5 per cent on corporations not paying a tax upon gross receipts. (This latter tax has been imposed upon utilities, railroads, pipe lines, steamboat companies, oil companies, and telephone companies since June 1, 1889.) Concerning this measure, the Legislative Bulletin of the Association stated: "The largest vote was in favor of a manufacturing tax on capital stock or a tax on property and franchises. Such a tax would probably have been imposed if the Armstrong bill [the corporate net income tax] had not been introduced and passed. Manufacturers will be paying only one-tenth of what they would have had to pay under the Stark bill [the capital stock tax]." 4 In 1935, during the Earle administration, a bill, opposed by the 1

See Chapter 12. Laws of Pennsylvania (1943), Act 1 3 2 3 , pp. 763-67. This act was a merger of the two bills, House #879 and House #1097. 3 Personal interview with G. Mason Owlett, October 19, 1953. 4 P M A : Legislative Bulletin, No. 18, June 7, 1923, p. 1. 2

110

The Pennsylvania Manufacturers' Association

Association, was passed imposing a 6 per cent net income tax upon all corporations doing business in Pennsylvania. 1 This was increased to 7 per cent in 1937, and remained so until 1943 when a bill favored by the P M A (House Bill #33), calling for a reduction to 4 per cent, was passed.2 The act as finally passed, however, provided that the amount of taxes paid to the federal government could not be deducted f r o m the net income although insurance companies were allowed to deduct from net income the dividends paid to policyholders. This obviously was gready beneficial to the P M A insurance companies w h o paid out a large amount of their profits in such dividends. 3 The corporate net income tax was raised to 5 per cent in 1951 and was reaffirmed in 1953 with P M A acquiescence. 4 In 1 9 5 1 , the Association, largely through its president, G. Mason Owlett, successfully fought to prevent the corporate net income tax from being raised to 6 per cent. At the Republican party caucus in Harrisburg during the legislative session of 1951, " G . Mason Owlett of the P M A assumed leadership in opposition to the Corporate Net Income T a x Bill." 6 He complained that such an increase would make it the highest in the nation, and, since three adjoining states (Delaware, Ohio, and N e w Jersey) had no corporate net income tax at all, Pennsylvania industry would thereby be placed in an unfair competitive position. T A X A T I O N BY L O C A L

GOVERNMENTS

Taxation by local governments upon manufacturing corporations located within their jurisdiction has also been an important interest of the Association. Since this taxing power is delegated by the state government, the j o b of the Association in this particular area of taxation has been rendered simpler because it could continue to act 1

Laws of Pennsylvania (1935), Act $91, pp. 7 0 8 - 1 7 . Laws of Pennsylvania (1943), Act #108, pp. 2 1 7 - 2 9 3 See Chapter II. 4 Interview with G. Mason Owlett, December 1 7 , 1953. 6 P M A : Legislative Bulletin, No. 27, August 17, 1 9 5 1 , p. 2. 2

Policies of the P M A toward Taxation Legislation in Pennsylvania

ill

upon one government where it had gained access. The P M A already had "status," 1 in Harrisburg, and preferred to w o r k with the state government rather than upon a series of smaller governments where its access was not always so assured because of local political circumstances. In this area, the Association has acted positively more than negatively; in other words, it has favored legislation rather than opposed it. In 1933, a bill was passed without recorded opposition by the Association that designated subjects, property, and persons were liable for taxation for all local purposes. 8 B y this act, all real estate, lands, mills, and manufacturers not otherwise exempt by law from taxation were subject to taxes by and for local governments. In 1949, the Association favored 3 legislation to amend Act #481 of June 25, 1947, which empowered localities to tax those things that the state did not. The amending legislation would exclude from the taxable goods manufactured articles and by-products of manufacturing, minerals, timber, natural resources, and farm products, produced by manufacturers, producers, or by farmers or on the transportation of such articles or products. 4 This bill also limited the the amount of tax that could be placed upon other sources, such as real estate or machinery, by localities. Again, in 1953, for special reasons direcdy affecting P M A members, 5 the Association favored amendment to the Act of M a y 2 1 , 1943. T h e new legislation would allow localities and municipalities to tax real estate but machinery, tools, appliances, and other 1 D r . T r u m a n believes that the gaining o f access—a position from which to influence—to key points in government is an important "intermediary objective" o f all political interest groups. T h e "position of the group or its spokesman in the social structure" is status—the " m o s t basic factor affecting access." Truman, op. cit., pp. 2 6 4 - 7 0 , specifically p. 2 6 5 . 2 Laws of Pennsylvania (1933), A c t § 1 5 5 , pp. 853092. 3 See Chapter X I I I for discussion of P M A methodology in " f a v o r i n g " legislation. 4 Laws of Pennsylvania (1940), A c t $246, pp. 898-904. 5 See Appendix, note 1.

The Pennsylvania Manufacturers' Association

112

equipment contained in any mill, mine, manufactory, or industrial establishment could not be considered in determining the value of such mine, mill, manufactory, or industrial establishment. 1 Regarding both of these legislative items, the Association's leaders were motivated in their favoring of this legislation by the fact that some of their members were about to be taxed by their local governments in a manner so prohibited in this new legislation. 2 T A X E S ON O T H E R S O U R C E S OF

REVENUE

Because the Association's leaders have primarily been interested in the Association membership, they have not been averse to finding and favoring sources for taxation other than manufacturers. In so doing, the Association's leaders have run into the opposition of other powerful interests in the state, especially the utilities and the railroads, and, at one time, the anthracite coal industry. 3 During the period of the twenties and the early thirties before the imposition of the capital stock tax, the Association, in fighting the capital stock tax, never registered (in the Legislative Bulletin) any protest against taxes on natural gas, crude petroleum, or on each ton of coal mined. N o r was there opposition registered to the gross receipts tax increases on utilities, railroads, pipe lines, steamboats, oil, and telephone companies. 4 Regarding taxes of a more general nature, the Association, largely to prevent the burden of taxation from falling upon its members, looked to income and sales taxes. It has always opposed the amendment to the state constitution which would allow the imposition of graduated income and inheritance taxes. 8 Recently, however, the Association has favored a flat percentage income tax along with a sales tax. 1

Laws of Pennsylvania (1953), Act #108. Personal interview with Mr. John H. Seeton, October 1 3 , 1 9 5 3 . s The political repercussions of this clash of interests will be discussed in Chapter 12. 4 N o w standing at 14 mills per dollar—the reduction to 8 mills having been postponed at every session since 1947. 5 See Appendix, note 2. 2

Policies of the P M A toward Taxation Legislation in Pennsylvania

113

In 1951, the Association's leaders favored the \ per cent income tax and the 1 per cent sales tax of Governor Fine's tax program. The Income Tax Bill (House #840) would eliminate from taxable income proceeds from life, accident, and health insurance, workmen's compensation, interest derived from securities of the United States or of the state of Pennsylvania or any "political subdivision thereof," gifts, legacies, and stock dividends, or income received by religious institutions, veterans' bonuses and pensions, public assistance and social security benefits.1 Even such a compromise bill as this could not pass the legislature although it did pass the House of Representatives 109-97, with support coming from 108 Republicans and 1 Democrat and opposition from 85 Democrats and 12 Republicans.2 The Association's leader and spokesman was, at least publicly, not overly enthusiastic about the income tax even though it was not a graduated tax. He stated at the Association's annual meeting in 1953: " W e of the PMA were no more enthusiastic about this tax than anyone else. We, however, did subscribe to the feeling prevalent in Harrisburg at the time that it would be the least burdensome of the various taxes proposed." 3 Even the state sales tax, passed in 1953, with the support of the Association's leaders, was not approached without misgivings. Mr. Owlett told the Board of Governors of the Association at their meeting in April of 1953 that, although a sales tax would be considered during the 1953 legislative session, it was "very doubtful if such a broad base tax could be passed during the present session."4 All Board members, however, were urged to contact their representatives and state senators "and to try to have publicity as to the advisability of the passing of a State Sales T a x . " 5 1

P M A : Legislative Bulletin, No. li, March 30, 1951, p. I. P M A : Legislative Bulletin, No. 14, April 20, 1951, p. 1. 3 P M A : Report of the Proceedings, Forty-fourth Annual Meeting, Owlett's address (February, 1953), p. 3. * Minute Book, op. cit., Board of Governors' meeting (April 28, 1953), II, 82. 5 Ibid. 2

114

The Pennsylvania Manufacturers' Association CONCLUSION

The increase of Federal taxes makes it of greater importance to the manufacturer to keep state and local taxes upon him very low or eliminate them entirely. Since wages have steadily increased, and (because of the power of labor groups and the high cost of living) are not liable to decrease drastically, if at all, the manufacturer must turn to smaller items in his business expenses if he is to cut his production costs.1 In a state like Pennsylvania that is heavily industrialized, the manufacturer is apt to be one of the most likely subjects for state taxes. The general unpopularity of personal income taxes and sales taxes, especially as issues upon which to conduct a political campaign, means that the greatest tax burden imposed by an industrial state like Pennsylvania can fall upon the manufacturer, unless, as a group, manufacturers can wield a sufficient amount of influence over the state legislature to prevent this occurrence. Presumably, the P M A has been in a position to wield such influence. It must be concluded, however, from the results of the Tax Study Committee's survey of Pennsylvania taxes in 1953, that the P M A has been unsuccessful in its attempts to keep taxes low on manufacturers in Pennsylvania. Aside from paying the corporation bonus charge2 on the authorized capital stock of a corporation for the privilege of engaging in business in Pennsylvania, Pennsylvania manufacturers are required to pay both a capital stock tax of five mills and the corporate net income tax of 5 per cent. The amount of federal income tax may not be deducted by the manufacturer before the state tax is computed. 3 The Pennsylvania corporate net income tax is exceeded only by that of Massachusetts, N e w York, and North 1 This is especially true of the smaller manufacturer w h o is apt to have to face a great deal of competition from without the state. 2 This tax is paid only once unless the authorized capital stock is increased. 3 Pennsylvania, compared with states of similar economic and financial problems, is one of seven that do not allow federal income taxes to be deducted before computation of the state tax.

Policies of the P M A toward Taxation Legislation in Pennsylvania

115

Carolina. 1 The Pennsylvania capital stock tax is surpassed only by that in Massachusetts,2 and this tax, unlike the Pennsylvania tax, is on the intangible value in excess of the value of the tangible property locally taxed and not the total value of the stockholders' investment. 3 The T a x Study Committee concluded that it was the small corporations that suffered most from this heavy tax burden imposed by the corporate net income tax and the capital stock tax: The smaller corporations with the lowest federal income tax rate and with the greatest tendency toward losses are placcd at a competitive disadvantage by the capital stock burdens in comparison with larger corporations which pay a higher federal income tax rate and obtain a relatively greater benefit from the deductability of state taxes in determining income for federal taxation. 4

This statement is of special significance to the P M A because its membership consists largely o f such small corporations. The T a x Study group further concluded that the present corporation taxes in Pennsylvania at the state level, as compared with taxes in other states, " d o not contribute toward producing a favorable industrial climate." 5 Based upon an analysis of the taxes paid by fifty-four representative corporations engaged in interstate commerce, even considering local taxes (which tend to be l o w on corporations and manufacturers in Pennsylvania), the ratio of total taxes to net investment in Pennsylvania in 1951 was higher than the same ratio in contiguous states and was surpassed by only a f e w other industrial states.8 1 The Tax Problem: Report of the Tax Study Committee (Harrisburg: C o m monwealth of Pennsylvania, May, 1953), p. 127. Unincorporated businesses are exempt from this tax and from the capital stock tax. 2 Ibid. 3 Ibid., p. 125. 4 Ibid., p. 130. 5 Ibid., p. 146. 6 Ibid., pp. 145-46. The acceleration of corporation net income taxes for 1953 raised the ratio of local and state taxes to net investment higher than any other state except Wisconsin.

The Pennsylvania Manufacturers' Association

II6

In comparison with utilities—corporations engaged in transportation, communication, electrical energy, and oil pipe lines (but not natural gas industries)—manufacturing corporations have an advantage in that they do not pay the gross receipts tax in addition to their other taxes. Utilities pay this tax in addition to the corporate net income tax and the capital stock tax. As for insurance companies, a particular field of interest of the P M A , all domestic insurance companies, which would include the P M A Casualty Insurance Company and the P M A Fire Insurance Company, pay the capital stock tax, and stock companies, such as the P M A companies, pay the corporate net income tax. 1 In addition to this, a 2 per cent gross premium tax is levied on all insurance companies, although domestic companies, such as those affiliated with the P M A , received a 60 per cent credit against this tax for payment of the corporate net income tax and the capital stock tax. 2 The P M A companies along with other domestic insurance companies, therefore, have a particular advantage over out-of-state companies. In Pennsylvania, despite the efforts of the P M A , in 1952, 52 per cent of the state's tax income came from corporations and 10 per cent from the gross receipts tax on utilities and the gross premium tax on insurance companies. Compared with other industrial states, Pennsylvania is by far the highest. N e w Y o r k obtains 26 per cent f r o m corporations, Delaware 31 per cent, Maryland 14 per cent, N e w Jersey 1 1 per cent, Ohio 3 per cent, and the national fortyeight state average is 15 per cent. In other states, one of the largest revenue producers, and in many cases the largest source of state income, is the personal income tax and the sales tax. 3 In one of its major fields of interest and legislative activity, the P M A has apparently fallen far short of complete success. 1 Since both companies pay out a large amount of its earnings in dividends to policyholders, their net income is drastically reduced. 3 Tax Study Report, op. cit., p. 158. 3 Minute Book, II, 82-85. Based upon Department of Commerce, Bureau of Census figures for 1952. See Appendix, note 3.

7 Policies of the PMA toward Workmen's Compensation Legislation in Pennsylvania T h e second important continuing interest o f the Association in the field of state legislation is workmen's compensation. It is of greater interest to some manufacturers than others because with some, where the possibility of personal physical injury to the worker is greater, workmen's compensation rates are a very important item in the cost of production. A n increase in the compensation benefits, for example, necessitates an increase in insurance premiums to be paid by the manufacturer for workmen's compensation insurance. The P M A has a dual interest in workmen's compensation because o f its active participation in the field o f workmen's compensation insurance through its Casualty Insurance C o m pany. Generally speaking, the Association has favored workmen's compensation benefits with modifications. They have usually compromised with other groups on benefit increases. It has been another field of legislative activity in which the Association's leaders automatically form a policy, leading to action to favor or oppose legislation. A specific request from a member or group of members is not necessary to produce Association action. THE W O R K M E N ' S

COMPENSATION

ACT

OF

I915

In the legislative session of 1911, the P M A successfully sponsored a bill to set up the Industrial Commission "to look into the causes o f accidents, the remedies therefor, and suggestions for proper

118

The Pennsylvania Manufacturers' Association

compensation for the injured." 1 In 1912, the Industrial Commission and the P M A drew up separate workmen's compensation bills, and, while the Association's bill was not accepted in its entirety, it was used to modify the one presented in the General Assembly in 1 9 1 3 . 2 M r . Grundy tersely expressed the Association's policy on the subject: " T h e P M A stands for a compensation bill that will put the cost upon the product and not upon the individual." 3 The bill sponsored by the administration of Governor B r u m baugh in 1 9 1 5 and which passed did not meet with the complete approval of the Association, but they made no attempt to repeal it later. 4 The Association objected to the bill that passed for several reasons, all of which were given by Mr. Grundy in his report to the Executive Committee of the Association on March 23, 1 9 1 5 . 5 The most important objections were: A . That the bill should have included a provision prohibiting compensation when the injury was caused by the employee's intoxication or by "his reckless indifference to danger or by his wilful disobedience of orders or in an attempt to injure another." B. The compensation period for total disability should be changed to 400 weeks instead of $00. C. The bill should provide a maximum sum, not to exceed $4,000, beyond which compensation shall not be received in any case. D . The bill should not exclude farm laborers and domestic servants from the provisions of the compensation bill. 8 1

Minute Book, Executive Committee meeting, Mr. Grundy's address (July 31, 1911), I, 38. The quoted section was prefaced by the statement: " W e succeeded in causing a law to be enacted authorizing the appointment of an Industrial Commission . . ." 2 Ibid., Annual Meeting, Mr. Grundy's Report (January 12, 1914), I, 1 1 5 . * Ibid. *Ibid., Eighth Annual Meeting, Mr. Grundy's report (January 8, 1917), I, 196. 6 See Appendix, note 1 for complete list of objections. The existence of an original copy of the P M A bill is unknown, so Mr. Grundy's objections supply the best source as to what the bill provided. ' Minute Book, Executive Committee meeting (March 23, 1915), I, 1 7 2 - 7 5 . Report on work of subcommittee on workmen's compensation and reasons for objections to the Governor's bill.

Policies o f the P M A t o w a r d W o r k m e n ' s Compensation Legislation

119

The P M A bill apparently would have provided the manufacturer with some of the safeguards the common law would give him in a civil suit for damages. The bill that passed, in effect, set up a system to substitute for such common law proceedings, based upon the assumption that regardless of whose fault it may have been, the injured worker must in some way be compensated according to an equitable system of compensation payments. C H A N G E S IN W O R K M E N ' S

COMPENSATION

SINCE

I9I5

At every legislative session o f the General Assembly since 1915, bills liberalizing compensation benefits have appeared. Most of them have been opposed by the Association's leaders, who have instead favored certain legislation every few years, that in effect is always a compromise increase in compensation benefits. The Association's policy was always to provide benefits that would not result in such a rise in production costs as to price the product out of its competitive market. The Association also had to compromise, internally, with its membership. With some of its members, the cost of maintaining workmen's compensation insurance, either as a self-insurer or with an insurance company, would be a much larger permanent expense than with others. A rise in the rates and a reduction in the waiting period—the time between the injury and the beginning of compensation payments—were provided for in a bill passed in 1919 over P M A opposition.1 This bill (Act #277, 1919) sponsored by Harry A. Mackey, chairman of the Workmen's

Compensation Board o f Penn-

sylvania, and Francis A . Bohlen, chief counsel of the Board, not only altered the rates, albeit to a small degree, but also specified a method o f computation of the compensation based upon average earnings that did not meet with P M A approval. 2 The Association opposed any major change in the workmen's compensation 1 Laws of Pennsylvania (1919), A c t 5277, pp. 642-69. Also see Chapter 13 for methods used b y P M A to oppose this bill. 2 P M A : Legislative Bulletin, No. ¡8, June 12, 1919, pp. 1 - 2 ,

I20

The Pennsylvania Manufacturers' Association

rate at that time because the bill was then known and was accepted b y manufacturers and "hundreds of thousands of blanks" were then in daily use. " A n y changes in the law, however slight," would mean " a readjustment of rates and calculations, endless confusion, and added w o r k . " 1 Further, they argued, if normal business was to be revived after the war (World W a r I), no further burdens should be added. 8 In 1 9 1 7 , the State Fund for Workmen's Compensation Insurance was established. The expenses of the Fund were to be paid out of the premiums collected plus appropriated state funds until July 1, 1919, and after that solely out of the premiums. 3 While the P M A did not oppose the State Fund, per se, it did object to the fact that the Fund was able, because of the state appropriation, to charge 10 per cent less than the rates of other companies, including the P M A ' s o w n company, for workmen's compensation insurance.4 Consequently, the Association did not oppose a bill in 1919 requiring the State Insurance Commission to set uniform premium rates for workmen's compensation insurance. 6 The P M A , however, did oppose the bill in 1 9 1 7 that provided for administration of the Workmen's Compensation Act by a bureau of Workmen's C o m pensation in the state Department of Labor and Industry. T h e logic of the Association's position was obvious : While it preferred not to have all of the machinery of the workmen's compensation law in the hands of the state, if that had to be, then the State Fund must be so controlled as to not compete with the private insurance companies in a w a y detrimental to the latter. Prior to the great changes in the compensation rates brought about during the Earle administration, there were demands for upward revision of compensation rates from representatives of 1

P M A : Legislative Bulletin, No. 1, February 6, 1919, p. 1. Ibid. 3 Laws 0/Pennsylvania (1917), Act $395, pp. 1 1 3 9 - 4 1 . 4 P M A : Legislative Bulletin, No. 13, June 8, 1917, p. 4. Also Bulletin, No. 9, M a y 1, 1917, p. 7. 5 P M A : Legislative Bulletin, No. 4, April 16, 1917, p. 2. 2

Legislative

Policies of the P M A toward Workmen's Compensation Legislation

121

organized labor, especially the Pennsylvania Federation o f Labor, during the Pinchot administration o f the early thirties. B e f o r e this, the only legislation o f any great consequence that passed were bills in 1927 and 1929. The 1927 bill (Act #156) raised the rates and reduced the waiting period. 1 T h e 1929 bill required all employers to insure themselves with the State Fund or private companies, unless exempted by the Bureau o f W o r k m e n ' s Compensation. 2 This bill received the support o f the Association. In 1 9 3 1 , several bills were introduced in the General Assembly, among them House #176® to provide f o r occupational disease compensation and House #580, a bill sponsored by the Pennsylvania Federation o f Labor to increase the rates o f compensation and the percentage o f average wages to be paid. 4 These bills were opposed by the Association and did not pass. T h e only bill on this subject that did pass was an amended version o f the House # 1 7 4 which called for treble compensation f o r illegally employed minors.® T h e Act, however, as finally passed provided only for double compensation and also provided that an e m p l o y ment certificate, issued by the state, w o u l d be conclusive evidence o f an employer's legal right to employ the child. T h e age certificate supplied to the employer by the school district (which the employer had to have before he could obtain an employment certificate f r o m the state), therefore, would be regarded as conclusive legal p r o o f o f the minor's age. 6 Thus, the burden o f responsibility was shifted f r o m the employer to the school district and the state. T h e employer, however, was still compelled to pay the extra compensation, not the insurance carrier. T h e result o f the 1933 legislative session was about the same. T h e 1

Laws of Pennsylvania (1927), Act §156, pp. 186-96. See Appendix, note 2. Laws of Pennsylvania (1929), Act §361, p. 829. 3 P M A : Legislative Bulletin, No. j, February 6, 1 9 3 1 , p. 2. 4 H. Franey, "Report of the President," Minutes of the Convention of the Pennsylvania Federation of Labor (1927), p. 26. 5 P M A : Legislative Bulletin, No. 1, February 6, 1 9 3 1 , p. 1. 6 Laws of Pennsylvania (1931), Act «29, pp. 36-37. 2

122

T h e Pennsylvania Manufacturers' Association

only legislation of any importance in the field of workmen's compensation that passed was Act #328 extending workmen's compensation benefits to anyone employed on work relief projects.1 Several bills were proposed at this time that would have increased compensation benefits by raising the percentage of weekly wages that would be paid in compensation from 65 per cent to 66§ per cent and by eliminating the seven-day waiting period and the limitation of five hundred weeks on the payment period for total disability.2 A bill to extend compensation to occupational diseases was also introduced.3 Both of these bills were opposed by the Association and failed to pass. The P M A , through its spokesmen, argued that businessmen at that time could not afford to add to their permanent costs that which would be entailed by the compensation benefit increase. Flynn, the Association president during this period, also pointed out that workmen's compensation was intended to "bridge the gap between the event of the injury and the return to employment." 4 It was never intended "to be complete health and accident insurance."6 The association also stuck to its classic argument that any increase in the cost of production would place Pennsylvania manufacturers in other states. To this last argument, the Democratic secretary of labor and industry, E. N. Jones, speaking before the Pennsylvania Confederation of Labor convention in 1935 replied: A b o u t the only measure which will increase the cost of doing business in this state is the new workmen's compensation bill which has passed the House and is n o w awaiting action in the Senate. But when w e k n o w that Pennsylvania stands thirty-third in the list o f states in average liberality o f compensation benefits, w e cannot get excited over the p r o paganda o f the P M A which claims that the n e w workmen's compensa1

Laws of Pennsylvania (1933), Act ¡ 3 2 8 , pp. 1 5 1 5 - 1 7 . P M A : Legislative Bulletin, No. 4, February 3, 1 9 3 3 , p. 1. 3 Minute Book, T w e n t y - f i f t h Annual Meeting, President Flynn's address ( F e b r u a r y 27, 1934), I, 408. 4 Ibid. 6 Ibid. 2

Policies of the PMA toward Workmen's Compensation Legislation

123

tion bill will, if enacted, drive industry out of Pennsylvania. The answer to that threat is to ask the question, where will these industries go if they decide to leave Pennsylvania, to escape the increased costs provided in the new compensation bill? Mr. Grundy knows the answer. He knows that to no adjoining state can they move where the cost of compensation is lower than in Pennsylvania.1 Changes

During

the Earle

Administration.

The workmen's com-

pensation measures mentioned by Jones failed to pass the General Assembly in 193 5. 2 A bill sponsored by the Earle administration did, however, pass in 1937 over the opposition of the P M A . Even this bill did not pass as proposed, although its amended final form represented the first major increase in compensation benefits since 1927. 3 The Association concluded that this bill would make compensation costs 60 per cent higher than they were. 4 The act, however, was short-lived; it was declared unconstitutional on March 27, 1939, by the Pennsylvania Supreme Court, the opinion being given by Chief Justice Maxey. The Court's decision was based upon the fact that it considered many provisions of the act unreasonable and therefore unconstitutional. Chief Justice Maxey concluded: If the compensation required by statute in Pennsylvania makes it impossible for Pennsylvania's industries employing wage earners to continue to operate with a reasonable return on the property invested., such a compensation law would have to be judged unreasonable as 1 E. N. Jones, "Report of the Secretary of Labor and Industry of the Commonwealth of Pennsylvania," Minutes of the Convention of the Pennsylvania Federation ofLabor, (193 5), p. 15. 2 All bills supported by the Earle administration were merged into House #1199 which passed the House of Representatives but failed in the Senate. The PMA emphatically opposed it in every step through the House. See Legislative Bulletin, No. 14, April 26,1935, p. 1. 3 The bill was House #99 or Act 1323 (Laws of Pennsylvania [1937], p. 1552). See Appendix note 3, for more details on the bill as passed and amended. 4 Personal interview with G. Mason Owlett, October 19, 1953.

T h e Pennsylvania Manufacturers' Association

124

respects those industries. 1 If they normally e m p l o y a sufficient number o f w a g e earners to make the destruction o f those industries substantially harmful t o the b o d y economic o f this commonwealth, the statute in question w o u l d have to be adjudged as failing to meet the standard o f reasonableness prescribed

by

Article

III, section 21, o f

the C o n -

stitution. 2

During the legislative session o f 1937, an occupational disease bill was passed, also without P M A support. This act provided a schedule o f compensation rates to be paid for complete disability (no payments provided for partial disability) caused b y the following diseases: silicosis, anthracosilicosis, and asbestosis—where the employee had worked in Pennsylvania for t w o years in an eight-year period preceding his illness.3 D I F F E R E N C E S IN A S S U M P T I O N S

REGARDING

C O M P E N S A T I O N BETWEEN PMA A N D OTHER

INTERESTED

G R O U P S IN P E N N S Y L V A N I A

It would be o f value at this point to point up some very obvious differences in assumptions regarding workmen's compensation for accidents (and some occupational diseases) between the Association and those groups, especially organized labor, w h o

continually

sponsored or favored legislation upon this subject. Before the 1915 Workmen's Compensation Act, the only recourse for an injured employee was a civil suit for damages and 1 M a x e y relied heavily for evidence o f unreasonableness upon the report o f the Industrial T a x Survey Committee, created b y the General Assembly in 1937. T h e committee was to compare the tax burden placed upon Pennsylvania industry with that in other states. T h e Committee's finding that the burden o f workmen's compensation upon the already declining anthracite and bituminous coal industry might possibly bankrupt those industries was apparently very influential in producing Justice Maxey's decision. 323 Pennsylvania Statutes 1552 (1937), Rich Hill Coal C o . v. Bashore (Sec. o f Labor and Industry). 2 Pennsylvania Statutes (1937), A c t #323, p. 1552. 3 Laws of Pennsylvania (1937), A c t S552, pp. 2714-19. There were other occupational diseases covered b y this A c t for which compensation would be paid for partial disability. These included poisoning b y various chemicals, oils, etc.

Policies o f the P M A toward W o r k m e n ' s Compensation Legislation

125

for full w a g e loss in which he had to prove the employer's negligence and be able to defend himself successfully against any charge o f contributory negligence. All those w h o favored some remedy for this situation f r o m the "reformers" to Mr. Grundy were in agreement only upon the need for some means of compensating the injured worker. There were wide differences of opinion as to the proper method to fulfill this need. T h e 1915 A c t represented a compromise between the Republican Progressives led by Governor Brumbaugh, and Mr. Grundy and his followers. As interpreted by John Flynn in 1941, the P M A spokesman, the compensation provided for by the A c t o f 1915 did not and would never represent full wages, "because b y electing to come within its protection, the employee gives up the uncertain outcome o f a damage suit for full wage loss in return for the certainty o f prompt weekly payments o f a percentage o f his weekly wage, and for such prompt and adequate medical care as will accelerate his recovery . . . all at no cost to the employee."1 President Flynn also pointed out that unlike Pennsylvania, three-fourths o f the states required the accident to occur in the course o f employment or rise out o f employment. Further, in Pennsylvania, the cause o f the accident and the employee's negligence were not considered in awarding compensation. T h e assumptions behind legislation which would increase the compensation benefits, judging from the proposed legislation itself, seemed to be that the idea o f fault should never have been considered a factor at all, since the ultimate responsibility was that o f the employer because he was the employer, and that he and the state owed adequate compensation to the injured worker. It was, in essence, the employee's right in a democratic society to receive such compensation. It seems also not too improbable a conclusion to make that many groups did not accept the idea o f payment o f only a percentage o f workers' wages. O f course, the public arguments favoring 1 Minute Book, op. cit., Thirty-second Annual Meeting, President Flynn's address (February 25,1941), 1,476.

126

The Pennsylvania Manufacturers' Association

compensation increases were always based upon the increased cost of living. It is significant that changes made in workmen's compensation since 1939 with PMA approval and support have been made upon this basis. A partial compromise on assumptions regarding such compensation seems therefore to have been reached. Changes Since 1937. At the 1939 session of the General Assembly under the Republican Governor James, the Workmen's Compensation Act of 1915 was re-enacted without many of the changes of the 1937 act. As for the rates, the greatest changes were made on this subject only. The seven-day waiting period was retained; the length of payments for disabilities was reduced and the minimum weekly compensation was lowered. The percentage of weekly wages paid in benefits, however, was increased. The provision in the 1937 act eliminating the negligence of the employee or his voluntary assumption of risk as a defense for the employer against a civil suit for damages by the employee was not restored. It was provided, however, that the employee's violation of the law would be a defense for the employer, even if a compensation agreement had been signed.1 The Occupational Disease Act was revised in 1939. The state, under the new Act, was required to contribute a portion of the compensation for certain diseases and a schedule of payments was set up very similar to the 1937 act. The Association favored both of these acts and, since 1939, has favored a rise in compensation rates for both workers' compensation and occupational disease when it considered the increase in the cost of living warranted such a rise and when its leaders felt its members could afford the added cost.2 The Association has also favored legislation that would shift some of the burden of compensation, especially with occupational disease, to the state. In 1941, the Association favored legislation that 1 2

Laws of Pennsylvania (1939), Act #281, pp. 520-6$. Interview with Mr. Thomas P. O'Neil, October 30, 1953.

Policies of the P M A toward Workmen's Compensation Legislation

127

became Act #65 to amend the Occupational Disease Act making the state liable when certain diseases have developed after an exposure of five years or more. The money was to be paid from the State Workmen's Compensation Insurance Fund, and the state's share was scaled down from 50 per cent between 1941 and 1949 when the employer would be liable for the full amount of the compensation. 1 Changes in Workmen's Compensation Act and Occupational Disease Act since 1945. In 1945, the compensation rates for both occupational disease and workmen's compensation were increased with the approval of the Association. The most significant procedural change made was that if neither party had elected not to be bound by the Workmen's Compensation Act, they shall be held bound by the Act and to have waived any other right or remedy at law or equity for recovery of damages. 2 Since 1945, the "compromise" policy of the Association has produced two further increases in compensation rates and a measure providing for second injuries. 3 This bill was an excellent example of the Association's compromise approach. In 1949, President Owlett, in a letter to the Honorable W . Stuart Helm, chairman of the House Committee on Workmen's Compensation, stated that "among our membership it is generally agreed that there should be a reasonable increase in Workmen's benefits because of the increased cost of living."

Compensation 4

He warned,

however, that the rates must not be raised so high as to adversely effect 1

the

competitive

position of

coal

mines

and

heavy

Laivs of Pennsylvania (1941), Act $65, pp. 1 2 5 - 2 8 . Laws of Pennsylvania (1945), Act «287, pp. 671-80. 3 Laws of Pennsylvania (1947), Act 2365, pp. 8737-4). The bill, passed in 1947, provided that, if an employee, who has incurred permanent partial disability, incurs total disability because of a subsequent injury, he shall receive, after the cessation of payments by the employer for the second injury itself, additional compensation to cover the period of total disability from the state upon award from the compensation board. All other benefits to the employee, except veteran's benefits, shall be credited against the state award. 4 P M A : Legislative Bulletin, No. 2, January 28, 1949, p. 1. See Appendix, note 1 1 . 2

The Pennsylvania Manufacturers1 Association

128

industries, many of which were, of course, Association members.1 The rates of compensation for occupational diseases were also raised without P M A opposition, and beryllium poisoning was made compensible.2 In 1951, the rates on occupational disease were again raised and the Association again was successful in its policy of requiring the state to share part of this burden.3 In 1949, the law provided for a continuation of the state's paying ten per cent of the compensation and in 1951 it was divided between the state and the employer, 40 per cent and 60 per cent, respectively. As before, this sharing of payments pertained to diseases which developed to the point of disablement only after an exposure of five years or more. The Association, during this period, however, was not relieved from opposing what it considered undesirable legislation in this field. Certain bills continually appeared. The most frequent were those to add more occupational diseases to the compensation law; those that would make the State Workmen's Compensation Insurance Fund a monopoly, thereby eliminating other carriers; and those measures aimed at making minor procedural changes in the compensation laws. 4 CONCLUSIONS

The evolution of the Association's compromise policy on workers' compensation and occupational disease compensation has been, from the point of view of their interests, quite logical. The Association's leaders recognized the need for compensation, and its leaders have evolved a compromise policy since 1915 out of necessity. Compromise was necessary both with groups outside the Association and with Association members. Some members could afford to favor increased compensation benefits because of the relative absence of the danger of physical injury or occupational disease from their enterprises. On the other hand, the coal industry 1

Ibid. Laws of Pennsylvania (1949), Act #410, pp. 7379-91. 3 Laws of Pennsylvania (1951), Act $36$, pp. 873-74. 4 See Appendix, note 3. 2

Policies of the P M A toward Workmen's Compensation Legislation

129

and heavy industry, such as the manufacture of steel, because of the high incidence of physical injury and occupational disease, could ill afford to favor higher compensation rates.1 The Association's leaders have, therefore, favored increases in benefits gradually over a long period of time and have endeavored to protect the employer as much as possible in so doing.2 This has been done by shifting a part of the financial burden on to the state and by opposing small procedural changes that would, in some cases, result in higher costs by way of what might be termed "fringe benefits." Judging from the nature of some proposed legislation3 there has been a continuing tendency to regard compensation as a form of health and accident insurance which is to be paid for by the employer as a permanent cost of his business. Needless to say, this assumption has never been nor is now shared by the PMA leaders. Compensation is still regarded by them as a carry-over payment and not as full wages for injuries or diseases that are not considered as being the fault of the employer but for which he must nevertheless insure himself. As the PMA sees it, the worker is obtaining guaranteed compensation. Under a common law tort proceeding, he might not be able to obtain anything if he had been negligent. Therefore, the guaranteed amount the injured worker receives now represents a compromise between nothing at all and his full wages for the duration of his injury. The fact that the Association has insurance interests made their task more complicated. It was probably one of the main reasons behind the Association's opposition to frequent rises in the compensation rates. Such increases would make the work of the insurance companies much more difficult because of the necessity to revise their premium rates. Unquestionably, there has been a relationship between the functioning of the insurance companies as commercial enterprises Personal interviews with Mr. O ' N e i l and G. Mason Owlett. See Appendix, note 4. »Ibid. 1

2

P.M.A.-E

130

The Pennsylvania Manufacturers' Association

and the Association's attitude not only upon laws governing such insurance companies but on the entire field of workmen's compensation. While they traditionally deplored governmental legislation that tended to interfere into business in any way,

the

Association's leaders accepted the State Insurance Fund and the Rating Bureau which sets the premium rates for all carriers issuing compensation insurance. The P M A leaders further successfully fought to prevent

the State Insurance Fund from having a

competitive advantage over private companies by charging lower premiums. The result has been that under this system the P M A insurance companies have prospered. The insurance service has been an attractive feature for the Association in expanding its membership. The joint-stock organization of the Casualty Insurance Company has enabled it to pay large dividends to its policyholders. Because of the restriction of those it would insure to members of the Association only, it has been virtually guaranteed sound risks. The risks that the P M A Casualty Insurance Company would not take have been forced to insure with other smaller companies that might be considered risks in themselves, or with the State Insurance Fund. 1 Being a Pennsylvania corporation, the Casualty Company pays a lower premium tax rate than insurance companies incorporated in other states but operating in Pennsylvania. 2 Unlike other insurance companies, the P M A Casualty Insurance Company concentrates on Pennsylvania and its nineteen district offices are self-supporting. 3 1 C . A . Kulp, " W o r k m e n ' s Compensation in Pennsylvania," The American Labor Legislation Review, X X I V , N o . 4 (December 1934), 174. In a personal interview with Mr. Stanley S. Atkiss, assistant underwriter and production manager of the P M A Casualty Insurance Company (July 8, 1954), he stated among the reasons for the success of the Company that they have been in a position to choose risks: they could turn down bad risks. 2 Personal interview with Mr. Atkiss. Mr. Atkiss believed that the P M A Casualty Insurance Company was more efficiently operated than others and that it had always had sound financial management. He also noted that the tax rate of 2 % of premiums on Pennsylvania companies was so arranged that they were virtually exempt. 3 Ibid.

Policies o f the P M A t o w a r d W o r k m e n ' s C o m p e n s a t i o n Legislation

131

The PMA company has the final advantage, outside o f the field of legislation, of not paying its agents commissions; they are all salaried employees. 1 This situation has not been without its disadvantages for the workmen's compensation program as a whole. In a report on workmen's compensation in 1934, by a committee appointed by Governor Pinchot, it was found that the procedural aspects of compensation legislation so well protected the insurance companies and the employers that the injured worker was always at a disadvantage. Where an injured worker accepted compensation under the 1915 law, he had no free choice o f doctors; treatment was administered either by the insurance company's doctor or the employer's doctor who, in most cases (especially with the P M A insurance company), had to be approved by the insurance company. If an injured worker should contest an award by the State Compensation Board, he was placed at a disadvantage, the committee felt, because all medical records were those o f the insurance carrier's doctors or of doctors approved by them and they were inclined to be partisan.2 The committee also found that the personnel administering the compensation laws were not under civil service but were generally appointed politically, thereby not only hampering the efficiency of the work but also providing a point of access for outside influence. 3 In conclusion, it may be stated that while the Association over the years has developed a policy of compromise on the periodic raising of compensation rates to meet higher living costs, they will never accept the view that it is the duty o f all employers to provide compensation insurance for all accidents and diseases. Cost o f living increases in compensation benefits appear reasonable to

PMA

leaders, but they also are inclined to believe that many workers, because of their own negligence, are obtaining something they don't deserve. 1 3 3

Ibid. K u l p , op. cit., p. 172. Ibid.

132

The Pennsylvania Manufacturers' Association

The P M A probably will always oppose procedural or administrative changes in the compensation laws that would place private insurance companies, the P M A Casualty Insurance Company in particular, at a competitive disadvantage with the State Insurance Fund. 1 The P M A also will probably oppose any change in the control over the compensation administration that would eliminate its accessibility to outside political influence. 2

1 The P M A Casualty Insurance Company actually today has a great competitive advantage over other carriers and the State Insurance Fund because of its joint-stock company organization as well as the aforementioned fact that it is virtually guaranteed relatively good risks because of its connection with the PMA. 2 See Chapter 11 for fuller discussion of access to the administration of workmen's compensation, namely the insurance commission. Also see Chapter 11 for more detail on the administration of the workmen's compensation law and the Pennsylvania Insurance Rating Bureau.

8 Policies of the PMA toward General Wage and Hour Legislation ( j e n e r a l l y speaking, the policy o f the P M A toward legislation affecting wages and working hours has been to support the status quo, or, if necessary, support a change that in effect would be a compromise with opposing interests. It might be assumed that no change in legislation would have taken place until there was a change of party dominance in the state when the Democratic party gained control of the state government in 1935. Many bills, however, passed in the field of wage and hour legislation that the Association opposed before this time—as other interests were strong enough to force the Association to compromise on something rather than to allow no legislation to pass in this field at all. In the area of legislation pertaining to working hours, the bills most frequently introduced were aimed at reducing the working hours of women and minors in industry and, in the case o f minors, in raising the age limit at which they might legally be employed and in reducing their hours. In the area o f wage legislation, bills that would set a minimum wage or would set up a board to regulate wages and hours appeared frequendy. 1 THE PROGRESSIVES

AND

LEGISLATION PERTAINING

WOMEN'S

AND

CHILDREN'S

TO

HOURS

Mr. Grundy had been able to say about the 1911 legislative session of the General Assembly during the administration o f Governor Tener that: " W e managed to get through the session 1

See A p p e n d i x , note 1.

The Pennsylvania Manufacturers' Association

134

without a scratch." 1 But, by 1913, the Progressives 2 o f the Republican party had gained great strength and by the end of that year were to capture the state and dominate the state Republican Party Convention of 1913. 3 The Legislative Committee appointed by the Pennsylvania Republican Party State Convention drafted a child labor bill, a women's hours bill and a minimum wage bill. 4 The minimum wage bill was opposed by the P M A and was, in their terms, "justly defeated." 6 The child labor law in the form presented was opposed and it also failed. Mr. Grundy stated that its sponsors "preferred no change rather than have improved conditions uncoupled from politics." 6 Specifically, the Association opposed the bill which was, " w i t h some modification, the Child Labor Association's bill," 7 because it limited all minors under sixteen years to a nine-hour day and a fifty-hour week. Minors were employed at this time in factories that worked a ten-hour day. The women's hour bill met with the approval o f the Association and was passed. In 1915, the Progressive forces were stronger and the Association suffered defeat on child labor legislation. Mr. Grundy, as PMA spokesman and leader, had been willing to compromise on the child labor issue if minors between fourteen and sixteen years were allowed to work on a fifty-four-hour weekly schedule with one day out for school, making actually a forty-four-hour week. 8 The bill that passed, however, limited the minor's working day to nine hours. Regarding this Mr. Grundy declared: ". . . nine hour 1 2 3

Minute Book, Executive Committee meeting (July 31, 1911), I, 36. See Chapter 1 and Chapter 5. New York Times, January 19, 1913, pp. 1 - 2 .

4

William Draper Lewis, "The Proposed Minimum W a g e Act," 77ic Annals, XLV1II, N o . 7, July, 1913. 6 Minute Book, Executive Committee Meeting (July 19, 1913). I, 97. 6

Ibid.

Charles L. Chute, "Child Labor in Pennsylvania," Hie Survey, XXIX, N o . I7(january 25, 1913), p. 542. 8 Minute Book, Seventh Annual Meeting, Mr. Grundy's address (January 10,1916), I, 180. 7

Policies of the P M A toward General W a g e and Hour Legislation

135

minors cannot continue to work in ten hour mills and factories. . . . , f l The Association's concern over wage and hour legislation that would effect minor and female labor was quite understandable since the textile industry, very well represented in the Association, would be most effected by such legislation, as it employed many minors and females. Such labor was paid less than adult male labor and this saving in cost of production was a considerable factor in making the industry a success competitively. 2 Mr. Grundy did not emphasize this fact at the time publicly as much as the fact that while he employed no one under the age of sixteen, the law made it impossible for him to employ minors (between fourteen and sixteen) who were "able and willing and anxious to work and in many instances badly in need of w o r k . " 3 The majority of members of the Association could not have been hurt too badly by the bill, however, if a poll to ascertain the number of minors employed by members was correct. According to this poll, taken in 1 9 1 4 - 1 5 , with replies from 96 per cent of the members, 248,000 people were employed by P M A members, 146,691 were males over sixteen years, and 5,756 were under sixteen; 65,767 females were over sixteen years of age and 8,715 were under sixteen. Thus, the law affected less than 6 per cent of the employees of P M A members. 4 The fact that so f e w employees of P M A members were affected by the so-called Brumbaugh Child Labor Bill—albeit possible that these were probably concentrated in a f e w individual factories— might have motivated Mr. Grundy's policies concerning legislation in 1 9 1 7 on the subject of child labor. Far from opposing them (child labor and workmen's compensation laws), "the Association encouraged them in every w a y possible, and it was only the impracticable features introduced into the bills by the Governor for political effect 1

Ibid. Personal interview with M r . Grundy, M a y 12, 1 9 5 3 . 3 Minute Book, Seventh Annual Meeting, M r . Grundy's address (January 10, 1916), 1 , 1 8 1 . 4 Ibid., Sixth Annual Meeting (January 1 1 , 1 9 1 5 ) , 1 , 1 6 4 - 6 5 . 2

The Pennsylvania Manufacturers' Association

136

that met with opposition." While these defects were considered no less marked than they were two years before, it was Mr. Grundy's opinion that "the laws should remain as they are for the present." 1 B I L L S T O C H A N G E T H E H O U R S A N D W A G B S OF

LABOR—

1915-35

From then, 1935 and 1937, no legislation seriously altering women's and minors' hours and wages one w a y or another, or even general w a g e and hours, was passed. Bills that would shorten the working hours of women and legally employable minors were continually introduced at each session of the General Assembly and were continually opposed by the Association. These bills, somewhat ironically perhaps, grew

more

extreme in their provisions over the years. Beginning with bills providing for "one day's rest in seven" in the early 1920's, there came bills to limit women's working hours to a forty-four-hour week in the late 1920's, and then bills to limit working hours for all labor, adult and minor, male and female, to a forty-hour week and an eight-hour day. O f the "one day's rest in seven" the Association stated: "There is no need for this legislation—no one works more than six days a week unless he or she wants to." 2 Again for the bills providing an eight-hour day for women, the Association shrewdly observed: "It aims to enable workers to get extra pay after eight hours work and really means only a forty-four hour w e e k . " 3 It was further noted that " f e w women or girls work fifty-four hours a week. In many mills they work ten hours a day for five days and are given all day Saturday." 4 The Association opposed legislation reducing the working hours 1

Ibid., Eighth Annual Meeting, Mr. Grundy's address (January 8, 1917), I,

196. 2 P M A : Legislative Bulletin, No. 4, February 27, 1923, p. 2. Re: House Bill 1 7 9 (see Appendix, note, 2). 3 P M A : Legislative Bulletin, No. 8, March 22, 1923, p. 2. Re: House Bill f 850 (see Appendix, note 3). 4 P M A : Legislative Bulletin, No. 9, March 29, 1923, p. 3.

Policies of the P M A toward General W a g e and Hour Legislation

137

o f all labor, minor or adult, female or male, because it w o u l d result in higher w a g e s and thus higher costs o f production. W h i l e m a n y o f those w h o sponsored such legislation regarded it as humanitarian, the P M A saw it as a means to obtain higher w a g e s indirectly. A universal eight-hour day is impossible. Some must w o r k longer hours, others will. This is a private matter. T h e real issue is more wages. The pretended issue is more time for rest, recreation, intellectual development, or to be at home, yet most gladly w o r k overtime because o f the higher wages. T h e strikes throughout the country [ 1 9 1 9 ] , because of the cutting of overtime, prove that the eight-hour demand on humanitarian grounds was simply h u m b u g . 1 W i t h the m i n i m u m w a g e , the eight-hour day, the f o r t y - h o u r w e e k , the f i v e - d a y week, or altering the hours o f labor, child or adult, the consideration always w a s — w i l l it raise or l o w e r the cost o f production; Stated M r . G r u n d y in regard to his opposition to the f i v e - d a y w e e k : If a workman's output increases, his w a g e goes up but the cost o f the product is lowered and easier f o r him to buy. W e must have production; therefore, w e must have a full w o r k week. W e cannot expect to get into f o r t y hours as much as w e have been getting into forty-eight or f i f t y four. . . . As the worker dreams of" as much pay f o r f o r t y hours as for forty-eight, or f o r five days as for six days, then a reduction in the cost of production is out of question. Moreover the added holiday and its expenditures would mean an expectation of increased wages to meet the increased expenditures during the idle time? LEGISLATION UNDER THE EARLE A D M I N I S T R A T I O N :

I935

D u r i n g the D e m o c r a t i c administration o f G o v e r n o r Earle, 1 9 3 5 39, several laws passed, concerning child labor, w o m e n ' s hours, and general w o r k i n g hours and w a g e s in general, o v e r P M A opposition. It is o f some interest to note that even w i t h m a n y political allies in the 1

P M A : Monthly Bulletin, January, 1919, p. 3. Minute Book, Eighteenth Annual Meeting, (February 2 1 , 1927), I, 330. 2

Mr.

Grundy's

address

The Pennsylvania Manufacturers' Association

138

Senate of the General Assembly in 1935, a child labor law, Act #418, opposed by the Association, was passed while other bills affecting general working hours were not. This bill was more radical than any previous in that it restricted the type of w o r k as well as the hours for minors under sixteen years and for those up to eighteen years as well. 1 The other bills passed were more extreme than most of those usually opposed by the Association and included such things as the establishment of a board in the Department of Labour and Industry to determine minimum wages for women and minors (Act $248), 4 and the provision for a forty-four-hour week and an eight-hour day for all labor (Act #567). 3 LEGISLATION

SINCE

1937

After the Democratic administration ended in 1938, no bills seriously altering the hours and wages of labor in general were passed over complete P M A opposition. Several passed that were favored by the Association and one, in 1947, represented a compromise. Exemplifying the type of bill that passed with favor by the Association was Act #164 in 1939, amending the Women's Hours Act of 1913 to allow women working in charitable, welfare, and other non-profit institutions to work a ten-hour day and fortyeight hours in six days. 4 Also, in 1939, Act #165 was passed allowing females working in manufacturing plants operating on two shifts to work on either shift (between 6 A.M. and 12 P.M.) for an eight-hour day and a five-day week. 5 A third example was Act #543 in 1947 under Governor Duff. B y this bill, also amending the Women's Hours Act of 1 9 1 3 , women could be employed in manufacturing establishments at any hour of 1

Laivs of Pennsylvania 1935, Act ¥418. Laws of Pennsylvania (1937 [including the special session of 1936]), Act «248, I, 917-25. 3 Ibid, (including the special session of 1936), Act $567, II, 2766-89. 4 Laws of Pennsylvania (1939), Act £164, pp. 305-6. 4 Ibid., Act 1 1 6 5 , pp. 306-7. 2

Policies o f the P M A toward General W a g e and H o u r Legislation

139

the day or night f o r a ten-hour day, a forty-eight-hour w e e k over a six-day period p r o v i d e d overtime w a s paid f o r w o r k over a f o r t y f o u r - h o u r w e e k . Females under eighteen years could not w o r k , h o w e v e r , before 6 A.M. or after 9 P.M.1 T h e " c o m p r o m i s e " in 1947 w a s A c t #544. This bill was originally House #195 calling for the elimination o f all w a g e differentials 2 o n account o f sex and was opposed b y the Association. T h e amended measure, passed apparently w i t h Association approval,

allowed

differentials to b e made f o r seniority, experience, training, skill, ability, and difference in duties performed, but not o n account o f sex. 3 T h e c o m p r o m i s e w o u l d appear to have been in the P M A ' s favor. CONCLUSION

T h e fact that w a g e and hour legislation, especially that affecting w o m e n and minors, has declined as a m a j o r field o f concern f o r the Association has n o t been because laws dealing w i t h such legislation have n o t been proposed. Bills have appeared calling f o r a five-day w e e k f o r w o m e n , the elimination o f minors under eighteen years f r o m certain occupations, and f o r higher m i n i m u m w a g e s and l o w e r w o r k i n g hours. 4 Aside f r o m the small amount o f the w o r k i n g force w i t h i n the state that m a y properly be called engaged in intrastate c o m m e r c e , the field o f w a g e and hour legislation f o r male and female, adult and minor, has been taken over b y the national g o v e r n m e n t . T h u s the topic has declined in importance as a subject for state legislation and has, therefore, been r e m o v e d f r o m the most important realm o f activity and influence o f the Association. Further, the legislative changes that have taken place in the field o f w a g e and h o u r 1Laws of Pennsylvania (1947), A c t #543, pp. 1 3 9 7 - 1 4 0 1 ; also P M A : Legislative Bulletin, No. 1, January 31, 1947, p. 7. 2 History of Bills in the Pennsylvania General Assembly (Harrisburg, 1957), p. 32. 3 Laws of Pennsylvania (1947), A c t #544, pp. 1401-4. 4 See A p p e n d i x , note 1.

The Pennsylvania Manufacturers' Association

I40

legislation, especially those affecting minors and w o m e n seem to h a v e been accepted b y the Association leaders and members. W a g e and h o u r legislation has lost m u c h o f its appeal as an issue around w h i c h g r o u p cohesion apparendy can be built. It is still o f great interest, o f course, to Association m e m b e r s w h o are e n g a g e d in intrastate c o m m e r c e and w h o are thus b e y o n d federal regulation. These members, h o w e v e r , d o not constitute a m a j o r i t y in the Association,

although

the Association has successfully

opposed

measures that w o u l d c o m p e l employers e n g a g e d in intrastate c o m merce to c o m p l y w i t h federal w a g e and h o u r legislation. 1 T h e history o f the Association's policies t o w a r d w a g e and h o u r legislation has been the story o f the decline o f a m o s t significant issue. W h a t was once one o f M r . G r u n d y ' s most important interests, especially legislation affecting minors and w o m e n , and one o f the most frequent i f not constant subjects in his addresses to the annual meetings and his reports to E x e c u t i v e C o m m i t t e e meetings, is n o w rarely, i f ever,

mentioned

by

Association leaders. D u r i n g

the

legislative sessions o f the General A s s e m b l y in 1951 and 1953, n o legislation o f this nature was mentioned in the Legislative o f the Association.

1

See Appendix, note 4, Senate Bill #264, 1941.

Bulletins

9 Policies of the PMA toward Other Legislation of Interest to Manufacturers General Labor Legislation. Before 1933, the PMA successfully opposed all legislation that might be termed labor "reform" legislation—legislation that would favor the growth and functioning of labor unions or would in any way regulate so-called employer practices. Before 1931, however, there was very little comprehensive legislation of this nature introduced. In 19x7, for example, about the most drastic bill proposed favoring labor unions was House #283 prohibiting advertisements or solicitations for employees during a strike unless such advertisements stated that a strike was taking place. Another, House # 1 3 1 1 , would allow the Commissioner of Labor and Industry to arrest "anyone, who, without obtaining a license, advertises or assumes to employ or procure employment for any person or persons who, by the terms of such hiring, are to travel to another county of the State or to another state in search of the employment offered." 1 Both of these bills were aimed at preventing the importation of outside labor to break a strike or to replace employees who were attempting to organize a factory. Regarding such legislation the PMA argued that they were "not only vicious" but especially at that time "savored of disloyalty." "Labor is scarce and will become more and more so and anything restricting production will be against the interests of the country and its people." 2 Perhaps a more candid example of PMA leaders' policy on the subject of such legislation was reflected in a decision of the Executive 1 2

P M A : Legislative Bulletin, No ¡1, Ibid.

M a y 24, 1 9 1 7 , p. 2.

142

The Pennsylvania Manufacturers' Association

Committee of the Association in 1921. In reply to a letter from Commissioner Connelly of the Department of Labor and Industry as to "when is a strike not a strike," the Committee decided that "it was unwise for this Association to recognize the right of an organization of employees to declare a strike." 1 After 1931, a great deal of legislation on labor union rights appeared. Most of the measures proposed in 1931 and 1933 were aimed at preventing strike-breaking. Such bills, as House #773 to prevent the state police from entering a strike area unless directed by the governor 2 or House #226 to repeal the Industrial Police Bill of 1929, were opposed by the PMA and failed to pass.3 House #1347 to outlaw "yellow dog contracts," and House #1232 to license private detective agencies,4 were opposed by the Association and were not passed. The only measure of any importance that did pass over P M A objections was in 1933 when the "yellow dog" contract was made illegal.6 THE EARLE ADMINISTRATION LABOUR

RELATIONS

ACT

AND THE

OF 1 9 3 7

A N D

PENNSYLVANIA AMENDMENTS

OF

1939

After 1933, a great deal of what is now termed New Deal labor legislation was proposed and passed over PMA opposition. Following the Earle administration, 1935-39, the Association role was reversed to a position of favoring legislation to amend or modify what had been passed during the Democratic administration. Some of the legislation, however, was accepted by the PMA, such as the repeal of the 1929 Industrial Police Act 8 and the law regulating and, in some instances, prohibiting industrial homework, 7 and the 1

Minute Book, Executive Committee meetings (May io, 1921), I, 62. P M A : Legislative Bulletin, No. 5, Marchó, 1931, p. 1. 3 P M A : Legislative Bulletin, No. 3, January 27, 1933, p. 1. * P M A : Legislative Bulletin, No. 9, March io, 1933, p. 1. 6 Laws of Pennsylvania (1933), Act #219, pp. 995-96. • Laws of Pennsylvania (1935), Act #156, pp. 348-49. 'Laws of Pennsylvania (1937), Act H76, pp. 665-74. 2

Policies of the P M A toward Other Legislation

143

prohibition against recruiting outside workers during a strike. 1 Other legislation, passed during the Earle administration, such as the so-called "Little Wagner A c t " (Act #294, 1937) which established a Labor Relations Board and defined unfair labor practices, and the Anti-Injunction Act (Act #308, 1937), were amended in 1939 under Governor James. These amendments made with the support of the P M A were substantial, but the essence of these acts remained. The amending legislation2 to the "Little Wagner A c t , " made the following significant changes : (a) no member of the Labor Relations Board could be a member of a business organization or a labor organization, (b) no checkoff would be allowed without the approval of a majority of the employees, (c) the Board was permitted to investigate labor disputes on other questions concerning representation of employees upon petition of an employer or a representative labor organization, (d) if a party filing a complaint charging unfair labor practice shall be found to have engaged in an unfair practice in connection with the matter of the complaint, such a fact shall be a complete defense to the complaint, (e) unfair labor practices would hereafter include such things as coercion or threats on the employer, or the exclusion of an employee from the labor union at a company in the process of unionization, as long as the employment of that person does not violate any previously existing agreement with the union. The Anti-Injunction Act was amended so that the restraint on injunctions should not apply to disputes which were in disregard or in violation of an existing labor agreement or in a labor dispute where the majority of the employees had not joined the union, or in a jurisdictional strike or in a sit-down strike or where the employers' property had been seized or damaged. 3 The purpose of all of these amendments, therefore, was not to 1

Ibid., Act J 3 9 I , p. 1982. -Laws of Pennsylvania (1939), Act «162, pp. 293-302. 3 Ibid., i A c t 163, pp. 302-5.

144

The Pennsylvania Manufacturers' Association

destroy the legislation as such but to balance it in the direction of the employer. In contrast to the view of the Association's leaders regarding strikes in the early twenties, the Association had now accepted the right to strike but it wished to hedge that right with legal restrictions. These legal restrictions reflected certain assumptions on the part of the Association regarding the paramountcy of property rights and the view that labor contracts, like all other contracts, should be legally binding on both parties and be legally enforceable. Amendments of 1947. The next significant amendments, again with positive support from the P M A , were made in 1947. Picketing by persons not employed at the place of employment being picketed, secondary boycotts, and jurisdictional strikes were made unfair labor practices.1 Since the advent of the labor legislation during theEarle administration of the 'thirties, a compromise policy has been adopted toward such legislation by the Association. Before the passage of this legislation, the Association opposed in principle any law that would tend to regulate the relationship between employees or representatives of employee organizations and employers. Such relations were deemed private and outside the scope of proper governmental action. The philosophy of Mr. Grundy regarding labor unions2 provides the explanatory background for this preNew Deal policy. There might be several reasons inferred as to why the Association, since 1938, has apparently adopted a compromise policy—why, specifically, they favored amendments to the laws passed establishing regulations and regulatory machinery for employer-employee relations rather than complete repeal. Probably the most significant reason is that such legislation was, by then, national legislation, affecting all American manufacturers and employers. Because of this, and since state legislation only 1 Laws of Pennsylvania 1445-48. 2 See Chapter 5.

(1947), Act #484, pp. 1 1 6 0 - 6 1 ; Act #558, pp.

Policies of the P M A toward Other Legislation

145

affects intrastate commerce, the field of labor legislation has greatly diminished in interest and importance to the P M A leaders.1 FEPC

LEGISLATION

The P M A has never taken a positive role regarding FEPC legislation. At best, they have been neutral, basing their views on the principle of non-interference with the relationship between employer and employee. The only evidence that implies a somewhat negative attitude regarding FEPC legislation resulted when an FEPC bill was introduced in 1921. The bill was introduced and defeated in 1921 and again in 1923. The Association stated in the Legislative Bulletin in 1923: "The Equal Rights Bill would again make its appearance. It was introduced by Representative Asbury, colored, and is similar to the one defeated in 1921." 2 While this statement does not offer evidence of a firm opposition policy to such legislation, it could be inferred with fairness that the Association certainly did not support such legislation. Such absence of their support could be presumed to be tantamount to actual opposition. This seemingly ambiguous attitude toward FEPC legislation remains to this day. The ambiguousness is generally more on the negative side than the positive. UNEMPLOYMENT

COMPENSATION

Unemployment compensation legislation was introduced as early as 1 9 1 1 and was opposed by the PMA. 3 In 1921, such legislation was again introduced and was vehemently opposed by the Association. It (House #1100) was referred to in the Legislative Bulletin as "The Pay For Idleness Bill." It was stated further in the Bulletin: 1

Interview with G. Mason Owlett, October 1 9 , 1 9 5 3 . P M A : Legislative Bulletin, No. 6, March 8, 1 9 2 3 , p. 4. 3 For 1 9 1 1 : Minute Book, Executive Committee meeting, M r . Grundy's report (July 3 1 , 1 9 1 1 ) , I, 37. 2

146

The Pennsylvania Manufacturers' Association This is the last word in paternalism and union labor schemes to get

something for nothing. It would be ridiculous in the extreme if labor leaders did not really convince their ignorant followers that such a condition will sometime come. There will be little work done when there is a premium on idleness, for if $ 1 . 5 0 a day were granted, it would soon be raised to multiples of that amount. While such a bill is not taken seriously now, it shows toward what conditions w e are tending. 1

In a later Bulletin, unemployment compensation or insurance, as it was then frequently called, was handled more roughly: "State insurance, unemployment insurance, compulsory health insurance and all such socialistic schemes have been imported from abroad and are un-American. . . . While there is fortunately no danger of such legislation in Pennsylvania, it is well to note that the Hun idea has friends in this country." 2 The Pennsylvania Association

Unemployment Compensation Act of 1937.

successfully opposed unemployment

The

compensation

until the special session of the General Assembly during the Earle administration in 1936. 3 In 1937, it was amended to bring it in line with the federal unemployment compensation law. 4 Employers were to pay a pay roll tax of 3 per cent, 2yV per cent of which was set and levied directly by the state. The benefits paid were to be based upon a percentage of average wages that had been earned over a period of time. There was to be a waiting period between the time employment ceased and the compensation payments were to begin and a maximum period for these payments. All of these rates and time periods were to be set by the state legislature. Following the Earle administration, the P M A used its customary tactics and favored amendments to the legislation of 1937. None were made, however, until 1941 when legislation was passed 1

P M A : Legislative Bulletin, No. 7, March 24, 1921, p. I. P M A : Legislative Bulletin, No. 10, April 1 5 , 1 9 2 1 , p. 2. In both paragraphs, the italics are the author's. s Laws of Pennsylvania (1937 [including special session of 1936]) Act ft 1, II, 2897-2923. 4 Laws of Petmsyhania (1939), Act » 1 7 5 , 1 , 658-65. 2

Policies of the P M A toward Other Legislation

147

redefining "wages." A yearly limitation of $3,000 was set and wages were no longer to include payments made by employer toward the employee's withholding tax, or payment to a health insurance fund, or to pension plans. 1 Since compensation payments were based upon employee's earnings, the limitation of $3,000, in effect, set a maximum limit on these payments. A man earning over $3,000 yearly would receive compensation payments based upon the maximum yearly limit of $3,000. B y eliminating such payments for so-called fringe benefits from the calculation of "wages" it served to reduce compensation payments. The net effect, therefore, of this legislation was to lower the compensation benefits and thereby enable the state to lower the amount of payroll tax the employer must pay. Perhaps the most successful amendment or modification was Act #283 in 1943 establishing a merit-rating plan. 2 Briefly, merit-rating, or perhaps more appropriately experience-rating, permitted a corporation to pay the unemployment compensation tax according to a new table of percentages based upon the division of total wages paid by an employer to his compensated employees during the last three calendar years by the total wages paid to all employees. If an employer had had a relatively small number of compensated employees during that period, his tax rate would be lower than the employer who had had a large number of such employees. In effect, experience-rating "individualized" the compensation tax. The further significant amendments that passed and were favored by the P M A included: a rate increase in 1945 couplcd with a change in the definition of a compensated employee; 3 an act placing experience or merit-rating on a permanent basis;4 and one redefining " w a g e s " in 1947;® and, also in 1947, a bill increasing the duration of the benefits and at the same time making strikers 1 2 3 4 5

Laws Laws Laws Laws Ibid.,

of Pennsylvania (1941), of Pennsylvania (1943), of Pennsylvania (1945), of Pennsylvania (1947), Act #18, pp. 50-51.

Act Act Act Act

$9, pp. 946-47. J283, pp. 639-45. $408, pp. 1 1 4 5 - 8 1 . £227, pp. 498-507.

148

T h e Pennsylvania Manufacturers' Association

ineligible for benefits ; 1 legislation in 1949 to increase the rates® and to modify further the manner in which contribution rates by employers were to be determined; 3 and in 1951 another increase in benefits along with a further modification in employee eligibility for payments.* During this period, legislation was continually offered to eliminate the merit or experience-rating system, to increase the benefits, to eliminate the one-week waiting period, to provide for compensation for partial unemployment, to provide for unemployment sickness compensation, to give compensation to dependents of the unemployed, and to prohibit voluntary retirement (at 60 years of age) from disqualifying a man for unemployment compensation. All o f these were opposed by the Association primarily because they felt it would increase the rate employers would have to pay or because they considered the legislation unfair to employers or as not safeguarding the unemployment compensation system from being misused. None of this legislation was passed. The pattern of compromise may again be seen here. The P M A has not completely opposed all benefit increases, although they opposed some. They were increased, with P M A approbation, in 1945, 1947, 1949, and 1951. Along with these increases, the Association has obtained certain desired changes in other aspects of the law such as the declaring of striking employees as ineligible for compensation, noted above, and providing in the same act (#493, 1947) penalties for employees fraudulendy claiming compensation. 5 STREAM

POLLUTION

The subject o f stream pollution has been an old problem in Pennsylvania. It has been of great importance to many o f the state's manufacturers for the obvious reason that its cause has largely been 1 2 8 4 6

Ibid., Laws Ibid., Laws Laws

A c t «493, pp. of Pennsylvania A c t «551, pp. of Pennsylvania of Pennsylvania

1186-95. (1949), A c t Ï404, pp. 1355-59. 1854-73. (1951), A c t 1408, pp. 1580-1608. (1947), A c t Ï493, pp. 1186-95.

Policies of the P M A toward Other Legislation

149

the contaminating waste matter thrown off into many of the state's waters by certain manufacturing processes. Its rectification would, therefore, be at the expense of those owning such manufacturing concerns or the state itself. Legislation before 1943. The PMA opposed all anti-stream pollution legislation submitted before 1943. The Association preferred to leave the prevention of stream pollution in private hands rather than have it regulated by the state,1 and, while recognizing such pollution as undesirable, they felt that since Pennsylvania was an industrial state such pollution was unavoidable. Rather than penalize those manufacturers, they argued it was better, as a choice of evils, to pollute the streams and lose some fish.2 The only anti-stream pollution measure passed before 193 5® was Act $ 3 1 1 in 1923 which authorized the Advisory Board of the Department of Health to make orders and regulations to preserve the purity of public water supplies. While the injunction power was granted to the Board, it was forbidden in this legislation to apply its orders and regulations to "sources of water shown, at said public hearing, to be polluted or contaminated by industrial wastes at the time of said hearing or at any time within one year prior thereto." 4 The legislation was therefore applicable only to those who might, in the future, pollute the waters. It was not until 1937, under the Earle administration, that any far-reaching and effective anti-stream pollution was passed.6 This legislation permitted political subdivisions to incur bonded indebtedness to abate pollution; it also provided that the present discharges 1

P M A : Legislative Bulletin, No. February 22, 1923, p. 2. Ibid., February 24, 1927, p. 1. It should be explained here that the specific bill referred to was House ¡¡911 which would fine manufacturers for the number of fish killed in the streams that their industrial wastes polluted. It was typical of all anti-stream pollution legislation introduced at this time. 3 An act virtually devoid of any enforcement provisions was passed in 1905, before the founding of the P M A . 4 Laws of Pennsylvania (1923), Act 1 3 1 1 , pp. 793-94. 5 Act $55 (Laws of Pennsylvania, pp. 141-42) was passed in 1935 but required only that abandoned coal mines must be scaled to prevent pollution. 2

150

The Pennsylvania Manufacturers' Association

of industrial wastes had to cease if the Sanitary Water Board of the Department of Health found them dangerous to public health.1 The Act, significantly, also specified that "such [waste] that is inimical and injurious to public health or to animal or aquatic life shall nevertheless be deemed unlawful and a nuisance whether the Board shall declare so or not." 2 Governor Martin's Administration—1943 and 1945. Further legislation regarding stream pollution was successfully opposed by the Association until the administration of General Edward Martin, who received the support of the P M A when he ran for governor. It has been reported that after Governor Martin saw the Philadelphia waterfront he called in Messrs. Grundy and Pew and announced that he was going to support anti-pollution legislation.3 Spearheading the Martin administration's drive for this legislation was the attorney general, James Duff. 4 The legislation passed during the last legislative session of Governor Martin's administration was passed largely because the P M A withdrew its opposition. The same legislation that passed in 194$ had failed in 1943, "killed" in the same committee that reported it favorably in 1945. 5 Among the acts passed were the Delaware River Basin Compact with New York and New Jersey to prevent pollution of the Delaware River,® the Potomac River Basin Compact with West Virginia, Maryland, Virginia, and the District of Columbia to prevent pollution of the Potomac River, 7 and an antipollution project for the Schuylkill River to be carried out by the state with appropriated funds.8 Further legislation was also passed 1

Laws of Pennsylvania (1937) Act #394, II, 1987-2003. Ibid., Act $394, Article III, Scction 302, p. 1995. The Act also repealed those of 1905 and 1923. 3 John Lewis, "Pennsylvania's Hidebound Revolutionary," Saturday Evening Post, C C X V I I I , No. 19 (November 10, 1945), 75. 4 Ibid. 5 See Chapter 13 (House Committee 011 State Government). * Laws of Pennsylvania (1945), Act ¡ 1 2 3 , pp. 272-82. 7 Ibid., Act «405, pp. 1134-39. 8 Ibid., Act ?44l, pp. 1383-89. 2

Policies o f the P M A toward O t h e r Legislation

151

amending the anti-pollution l a w o f 1937 so that all prosecutions f o r stream pollution had to be carried o u t b y the attorney general. T h e provision

regarding

what

constituted

pollution

(whether

the

Sanitary W a t e r Board declared it to be so or not) remained, and coal mines w e r e specifically included and emphasized in this legislation. 1 T h e o n l y legislation passed after 1945 was during

Governor

D u f f ' s administration. O n e bill p r o v i d e d for the issuance and sales o f state bonds to finance anti-pollution projects, 4 and the other required that all abandoned coal mines (before it was just b i t u m i n ous) must be sealed. 3 Stream pollution as an issue for the Association has virtually disappeared. T h e Association was forced to c o m p r o m i s e o n the subject after t h e E a r l e administration because o f the pressure exerted b y the other groups headed b y G o v e r n o r M a r t i n in the state Republican organization. T h e co-operative m e t h o d o f ridding the streams o f industrial waste that the Association favored had apparently n o t been sufficiently successful. It should be noted, h o w e v e r , that w h e n the great anti-pollution projects w e r e started they w e r e state projects, albeit indirectly paid for b y the state's manufacturers t h r o u g h their taxes. Nevertheless, the main burden o f the anti-stream pollution projects had been shifted a w a y f r o m the manufacturer. OTHER

LEGISLATION

T h e P M A traditionally has been primarily interested in the a b o v e fields o f legislation, especially those discussed in previous chapters, taxation and w o r k m e n ' s compensation. T h e r e h a v e been other legislative items o f m u c h smaller importance to the manufacturers o f the state as a w h o l e u p o n w h i c h the P M A has had a policy and has taken definite a c t i o n — a l w a y s f o r v e r y specific and special reasons. O n the other hand, there has been legislation, o f t e n o f importance to the state as a w h o l e , t o w a r d w h i c h the P M A has adopted w h a t 1 2 3

Ibid., A c t j 177, pp. 435-41. Laws of Pennsylvania (1942), A c t #455, pp. 1062-65. Laws ojPennsylvania (1947), A c t S490, pp. 1 1 7 7 - 7 9 .

152

The Pennsylvania Manufacturers' Association

might be termed an indifferent or neutral policy, and here again for very definite reasons. It is of value to note what some of this legislation has been and the Association's policy toward it. Old Age Pensions. T o exemplify the first type of legislation toward which the Association has had a definite policy, the so-called old age pension legislation serves well. Legislation to provide old age pensions was introduced by William S. Vare, a state senator and Republican leader from Philadelphia in 1923. The pension had been opposed by the Association when introduced in 1921. The P M A argued that the aged were amply cared for and that such a pension plan would be much too expensive. "There can be no pressing need for the state to interfere with the good work being done by Counties, by fraternal and benevolent homes and private relief societies," 1 the P M A argued. The Vare legislation was passed in 1923, creating an Old Age Assistance Commission and an Old Age Assistance Board in each county. Pensions were to be paid to those over seventy years of age who did not own more than three thousand dollars worth of property. 4 The PMA's successful opposition to the measure was reflected by the fact that only twenty-five thousand dollars was appropriated to carry it out. This made it virtually inoperable. Old age pension legislation continued to appear in 1927, 1931, 1933, and 1935, and was always opposed by the P M A , and not until 1937 under the Democratic administration was anything in this field passed.3 The Association was greatly assisted in its opposition to the legislation by the constitution of Pennsylvania which specifically forbade appropriations for pensions.4 Consequently, such legislation would have had to be in the form of a constitutional amendment— a 1

P M A : Legislative Bulletin, No. 6, March 17, 1 9 2 1 , p. 2. P M A : Legislative Bulletin, No. 6, March 17, 1921, p. 2. 3 A constitutional amendment was passed which allowed pensions for military services, blind persons over twenty-one years of age, mothers with dependent children, and for aged persons without adequate support. 4 Constitution of Pennsylvania, Pennsylvania Manual (Harrisburg: C o m monwealth of Pennsylvania, 1950), X I C , Article III, Section 18, p. 37. 2

Policies of the PMA toward Other Legislation

153

difficult thing to accomplish a n y w h e r e and especially in Pennsylvania. Regulation

of Bakeries.

A

second

example

w h i c h the Association acted was bakery

o f legislation and bakery

upon

products

licensure. T h e old age pension legislation was opposed, aside f r o m the constitutional factors involved, because appropriations f o r it w o u l d have had to be paid f o r b y higher taxes w h i c h , the Association's leaders felt, w o u l d inevitably fall upon corporations. T h e r e w a s also the factor that pensions as such w e r e abhorred in M r . G r u n d y ' s philosophy. W i t h bakery and bakery products regulation, the issue was n o t as o b v i o u s or clear-cut. T h e first regulatory legislation concerning bakeries w a s in 1933. A bill was passed requiring that all bakeries be licensed and meet certain standards o f cleanliness in order to protect the public health. 1 T h e P M A registered n o disapproval o f this legislation and it passed. This was in line w i t h past P M A

policy concerning

regulation

t h r o u g h licensure to protect the public health. A n o t h e r bill in 1941 w a s passed requiring that all bakery products, a m o n g other similar products, had to be stamped on their package or w r a p p e r that they w e r e produced b y licensed bakeries or producers. 3 T h e only legislation that m i g h t have affected bakery products before the a b o v e - m e n t i o n e d bills w e r e passed was the 1913 C o m m o d i t y A c t w h i c h required that the packages o f all c o m m o d i t i e s state, in terms o f w e i g h t , measure, or numerical count, the contents o f the packages. 3 B r e a d wrappers, h o w e v e r , w e r e n o t considered such a package in the terms o f the l a w . In 1949, House B i l l #773 passed the House o f Representatives (199-0). It required n o t o n l y that all bread wrappers carry the n a m e o f the baker and the distributor but also should s h o w the exact w e i g h t o f each l o a f o f bread. T h e Pennsylvania Bakers' Association, an affiliate o f the P M A , unjustifiably 1 2 3

burdening.

objected to this latter requirement as They

requested

that the

Laws of Pennsylvania (1933), Act #168, pp. 912-15. Laws of Pennsylvania (1941), Act »243, pp. 575-77. Laws of Pennsylvania (1913), Act $445, pp. 465-68.

Association's

154

T h e Pennsylvania Manufacturers' Association

leaders act to prevent the passage of this legislation in the Senate.1 The argument of the Bakers' Association against the bill and given by the P M A before the Senate Committee on Rules was quite simple. Since the bakery business, by the nature of its product, was highly competitive, it was difficult to adjust the prices of bread by an increase or decrease in the price o f each loaf of bread. The price of the loaf depended upon the locality in which it was sold and the price in nearby localities or markets. Were a small baker, whose products were sold almost exclusively to a single community, to raise his price per loaf even a small amount whenever the price of flour rose, a larger producer could easily move in on the small baker's market. The larger company could afford to keep the price low and, possibly, sell at a loss in order to gain a new market. Consequendy, in order to survive amidst such competition and in the face o f possibly increased costs, such as a rise in flour prices, the baker will reduce the total amount of ingredients used in each loaf of bread (still retaining, however, the same proportion) and thereby reduce its weight. The requirement of such exact weight being stamped on each wrapper would result in a constant weight being maintained. In this case, many small bakers would be forced out of business or would have to alter the proportion o f ingredients in the bread and thereby affect its quality (which might in turn be ruinous to the business). Otherwise, bakers would have to have special wrappers made up which would allow weights to be stamped thereon daily. The added financial burden of this might also be ruinous. The Senate Rules Committee was, apparently, sufficiently impressed with the P M A argument as the bill's path through the Senate was abruptly terminated at that point. This bill is illustrative of an apparent point of view of the P M A . While they never opposed legislation that was obviously in the 1 O w l e t t , op. cit., p. 50. T h i s specific case was taken, according to M r . O w l e t t ' s thesis, f r o m the P M A files. T h e author k n o w s , f r o m a conversation w i t h M r . O w l e t t , that m u c h o f the i n f o r m a t i o n concerning this specific legislation and the Association's p o l i c y and actions thereon came f r o m his father, G . M a s o n O w l e t t , the late president o f the Association.

Policies of the P M A toward Other Legislation

155

interest of public health and safety, they were always more concerned with the protection of their members' interests. In a case such as this, where the public's health and safety were not so much an issue as fairness to the consumer, the P M A acted to protect its members rather than the public. BILLS UPON W H I C H PMA HAS BEEN N E U T R A L W O U L D A F F E C T ITS

THAT

MEMBERS

There have been several examples of the P M A indifference or neutrality regarding certain legislation. One of the earliest was House Bill #160 in 1919. This bill required a cash deposit in lieu of bail and was opposed by a member of the P M A in a letter to the Association's leaders.1 The Association's reply was that the bill was not of direct concern to manufacturers: " W e must not be expected to extend our work over too large a territory. On general and local bills, members should consult their Senator and Representative, and enlist their service." 2 Another example was House Bill $871 in 1923. This bill regulated through licensure the making, renovating, sterilizing, sales, etc., of pillows, feather beds, and mattresses.3 Here again, the Association generally approved of the legislation even though one of its members protested certain aspects of the Bill. The Legislative Bulletin commented: "It has meritorious provisions but we have been asked to print a paragraph which one of our members calls 'a most vicious proposal'." 4 The legislation was passed with the requirements the P M A member had termed vicious, and without PMA opposition.6 A later example of P M A tacit support, or at least lack of opposition, to a regulatory measure to protect the consumer, was the 1

P M A : Legislative Bulletin, No. 5, March 6, 1 9 1 9 , p. 4. Ibid. Laws of Pennsylvania (1923), A c t # 3 1 4 , pp. 802-8. 4 P M A : Legislative Bulletin, No. 14, M a y 3, 1923, p. 2. 5 Laws of Pennsylvania (1923), pp. 802-8. T h e sections 6 and 8, pp. 805 and 806 respectively, covering requirements of tags, procured from the Department of Labor and Industry for a fee, to be placed upon all pillows, mattresses, etc., covered by this Act, were the so-called "vicious requirements." 8 3

The Pennsylvania Manufacturers' Association

I56

H o u s e B i l l #912 (1949) regulating dry-cleaning and d y e i n g establishments. L i k e the Pennsylvania B a k e r s ' Association, the Pennsylvania Association o f D y e r s and Cleaners was also affiliated w i t h the P M A . In this case, h o w e v e r , the Association's leaders apparently felt that the legislation regulating dry-cleaning and d y e i n g establishments b y the D e p a r t m e n t o f L a b o r and Industry 1 w a s n o t unfair and burdensome to those engaged in such businesses. O n e example o f a subject that " n e u t r a l i z e d " the p o l i c y o f the P M A w a s the so-called United D r y Bill o f 1 9 2 5 — a Prohibition measure. T h e Association stated in the Legislative Bulletin that such legislation was b e y o n d its scope and that because o f the differing v i e w o f its members, they w o u l d "refrain f r o m c o m m e n t o n all so-called D r y or W e t Bills." 2 O n the subject o f legislation other than that w h i c h was solely o f specific concern to manufacturers, it m a y be concluded that the Association has not been v e r y interested or v e r y active. O n e o f the o b v i o u s dangers in extending its interests and activities b e y o n d a certain scope w a s that it could i n v o l v e interests that m e m b e r s o f the P M A had outside o f the Association. 3 Attitudes t o w a r d such outside interests m a y not be at all c o n genial, thereby m a k i n g it difficult for the P M A to adopt a policy t o w a r d such matters. T h e Association, consequently, has deemed it wise not to act u p o n legislation i n v o l v i n g such interests. The P M A

f o l l o w e d this neutral course w i t h legislation that

w o u l d regulate certain enterprises f o r the health and safety o f the public, and w i t h m o r e general legislation such as Prohibition. A t the same time, h o w e v e r , w h e r e its m e m b e r s ' interests w o u l d be h a r m f u l l y affected b y such consumer-oriented legislation, the P M A has acted to protect its members, as w i t h the bakery regulatory legislation. Likewise, the P M A

opposed old a g e pensions most

emphatically because it was related t o a matter o f great interest to the Association members, that is, taxation. 1 2 3

Laws of Pennsylvania (1949), Act #402, pp. 1342-52. P M A : Legislative Bulletin, No. March 5, 1925, p. 2. Truman, op. cit., pp. 157-67. These were called "overlapping" interests.

10 The PMA and National Legislation Cjeneral

Policy on National Legislation. T h e P M A ' s general policy

on national legislation was propounded early in the life o f the Association b y its leader, M r . Grundy. A t the Fifth Annual Meeting o f the Association, M r . G r u n d y stated in regard to the question o f extending the activities o f the P M A to national questions and C o n gress that the Executive C o m m i t t e e was opposed to such action. A t the same time he realized that there were and w o u l d be times w h e n the P M A should act in the interest o f Pennsylvania manufacturers on such matters as a national m i n i m u m w a g e l a w or a national forty-eight-hour law, similar to those that had been defeated in Pennsylvania. As for the forty-eight-hour law, M r . Grundy stated: " W e might keep our hands off, feeling assured that any legislation as to hours w h i c h applied to manufacturers o f all states could not w o r k special injustice upon the manufacturers o f this state." 1 As for the m i n i m u m w a g e law, M r . Grundy stated that the Association w o u l d actively oppose it as "an economic fallacy." 2 He further stated that the P M A should "speak u p " in favor o f a bill then pending in Congress that w o u l d outlaw interstate shipment o f convict-made goods. 3 These remarks o f M r . G r u n d y m a y be said to characterize the general policy o f the P M A toward national legislation. As long as the legislation did not harm Pennsylvania manufacturers in their competitive position w i t h manufacturers f r o m other states, the Association leaders w o u l d not act. E v e n concerning legislation 1 Minute Book, Fifth Annual Meeting, M r . Grundy's address (January 12, 1914), I, n o . 2 Ibid., p. i n . 3 Ibid.

158

The Pennsylvania Manufacturers' Association

w h i c h w o u l d be opposed b y Association members as most definitely counter to their interests as manufacturers, whether their competitive position w i t h other manufacturers was involved or not, the Association was not in a position to do m u c h more than publicly register a protest before a congressional committee. 1 Being a state association, the P M A was thereby limited in its access mainly to the government o f Pennsylvania. THE P R O T E C T I V E

TARIFF

There was one subject involving national policy and congressional legislation that concerned the P M A greatly and regarding w h i c h the P M A held a definite policy and took definite action. This subject was the protective tariff. The Association's access to places where decisions o n tariff policy were made and even the Association's attitude toward the tariff were largely the result o f the political influence and personal economic philosophy o f its leader, M r . Joseph R. G r u n d y . T h e possibility o f a federal forty-eight-hour law did not bother M r . Grundy greatly as it w o u l d not harmfully affect the competitive position o f the manufacturers o f Pennsylvania. H o w e v e r , the protective tariff greatly concerned him because its absence or presence w o u l d greatly affect the competitive position not only of Pennsylvania manufacturers w h o were his main concern, but all American manufacturers as well. Mr.

Grundy's

Tariff Philosophy. The most concise statement o f

M r . Grundy's tariff philosophy was made b y him before the L o b b y Investigating C o m m i t t e e o f the United States Senate in 1929. Mr. Grundy admitted that many o f his ideas concerning the protective tariff had come d o w n to him from his father w h o had lobbied for the M c K i n l e y tariff, especially for higher w o o l rates. He believed that the "entire industrial and financial structure o f the United 1 T h e only other means of protest, of course, was through a representative or senator from Pennsylvania to w h o m they had access because of their political support. See Chapter 12.

The P M A and National Legislation

159

States" was built upon tariff protection. 1 It had been the tariff that had enabled industrialization to take place in the United States. The revisions that he desired in the tariff system, called for by the tariff plank adopted at the Republican National Convention in 1928, provided for the adoption of the American system of evaluation. Simply stated, this meant that all imports would be evaluated according to American standards rather than by European or other foreign standards. A product, in other words, evaluated by the foreign producer to be worth so much in his own currency and according to the living standard of the producing country might still be able to sell in the United States at a lower price than the American product even with the tariff added. This was so because of the higher American living standards, especially wage rates. The American evaluation system, Mr. Grundy thought, would prevent this. As to procedural matters, Mr. Grundy wanted the administration of the tariff taken out of politics by having an appointed tariff commission continue but with much less freedom of interpretation of the rules covering tariff matters. He wished this to continue regardless of what party was in power. One of his great disappointments with the 1929 Smoot-Hawley Tariff, aside f r o m his objection to the continuation of the ad valorem rates, was that the Secretary of the Treasury was granted wider discretion to determine foreign valuations. Allowing a political appointee such authority kept the administration of the tariff "in politics" in Mr. Grundy's opinion. 2 Part of the assumptions behind Mr. Grundy's views on the tariff were those toward the relationship of industrial states like Pennsylvania to the nation's economy. Mr. Grundy bared his thoughts upon this subject to the public during his interrogation by the Senate 1

"Pennsylvania's Relationship to the Protective Tariff Principle," statements by Joseph R. Grundy before the Lobby Investigating Committee of the United States Senate, October 24, to November 1 1 , 1929. From the P M A files (printed booklet), p. 4. 2 New York Times, May g, 1929, "Rising Tariff Bill Revolt Stirs Republican Chiefs; House Opens Debate T o d a y , " p. 1.

i6o

T h e Pennsylvania Manufacturers' Association

Lobby Investigating Committee, and they constitute what has colorfully been referred to as the "backward states" theory. Mr. Grundy regarded Pennsylvania and other such industrial states—in much the same way that he regarded manufacturing per se—as the foundations of the national economy.

They were "the great

reservoirs of income," and, since the tariff was essential to the prosperity o f their industries, their voices alone should be heard on tariff matters, or most certainly should predominate. Quoting from Mr. Grundy's actual testimony in which he most candidly stated his views: ". . . if the volume o f voice in the Senate were divided proportionally according to size, population, productive power or total taxes contributed toward national upkeep, some of those states which are now most vocal would need amplifiers to make their whispers heard." 1 He further noted that such states as Arizona, Arkansas, Montana, South Dakota, Idaho, and Mississippi did not pay enough taxes to make up the cost of collection. These he included among the "backward states." Such states, Mr. Grundy stated, could have their say on such matters as junior Red Cross work and outdoor relief but, generally speaking, they should be required to be silent on general tariff matters.2 In reply to Senator Borah's question as to whether he thought it a misfortune that each state had t w o senators, Mr. Grundy replied with customary frankness: "I think so, yes." 3 Senator

Caraway

asked

Mr.

Grundy:

I understand y o u n o w that they

[the Grundy "backward states"] should not have a vote w h e n tariff laws are being enacted? Mr. Grundy

replied:

I do not want to say they should not have a vote,

but they should not throw a m o n k e y wrench into the machinery every minute o f the twenty-four hours o f the day. 1 Subcommittee of the Committee on the Judiciary, U.S. Senate: Hearings (pursuant to S. Res. 20, A ) (Washington, D . C . : U . S. Govt. Printing Office, 1929), Part II, p. 473. (From M r . Grundy's prepared statement before the subcommittee.) a Ibid., p. 500. 3 Ibid., p. 504.

The PMA and National Legislation

161

Senator Caraway: They should not be allowed to talk; Mr. Grundy: They ought to talk darned small. In another exchange, Senator Caraway asked: Whenever it came to the interest of Pennsylvania, people from Idaho should not have anything to say; Mr. Grundy: I don't want to say that they should not have anything to say, but they should not have as much to say as they apparently arc saying. Senator Caraway: They should not have as much to say as Pennsylvania, for instance; Mr. Grundy: Honestly not; no, sir. 1 Later Senator Walsh [Democrat] of Montana asked Mr. Grundy: But how would you silence Senator Borah and myself in the United States Senate; Mr. Grundy: I think your great understanding ought to indicate the propriety of allowing those things to prevail. Senator Walsh: Y o u would improve our intelligence? Mr. Grundy: No. I would only want you to exercise it. 2 The Democratic-Progressive Republican alliance in Congress at that time represented mostly agricultural states, and they opposed the tariff increase because they believed it resulted in an increase in consumer prices on manufactured goods. M r . Grundy disagreed with this belief: " B y and large the duty has eventually to be borne by the foreigner, and the price o f the commodity has not been increased to the consumer." 3 W h e n questioned as to h o w much of his tariff policy was the result of attempts to gain consideration for the wishes of specific industries in Pennsylvania, such as United States Steel and Bethlehem Steel or the Jones and Laughlin Steel C o m p a n y , M r . Grundy answered that f e w , if any, of the big concerns were affiliated with 1

Ibid., p. soiIbid., p. 503. 3 Ibid., p. 463. Mr. Grundy insisted his tariff policy favored the farmer. He supported a tariff on farm products that would equalize costs at home and abroad. He also favored having most of the farmer's purchases, such as farm machinery, placed on the free list (p. 483). P.M.A.-F 2

162

The Pennsylvania Manufacturers' Association

the PMA. When asked why manganese used in steel production should not be on the dutiable list, he answered that such action would not be wise because the United States produced only five per cent of what it used.1 Tariff Policy Since 1930. The general policy of the PMA remained unchanged until recendy. Statements from PMA leaders before the annual meetings and those appearing in the Monthly Bulletins during the thirties and early forties reflected a continuation of the Grundy tarifFphilosophy. At the Twenty-seventh Annual Meeting of the Association in 1936, John Flynn, then president, sharply attacked the Roosevelt policy of reciprocal trade treaties: "It is temperate language to say that this situation alone accounts for a large part of our unemployment." 2 PMA Policy during the Owlett Presidency. After G. Mason Owlett became president of the PMA, little was mentioned by him or by any other speaker regarding the tariff at any of the annual meetings. Owlett, however, shared many of Mr. Grundy's views on the tariff.3 The tariff issue while fading out in the late thirties and during the war was mentioned again after the war in 1944. Owlett was quoted as calling for legislation to prevent the postwar market from being flooded with surplus war goods from Europe left there by the lend-lease plan. He blamed the six-year depression following World War I upon the lack of such legislation.4 Again in 1945, Mr. Grundy's tariff views were quoted: The Protective Tariff is not a system for stopping trade but a rational process for keeping it in order. The appeal of the Protective Tariff is for wider employment at higher wages. T h e forbidden firuit o f free trade is l o w commodity prices and national disaster.5 1 3 3 4 6

Ibid., p. 460 and pp. 537-38. Minute Book, Twenty-seventh Annual Meeting (February 2 5 , 1 9 3 6 ) , I, 427. Personal interview with G. Mason Owlett, M a y 4 , 1 9 5 3 . P M A : Monthly Bulletin, January, 1944, p. 1. P M A : Monthly Bulletin, October, 1945, p. 4.

T h e P M A and National Legislation

163

T h e ' 'self-sufficiency" argument was also emphasized after the war. . . .

in Latin America there is today a determination to have their

o w n shoe factories, spinning mills, oil production, steel mills and other major industries. T h e y do not intend to be dependent upon international trade again. B u t they w i l l need protective tariffs to sustain these industries. M a n y other nations w i l l drive intensely to avoid ever again being dependent upon overseas f o o d and therefore w i l l seek to encourage and protect their o w n production w i t h tariffs. W e in the U n i t e d States, w i l l experience this stimulus to selfsufficiency i f w e have not already felt it.*

Articles favoring a high protective tariffhave continued to appear in the Monthly Bulletin but have not had the appearance o f reflecting a conscious plan on the part of the Association leaders to exert whatever pressures possible upon the national government to raise tariffs. There have been, however, especially vociferous editorials on the tariff in the past few years. The first was ostensibly a critique o f the International Monetary Fund. Actually, the editorial was a criticism o f the extension of the Trade Agreements Act after the British devaluation of the pound. The editorial accused unnamed leaders in the government of planning with British leaders to put through the Trade Agreements Act the devaluation was announced. Since, presumably, those leaders in Washington knew o f the coming devaluation, according to the editorial, they were guilty of deliberate deception: W h y didn't our o w n Government tell the truth? Because it fitted in w i t h the Socialist schemes o f those in p o w e r in W a s h i n g t o n to keep the deception going. I f Congress had been aware that the British were about to l o w e r their labor and other costs, in a n e w drive to flood this nation w i t h cheap goods that w i l l put our o w n mills and factories out o f business, and greatly raise unemployment in this c o u n t r y — d o y o u think even a D e m o c r a t controlled Congress w o u l d have extended the Trade Agreements A c t ! 2 XPMA: 2

Monthly Bulletin, October, 1945, p. 4. P M A : Monthly Bulletin, October, 1949, p. 4.

164

The Pennsylvania Manufacturers' Association

The second editorial, reprinted from Mr. Grundy's paper, The Bristol Courier, was on Swiss watches. The editorial criticized Sylvia Porter, a columnist, who had written that a rise in American tariffs on Swiss watches would "send this little democracy spinning from boom to bust." It was pointed out that Switzerland was probably not a democracy, that its economy was rigidly government controlled and planned. "It is a vest-pocket welfare state—a benevolent (for the present) police state." The editorial then proposed a reason for the New Deal's virtually putting American watchmakers out of business: " . . . in the days when Henry Wallace was a big power in the New Deal, he engineered the sell-out of American watchmakers to Switzerland as a favor to his brother-in-law, who happened to be the Swiss Minister to the United States." 1 The extreme nature of this criticism of the tariff belies a certain desperation. Such desparate distortion of truth, usually associated with propaganda, is quite different from Mr. Grundy's candid arguments of the late twenties. Present PMA Policy: The Randall Commission Report. Regarding the Randall Commission report favoring a downward revision of American tariffs, the PMA has taken an official position. On one hand, Representative Simpson of Pennsylvania, who wrote the minority report criticizing the Randall Report with Representative Reed, has been closely associated with the P M A leaders, especially Messrs. Grundy and Owlett. He addressed the annual meeting of the Association in 1947 and in 1951 but in neither address did he mention the tariff. On the other hand, the Executive Committee, upon request to send a speaker opposed to the Randall Report to the Pennsylvania Political Science Association's dinner in April, 1954, decided not to send any official of the PMA. Instead, a spokesman from the American Tariff League was sent. The reason given for this decision was 1 P M A : Monthly Bulletin, April, 1951, p. 1. Reprint from The Bristol Courier, March 30, 1951.

165

The P M A and National Legislation

that several of the P M A ' s larger members, who enjoyed a sizable export business, favored the findings of the Randall Report. It was reportedly considered ill-advised for an official of the P M A to speak out publicly against the Randal Report, as such action might be construed as a pronouncement of official P M A policy. 1 Thus, because of conflicting views among the Association's members on the tariff issue, the Association's leaders have been more or less neutralized from taking any official stand or action upon the issue today. This perhaps explains the lack of mention of the subject in the past few years at the annual meetings and w h y , generally, all comments and editorials on the tariff in the Monthly Bulletins are reprints of other editorials or articles and did not originate with any P M A official. POLICY

TOWARD

OTHER

NATIONAL

FOREIGN

LEGISLATION

AND

POLICY

The P M A rarely expressed a policy toward specific national legislation and never proposed nor took any action regarding such legislation before the N e w Deal period except for the protective tariff. The interest in the tariff, while of natural concern to many members of the Association, especially textile manufacturers, was largely the result of Mr. Grundy's interest in and activities concerning that subject. "New Deal" Legislation. Regarding the legislation passed during the Roosevelt administration that would be categorized as N e w Deal legislation, it may be safely stated that the P M A was opposed to all of it. N o address before an annual meeting during the N e w Deal period failed to criticize some aspect of its legislative policies or the entire philosophy itself. The tenor of the criticisms became more and more vehement in the 'forties. In 1943 on the front page of the Monthly Bulletin for December, the following appeared: 1 Reported by Dr. Edward Janosik from a telephone coversation with Mr. Thomas P. O'Neil, director of public relations for the P M A , March 18, 1954.

The Pennsylvania Manufacturers' Association

166

The history of the Roosevelt administration shows that it has taken sadistic delight in attacking and dissipating the nation's industrial resources. It has sought to perpetuate its political power on a preposterous dole system or vote catch-all which has helped undermine public morale and discourage personal initiative. Free enterprise has become the favorite whipping post of starry-eyed planners and enraptured visionaries who, in the fury of bureaucratic controls and regimented panaceas, have tried to break down every constitutional bulwark and strip the federal government of all its elemental human decencies. If business is to deliver the goods in peace, as in war, something has got to be done to end the economic programs the N e w Deal has waged relentlessly against competitive enterprise. . . . What is needed is a simplified tax system, relaxation of restrictions and red tape, elimination of government snooping and prodding and a certainty that business never again will be harassed by an unfriendly bureaucracy. The first step to peace time plenty is to encourage a public renewal of faith in our American institution of undefiled, undiluted free enterprise.1 Free enterprise was defined by President Owlett as "the right to live our o w n lives, choose our o w n jobs and direct our o w n industries, free from the c h a f i n g bonds o f regimentation." 2 T h e P M A was opposed to any legislation that, regardless of the reason involved, sought to regulate the economy or to enforce standards or rules upon American industry in any o f its activities and relationships. Such legislation, the P M A believed, tended to produce a big government to administer it and this called for a bureaucracy. T h e Association's v i e w o f bureaucracy and its results was best stated in a Monthly

Bulletin

in 1 9 4 3 :

Bureaucracy is a blight on democracy. It is the clutching hand of mono-party arrogance which threatens to strangle free competitive enterprise and lace individual initiative in the strait jacket of iron-handed regimentation. The bureaucrats do not believe in free enterprise or democracy. W h y 1 2

P M A : Monthly Bulletin, December, 1943, p. 1 (italics added). P M A ; Monthly Bulletin, April, 1944, p. 1,

167

The P M A and National Legislation

camouflage the issue? Those are the institutions they seek to change. Bureaucracy is the forerunner of totalitarianism. It has always been the strongest instrument in the dictator's kit. 1

The leaders of the P M A recognized the necessity of postwar planning, but: " . . . the individual must plan for the individual, the little company for the little company, the corporation for the corporation. Each and every entity must plan for itself. It cannot leave its planning to others. Enforcement of a plan upon some one else is dictation, and dictation is never acceptable to anyone." 2 The Fair Deal policies of President Truman fared no better than those of the New Deal. The arguments that all of these policies were for the general welfare and to promote economic security for all Americans failed to impress the PMA. President Owlett in 1945 stated that the New Deal was trying to fool the people into believing that: ...

it is possible to gain freedom from want by depending entirely

on the government instead of the time-honored principles of opportunity, work, and thrift. Security is the creation of man's own enterprise. It is not a commodity to be bartered by the politically powerful. 3 General

Regulatory

Legislation

and Labor

Legislation.

The

PMA

was in the forefront of those, who, in the immediate postwar period, called for revision of the existing labor laws. The P M A had long criticized labor leaders and had always distinguished between them and the rank and file of labor. The latter were always complimented, but the P M A saw that labor leaders: ...

in league with the N e w Deal's confirmed business haters, can

place American industry in an inescapable economic strait-jacket. What the instigators of this political racket fail to see is that labor and 1

P M A : Monthly Bulletin, November, 1943, p. I. P M A : Monthly Bulletin, January, 1945, p. 4. Quoted from Owlett's five-point postwar program. 3 P M A : Monthly Bulletin Supplement, September, 1945, p. 1. Quoted from G. Mason Owlett, president of the P M A , 2

The Pennsylvania Manufacturers' Association industry are interdependent and that one cannot endure the crippling pressures of governmental discrimination without bringing suffering to the other.1 This linkage between labor leaders and the N e w Deal was again attacked when the P M A , in a Monthly

Bulletin

in 1945, called for a

revision of labor laws as the only hope o f restoring co-operation between labor and industry. 2 Following the Republican victories in 1946, an editorial appeared in the Monthly Courier

Bulletin

reprinted from M r . Grundy's The

Bristol

that was of significance. Judging f r o m the P M A ' s policies

toward state legislation, especially that passed during the Earle administration, Pennsylvania's N e w Deal, it might be assumed that a spirit of compromise might prevail in its attitude toward national legislation as it had with state legislation. T h e editorial published in 1946, however, expressed a different attitude. . . . the American people as a whole never voted for the N e w Deal in the first place, and until the recent election never had it before them as a pro-and-con issue, divorced from questions of personality and other confusions. N o Republican candidate has ever attacked the N e w Deal. Landon sidestepped it; moreover, he suffered the handicaps of a weak literary style and bad radio voice. Wilkie promised to enlarge the N e w Deal and make it a world-wide program. Dewey criticized the N e w Deal, not for going too far, but for stopping too soon. Meanwhile, while the N e w Deal was not being challenged on a national level, it was being attacked most successfully in various states. . . . the Republican Party could have been back in power in Washington any time in the past fourteen years that it found the vision, courage, and leadership to attack the N e w Deal. 3 1

P M A : Monthly Bulletin, September, 1943, p. 2 (italics added). Note the continuance of the old idea of Mr. Grundy that the interests of management, owners, and labor were identical. 2 P M A : Monthly Bulletin Supplement, December, 1945, p. 1 (italics added). 3 P M A : Monthly Bulletin, November, 1946, p. 1. Reprinted from editorial in The Bristol Courier, November, 1 j , 1946. A similar editorial, reprinted from the Wall Street Journal (November 10, 1950), appeared in the Monthly Bulletin (December, 1950, p. 1) following the congressional elections of 1950.

T h e P M A and National Legislation

169

There is a possible explanation for the apparent difference between the PMA policies on state and national legislation. One reason for the PMA's compromise attitude toward much state legislation that it had formerly opposed completely was that such legislation had been passed by Congress, thereby severely limiting the PMA's field of action. If this legislation, on the national level, could be repealed, then the Association would be better able to do the same at the state level, although this did not seem probable. In recent years, the Association has spoken out against national legislation that would raise taxes, or that would place any more power in the hands of the federal government to regulate any aspect of industry. The Association opposed the continuation of the excess profits tax in 1953, under the Republican administration of President Eisenhower. In testifying before the House Subcommittee on Small Business, Mr. John Seeton, secretary of the P M A , stated that the P M A spoke for the small businesses in Pennsylvania who were most seriously affected by the excess profit tax. Small businesses had difficulty obtaining capital; therefore, they had to reinvest earnings and this was greatly hampered by the tax and might tend to destroy the incentive for small businesses to develop. 1 Reflecting its customary attitude toward the relationship of government, the P M A also in 1953 opposed the Humphrey and Murray bills, S. 2325 and S. 2714 respectively, concerning safety regulations in industry. Mr. John Seeton stated that the reasons for the PMA's opposition to such legislation were that it was not necessary, that "safety is a matter of education, not legislation," that the legislation was an attempt to "standardize all industry and to stifle competition, rather than encourage it, and that it would be difficult to set up standards for all industries in all states."2 "Should any Board—Federal or State—have the power to order a company to construct any facility? Should a Board's opinion on a matter of 1 P M A : General Bulletin, M a y 1 5 , 1 9 5 3 , p. 2. Statement of P M A submitted to Subcommittee t 2 of Select Committee on Small Business of the House of Representatives, March, 1 9 5 3 . 2 P M A : Monthly Bulletin, M a y , 1 9 5 3 , p. 3.

The Pennsylvania Manufacturers' Association

l a y - o u t or process be substituted f o r the j u d g m e n t

o f trained

technicians, engineers and executives?" 1 In its statement submitted to the Senate s u b c o m m i t t e e considering this legislation, the P M A pointed o u t that 25.9 per cent o f the p a y rolls in Pennsylvania w e r e covered b y the P M A Insurance C o m p a n y .

Casualty

T h i s c o m p a n y has its Safety E n g i n e e r i n g

D e p a r t m e n t that inspects, trains, and advises in the interest o f safety in industry. " V o l u n t a r y safety training has been the

dominant

factor w h i c h has produced the decrease in accident f r e q u e n c e . " 2 PMA'S

SECTIONALISM

A l l o f the a b o v e - m e n t i o n e d attitudes and policies o f the P M A h a v e been v e r y similar to those expressed b y the N A M and m a n y other manufacturers' associations. T h e y d o not reflect any particular " l o c a l i s m " ; they do not reflect any attitudes t o w a r d national legislation that c o u l d be termed exclusively " P e n n s y l v a n i a " or even " E a s t e r n . " T h e r e has been, h o w e v e r , a consistent policy t o w a r d certain policies o f the federal g o v e r n m e n t that c o u l d be so termed. It has been and to s o m e extent today remains closely tied t o M r . G r u n d y ' s " b a c k w a r d states" theory. In 1934, the P M A c o m p l i m e n t e d Senator Reed, then running for re-election in Pennsylvania, f o r his attack u p o n "those phases o f the R o o s e v e l t p r o g r a m under w h i c h the earnings of the East are being transferred to the West and South w h e r e they are being distributed in the f o r m o f subsidies and gratuities a m o u n t i n g to hundreds o f m i l lions o f dollars." 3 T h e Association regarded the P W A (Public W o r k s Administration) set up early in the days o f the N e w D e a l as such a phase o f the R o o s e v e l t administration. T h e truth o f the matter is, however, that P W A is not so much a j o b P M A : General Bulletin, May, 1953, p. 9. Statement of the P M A submitted to the Health Subcommittee of the Senate Labor and Public Welfare Committee. 1 Ibid. 3 P M A : Monthly Bulletin, May, 1934, p. 1. J

The PMA and National Legislation

171

creating enterprise as it is an undertaking, in common with other of the so-called Emergency and Recovery activities, to transfer investments and savings of the productive industrial State of the North and East, to the nonindustrial and non-productive State of the West and South. Throughout the Depression, unemployment has been most acute, and under the largest scale, in the industrial states. If the plan of the P W A had been to relieve that condition where it was worst, obviously it would have diverted relatively large sums into the industrial states. Its policy has been the reverse. 1 The P M A attacked the T V A not because it was "socialistic" but because it destroyed jobs in Pennsylvania. Money is poured into this sparsely populated and impoverished section—to provide hydro-electric power far in excess of their needs to attract industries. This is financed by States—which are to lose their industries and whose workers thus will be left unemployed. It aims to finance the social and economic resurrection of the rurals of a backward section, and to give the "hillbillies" of Tennessee jobs that have been held by the workers of this and like states, all accompanied by a permanent paralysis of the soft coal mining and other industries.2 The P M A

most vehemently opposed the McCarran Plan to

decentralize the industries of the North and East and move them to the western and southern States after the w a r . 3 A s recently as 1 9 5 1 , examples o f this unique P M A attitude or argument were available. In the Monthly

Bulletin

o f 1 9 5 1 , an editorial b y Senator E d w a r d

Martin opposed giving the Defense Mobilization director the power ' P M A : Monthly Bulletin, July, 1934, pp. 2-3. The Association further criticized Harry Hopkins for his decree that Pennsylvania would receive no further federal relief money until it could match such a grant with state funds which the P M A was loath to see voted as it might mean higher taxes on manufacturers. The PMA's comment on this: "The Attitude of the Federal Government toward Pennsylvania is difficult to understand in view of the generous treatment accorded other States, many of which contributed nothing of their own funds during all of 1933 and the first quarter of 1934." 2 P M A : Monthly Bulletin, August, 1934, p. 1. 3 P M A : Monthly Bulletin, November-December, 1944, p. 2.

The Pennsylvania Manufacturers' Association

172

to say where industrial plants necessary for defense production were to be located. The real purpose of such action Senator Martin believed was " t o force, in the name of national defense, the industrialization of areas where industry has been unable or unwilling to go.

1

FOREIGN P O L I C Y

While foreign policy has never been of prime concern to the leaders of the P M A or its members, the leaders have occasionally expressed views thereon which are worth noting. The only comments on matters pertaining to the foreign policy, aside from the tariff, during the twenties would lead to the conclusion that the P M A leaders were in general agreement with the so-called isolationist foreign policy then popular and being practised by the United States. In 1919, in the Monthly Bulletin under the heading, " W a n t e d : A Divorce," an article appeared calling for the complete withdrawal of the United States from Europe and European affairs. As for the League of Nations: " A League of Nations not involving our fundamental principles, nor imposing responsibilities without end, if permanent peace were insured, would, of course, be a desideratum, but such a covenant has not yet been framed." 2 At the annual meeting of the Association in 1925, Mr. Grundy observed in his address: " W e can rejoice that w e shall have Calvin Coolidge as our President, four years more and with him, w e trust our great Pennsylvanian, Andrew W . Mellon as Secretary of the Treasury. That means that our finances will be safe in every essential. Our State Department u/ill see to it that we have no entangling alliances."3 There was no mention of foreign policy during the 'thirties until W o r l d W a r II approached. In 1940, John Flynn, then president of the P M A , warned at the annual meeting: 1 P M A : Monthly Bulletin, September, 1 9 5 1 , p. 1. Editorial by Senator E d w a r d Martin. 2 P M A : Monthly Bulletin, June, 1919, p. 3 (italics added). 3 P M A : Minute Book, Sixteenth Annual Meeting (February 16, 1925), I, 306 (italics added).

The P M A and National Legislation

173

. . . every major move that the President has made during the last several weeks has been an obvious part of a palpable plan to use the European situation, and his own foreign policies to divert public attention from the vital domestic issues which face the people of this country. . . .

for the American people unitedly have served notice that they

are determined to keep out of the war in Europe. Moreover, there are many who have not complained about the N e w Deal's bankrupting and unworkable experiments w h o are openly fearful that except for this strong brake of unmistakable public opinion, the President would, consciously or unconsciously, drag us into war. 1

During the war, few foreign policy pronouncements were evidenced. One by G. Mason Owlett, then (1945) president of the Association, is of interest: "Russia and the Russian people can have whatever kind of government they want. If dictatorship under Communism appeals to them, then that's their business. W e of America are glad to see the growth of Russia, glad that our lendlease helped them turn the tide against Hitler in the siege of Leningrad, proud to see the mighty drive of the Russian people pounding away towards Berlin." 2 Owlett continued to point out, however, the dangers of Communist thought and how he felt that the N e w Deal was moving in that direction. Regarding foreign policy since the end of World War II, there have been few pronouncements from P M A leaders. The Monthly Bulletin has carried several items of interest on this subject. A column in 1948 urged P M A members to exchange letters with citizens of foreign countries and offered to supply addresses to those interested in doing so.8 Several critical articles appeared in 1949 on the Labour party government written by an Englishman, Cecil Palmer, spokesman for the Society of Individualists.4 In 1953, a guest 1

Ibid., Thirty-first Annual Meeting, Flynn's address (February 27, 1940), I, 463 (italics added). 2 Ibid., II, p. 2 of Owlett's address. Thirty-sixth Annual Meeting, February 27. 19453 P M A : Monthly Bulletin, May, 1948, p. I. J P M A : Monthly Bulletin, March-April, 1949; May-June, 1949; July, 1949.

The Pennsylvania Manufacturers' Association

174

editorial appeared by Mr. Herbert Pell, former United States minister to Portugal and Hungary. Several statements therein are of interest. The great wealth of the United States is based on the low taxes o f the past and will be ruined by the enormous taxes of today. The colossal expenditure of European nations on military preparations was saved to the people of America. In those days w e did not have many of the physical conveniences of today, but at least w e had no fear, and the ordinary American dared, in in the words o f an unknown cowhand, to look any man in the eye and tell him to go to hell. Make no mistake, the only possible basis for happiness, prosperity, and liberty is peace. 1

What exactly are the current views on foreign policy today is difficult to spell out specifically. The leaders of the P M A have been aligned with that branch of the Republican party which, while perhaps no longer isolationist, at least favors a minimum effort in the line of foreign involvements and commitments. Senator Taft was supported by P M A leaders over General Eisenhower for the Republican nomination in 1952, even though these same leaders, in 1948, supported Governor Dewey over Senator Taft. In neither case, however, were foreign policy considerations a major determining factor. A little light is thrown on the subject of foreign policy attitudes by reviewing the list of speakers at the annual dinners after the war, if it is assumed that the P M A leaders are in agreement with these speakers. There have been: Senator C. Waylan Brooks of Illinois, in 1948; the Honorable Samuel B. Pettingil, former representative from Indiana; Senator Robert A. Taft, in 1949; George Sokolsky, the columnist; and Dr. Milton S. Eisenhower, president of Pennsylvania State College, in 1950; Senator Harry F. Bryd of Virginia, in 1 9 5 1 ; Mr. Fulton Lewis, Jr.; and the then Senator Richard M. 1

p. x.

P M A : Monthly Bulletin, July, 1953, guest editoiial by Mr. Herbert Poll,

The P M A and National Legislation

175

Nixon of California, in 1952; Mr. John T . Flynn, author of The Roosevelt Myth and other books, in 1953; and Senator William F. Knowland, in 1954. What might be said, generally, of the P M A ' s attitude on present American foreign policy is that it is less isolationist than it was but foreign policy still places second in interest to the P M A leaders and presumably most of its members. C o n sequently, they tend to view foreign policy through the eyes o f domestic economic policies and related domestic politics.

PART FOUR Access: Those Political Institutions to which Access is Desired in order to Accomplish Legislative Goals

II The Pennsylvania State Government, the Republican Party, and the Democratic Party THE G O V E R N O R :

HIS P O W E R S O V E R

THE

EXECUTIVE

BRANCH

T h e constitution of Pennsylvania grants certain broad appointive and discretionary powers to the governor and, at the same time, places certain limitations upon the office that can serve virtually to negate the other powers given him. The governor has broad appointive powers, and, since the civil service system covers so few executive departments and bureaus,1 he wields great patronage power over the entire executive branch of the government. 2 He is empowered to appoint, " b y and with the advice and consent of two-thirds of all the members of the Senate," the heads of all departments except the auditor general, the state treasurer, and the secretary of internal affairs, all of whom are elected. He also appoints, in a similar manner : . . . the members o f all independent administrative

boards

and

commissions, the members o f all advisory boards and commissions, w i t h 1 T h e C i v i l Service Commission, appointed by the Governor, supervises and administers civil service procedures and establishes eligible lists only for the Department o f Public Assistance, the Bureau of E m p l o y m e n t and U n e m p l o y ment Compensation in the Department o f Labor and Industry, the Pennsylvania Liquor Control Board, the Pennsylvania B o a r d of Parole, the Rehabilitation Bureau under the Department of Labor and Industry, the Rehabilitation Section o f the Pennsylvania State Council for the Blind in the Department o f W e l f a r e , the Division of Rural Child W e l f a r e of the Department of Health, and the Division of Hospital Construction of the Department o f W e l f a r e . Pennsylvania Manual, lgqg-ig^o (Harrisburg ; C o m m o n w e a l t h o f Pennsylvania, 1950, X I C , to 646). A p p r o x i m a t e l y 50,000 jobs.

i8o

T h e Pennsylvania Manufacturers' Association

few exceptions the members of all departmental administrative boards and commissions and Workmen's Compensation Referees, all under the Administration Code; also the members of the Executive Board, and Anthracite Mine Inspectors and Bituminous Mine Inspectors. He also appoints members of various other State boards, commissions, committees and agencies not under the Administrative Code. 1 It should be noted that the governor's appointive p o w e r , limited b y Senate approval but not b y civil service, extends to all high administrative posts in w h i c h an association like the P M A

w o u l d be

interested for the sake o f access and influence. In addition to his normal appointive p o w e r , the governor also has an additional p o w e r that can be o f great value to him, especially in dealing w i t h a recalcitrant Senate. This is the interim appointive p o w e r that enables him to fill any vacant office during the recess of the Senate. W h i l e these temporary appointments expire at the end o f the next Senate session, the governor is nevertheless enabled b y this p o w e r to fill offices w i t h his o w n choices if the Senate refuses initially to consent to them. 2 The Governor's Powers Over The Legislative Branch. T h e Governor has rather broad powers over the convening and adjourning o f the General Assembly that are not possessed b y the president o f the United States. He m a y call extraordinary sessions o f the General Assembly (in addition to their biennial sessions), and, in cases where there is disagreement between the state Senate and the state House o f Representatives as to the time o f adjournment, he m a y adjourn them to such time as he chooses, not exceeding four months. 3 This p o w e r o f calling extraordinary sessions is an important one and has been used b y many governors in an attempt to get certain bills w h i c h they sponsored or supported through the state General Assembly. T h e state constitution directs the governor to give to the General 1

Pennsylvania

Manual,

op. cit., p. 590.

Ibid. This interim appointive power also extends to elected offices such as lieutenant governor, auditor-general, etc. 3 Ibid., p. 590. 1

The Pennsylvania State Government, Republican and Democratic Party

181

Assembly "information on the state of the Commonwealth," and he may "recommend to their consideration such measures as he may judge expedient." 1 The manner in which this latter power has been exercised by various governors has been a determining factor in their gaining personal political power. The P M A leaders, guided by Mr. Grundy's views, have frequently regarded this power as that most susceptible to misuse by the governor. Their assumptions regarding its use have often differed greatly from those held by many Pennsylvania governors. Another significant power, given the governor under the provisions of the Administrative Code, is that he is required to submit a state budget to each biennial session.2 The governor thus is empowered to recommend needed appropriations, the money for which must be supplied by taxes, a matter of enormous concern to the PMA. Probably the greatest power granted the governor is the item veto power, another power not held by the president of the United States. The governor may not only veto individual items in bills before signing them into law, but he may reduce individual appropriations as well. The constitution also gives the governor an important indirect veto power. While a bill becomes law within ten days after its submission to the governor if he does not approve or veto it, if the General Assembly has adjourned, the governor may indirectly veto a measure. This occurs when the governor files, within thirty days following adjournment, his objections to a bill in the office of the secretary of the commonwealth and gives public notice thereof.3 The reason such an indirect veto has had much value for the governor is because budget messages have often been submitted late in the legislative session, and because most bills are passed and sent 1 "Pennsylvania State Constitution," Article IV, Section n , Pennsylvania Manual, op. cit., p. 39. 2 Pennsylvania Manual, op. cit., p. 590. 3 "Pensylvania State Constitution," Article IV, Section 15, Pennsylvania Manual, op. cit., p. 40,

The Pennsylvania Manufacturers' Association

to the governor near or at the end of the session.1 Adding to the importance of the veto power, also, is the tradition against overriding the governor's veto. A two-thirds majority has been and remains difficult to obtain, which might explain w h y the tradition has been so long-lived. Only once in the present century has the legislature overridden a veto. 2 Thus, it is understandable why a a student of Pennsylvania government should conclude: " T h e full significance of the veto authority of the Governor of Pennsylvania is not apparent until it is understood that in practice the power is almost absolute." 3 While the appointive powers of the governor over the executive branch would require a political interest group to have access elsewhere—preferably the Senate—as well as with the governor in order to wield influence successfully over the executive branch, the veto power enhances the value of exclusive access to the governor. For any political interest group that is concerned with the size of appropriations because of the effect upon taxation, access to the Governor alone, at least in this matter, could be sufficient. Significant Limitations on the Governor's Power. There are two great limitations on the governor's power. T h e lesser of the two is that four offices in the executive branch are elected separately and are, therefore outside of the governor's appointive and patronage sphere. The lieutenant governor, elected for a four-year term (without succession), has the primary function of presiding over the Senate as its president. 4 The auditor general, elected for four years (without succession), has appointive power over the Department of the Auditor General which is in charge of such matters as auditing the commonwealth's accounts, tax settlements, and the disbursements of moneys from appropriations to specified departments. 6 The state 1

M. Nelson McGreary, " T h e Governor's Veto in Pennsylvania," American Political Science Review, X L I , No. 5 (October 1947), 941-46. * Ibid., p. 944. 3 Ibid. 4 Pennsylvania Manual, op. cit., p. 593. 5 Ibid., p. 594.

The Pennsylvania State Government, Republican and Democratic Party

183

treasurer is also elected for four years, without succession, to administer the Treasury Department, 1 and the secretary of internal affairs, elected every four years to administer the Department of Internal Affairs. 2 It is not so much because any one of these positions carries such a great deal of institutional power with it, rather it is because each of these separate posts, excluding the lieutenant governor, carries with it exclusive appointive and therefore patronage power over its individual department. In terms of political realities, this means that the governor is faced with the possibility of having three separate political organizations—created through patronage—at work within his executive branch of the government. The fact that all of these posts, except for lieutenant governor and the secretary of internal affairs, are filled at the general state election, following the gubernatorial elections, opens them also to the possibility of being filled by a political party other than the governor's. The greatest limitation upon the governor is the fact that he is constitutionally forbidden to succeed himself. He may run after another four years but never consecutively.3 To a large degree, his other powers pale before this restriction because of the realities of the political process. In order to stand as an independent political power, a governor must have a political organization behind him. Such an organization is not built upon personalities and programs alone. It rests largely upon patronage. Since his patronage is automatically limited to four years, it is and certainly has been almost impossible for such an organization to be built. A governor has been and is still forced to rely upon the political organizations and interest groups that originally supported him. If he had a small local organization of his own before he became governor, he is assured of at least something to return to at the end of his four years. If he has further political aspirations, such as the 1

Ibid., p. 597. Ibid., p. 598. 3 "Pennsylvania State Constitution," Article IV, Section 3, Pennsylvania Manual, op. cit., p. 38. 2

The Pennsylvania Manufacturers' Association

United States Senate (and so many governors do), he is faced with two choices. He may try to please and remain loyal to those organizations and groups that supported him originally in order to gain their future support, or he can assert his independence during his governorship and thereby attempt at least to gain the support of other organizations and groups. Needless to say, the latter course is most difficult in view of the American two-party system as it is today. Even if such an attempt is successful, the new alignment is difficult to maintain because the patronage of a senator is more limited than that of a governor, at least for the purposes of state politics, and because the senator is required to spend most of his time outside of the state. Thus, the governor, always a valuable point of access for a political interest group, may possibly be controlled by such a group, if that group supported him for election and has access to and influence over an important segment of the political organization in the state. THE G E N E R A L

ASSEMBLY

The Senate. The Senate, because of its special powers over gubernatorial appointments, the four-year term of its members, and its small size (fifty), is the more powerful of the two legislative bodies. While all revenue bills originate in the House, 1 the final effect of even this exclusive power is up to the Senate's discretion. The most powerful single person in the Senate is not the president of the Senate, the lieutenant governor, but the president pro tempore who is elected by the Senate itself. The president pro tempore not only exercises the powers of the president of the Senate during the latter's absence,2 but he has the highly important power to appoint the members and chairman of each standing committee of the Senate, and is an ex-officio member of all standing com1 "Pennsylvania State Constitution," Article III, Scction 14, Pennsylvania Manual, op. cit., p. 37. 2 Pennsylvania Manual, op. cit. Rules of the Senate, adopted January 4 , 1 9 4 9 , # 1 3 , P-336.

The Pennsylvania State Government, Republican and Democratic Party

185

mittees.1 The significance of this power is great because most of the legislating in both houses of the General Assembly is done by the committees. A bill, introduced by a member, is referred by the president pro tempore to a committee he considers appropriate. It is then considered by that committee as a whole or, if it is too large, by a subcommittee. Hearings may be held, during which representatives of interest groups and associations may testify, at the request of such groups, and if the committee members are so inclined. Since there are no rules prescribing such hearings, there is no definite method of announcing and publicizing such hearings. The responsibility of ascertaining when and where such hearings are to be held is placed upon the interested groups and associations.2 The committee may decide to report the bill favorably or unfavorably. If the decision is favorable, the bill goes on the calendar and must be read and voted on three times on three different days. At any reading, it may be amended or recommitted to the committee. If the report of the committee is negative, a majority vote of the elected members of the Senate is required to put the bill on the calendar. If such a motion fails, it cannot be renewed. A committee is not required to report a bill at all, and may "kill" a bill unless a majority (twenty-six) vote of all members of the Senate vote to discharge the committee from further consideration of the bill.3 C. L. Winslow, in his study of the committee system in Pennsylvania, concluded that usually half the bills introduced were killed by committees and the decision of the committee on other bills, favorably or unfavorably, was generally accepted as final. 4 That the power of the committees is as great today as it was when Winslow's study was made is attested to in the following statement from the 1

Ibid. Rules of the Senate, #23, p. 337. C . L. Winslow, State Legislative Committees (Series X L I X , N o . 2 of "Johns Hopkins University Studies in Historical and Political Science" [Baltimore: Johns Hopkins Press, 1931]), pp. 84-87. 3 Pennsylvania Manual, op. cit. Rules of the Senate continued, #43, p. 339. 4 Winslow, op. cit., pp. 100-20. 2

T h e Pennsylvania Manufacturers' Association

P M A Legislative Bulletin of January 12, 1 9 5 1 : " T h e most important w o r k of the Legislature is done in committees. U p o n introduction, all bills are referred to committee for consideration. T h e committee has authority to approve a bill, to kill it or to revise it by amendments. In short, committees hold the power of life or death over all legislation. Therefore, it is n o w most important that you know your legislative committee members." 1 Since the power of these committees is so great, access to them would naturally be considered imperative by political interest groups. Because of the great appointive power of the president pro tempore, the desired access may be had through him. Another point of access would be the committee chairman. He has the power to call all committee meetings and the power of final decision so that he may personally kill a bill, unless of course, the necessary majority vote is obtained in the Senate to discharge the committee. 2 T h e manner in which committee meetings are conducted adds to the importance of the chairman as a point of influence, as well as to that of the committee hearings. Mr. Winslow found that there was little discussion in the meetings. Usually a senator or representative o f an interest group actively supported or opposed the measure under consideration. There often was very little argument as there was a tendency for few members to have read and studied the bill. Also the Winslow study found t h a t . . their [the committee members] consent to the action of the committee depended apparently upon their confidence in the man making the suggestion for whatever action was taken." 3 It is this predisposition on the part of the committee members that is related to the access a group such as the P M A may have to them. In The Governmental Process, David Truman found that the "basic factor affecting access" was the "position of the group or its spokesman in the social structure." 4 It is clear then that there can be a very 1

P M A Legislative Bulletin, No. 1, January 1 2 , 1 9 5 1 , p. 1. W i n s l o w , op. cit., p. 1 7 . W i n s l o w cites six bills in 1929, killed by the committee chairmen personally, p. 1 2 2 . s W i n s l o w , op. cit., p. 83. (Italics added.) 4 Truman, op. cit., p. 265. 2

T h e Pennsylvania State Government, Republican and Democratic Party

187

important relationship between the general social status o f the P M A and its members and the access to the state legislature. If committee members are affected in their decisions by their confidence in the man making the suggestion—either privately or at a public hearing —the status in the social structure of the P M A and its members becomes highly important. If, for example, a committee member was predisposed to respect a businessman, who generally has high social status in our society, he would probably be willing to accept his point of view regarding pending legislation. The House of Representatives:

The Speaker and the

Committees.

Like the president pro tempore o f the Senate, the speaker o f the House is elected by the House members. 1 He has the power to appoint members of the select and conference committees, 2 the chairman and vice-chairmen of the standing committees, 3 and the members o f the Rules Committee. The "members o f the Standing Committees are appointed by the Committee on Committees, headed by the Speaker and membered by seven Representatives chosen by the majority party and three by the minority party." 4 The procedure in the House is very much the same as in the Senate, with committees as powerful and important as in the Senate. The speaker refers the bill to a committee. If he does not do so within t w o days, he may be forced to by a majority vote o f the House. 6 The Rules Committee is important because it controls the calendar. This can be most important at the end-of-the-session rush since the order of bills can determine which will be considered before adjournment and which will not.® Since the committee procedure is about the same in the House as in the Senate, the same statements made above concerning Senate 1 Pennsylvania State Constitution," Manual, op. tit., p. 35.

' Pennsylvania

Manual,

Article II, Section 9,

op. cit. Rules o f the House o f Representatives, #5,

P- 463Ibid. Rules o f the House o f Representatives, #27, p. 465. ' Ibid. Rules o f the House o f Representatives, f$, p. 465. 6 W i n s l o w , op. cit., p. 16. 6 Ibid., p. 31, 3

Pennsylvania

188

The Pennsylvania Manufacturers' Association

committees are applicable to the House. The only significant difference is that, since the House committees are so much larger than those in the Senate, a wider use of subcommittees is necessitated. This, in Winslow's opinion, tended to destroy the individual responsibility of committee members for consideration of measures.1 The speaker and the committee chairman would then be valuable points of access for a political interest group seeking to influence legislation. Another point that has not as yet been noted is the individual member. Access to an individual member of the General Assembly can be of some value, regardless of his prominence or of what committee he may be a member, because he can propose amendments to bills during any of the three2 readings in the Senate and, in the House, after the second reading.3 Amendments, of course, may also be made by the committees, but those adopted by the House or Senate may not be changed by a committee. The Winslow study, however, found that few amendments were made from the floor; rather, the great majority were made in committee and accepted by the respective house of the General Assembly. 4 The Legislative Personnel. Before concluding this part of the chapter, it should be mentioned, in regard to institutions and offices in the state government to which access would be desirable for a political interest group, that there are certain aspects about the legislative personnel in Harrisburg that would encourage or discourage the access to them of certain interest groups. The constitution of Pennsylvania limits any one city or county to one-sixth of the membership of the Senate; consequently, while the two great population centers in the state, Philadelphia and Pittsburgh, represent 34 per cent of the state's population, they actually control only 28 per cent of the Senate. While the urban population of the state is 79 per cent, according to a study in 1938, it had 1

Ibid., p. 57. Unanimous consent is required for an amendment on the third reading: Senate Rule »17. s Pennsylvania Manual, op. cit., House Rules 144, p. 466. 4 Winslow, op. cit., p. 122. 2

The Pennsylvania State Government, Republican and Democratic Party

189

between 64 per cent and 76 per cent of the representations in the Senate.1 In the House, Philadelphia and Pittsburgh have forty representatives, or a little under 20 per cent of the entire House.2 The result of this situation has been that the majority of the members of both houses have come from the so-called "up-state" areas, consisting of small cities, towns, farms, and small industries. Therefore, access to the political organizations of both metropolises in Pennsylvania could not guarantee a political interest group success in influencing legislation at Harrisburg. It would be wise for such an interest group, then, to have influence in those areas whose representation constituted a majority in the General Assembly. In the study of legislative personnel made by William T. R. Fox in 1938, he found that the average age of the state senators was higher than that of representatives and that lawyers constituted the largest single occupation group. 3 The other occupation groups severally represented were found to be merchandising, real estate and insurance, agriculture (this group has shown a marked decline from 1881 to 1937 from 16 per cent to 5^- per cent), construction and maintenance, manufacturing (this group has never been large: 1881, 63%- per cent; 1933, n^V P e r cent; 1937, per cent), and education (1937, per cent).4 The number of senators and representatives with a college education has increased since 1881 and Fox found that Republican and urban members were more likely to have attended college than had Democrats and rural members. 5 From a brief study made by the author, of the legislative personnel of the General Assembly in 1927, 1931, 1939, 1947, and 1951, certain further observations can be made. There were more manufacturers in the Senate and House in 1927 and 1931 than in 1939, 1 William T. R. Fox, "Legislative Personnel in Pennsylvania," The Annals, C V C (January 1938), 32-33. The percentage of Senate representation is the same today. 2 Based upon figures from the Pennsylvania Manual of 1951-52. 3 Fox, op. cit., p. 34. 4 Ibid., p. 35. 5 Ibid.

I90

The Pennsylvania Manufacturers' Association

1947, and 1951. In 1951, the only five men in the Senate and six men in the House could, from their occupations, reasonably be termed manufacturers.1 In contrast, lawyers remain the largest single occupation group although they have decreased from 1937 to 1951.» Since one of Mr. Grundy's tenets was always that businessmen should get into politics, it was the purpose of the author's study to see if many businessmen—especially manufacturers—had entered politics actively as representatives in Harrisburg. It was also the author's purpose to ascertain whether those representatives who were manufacturers were on committees, as members or chairmen, which would consider legislation of vital importance and interest to their occupations. In 1927 and 1931 when there was a large number of manufacturers in the legislature,3 most of them did not sit on any committee that would pass upon legislation of great interest to manufacturers. In the Senate in 1931, the chairmanship of the Committee on Railroads, the Judiciary Special, and the Apportionment were held by men who could be termed businessmen, although not necessarily manufacturers.4 The committees which considered legislation of interest to manufacturers or even general businessmen: the Judiciary General, Labor, Public Utilities, Ways and Means, and Workmen's Compensation Committees were not chaired or membered by manufacturers. In the House, the situation was the same. Of the eighteen members who might have been termed businessmen, one was the chairman of the Committee on Boroughs, one chairman of the Committee on Banking, one chairman of the Committee on 1 Pennsylvania Manual 1951-1952 (Harrisburg: Commonwealth of Pennsylvania, 1952), PP- 337-39* Ibid. The percentage of lawyers in the Senate in 1937 according to the article by W . T. R. Fox in the Annals, cited above, was 42 per cent; in 1951 the percentage was about 11 per cent. ' I n 1927: Senate: 6, House: 14, Pennsylvania Manual, 1927. In 1931: Senate: 7, House: 18, Pennsylvania Manual, ¡931-32. 4 See Appendix, note 1.

The Pennsylvania State Government, Republican and Democratic Party

191

Forestry, and one speaker of the House.1 The latter was C . J . Goodnough of Cameron County, formerly a real estate and tax agent and an officer of the United Natural Gas Company, the Mais Company, the Pennsylvania Gas Company, and the Pennsylvania Oil Company, none of which could be termed manufacturing establishments.2 In 1951 there were fewer manufacturers but they held more significant committee posts, largely because of seniority rights.3 Even with this, however, only one of these manufacturers held an important committee chairmanship. Senator T. N. Wood, president and general manager of the Pressed Steel Company of WilkesBarre, was chairman of the Senate Finance Committee.* It would thus be difficult to make a case for the wisdom and success of Mr. Grundy's views on businessmen in politics. Seniority rules being what they are, a businessman or a manufacturer would have to remain in the legislature for some time in order to gain the chairmanship of an important committee. Judging from the number who have done this, businessmen, in general, and manufacturers especially, have either found it impossible to devote this much time to active politics because of the pressures of their business, or have been otherwise ill disposed to do so. Another important factor that must be considered is that the chance of a man's becoming a success in politics depends a great deal upon his personal relationships with professional politicians, who have spent most of their lives in politics either as representatives or senators or who have been active in a party organization either at the state or county level. Seniority and occupation are not the final determining factors to political success—that is, a powerful position in the legislature or in the party organization. It is more often who 1

See Appendix, note 1. Pennsylvania Manual, ¡931-32, pp. 1103-7. The situation was somewhat different in 1927 when Mr. Goodnough, a businessman but not a manufacturer, was chairman of the House Committee on Manufacturers. 3 See Appendix, note 1. 4 Pennsylvania Manual, 1951-52, pp. 337-39, 440. 2

192

T h e Pennsylvania Manufacturers' Association

one's political friends have been and are and what one does regarding them. Mr. M. Harvey Taylor, the president pro tempore of the Senate for many years, did not hold that position of political power primarily because he was in the insurance business or because he served in the legislature from 1941. Probably the greatest factor contributing to his position was that Mr. Taylor was the leading political power in Dauphin County, and at various times in his career aligned himself with other men who were political powers in other sections of the state. At one time, he was aligned with Mr. Joseph R. Grundy and received his support for the chairmanship of the Republican party in Pennsylvania. In 1950, he was aligned with Governor James Duff, representing another group within the Republican party—a winning group—and to the victor, in politics as in war, go the spoils. STATE

OFFICIALS,

BUREAUS

TO

COMMISSIONS,

WHICH

ACCESS

FOR

DEPARTMENTS THE PMA

AND

WOULD

BE

DESIRABLE

1. The secretary of commerce. The main purpose of the Commerce Department is to develop and promote industries in Pennsylvania and to expand employment opportunities. The Department of Commerce is also empowered: ". . . to make to the General Assembly from time to time, recommendations for the remedy or improvement of any conditions, and the elimination of any restrictions and burdens imposed by law, or otherwise existing, which adversely affect or retard the development and expansion of business, industry or commerce." 1 2. The Sanitary Water Board of the Department of Health which administers the anti-pollution laws of the state. 3. The insurance commissioner of the Department of Insurance who heads the Insurance Commission that administers the laws 1 Ibid., p. 608. Also Orus J. Matthews, "Pennsylvania's Commerce D e partment," State Government, X X I , N o . 2 (February 1948), 39-40.

T h e Pennsylvania State G o v e r n m e n t , Republican and D e m o c r a t i c Party

193

pertaining to workmen's compensation insurance. Under the Commission is the Pennsylvania Compensation Rating Bureau. All of the insurance companies operating in Pennsylvania that write workmen's compensation insurance are represented on this Bureau. They vote on the rules and procedure of the Bureau in proportion to the total amount of premiums collected by each one. Since the PMA Casualty Insurance Company receives 25 per cent of the premiums paid out yearly in the state for compensation insurance, it could be in a position to dominate the Bureau. 1 Consequently, there is a limit placed upon the number of votes each company can exercise. The member companies elect the Board of Governors upon which the State Insurance Fund2 is always represented. This Board appoints a general manager and various advisory committees. All acts of the Board and the Bureau are subject to the final approval of the insurance commissioner. The function of the Bureau is gathering statistics and ratemaking, the latter, of course, with the approval of the insurance commissioner. There are about two hundred classes of insurances based upon the type of risk involved in a specific industry and a premium rate is set for each classification that is standard throughout the state with all insurance companies for that class of insurance. Obviously, the insurance commissioner is in an important position for the P M A interests. His decisions can affect the P M A insurance companies as well as the interests of PMA members. Logically, access to the insurance commissioner would be highly desirable for the PMA. It is of interest that the last insurance commissioner under the Republican administration of Governor John Fine was Mr. James Malone, Jr., the present president of the PMA. Undoubtedly, his appointment to the position of insurance commissioner was related in some way to the PMA's relations with 1 Personal interview w i t h M r . Stanley Atkins, the assistant insurance underwriter and assistant production manager o f the P M A Casualty Insurance C o . . J u l y 8, 1 9 5 4 . 2 See Chapter 7.

P.M.A.-G

The Pennsylvania Manufacturers' Association

194

Governor Fine,1 who appointed him. Most probably, his subsequent accession to the PMA presidency was related not only to his past relations with the PMA, but it is not impossible that his work as insurance commissioner was a factor in his being considered for the PMA position. 4. Under the secretary of labor and industry in the Department of Labor and Industry is the Workmen's Compensation Bureau which administers the Pennsylvania laws pertaining to workmen's compensation. Also under the secretary is the Workmen's Compensation Board which hears and determines petitions and appeals from decisions of the referees in workmen's compensation cases. All three members of this Board are appointed by the governor as well as all workmen's compensation referees. 5. The Bureau of Mediation in the Department of Labor and Industry. The duties of this Bureau are to settle labor disputes before an open breach occurs between employer and employee and, in the case of a strike, to aid in its settlement by selecting an arbitrator. Under this Bureau is the Labor Relations Board which administers the Pennsylvania Labor Relations Law and determines unfair labor practices. 6. While the Bureau of Unemployment Compensation in the Department of Labor and Industry is under civil service, the Unemployment Compensation Board of Review is appointed by the governor. It is charged with supervising a staff of unemployment compensation referees in appeals from benefit determinations made by the Bureau of Unemployment Compensation. Appeals from these referees are decided by the appointed Board of Review "after a hearing and a review of the entire record established at both the Referee and Board levels."8 7. The Bureau of Women and Children and Hours and Minimum Wages in the Department of Labor and Industry, which investigates working conditions of women and employed minors, 1 2

See Chapter 12. Pennsylvania Manual, op. cit., p. 624.

The Pennsylvania State Government, Republican and Democratic Party

195

certifies for industrial homework, and issues permits for minor's employment. The Bureau also "investigates petitions requesting variations from the several laws applicable to women and minors in industry and recommends final action to the Industrial Board." 1 8. The five members of the Public Utility Commission whose function it is to regulate the intrastate rates and services of public utilities in Pennsylvania. All of these eight administrative bureaus, boards, and commissions are of importance to the P M A because they are decisionmaking authorities. They can exercise an appreciable amount of discretion in making decisions, and these decisions determine how the various regulatory laws will be applied to specific cases. These positions then offer to the P M A a means of minimizing the effect of regulatory legislation that successfully passed over their opposition. The Workmen's Compensation Board, appointed by the governor, would be of interest to the P M A because it is the final place of appeal from the decisions of referees in workmen's compensation cases. Possible influence upon this Board could result in a decision favorable to a P M A member, not to mention the interest the P M A Casualty Insurance Company would have in such decisions. The Unemployment Compensation Board of Review presents a similar situation. It too has the final decision in cases referred to it by the unemployment compensation referees in appeals from the benefit determinations made by the Bureau of Unemployment Compensation. The Board of Review is in a more unique position because it is appointed by the governor while the Bureau of Unemployment Compensation itself is under civil service. The Public Utility Commission would also be of special interest to the P M A because of effect utility rates have upon manufacturing costs. For the P M A , a group interested in manufacturers and in politics, this Commission can and has been used as a weapon to fight some large and financially powerful groups in the Republican party that compete with the P M A for political influence. 1

Ibid.

196

The Pennsylvania Manufacturers' Association

All of these officials, bureaus, and commissions are under the Administrative Code and are appointed by the governor with the consent of the Senate. Access to them can thereby be obtained by access to the governor, and any interest group such as the PMA would naturally have its own ideas as to what men might be desirable or undesirable in each of these positions. There is no intent to imply that this means that these appointive posts will therefore be automatically at the disposal of outside interest groups who have access to the governor. All that is shown is that the possibility of access is present because of the governor's appointive and patronage powers. The limitation of Senate consent can be a hindrance to the governor's freedom of selection in his appointments. Nevertheless, while it could not be certain that access to the governor alone would assure access to certain important executive departments, in most cases, it would probably be sufficient. There are several points in the government of Pennsylvania to which a political interest group would find access desirable in order to effect their aims as a political interest group. These are the governor, the president pro tempore of the Senate, the speaker of the House of Representatives, the chairmen of the House and Senate committees, and, finally, of lesser importance, the individual members of the legislature. It would be difficult to list all of these in order of their importance because of the peculiar relationships and balances between them. Access to the governor, for example, would aid a group in influencing the executive branch in such matters as the state budget, what appropriations and taxes would be called for, and in the administration of such matters as workmen's compensation, but it would not guarantee access to the legislature. O n the other hand, access to the speaker of the House or the president pro tempore of the Senate could promote a group's or association's influence over the legislature through the respective appointive power of these two men vis-a-vis committee chairmen, but would not necessarily guarantee that group any access to the executive branch.

The Pennsylvania State Government, Republican and Democratic Party

197

It would be to the advantage of a political interest group, therefore, to devise some means of gaining access to both the executive and the legislative branches. Fortunately for such groups as the P M A , this means has always been available in the form of the Republican party of Pennsylvania. THE R E P U B L I C A N P A R T Y OF P E N N S Y L V A N I A

Interest Groups and Local Political Organizations. A political party, even at the state level, is not a unified entity but rather a series of smaller political organizations in counties and cities that join together at various times to function as a state organization. A state party committee, while it functions as a single unit, is actually made up of representatives of the various county organizations. It has indeed been rare for unanimity to exist among all of these various organizations, regarding either the choice of a gubernatorial candidate or upon all questions before the legislature. The reason, of course, for this lack of permanent agreement has been that while all of these local organizations may be part of the same political party, they represent or are supported at the local level by different interest groups. These local organizations are, of course, interest groups in themselves. As professional political workers they are interested in promoting themselves for the very functional reason-that they wish to keep their jobs. Often, these local organizations are strong enough to meet other strong local interest groups on an equal footing and hold their own. What has been more often the case, however, when a power clash has developed between the local political organization and a strong local interest group is for the political organization to bow to the will of the interest group. Such a clash of interest was exemplified in the fall of William S. Vare in the early thirties as the dominant political leader of the Philadelphia Republican organization. Vare had grown more and more independent of others in his organization and of the various powerful interest groups that backed him. Prominently included

198

T h e Pennsylvania Manufacturers' Association

among them were the Pennsylvania Railroad and Philadelphia contractors. It was leaders of these two strong interest groups that engineered Vare's downfall. 1 T h e local organization is important not only because of its power in selecting the gubernatorial candidate, but also and especially because the local organization generally selects the local candidates for state legislators. The gaining of access to a local political organization then serves two purposes: to gain access to the gubernatorial candidate by being influential in his selection and to gain access to local legislators. T o carry the process of access for the sake of influence a step further, since there is usually more than one interest group involved in any local political organization, it would be advisable for any group such as the P M A to gain access to what would appear to be the most influential of these local groups or to be one of those groups. Frequently, it is impossible for any access to be gained because of the great power of an existing local interest group. Its influence may be so great as to make access to the local political organization impossible for any other group. This has frequently been the case in large cities. The Pennsylvania Railroad, for example, successfully dominated the Philadelphia Republican organization during the 'twenties and early 'thirties. Mr. Grundy and the P M A had little access to this organization until recently. G. Mason Owlett, the late P M A president, had a close alliance with that part of the Philadelphia organization headed by William F. Meade. 2 In connection with this access, it should be remembered that the Pennsylvania Railroad has in the past several years been on very friendly terms with the P M A 3 and that the Republican party has been out of power in Philadelphia since 1 9 5 1 . The Role of "Status."

The determining factor in the influence

' J . T . Salter, " T h e End of V a r e , " Political Science Quarterly, L, N o . 2 (June 1955). 2 See Chapter 12 for more details concerning this political relationship. 3 Personal interview with G . Mason Owlett, June 23, 1954.

The Pennsylvania State Government, Republican and Democratic Party

199

such local groups might have over the local party organization is the status of that group in the community. 1 Since access to the county party organizations gave access to the state organization, actually the state Republican committee, the status factor again could determine the success of an ambitious political interest group in gaining a powerful voice on the state committee. For a group primarily interested in state legislation, however, access to the state committee was of secondary importance to access to the county Republican organizations. This status, aside from being the product of social forces and values, is also—when dealing with political organizations—related to financial affluence and votes. Both elements are needed for the success of any political party organization. Those groups, therefore, who enjoy high status in the community and are in a position to contribute extra campaign funds or votes or both, logically could gain access to party organizations. These political facts will help explain the P M A ' s methods to gain access to various county Republican organizations and the related success or failure of those methods. National. At the national level, the Republican Party National committee, having two representatives from each state, chosen by each state committee, reflects the dominant interests behind each state committee. 2 Thus access to the state Republican committee is a means of access to the National Republican Committee. There is another means of access to the National Committee that is more subtle and certainly less institutionalized. It is also more difficult and less permanent and was, for some years, used by Mr. Grundy. An individual or a group w h o can command large sums of money or a large number of votes, or both, may gain access to the National Committee of a political party and to the presidential nominee and his staff without being in a dominating position over T r u m a n , op. cit., pp. 265-68. For discussion of party structure, see V . O . Key, Jr., Politics, Parties and Pressure Groups (3rd ed.; N e w Y o r k : T . Y . Crowell Co., 1952), pp. 358-592

200

T h e Pennsylvania Manufacturers' Associarion

any state party committee. Such an individual, so long as his fundraising ability remains useful, may gain access also to those powerful leaders from other states w h o may be most influential in selecting a presidential candidate—Mr. Grundy did this during the 'twenties. Access to the National Committee of either political party would be desirable for any single leader or interest group for t w o purposes. If they wished to influence national legislation, especially by persuading party leaders to announce publicly (e.g., through the party platform) that they favored specific legislation, such access would be indispensable. Such access could also be used if the group were primarily interested in state legislation. Access to and influence over those decision-making bodies at the national level can be used as a lever against the influence of a rival interest group at the state level. This can be done through influence over those national party figures w h o dispense federal patronage at the state and national level. 1 Continued access to the national level of any party is more difficult than at the state level. It requires a command over a larger amount of money for campaign funds or it requires the backing of a large state organization. These prerequisites are difficult for any single interest group or individual to obtain in a democracy as large and as wealthy as the United States is today. Senators and Representatives from Pennsylvania.

Sincc the

PMA

leaders have largely concerned themselves with state legislation, they have consequendy been less interested in having access to the congressional representatives from Pennsylvania than to the members of the Pennsylvania General Assembly. Nevertheless, congressmen from Pennsylvania can be of great advantage as points of access for a group such as the P M A , for several reasons. First, they vote on national issues including tariff matters which have been of great interest to Mr. Grundy and the P M A . In connection with this is the fact that national legislation has come to be 1 K e y , op. cit., pp. 3 2 0 - 2 1 . Such patronage is dispensed through congressmen—representatives and senators or through the " r e c o g n i z e d " party organization at the state level where the national administration has no congressmen. See Chapters 1 2 and 13 for examples of P M A ' s activities along this line.

The Pennsylvania State Government, Republican and Democratic Party

201

of much greater importance for the manufacturer in every state than ever before. The second reason is that senators and representatives have federal patronage jobs at their disposal that could be of great use to any political organization interested in strengthening its position in the state. The third reason is one that Mr. Grundy evidenced much awareness in the forties in relation to the incumbent, Senator Davis. While Mr. Grundy was quite aware of the value of having a senator or representative from Pennsylvania continually re-elected over a period of time in order to gain the advantages and increased power of seniority in congress, he also realized that such a man could become a political figure of recognizable strength in the state. This would especially be the case if there were a Republican administration in Washington. It would be better, then, to have access to such a man or, if such access were unobtainable, to replace him with one more friendly. Illustrative of such a situation was Mr. Grundy's thinking regarding the running of Mr. Jay Cooke for the United States Senate against Senator Guffey in 1940. Mr. Grundy believed a younger man should run because the Republican party, he felt, could not successfully return to power until 1948 and by that time the Pennsylvania senator—hopefully, Mr. Cooke—would have the needed seniority and prestige to place him in a powerful position with the Republican administration. While Senator Davis already had such seniority, Mr. Grundy did not feel he could ever have the necessary prestige: "The present senior Senator from Pennsylvania, whatever his other claims to fame may be, cannot include among them either experience in the governmental and economic affairs of this State, nor any important participation in the councils of the Party." 1 Probably the greatest fear Mr. Grundy had regarding Senator 1

T w o undated memos (mimeographed) regarding the Cooke candidacy in 1940 found in the P M A files under Mr. Grundy's portfolio. Quotes are from the 1942 memo.

202

T h e Pennsylvania Manufacturers' Association

Davis was that through control o f federal patronage under a Republican administration in Washington, he could successfully set up a personal political leadership in the state. Mr.

Grundy

wanted a senator w h o would see that patronage "was dispensed from the viewpoint o f State and Party benefit, rather than as the instrumentality o f personal dominance and individual prestige." Mr. Grundy also wanted a man " w h o had a clear and intimate knowledge of those economic requirements of Pennsylvania which can be met only through national legislation." 1 Primarily, Mr. Grundy was interested in cutting the power o f a potential state political figure who had gained much of that power from his two terms as the senior senator from Pennsylvania. Secondly, he was interested in having a new senator to whom he would have access. THE D E M O C R A T I C

PARTY

During the 1929 investigation o f lobbying by the Caraway Subcommittee o f the Senate Judiciary Committee, Mr. Grundy was asked by Senator Walsh o f Montana: W h a t D e m o c r a t i c C o n g r e s s m e n h a v e y o u assisted in e l e c t i n g ; Mr. Grundy:

Fortunately, w e are j u s t o u t o f D e m o c r a t s up there.

F o r t u n a t e l y . I d o n ' t w a n t to say u n f o r t u n a t e l y ! Senator Caraway then asked: I was interested, i f y o u w i l l pardon m e a m o m e n t — y o u said assisted Republicans and s o m e D e m o c r a t s . D o I understand that y o u r association ( P M A ) s o m e t i m e s assists D e m o c r a t s to b e elected? Mr. Grundy:

Yes.

Senator Caraway:

D o y o u contribute t o b o t h the Republican and

D e m o c r a t i c Parties, so that w h i c h e v e r o n e goes in, y o u w i l l be square with» Mr. Grundy:

O h n o ; b u t in some o f the counties there are m a n y

D e m o c r a t i c m e n interested in the same e c o n o m i c p r o b l e m s . 1 Ibid. W h e t h e r M r . G r u n d y k n e w at the time that the various insurgent organizations in the state w h o w e r e not aligned either w i t h h i m or M r . P e w w o u l d j o i n Senator Davis in the gubernatorial primary contest in 1942 is not definitely k n o w n , but it may be surmised that he suspected it.

The Pennsylvania State Government, Republican and Democratic Party

203

Senator Caraway: In other words, if y o u cannot beat a Democrat y o u go in and help him so that you can help control him? Mr. Grundy: O f course, these men are interested in the economics o f Pennsylvania. Senator Caraway: That is not what I asked you. Y o u wanted to be influential,and do youhelphimwhenyoucannotbeathim; Is that the ideas Mr. Grundy: Well. . . . Senator Caraway: Just " y e s " or "no." Mr. Grundy: Well, w e help them because they are on the same line o f thought that w e are on. Senator Caraway: W e l l do y o u have any objection to answering the question, Mr. Grundy? Mr. Grundy: W o u l d y o u state it again; Senator Caraway: Yes, sir; and that will be about the fourth time. Y o u look right at me and I will look at you. Mr. Grundy: Yes, sir; I will be very glad to. I appreciate the opportunity. Senator Caraway: W h e n y o u find out there is a Democrat running for office that you cannot beat, did y o u help him so that you would be influential—. Mr. Grundy: Oh, no, no. N o t at all. If they were in sympathy with the things w e were interested in, we would be glad to help him. Senator Caraway: If he was a Democrat that was a good Republican, you would help him? Mr. Grundy: If he was interested in the things that w e were interested in. Senator Caraway: Well, what were you interested in? Mr. Grundy: In the legislation that w e were interested in accomplishing in Pennsylvania. 1 T h i s interchange b e t w e e n M r . G r u n d y and Senators C a r a w a y and W a l s h perhaps best explains the traditional relationship b e t w e e n the P M A and the D e m o c r a t i c p a r t y in Pennsylvania. A s f o r access to the D e m o c r a t i c p a r t y itself, the P M A w a s n o t interested, b u t i f there w a s a D e m o c r a t w h o shared the P M A ' s e c o n o m i c and political v i e w s , and there h a v e b e e n a f e w , he w o u l d b e supported. O n e o f the m o s t notable D e m o c r a t s supported b y the P M A w a s the late 1

Subcommittee of Senate Judiciary Committee, op. cit., pp. 498-99.

204

The Pennsylvania Manufacturers' Association

Honorable John Flynn o f E l k County, P M A president from 1932 to 1943. Flynn, however, became a Republican officially—during the 'thirties. The only Pennsylvania Democratic officeholder with whom the P M A is admittedly on "friendly" terms is Representative Francis E. Walter of the Fifteenth District. 1 The main reason for the PMA's lack of interest in access to the Democratic party in Pennsylvania is that the Democratic party has traditionally been so weak that access to it would have been of little value. Aside from the present governor, David Lawrence, there have been only two other Democratic governors in Pennsylvania during the twentieth century. They were Mr. George H. Earle, Jr., who served from 1935 to 1939 and Mr. George Leader, governor from 1954 to 1959. The weakness of the Democratic party has been more greatly evidenced in the General Assembly of Pennsylvania. From 1909, when the P M A was founded, to 1920, the Democrats never had more than fifteen senators out of the fifty members of the state Senate, and that occurred only once—in 1913. 2 In the House of Representatives, there were never more than fifty-four out of a total of 204-207 members. During the twenties, the Democrats were even weaker. At no time between 1920 and 1935 were there more than eight state senators who were Democrats,3 and only once were there more than twenty-two Democrats in the House of Representatives; in 1923-24 there were forty Democratic representatives. During the first legislative session of the General Assembly under Governor Earle, the Republicans had a majority in the state Senate as they do now under Governor Lawrence. Between these two Democratic governors, the Democrats have fared somewhat better in the House of Representatives. They never had even half of the Senate's members since they controlled it in 1937-38. In the House, 1 Personal interview with Mr. Thomas P. O'Neil, March 25, 1955. Northampton, Carbon, and Monroe Counties are represented by Mr. Walter. 2 The Pennsylvania Manual, 1953-1954 (Harrisburg: Commonwealth of Pennsylvania, 1954), p. 442. 3 Ibid., p. 442. In 1 9 2 1 - 2 2 there were only three Democratic state senators.

The Pennsylvania State Government, Republican and Democratic Party 2 0 5

however, while they have had much greater representation, the Democrats, aside from the present, have controlled it only four times—in 1935-36 (117-88), in 1937-38 (154-54), hi 1941-42 (12682), and in 1955-56. Such a record has not made the Democratic party of Pennsylvania a desirable vehicle of access with which to influence Pennsylvania legislation. The second and final reason for the PMA's lack of interest in the Democratic party has, of course, been that all of its leaders and most influential members have been Republicans and, frequently, quite active in Republican party politics, John Flynn not withstanding. One of the reasons today, for example, for the PMA's important connection with the Republican party nationally was that its president, G. Mason Owlett, has been national committeeman from Pennsylvania. Mr. Owlett, before his death, was replaced by Mr. Jay Cooke. Mr. Cooke, to some extent was a compromise choice between the Grundy-Owlett group and the Duff group. As far as past connections are concerned, however, it would appear that Mr. Cooke was on closer terms with the Grundy-Owlett group, especially on purely state political matters, than with Senator Duff. CONCLUSION

Because of its traditional strength the Republican party of Pennsylvania has been the most desirable means of gaining access to influence both branches of the Pennsylvania state government. The Democratic party, until recently, has not been sufficiently successful at the polls to attract the attention of groups such as the PMA. Access to the Republican party is, of course, most desirable at its greatest source of strength—the county or city organization. It is at this level that there can be much competition with other local interest groups seeking to influence the local organization. In its attempts to gain access to the local party groups, the community status a group such as the P M A may have, its financial resources, and the number of votes at its command are determining factors.

P A R T FIVE Methods used by the P M A to Accomplish its Legislative Goals and Conclusions

12 The Methods used by the P M A to Gain Access to the Republican Party in Pennsylvania and to Pennsylvania Legislators and Governors THE O R G A N I Z A T I O N

OF T H E

PMA

I n order to gain access to the Republican party in Pennsylvania, the P M A and its founder, Mr. Grundy, used several methods. Perhaps the most important, because it supplied the base from which the P M A and its leaders worked, was the organizational structure of the P M A itself. In order to relate itself to a political party at its most fundamental organizational level, a political interest group would be wise to start with the county organization in the state.1 This is precisely what the P M A did. Federative Nature: The Local Associations. As discussed in Chapter 2, the organization of the P M A was along apparent federative lines. Local and county manufacturers' associations were founded in all important areas of Pennsylvania, whether they were primarily industrial or not. Branch offices were set up throughout the state directed by representatives of the local manufacturers' association and those from the P M A central offices in Philadelphia and from its insurance companies w h o acted as "field agents," keeping in close contact with the local political leaders. 2 Regarding these "field agents," M r . Grundy, in his testimony before the Senate subcommittee investigating lobbying in 1929, stated that they were interested in the politics of the area in which 1 2

K e y , op. cit., pp. 299-300. See Chapter 2, pp. 2 9 - 3 2 .

210

The Pennsylvania Manufacturers' Association

t h e y w o r k e d . T h e f o l l o w i n g e x c h a n g e b e t w e e n M r . G r u n d y and S e n a t o r W a l s h , D e m o c r a t o f M o n t a n a , explains f u r t h e r the f u n c t i o n o f the P M A " f i e l d a g e n t . " Mr. Grundy:

W e l l , w e have over a dozen or fifteen branch offices in

the industrial centers o f the State, all of which are officered b y a president and secretary and board of directors, and of course those men are from time to time at Harrisburg in conjunction with matters in which their members are interested. Senator

Walsh:

Y o u have field agents throughout the State too, I

suppose > Mr. Grundy:

Well, if you call these various local organizations "field

agents," w h y , to that extent, yes. Senator Walsh:

About how many men are thus engaged throughout

the State? Mr. Grundy:

Well, there are probably a dozen or fifteen in these

different offices. Senator Walsh: They look after the politics of the State, I suppose. Mr. Grundy: tion.

O f course, w e are all interested in the general proposi-

1

T h e purpose in starting local m a n u f a c t u r e r s ' associations w a s to attract n e w m e m b e r s and thereby to strengthen the association b y e x t e n d i n g its i n f l u e n c e — t h r o u g h local m e m b e r s — t o the political organizations and representatives o f a certain locality. M r . G r u n d y ' s reasons and those o f the P M A secretary, M r . S h o e m a k e r , in 1 9 1 7 , f o r d e v e l o p i n g local associations w e r e h i g h l y p r a g m a t i c : . . . the w o r k done b y local associations, our experience shows has been much more effective when there is such a local organization in the community. 2 The usefulness of our association is dependent largely on the character and numerical strength of its members, and in the ability to reach the reasoning 1

Subcommittee of the Judiciary Committee of the United States Senate: op. cit., pp. 498-99. 1 Minute Book, eighteenth Executive Committee meeting (July 20, 1917), 1, 209.

T h e Methods used by the P M A to Gain Access to the Republican Party

211

mind of every Senator and member of the Legislature through their constituents.1 Status of PMA

Members.

W h i l e the numerical strength o f the

membership o f the P M A was an important factor in its relating itself successfully to the local party organization, the character or the status o f that membership was also a decisive factor. It was natural f o r the P M A to obtain local businessmen as members, men in the community w h o were respected and w h o were therefore apt to be influential. T h e y w o u l d be o f high status. W h e n the P M A was founded, such a man o f high status w o u l d have been the local businessman. He was then, as M r . Grundy often noted, the natural community leader and w o u l d be in a natural position o f access to the local legislators. 2 In most up-state areas in Pennsylvania today, this w o u l d still be true. Financial

Contributions.

The great expense o f political campaigns

and o f maintaining a political organization of any size has made money a traditional means o f access to any political organization, local, state, or national. While the activities o f the P M A as an association in this field are somewhat ambiguous, those o f its leader, M r . Grundy, were quite clear. There is no evidence that the P M A used any o f its moneys to assist any political personage or campaign directly and its leaders have always denied this practice. 3 Nevertheless, fmancial contributions have and continue to come f r o m P M A members as individuals and M r . G r u n d y himself acted as one o f the great "money-collectors" f o r the Republican party. As for M r . Grundy's personal activities, the testimony before the Senate special committee investigating campaign expenditures o f the Sixty-ninth Congress, 1926, revealed that M r . Grundy had personally " l o a n e d " to the Pepper-Fisher primary campaign 4 the sum o f $300,000. Also M r . Grundy admitted having contributed $50,000 1

Minute Book, eleventh Executive Committee meeting(july 19, 1 9 1 3 ) , 1 , 9 8 . Sec Chapter 5. 3 Personal interview with G . Mason Owlett, October 1 3 , 1 9 5 3 . 4 George W . Pepper and J o h n S. Fisher running for U . S . senator and governor respectively in 1 9 2 5 in the Republican primary. 2

212

The Pennsylvania Manufacturers' Association

personally to the Coolidge presidential campaign in 1924 and having collected in Pennsylvania—"not from manufacturers alone"—the sum of $700,000 for the same campaign. 1 Previous to this and concerning his activities in the Coolidge campaign of 1924, Mr. Grundy told the Borah Committee on campaign expenditures that he had been collecting money for campaigns since he had reached his majority. Further, he stated that the money came from all kinds of industries, practically all of which were beneficiaries of the tariff. 2 Nathan T . Folwell and Chester W . Hill, who aided M r . Grundv in collecting the campaign funds, were both officers of the P M A and admitted collecting $10,000 from the weaving industry, most of which were P M A members. 3 M r . Grundy was well aware of the fact that access to the higher echelon of the party hierarchy required larger financial contributions than to the strong but small county organizations. Access could be had to the state party committee without completely controlling a majority of the county organizations, and access most certainly could be and was had to the national party committee and national candidates without control over a majority of the state party committees. Sizable financial contributions provided this desired access. The successful spread of Mr. Grundy's influence to the national level was most probably due to his acting, as the New York Times called him, as the "angel" for the Republican party. 4 The Literary Digest used more candid terms: "Joseph R . Grundy incarnates the political system against which enlightened leaders of both parties-—have been fighting for generations. He is the unreserved exponent of the use of money in politics for the direct financial benefit of the contributors of the money."6 1 New York Times, June 1 1 , 1926, pp. 1 - 2 . Mr. Grundy admitted contributing $18,000 personally and signed notes for about $300,000. 2 New York Times, October 23, 1924, p. 1. 3 Ibid. 4 New York Times, editorial, March 14, 1929, p. 26. 5 " A Grudging Senate Seats 'Uncle Joe' Grundy," Literary Digest, CIII, No. 13 (December 28, 1929.) Quoted from an editorial in the New York World (independent Democrat), p. 5. (Italics added.)

The Methods used by the P M A to Gain Access to the Republican Party

213

The Lobby Investigating Committee of the United States Senate in its report in 1929 stated: " T h e inference is irresistible that it was believed by him [Grundy]—that by reason of the very substantial aid he had rendered as revenue raiser for political campaigns, he would be able to influence the action of his party associates in Congress."1 Significance of Mr. Grundy's Relationship to the PMA.

While M r .

Grundy's personal financial contributions and fund-raising activities were responsible for much notoriety concerning him and his personal political influence with the Republican party in Pennsylvania and nationally, his relationship to the P M A also played a great role in this influence. The organizational nature of the P M A placed Mr. Grundy in contact with important sources of financial aid: Pennsylvania businessmen interested in the prevention of certain reform legislation at both the state and national levels. The P M A itself thus served as a method of gaining access to the Republican party at the state and national levels through campaign contributions. As was noted in Time as late as 1952: T o Cameron and Quay 2 the money to be made in politics was an incidental increment of political power. T o Penrose money was just a means to political ends. But Grundy and friends were primarily businessmen, interested in politics as an aid to business. T o this day the Grundy "machine" is not a normal political organization with normal responses. It is the super body of a pressure group. It reaches the grass roots voters only through alliances with certain county leaders.3

Access Through Friends in the Party Hierarchy. Another significant and traditional method used by the P M A to gain access to the Republican party was to obtain or to place friends in the party hierarchy. At the state level, such friends would be on the party state committee, especially the state chairman, and, at the national level, the national committee and the national chairman. Such 1 New York Times, December 1 1 , 1929, p. 1: "Grundy Attacked in Senate Report: Assailed on Floor." (Italics added.) 2 Republican "bosses" in Pennsylvania in the nineteenth century. 3 Time, June 30, 1952, LIX, N o . 26, p. 19.

T h e Pennsylvania Manufacturers' Association

214

members of the party hierarchy are important to political interest groups because of their patronage influence and because of their influence over campaigns, state and national. That such friends in the party hierarchy, however, do not always guarantee political success for a political interest group has been evidenced several times during the lifetime of the PMA. THE T W E N T I E S :

T H E V A R E S OF

PHILADELPHIA

During the 'twenties Mr. Grundy had few friends on the state party committee, as it was largely dominated by the Vare organization of Philadelphia. The two national committeemen from Pennsylvania were usually followers of the Vare or Mellon organizations. Yet he was closely allied with the two Republican governors of the period : Pinchot and Fisher. His greatest point of access at the national party level was the secretary of the Treasury, Andrew Mellon, whom Mr. Grundy had actively supported for that post.1 In contrast, during the 'thirties, Mr. Grundy had many friends on the state committee, including his personal choice as party chairman, M. Harvey Taylor. 2 One of the national committeemen from Pennsylvania at this time was G. Mason Owlett, Mr. Grundy's political aide and later successor as PMA president.3 This period, when Mr. Grundy's access to the party hierarchy, both state and national, was stronger than ever, was also the period that the Republican party nationally and in the state was at a low ebb. President Roosevelt was in Washington and Governor Earle was in Harrisburg. Also the Vare and the Mellon organizations had collapsed and the latter, in Allegheny County, had been replaced by a rising Democratic organization.4 1

See Appendix, note I. Evening Bulletin, "Martin Backs Taylor A s H e Quits Contest," Houston McCullogh, p. i. 3 New York Times, M a y i6, 1936, p. 2. He succeeded former Senator David A . Reed, a Mellon ally. 4 Philadelphia Record, " V a r e Overthrown as G O P Boss by Loucheim C o u p , " Harry Kalodner, June 6, 1934, p. 2. Salter, op. cit., pp. 2 5 8 - 6 2 . George S. Bailey, "Mellonism Takes the C o u n t , " The Nation, C X X X I I I , N o . 3465 (December 2, 1 9 3 1 ) , 5. 2

The Methods used by the P M A to Gain Access to the Republican Party THE

THIRTIES:

MR.

GRUNDY

AND

MR.

21$

PEW

During the political ascendency o f Mr. Joseph N . P e w , Jr., M r . Grundy's access to the party hierarchy was limited not only b y M r . Pew but b y the emergence o f strong county organizations such as that in Allegheny C o u n t y led by Frank J. Harris, the M c C l u r e organization o f Delaware C o u n t y , and a group in central Pennsylvania led b y state C o m m i t t e e m a n W . C l y d e Harer o f Williamsport, formerly allied with the Baker-Beidleman faction. 1 There was also a more nebulous faction that found representation in the state-wide W i l k i e clubs led by state Committeeman W i l l i a m H. Harman. During this period, Mr. Grundy and his political successor, G. Mason O w l e t t , president o f the P M A (after 1943), were partially allied with Governor Arthur James (1939-44), and closely allied with G o v e r n o r E d w a r d Martin (1944-47). M o r e recently, the P M A ' s access to the party hierarchy had been further limited b y the emergence o f strong county organizations, most o f w h o m backed Mr. D u f f in 1950 for U . S . Senator 2 against the Grundy O w l e t t candidate. T h e recent state chairman, Miles Horst, and his predecessor, Mr. Harvey T a y l o r , have not been politically allied with Mr. Grundy and O w l e t t . M r . T a y l o r , an old Grundy ally, switched his allegiance to Mr. D u f f after the latter became governor. Today, Mr. Bloom and Mr. Cooke.

In 1956, a year not kind to

Republican party fortunes in Philadelphia, w i t h a Democratic governor in Harrisburg, the P M A strength was revived in the party hierarchy. Their candidate, M r . George J. B l o o m , Senator E d w a r d Martin's former administrative assistant, was elected state chairman. 3 A t the national level, the P M A gained and maintained some access

to

the

National

Committee

and

to

the

Eisenhower

1 Philadelphia Record, January 14, 1941, p. 2. T h e Harris group was referred to as the western "progressives." The old Baker-Beidlcman faction, composed of former state Chairman Harry W . Baker and Lieutenant Governor Edward Beidleman (1919-23), was always opposed to Mr. Grundy. 2 3

New New

York Times, January 29, 1950, p. 42. York Times, M a y 20, 1956, p. 1.

216

The Pennsylvania Manufacturers' Associarion

administration through United States Representative Hugh D. Scott of Pennsylvania, who was national chairman in 1948, and through friendship with the group around former Governor Dewey of New York. Scott was made national chairman at the suggestion of Mason Owlett, the P M A president, after his group had successfully backed the Dewey candidacy for president in 1948. 1 Owlett's and Mr. Grundy's support of Mr. Dewey in 1948 apparently ingratiated them with the Dewey group sufficiently to offset their support of Senator Taft against the Dewey candidate, General Eisenhower, in 1952. The P M A is reportedly still on most friendly terms with the Dewey group. 2 Owlett was replaced in 1956 as national committeeman by Mr. Jay Cooke. Following the Eisenhower nomination in 1952, Owlett was removed from the Republican National Executive Committee, and replaced by Mrs. Katherine Murdoch, national committeewoman and then allied with Senator Duff. 3 A movement reportedly begun in 1952, 4 and revived in 1954, following the Republican defeat in the state, to oust Owlett had the backing of various local organizations then allied with Mr. Duff. 5 The Cooke replacement therefore appears to represent a compromise by the P M A with these opposing factions. The compromise, however, has been largely in the PMA's favor as Mr. Cooke can be regarded as relatively friendly to them.6 ELECT FRIENDLY

LEGISLATORS

Once a political interest group has gained access to a political party in a state, it is then in a position to exert influence over that party in the election of candidates for important state and national 1

Philadelphia Evening Bulletin, "Rep. Hugh D. Scott is Elected National Chairman of G. O. P . " Raymond C . Brccht, June 28, 1948, p. 1. Philadelphia Inquirer, June 28, 1948, p. 1. 2 Personal interview with G. Mason Owlett, October 13, 1953. 3 Pittsburgh Press, editorial, September 16, 1952, p. 7. 4 Ibid. 5 The Sunday Bulletin, November 7, 1954, p. 1. 6 See this chapter, pp. 247-251.

The Methods used by the P M A to Gain Access to the Republican Party

217

offices. In Pennsylvania, two of the most important offices are state senator and state representative. It is these men who elect the speaker of the House and the president pro tempore of the Senate in Harrisburg, who in turn appoint committee members and chairmen who consider bills referred to them by these same legislative officers and who thus are largely responsible for the passage and defeat of legislation.1 Election of Richard J. Baldwin as House Speaker in 1917. Perhaps the most classic example of the significance and effect on legislation of electing friendly legislators was the election of Richard J . Baldwin as speaker of the House in 1917. The Progressive legislation sponsored by Governor Brumbaugh in 1915 had greatly aroused the ire of Mr. Grundy. Brumbaugh was assisted by the Vare organization which had completely displaced the Penrose organization in Philadelphia. The delegates to the state legislature from Philadelphia followed the bidding of the Vares and supported all of the reform legislation then pending, including the controversial Child Labor Bill and the Brumbaugh Workmen's Compensation Bill, both of which were opposed by Mr. Grundy, but which passed.2 The Vares supported Charles A. Ambler of Montgomery County for speaker of the House and it was under his aegis that the controversial legislation passed, even though, in the words of William S. Vare: ". . . the reactionary forces were almost solidly arraigned in opposition." 3 Mr. Grundy could have been numbered among those forces, and his complete opposition to the Vare organization was formed at this time, never to be changed. Nevertheless, Mr. Grundy's bitterest words at this time were not for the Vares, but for Governor Brumbaugh: "Not only were we insulted and flouted by the Governor of the State, but the Sovereign Legislature itself was forbidden by him, under dire penalties, to act upon its own sound judgment as regards 1

See Chapter n , pp. 184-188. William S. Vare, My Forty Years in Politics (Philadelphia: Roland Swain Co., 1933), pp. 2 1 - 2 3 . 3 Ibid., p. 23. 2

2l8

T h e Pennsylvania Manufacturers' Association

the amendments w e proposed, to certain measures with which w e were particularly familiar, notably the so-called 'child labor' and the Workmen's Compensation Acts." 1 Mr. Grundy, at this time, spent a great deal of time in Harrisburg during the sessions o f the legislature. Mr. Grundy's prime activity during these sessions was lobbying. It was this work that placed Mr. Grundy in direct contact with the county organizations in the state. He was thus able to see who would be the "sound" or "friendly" men to support in the future. The result was that Mr. Grundy in 1 9 1 7 was able to oppose Governor Brumbaugh successfully by having a new speaker of the House elected—Richard J . Baldwin of Delaware County. Regarding the contest over the speakership, and the election of Mr. Baldwin, Mr. Grundy stated: " T h e management of the P M A has not been idle in the last twelve months. Fully cognizant of the importance of the Speakership contest and of the intention of the administrative forces to renew the scandalous tactics of 1915, we have used every honorable means to procure the election of legislators who could be depended upon to resent and resist gubernatorial power running amuck in the law-making chambers."2 The result of the election of such legislators was a House and speaker favorable to Mr. Grundy. The Senate, being elected every four years, remained unchanged and the president pro tempore, Edward A . Beidleman of Dauphin County, 3 a political independent then allied with the Governor, remained until the end of the session when he was succeeded by a solid Grundy lieutenant, Senator Clarence J . Buckman o f Bucks County. The year 1 9 1 7 , as noted in earlier chapters, also saw the beginning of two important P M A publications: the Monthly Bulletin and the Legislative Bulletin. T w o years prior to this, the P M A had expanded its activities into another important field—casualty insurance. A 1 Minute Book, Seventh Annual Meeting, M r . Grundy's address (January 10, 1916), 1 , 1 7 9 . 2 Minute Book, op. cit.. Eighth Annual Meeting, M r . Grundy's address (January 8, 1 9 1 7 ) , I, 195 (italics added). 3 See this chapter, pp. 2 2 1 - 2 2 2 .

The Methods used by the P M A to Gain Access to the Republican Party

219

"political department" had also been formed to work closely with the P M A publicity bureau in Harrisburg. The period 1917-20 was also the greatest period of expansion of the PMA. It was during this period that Mr. Grundy, in addressing the annual meeting and the Executive Committee meetings, constantly reiterated the value and necessity of forming new county associations of manufacturers.1 With these facts in mind, such a statement by Mr. Grundy as the following takes on a clearer meaning: "The work done by local units, our experience shows, has been much more effective than when there is no such local organization in the community." 2 Without the expansion of the number of local organizations into more and more counties, the elections to the House of Representatives and the subsequent election of Mr. Baldwin most probably would not have taken place. The fact that the legislature of 1915 had passed legislation that was opposed by many manufacturers no doubt spurred them into taking an active role in the 1916 elections as Mr. Grundy thought essential. The history of the P M A offers many examples of the value of this method of causing the election of friendly leadership in both the House and the Senate of the General Assembly. Because of the appointive power of these two offices, friendly leadership tends to assure friendly committee chairmen whose potential power over legislation can be decisive.3 G A I N I N G A C C E S S TO T H E G O V E R N O R : E L E C T A F R I E N D L Y GOVERNOR

The powers of the governor of Pennsylvania, as discussed in Chapter 5, give him great value to an association like the PMA. His great veto power can be a tremendous aid to a primarily defensive association such as the PMA. His patronage power is valuable as a potential means of maintaining access to executive or semi-legislative 1

See Chapter 2, pp. 2 9 - 3 2 in particular. Minute Book, Executive Committee meeting, Mr. Grundy's report (July 20, 1917), I, 209. Also quoted above, Chapter 2, p. 31. 3 See Chapter 5 and Appendix, note 2. 2

220

T h e Pennsylvania Manufacturers' Association

agencies whose decisions and actions may affect manufacturers. The limitation on serving successive terms w o u l d appear to make access easier f o r a p o w e r f u l association. If such a group could command political influence and financial aid, it could assist a governor w h o lacked a political organization o f his o w n in maintaining a political career after his four-year term o f office had ended. The gaining o f access to the important office o f governor by the election o f a " f r i e n d l y " candidate is not, h o w e v e r , an easy process as can be observed with five governors in w h o m M r . Grundy and the P M A showed great interest. Governor Fisher 1926-30:

Choose and Support a Friendly

Candidate.

Governor J o h n S. Fisher was perhaps the most accessible governor for the P M A and M r . Grundy. Access to G o v e r n o r Fisher was assured by the fact that he had been personally chosen and supported by M r . Grundy f o r that office. 1 T h e political relationships involved in the selecting o f M r . Fisher and his success in the gubernatorial primary o f 1925 are significant in that they reveal not only the reasons behind M r . Grundy's choice but the methods used to promote him to the candidacy as well. M r . Grundy had been allied with the Republican organization o f Allegheny C o u n t y led by W i l l i a m L. Mellon, nephew o f the secretary o f the Treasury, A n d r e w Mellon. Regarding this political alliance, the Philadelphia Inquirer commented in 1 9 2 5 : W h i l e this is but a tentative getogether o f a g r o u p o f m e n o f influence in the party organization covering ever)' section, the outlook appears to be encouraging for the Alliance to accomplish everything it sets out to

do in the way of keeping the State's expenditures well within its revenues, to kill all schemes for additional taxation and to block every attempt to hamper and embarrass any legitimate industrial or business interest.2 1 New York Times, June 12, 1926, p. 1. M r . Grundy, under questioning b y the Borah Special Committee of the Senate investigating campaign expenditures, was loath to phrase his support in these terms, preferring to say that he was " v e r y favorable" to Fisher. Political realities call for a little more candid language. 2 P M A : Legislative Bulletin, No. 5, March 5, 1 9 2 5 , p. 4. Quoted from The Philadelphia Inquirer (italics added).

The Methods used by the P M A to Gain Access to the Republican Party

221

The Mellon side, as was customary, was more concerned with national politics and therefore more interested in seeing a senator of their own choosing win. They were willing to compromise on the governor. Mr. Grundy, on the other hand, as was his custom, was more interested in the governor and would compromise on the senator. The Mellon organization, along with that of Mayor Kline of Pittsburgh, were interested in seeing Senator Pepper run for the Senate—to continue in the seat to which he had been appointed to replace Penrose. William S. Vare of Philadelphia had senatorial aspirations also. "William L. Mellon admitted supporting harmony moves which aimed at persuading Vare to run for governor rather than senator, and, when these failed, he supported Senator George Wharton Pepper, who had already formed his own organization.1 Mr. Grundy, by his own admission, was concerned over the governorship, and brought out John S. Fisher again.2 Grundy was not very enthusiastic about the Pepper candidacy, probably because of their dispute over the Republican state chairmanship.3 Grundy admitted trying to persuade Vare to accept the Fisher candidacy in return for his support of Vare's candidacy in the senatorial primary. 1 He regarded Vare along with Mr. Pepper as a good Republican and a supporter of the Coolidge-Mellon policies.5 Logically then, Mr. Grundy, while frequently in violent disagreement with Vare on state legislation, considered him "sound" on national matters. Further, as senator, Vare would be out of the state and, with Fisher as governor, a Grundy man would be in Harrisburg. Unfortunately, for harmony's and Mr. Grundy's sake, Vare was 1

New York Times, June n , 1926, p. 1. Ibid. 3 Mr. Grundy, Mr. Pepper believed, fell out with him completely over the state chairmanship of the party. M r . Pepper supported the former Penrose lieutenant, W . Harry Baker, who was then allied with the Vare organization. G. W . Pepper, In the Senate (Philadelphia: Lippincott, 1930), p. 59. 4 New York Times, June 1 1 , 1926, p. 2. s Ibid. 2

222

The Pennsylvania Manufacturers' Association

not willing to accept Fisher as governor but, instead, supported former Lieutenant Governor Beidleman for governor. 1 Mr. Grundy considered Beidleman untrustworthy in the very important matter of taxation on the capital stock of manufacturing concerns. He felt he would favor such taxation and would ask for a repeal of the anthracite coal tax which raised twenty million in the revenue at the time for the state; the capital stock tax on manufacturers would then be instituted to replace it.2 Cyrus E. Woods, Allegheny County commissioner, was asked by Mellon to bring about harmony after all bargaining attempts had failed. The state party chairman, W . Harry Baker, chose to support Beidleman and thus was obliged also to support the candidacy of Vare for senator rather than Mr. Pepper with whom he had formerly been allied.3 Thus, this group had to be eliminated from the harmony arrangement. The result was that the Pepper-Fisher candidacies were linked, although, according to Woods, it was some time before Mr. Pepper consented to this arrangement. 4 In the end then, the Mellon-Grundy alliance continued, with the Vare organization making an independent bid for power along with Gifford Pinchot, who ran for senator without any great organizational support. The result, of course, was that Fisher won the primary and the governorship, and Vare the senatorial primary, but he never received his seat. Pinchot, still governor, refused to certify him, and the Senate, after the report of the Reed Committee on Campaign Expenditures, refused to seat him in the senate.6 The New York Times quoted Mr. Grundy as having told the Borah Special Committee of the United States Senate investigating 1 Edward F. Beidleman had been president pro tempore of the Senate during the Brumbaugh administration, and was no political friend of Mr. Grundy. * New York Times, June n , 1926, p. 2. 3 New York Times, June n , 1926, p. 1. 4 Ibid., p. 2. 5 William S. Vare, My Forty Years in Politics (Philadelphia: Roland Swain Company, 1933), p. 179-

The Methods used by the P M A to Gain Access to the Republican Party

223

campaign expenditures in 1926 that he supported Fisher because: " . . . he [Fisher] was in sympathy with the economic views of the people who would work to conserve our resources and industrial development whichhave made us the outstanding State in the Union." 1 He stated further: As w e understand it, w e wanted to preserve in Pennsylvania, the Coolidge-Mellon line of economic thought. W e felt that because of the accomplishments of the Secretary of the Treasury as the leader of the Republican Party, he should be sustained in Pennsylvania. 2

In his address to the annual meeting of the P M A in 1927, Mr. Grundy expressed his belief that Governor Fisher would serve all interests. Regarding the General Assembly: " W e have great confidence in the Legislature now at work. The session will be short and businesss-like and there is no present indication of the discord that has accentuated past sessions."3 In 1927, E. J . Stackpole, a veteran news reporter on the Harrisburgh political scene, wrote concerning the Fisher-Grundy relationship: "It is on the basis of their mutual understanding of what constitutes the proper relation between business and government that these men were expected to proceed. . . ."4 Probably the best example of how Governor Fisher fulfilled Mr. Grundy's expectations is with the defeat of the old age pension bill in 1927 backed by the Vare organization and the Democrats, and bitterly opposed by Mr. Grundy. 5 He was assisted by the Mellon 1

New York Times, June 12, 1926, p. 1. Ibid. 3 Minute Book, Eighteenth Annual Meeting, Mr. Grundy's address (February 2 1 , 1927), 1,3394 E. J. Stackpole, (Behind the Scenes With a Newspaper Man (Philadelphia: J . B. Lippincott Co., 1927), p. 61 (italics added). 6 See below, Chapter 4. Included in the supporters of this legislation were William S. Vare, James H. Maurer, president of the Pennsylvania Federation of Labor and the Socialist chairman of the State-Old-Age PensionCommission, Bishop Talbot of the Episcopal Diocese of Bethlehem, the Fraternal Order of Eagles, and various church groups. Abraham Epstein, "After Four Lean Years," New Republic, LI, N o . 652 (June 1, 1927), 3 9 - 4 1 . 2

224

T h e Pennsylvania Manufacturers' Association

aide, state Senator Max G. Leslie, and Alba B. Johnson, president of the state Chamber of Commerce. 1 It was reportedly agreed that the bill should go through the Senate to compliment Senator Flora B. Vare, sister-in-law of William S. Vare, and then on to be killed in the House. Grundy and Johnson demanded a hearing and the Vares saw to it that a large, enthusiastic group of supporters was there. The bill, as a result, was reported favorably out of committee in the House. Fisher opposed the bill as too costly and tried to dissuade the Vare organization from pushing it. Vare refused; so with Grundy's backing, Governor Fisher reportedly called in each legislator and threatened their bills with defeat or veto if they didn't oppose the pension legislation. As a result, of the 120 who originally supported the bill in the House, only 64 finally did and it was defeated.2 Governor Fisher also assisted Mr. Grundy by appointing him to the United States Senate to fill the vacant seat of William S. Vare who refused admission by the Senate. Mr. Grundy's interest in going to the Senate in 1929 was to promote his views on national tariff policy. 3 Governor Fisher provides an example of the ideal way for a political interest group such as the P M A to gain access to the governor; select the desired candidate and gain other support for him by alliances with strong local and state organizations. This situation was also ideal because it was relatively simple for Mr. Grundy to maintain access to Fisher since his other supporters—the Mellons—were largely congenial with Mr. Grundy on state legislative matters and because they were more concerned with national than state politics. Finally, the example of Governor Fisher demonstrates the great advantage of strong access to one important decision-making point in the state government for the blocking of undesired legislation. 1 M r . Johnson said in his testimony before the O l d A g e Pension Hearing: 'Should it pass, Pennsylvania labour w o u l d simply lie d o w n , refuse to w o r k , and merely wait to reach the age of seventy in order to live upon the State. It w o u l d ruin the State's industries which are so overwhelmingly oppressed and burdened." Ibid., p. 40. 3 Ibid., pp. 3 9 - 4 1 3 See Chapter 14.

The Methods used by the PMA to Gain Access to the Republican Party

225

During most of the legislative session of 1927, the leadership o f both House and Senate of the General Assembly was unfriendly to Mr. Grundy, being Thomas Bluett and Samuel Salus, respectively, of Philadelphia and of the Vare organization. In such a situation, the governor's veto power is the most effective weapon against the opposed legislation as evidenced with the blocking of the old age pension bill. Governor Pinchot (1923-27, 1931-35): Support an Independent. Gifford Pinchot presents probably the best example of a most unique method of obtaining access to a governor. The method, simply stated: If you cannot obtain sufficient support from other organizations in the party for your desired "friendly" candidate, support an independent whom no one else is supporting whether you agree with his political and economic views or not. The New York Times, in 1922, following the death of Senator Boies Penrose, made a perceptive prediction as to the future of Pennsylvania politics: Absolute control resting in one man is at an end in Pennsylvania, according to the politicians. In the near future there will be four or five big county leaders who will dictate the policies. . . . The independent citizen must be considered, they add. Thus, attempts by these leaders to nominate a State list of candidates and Senators without consulting the wishes of the independent vote would be disastrous to the party.1 The first test of this prediction was the gubernatorial primary in 1922. Mr. Grundy initially supported John S. Fisher, later Governor Fisher (1926-30), against the so-called organization candidate George E. Alter who was supported by the Vare organization of Philadelphia.2 The Mellons of Pittsburgh and Governor Sproul decided to seek a harmony candidate. It was reported that William L. Mellon agreed with Governor Sproul and State Senator William S. Vare of Philadelphia that he would support a harmony candidate 1

2

New York Times, January 3, 1922, p. 19. Vare, op. cit., p. 139.

P.M.A.-H

226

The Pennsylvania Manufacturers' Association

of their choosing if the senatorial field were left open to the Mellon candidate, David A. Reed of Pittsburgh.1 The harmony candidate became George Alter; John Fisher withdrew from the race and Mr. Grundy threw his support to the independent Gifford Pinchot. Pinchot won, largely, William S. Vare believed, because of the Grundy support.2 There was, nevertheless, the factor of the independent vote 3 which cannot be ignored. The speculation following the Pinchot victory attributed his election to a number of different causes, among them being his popularity among women voters,4 the support of Buck Devlin, the "boss" of the Eighth Philadelphia Ward, 8 and the support from labor groups.' The fact that Pinchot gained great enough majorities in the rural counties to offset his losses in the two great Pennsylvania municipalities would also seem to reflect the factor of the up-state " d r y " vote 7 as well as the support of Mr. Grundy whose political alliances were largely in the so-called up-state counties. The election of Gifford Pinchot brought out several groups that were to dominate Pennsylvania politics for ten years and several characteristics regarding Republican politics in Pennsylvania that have preavailed to this day. The central figure of Senator Penrose had passed and the atomization of the state organization followed. This could hardly have been termed unexpected as the separate organizations were already in existence and developing their independence during his lifetime. Of these organizations, several 1

New York Times, April 5, 1922, p. 7. Vare, op. cit., p. 139. A vote that is not consistently part of, or allied with, any political organization and one that in many elections may not exercise its right at all in contrast to the usually solid performances of the organization vote. 4 New Republic, X X I , No. 391 (May 3 1 , 1922), 2. 6 Reginald W . Kauffman, "Pennsylvania Still a Keystone," Nation, C X V I , N o . 3009 (March 7 , 1 9 2 3 ) , 5. • " W h y Pennsylvania Picks Pinchot," Literary Digest, L X X I I I , N o . 9 (May 2 7 , 1 9 2 2 ) , 10. 7 Pinchot always ran in favor of Prohibition, a factor which always prevented any close alliance with either the Philadelphia or the Pittsburgh organizations. 2

3

The Methods used by the P M A to Gain Access to the Republican Party

227

emerged as powerful contenders to replace that co-ordinating power of Senator Penrose. Perhaps the most prominent group was that backed by the Mellon family of Pittsburgh, which included the Leslie-Coyne organization of Allegheny County 1 and Senator David Reed. It was generally supported by the large financial and industrial interests of western Pennsylvania. The other group, centering in Philadelphia, was the Vare organization which was allied to U.S. Representative Greist of Lancaster and Mayor Magee of Lancaster. Also included in this group were the new chairmen of the state Republican Committee, W . Harry Baker and General W . W . Atterbury, president of the Pennsylvania Railroad, who was regarded as the real "power behind the throne" of the Vare organization.2 Allied with this group were such financial interests and large utility interests as the Pennsylvania Railroad and the mining interests of eastern Pennsylvania. Of this group, the New York Times wrote in 1922 that they: ". . . are hopeful of effecting a combination of county leaders and, thereby, of controlling the State through leaders representing the voteproducing centers." 3 As to the third emerging power, the New York Times commented : O n the other hand, there is one man, unskilled in practical politics but a keen organizer, equipped with many resources w h o is striving for undisputed sway. This man is Joseph R. Grundy. Grundy, for the last five years has collccted the money from the protective tariff interests in Pennsylvania which has been used in State and National campaigns. . . . many politicians are opposed to Grundy, fearing that if he comes to power, he will eliminate them . . . but the cost of financing 1 Mayor M a x Leslie of Pittsburgh and state Senator Coyne of Allegheny County. 2 Robert S. Allen, Our Fair City (New York: The Vanguard Press, 1947), p.68. 3 New York Times, April 5, 1922, p. 7.

228

The Pennsylvania Manufacturers' Association

a primary campaign in Pennsylvania is estimated at $500,000. Grundy is the only man who can command such resources.1

This method of gaining access to the governor, that is, by supporting an independent has many weaknesses, the greatest, of course, being that the access can be difficult to maintain. Since the governor has only four years of political life guaranteed him by the Pennsylvania constitution he has, essentially, two choices before him. He may conduct his administration in a manner pleasing to the strongest of the interest groups that originally supported him, and thereby assure himself a political future under the aegis of these groups. He can go against the wishes of his strong political supporters and, by so doing, gamble on gaining enough independent political support among the voters to secure his political future after he leaves the governorship. A third, but more improbable and difficult possibility would be, of course, to curry the favor of a rival group or groups in order to offset the influence of his original supporters. While Pinchot somewhat followed all three courses, Mr. Grundy acted to hedge himself against all possibilities. Thus the GrundyMellon alliance2 functioned in the General Assembly to oppose the Progressive and reform legislation, much of which appealed to Governor Pinchot. The other hedge was that Pinchot, as Mr. Grundy obviously assumed, paid his patronage debts in return for the Grundy support. 3 The result of all this was that the 1923 legislature (and the same might have been said in 1925) was described as follows: As for the general activity of the legislature; it may be said that the group typified by the manufacturers' association are the only ones who got all or nearly all they wanted. Not a single labor measure of importance passed, though labor had been with Pinchot strongly in the primaries. The defeats included an eight hour bill for women, a bill for one day of rest in seven, a children's eight hour bill, a bill forbidding child labor under 1 2 3

Ibid, (italics added). See above, p. 220. See Appendix, note 3.

The Methods used by the P M A to Gain Access to the Republican Party

229

sixteen years of age, an effort to set up a minimum wage board for women and minors, a series of bills liberalizing the Workmen's C o m pensation Act. . . . 1

Mr. Grundy and Mr. Pinchot (1930-35). Mr. Grundy used the same method in backing Pinchot when he ran again in 1930 for governor. Mr. Grundy's position this time was somewhat weakened by his becoming deeply embroiled in national politics to the extent of running in the Republican primary for the U.S. Senate against heavy odds.2 Originally, the Mellon group had supported Mr. Grundy and his candidate for governor, Samuel S. Lewis, after failing to reach an agreement with the Vare organization.3 Mr. Grundy himself had been approached by the Vare organization to reach a compromise that would promote party unity. In February of 1930, William S. Vare announced he would not seek the nomination for senator if the Grundy-Mellon-Fisher forces would accept the Vare candidate for governor, Francis S. Brown. 4 Several Vare men, Charles B. Hall, Thomas W . Cunningham, and James M. Hazlett, were reportedly very much interested in reaching an agreement with Mr. Grundy.5 Mr. Grundy, however, refused to accept the compromise on Brown. By April of 1930, Samuel S. Lewis, the Grundy candidate, withdrew from the race, and this action prompted speculation as to whether Mr. Grundy might not retire also, in which case the Mellons would probably back the Vare ticket. In the gubernatorial race by this time was not only the Vare candidate, Francis S. Brown, but also Thomas W. Phillips, Jr. and, again, Gifford Pinchot. Phillips was running on an anti-Prohibition or "wet" ticket, while 1 Edward T . Paton, "Gifford Pinchot's First Legislature," National Municipal Review, XII, N o . 10 (October, 1923), 570 (italics added). 2 See below, p. 276. 3 New York Times, "Grundy Backed by Mellon Group," March 25, 1930, p. 3 1 . 4 New York Times, "Vare Forces Seek Peace with Grundy," February 4, 1930, p. 1 1 . Also Philadelphia Public Ledger, "Governor Must Be From Philadelphia Leaders Insist," Bernard Haggerty, January 1 1 , 1930, p. 1. 6 Ibid.

230

The Pennsylvania Manufacturers' Association

Pinchot was a " d r y , " a popular issue in the up-state rural areas from which came most of his support. Aligned with the Vare organization behind the Davis-Brown ticket were several powerful figures representing significant interests in Pennsylvania. Led by the national Republican committeeman, W . Wallace Atterbury, president of the Pennsylvania Railroad, they included the banking interests of Philadelphia led by E. T. Stotesbury, a Morgan partner, and Samuel Vauclain, president of the Baldwin Locomotive Works. 1 Other interests that had in the past frequently been opposed to Mr. Grundy were supporting the Davis-Brown ticket. These included the utility interests, the traction interests, and most of organized labor. In the words of the New York Times: "The manufacturers aligned with Senator Grundy and the railroads and utility companies supporting Secretary of Labor Davis and Francis Shunk Brown are privately using vast sums in the campaign in which their special interests and the leadership of the Republican Party are at stake." 8 Mr. Grundy obviously was faced with a dilemma. He had become involved in a senatorial primary that he was liable to lose and he had no real candidate for governor. So, Mr. Grundy again turned to GifFord Pinchot, and, again, with Mr. Grundy's support before and after the primary, Pinchot was victorious. While both men opposed most of the interests behind the Davis-Brown ticket many of which, including General Atterbury and the Vare organization, switched to the Democrat-Liberal candidate, John M. Hemphill against Pinchot, they had different reasons for so doing. When Pinchot denounced the corporations, the utilities, and the railroads, he did so as an old supporter of the Progressives under Theodore Roosevelt. 3 Mr. Grundy's reasons were more complex and subtle, 1 New York Times, "Political Chaos in the Keystone State," M a y 18, 1930, p. 2. Also New York Times, February 24, 1930, p. 3. And " W h o W o n in Pennsylvania?" New Republic, LXIII, N o . 809 (June 4, 1930), 59. Also New York Times, "Davis-Brown Ticket Expended 362, 5 4 7 , " June 3, 1930, p. 1. 2 Ibid, (italics added). 3 New York Times, May 18, 1930, p. 2.

The Methods used by the P M A to Gain Access to the Republican Party

231

not only for his opposing those interests but for his subsequent support of Pinchot. In March of 1930, M r . Grundy attacked General W . Wallace Atterbury as a "conspiracy head": " T h e Philadelphia gang and the Pennsylvania Railroad are attempting to grab control of the State Government and the public treasury, dictate the personnel and policy of the Public Utility Commission and dominate all the important relationships of this great State with the Federal Government." He cited as the most corrupt period in American political history as that when: " . . . the railroads dominated elections, controlled the State legislatures, bought or repealed laws at their o w n will, strangled industry and shook down the public." 1 It was in order to prevent such a return to power by the railroads and the domination of the state government by the Vare organization that Mr. Grundy supported Pinchot. In a letter to Kern Dodge after the primary (reported in the New York Times), Mr. Grundy explained w h y he supported Pinchot "in view of his record." M r . Grundy explained that he adhered to principle when he supported the candidate w h o was victorious at the primary and Pinchot's Bull Moose past, so to speak, was no obstacle to his support. 8 Mr. Grundy was not, it would seem, being as candid as he usually was since it was reported that early in the campaign he showed a preference for Pinchot before he turned to other possible candidates. 3 It was also reported, after the primary and M r . Grundy's defeat therein, that he had considered it more important that Pinchot win the gubernatorial contest than he win the senatorial nomination. 4 The evidence for such a report would appear to be the fact that sample ballots were issued in certain areas by the Grundy campaign committee marked for Mr. Grundy and Pinchot, although Mr. 1 Ibid, (italics added). - New York Times, " O w n County Chief Deserts Pinchot," October 27, 1930, p. 2. 3 New York Times, May 18, 1930, p. 2. 4 New York Times, May 22, 1930, p. 1,

232

The Pennsylvania Manufacturers' Association

Grundy's committee denied it officially supported Pinchot. 1 It would seem that Walter Davenport in his Collier's article was most perceptive when he noted that Mr. Grundy was well aware of the fact that the governor appointed the insurance commissioner2 and the secretary of labor and industry and that "Mr. Grundy wanted to be sure that men favorable to the ideals of the Association [PMA] would fdl those posts." 3 Mr. Grundy knew from past experience that Pinchot paid his patronage debts. The maintenance of access to the independent Pinchot was more difficult during his second and final administration. Both of the two great municipal Republican organizations collapsed and Pittsburgh was lost to the Democrats. Pinchot, nevertheless, did turn more to the independent vote and to the independent organizations. The circumstances were perhaps ripe for such independence, as the Democrats had captured the presidency in 1932. Few reform legislative measures passed, however, as Mr. Grundy had access to friendly leadership and friendly legislators in the General Assembly, again to hedge the independent Pinchot. Governor James

1939-43:

Gain Access to Another Faction s

Candidate.

Governor Arthur James provides an example of how Mr. Grundy obtained access to a governor who was the specific candidate of another faction in the Republican party. Mr. Grundy had his own personal choice as state chairman and had been successful in having his personal choice nominated for governor in 1934, 4 although he failed to win the election against the Democratic candidate, George Earle. It would appear at this time that Mr. Grundy was in complete control of the various Republican organizations of the state and would thus be able to nominate a personal gubernatorial candidate for 1938. Other factions, however, emerged to challenge Mr. Grundy, most of which were led by Mr. Joseph N. Pew, Jr. 1

New York Times, May 20, 1930, p. 1. See Chapter i i , pp. 192-194. Walter Davenport, "Double-Cross Marks the Spot," Collier's, October 25, 1930, p. 12. 4 Former Attorney General William Schnader. 2 3

The Methods used by the P M A to Gain Access to the Republican Party

23 3

Mr. Pew appeared in Pennsylvania politics during the Earle administration. He had been encouraged to interest himself in Republican politics by Mr. Grundy. 1 As a vice-president and major stockholder in the Sun Oil Company and other allied interests, Mr. Pew, because of his large personal financial power, was able to wield personal political power. In other words, unlike Mr. Grundy, Mr. Pew commanded sufficient personal resources as to make it unnecessary to be a "money collector." Also unlike Mr. Grundy, Mr. Pew had had little or no experience in politics in any capacity before. His primary interest (again somewhat different from Mr. Grundy's) was a national victory for the Republican party.2 While he aided the party as a national organization with money, he also started with several local organizations in Pennsylvania. His first interest was the Philadelphia Republican organization, and by 1937 his influence with the Republican city committee was predominant when it was reorganized under Mr. Jay Cooke, a Philadelphia banker and a friend of Mr. Pew. 3 After the reorganization of the City Committee, a gesture was made by Mr. Cooke to Frank J . Harris, chairman of the Republican Committee of Allegheny County, to form an alliance in order to elect a new state party chairman to replace M. Harvey Taylor. Mr. Cooke wished to elect someone "of the type and character of Superior Court Judge Arthur James." 4 While the Pew forces did not gain the desired predominance over the state committee by having a favorite elected state chairman, Mr. Pew, by 1938, was regarded as being in control of the Philadelphia organization, through his alliance with Cooke, and of those in Montgomery and Delaware Counties.® Also, in 1938, Mr. Pew Personal interview with G. Mason Owlett, June 23, 1954. "Mr. Pew at Valley Forge," Time, X X X V , No. 19 (May 6, 1940), 1 5 - 1 8 . 3 Ibid. 4 New York Times, "Philadelphians Seek Republican Alliance," June 20, 1937, P- 55 New York Times, "Grundy-Pew Split Shakes Old Guard." May 1 6 , 1 9 3 8 , 1 1

P- 3-

234

The Pennsylvania Manufacturers' Association

succeeded in picking a winning candidate for governor, Arthur H. James, Superior Court judge, even without the support of the state party chairman, C. Edward Green, the western Pennsylvania organizations, or of Mr. Grundy. In the case of the western Pennsylvania organizations whose alliance with the Philadelphia organization failed to materialize, they supported Pinchot in the primary against James for governor, and Frank J . Harris, Allegheny County Republican leader, for Lieutenant Governor against Mr. Grundy's choice, Samuel S. Lewis of York County. 1 As for Mr. Grundy, he was reportedly more interested in having a high tariff man in Washington than in the governorship itself. He was also not enthusiastic about Arthur James although he did not openly oppose him. Instead, he reportedly compromised with the Pew forces (assisted also now on the James's candidacy by Moses Annenberg, owner of the Philadelphia Inquirer) and agreed to support James if Pew would support Lewis against Harris for lieutenant governor and G. Mason Owlett for senator against Senator James J . Davis. Apparently Mr. Pew did not sufficiently fulfill his end of the bargain and reports of a split between the two leaders were widely circulated before the primary. 4 James, however, defeated Pinchot who had felt aided by the Grundy-Pew split, and Owlett lost to Davis. Because of the reported split between Messrs. Grundy and Pew, the latter had much closer access to the governor than Grundy during the 1939 legislature. Grundy consequently was obliged to rely heavily upon his access to the legislature, especially the Senate where the Republican leader was state Senator G. Mason Owlett, a close associate of Mr. Grundy. Mr. Grundy remained somewhat in the background during the 1930 session of the General Assembly and witnessed the veto by Governor James of House Bill #701 to restore 1

New York Times, "C.I.O. and Tax Made Issues," May 16, 1938, p. 3. And New York Times, "James is Cheered as 1940 Nominee," June 12, 1938, p. 1 1 . 2 New York Times, May 16, 1938, p. 3.

The Methods used by the P M A to Gain Access to the Republican Party

235

the capital stock tax exemption on the capital stock of manufacturing concerns.1 Before mentioning Mr Grundy's relations with Governor James during and after the 1940 Republican National Convention, it would seem appropriate to consider some of the probable causes of friction between Mr. Pew and the interests he represented and Mr. Grundy and the interests who looked to his leadership. It should be noted first of all that Mr. Grundy, in 1932, seeing the need of new and larger contributors to the Republican party in the state went to Mr. Pew to interest him in such activity. Reportedly, Mr. Grundy had endeavored to interest Mr Pew in state politics because of the great need at that time for increased financial aid for the Republican party in Pennsylvania. The Depression had greatly curtailed the amounts that many PMA members were able to contribute to political campaigns so that a man of Mr. Pew's financial resources was quite needed.* On state legislation there was little difference between the two. Mr. Pew was interested in the national scene, in guiding the Republican party to national power again, and, appropriately, he concentrated most of his efforts upon picking and grooming a presidential candidate for the party. Unfortunately for his sake, he chose the wrong candidate, Governor ArthurJames. On state issues, the interests with Mr. Pew, utilities, oil, and banking, would differ with the small and large manufacturing interests in that they were more interested in a lower gross receipts tax on utilities than in restoring the capital stock tax exemption which applied exclusively to manufacturers and some allied interests such as brewers and laundries. Each interest was naturally interested in shifting the tax burden away from itself. On national matters, Messrs. Pew and Grundy were generally in agreement except on the tariff issue, and here Mr. Pew's international business interests made him more tolerant of lower tariffs.8 1 2 3

See Chapter 6. Personal interview with G. Mason Owlett, June 23, 1954. Personal interview with G. Mason Owlett, October 13, 1953.

The Pennsylvania Manufacturers' Association

236

Mr. Grundy's concern over the success o f Owlett at the primary over Senator Davis was reportedly due to his concern over the tariff issue. It seems to be generally agreed regarding Mr. Pew that his ability and willingness to contribute larger sums to political organizations than any one else in the state accounted for his personal political power. Time wrote in 1940: " H e [Pew] became Pennsylvania's G. O. P. boss by the simple but tremendous expedient of putting up the m o n e y . " 1 Robert S. Allen in Our Fair City picturesquely observed: "Joe Pew, who currendy [1947] dominates the Philadelphia political scene, is a power because of his fat purse rather than any political sagacity." 2 George Wharton Pepper admits that he was nominated and elected as a delegate to the 1940 Convention becausc of Pew's support. His evaluation of Mr. Pew is more generous and restrained: " H e [Pew] neither wants public office himself nor is he interested in patronage. He seems to have only one objective and that is the upbuilding of a strong Republican Party patterned after the major political parties in England." 3 T H E R E P U B L I C A N N A T I O N A L C O N V E N T I O N OF

I94O

The oil, banking, and utility interests were predominant at this time in Pennsylvania politics and the Pennsylvania delegation to the Republican National Convention of 1940 reflected their influence.4 This influence appeared to center more in the figure of Mr. Pew rather than Mr. Grundy, who did not attend the Convention but sent G. Mason Owlett as his spokesman. Herman A . Lowe, writing on Pennsylvania in Robert S. Allen's anthology; Our Sovereign State, reported that at the 1940 Conven1 2 3

Time, X X X V N o . 19 (May 6, 1940), 17. Allen, op. tit., p. 63. George Wharton Pepper, Philadelphia Lawyer (Philadelphia: Lippincott),

p. 15s4 Philadelphia Record, "Grundy's Forces M a y T r y to Grab G. O. P. Reins A g a i n , " Thomas P. O ' N e i l , December 1, 1940, p. 1.

The Methods used by the P M A to Gain Access to the Republican Party

237

tion the "James-for-President" campaign was master-minded byCarl Estes, a newspaper publisher and oil-man from Texas. He apparently convinced himself and Mr. Pew o f the inevitability of Mr. James's nomination. 1 Whether Mr. Grundy was so convinced or not is not known, but James received the support of Grundy up to the end of the balloting, even after many of the Pew delegates had deserted to Wilkie. 2 There are several possible motives for Mr. Grundy's action. One is that he wished Mr. James to be a candidate in order to remove him as governor in favor of Lieutenant Governor Lewis, an old Grundy man. The other, that, while he knew his nomination to be impossible, Mr. Grundy would, by such support, gain Mr. James's confidence and friendship which could be of great benefit in the 1941 session o f the legislature. THE

LEGISLATIVE

SESSION

OF

I941

In 194.1, the so-called Grundy "comeback" in the state began. The fiasco of the Convention severely cut Mr. Pew's political influence outside and within the state. The beginning of an investigation of the Philadelphia Electric Company rates by the Public Utility Commission headed by a Grundy man, John Siggins, Jr., was regarded by one astute political reporter at the time, Mr. Thomas P. O'Neil, 3 as being "Grundy's first move to get back into the G. O . P. saddle." 4 Mr. O'Neil also regarded as significant the appointment of the Republican leader of the state Senate, G. Mason Owlett, as chief counsel of the P M A : "He will serve as chief marshall o f the Grundy comeback campaign." 5 A t this time, there were other groups aside from Mr. Pew in 1 Allen, op. cit., p. 124. Also Philadelphia Record, December 1, 1940, p. 1. There was a W i l k i e group in the Pennsylvania delegation a m o n g w h o m was the Philadelphia contractor Jerome Loucheim. Reportedly 30 out o f the 72 delegates were leaning to W i l k i e before the Convention regardless of M r . Pew's views. 2 3 4 5

Ibid. Mr. O ' N e i l is n o w director of public relations for the P M A . Philadelphia Record, December 1, 1940, op. cit. Ibid.

The Pennsylvania Manufacturers' Association

238

the Republican party in Pennsylvania, who were challenging Mr. Grundy's influence. One of these groups, from western Pennsylvania, was led by Allegheny County Party Chairman Frank J . Harris and regarded as "Progressive." 1 The other group was led by state Committeeman W . Clyde Harer of Williamsport, Pa., formerly allied with the Baker-Beidleman faction. A third group, more nebulous and less political, was the group of Wilkie clubs headed by William H. Harman who opposed Messrs. Pew, Grundy, James, and state Chairman, a Pew man, James F. Torrance. 2 It was probably the existence of these other factions that best explains why Mr. Grundy never allowed his differences with Mr. Pew to alienate them completely. While he always regarded access to the governor as important, he was willing to compromise with a powerful political faction in order to gain limited access or at least to prevent the other factions in the state from gaining access. A union of these factions under a dynamic leader could conceivably curtail the Grundy-Owlett group's power drastically, not only in terms of access to the governor but to the General Assembly as well. GOVERNOR

DUFF I 9 4 7 - 5 I : G R O U P S ON A

COMPROMISE WITH

OTHER

CANDIDATE

In 1947, there were several possible candidates available for the Republican gubernatorial nomination. T w o that were looked upon favorably by Messrs. Grundy and Owlett (by then president of the PMA) were General Daniel B. Strickler and state Senator Weldon B. Heyburn of Delaware County. 3 Governor Martin reportedly 1

Philadelphia Record, January 14, 1941, p. 2. Philadelphia Record, December 1, 1940, p. 2. 3 Personal interview with G. Mason Owlett, October 13, 1953. Senator Heybum had run on an Independent ticket against Delaware County boss John M . McClure in 1936 with Pew backing and beaten him for the State Senate scat. Evening Ledger, November 9 , 1 9 3 6 , p. 1. He was regarded as a Pew man in 1941 when made chairman of the Senate Finance Committee. Sec Philadelphia Inquirer, " P e w and Grundy Men Share Control of Committees in Senate," January 14, 1941, p. 1. But, apparendy as the Pew power declined, Senator Heyburn became more friendly with the Grundy-Owlett group. Scc Appendix, note 4. 2

The Methods used b y the P M A to Gain Access to the Republican Party

239

supported the choice of Attorney General D u f f and hinged his own candidacy for the Senate race upon the selection of Mr. D u f f as gubernatorial

candidate. 1

Owlett joined

Governor

Martin

in

supporting Mr. D u f f after Mr. Pew had made known his acceptability to him and persuaded Mr. Grundy to accept Duff. 2 It is perhaps significant that in this gubernatorial election, Mr. Grundy took a secondary role acting as an elder statesman, and allowed the new P M A leader, Owlett, to act as his spokesman. In a sense, Mr. Grundy had retired from politics, leaving it to his trusted lieutenant to carry on the Grundy tradition. The selection of Mr. D u f f presents the unique method of the Grundy-Owlett faction for gaining access to the governor by compromising with other political leaders in the state, e.g., General Martin and M r . Pew, on a candidate satisfactory to them. Access to Governor Duff, it would appear, would therefore have to be shared. The problem with Governor Duff, however, was not the sharing of access, presumably assured because of the initial Grundy-Owlett support, but the maintenance of any access to the governor at all, and later, to some Republican organizations in the state. The methods used by M r . Grundy and Mr. Owlett and the P M A to handle this situation are of great interest. First part of Governor Duff's Term: 1947-48.

Speaking at the Thirty-

eighth Annual Meeting of the P M A , shordy after he became governor, M r . D u f f gave a broad suggestion as to what sort of governor he would be and as to what M r . Grundy and Owlett might expect in terms of access to him as governor. What Mr. D u f f said was perhaps made more significant by the speeches of Owlett, state Senator O. J . Tallman, and United States Representative Richard M . Simpson that preceded him. They were filled with such familiar references to some labor leaders as "arrogant parasitic racketeers," with warnings against "the stifling interference of 1

Scranton Tribune, " A r t h u r Bares Duff-Martin Split S t o r y , " Robert J . Arthur, editor, June 2 3 , 1948, p. 1, October 1 3 , 1 9 5 3 . 2 Personal interview with G . Mason Owlett, October 1 3 , 1 9 5 3 .

240

The Pennsylvania Manufacturers' Association

bungling bureaucracy," 1 and with the often quoted phrase: " W h a t is good for business is good for all." 2 Governor D u f f spoke of the United States' new

leadership

responsibilities in the world, of the Marshall Plan, of the need for greater production in the United States, and, in order to have this, a new understanding between labor and management would be needed: There have been times in America when management has engineered the making of laws and made an economic setup decidedly unfavorable to labor. And there have been times when a like situation has been made effective at the instance of labor. Management and labor relations must not be a one-way street for either management or labor. The time has come when the security of the nation demands that we must have two-way traffic on a two-way street. 3 This was the first time such views had been presented by a speaker before a P M A meeting, and this speaker was the man the Association had supported for governor.* B y the close of the 1947 session of the General Assembly, it was undoubtedly clear to Owlett and Grundy that their access to the governor was far from ideal. Whether Owlett actually did present a budget to Govenor D u f f that the P M A

would support and

which the Governor rejected® is somewhat immaterial. W h a t is significant is that Governor D u f f successfully put through a program which included such things as increased state aid to education, and * P M A : Report of the Proceedings, Thirty-eighth Annual Meeting, Mr. Owlett's address (February 25, 1947), p. 4. 2 Ibid., Representative Simpson's address, p. 9. a Ibid., Governor Duff's address, p. 22. 4 Time magazine noted this address as a contrast to "Grundyism" which they defined as "opposed to unemployment insurance, child labor laws, workmen's compensation, low tariffs, old-age pensions and labor legislation." Time, "From Joe to Jim," X L I X , No. 10 (March 10, 1947), 20. 5 This story was widely circulated at the time and appeared in Time magazine in June of 1948 ("Big Red and the Standpatters," cited above) and in the Pittsburgh Post-Gazette ("GOP Delegation Rivalry Bears on Control of the Legislature,"John E.Jones,June 14, 1948, p. 5).

The Methods used by the P M A to Gain Access to the Republican Party

241

an eighty-two million dollar appropriation for rebuilding state mental institutions. All of this required more revenue; 1 this was successfully obtained by Governor D u f f by raising cigarette taxes, beer and soft drink taxes, and by postponing, over great opposition from the P M A , the restoration of the capital stock tax exemption, also retained were the fourteen-mill gross receipts tax on utilities and the 5 per cent corporate net income tax. 2 At the same time Governor D u f f did not oppose House Speaker Franklin Lichtenwalter's amendments to the Pennsylvania Labor Relations Law that brought it in line with the Taft-Hartley Act and were favored by Owlett. 3 Nor did he oppose another measure favored by the P M A , making strikers ineligible for unemployment compensation benefits. The 194.8 address of Governor Duff to the P M A annual meeting served as an even further warning of things to come. Again Governor Duff spoke of United States leadership and the fact that such leadership required economic stability at home. He called for voluntary action to halt inflation. Business must be told: " O u r first need is a pricc roll-back. Every one is going to have to sacrifice." But the initiative must be taken by the group in the best position to afford the risk involved.

That group is Business.

Business can well afford to take the lead. Its earnings are at the highest level ever recorded according to Federal Reserve data, profits after taxes are more than double any prewar year and almost double any war year.

He called upon labor for greater production and to refrain from demanding further wage increases. But

. . labor must have the

assurance that when balance has again been achieved in our econom y , it will again be given the green light to seek a share of increased productivity." 1

Time, June 21, 1948, p. 21. Laws of Pennsylvania 1947-1948, Acts ;97, pp. 224-29; {98, pp. 2 2 9 - 3 2 ; *99, pp. 232-45 respectively. 3 Time, " D o w n in Lehigh Valley," L, No. 12, p. 24. 2

242

The Pennsylvania Manufacturers' Association

The only alternative to voluntary group action was government action, which, he felt, was undesirable. Government will never save our free economic system. . .

The

salvation of our free enterprise system depends upon the men and women, both in management and labor w h o run the system. That salvation depends also upon their clear and distinct realization that there are times when their moral and patriotic obligations rise far superior to their duties to their stockholders or to the members of their labor unions. 1

What Governor Duff said was of significance because it expressed a different conception of the relationship between business, labor, and government from that generally promulgated by Mr. Grundy and Owlett and other P M A leaders. Thus, within the same political party in the state, two distinct political philosophies existed, distinct because they were based upon entirely different assumptions that could easily be recognized by comparing Governor Duff's statements with those so frequently reiterated by Mr. Grundy and Mason Owlett. The existence of more than one political philosophy within the same political party—even the Republican party in Pennsylvania—was not a new situation. What distinguished the eventual Duff-Grundy-Owlett clash from other factional battles was that this one appeared to be a battle by both sides to dominate the other completely. While differing political philosophies existed before, there was seldom a central figure strong enough around which dissident organizations could rally in order to give strength to the new figure and therefore to the different political viewpoint. Governor D u f f believed in and enunciated a different political philosophy from the GrundyOwlett faction of the party and he was in a sufficiently powerful position at the time to try to rally various organizations around him to battle the other faction. Many have argued, especially Governor Duff's political opponents, that his purpose in trying to set up his 1 P M A : Report of the Proceedings Thirty-ninth Annual Meeting, Governor Duff's address (February 24, 1948), pp. 2 6 - 2 7 [italics added].

The Methods used by the P M A to Gain Access to the Republican Party

243

own political organization in the state to gain control of the Republican party of Pennsylvania was purely selfish. It reflected not the desire to put across a special legislative program or to promote a different political philosophy, but rather that he was acting as a "little Caesar." The factual evidence, however, does not appear to justify or prove such a conclusion about Governor D u f f any more than it does about Grundy and Owlett. 1 The 1948 Republican National Convention.

The 1948 Republican

National Convention becomes the first open batdeground between Messrs. D u f f and Grundy. This Convention and the one in 1952 demonstrate how national politics may be used by a local or state group to strengthen their control or influence over a state political organization. Before the Convention began, it was obvious that the "favorite son" candidacy of Senator Martin was going to be used by Owlett and Grundy as a "stalking horse" to hold the delegation together, with the end in mind that all of its votes would be turned over to Governor D e w e y of N e w Y o r k . Governor D e w e y was backed by the Owlett-Grundy group not because of any predisposition toward his views on domestic and foreign policy but because they felt he was the only candidate who would win. 2 Mr. Grundy had felt several years ago that 1948 would be the winning year for the Republican party so it was only natural that he would wish to ally himself immediately with the man most likely to win, although in 1944 he was not so disposed toward Governor D e w e y and, reportedly, did little in his behalf during the presidential campaign. 3 1 The belief that Governor Duff was interested only in political power and in being a "little Caesar" was expressed to the author by Owlett several times. The charge was also made publicly by Owlett prior to and during the 1950 primaries. 2 Personal interview with G. Mason Owlett, June 6, 1953. 3 "Pennsylvania's G. O. P. is Worried," The Nation, C L I X , No. 11 (September 9, 1944), 289-91. The article reported that neither Messrs. Grundy or Pew were making much effort in Mr. Dewey's behalf because they weren't anxious to win with Dewey, and they didn't think the Republican party could win in 1944, anyway, so they wouldn't waste their money.

The Pennsylvania Manufacturers' Association

244

Governor D u f f was reported to have been genuinely determined to see that the Convention named a progressive candidate and the man D u f f preferred was the late Senator Arthur Vandenberg of Michigan. 1 D u f f vehemently opposed Governor Dewey, and turned to back Senator Taft when Vandenberg declined to run. This has been regarded by some observers as his first great political mistake. 2 In the eyes of his opposition led by Mr. Grundy, Governor D u f f ' s actions were directed at one thing—patronage. Already in control of a large amount of patronage by virtue of his being governor, he was now seeking federal patronage in the state, which was much greater, through access to the successful Republican candidate. 3 This, Grundy and Owlett knew, must be stopped; the patronage must go in their direction to counter the patronage power Governor D u f f already held. 4 Behind all of this was the use to which such patronage would be put: to influence state Republican organizations in order to prevent legislation from passing which might be considered undesirable by M r . Grundy and Mason Owlett. They had already opposed much of the Governor's program and they had reason to fear that his program for the 1949 legislature would be worse. In addition, a greater fear confronted Mr. Grundy and Owlett. There was much reason to fear that Governor Duff was interested in more than a legislative program; he was, it could be surmised, interested in denying to Mr. Grundy and Owlett and their followers access not only to the Governor but to as many state Republican organizations as possible—all of which might curtail severely, if not sever, their channels of access to the General Assembly. 1

Time, June 2 1 , 1948, p. 20. Pittsburgh Post-Gazette, "State G . O . P.'s Old Guard N e v e r Fades A w a y , " John E. Jones, political column, June 23, 1948, p. 2. 3 Pittsburgh Sun-Telegraph, " D u f f Blast at Grundy Laid to Attack in Paper," Milton V . Burgess, June 1 7 , 1 9 4 8 , p. 1. 4 Pittsburgh Post-Gazette, "Pennsylvania Politics," (column) J . E. Jones, June 20, 1948, p. 2. Also the Alsops' column in the Philadelphia Evening Bulletin, June 2 4 , 1948, p. 1 2 , supported theory of a deal between Messrs. Grundy, Owlett, and Martin to obtain federal patronage in return for their support of him. 2

The Methods used by the P M A to Gain Access to the Republican Party

245

T h e result o f the 1948 Convention was a victory for M r . G r u n d y and Mason Owlctt. Governor D e w e y was nominated and the majority of the Pennsylvania delegation stayed with them. Further, Senator Martin, having withdrawn in f a v o r of Governor D e w e y , placed his name in nomination, thereby placing his backers, G r u n d y and Owlett in a most favorable position—almost a " k i n g - m a k e r " position—with

the

presidential

candidate.

To

complete

Mr.

Grundy's success, Owlett's proposed candidate for national party chairman, United States Representative Hugh D . Scott, w o n the post. 1 Several things occurred at the Convention that did not portend complete success for the G r u n d y - O w l e t t group in the next f e w years in Pennsylvania. The most significant was the split in the delegation between those w h o followed Governor D u f f for T a f t and those w h o remained with M r . Grundy and Owlett for D e w e y . T h e groups behind both were significant. Regarding those behind Senator Martin, the Scrauton

Tribune

editor, Robert J .

Arthur,

wrote: Martin was behind, h i m and pushing him the moneybags o f the Republican Party of Pennsylvania. H e has f o r m e r U . S . Senator J o e G r u n d y , he has f o r m e r Senator Mason O w l e t t , head o f the P M A , he has Mrs. W o r t h i n g t o n Scranton, national c o m m i t t e e w o m a n and one o f the biggest contributors to the Republican organization. He has quite a f e w others, including the Pennsylvania Railroad leadership etc., etc., not to mention the biggest w i n g o f the anthracite and bituminous coal industry. 2

As for the political organizations, the G r u n d y - O w l e t t group had most of the up-state county organizations with them, plus half o f the Philadelphia organization including C i t y Chairman William F. 1 Philadelphia Evening Bulletin, " R e p . Hugh D . Scott is elected National Chairman of G . O. P . " R a y m o n d C . Brccht, June 28, 1948, p. 1. Philadelphia Inquirer, " M e a d e Backs Selection of Scott for G. O . P. Post," June 28, 1948, p. 1. 2 Scranton Tribune, " A r t h u r Bares Duff-Martin Split S t o r y , " Robert J . Arthur, June 23, 1948, p. 1.

246

The Pennsylvania Manufacturers' Association

Meade. In addition, such political figures as Chief Justice George W . Maxey

o f the

Pennsylvania

Supreme

Court,

and

Lieutenant

Governor Daniel B . Strickler of Lancaster were allied with Mr. Grundy. 1 Aligned with Governor D u f f were several important organizations including the M c C l u r e organization o f Delaware County, the organization o f Superior Court Judge John S. Fine o f Luzerne County, the organization of County Commissioner Fred C . Peters of Montgomery County, and part o f the Philadelphia organization led by Sheriff Austin Meehan, and almost all of the Allegheny County organization. 2 Also with Governor D u f f were such men as M r . Richard K . Mellon of Pittsburgh, 3 Samuel S. Lewis o f Y o r k , Mr.

M.

Harvey

Taylor,

state Repulican

party

chairman

and

head of the Dauphin County organization, and Secretary of H i g h ways R a y F. Smock of C r a w f o r d County.* Several observers regarded Governor D u f f as having a "friend in court," so to speak, in Senator Martin and in the vice-presidential candidate, Governor Earl Warren of California. N o t e d the Pittsburgh Post-Gazette: The Governor's one possible remaining source of help within the organization is Senator Edward Martin. Despite the conflict that broke 1 Philadelphia Evening Bulletin, June 24, 1948, p. 1. Stenographic transcript of caucus voting with Grundy-Owlett: counties: Bucks, Lackawanna, Bradford, Pike, Susquehanna, Wayne, Columbia, Mountain, Sullivan, Clinton, Lycoming, Potter, Tioga, McKean, Cameron, Fulton, Huntington, Juniata, Mifflin, Perry, Snyder, Bedford, Union, Warren, Jefferson, Venango, Forrest, Clarion, Elk, Clearfield, Centre, Blair, Greene, Washington, Beaver, Butler, Lawrence, Armstrong, Indiana, Cambria, Westmoreland, Mercer, and Erie; With Duff: counties: Delaware, Luzerne, Montgomery, Cumberland, Dauphin, Lebanon, Fayette and Somerset. Split counties: Philadelphia (even), Allegheny (6 out of 8 with Duff), Berks, Northampton, Carbon, Monroe, Lancaster, and Chester, Adams, York, and Franklin. a Ibid., p. 1. 3 Time, June 2 1 , 1948, p. 23. 4 New Castle (Pa.) News, "Aftermath of State Battle," June 29, 1948, p. 2. The report was that under threat of being fired, Secretary of Highways Ray F. Smock, Crawford County G O P chairman, ordered his aide, Harry I. Matthews of Titusville, a delegate to the Convention, to vote with Duff.

The Methods used by the P M A to Gain Access to the Republican Party

247

out between them over a Presidential candidate, Senator Martin does not seem inclined to part company with Mr. Duff. Mr.

Martin's preeminent position in Washington, if Governor

Dewey is elected, will give him much to say about the organization's attitude toward the Governor. 1

And the Pittsburgh Sun-Telegraph: "Warren was not the choice of the Martin-Grundy group. He was Dewey's personal choice, and, incidentally a close friend of Governor Duff, to whom the Governor can give enthusiastic backing." 8 The 1950 Senatorial and Gubernatorial Primary. The second and final political battleground for Governor Duff and the Grundy-Owlett group was the 1950 senatorial and gubernatorial primary. The 1949 legislature had not been the battleground that had been expected. While the Governor's tax program went through without P M A support, along with his State Authority Program 3 to finance his public works program, many of the specific items of legislation desired by the P M A were passed and signed by Governor Duff. In fact, judging by the tone of Mason Owlett's address before the P M A annual meeting in 1949—in the presence of Governor Duff (who did not speak at the meeting)—Owlett was prepared to accept the Governor's tax program however distasteful to him and the PMA. While his entire address was devoted to an explanation and critique of the capital stock tax, he said early in his address: " W e , of course, regret that the Governor has found it necessary to again ask the Legislature to postpone the effective date of the exemption for another two years. It should be emphasized, however, that the 1 Pittsburgh Post-Gazette, " D u f f Faces Test in 1949 Assembly," John E. 'ones, June 28, 1949, p. 1. Judging from Mr. Martin's remarks before the P M A annual meeting earlier in 1948, he valued his close relationship with Mr. Duff: " I want to say again—that when my friend of many years, Jim Duff, served in my Cabinet, he was my close confidant and advisor. . . ." He praised him for carrying on as governor "with added brilliance." a Pittsburgh Sun-Telegraph, "Pa. G O P N o w Eased by Warren," July 14, 1948, p. 1. 3 See Appendix for brief description of the State Authority Program, note 5.

248

The Pennsylvania Manufacturers' Association

Governor's recommendation calls for postponement and not repeal. Likewise, it should be remembered that the Governor himself recognized the validity of the exemption two years ago when he first asked for postponement." 1 There is, therefore, reason to believe that the underlying cause of the second and final battle between Governor D u f f and Owlett and Mr. Grundy was not the Governor's legislative program that included the objectionable capital stock tax. It undoubtedly was a factor, but the real cause was political. The issue, it seemed, was really whether or not Mr. Grundy, Owlett, the P M A , and their followers would continue to have access to the Republican party of Pennsylvania and could therefore continue to wield influence over the state government. Governor D u f f definitely challenged this access and this influence. On December 30, 1949, he announced his candidacy for United States Senator and on January 28, the famous Hershey (Pa.) meeting took place in which forty-seven out of Pennsylvania's sixty-seven Republican county leaders announced their support of Duff. 2 In February, Governor Duff publicly called upon the Republican party in Pennsylvania to "smash Grundy" and " G r u n d y i s m . " The New York Times defined the "Grundy group" as follows: " T h e Grundy group, which openly and proudly operates the Republican party of this state [Penna.] from the headquarters of the Pennsylvania Manufacturers Association. . . ."s In answering Governor D u f f ' s attack, Owlett, at the Fortyfirst Annual Meeting of the P M A on February 26, 1950, charged the Governor with ingratitude and "Caesarism." I want to remind you that eight years ago it was none other than this same Governor Duff w h o importuned Senator Grundy, and incidentally me—and I am unimportant in this discussion, to be appointed as Attorney 1

P M A : Report of the Proceedings, Fortieth Annual Meeting, Owlett's address (February 22, 1949), pp. 3-4. 2 New York Times, "Leaders for Duff in Pennsylvania," January 29, 1950, p. 42. 3 New York Times, "Duff"Calls Party to Smash Grundy," W . H. Lawrence, February 12, 1950, p. 1. The statement is quite an exaggeration (italics added).

The Methods used by the P M A to Gain Access to the Republican Party

249

General. Y o u didn't hear any lambasting of Grundyism then. A n d four years later he sought our support for Governor. Specifically he sought Senator Grundy's support. He knew what Senator Grundy had stood for during his sixty-six years in the Republican Party when he sought that support. He knew that Senator Grundy had always stood for a protective tariff, whether he, Governor Duff, believed in it or not. He knew that Senator Grundy had unselfishly and patriotically devoted his life to the Party. N o w , when he says w e must eliminate Grundyism, what is he doing. Just using such tactics to get himself to the top rung of the ladder, then as was said in the same Julius which he attained those heights.

Caesar,

kicking over the ladder by

1

Owlett also attacked M. Harvey Taylor, state party chairman and president pro tempore of the Senate, for his support of Duff and desertion of his former supporter, Mr. Grundy. He warned others who might "desert" to Governor Duff: " I sat in the meeting in Hershey four years ago when Governor Duff was selected as a candidate for the Republican Gubernatorial nomination. He sat there too. Do you know that he is hardly on speaking terms with a single one who sat in the room and who picked him to run for Governor? And I just want to warn those who are playing around with him now to consider the experience of those who were for him four years ago." 2 The majority of the county organization leaders did not, however, heed Owlett's advice. While forty-seven county leaders had originally met with Governor Duff in Hershey in January of 1950, by February when the gubernatorial candidate was chosen, fifty-one country leaders had joined Governor Duff. 3 The candidates chosen for all offices included John S. Fine of Luzerne County for governor, Lloyd S. Wood of Montgomery County for lieutenant governor, and William S. Livingood, Jr., for secretary of internal affairs.4 1

P M A : Report of the Proceedings, Forty-first Annual Meeting, Owlett's address (February 28, 1950), p. 6. 2 Ibid., p. 7. 3 New York Time!, "Leaders for Duff in Pennsylvania," January 29, 1950, p. 42. Also " D u f f Wins Round in Pennsylvania," February 19, 1950, p. 57. * Ibid,

250

The Pennsylvania Manufacturers' Association

Among the group of original Duff supporters were the "Blue Bell Boys," a group of county leaders who met at Governor Duff's request in 1949 at Blue Bell, Pennsylvania, to decide on a senatorial candidate. These included such leaders as Fred Peters, Montgomery County Republican leader, John M. McClure of Delaware County, Graybill Diehm of Lancaster County, Kenneth F. Kressler of Northampton County, Harold Watkins of Schuylkill County, and Harvey Taylor of Dauphin County. 1 The Grundy-Owlett group backed Congressman John Kunkel of Harrisburg for senator and Jay Cooke of Philadelphia for governor. Mr. Grundy originally favored former Lieutenant Governor Daniel Strickler but turned to Mr. Cooke as a possible harmony candidate, even though Mr. Cooke announced that he refused to be a candidate of any specific faction.2 While Messrs. Duff and Cooke were on friendly terms, Duff refused to support Cooke even though it had been reported that the Grundy-Owlett group would have been willing to have dropped the fight on Duff if he would have compromised with them on the governor.3 The Cooke candidacy caused Duff the loss of one valuable supporter, James F. Malone, Jr., then chairman of the Republican Committee of Allegheny County. Malone favored Cooke over Fine and Governor Duff fired him as state insurance commissioner.4 The end result of the second batde between Duff and the GrundyOwlett group was victory and defeat for both sides. Duff and his ticket won by a "landslide" but Mr. Fine ran far behind Duff. When the final election was held, however, the Duff policy of no compromise with the Grundy-Owlett group had not been carefully followed, so that when Mr. Duff went to Washington, Owlett and the PMA returned to Harrisburg, the access to 1

New York Times, February 12, 1950, op. cit. Ibid., p. 64. New York Times, January 29, 1950, p. 42. 4 New York Times, "Landslide by Duff Routs 'Old Guard'," W . Lawrence, M a y 1 8 , 1 9 5 0 , p. 15. 2 3

H.

The Methods used by the P M A to Gain Access to the Republican Party

251

the governor having been restored by Mr. Fine personally.1 The method used by Mr. Grundy and Owlett to survive successfully the concerted attack upon their access to the Republican party was quite simple. It may be attributed to the inherent political strength of Mr. Grundy and Owlett and the P M A , and to political realities. The political strength lay in the Grundy-Owlett-PMA command of sufficient financial resources to conduct a political campaign and their continuing strength with certain up-state county organizations which gave them a strong voice in the state Senate. The political realities facing Mr. Fine were, of course, the need for campaign funds and the need for support in the General Assembly, especially the Senate, if any gubernatorial program were to be put through.

1

Time, LVIII, N o . 5 (July 30, 1951), 13. See Appendix, note 6.

13 The Methods used by the PMA to Favor and Oppose Legislation and Its Specific Lobbying Methods S i n c e most of the PMA's legislative policies have been of a nature, the examples of the usefulness of friendly leadership in the General Assembly and friendly legislators to block undesirable legislation are discussed first. Concluding this chapter is a discussion of the important specific lobbying methods used by the P M A in general. negative

NEGATIVE

LEGISLATION

River Basin Pact of 1945. The Delaware River Basin Pact of 1945 which called for anti-pollution measures is an excellent example of how legislation opposed1 by the P M A was defeated even when it had bipartisan support. Since Governor James apparently took a neutral position on the legislation and since, unlike the capital stock tax, it would involve no change in revenue income, but rather might require further expenditure by the state, the Governor was probably more on the PMA side of the issue than not. The Delaware Pact House Bill #900, introduced in 1941, was sponsored by Representative Elwood Turner, 2 Republican of Delaware County and former House speaker (1939), and Representative John B. Herring, Democrat, of Philadelphia. The bill passed the House—then under Democratic control—and was referred to the Committee on Forests, Waters, Game, and Fish in the Senate, Delaivare

1

See Chapter 9. Mr. Turner was allied to Mr. Joseph N . Pew, Jr., and to the McClurc organization of Delaware County and was not regarded as friendly to the Grundy-Owlett group. Personal interview with G. Mason Owlett, June 2

23, 1954-

The Methods Used by the P M A to Favor and Oppose Legislation

253

and was reported as committed and passed on first reading. It was then committed to the Committee on Public Health and there it died on the third of June. 1 T h e persons involved were important: the P M A had a friendly president pro tempore o f the Senate, Charles A . Coles, and a friendly committee chairman, George H. Dietrick (Republican) o f N o r t h umberland County. 2 Since the Senate leader is not compelled by any Senate rule to refer a bill to any specific committee, he may, as was done in this instance, upon a vote to recommit a bill, refer it to a committee other than the one that first considered it. The fact that the "second" committee may be chaired by a man w h o is k n o w n to be opposed to the measure makes such a recommittal to a second or different committee an excellent means o f killing a bill. 1941

Amendment

to the 1915

Workmen's

Compensation

Act.

The

House Bill #1002, 1 9 4 1 , to re-enact and amend the W o r k m e n ' s Compensation Act o f 1 9 1 5 , to pattern it after the Earle L a w o f 1937 which was repealed in 1939, was defeated more easily. The bill passed the Democratic-controlled House with little difficulty and with some Republican support. 3 It was referred to the Committee on Workmen's Compensation in the Senate on June 26 and a motion to discharge the Committee f r o m further consideration was defeated (31-16) on J u l y 10.* W i t h this bill, the P M A was aided in its opposition by a friendly committee chairman and a Republican majority in the Senate. T h e committee chairman was Senator Henry I. Wilson, Republican o f T i o g a County, w h o had been an attorney in the f i r m o f Elliott and Watrous (G. Mason Owlett's old law firm) and the author and 1

History of Bills 1941, House $900, p. 123. Apparently the Chairman of the Senate Committee on Forests, Waters, Game and Fish, Montgomery F. Crowe, Republican of Monroe County, did not agree with the P M A on the Delaware River Pact. Mr. Crowe represented a county that borders the Delaware River, which undoubtedly influenced Senator Crowe's decision. 3 The vote in the House was 142-22. There were 126 Democrats in the House so they were joined obviously by some Republicans. 1 History of Bills 1941, "House S1002," p. 135. 2

254

The Pennsylvania Manufacturers' Association

sponsor of the Workmen's Compensation Act of 1939 which replaced the Earle Law. 1 Legislation Under the Earle Administration. The first part of the Earle administration, 1934-36, well demonstrates the great value of friendly legislative leadership even in only one house of the General Assembly. With a Democratic governor and a Democratic majority in the House of Representatives, the P M A was without access to any significant point in the state government except the Senate, where there was a Republican majority (31-19) and a friendly president pro tempore, John G. Homsher of Lancaster County. 2 As for legislative policy, the P M A was interested in opposing as much of Governor Earle's program as it considered harmful or unreasonable. Since most of the Earle program included legislation that the PMA had opposed for years, it can safely be stated that the P M A was opposed to virtually all of that program. While Governor Earle complained that the Republicans blocked passage of his program in the Senate, his tax program was passed and included a rise in the gross receipts tax on utilities,8 a corporation net income tax, 4 and the temporary restoration of the capital stock tax on corporations engaged in manufacturing. 6 To sustain Governor Earle's argument, however, is the fate of certain reform legislation such as an unemployment compensation bill (House #55) which was killed when the Conference Committee appointed by the Senate and House was unable to agree on the bill. Before the deadlock had been reached in July of 1935, the House had almost unanimously passed (198-3) the bill and the Senate had temporarily killed the bill when the vote requiring the Senate 1

Pennsylvania Manual, 1952, p. 594. Personal interview with G. Mason Owlett, June 23, 1954. * Laws of Pennsylvania 1935, "Act 89," pp. 200-203. Rate increased from 8 to 14 mills. 4 Ibid., "Act 9 1 , " pp. 208-17. 6 Ibid., "Act 86," pp. 184-90. Tax of 5 mills applied to all manufacturing corporations, domestic and foreign except those engaged in liquor distilling. The money was earmarked for unemployment relief, as was that collected from the corporate net income tax. The tax was restored for the years 1935 and 1936. s

T h e Methods Used by the P M A to Favor and Oppose Legislation

255

Committee on Insurance to discharge the bill failed by one vote (21-22). The bill was later reported and passed by the Senate with amendments and a sufficient number of Republican votes (26-20). The House refused to accede to these amendments and the unsuccessful Conference Committee was appointed. 1 The personalities involved in all of these procedures in the General Assembly point up the great value of access to committee chairmen and to the leadership of only one body of the legislature when other places of access are closed. The chairman of the Senate Finance Committee which favorably reported the tax measures, including the capital stock tax, was John M . McClure of Delaware County, the controlling figure in Republican politics in Delaware County and no close friend of Mr. Grundy. In the next election, November of 1936, it is interesting to note Mr. McClure was defeated by Weldon Heyburn running on the Democratic ticket and supported by independent Republicans, among w h o m were Mr. Joseph N . Pew, Jr. and Mr. Joseph R. Grundy. 2 The Chairman of the Committee on Insurance in the Senate was James E . Norton of Berks County, friendly to Mr. Grundy and the P M A . Those appointed to the Conference Committee included Senators Coyne and Chapman, the former having long been a lieutenant of the Mellon organization of Allegheny County and the latter a friend of Mr. Grundy. 3 POSITIVE

LEGISLATION

Workmen s Compensation Act of 1915. Probably the most important single piece of legislation actively and openly sponsored by the P M A was the Workmen's Compensation Law of 1 9 1 5 . The history of the workmen's compensation legislation and the methods used to obtain its passage began in 1 9 1 1 . 1

History of Bills (Hinisburg: C o m m o n w e a l t h of Pennsylvania, 1935), p. 10. Evening Ledger, N o v e m b e r 9, 1936, p. 1 ; and personal interview with G . Mason Owlett. 3 Information on committee chairmen from Pennsylvania Manual 1952, p. 2 5 6 ; and on political affiliations thereof from George S. Bailey, op. cit., p. 5 ; and personal interview with Mason Owlett, June 2 3 , 1 9 5 4 . a

The Pennsylvania Manufacturers' Association In 1911, during the first legislature o f the administration o f Governor Tener, Mr. Grundy was largely instrumental in obtaining legislation authorizing the appointment o f an Industrial Commission to investigate the causes of accidents, the remedies therefor, and suggestions for proper compensation for the injured. 1 Mr. Grundy suggested members to be appointed to the Commission and t w o o f them, David A . Reed o f Pittsburgh and George C . Hetzel o f the G . C . Hetzel C o m p a n y o f Chester, were appointed as chairman and employers' representative, respectively. 2 B y 1913 the purpose o f the Industrial Commission, the drawing up o f definite legislation on workmen's compensation, had almost been fulfilled. The Commission had heard testimony from all interested parries including the P M A ' s consultant Miles Dawson, a N e w Y o r k attorney. H. W . Moore, later secretary o f the P M A , attended all meetings o f the Commission as the P M A representative. 8 These t w o men drew up the bill on workmen's compensation which was presented but not adopted b y the Industrial Commission. 4 Nevertheless, the bill presented to the legislature o f 1913 was a combination o f an Industrial Commission bill and the P M A bill. It was defeated, however, largely because o f the opposition o f state Senator William E. C r o w and not by the P M A . 6 The political situation in Pennsylvania at this time was favorable to Mr. Grundy and his patron and friend, Senator Boies Penrose, but opposition was mounting in the form o f the Progressives. B y the next legislature in 1915, the Progressives were in control of the Republican state organization and a Progressive Governor, Martin G. Brumbaugh, was in Harrisburg. The leadership o f the General Assembly was also favorable to the Governor. It should also be 1

Minute Book, I. Executive Committee meeting, Mr. Grundy's report

( J u l y 31, I 9 i i ) , l , 3 8 . 2 Ibid., pp. 40-41.

David A. Reed, politically allied with the Mellon organization, later became U.S. senator. 3 Ibid., Executive Committee meeting, April I, 1912. 4 Ibid., Fourth Annual Meeting, Mr. Grundy's report (January 13, 1913), P- 776

Ibid.

T h e Methods Used by the P M A to Favor and Oppose Legislation

257

remembered that this was a period of expansion of the PMA and, in 1915, almost every county was represented among P M A members.1 The PMA, after the failure of their bill in 1913, called a special state convention to discuss future workmen's compensation and to write a new workmen's compensation bill. In attendance at this convention were David A. Reed, chairman of the Industrial Commission, and John J. McDevitt of the Pennsylvania Federation of Labor.2 Before the PMA was able to draw up another bill, the Association's leaders were compelled to convince some of their members not only of the value of the bill that the Association would present in 1915, but of the value of presenting any bill at all. John P. Wood, one of the original members of the Executive Committee of the PMA, spoke in favor of the PMA's acting positively in proposing legislation: "Let us place ourselves in the position of advocating constructive legislation and not merely opposing destructive features of legislation brought forward by others." 3 At the same time, the Beaver County Manufacturers' Association had drawn up a bill of its own and wished the P M A to use it to modify the PMA's bill before submission to the Industrial Commission. The representative of the Erie Manufacturers' Association, Ray Hinrod, stated at the same meeting that the Erie Association was "not very strong for compensation bills." 1 A new bill was drawn up and submitted, but the bill sponsored by the Brumbaugh administration was passed without the amendments proposed by the PMA. 6 The great significance of the Workmen's Compensation Act of 1

See Chapter 2. Minute Book, Executive Committee meeting (January 1 2 , 1 9 4 1 ) , I, 13 S. 3 Ibid., Fifth Annual Meeting. W o o d had made a similar statement concerning the proposing of " g o o d " legislation in 1 9 1 2 at the Third Annual Meeting on January 8. 4 Ibid., p. 1 3 4 . 5 Ibid., Seventh Annual Meeting, M r . Grundy's report (January 10, 1916), p. 1 7 9 . M r . Grundy, in his address, devoted more time to an attack on the Child Labor L a w passed in 1 9 1 5 than to the W o r k m e n ' s Compensation Act. See also Chapter 4. 2

P.M. A.—I

258

The Pennsylvania Manufacturers' Association

1 9 1 5 is thus clear. It marked the transition of the P M A f r o m a small association of manufacturers with a dynamic leader into a political interest group of sufficient strength and proportions to be a vehicle for considerable political power. Further, the fact that the P M A had played such an active role in the making of workmen's compensation legislation gave it a permanent stake in such future legislation. As long as the P M A

represented appreciable political

strength, all future changes in workmen's compensation would have to be reckoned with the P M A ' s desires and interests on the subject. The experience with the compensation bill also pointed up the necessity of access to the General Assembly. Friendly leadership and friends in the legislature were perhaps shown to be more important with positive legislation than with negative. Future changes in the Workmen's Compensation Act that the P M A favored illustrate this well. A n example is the House Bill #1048 in 1947 to increase the workmen's compensation benefits. 1947 Amendment to Workmen's Compensation Act of 1915.

This bill

apparently found the D u f f administration and the P M A in agreement. It was reported favorably by the House Committee on Workmen's Compensation within a f e w days after committal and passed the House a few days later. 1 In the Senate, the Senate C o m mittee on Labor and Industry reported the bill favorably with amendments and the House concurred in these amendments. The chairman of the House Committee on Workmen's C o m pensation was Representative W .

Stuart Helm of

Armstrong

County. 2 Owlett had written Representative Helm, before the workmen's compensation amendment was introduced and given a committee assignment, to clarify the P M A position on benefit increases: " A m o n g our membership it is generally agreed that there should be a reasonable increase in workmen's compensation benefits because of the increased cost of living." 3 1 History of Bills, 1949, p. March 3 and reported March 9 2 Pennsylvania Manual 1949, 3 P M A : Legislative Bulletin,

1 1 9 . T h e bill w a s referred to committee on and passed third and final reading on March 1 7 . p. 450. No. 2, January 28, 1949, p. 1.

The Methods Used by the P M A to Favor and Oppose Legislation

259

Owlett warned, however, of adversely affecting the competitive position of the coal mines and heavy industries with too high a benefit rate. The chairman of the Senate Committee on Labor and Industry was state Senator James S. Berger, representing McKean, Potter, and Tioga Counties (the area formerly represented by Owlett) and regarded as a close ally of Owlett. The bill was introduced by Representative Adam T. Bower of Northumberland County, a member of the House Committee on Workmen's Compensation, and Representative Paul A. Delong of Lehigh County. Both of these county organizations had been friendly to the PMA. 1 1949 Amendment to Tax Law of June, 1947. A final example of specific legislation favored especially by the P M A was Act #28 (1949) to amend the act of June 25, 1947, empowering localities to tax those things that the state did not. In the Legislative Bulletin #4 of February 1 1 , 1949, it was reported that Owlett had advocated amendments to Act #481 of 1947 to exclude natural resources and manufactured products from the possible scope of taxation by localities.2 Owlett had advocated this amendment in a letter to Governor Duff and had stressed what the burden such local taxes would be on coal companies. The bill to amend the Act was introduced as Senate Bill #446 by state Senators George B. Stevenson, Charles H. Mallery, and Rowland B. Mahany. 3 All three could be considered as friendly to the Grundy-Owlett group. The bill was referred to and reported favorably by the Senate Committee on State Government, chaired by Representative Stevenson.4 In the House, the bill was reported favorably within a day after it had 1 In the 1948 Republican National Convention, the delegates of these counties remained with the G r u n d y - O w l e t t group throughout. 2 P M A : Legislative Bulletin, No. 4, February 1 1 , 1949, p. 1. 3 History of Bills 1949, p. 88. These senators represented Clinton, Blair, and C r a w f o r d Counties whose Republican organizations were friendly to the G r u n d y - O w l e t t group. O w l e t t interview, June 2 3 , 1 9 5 4 . 4 Pennsylvania Manual 1949, p. 3 3 2 . Representative M a h a n y was vicechairman of the committee and Representative Mallery a member of the committee.

26o

T h e Pennsylvania Manufacturers' Association

been referred. The committee was the Committee on Municipal C o r p orations headed by Representative Howard C . Boorse of M o n t g o m e r y County. T h e bill was signed by Governor D u f f on May i , 1949. The significance o f this measure was not only to demonstrate the necessity o f friendly leadership in the General Assembly to refer bills to friendly committees, but also the indispensability o f having some powerful legislators w h o will sponsor certain desired legislation. The P M A does not officially sponsor legislation by writing up the bill and having it presented by a legislator. However, the former P M A president, Mason Owlett, admitted that the P M A did have friends in the General Assembly w h o knew what legislation some P M A members might desire. The P M A would thus support the legislation drawn up by such friendly legislators and introduced b y them. O w l e t t stressed, however, that the P M A ' s main interest was not in the sponsorship o f legislation but in preventing

harmful

measures f r o m passing. SPECIFIC

LOBBYING

METHODS

While the gaining o f access in order to influence members o f the General Assembly and the governor through access to local political organizations has always been the prime method of the P M A in effecting its policies, there have been other methods used which may be termed lobbying. Lobbying may be defined as the addressing or soliciting o f members o f a legislative house with intent to influence legislation. 1. One old and somewhat respectable lobbying method traditionally used by the P M A was the sending o f letters and telegrams to members o f legislative committees, especially to the committee chairmen, by P M A members. The distribution of printed literature under the direction o f P M A leaders among the legislators should also be included in this category of lobbying. O n e o f the earliest examples o f the use o f this method o f lobbying was during the legislative session of 1911. Regarding the failure of the eight-hour workday bill which the P M A opposed, Mr. Grundy

T h e Methods Used by the P M A to Favor and Oppose Legislation

261

told the T h i r d Annual Meeting o f the Association: " . . . the legislation committee reported the same [the bill] favorably, then by liberal use of telegrams w e succeeded in having the members o f the Legislature advised o f the attitude o f our members, with the result that the Legislature o f 1 9 1 1 adjourned without the enactment o f any measure that appeared to your Executive

Committee

to be especially

unfair or o b n o x i o u s . " 1 A n early example of the use o f printed material was in 1 9 1 2 w h e n the P M A was interested in defeating bills that w o u l d reduce the w o r k i n g hours o f w o m e n and minors. Pamphlets were prepared b y the Association concerning the proposed legislation and distributed a m o n g P M A members and other manufacturers that were not then members o f the P M A . 2 T h e purpose of this literature was to arouse interest a m o n g employers o f w o m e n and minors concerning the then pending legislation. T h e ultimate purpose o f course was to influence individual legislators to vote against the bill. M r . G r u n d y told the Executive C o m m i t t e e o f the success o f the P M A ' s " e d u c a t i o n " campaign at the close o f the 1 9 1 3 legislature. He said that the campaign was conducted " v i g o r o u s l y " ; literature and meetings w e r e used to "arouse"

the interest of manufacturers in the

state. T h e result was that w h e n the Senate committee considering the undesirable legislation met on M a y 14, 1 9 1 3 — " t w o thousand to t w e n t y - f i v e hundred manufacturers" came there " f r o m probably every county in Pennsylvania" to protest the legislation. T h e result was that a W o m e n ' s Hours Bill satisfactory to the P M A was passed and the C h i l d L a b o r Bill failed entirely. 3 T h e Legislative

Bulletin has always recommended personal letters

to committee chairmen as a g o o d w a y o f protesting bills. 4 In 1 9 2 3 , 1 Mitwte Book, Third Annual Meeting, M r . Grundy's address (January 8, 1 9 1 2 ) , I, 4 8 - 4 9 (italics added). 2

Ibid., Fourth Annu.il Meeting, M r . Grundy's report (January 1 3 , 1 9 1 3 ) ,

P- 77-

3 Ibid., Executive Committee meeting, M r . Grundy's report (July 1 9 , 1 9 1 3 ) , pp. 9 6 - 9 7 . 4 A letter from a member first appeared under the heading, " T h e W a y T o Protest a b i l l , " in the Legislative Bulletin, N o . 6, March 1 7 , 1 9 2 1 , p. 2.

2Ó2

The Pennsylvania Manufacturers' Association

the Bulletin gave instructions as to how such letters of protest should be written: "In writing to the Chairman of a Committee concerning any bill, be explicit and give reasons why you approve or disapprove of said bill, and, if possible send a copy of your letter to this office." 1 The Legislative Bulletin also in 1923 attributed the defeat of the Income and Inheritance Tax Bill (House #29) to the use of letters to the House committee considering the legislation: "In response to our request hundreds of letters were written in protest with the final result [defeat in Committee] noted above." 2 The letter-telegram method of lobbying members of the state legislature, especially committee chairmen, has continued to be called into use by PMA leaders through the Legislative Bulletin, or through calls to the various affiliated local manufacturers' associations asking them to urge their members to use letters or telegrams to persuade local legislators.3 2. The second method of lobbying closely allied with the first and probably the most conventional has been testifying before legislative committees. The first mention of this method and its success was in 1911. Mr. Grundy, in his report to the Executive Committee, told them that members responded willingly to calls by the Executive Committee to come to Harrisburg to testify before various committees against undesirable bills.4 In 1912 Mr. Grundy commented further upon this method: Proper argument before a committee is the only method adopted by us to reach the ear of the Legislature, except, where, as stated above, it is desirable for constituents to properly approach their own members of the Senate and Assembly giving their views on legislative propositions. . . . [This third important lobbying method to be discussed below.] W e therefore are kept absolutely free from any charge of suspicion of lobbying, which 1

P M A : Legislative Bulletin, No. 1, February I, 1923, p. 1. P M A : Legislative Bulletin, No. 10, April 5, 1923, p. 1. 3 Personal interview with Mr. John Seeton, secretary of the P M A , October 13, 19534 Minute Book, Executive Committee meeting, Mr. Grundy's report (July 31, 1911), I, 36. 2

T h e M e t h o d s Used by the P M A to Favor and O p p o s e Legislation

263

practice though much indulged in by some, is considered not becoming.1 While there would be many w h o would not agree with Mr. Grundy about what did and did not constitute lobbying, it is significant that he regarded both methods discussed and one other mentioned above as legitimate and proper ways of making opinion known to the legislature. In Mr. Grundy's favor is the fact that testimony before committees both at the state and federal levels has always been regarded as the most "legitimate" means by which any interest group or association could make its views known to the lawmaking body of the government. In the specific case of Mr. Grundy, however, and the members of the PMA or their appointed representatives, such testimony cannot be divorced from the political activities of Mr. Grundy and other PMA leaders. The testimony, therefore, of PMA members, because of this activity, takes on a special weight for committee members, especially committee chairmen, who were always appointed by the House speaker or the president pro tempore of the Senate. These latter figures, as has been discussed earlier, have more often than not been on very friendly terms with Mr. Grundy and other PMA leaders. This method has continued to be used, and again, as with the letter-telegram method, the various affiliated local manufacturers' associations arc often called into action to send representatives to testify in Harrisburg when necessary.2 3. The third method of lobbying or of making PMA views known to legislators, as, perhaps Mr. Grundy would prefer, has been the personal contact with individual legislators by PMA leaders or members. This has probably been the most important method used by PMA leaders. The first mention of this method in the Minute Books of the Association was in 1911 when Mr. Grundy in his report to the third meeting of the Executive Committee mentioned it in connection 1 Ibid., T h i r d Annual Meeting, M r . G r u n d y ' s address (January 8, 1912), PP- 53-54 (italics added). 2 Personal interview w i t h M r . J o h n Seeton, O c t o b e r 13, 1953.

The Pennsylvania Manufacturers' Association

2Ó4

with the necessity for expanding the organization of the Association to include members in more Pennsylvania counties. He stated that he wished the Association to have representation from every county in Pennsylvania: " . . . for the obvious reason of being better able to reach the attention of every legislator in

Pennsylvania."1

Mr. Grundy again emphasized the importance of this method in 1 9 1 2 : "It is through their own constituents, voters who live in their o w n representative district, that the Legislature members can best be reached, for the opinion of a voter whose political support is desired, will be considered and the argument of such a person will most likely receive due weight. . . ."2 Again in 1 9 1 3 , Mr. Grundy stressed the fact that the P M A had been able to reach legislators through P M A members who were men of prominence and influence in their communities. Again he stated that he did not regard this as " l o b b y i n g . " 3 Regarding the Child Labor L a w which failed during the 1913 Legislature, but which was expected to be revived, Mr. Grundy wisely observed: The usefulness o f our Association is dependent largely on the character and numerical strength of its members, and in the ability to reach the reasoning mind of every

Senator

and member of the Legislature

through their

own

constituents. . . .

in some counties we [The P M A ] were without sufficient strength to

make any serious impression on law-makers from those counties*

Mr. Grundy also wisely foresaw further potentialities in having representation in every county. N o t only could every state senator and representative be contacted by an important constituent, but that constituent might well go further and play an active role in the election of such political representatives from their localities. This 1 Minute Book, Executive Committee meeting, Mr. Grundy's report (July 3 1 , 1 9 1 1 ) , I, 35 (italics added). 2 Ibid., Third Annual Meeting, Mr. Grundy's address (January 8, 1912), p. 53 (italics added). 3 Ibid., Fourth Annual Meeting, Mr. Grundy's address (January 13, 1913), p. 72. 4 Ibid., Executive Committee meeting, Mr. Grundy's report (July 19, 1913), p. 98 (italics added).

The Methods Used by the PMA to Favor and Oppose Legislation

265

w o u l d be fulfillment o f one o f M r . Grundy's and later one o f M r . Owlett's frequently stated hopes: to get businessmen into politics. In 1 9 1 6 M r . G r u n d y told the Seventh Annual Meeting: " T h e r e was considerable discussion on the matter o f our members being in their various communities

to see to it that broad-minded

active

men should be

chosen to represent their respective districts in the next Legislature. Such candidates who would represent their own constituents rather than obey the dictates ofpeople

living in other parts of the state should be chosen." 1

T h r o u g h o u t the 'twenties and later, M r . G r u n d y reiterated the value o f members personally contacting their political representatives in the state and participating actively in their elections as the best means o f preventing undesirable legislation f r o m being passed. T h e following quotations are illustrative: There is no Senator or Representative that our members cannot reach and talk with over every weekend, and it is largely by this very legitimate and most effective influence that we should protect ourselves from hostile legislation. 2 There has been some help from members, for which w e have been grateful, but there has not been one hundredth part of the help that we should have had. [in fighting the repeal of The Capital Stock exemption] As far as technical details are concerned they can be left to those at Harrisburg, but the instructive and persuasive part should be done at the homes of the members of the Legislature.3 Succeding presidents o f the P M A , such as the late James Rawle, John Flynn, Mason Owlett, have not stressed the "personal contact method"

so specifically. O w l e t t did, h o w e v e r , constantly

em-

phasize the necessity o f businessmen becoming active in politics. 4 1 Ibid., Seventh Annual Meeting, Mr. Grundy's address (January 10, 1916), pp. 190-91 (italics added). 2 Ibid., Twelfth Annual Meeting, Mr. Grundy's address (January 10, 1921), p. 225. 3 Ibid., Fifteenth Annual Meeting, Mr. Grundy's address (January 14, 1924), p. 299 (italics added). 4 This was discussed at some length with quotations from Owlett in Chapter 5.

The Pennsylvania Manufacturers' Association

266

T h e Legislative Bulletin has become the vehicle f o r rallying m e m bers to act on specific legislative items either by letter, telegram, or b y personal contact. This old method o f personal contact is still regarded as very effective and is still emphasized. As recently as 1 9 5 1 the following paragraph appeared on the first page o f the second Legislative Bulletin o f that year: " T h e most important w o r k o f the Legislature is done in committees. U p o n introduction all bills are referred to a committee f o r consideration. T h e committee has authority to approve a bill, or to kill it, or to revise it b y amendments. In short, committees hold the power of life or death over all legislation. Therefore, it is most important that you know your legislative committee members."1

1

Legislative Bulletin, No. 2, January 19, 1 9 5 1 , p. 1 (italics added).

14 The Methods used by the PMA to Influence National Legislation (General

Legislation: Testifying before Congressional Committees. The

P M A , as a general rule, has never concerned itself greatly with national legislation. Organized as it has been on a state level, it has never been in a position to influence such legislation to any great degree. While the Association has occasionally taken a definite position on such legislation, the Association has limited itself to letters and telegrams to congressmen and to testifying before Senate or House committees in Washington. In 1953, Mr. John Seeton, secretary of the P M A , testified before the Health Subcommittee of the Senate Labor and Welfare C o m mittee on Bills S. 2325 and S. 2714, the Humphrey-Murray Bills which would regulate safety measures by prescribing general safety rules and standards for manufacturing plants. The P M A opposed such "federalization" of safety as unnecessary and impractical. 1 Membership in the National Industrial Council. The P M A ' s membership in the National Industrial Council serves its purpose in this capacity members,

in that the Council, representing testifies before congressional

its manufacturer-

committees

regarding

national legislation. It is an adjunct of the N A M and is made up of state manufacturers' associations. The council handles all the actual lobbying done by the N A M such as testifying before Congress. 2 1

P M A : Statement Submitted to Health Subcommittee of Senate Labor and Public Welfare Committee, mimeograph, 1953. The P M A also submitted testimony to Subcommittee N o . 2 of the Select Committee on Small Business of the House of Representatives in 1953 opposing the continuation of the excess profits tax. 2 Personal interview with Mr. John Seeton, March 25, 1955.

The Pennsylvania Manufacturers' Association

268

Political Activities of PMA Leaders. Perhaps the influence of the P M A is and has been felt on national legislation more through the political activities of its leaders: the simple fact that its leaders are and have been powerful Republican leaders in Pennsylvania. The activities of Mr. Grundy in fund-raising during the 'twenties and his close relationship with Boies Penrose were probably the two most important reasons for his presence in the Blackstone Hotel room in Chicago when Warren Harding was chosen as Republican presidential nominee in 1920. There is little doubt that Mr. Grundy had access not only to Harding but to Coolidge, and to Mr. Hoover to some extent, if for no other reason than his close friendship with Andrew Mellon, then secretary of the Treasury. If Mr. Dewey had been elected president in 1948, the P M A leaders would definitely have had access to him because of their early support of Mr. Dewey's candidacy. It is of interest to note today that the P M A leaders, while they opposed President Eisenhower's 1952 candidacy, might still be said to have some access to the present administration by their continued friendly relationship with the "Dewey group." 1 The P M A has never had nor has it ever sought great access to the Congress except on tariff matters and then, only in the late 'twenties. Most of the senators from Pennsylvania have not been politically friendly to the P M A leaders.2 The PMA leaders, from Mr. Grundy to Mr. Malone, have always been willing to compromise on the scnatorship in return for support of their candidate for governor. Republican representatives from Pennsylvania on the other hand have been closer to P M A leaders.3 The reason for this is obvious. Representatives, being elected by small districts, have a smaller number of interest groups among their constituents. Thus it is easier for a well-organized political interest group such as the PMA to make its influence felt in the election of such representatives. 1 2 3

Mason Owlett, interview, October 13, 1953. See Appendix, note 1. See Appendix, note 2.

The Methods Used by the P M A to Influence National Legislation THE PROTECTIVE

269

TARIFF

Mr. Grundy's Personal Lobbying. It has been the protective tariff that has concerned the P M A more than any other subject in the category of national legislation. It has also been the field of tariff legislation over which the P M A , through its leaders, has exerted the most influence. This influence was exerted almost solely by the activities of Mr. Grundy. As evidenced by his testimony before the Senate committee investigating lobbying, Mr. Grundy's active participation in the presidential elections of the 'twenties, especially that of Mr. Hoover in 1928, was largely motivated by his interest in changing the American tariff system to revise most schedules upward and to establish American valuation rather than the traditional ad valorem system. That Mr. Grundy's influence over past tariff rates had made itself felt was evidenced by the following exchange between Senator Caraway of Arkansas and Mr. Grundy during the 1929 lobby investigation: Senator Caraway: Y o u think there are tariff rates now reflected in the tarifFlaw that your activities put there? Y o u can answer that yes or no. Mr. Grundy: I am pleased to say yes; yes. Senator Caraway:

Y o u say you were cffcctivc and you have been

down here ever since the Dingley bill ? W h a t year was that? Mr. Grundy:

1897.

Senator Caraway: And you have been down here ever since? Mr. Grundy: Yes. 1

Mr. Grundy testified that he was interested in seeing the Republican platform calling for tariff revision put into effect. When asked by Senator Caraway (Democrat, Arkansas) whether he felt that the manufacturers, by contributing campaign funds, had bought the legislation and ought to have it, Mr. Grundy replied that since 1 Subcommittee of the Senate Judiciary Committee of U.S. Senate, Hearings (pursuant to Senate Resolution 20 [Washington D . C . : U . S . Govt. Printing Office, 1930]), Part II, p. 433.

The Pennsylvania Manufacturers' Association

270

legislation was in the Republican party platform it ought to be enacted. 1 This

brief

interchange

illustrates

Mr.

Grundy's

methodo-

l o g y — S e e to it that the party platform contained a high tariff plank and then see to it that such a plank was fulfilled. M r . Grundy's methods in doing

this were

quite simple and,

time, regarded as "old-fashioned." T h e Outlook

even

at

the

editorialized in

1929: . . .

he [Grundy] sought to control Congressmen at the source

instead of at the stomach, and so he poured m o n e y into county, State, and national campaign chests. . . . in all this b o m b a r d m e n t of bombast [by w h a t were described as "new-style lobbyists" w h o used statistics, charts, and literature] there was n o t a single statement f r o m G r u n d y . He went his customary way and saw his friends in the House. H e seemed to scoff at the notions and methods of these novices at lobbying. Yet w e venture that m a n y interests represented b y the new-style lobbyists will fare better in the final bill than he will, even t h o u g h he has shifted his operations to the Senate side. T h e old-fashioned cash-and-carry lobbyist, w e fear, is as out-of-place in the House W a y s and Means C o m m i t t e e r o o m as Calvin Coolidge w o u l d be around the Hooverized W h i t e House. 2 M r . Grundy admitted before the C a r a w a y Committee that he had spent at least twenty thousand dollars on tariff lobbying; h o w ever, he pointed out that these funds were his o w n and did not belong to the P M A . 3 He also admitted calling on various senators to discuss tariff matters. 4 T o further assure passage of the desired tariff legislation, M r . Grundy was appointed senator in December o f 1929 by Governor 1

Ibid., pp. 432. 434"Backstage in Washington," The Outlook, CL II, N o . 2 (May 8, 1929), p. 60 (italics added). 3 Subcommiteee of Senate Judiciary Committee of U.S. Senate, Hearings, Part II, p. 440. * Ibid., pp. 432-33, 447-48. These senators included Smoot, Reed, Edge, Hatfield, Fess, Bingham, Watson, and Moses. 2

The Methods Used by the P M A to Influence National Legislation

271

Fisher.1 Mr. Grundy had worked to obtain the special session of Congress in the fall of 1929 which was called to pass tariff legislation. Mr. Grundy was credited by many observers at the time with being almost solely responsible for persuading congressional leaders to call the special session in face of opposition by the Mellons, the Western Republican leaders, and even President Hoover. 2 The final passage of the Smoot-Hawley Tariff was assured by the votes of Senators Reed and Grundy of Pennsylvania.3 Ironically, however, both Grundy and Reed assailed the tariff as inadequate; Mr. Grundy announced "his intention" after the campaign (the Republican senatorial primary in Pennsylvania in 1930) to devote his efforts to lining up industrialists to assist in the election of "protection delegates" to the next Republican National Convention.* The irony of Mr. Grundy's displeasure over the final Smoot-Hawley Tariff was that he was credited by fellow Republicans and Democrats (who opposed raising tariffs on any items but agricultural products in order to afford some relief for Western farmers) with creating a bill he desired against all Republican-Democrat opposition. Commented the New York Times: "According to insurgent Republicans Senator Grundy was the directing genius in the formation of the new combination that succeeded in routing the 1 W h i l e there is no proof that M r . Grundy requested Governor Fisher to appoint him as senator to fill the unexpired term of William S. Vare whose Senate scat was refused him, it might safely be assumed that M r . Grundy e x pressed a desire for the Senate seat to Governor Fisher. Fisher had been handpickcd b y Grundy and w o n the gubernatorial nomination in a bitter battle with Grundy's support. T h e realities of politics w o u l d dictate that Governor Fisher w o u l d do M r . Grundy the favor o f granting an expressed desire, or, to be more charitable, to anticipate a desire of his benefactor. 2 Philadelphia Evening Bulletin, " G r u n d y a Political P o w e r M a n y Y e a r s , " December 1 2 , 1929, p. 4 3 . Also Paul Y . Anderson " O h , Poor M r . M e l l o n ! " Nation, C X X V I I I , N o . 3 3 2 0 (February 20, 1929), 2 1 8 . Also " M r . H o o v e r and M r . G r u n d y " in the same issue. 3 New York Times, " S m o o t Feels Sure of the Tariff Bill," June 1 2 , 1930, p. 1. The close vote 4 9 - 4 7 illustrates the necessity of the Reed-Grundy votes. 4 Philadelphia Public Ledger, " G r u n d y Attack on Tariff Bill Stuns Capital," April 26, 1930, p. 1. M r . Grundy's attack was regarded as an indirect attack on President H o o v e r and his tariff policies.

272

T h e Pennsylvania Manufacturers' Association

old coalition and in retaining rates for industrial and other commodities which the coalition had fought and labeled unnecessary." 1 The passage of the Smoot-Hawley Tariff and Mr. Grundy's defeat in the senatorial primary ended a period of great influence on tariflf matters for Mr. Grundy and indirectly the PMA. From then until 1944 Republican party platforms have included a tariff plank that has met with at least partial approval of Mr. Grundy. 8 The last time Mr. Grundy participated actively in writing planks for the Republican party platform was in 1944 when he was a member of the Resolutions Committee and was successful in obtaining an "adequate" tariff plank.3 Since 1944, the Republican tariff planks, especially that of 1952, would probably not have been termed adequate by Mr. Grundy, so that it might be said that the method of obtaining a commitment by the Republican party to support high tariffs has to some extent passed. Certainly as far as the 1952 platform was concerned and the policies of the present administration, PMA leaders must rely solely upon access to certain congressmen to influence tariff policy.4 Their access to party policymaking councils was curtailed in the 1952 Convention, and it has certainly not been any better with executive policy-makers of the Eisenhower administration, especially in view of the President's pronouncements on tariff matters favoring a reduction of tariffs. 5 1 New York Times, March 10, 1930, p. 2. Also New York Times, June 1 2 , 1930, p. 1. Senator Harrison: " H e [Grundy] did more than any other to destroy our w o r k and reorganize the forces over across the aisle and start the bill on the d o w n w a r d trend again." 2 N o n e have called for M r . Grundy's favored American valuation method but most have called for a high protective tariff. 3 Republican State Committee of Pennsylvania; press release, June 28, 1 9 4 4 . (Mimeographed copy from P M A files on M r . Grundy.) 4 For example, the late Representative Simpson of Pennsylvania, an old G r u n d y man, was a member of the Randall Commission and participated in writing the minority report which favored the continuation o f high tariffs. 5 New York Times, March 24, 1 9 5 5 , p. 1. Sec text o f Republican party platform of 1952, New York Times, July 1 1 , 1 9 5 2 , p. 8.

The Methods Used by the P M A to Influence National Legislation MR. GRUNDY ACTIVELY ENTERS NATIONAL

273

POLITICS

Mr. Grundy in 1929 and 1930 actively entered state and national politics for the first and last time to hold an elective office. 1 It is perhaps the most extreme method ever used by Mr. Grundy to gain access to the United States Congress in order to influence the pending tariff legislation. The fact that he became Senator in 1929 was the result of access to Governor Fisher, but Mr. Grundy's running in the Republican senatorial primary in 1930 was a method to go beyond positions of state power—to which he already had access—to the national legislative/body where his access was more tenuous. This important step by Mr. Grundy is significant because of what it demonstrated about the nature of his and the PMA's political power. In early 1929, before his appointment as senator, the New York Times described Mr. Grundy as the successor to William S. Vare. The Mellons reportedly were "allowing the reins" to fall to others. This was evidenced by W . L. Mellon's resignation as state party chairman, a post he had held after defeating W . Harry Baker in 1926. There was also defection in the Vare organization that might turn to Grundy. 2 B y May of 1930, after Mr. Grundy's short term in the United States Senate and before the outcome of the senatorial primaries, another observer wrote that Mr. Grundy had wished to boss the state as did the Pittsburgh and Philadelphia organizations but that he was actually "the most hated man in Pennsylvania." 3 It was predicted the Vares and their allies would soon dominate the state, and the Mellons and Mr. Grundy would "go down." They would attract the money the Mellons and Mr. Grundy did.4 While neither 1 While Mr. Grundy had resigned as P M A president when he took the Senate seat, he remained closely associated with it in the public mind so that the two—Mr. Grundy and the P M A — a t the time were virtually synonymous. 2 New York Times, "J. R. Grundy Looms as Vare Successor," Lawrence Da vies, January 2 7 , 1 9 2 9 , Section V L , p. 1. 3 "Gentlemen A t the Keyhole: 'All or Nothing' " (political comment column), Collier's L X X X V , N o . 20 (May 17, 1930), 52. 4 Ibid.

The Pennsylvania Manufacturers' Association

274

one of these predictions or interpretations was completely correct in all of its aspects, both partially described the situation as it was. Mr. Grundy's political power did appear to decline rapidly and drastically between 1929 and late 1930. Originally, the Mellon group had supported Mr. Grundy and his candidate for governor, Samuel S. Lewis, after failing to reach an agreement with the Vare organization.1 Mr. Grundy was unable to compromise with the Vare organization because of differences over gubernatorial candidates. B y April of 1930, Samuel S. Lewis, the Grundy candidate had withdrawn from the race and it was assumed Mr. Grundy might do likewise. It was about this time that Herman Blum, a former associate of Mr. Grundy in the American Tariff League and a Philadelphia manufacturer who had originally advocated Mr. Grundy's appointment to the senate, suggested publicly that Mr. Grundy withdraw from the senatorial race: Senator Grundy's leadership in Pennsylvania would mean the end o f Republican control. He [Mr. Grundy] has antagonized the women by declaring that they have "adulterated the electorate." He is opposed by labor and all humanitarians. He does not have whole support from

manufacturers.2

In March of 1930, Mr. Grundy's opposition appeared in the form of James J . Davis, then secretary of labor in the Hoover cabinet. William S. Vare announced his withdrawal from the race in favor of Secretary Davis. 3 Also in the race for the senatorial nomination by the end of March was Professor Francis H. Bohlen of Philadelphia who ran on an anti-Prohibition ticket.4 The situation with the political activities of organized labor 1

See below, p. 229. New York Times, "Grundy Shifts Fire; Attacks Atterbury as Conspiracy Head," March 31, 1930, p. 1 (italics added). 3 New York Times, "Vare Withdraws From Racc for Senate; Will Back Secretary Davis Against Grundy," March 8, 1930, p. 2. * New York Times, "Pennsylvania Votes in Primary Today," May 20, 1930, p. 1. 2

The Methods Used by the P M A to Influence National Legislation

275

was somewhat enigmatic. While most of the large unions such as the U . M . W . of America supported the Davis-Brown ticket, 1 Mr. Grundy did have some public support from labor. Among these were several unions in the Associated Building Trades of Philadelphia who were affiliated with the Central Labor Union of Pennsylvania. Explaining his support of Mr. Grundy, Frank Feeney, international president of the Elevator Constructors Union said: " . . . an investigation of Mr. Grundy's record reveals that he had on innumerable occasions used his influence with his associated political friends to further the cause of measures protecting working people with Workmen's Compensation enactments." Also noted by Feeney were: . . his keen abilities in the intricacies of protective tariff, which means prosperity to the working people of our city and State." 2 While the Mellons—namely Andrew Mellon and William L. Mellon, his nephew—supported Mr. Grundy early in the campaign, and while Mr. Grundy was referred to authoritatively as the "Mellon candidate for Senatorial nomination," 3 there is reason to •doubt how much they actually supported him. The Mellons had difficulty with the Allegheny County organization, which backed Francis Brown for governor, as did the Mellons themselves.4 They had had difficulty with this organization before and over the same issue— Prohibition—the unpopularity of which attracted Allegheny County leaders to the "wet" Vare candidacy. 5 This factor may again have been decisive in swinging the Allegheny County organization away from the "official" Mellon candidate, Mr. Grundy, although both Davis and Mr. Grundy supported the enforcement of the Volstead Act. 8 Ibid., p. 2. Philadelphia Public Ledger, " 5 0 Labor Chiefs Indorse Grundy," April 16, 1930, p. 1 (italics added). 3 "Pennsylvania Politics," The Outlook, CLIV, No. 13 (March 26, 1930), 496. 4 New York Times, "Political Chaos in Keystone State," May 18, 1930, p. 2. 6 Walter Davenport "Beer and Vare Will W i n , " Collier's, L X X V I I , No. 20 (May 15,1926), 57-63. 6 New York Times, "Political Chaos in Keystone State," May 18, 1930, p. 2. 1 2

276

The Pennsylvania Manufacturers' Association

The Mellons had reason not to support Davis over Mr. Grundy because of the powerful position in the state political scene in which such a victory for the Vare organization would place them. There was always the danger that the Vare position on Senator David Reed, long a Mellon favorite, might not be favorable. 1 Nevertheless it was reported in May, shortly before the primary, that William L. Mellon, following Mr. George Wharton Pepper, would support the Davis-Brown ticket and not Mr. Grundy. 2 One of the best possible explanations for the alleged Mellon defection from Mr. Grundy appeared in an article by Walter Davenport in Collier's late in 1930. It was argued that Mr. Grundy's adventure in national politics as a senator in Washington, where his main activity was trying to obtain a satisfactory tariff bill, coupled with his blunt and devastatingly frank testimony before the Lobby Investigating Committee, had alienated him from many influential Republicans, especially in the West. " A purposeful man, Mr. Grundy, as careless of public opinion as a stuffed buffalo, was fearless and direct as a silver dollar." 3 His disagreement with President Hoover over tariff matters had alienated him not only from the Hoover administration leaders but from all Republican leaders who desired the renomination of Mr. Hoover. They feared that a Grundy victory would jeopardize Mr. Hoover's chances, and a Pinchot victory was feared for the same reason.4 Thus, Mr. Grundy's adventure into national politics as an active participant rather than advisor and financial aide had greatly harmed his political power in the state, at least temporarily. What is most significant about Mr. Grundy's supreme attempt to extend his personal influence and that of the P M A to the national legislative body is that he was defeated not by Democrats, labor 1 New York Times, "Mellons Support Grundy for Senate; Split Primary Aid," April 14, 1930, p. 1. 1 New York Times, "Pepper Endorses Davis and B r o w n , " May 7 , 1 9 3 0 , p. 5. 3 Walter Davenport, "Double-Cross Marks the Spot," Collier's, October 25, 1930, p. 12. 4 Ibid. Also New York Times, "Pennsylvania Votes in Primary Today," May 20, 1930, p. 1.

T h e Methods Used by the P M A to Influence National Legislation

277

groups, or social reformers, but by groups and interests within the very political party to which he had access. There are several possible explanations for this, some of which were given in the Davenport article. There are other equally valid explanations, the first of which being the fear among Republican organizations of what would happen in Pennsylvania Republican politics if Mr. Grundy's political power should be further enhanced by federal patronage. The second is probably the most important. The great issues upon which the Republican party of Pennsylvania had built itself were changing. While the various factions in the party had disagreed

as to which interest deserved most favored treat-

ment—manufacturers, the railroads, or utilities—all factions had been in agreement on the tariff. B y 1930, this was not altogether true. General Atterbury's failure to support the Republican gubernatorial candidate, Gifford Pinchot, and his resignation from the Republican National Committee was not, it was reported, due solely to his dislike for Pinchot and Mr. Grundy. The candidate he supported, the Democrat-Liberal John Hemphill, ran on a " w e t " ticket which appealed to General Atterbury. In 1 9 3 1 , however, when Atterbury criticized high tariff policies and some of Andrew Mellon's fiscal policies, it was evident that his disagreement was not only with the prevailing beliefs and policies of the Pennsylvania Republican party but also with the national party principles, somewhat symbolized in Herbert Hoover whom Atterbury opposed. Regarding General Atterbury's position and that of others like him, Frank R. Kent wrote in 1 9 3 1 : " A renominated Hoover, on a dry platform, means a far larger bolt by wet Republicans of the East, high up in party and financial circles, than in 1928. 1 , 1 In 1930, on the eve of the Republican senatorial primary in Pennsylvania, the New York Times prophetically warned: "Traditions 1 Baltimore Suit, " T h e Great Game of Politics," Frank R . Kent (editorial column), April 2 6 , 1 9 3 1 .

278

The Pennsylvania Manufacturers' Association

that have bound the voter to the machine do not exist today." 1 The tariff, it was believed, had no appeal to younger voters. The wet-dry issue was of greater appeal.2 Also in 1930, two articles appeared in the North American Review which were of significance to the tariff issue. In one, "The Tide of the Times," appeared the statement: " . . . the Old Guard have found themselves deserted on the tariff issue by the influential business element which once was their support." 3 The other article, written by James A. Farrell, then president of the United States Steel Corporation, and entitled, "Greater Prosperity Through Foreign Trade," speaks for itself.4 It would only be logical that Mr. Grundy, who had built his brief career in national politics almost solely upon high tariffs, should suffer politically from the change in opinion on the tariff which was taking place. The third explanation follows from the second. While there was disagreement among the leaders of Republican interests over the value of the high tariff, the average voter was turning to new interests. The Prohibition issue was becoming more important. The New York Times noted the great anti-Prohibition sentiment in Pennsylvania cities and suburban areas. The large vote in Pennsylvania for Al Smith, the Democratic candidate in 1928, was cited as a further example of the popularity of the anti-Prohibition feeling in the Republican stronghold of Pennsylvania.5 Coupled with this new issue was a rising feeling of "revolt," the Times noted, in the country and mining areas against the city political organizations or machines. This revolt was syphoned off in Pennsylvania into a 1

p

-

New York Times, "Pennsylvania Votes Primary Today," May 20, 1930,

2 Kenneth W . Payne, "The Tide of the Times," North American Review, C C X X I X , No. I (January 1956), 353 James A. Farrell, "Greater Prosperity Through Foreign Trade," North American Review, CCXXIX, No. 1 (January 1936), 35. * Ibid. 5 New York Times, "Political Chaos in Keystone State," May 18, 1930, p. 2.

The Methods Used by the P M A to Influence National Legislation

279

Pinchot victory. In the nation, however, it was reflected in a victory for the Democratic party and Franklin D. Roosevelt in 1932. THE P E N N S Y L V A N I A EMPLOYER — WAGE EARNER PROTECTION

JOB

ASSOCIATION

It has been apparent during the past few years that the P M A no longer has found the tariff to be a cohesive group interest. While probably a majority of the P M A members favor a continuation of high tariffs, especially those in pottery, glass, or textile businesses, there is apparently a number of P M A members of considerable size (and therefore who pay a large amount of dues) who do not share these views on the tariff. It has therefore been necessary for the P M A to adopt a new method of tariff lobbying. The new method has had to be relatively subtle. Since the tariff issue does not strike a congenial note with all P M A members, a new group outside the P M A had to be formed. The group was the Pennsylvania Employer—Wage Earner J o b Protection Association, founded in 1 9 5 1 , ostensibly by a leading P M A member, Mr. Roger W . Rowland, president of the N e w Castle (Pa.) Refractories and a member of the Board of Governors of the P M A . The other top officers of the Protection Association included Benjamin

M.

Weigand of Lancaster, a former vice-president of the Pennsylvania State Federation of Labor; David Williams, director of the Association, a former union organizer, and former deputy state secretary of labor and industry under Governor Edward Martin; and James E. Shade treasurer of the Association who was also treasurer of the PMA. The announced purpose of the Protection Association was the protecting of jobs and industries in Pennsylvania largely by advocating high tariff policies through its periodic bulletins. These bulletins were aimed at the Pennsylvania legislature and at Congress. The material contained in these bulletins was largely of an extreme nature and was similar to the sort of material published in the P M A Monthly Bulletins on the tariff that had been taken from

280

T h e Pennsylvania Manufacturers' Association

such sources as The Bristol Courier. It was more of a distinct propagandist nature and included direct attacks upon President Eisenhower for his tariff policies. It was this sort of attack upon the President that led the Philadelphia Inquirer, in 1955, to attack the late G. Mason Owlett, and to demand his replacement as Republican national committeeman from Pennsylvania.1 The Philadelphia Inquirer based its attack on Owlett upon their assumption that the PMA through the Protection Association was undermining President Eisenhower's policies. Ostensibly, the PMA supported the President, but, on the side, the Inquirer argued, Owlett was attacking him through this new tariff group. The significance of this method of influencing legislation is, of course, that it failed completely to accomplish much of anything for the P M A except bad publicity. Formed, in a sense, to satisfy some members' interests in a specific way that the P M A itself could not do, the Protection Association represents probably the death of Mr. Grundy's old tariff views as any kind of a cohesive issue upon which to base group action. At least in Pennsylvania, the issue no longer has enough appeal to give a group supporting it any appreciable strength. Ironically, what was once one of the great issues of the Republican party nationally as well as in Pennsylvania can no longer be fully supported by a group such as the PMA whose founder and mentor, Mr. Grundy, was once regarded as the "high priest of the high tariff." It is difficult to evaluate fully the use of a group like the Protection Association as a method of influence by the PMA, because the PMA's officers disclaim any close connection with it. In February of 1955. Mr. Rowland stated that the Protection Association was supported by contributions from labor organizations and individual industries. He denied that the PMA controlled or supported it, but he admitted that many PMA members belonged to it and supported it financially.2 1 2

Philadelphia Inquirer, February 22, 1955, p. 3. Philadelphia Inquirer, op. cil., p. 3.

T h e Methods Used by the P M A to Influence National Legislation

281

The P M A Secretary John Seeton also disclaimed any connection with the Protection Association. He stated that Mr. Rowland had very little connection with it aside from lending the use of his name. Mr. Seeton also suggested that he felt the Protection Association was " a losing battle." He quoted another P M A official as having commented in reference to the J o b Protection Association " . . . when you put up a flag and no one rallies around it, you had better take it d o w n . " 1 In conclusion, it may be stated that when a small interest group— in this case, those interested in high tariffs—-is not strong enough in the larger group—the P M A , for example—to have its policies adopted by it, there is little likelihood that it can be stronger working outside the larger group. Plainly, there isn't enough support for the policies o f the smaller special groups. If a manufacturer is unable to find support from other manufacturers who share many of his interests for a high tariff policy, it is unlikely that he will find support from other outside groups with whom he has fewer interests in common. 2

1

Personal interview with M r . John H. Seeton, March 22, 1955. See T r u m a n , op. cit., pp. 39—41 as to h o w associations are formed. T h e experience o f the J o b Protection Association appears to substantiate his thesis. 2

15 A Summary and Analysis of all the PMA's Methods to Accomplish Its Legislative Goals (pertain history of PMA and governor,

continuing characteristics have emerged f r o m the the P M A that describe the general methods used by the its leaders in gaining access to the General Assembly, the and to senators f r o m Pennsylvania. IMPORTANCE

OF A FRIENDLY

GOVERNOR

First, the P M A and its leaders have been more interested in a friendly governor than a friendly senator f r o m Pennsylvania. Since the primary interest of the P M A and its leaders f r o m Mr. Grundy to Mr. Malone has been the protection of Pennsylvania manufacturers from undesirable legislation and the promotion of a climate favorable to the continued development of industry in Pennsylvania, it was more necessary to have a friendly governor and friends in the General Assembly than a friendly senator in Washington. Thus the P M A leaders, in their political dealings in the state, have always been willing to compromise on the senatorial candidate in order to obtain a friendly gubernatorial candidate. PMA Never Demands Complete Loyalty From a Candidate. Second, in supporting a candidate for governor or the General Assembly, the P M A leaders, and Mr. Grundy especially, have never demanded complete loyalty f r o m the candidate. They wanted access but never expected control. W h e n Mason Owlett said that he and the PMA support the "sound" man w h o is among the candidates, he was carrying on a successful Grundy tradition. In the first place he supports a man w h o already has some backing, either by a political organization or by other interest

283

A Summary and Analysis of all the PMA's Methods

groups. The candidate thus cannot be called purely a P M A or Grundy-Owlett man.1 He would be, rather, a man whose economic and social philosophy is conservative and who has no ties with labor or other reform groups. He would not, however, be expected to agree with Grundy and Owlett on all legislative matters. Finally, this "sound" candidate will undoubtedly have a following in his community. He will be a man of respected status and, in some communities, a man whose views quite accurately reflect the general economic and political philosophy of his constituents. Certainly Mr. Grundy and Mr. Owlett did support certain candidates that had little or no other organizational backing in the Republican party. Such a man was the independent Pinchot, but even he had the support of some small up-state county organizations and he had obviously a great fund of popular support from the upstate area behind him. John Fisher, while regarded as a Grundy man, had other organizational support, especially from the Mellons. Probably only Mr. John Kunkel, Pennsylvania congressman from the Eighteenth District, who ran in the senatorial primary in 1950 against Mr. James Duff, came close to being a purely P M A or Grundy-Owlett candidate. His running mate, Mr. Jay Cooke, however, could not be so regarded. Maintain

a Position of Maneuverability

in Relation

to other Interests in

the Party. Coupled with the characteristic of expecting access but not control is a third, and that is the maintenance of a position of maneuverability in relation to other interests in the Republican party. Mr. Grundy was always willing to compromise but if it were apparent that a candidate had allowed access to himself to be gained by a competing powerful interest group or a powerful political association, there could be no compromise. This was especially the case with the Vare organization in Philadelphia. The Vare organization was backed by the eastern Pennsylvania traction interests—utilities, electric, gas, and water—and the Pennsylvania Railroad. These groups had never evidenced great 1

Personal interview with G. Mason Owlett, October 19, 1953.

The Pennsylvania Manufacturers' Association

284

sympathy for the interests of their fellow businessmen, the small manufacturers. Frequently their interests clashed, especially regarding such matters as electric, water, and gas rates not to mention railroad rates. Then, regarding the matter o f taxation: all were interested in keeping taxes away from themselves and w e r e not overly interested in what other groups had to bear the burden as long as it was not themselves. Mr. Grundy in return fought long and hard against a capital stock tax and a corporate net income tax, but he showed little interest in preventing an anthracite coal tax, a gasoline tax, or a low tax on the gross receipts o f utilities, railroads, and traction companies. It might appear that this attitude contradicts what has been said regarding M r . Grundy's not demanding complete loyalty. W h i l e M r . Grundy rarely sought a candidate w h o w o u l d be exclusively dominated by himself, he preferred, with great logic, not to support a candidate w h o already had great support f r o m other p o w e r f u l political or economic interests. Thus he could never support candidates already backed by the Vares or the Pennsylvania Railroad. Such candidates would not need Mr. Grundy's aid—political, moral, or financial—and thus would not be obligated to grant access to him and the interest group he represented. Such candidates w o u l d not necessarily encourage legislation that would be unfavorable to the manufacturing interests. Nevertheless, if a situation arose where a decision had to be made between a policy favored by M r . Vare or General Atterbury o f the Pennsylvania Railroad, and one favored by M r . Grundy and the manufacturers, there w o u l d probably be little question as to which policy would be followed. M r . Grundy, therefore, turned away f r o m such candidates to those w h o w o u l d be willing to obligate themselves to him to some extent because they needed his support. Thus, the strange alliance between M r . Grundy and Pinchot could occur. Pinchot allowed patronage to be distributed by those local organization leaders that Mr. Grundy favored, and, in return, M r . Grundy never tried to dictate to Pinchot in any w a y so as to prevent

A Summary and Analysis of all the P M A ' s Methods

285

him from presenting any of his governmental or social reform programs. The Grundy-Pinchot alliance was based upon political realities. Mr. Pinchot had much popular following in the up-state rural counties. These areas were " d r y " and they tended to distrust the political organizations of the large cities. Mr. Grundy's economic and political views were widely shared by the up-state populace and his closest political contacts were with those organizations in upstate counties. It was thus natural that the two should be drawn together amongst their common supporters and against the common enemy. The relationship functioned on the basis of favors. Pinchot needed Grundy's support and granted him continued access to the state government in return. Officials whose jobs came from Governor Fisher, the former Governor and ally of Mr. Grundy, were retained. Some of Pinchot's program was not opposed by Mr. Grundy and some of it was, but it was not until his second administration that Pinchot showed much interest in bucking Mr. Grundy's political friends in the General Assembly to put through any legislation that could be termed favorable to labor interests. The relationship between Mr. Grundy and the so-called Mellon organization of western Pennsylvania also illustrates this important characteristic of Mr. Grundy's political activities. Mr. Grundy's relationship with the Mellon group was much friendlier, largely because of person friendship with Andrew Mellon and because the Mellons were just as concerned with national politics as with the state political scene and consequendy were more apt to compromise with Mr. Grundy on state matters. Also, there was a closer kinship of interests in that the Mellon interests did involve manufacturing, albeit on a much larger scale than Mr. Grundy's. The great difficulty with the so-called Mellon organization was that they rarely were able to control it effectively. B y the end of the 'twenties, they were hardly able to exercise much control at all and, as the new interests (such as the anti-Prohibition feeling then prevalent in cities) increased, the importance of the Mellons' financial

286

The Pennsylvania Manufacturers' Association

support decreased, and the Allegheny County organization moved closer to the Vare group in Philadelphia. Ironically, however, while both groups supported the candidacy of Davis against M r . Grundy in 1930, a working alliance was not then and never has been formed between Philadelphia and Pittsburgh, even under the present Democratic leadership. Maneuverability with regard to the other groups in the Republican party, therefore, dictated temporary alliances more frequendy based upon political realities than upon congeniality of economic interests or general political attitudes. Differences in economic interest were and continue to be a motivating factor in the actual maneuvering of groups for positions behind candidates. Purely political considerations, however, have been and continue to be more important. M A I N T A I N A B A L A N C E OF P O I N T S OF A C C E S S TO T H E STATE

GOVERNMENT

A fourth characteristic of the political methodology of the P M A ' s leaders has been to maintain a balance of points of access in the Pennsylvania government. Attention is paid to all points of access, representatives, state senators, governor, and even

appointive

officials, especially the insurance commissioner. The reason is obvious: failure of one point of access may be then offset by access to another point. For example, an unfriendly governor can be offset by a friendly leadership in the Senate to guarantee access to committee chairmen. An unfriendly House, or what has occasionally been the case, a House controlled by the Democratic party, can be offset by access to Senate leadership. An unfriendly Senate may be offset by friendly leadership in the House or by access to the Governor. The governor's veto power can be almost absolute, and therefore can serve as an excellent weapon against unfriendly leadership in either branch of the General Assembly. A corollary characteristic has been the fact that seldom did the P M A have friendly leadership in the House and the Senate and a

287

A Summary and Analysis of all the P M A ' s Methods

friendly governor all at the same time. 1 The P M A , however, always had access to some point in the government (except during the second part of the Earle administration) and thus was always in a position to influence legislation. USE N A T I O N A L P O L I T I C S TO S T R E N G T H E N POLITICAL

STATE

POSITION

The fifth and final characteristic has been to use national politics, including access to senators f r o m Pennsylvania, to strengthen the P M A ' s political position in the state. Mr. Grundy never concerned himself much with national legislation except the tariff, consequently his main interest in the senator from Pennsylvania was his position on the protective tariff. As long as the candidate favored high tariffs M r . Grundy

could accept him, all other things

being

equal. A m o n g these "other things" was the senator's patronage power in the state and the political position he held in the state and what he did with it. This was quite another matter, and basically a more important one. Mr. Pepper and M r . Grundy failed to be close political allies when the former ran for the Senate not because o f M r . Pepper's tariff views but because of his state political activities and those groups whose support he accepted in the state. James Davis also was opposed by Mr. Grundy for senator not because o f his tariff views but because o f the group that backed him in the party. Mason Owlett carried on the tradition in his fight with Mr. Duff. Probably one of the leading reasons w h y M r . Grundy was not so concerned about national legislation and thus about the senators f r o m Pennsylvania was that he didn't have to be. During the 'twenties the most important legislation affecting small manufacturing establishments, except for the tariff, was at the state level. Also M r . Grundy's fund-raising activities f o r the national Republican 1 Only during part of the Fisher administration in 1929 did the P M A have friendly leadership in the General Assembly and a friendly governor.

288

The Pennsylvania Manufacturers' Association

party gave him as much access as he needed to influence tariff policies. In the 'thirties, the situation somewhat changed and has remained so today. While the P M A has become more interested in national legislation because Congress has taken over so many of the subjects formerly limited to the states, they are even less in a position to do anything about it. They are no more interested in the senators from Pennsylvania than they were before. That is, they always support a candidate but that support can always be compromised in order to gain a friendly governor and the state political background of the prospective senatorial candidate is still a more important factor than the candidate himself. For example, Mr. Grundy backed Mason Owlett for the Senate in 1938 against James J . Davis, ostensibly because of Owlett's tariff views. Since these actually weren't very different from Davis', and inference cannot be avoided that Mr. Grundy was more interested in seeing Davis defeated so that he might thereby eliminate his potential state patronage power which could be used to favor political organizations unfriendly to the PMA. 1 Owlett and the P M A remained interested in representatives from Pennsylvania to whom it was easier for them to gain access and it is through them that they maintain access to Congress. This has been perhaps the wisest policy for the P M A and its leaders to have followed since an up-state representative is more likely to be a Republican and is more apt to be re-elected over a period of years. He will thus gain the needed seniority for great influence in the House. Such a man has been the PMA's friend, the late Representative Richard Simpson of the Seventeenth District.2 The P M A is no longer in a position to offset lack of access to Congress with Mr. Grundy's personal access to top Republican leaders through fund-raising, but they have replaced this with their 1

See Chapter 12. Representing the up-state central Pennsylvania counties of Bedford, Fulton, Huntingdon, Juniata, Mifflin, Perry, Snyder, and Union. 2

A Summary and Analysis of all the P M A ' s Methods

289

support of certain factions in the national Republican conventions in the nominating of certain candidates. The 1948 and 1952 conventions, especially the former, exemplify this. There is the doubt, however, whether the actions of Grundy and Owlett were motivated primarily by a desire to gain access to certain national Republican leaders such as Mr. Dewey or the late Senator Taft or whether they were more interested in countering the influence of certain Pennsylvania Republican factions, those following James Duff and Governor Fine, in particular. Both motives were undoubtedly involved but the latter probably prevailed. Mr. Grundy's one personal entrance into active state and national politics probably best explains why it remained unique, never to be repeated again. Mr. Grundy's personal political power in national Republican circles through fund-raising had enhanced his political influence in the state but this was always done on a personal behindthe-scenes basis. Mr. Grundy's special type of political activity and his personal economic and political philosophy, while a source of strength and support at the state level, were never an asset at the national l e v e l .

His active entrance into national politics and his defeat by James J . Davis for the Senate candidacy in 1930 brought his political power from a very high to a very low point in a very short period of time. He had been extremely influential both as a private citizen and as a Senator in writing the Smoot-Hawley Tariff. In Pennsylvania, a personal friend, his hand-picked candidate, was governor; and yet in the 1930 election, he was soundly defeated in the senatorial primary. The reason was simple. His ideas actually favored a special interest, not only economically but geographically as well, and the Senate of the United States and the national parties that aspired to control it, the Republican party included, were national in scope. While Mr. Grundy antagonized various interests in Pennsylvania within his own party, it was only natural that, moving into the national political area, he should antagonize much wider and more P.M.A.-K

290

The Pennsylvania Manufacturers' Association

varied interest groups, still within the Republican party. As always, M r . Grundy "did what came naturally." 1 THE RESULT

OF P M A

LEGISLATIVE POLICIES AND

PMA HAS D E V E L O P E D I N T O A P O L I T I C A L

METHODS:

ORGANIZATION

The combination of the P M A ' s legislative policies and M r . Grundy's political activities has presented interesting and unique results. The first is that the P M A has developed along the lines of a political organization (such as a political party) in that the local organizations were based more upon political interest rather than economic interests. The trade associations, however, that were affiliated with the P M A were developed on the basis of shared economic interest. The members of the Pennsylvania Association of Dyers and Cleaners for example, were all engaged in the business of dyeing and cleaning, clothes. They were drawn into an association largely because they were all engaged in the same type of economic enterprise. The local manufacturers' association, on the other hand, was organized on a geographical basis with a political intent. The purpose was to organize the manufacturers of a particular county or neighboring group of counties not primarily because of the binding interest of geographic proximity, and certainly not solely because of the congenial interest oj similar enterprises, but because from each geographic area, such as a county, representatives were sent to the Genera! Assembly in Harrisburg to make laws. M r . Grundy and the P M A leaders were then interested primarily in a local or country level manufacturers' association, because potentially it was in a better position to gain access to the 1 " B e e r and Vare W i l l W i n , " Collier's, M a y 1 5 , 1926, p. 65. " H e [Grundy] came into office at a bad time, when upset business conditions made the voters resdess. H e personified, as no one else had, the callousness of tariff logrolling, the indifference of high duty grabbers to the pressure of high costs upon the consumers, and, in the eyes of the West, the determination o f the East to rule or ruin the Republican Party. His was the 'after me the deluge' role." Also, from editorial in the New York World, quoted in the Literary Digest, December 28, 1929 (op. cit.), "Senator Grundy will be worth thousands and thousands of votes to the Democrats and insurgents next fall."

A Summary and Analysis of all the P M A ' s Methods

291

local political organization and the local representatives in Harrisburg. The PMA

has Become a Political Power Itself. The second result has

been that the P M A , largely because of the political activities of two of its leaders, Mr. Grundy and Mason Owlett, has grown into a political power in itself. Technically, this popular impression is incorrect as the P M A , as an association, has never, and still does not make financial contributions to political parties or campaigns. Nevertheless, individual members do make such contributions and otherwise participate in the activities of the Republican party. Mr. Roger Rowland, for example, a vice-president of the P M A and the two insurance companies, has been the Republican county chairman of Lawrence County. Mr. Andrew J . Sordoni, a member of the P M A Board of Governors, has been a close friend and supporter of Governor Fine and was Secretary of Commerce under him. 1 It can be argued that Mr. Grundy's and Mason Owlett's urging of businessmen to participate in politics more actively has not been aimed at giving the P M A itself a definite political purpose. Nevertheless, since the P M A has been organized primarily along the line of political interests and its leaders and some of its members have been politically active in political party activities in both parties (especially the Republican party), it is quite natural that the P M A became regarded as a political power in itself. Thus, the P M A as an association, while it contributes no financial aid to political activities, has come to be regarded as a political force in itself and its leaders today admit that situation and are quite willing to use it to promote the interests of the Association and its members. The P M A , in other words, admits today that it "is in politics," albeit in the interest of its members. 2 PMA

has Become Closely Associated with the Republican Party. The

third result has been that the P M A has become very closely associated with the Republican party nationally and locally, although its 1

Time, "President Maker?" LIX, No. 26 (June 30, 1952), p. 22. All members of the P M A organization interviewed readily admitted that the P M A was "in politics," and in the interest of its members. 2

P.M.A.-K*

The Pennsylvania Manufacturers' Association

292

influence has been and remains much greater over the state organization. While Mr. Grundy always claimed that the P M A was nonpartisan, and even though his successor as president of the P M A , the late Honorable John Flynn, was a Democrat, the P M A in the popular mind was always closely linked to the Republican party of Pennsylvania. This was because of Mr. Grundy's political activities which were always involved with the Republican party at the state and national level. During the 194.0's, P M A leaders publicly praised the Republican party as the only political party in the United States that could be supported if "traditional American liberties and methods" were to be restored. When Mason Owlett was the P M A president, he was also a member of the National Republican Party Committee and a former member of the National Executive Committee. The Association could then no longer claim to be nonpartisan; it then and does today officially support the Republican party. This, of course, does not mean that all P M A members are Republicans or must become Republicans; it does mean, however, that no one could remain as a member of the P M A or become a member without being fully aware that he was associating himself with a group committed to the support of the Republican party. PMA

has not always been able to influence effectively the Republican

Party of Pennsylvania. The fourth result has been that while the P M A has become closely associated in the public mind and in actuality with the Republican party of Pennsylvania, it has not always been able to maintain great influence over the party even though it has always had access to it both nationally and at the state level. Mr. Grundy has always had access to the state Republican organization through his access to various local organizations, but he has never completely dominated it in the fashion of the late Senator Penrose. Even after the decline of the Mellons

and

the

Vares,

Mr.

Grundy was certainly a leading political leader but not the dominant one. During the time the Republican party was out of power in the

A S u m m a r y and Analysis of all the P M A ' s Methods

293

state, Mr. Grundy came closest to being the dominant Republican leader. Mr. Harvey Taylor, then his political ally, was state chairman, but even then there were many local factions who were not following Mr. Grundy's lead. Many of these centred temporarily around Mr. Pew and Governor Arthur James. While Mr. James was more Mr. Pew's candidate, Mr. Grundy had access to him and Mr. James was friendly to some of Mr. Grundy's policies but not all of them. Mr. Grundy, in other words, had not the access to and influence over Governor James that he did over Governor Fisher. The relationship with Governor Martin was closer but other factions remained. Many of these dissenting factions rallied around Governor Duff who came closer to destroying Mr. Grundy's and Mason Owlett's access to the party in Pennsylvania than anyone else. The DuffGrundy-Owlett battle was not fought over legislative policy or "progressives" vs. "reactionaries" but over whether or not the Grundy-Owlett-PMA group was to continue to have access and influence over the various local organizations that make up the Republican party of Pennsylvania. The Grundy-Owlett group did not, in this writer's opinion, demand complete domination as Governor Duff accused them of doing. They demanded access but were willing to compromise. This is evidenced by their willingness to ignore the senatorial battle if Governor Duff would agree to a "harmony" candidate for governor. Jay Cooke, who received support from the Grundy-Owlett group, was never closely associated with them in the past and could never have been fairly termed a "Grundy man." The Grundy-Owlett group had to fight because they had too much to lose if Governor Duff was not willing to compromise. They had placed everything on the Republican party and the denial of access thereto would be disastrous because they could not turn to the Democrats. Governor Duff won the Senate seat but he failed in his attempt to deny access to the party organization to the GrundyOwlett-PMA group. Governor Fine acceded to their return to a

294

T h e Pennsylvania Manufacturers' Association

position of access and influence, largely as a matter of accepting political realities. Today, the PMA has access to the Republican party of Pennsylvania through its access and influence over various local organizations and because it is the PMA—a political force in itself. While its position in party councils is not completely predominant, it is a powerful faction and its views are respectfully considered. A recent Republican candidate for governor, Lloyd Wood, a former Duff ally, had the support of Senator Duff and of Mason Owlett, speaking for the PMA. The present state chairman, Mr. George I. Bloom, is friendly to the PMA as is Mr. Jay Cooke, Pennsylvania's national committeeman. There are several reasons why Mr. Grundy and the PMA have had such variable influence onver the Republican party in Pennsylvania and the state government. The two most important reasons are the continuous existence of other active political interest groups and associations and the development of "potential" interest groups. COMPETITION

WITH OTHER INTEREST

GROUPS

At no time during the history of the PMA was it the sole political interest group with access to the Republican party organizations in Pennsylvania. While with some local organizations the PMA may have sole or dominant access, at the level of state government this access was always shared with other groups. Conditions of the times, of course, have always determined how much competition or co-operation there would be between the PMA and other interest groups. Occasionally, the competition has been purely political, that is, a clash of interests over political domination virtually for its own sake. Such competition involves few if any economic interests; in fact, the economic interests may well be congenial. An example of the existence of this purely political interest can be seen in the relationship of the PMA and certain county organizations. The Montgomery County Republican organization, for

A S u m m a r y and Analysis o f all the P M A ' s Methods

295

example, has frequently favored candidates for governor and senator who were opposed by P M A leaders. A recent example was the DufF-Grundy-Owlett fight in 1950 when Mr. Fred Peters, then county chairman, was emphatically on Mr. D u f f ' s side as a " B l u e Bell B o y . " Nevertheless, Mr. Peters' relations with the Manufacturers' Association of Montgomery

County, a

PMA

affiliate, had always been close and friendly. 1 The economic interest groups behind both tend to be the same. The same situation existed in the Pew-Grundy relationship. Economically, both represented a similar political philosophy and similar economic interests; competition between the two for access to and influence over various local organizations and the government of Governor James cannot solely be explained in terms of competing or even differing economic interest groups. Even if the differences regarding the protective tariff are granted, 2 the fact that Mr. Pew's interests involved larger industry and the oil business, which was regarded as a utility under Pennsylvania tax laws, was not the only motivating reason or interest behind most of his political actions. N o r was the difference between Mr. Pew and Mr. Grundy a matter of a conflict of political philosophy. Neither could be termed more "progressive" or "liberal" than the other; both, in fact, were wedded to the Republican party and to the cause of restoring it to power in the state and in the nation. While there was the factor of somewhat different economic interests in their relationships, especially reflected in the efforts made by both to control the Senate in 1941, they never appeared as the most important motivating factor. In later years, Mr. Pew and Mr. Grundy united behind the same candidates which again would seem 1

W h i l e M r . Peters has not always had high regard for M r . Grundy's political machinations—because he believed M r . Grundy attempted to tell individual members of the General Assembly how to vote—he is nevertheless regarded as always having been friendly to the P M A in M o n t g o m e r y County by Owlett. Personal interview, June 23, 1954. 2 M r . P e w was not in favor of high tariffs. Owlett attributed this to the Sun Oil C o m p a n y ' s foreign trade. Personal interview, June 23, 1954, Mason Owlett.

296

The Pennsylvania Manufacturers' Association

to demonstrate that the difference in economic interests behind them, while of some import, was not the most important motivation behind their political actions. On the other hand, there have also been genuine clashes of economic interests. Legislation that would benefit the small manufacturer may not equally benefit and may actually harm the large industrialist, the railroads, or other utilities. The long conflict between the Vare organization and Mr. Grundy represented a clash of several interests, many of them predominantly economic in nature. There was a genuine economic conflict between the interests of the Pennsylvania Railroad, the traction interests, the light, power, water companies and Mr. Grundy's textile interests and small manufacturers. This clash was especially in evidence on tax legislation and the regulation of all utility rates. Yet the clash was also one of political interests. While the Vares accepted support from the Pennsylvania Railroad and the Philadelphia utilities, their main interest was the continuance of their jobs and thus of their political power. When William S. Vare pushed old age pensions, it would not seem unreasonable to conclude that he was acting in his own political interest vis-a-vis the Philadelphia and the Pennsylvania voter rather than as a representative of certain economic interests represented by the Pennsylvania Railroad. Likewise, the Duff-Grundy-Owlett conflict has both the economic and purely political interests involved. Unquestionably, Mr. Grundy and Owlett and PMA members had reason to be distressed with some of Governor Duff's legislation. The burden of the capital stock tax was not lifted and the Duff program would and did mean that Pennsylvania taxes would have to be expanded and raised in the future. As to what specific economic interest group Governor Duff was favoring, certainly it was not labor unions or the Mellon interests, although he was supported by Mr. Richard K. Mellon of Pittsburgh. The irony of this situation is that the PMA leaders reluctantly supported the Duff program and accepted the continuation of the

297

A S u m m a r y and Analysis o f all the P M A ' s M e t h o d s

capital stock tax. They did not openly attack the Duff appropriations and administration in general until he declared his intention of denying them continued political access. DEVELOPMENT

OF N E W I N T E R E S T

GROUPS

The second reason that the P M A has not always been able to maintain great influence over the Republican party in Pennsylvania is because of the change in strength o f older groups and the development of "potential" groups. This involves interests that are neither exclusively political or economic. They can be simply described as ideas and beliefs shared by any number of people. Those who share such ideas or beliefs are rarely organized. Those w h o share the same idea or belief—those who belong to a potential interest group—are rarely conscious o f being a member o f such a group and do not act as if they do. Nevertheless, the result of their action upon their belief or ideas has the effect o f group action. 1 The history of Mr. Grundy's P M A and his o w n political activities exemplify this well. Between 1920 and the present, there have been several changes in the old group balances and "potential" interest groups have emerged as active political interest groups. In other words, between 1920 and the present, certain industries have declined, new ones have appeared, and others have grown larger. An economic depression occurred and the Democratic party came to national power in 1932 for twenty years, and with it brought an economic and political philosophy not shared by Mr. Grundy. Labor unions, in 1920 hardly considered a major political interest group or a major political power, have become so today. More people think about government in a way that they did not think about before. The idea of government acting as a welfare agent as one o f its inherent responsibilities has gained wide acceptance. This does not, o f course, mean that all Americans or even a 1 Bentley, op. cit., p. 446. As Bentley has pointed out, these underlying g r o u p s are affected b y the organization and discussion groups, such as associations, and affect them in turn.

298

The Pennsylvania Manufacturers' Association

majority of them have become convinced " N e w Dealers" as such between 1920 and the present. Nor does it mean that all of those people who today regard governmental functions differently from the way they or others regarded them in 1920 will always feel that way. This change in viewpoint, however, has had an effect upon the older groups, such as the PMA. Some of these groups have been destroyed by these changes, and others, like the PMA, have had to accept them and compromise with them. Mr. Grundy is no longer the great money-collector for the Republican party, either at the state level or national. The present PMA members represent a formidable economic group in terms of financial value but there are others in the state who can command larger financial resources and, in the nation, there are groups who can command financial resources much greater than Mr. Grundy and the PMA. N o doubt the Hatch Act limiting the amount of contributions from individuals to political campaigns has effected Mr. Grundy but this has not been a great factor. In a very short period of time, for example, Mr. Joseph N. Pew, Jr., had personally spent about two million dollars on the Republican party. 1 Simply stated, Mr. Grundy couldn't afford this. There have been other and, it appears, more important factors in this change of interest groups. The general interest group that opposed individual men contributing large sums of money to political campaigns in return for favors was of considerable size in the late 'twenties and is of greater size today. While certain wealthy individuals and interest groups continue today to contribute to both political parties and while some favors may be obtained, the whole procedure is more restrained, less publicized, and the favors are of a general nature and therefore often indistinguishable, in contrast to those of the past. For this reason, men like Mr. Grundy and Mr. Pew and groups like the PMA have often been regarded as political liabilities. While 1 According to the Philadelphia Record, January 14, 1941, p. 1, the Philadelphia Republican Committee alone was indebted to Mr. Pew for $500,000.

A S u m m a r y and A n a l y s i s o f all the P M A ' s M e t h o d s

299

their money might have been desired, the loss in votes such money might entail would reduce greatly if not eliminate the value o f the financial aid entirely. T h e rise then o f new interest groups has not been to the advantage o f the P M A . Their political position has been challenged by new groups not only in the Republican party but especially in the rise o f the Democratic party to a strong position in Pennsylvania. SUMMARY

AND

CONCLUSION

The P M A today faces the same problem that exists for all groups that have engaged in partisal political activity in order to promote or protect an economic interest. Unlike many groups today that tend to play all sides of the political spectrum, the P M A has relied heavily on only one party. In so doing, it has had to compete with other groups that desired access to and influence over the Republican party in Pennsylvania. This was especially true w h e n the Republican party was at the height o f its power in Pennsylvania in the 'twenties. Significantly, only when the Republican party has failed to control the governorship, as it did under Governor Earle, did the P M A and its leaders come close to playing a dominant role in the party. Such a situation exists today. N o w that the Democrats are in control o f the governorship in Harrisburg, the P M A seems again to be playing a dominant role in the Republican party. This enables it to continue having substantial access to the House and Senate, especially since the Republicans are in a majority in both houses. There is still a sharing o f access with other interests in the Republican party, especially other business interests as the oil and gas industry, the Pennsylvania Railroad, and other utilities. There is probably, however, more agreement between these groups and the P M A than ever before. The working relationship, for example, between the P M A and the Pennsylvania Railroad is quite close today. 1 1 Personal i n t e r v i e w w i t h G . M a s o n O w l e t t , J u n e 23, 1954. O w l e t t e x p l a i n e d that his personal relations w i t h M r . James S y m e s , then president o f the P e n n s y l v a n i a Railroad, w e r e quite close and cordial.

300

The Pennsylvania Manufacturers' Association

The explanation for this probably lies in the fact that their mutual political opposition is more formidable than any differences they have amongst themselves. This situation points up the dilemma the PMA must face in the future. Its leaders, especially Mr. Grundy, chose to create an association (albeit to protect a legitimate economic interest group) that has become political in purpose and a political power in and of itself. They have chosen, probably inevitably, to link it closely to a political party. Today if that party, the Republican, is to be dominant in Pennsylvania politics as it was in the past, it must attract to it other groups. Undoubtedly, the interests of these other groups will clash with those of the PMA. The PMA has been able to avoid this competition with other strong groups in the Republican party only when the party has been out of power in the state. The risk involved here is, of course, obvious. If the party is completely out of power in Harrisburg, the PMA loses all access to the state government even though it may play a more dominant role in the Republican party under such circumstances. To make the situation worse, the Democratic party will probably remain a formidable force in Pennsylvania. This means that if the Republicans are to win the governorship in the future, they must attract the groups lost in the last gubernatorial election. The PMA, if it wants the party to win, will then have to compromise with these groups and share party leadership. Neither situation can be completely advantageous to the PMA; that is its dilema, and, the PMA must learn to live with it for the future in order to survive successfully.

i 6 Conclusions: PMA Success or Failure and Its Future B e f o r e drawing any conclusions about the past success or failure of the Pennsylvania Manufacturers' Association, or making any predictions regarding its future, a few concluding assumptions regarding its founding and organization should be stated and examined. PMA'S

FOUNDING

AND

ORGANIZATION

The most significant factor emerging from the founding of the PMA is leadership—in this case, the personal leadership of one man, Mr. Joseph R. Grundy. While all early and later members of the PMA presumably had interests in common, nevertheless, the igniting role was that of Mr. Grundy. Leadership has always been recognized as the key factor in producing and maintaining group cohesion. Interest groups of various sorts have, in the past, been known to develop around one dynamic personality. This has been particularly true of some political party organizations. The PMA experience demonstrates the importance of personal leadership as the leading force in bringing an organized association into existence. While their shared interest did produce a general interest group of Pennsylvania manufacturers, some of whom had formed small trade associations, dynamic personal leadership was apparently required to bring about a specific organized association such as the PMA. This personal leadership, exercised by Mr. Grundy and his successors, has always appealed to the shared interest of PMA members, and has provided them with special services. Its

302

T h e Pennsylvania Manufacturers' Association

continuous exercise has therefore been largely responsible for the continued successful maintenance of the P M A . The second factor that has been in evidence in the growth o f the P M A is that those who manage and operate this organization constitute a special interest group in themselves. Mr. Grundy and Mason Owlett urged businessmen—PMA members—to participate actively in politics. Some have done so but apparently not nearly enough. Consequently, the P M A has functioned as a middleman, or intermediary, between its members and members of the Pennsylvania state government. Mr. Grundy himself was such a middleman although he had definite personal economic interests. He was thus, in a sense, the businessman active in politics to protect his economic interests. Mason Owlett, on the other hand, a lawyer by profession, was more of the professional middleman in that he spent much of his career in politics. While he had some business interests, he was not a manufacturer. He could be more aptly, if less gracefully, termed a professional politician. His primary interest thus might reasonably have been described as that of professional lawyer and politician serving a specific economic interest in the political area because he probably believed in that interest. The function of this special interest group of the leaders, managers, and operators, so to speak, of the P M A as an organization, is therefore that of the middleman. Since their basic interest is to maintain their jobs, it is definitely in their interest to be good middlemen—to serve well the interests of P M A members. T H E P R O B L E M OF THE S P E C I A L I N T E R E S T G R O U P PMA O R G A N I Z A T I O N

LEADERS AND

OF

MEMBERS

The first problem that may arise from the existence o f this special interest group of the P M A organization leaders and members is that they may try to create a need for themselves. They may do this in a manner that would not be in the best interest of the members of the P M A whom they presumably represent and for whom they work.

Conclusions: PMA Success or Failure and Its Future

303

Before concluding whether or not this has been the case, conclusions regarding several other aspects of this situation must be reached. The Organization Interest Group as a Service and as a Promotional Organization. In 1953 the P M A secretary, in two separate speeches, called the P M A a "service organization" and a "promotional organization." As a service organization the P M A must provide useful services for its members, the most unique of which was, as Mr. Seeton noted, the "legislative service." A less attractive name for this P M A activity would be "lobbying." As a promotional organization, Mr. Seeton told members of the P M A organization—its employees—that they must keep things "astir," in order to show present and potential P M A members that it is actually needed. Mr. Seeton seemed to imply further that while people tended to gravitate or join with others who had interests congenial with theirs, more specialized attractions were needed to draw them into highly organized associations such as the P M A . He noted several important reasons why men join groups like the P M A and reasons w h y they do not. 1 All of these reasons and interests had to be kept in mind by P M A leaders in appealing to prospective members for the association. The existence of this separate organization interest group leads to the irresistible inference that in promoting the P M A they are protecting their own jobs as managers and employees of the P M A . Their promotional efforts are complicated, as Mr. Seeton also pointed out, by the existence of other associations who compete with the P M A for the "competitive organization dollar." This situation—the development of a separate organization interest group—carries with it another problem: H o w can it be determined whether the association leaders are acting to promote the genuine interests of the Pennsylvania businessmen they presumably represent or to promote their own group interests as managers and employees of the P M A » 1

See Appendix, note 1.

T h e Pennsylvania Manufacturers' Association

3°4

To assist in solving this problem, a further statement of Mr. Seeton should be mentioned. He told the PMA employees that: " W e must be able to deliver and we must be able to present that which is delivered in a package acceptable to those from whom we are demanding support." 1 It can be inferred from this that as long as the "organization" interest group acts to promote the interests of those whose support they desire there is no distinguishable difference between their interest and that of the PMA members. If the criterion of membership growth and expansion is accepted, it could be concluded that the organization leaders and members have been successful in identifying their interest with that of P M A members. The fact that the membership has continued to grow since 1909 would appear to demonstrate that many manufacturers feel that the P M A has and can continue to protect and promote their interests. The P M A also has been able to promote itself into an increasingly diverse number of manufacturing fields. While the original membership represented a predominance of textile interests, the PMA membership today has expanded to include representatives from most of the important industries in Pennsylvania. The textile industry is still well represented and in some ways appears predominant, and the glass industry, the brewery industry, and the metals industries are well represented. The P M A does, however, lack much representation from the oil industry,2 the utilities, and the food processing and packaging industry. The composition of the Board of Governors reflects a conscious attempt to keep a balance of industries and geographical areas represented. While there appears to be a predominance of textile interests represented, especially since the late Colonel Brown, chairman of the Board, was interested in textile manufacturing as are five of the eighteen Board members, there is no other evidence 1

Seeton, op. cit., p. 4. T h e Sun Oil C o m p a n y , controlled by the P e w family, belongs to the P M A but the G u l f Oil C o m p a n y , a Mellon family interest, does not. 2

Conclusions: PMA Success or Failure and Its Future

305

to show that this industry has any greater power over the Association's actions and decisions than does any other. In fact, there is evidence, especially during the past ten years, of a definite attempt to have all types of manufacturing in Pennsylvania represented in the P M A and to include among these some of the larger industries in Pennsylvania. The PMA leaders feel they have been successful in accomplishing this but still recognize that the bulk of their m e m bership is the small manufacturer. It is apparent then that the PMA organization leaders have acted sufficiently in the interest of Pennsylvania manufacturers to attract the leading members of almost every industry in Pennsylvania. They have been more successful in doing this during the past ten or fifteen years, however, than they were during the 'twenties, when Mr. Grundy's leadership was predominant. The Effect of the Political Activities of the PMA Leaders on the Economic Interest of the PMA Members. It is probably in this area of political activity that there may be some evidence found of a divergence between the interests of the PMA "organization" leaders and the P M A members. It can be concluded f r o m Chapter XIII that the most significant results of the methods used by PMA leaders to accomplish what they assumed to be the PMA legislative goals were that the PMA became a political power in itself and that it became deeply involved in the internal politics of the Republican party of Pennsylvania. Unquestionably, these results have brought advantages to P M A members. N o t only is this evidenced by the development of P M A membership but also by the fact that certain legislation, not advantageous to the manufacturer, was successfully blocked in Pennsylvania for a long time—and still meets stiff P M A opposition. Nevertheless, there have been, and will continue to be, recognizable disadvantages arising f r o m these political activities. Ideally, the legitimate economic interests of manufacturers, especially small ones so predominant in the PMA, should be considered by government along with other such groups when

3o6

T h e Pennsylvania Manufacturers' Association

legislation is formulated. The close linkage, however, of such an economic interest group with an association that has become a political power itself and has become intimately identified with one political party can prevent that group's interests from being properly considered by government. The PMA, as the agent of this economic interest group, may be unsuccessful in the political arena or it may antagonize a sufficient number of other interest groups in the political arena to cause them to unite and challenge the political influence of the PMA. Both of these possibilities have occurred during the lifetime of the PMA. Because the PMA has committed itself so closely to the Republican party of Pennsylvania, its members have been virtually without access to the Democratic party. While this has not presented too much of a problem for PMA members when the Republican party was dominant in Pennsylvania, it has resulted, when the Democrats were in power in Harrisburg, in the almost complete denial to them of any access to the state government. The PMA retained some access to the state government under the Leader administration because of the Republican majority in the Senate and House of Representatives during the second legislative session of that administration. Several times, during its lifetime, because of purely political antagonisms brought about by the activities of PMA leaders, notably Mr. Grundy and Mason Owlett, the PMA has had their access even to the Republican party challenged by various organizations. The clashes with the Vare organization of Philadelphia during the 'twenties, and with certain dissident county organizations who failed to appreciate Mr. Grundy's leadership during the 'thirties and 'forties, and finally, the battle with Governor Duff all worked in some way to the disadvantage of the interests of PMA members. Usually these clashes were in some way connected with differing views on certain legislation1 reflecting differences of economic in1

See Chapters 6, j , 8, 9.

Conclusions: P M A Success or Failure and Its Future

307

terest. Some of these differences, however, seemed to be more purely political than economic. In other words, it sometimes appeared that Mr. Grundy was acting more to obtain control or dominance over many local Republican organization leaders just for the sake of political control rather than to promote a definite economic interest. Dr. Truman noted the complicated interest relationship surrounding Mr. Grundy's activities: T h e activities of Joseph R . G r u n d y of Pennsylvania in his h e y d a y arc illustrative o f the complexities o f this kind o f relationship. H e w a s not only a key member o f one major faction of the Republican Party, but also an official o f the Pennsylvania Manufacturers' Association and a producer o f w o o l yarn. T h e latter c o m m o d i t y was protected in the 1 9 2 0 ' s b y v e r y high tariff rates, a fact that helped account for and w a s the result o f his deep involvement in successive tariff revisions. W h e n G r u n d y acted as fund-raiser extraordinary for the Republican Party in Pennsylvania both for the national ticket and for individual members to Congress, it was not always clear e x a c d y w h a t interests were represented b y his middle-man position. 1

If it could be determined whether Mr. Grundy—and later Mason Owlett and other P M A organization leaders—acted purely to gain political power for its own sake, it would be much easier to draw conclusions regarding the congeniality of interest between the "organization" interest group and the P M A members. If there were evidence to show that Mr. Grundy founded the P M A and used an economic interest group to further his own political career, then it could be concluded that the P M A members' legitimate economic interests could be seriously damaged thereby. It could probably be concluded further that the present leaders of the P M A were professional managers and politicians interested mainly in promoting their own careers and were using a large economic interest group to assist them. Unfortunately, the facts do not allow such a black and white conclusion to be drawn. Mr. Grundy was a believer in the 1

Truman, op. cit., pp. 3 0 7 - 8 .

308

The Pennsylvania Manufacturers' Association

philosophy of laissez-faire capitalism which he enunciated frequently in public addresses, and he did have an economic interest, the woolen manufacturing business. He also had distinct views on government, most of which reflected the McKinley era of the late nineteenth century. Government, then, was either friendly toward business interests or it was indifferent. This was, as he frequently stated publicly, Mr. Grundy's view of government's proper role. He therefore gravitated naturally toward the political party that best represented these interests and that, of course, nationally and in Pennsylvania was the Republican party. Mr. Grundy unquestionably sought to play a dominant role in Republican politics. He formed alliances within the party with groups who did not agree with his economic philosophy but who assured him access to the state government where he could try to block undesirable legislation. Such an alliance was that with Gifford Pinchot. Mr. Grundy, on the other hand, appeared to fight groups within the party solely for the sake of political dominance. Mr. Grundy's running battle with the Vare organization gave this appearance. A closer examination of the different interest groups behind the two would show, however, that there was a genuine difference of interest between the two 1 that justified this intra-party clash. It was a clash of the interests of large utilities against those of the small manufacturer. It thus must be concluded that Mr. Grundy and subsequent PMA leaders have always had the protection of a distinct economic interest in their minds in their political activities. The difference between the PMA under Mr. Grundy and the P M A today is that it was probably guided more by Mr. Grundy's distinct economic philosophy than it is now. The present PMA leaders have had to adapt themselves to changed economic and political conditions. These new conditions have worked against the philosophies of Mr. Grundy. Some PMA 1

See Chapter 12, especially section on Governor Fisher.

Conclusions: P M A Success or Failure and Its Future

309

members today do not share M r . Grundy's tariff views. The handling of and final abandonment of the Pennsylvania E m p l o y e r - W a g e Earner J o b Protection Association resulted in a large measure f r o m this situation. T h e P M A leaders, in their political activities, face a difficult situation. W h i l e they recognize that the legislative service is one of their most important to members, they must also be aware of the difficult situation they face in Pennsylvania politically. The fact that the Republican party, with which the P M A has been aligned, has been suffering f r o m increasing factional splits has meant that the P M A leaders must show greater caution in their political activities. By becoming attached to a minority faction of a majority party, the P M A leaders would probably be harming their members' interests. These interests would be even less served by being the dominant faction in a minority or defeated party. B o t h risks at present face P M A leaders. It m a y be concluded then that the future political activities of the P M A leaders may reflect badly u p o n their members' interests. It m a y n o t be concluded f r o m this, however, that it is brought about by the P M A leaders' separate interest f r o m the members or f r o m their acting merely to create a need for themselves. It can be granted that there is definitely more "professionalism" in the P M A leadership today than in the 'twenties under M r . Grundy's sole tutelage. Most of the top P M A leaders and managers are certainly not manufacturers. T h e y are, however, relatively expert at the jobs of administration, public relations, law, or the intricacies of organization politics. All of these skills have become necessary to r u n the P M A today, but not because its leaders have consciously created a need for themselves. These skills are needed in order to render to the P M A members the services they apparently want and expect—especially the so-called "legislative service." As government has g r o w n in size and complexity and as various n e w interest groups have emerged to bring pressure on government, the whole governmental process has been affected. T h e methods of

The Pennsylvania Manufacturers' Association

influencing government even at the state level have become more complicated and require more skill and subtlety today than they did in 1909 or even in the 'twenties. Mr. Grundy's rather crude lobbying techniques which he exhibited during the passage of the SmootHawley Tariff could no longer be repeated—even at the state level. This does not mean, however, that such lobbying has ceased; it has, on the contrary, developed into a more subtle and complicated activity and more groups have emerged to participate in the whole process. It can therefore be concluded that the problem for P M A members is not the possible detriment to their legitimate economic interests brought about by the P M A "organization leaders" creating a need for themselves. The problem rather is that these leaders may not be successful in trying to protect and promote the members' interests in the political process in which case the P M A members' interests will suffer. One further factor must be considered and that is the apparent approval by P M A members of its leaders' partisan political activities. Most observers of "pressure" or interest group politics have always observed that most of these groups refrain from making an open commitment to a particular party organization or faction. 1 The P M A like several other large and powerful interest groups, especially at the state level, is the exception to this conclusion. The explanation for this partisan behavior of the P M A is probably twofold. Its founder, Mr. Joseph R. Grundy, was distinctly partisan and attracted members to the P M A who shared his " R e publicanism."

Secondly, the Republican party, although split

factionally to varying degrees, especially after the death of Boies Penrose, generally dominated Pennsylvania politics. Therefore it was the vehicle by which most industrial interests, both large and small, obtained access to the state government of Pennsylvania. It is reasonable to assume today that, mindful of the P M A leaders' partisan political activities, the P M A members would pro1

Truman, op. cit., p. 297.

Conclusions: P M A Success or Failure and Its Future

3"

test these if they disapproved. Perhaps some P M A members have resigned by way of protesting this, although no specific evidence was found to substantiate this possibility. Undoubtedly, not all P M A members are Republican but they are apparently not bothered by the fact that they have allowed their interests to be furthered by a group of men who are closely involved with the Republican party in Pennsylvania. Bringing this factor into consideration with the other conclusions so far reached, it can further be concluded that, whether partisan or not, a group such as the P M A has been engaged in the acquisition of political power. This acquisition has been motivated by a desire to protect and promote an economic interest mostly through the prevention of undesirable legislation. If the means—the gaining of political power through partisan activity—has appeared to dominate the end—the protection of manufacturers in Pennsylvania—it is probably because the means have been so important. In the governmental process, political interests and economic interests become hopelessly intertwined and both can help or harm each other. That is the risk involved in trying to influence government. Perhaps the means selected by past and present P M A leaders to protect their members' interests have been unwise. Given the economic and political situation in Pennsylvania, however, they were probably inevitable. PMA:

SUCCESS

OR

FAILURE

There are two closely related criteria that can be used to determine the relative success or failure of the P M A . The first is the most obvious: survival amidst the economic and political changes that have taken place since its founding in 1909. The P M A has not only survived but it has developed into the largest organized association of its kind. It has steadily expanded its membership during its forty years' existence. While there have been individual years when the total membership declined, the overall trend has been to increase,

T h e Pennsylvania Manufacturers' Association

312

T h e second criterion is whether or not the P M A has been able to continue to accomplish its announced purposes. Such accomplishment, o f course, required first that it continue to have access to the Pennsylvania government and the Republican party o f Pennsylvania, its chosen vehicle o f access to that government. T h e P M A , since 1909, has definitely established itself as a political p o w e r in the state, and in the Republican party o f Pennsylvania. It has this continued assured access to the Republican party o f Pennsylvania largely because o f the status o f P M A members in their respective c o m munities. This is one o f the most important bases o f the P M A ' s political power. Successful functioning for the association also requires that it be able to use its position o f access to influence governmental policy and legislation. It is because o f this influence that it is able to promote and protect its members' interests. W h i l e the P M A has become a powerful association, potentially well able to fulfill its legislative aims, it has not always been able to do so. Most o f the legislation it has opposed since its founding in 1909 n o w exists in Pennsylvania. Taxes on corporations and manufacturers in Pennsylvania are a m o n g the highest in the country. T h e fact that the utilities pay relatively more taxes cannot be attributed directly to the w o r k o f the P M A . O n the other hand, with the subject o f w o r k m e n ' s compensation benefit rates, the P M A has had and continues to have greater success and more effect. T h e P M A is relatively successful today and has been so in the past in keeping w o r k m e n ' s compensation benefit rates within what it considered reasonable boundaries. This has been so because w o r k m e n ' s compensation is an interest for only a f e w groups that could effectively compete w i t h the P M A for access to the points o f decision in the Pennsylvania g o v e r n m e n t — s o long as the Republican party remained in power. It is, however, a secondary interest o f sufficient importance to certain p o w e r f u l interest groups, such as labor organizations that w o u l d probably gain access to the state government should the Democratic party completely come to

Conclusions : P M A Success or Failure and Its Future

313

power in Pennsylvania. This was the case during the Democratic administration in 1935-39 and there is no reason to believe it would not occur again. The subject of taxation has been another matter. The most important reason w h y the P M A has not been successful in this field is that access to the Republican party and to the various Republican administrations has not been enough. Taxation is such a broad interest that it concerns a large number of interest groups within the Republican party itself and it affects all citizens to some degree. Whether they are organized or not, the voting power of tax-paying citizens gives them all an indirect access to every political leader and elected official. T w o final important factors that have prevented the P M A from being successful with all of their legislative policies have been the effect of national legislation and the change in the strength of former powerful interest groups and the rise of former potential groups into being. National legislation, especially during the 'thirties and thereafter, served to eliminate many subjects from the realm of state legislation and, therefore, from the sphere of P M A influence. In the 'twenties, for example, Mr. Grundy and the P M A could and did oppose the forty-hour week for all employees in Pennsylvania. Today, such legislation is beyond the opposition of Mr. Grundy and the P M A because of congressional action and some Supreme Court decisions. Since the P M A never made any pretense of acting on the national level (aside, of course, from Mr. Grundy's personal actions in the Republican party on the national level regarding the tariff which cannot really be termed P M A actions) it cannot be blamed for failure when legislation it opposed at the state level is passed at the national level. The decline in the popularity of the economic and political philosophy that animated, as Mr. Grundy termed it, the industrial development of the United States in the nineteenth century has actually been the decline or disappearance of certain interests and the

314

The Pennsylvania Manufacturers' Association

development of new interests.1 In simpler terms, new ideas and concepts have become more popular and accepted. Where these have countered the former ideas and interests held by older organized groups, a compromise, of necessity, has had to come about if the older group was to survive. There is also the fact that members of the older organized group may have been affected by the new interests and may themselves have adopted some of the new ideas, concepts, or interests.* The new interests that result from this compromise are of just as great importance to the organized group members as were the older interests. For example, the P M A member of today is no longer concerned with child labor or with trying to prevent the work week from being cut from fifty-four hours. He is, however, concerned with the amount of corporate net income tax and whether he must pay a capital stock tax or not. If he is engaged in an industry where accidents are frequent, he is probably interested in keeping w o r k men's compensation benefits as low as possible. He is also interested in seeing that unemployment compensation benefits do not become too high. His interest in these matters is as great as was that of the P M A member of the 'twenties in such matters as wage and hour legislation, anti-stream pollution, and the prevention oflegislation that would foster the growth of labor unions. The conditions of today are the result of a change in group balances that resulted from the rise of some former potential interests to power—such as organized labor—and has seen the new interests become predominant. The acceptance of these interests by more people and their influence over legislation did not destroy all 1 Truman, op. cit., pp. 34-35. Dr. Truman wrote of "potential" interest groups which were in effect "widely held attitudes that are not expressed in interaction," and therefore were not represented by specific organized associations. (pp. 1 1 3 - 1 4 , 511.) 2 Ibid., "The resolution of conflicts between the claims of such unorganized interests and those of organized interest groups must grant recognition to the former not only because affected individuals may feel strongly attached to them but even more certainly because these interests are widely shared are a part of many established patterns of behavior. . . .'(p. 512.)

Conclusions: PMA Success or Failure and Its Future

315

of the old d o m i n a n t groups a n d interests b u t created n e w conditions in w h i c h they had to live. These n e w conditions in turn created n e w interests for the old interest groups. T h e r e has been, for example, in recent years an emphasis u p o n developing n e w services by P M A leaders. T h e fact that its f a m e d "legislative service" is not regarded as sufficient alone to attract n e w m e m b e r s does not signify that it has been a complete failure. Rather, it w o u l d seem that the P M A leaders realize that other services are needed as other means of obtaining and maintaining m e m b e r s since they realize that the "legislative service" can only be relatively successful. T h e P M A is b e c o m i n g less a highly organized political l o b b y and, as M r . Seeton pointed out, m o r e of a service and p r o m o t i o n a l association. Its leaders therefore, m i n d f u l o f the n e w circumstances in w h i c h the P M A must operate, seem to be interested in establishing it o n a m o r e p e r m a n e n t basis. B e f o r e concluding, then, u p o n the success or failure of the P M A , all of these limiting or mitigating factors must be considered. T h e P M A has n o t been completely successful in all of its legislative policies because of factors over w h i c h it could have n o real control. T h e y staved off change as l o n g as possible, and, b y the time they w e r e obliged to accept N e w Deal legislation in Pennsylvania, the nation had already d o n e so. Thus, the P M A has been and continues to be relatively successful becausc it has survived change and c o n tinues to h a v e sufficient access to and influence over the state g o v e r n m e n t t o accomplish some of its legislative aims. This success is always relative to current circumstances and the f u t u r e possibility of n e w e c o n o m i c and political groups b e c o m i n g stronger. H o w the P M A can adapt itself to these possible changes will determine its f u t u r e success or failure.

Appendix CHAPTER I

1. Mr. John P. Wood is credited with being one of the originators of the P M A by Stevens in Titan of Industry. While he was appointed to the first Executive Committee he is not listed in the Minute Book as having been present at the first two meetings on October 19, 1909 and December 7, 1909. 2. Articles of Agreement—condensed. Section II. The objectives of this Association shall be to advancc and protect the interest of its members. Section III. Membership: T w o Classes 1. Individuals, firms and corporations direcdy engaged in manufacturing in Pennsylvania. 2. Trade and local Associations, the membership of which represent manufacturing industries in Pennsylvania. Section IV. Application for membership must be approved by a majority of the Executive Committee, and shall be required to sign the articles of association and pay the required dues. Applications for membership are sent to the Secretary of the Association. Section V . The Executive Committee shall consist of seven members and it shall elect from its membership a President, one Vice-President, and one Treasurer. There shall be no compensation for service outside of the expenses for attending the Executive Committee meetings. The Executive Committee members are elected for a year " o r such time thereafter as their successors are duly chosen and signify their acceptance of office." Section VI. The entire management and control of the Association, including filling vacancies, adopting rules, policies, etc., not

T h e Pennsylvania Manufacturers' Association

3I8

inconsistent w i t h these articles o f agreement shall be vested in the Executive C o m m i t t e e , w h o shall appoint and fix the compensation o f all employees and discharge same at will. Section VII. T h e

Annual

Meeting

shall be

on the

second

M o n d a y in January. T h e first Annual Meeting shall be January 10, 1910 to elect an Executive Committee and to transact such other proper business. Notices for meetings shall be mailed out ten days at least before the meetings. Seven members in g o o d standing shall constitute a quorum. T h e election o f the Executive Committee shall be conducted as the meeting shall see fit. Special meetings o f the Association may be called any time after five days' notice b y direction o f a majority o f the Executive C o m mittee. T h e v o t i n g strength shall be based upon the amount o f dues paid. Section VIII. T h e annual dues o f members in Class I shall be based upon the w h o l e number o f employees including officers as shown by the average o f four pay rolls preceding N o v e m b e r 1st of any year past. Dues shall be payable in advance each year on January 1 for the ensuing year. T h e rate shall be ten cents per employee. T h e annual dues for Class II members shall be as agreed upon between them and the Executive Committee, also payable in advance on January 1. T h e basis o f voting p o w e r shall be one vote for each one dollar so paid. Section I X . If a member fails to pay dues within thirty days he shall be notified and given thirty days in which to pay. If he has not paid in that time, his name shall be presented to the Executive C o m m i t t e e and, if a majority o f them decide, the names o f such delinquents shall be dropped f r o m the rolls o f the Association. Section X . Amendments shall be made by a majority o f votes cast at any meeting o f the Association providing ten days' notice is given to the members o f the proposed change. This was condensed and paraphrased f r o m pp. 1-8 o f the P M A Minute Book, V o l u m e I.

Appendix

319 CHAPTER

3

1. Before the expansion of the Executive Committee from seven to fifteen in 1913, the Committee predominantly represented textile manufacturing in the Philadelphia area (see Chapter I). The eight new members were : J . Lewis Hough, Darling Pump Manufacturing Co., Williamsport; O. H. Creider, secretary of the Pittsburgh Manufacturers' Association; M . J . Beach, Elk Tanning Co., Ridgway, Charles E. Leippe, Reading Knitting Mills ; William B. Todd, secretary of the Manufacturers' Association of Beaver County; E. M. Zehnder, Scranton Bolt and Nut Co.; William F. Long, president of the Pennsylvania Launderers' Association; and Justus H. Schwacke, Wm. Sellers and Co., machine tools, Philadelphia. The new members reflected the PMA's expansion not only into other industries but geographically as well. The Executive Committee was still more heavily representative of the textile industry than any other single enterprise because of the original seven members. 2. The present local manufacturers' associations : Manufacturers' Assoc. of Beaver Co. 1912 Manufacturers' Assoc. of Berks Co., 1921 Central Pennsylvania Employers' Assoc., Johnstown, 1925 Manufacturers' Assoc. of Delaware Co., 1914 „ „ Lackawanna Co., 1918 ,, ,, Lancaster Co., 1915 ,, „ Luzerne Co., 1916 „ „ Monroe Co., 1916 ,, „ Montgomery Co., 1912 „ „ Northwestern Pa. 1919 Waynesboro Manufacturers' Assoc., 1920 West Branch Manufacturers' Assoc., Williamsport, 1947 Manufacturers' Assoc. of York, 1914 Only two of these Associations, Montgomery County and York County, were formed before the P M A , in 1908 and 1906 respectively.

32o

The Pennsylvania Manufacturers' Association

3. The 1954-55 Board of Governors of the P M A : Chairman, Millard D. Brown, Continental Mills, Philadelphia; Everett L. Kent, president and general counsel; Henry S. Bromley, North American Lace Co., Philadelphia; Andrew J . Sordoni, Sordoni Construction Co., Wilkes-Barre; Wilbert Wear, Harrisburg; J . Lee Bausher, Infants Socks, Inc., Reading; Ivan E. Garver (deceased), Roaring Spring Blank Book Co., Roaring Spring; Roger W . Rowland, New Castle Refractories, Inc., New Castle; Robert L. Warren, Brockway Glass Co., Brockway; Joseph H. Mosser, leather manufacturer, Williamsport; M. R. Williams, C. K. Williams & Co., Easton; Chester M. Woolworth, Animal Trap Co., Lititz; F. Otto Haas, Rohm and Haas, Philadelphia; Willard F. Rockwell, Rockwell Manufacturing Co., Pittsburgh; Robert R. Titus, The Synthane Co., Oaks; H. Thomas Hallo well, Jr., Standard Pressed Steel Co., Jenkintown; Frank E. Masland, Jr., C. H. Masland & Sons, Inc., Carlisle; G. Blair Sheers, Standard Horse Nail Co., New Brighton; and Mark K. Dresden, A. H. Wirz, Inc., Chester. Ex-officio: James E. Shade, John H. Seeton. PMA officers: President G. Mason Owlett, Secretary, John H. Seeton, Vice-Presidents: Everett L. Kent, Roger W . Rowland, J . Lee Bausher, Robert L. Warren. PMA Casualty and Fire Insurance Co. Officers: Board Chairman, Millard D. Brown; President, Everett L. Kent; Executive VicePresident and General Counsel, G. Mason Owlett; Treasurer, James E. Shade; Secretary, Harry M. Engell; Assistant to the President, Russell P. Goddard; Vice-Presidents, Roger W . Rowland, J. Lee Bausher, Robert L. Warren. 4. Affiliated Members: (with date of beginning of PMA membership) Iron League of Philadelphia & Vicinity, 1950 Keystone Cemetery Owners Assoc., 1941 Metal Manufacturers' Association of Philadelphia, 1912 Penna. Association of Dyers and Cleaners, 1915 Penna. Laundryowners Assoc., Inc., 1912

Appendix

321

Penna. Millers and Feld Dealers Assoc., 1931 Sash and Door Manufacturers' Assoc. of Phila. & Vic., 1918 The Metal Club of Philadelphia, 1922 Associate Members: Anthracite Institute, 1952 Associated Petroleum Industries of Penna., 1952 Keystone Building Contractors Assoc., 1952 Lumber Dealers Assoc. of Western Penna., 1949 Penna. Assoc. of Plumbing Contractors, Inc., 1950 Penna. Assoc. of Milk Dealers, Inc., 1950 Penna. Bakers Assoc., 1935 Printing Industries of Philadelphia, Inc., 1915 Tristate Industrial Assoc., Inc., 1949 Philadelphia Textile Manufacturers' Assoc., 1951 The New Castle Manufacturers' Society, 1953 Steel Boiler Institute, Inc., 1953 The Electrical Assoc. of Philadelphia, Inc., 1941 The Penna. Ceramics Assoc., Inc., 1953 The Engineer Club of Philadelphia, 1952 Retail Merchants Assoc., 1928 Mushroom Growers Cooperative Assoc. Of Penna., 1941 Full-fashioned Hosiery Manufacturers of America, Inc., 1940 Assoc. of Narrow Fabrics Manufacturers, Inc., 1954 Penna. State Brewers Assoc., 1954 General Building Contractors Assoc., 1954 The Federation of Jewish Charities, Inc. became an associate member of the PMA in 1954 largely because they were interested in insuring with PMA insurance companies (personal interview with Mr. John H. Seeton, March 25, 1955). 5. Mr. Seeton stated that one very large PMA member joined almost solely because of the survey entitled "Overtime on Overtime" done by the Employer's Advisory Division. President Owlett stated that he thought the United States Steel Co. joined the PMA

322

T h e Pennsylvania Manufacturers' Association

because of past " f a v o r s " done for them by Owlett when he was state senator. 6. While the P M A dues are fifteen cents per employee with a ten dollar yearly minimum and a five hundred dollar yearly maximum, the local association's dues are considerably higher. O f course, the dues paid to the local association automatically make the member part of the P M A as well so that only one dues payment—to the local association—is necessary. Considering this, for the services rendered, the dues charged by the local association are quite reasonable. For 100 employees, the dues run between $200 a year and $85: amount paid by Montgomery C o . Assoc. is $ 2 1 0 for 100-200 employees; Y o r k C o . Assoc. is $ 1 6 2 for 100-200 employees with $1.00 per employee added for each one over 100; the Lancaster Co. Assoc. is $ 1 1 0 for 100-300 employees; the Berks Co. Assoc. is $85 for 100-200 members. The dues of each county association are scaled to the living costs and other specific conditions of the particular county. 7. The P M A officers requested that their financial statement not be published, although this writer was permitted to see it. The amount of disbursements was well under $100,000, but the salaries to the top officers of the P M A were not listed among the "disbursements." CHAPTER

4

1. Examples of studies by the Employer's Advisory Division that have been released to members include: survey on unskilled labor rates, 1950 (the first of its kind ever undertaken for the entire state of Penna.); a study on existing pension systems and social insurance and other "fringe benefits" in Pennsylvania, 1950 (this study was sent to the President's Fact Finding Panel before they issued their report recommending pensions and social insurance for the steel industry); releases entitled: Wages and Hours under the Fair Labor Standards Amendments of 1949, New White Collar Regulations under the Wage and Hour Law, Employment Posters and Records Required by Law, 1950; a study in 1951 on the extent of disability protection for

Appendix

323

Pennsylvania employees; a survey o f w a g e increases in Pennsylvania f o r 1950 f o l l o w i n g the outbreak o f the Korean W a r ; a digest o f inventory and priority controls established by the Defense Production Act o f 1950. 2. Examples o f U n e m p l o y m e n t Compensation Division releases: Redetermined

1949 Rate and the Employer's

3, 1 9 5 0 ; Two Factors Control Determination

of a Claimant's

Unemployment

Compensation

Reserve Account, February

Contribution Base

Rates, August 4, 1 9 5 0 ;

Year,

Developments,

Compensation Amendments Introduced—Employer 1 9 5 1 ; Amendments

to the Pennsylvania

September 25, 1951;

1950;

Unemployment

Support is Necessary,

Unemployment

Compensation

Act, 1 9 5 1 . 3. T h e P M A Casualty Insurance C o . has offices in every area where there is a local manufacturers' association and in t w o other Pennsylvania cities. Allentown, B e a v e r Falls, Chester, Erie, Harrisburg, J o h n s t o w n , Lancaster, N o r r i s t o w n , Pittsburgh, Reading, R i d g w a y , Scranton, Stroudsburg, W a y n e s b o r o , Wilkes-Barre, Williamsport, Y o r k . T h e central office, o f course, is in Philadelphia. 4. T h e P M A is represented on the f o l l o w i n g N . I . C . committees: State G r o u p Advisory C o m m i t t e e , Washington Advisory C o m m i t tee,

State

Group

Committee

on

Workmen's

Compensation,

Technical Subcommittee on W o r k m e n ' s Compensation. T h e P M A is also represented in the N . I . C . ' s Conference of State Manufacturers' Associations which handles all testimony given by state associations on federal legislation. 5. M r . Seeton stated that he believed the best w a y to contact new members was f o r an officer o f a local association to speak to the potential m e m b e r in the c o m p a n y o f a m e m b e r of the association k n o w n to the prospective member. H e also advised having several members write to the prospective member. CHAPTER

5

1. M e m b e r s o f this special A d v i s o r y C o m m i t t e e were: Colonel Brown,

Mr.

Owlett,

e x - o f f i c i o ; Messrs. R o g e r

W.

Rowland,

The Pennsylvania Manufacturers' Association

324

Joseph H. Mosser, Robert L. Warren, M . R. Williams, Robert R . Titus. CHAPTER

6

1. Mr. Seeton explained that the city of Erie was about to tax railway freight cars, owned by a P M A member corporation, that were on a siding on the corporation's property. 2. The income and inheritance tax bill such as the bill introduced in 1953 by Representative Nolan Ziegler of Dauphin County had to appear as an amendment to the state constitution because it (the constitution) specifically forbade the levying of such graduated taxes. A n y constitutional amendment had to be passed by two consecutive legislatures and then submitted to a popular referendum. Consequently, the bill was apt to appear at every legislative session. 3. The statistics reprinted in the P M A Minute Book included the following significant percentages on the sources of state revenues (for 1952): Massachusetts

Oregon

Corps. 3 7 %

Corps. 2 8 %

Personal Inc. 2 4 %

Personal Inc. 2 4 %

Wisconsin Corps. 3 3 %

Personal Inc. 32°./,

North Carolina Corps. 2 6 % Personal Inc. 1 9 % Sales 2 8 %

Connecticut Corps. 1 4 % Personal Inc. 1 1 % Sales 3 6 % California Corps. 1 4 % Personal Inc. 1 1 % Sales 5 0 %

Texas

Corps. 4% Property 1 2 % Severance 46% Michigan

Corps. 7 % Sales 66%

Appendix

325 Illinois

Pennsylvania

Corps. 1 7 %

Corps. 5 2 %

Sales 5 9 %

Utilities (Gross Receipts Tax) 1 0 %

New York

Delaware

Corps. 2 6 %

Corps. 3 1 %

Personal Inc. 3 6 %

Personal Inc. 2 6 %

Maryland

Neti> Jersey

Corps. 2 6 %

Corps. 3 1 %

Personal Inc. 2 1 %

Tobacco 2 1 %

Sales 2 7 % Ohio

The National Average

Corps. 3 %

Corps. 1 5 %

Sales 54%

UtiHf

y

Insurance

\

?0/

J

Personal Inc. 1 3 % Sales 3 2 % Based upon these statistics the P M A favored the passage o f a sales tax in Pennsylvania rather than increase any of the corporate taxes.

CHAPTER

7

1. The P M A ' s reasons for objections to Governor Brumbaugh's workmen's compensation bill (Minute Book, I, 1 7 2 - 7 5 ) . It should be included in the bill a. That it shall be a defense at common law that the injury to the employee was caused by his willful disobedience or orders or in an attempt to injure another. b. That in all actions at law where the employer has elected to pay compensation but the employee has refused to accept compensation, the so-called common law defenses would be reinstated. c. Under the compensation provisions of the bill there should be a provision that no compensation should be allowed where the injury was P.M.A.-L

The Pennsylvania Manufacturers' Association

326

caused by the employee's intoxication or by his reckless indifference to danger or by his willful disobedience of orders or in an attempt to injure another. d. There should be no compensation allowed for non-resident dependent aliens. e. The bill should provide that if notice be not given or knowledge not obtained until after fourteen days from the date of the accident, the burden of proof to establish the injury should be upon the employee or his dependents, and, in all fatal cases, where there arc less than two eyewitnesses to the accident, an autopsy should be required to determine the cause of the accident. f. The bill should provide that where the injured man is already in receipt of compensation under the laws of the United States or in the State of Pennsylvania, or any other state or territory', the amount of compensation received should be considered in awarding additional compensation so that in no event should he receive more than the maximum amount provided for in the Act. g. A provision should be inserted to forfeit compensation when the beneficiary has knowingly secured, or attempted to secure, payment for a longer term or a larger amount than legally entitled to under the Act. h. The provision allowing compensation for 500 weeks in cases of total disability should be changed to 400 weeks as provided in the proposed Act of the Industrial Accidents Commission. i. A strong remonstrance should be made against the supplementary bill exempting farm hands and domestic servants from the provisions of the compensation bill. There is no logical reason for exempting any employee from the provisions of such a bill. An injured man, or his dependents, are just as much entitled to compensation, if injured, on a farm or in a house as if injured in a factory. j . The bill should provide a maximum sum, not to exceed 84,000 beyond which compensation shall not be received in any case. k. W e object to the proposed legislation being covered by five separate acts and urge that the entire subject be embraced in one act covering all the proposed features of Workmen's

Compensation.

Should one or more of the proposed acts fail of passage, grave injustice would be done to many employers w h o would be left without any practical means of protecting themselves by insurance.

Appendix

327

2. Act #156 of 1927 (Laws of Pennsylvania, 1927, pp.

186-96)

made some significant changes in the Workmen's Compensation Act of 1915 that were to remain until the so-called Earle Act was passed in 1937. The waiting period—that time between the beginning of the disability and the beginning of compensation payments —was reduced from ten to seven days. The percentage of wages paid as weekly compensation benefits was increased from 60 per cent to 65 per cent. The maximum weekly benefit was raised from twelve dollars to fifteen dollars and the minimum was increased from six dollars to seven. In the case of partial disability, the per centum of wages was raised from 60 to 65. This percentage was also extended to specific injuries such as the loss of a hand which was compensable for a period of 175 weeks at 65 per cent of the former weekly wages. Thirty days of medical care had to be provided by the employer. The hernia provision was altered requiring "conclusive" proof that it was immediately precipitated by sudden effort of severe strain. Otherwise, it would be regarded a physical weakness and not be compensable. 3. Act #323 of 1937 (Laws of Pennsylvania (1937), pp. 1552-99), the so-called Earle Workmen's

Compensation

Act,

made

several

significant changes in the 1915 Act. The waiting period remained unchanged at seven days, but the maximum weekly benefit for total and partial disability was raised from fifteen dollars to eighteen. The minimum was increased from seven to twelve dollars weekly. For specific injuries, the percentage of wages remained at 65 per cent but the period over which it was paid was increased. For example, the loss of a hand was compensable for 200 weeks instead of 175The period during which the employer was responsible for medical expenses was increased from thirty days to three months and the maximum cost of these services was raised from one hundred dollars to two hundred. Also, the injured employee was to be allowed to consult a doctor of his own choice at any time.

328

The Pennsylvania Manufacturers' Association CHAPTER

8

1. At every legislative session of the 'twenties and early 'thirties, such legislation appeared. The women's hours bill called either for "one day's rest in seven," a 54-hour week or 44-hour week, or an 8-hour day, or both. The various bills that would amend the Child Labor Act of 1913 covered such matters as the actual prohibition of labor by minors under sixteen, the examination of working minors by a physician, and the reduction of the working hours of all minors (under twenty-one) to 48 hours a week and an 8-hour day. Other bills that would regulate the working hours of all employees changed over a period of several years from bills that would merely set up a wage and hour board to those that would limit all employees to an 8-hour day, beyond which, of course, overtime would be paid. 2. House Bill #79, the "one day rest in seven" bill, appeared at every legislative session and was aimed at reducing the work week for women to six days and a forty-eight-hour week. 3. House Bill #850. This bill was a further development of reform legislation aimed at reducing the working hours of women. It proposed to limit the daily work period to eight hours, beyond which overtime wages would have to be paid. While all of these reform bills appeared to have the reduction of working hours as their purpose, they would result in higher wages, through overtime. 4. Senate #264 would extend the provisions of the federal Fair Labor Standards Act to intrastate labor, excluding only agricultural workers and domestics. CHAPTER

II

1. Below are the results of a study of the number of state senators and state representatives that were classed as businessmen or manufacturers and the important committee posts they held. The criterion in selecting "important" committees was whether or not the committee would be apt to consider legislation that could affect businessmen or manufacturers. These committees were: Appropriations,

329

Appendix

Corporations, Finance, Insurance, Labor and Industry, Judiciary General in the Senate and Appropriations, W a y s and Means, Corporations

and Industry, Labor Relations, and

Workmen's

Compensation in the House. (Information is f r o m the Pennsylvania Manuals for each year considered.) A. 1927 Legislature 1. There were six senators that could be classified as businessmen or manufacturers and one was chairman of the Judiciary Special Committee, and one was chairman of the Game and Fisheries Committee. 2. There were fourteen representatives that could be classified as businessmen or manufacturers and one was chairman o f the Game and Fisheries Committee, another chairman of the Committee on Manufacturers, and one was chairman of the Committee on Public Roads. B . 1931 Legislature 1. There were seven senators w h o could be classified as businessmen or manufacturers, three of w h o m , J o h n M . McClure

of

Delaware County, Joseph C . Trainer o f Philadelphia, and Morris Einstein of Allegheny County w h o had served in the General Assembly since 1919, could also be termed professional politicians. One was chairman of the Committee on Railroads, one chairman o f the Judiciary Special Committee (Einstein), and one was chairman o f the Committee on Apportionment (McClure). 2. There were eighteen representatives w h o could be classified as businessmen or manufacturers, o f w h o m at least two—John M . Flynn, w h o later became P M A president, and C . J . Goodnough, w h o had served in the General Assembly since 1 9 1 5 — c o u l d be termed professional politicians as well. One o f the eighteen was the speaker o f the House (Goodnough), one was chairman of the Committee on Boroughs, another chairman of the Committee on Banking, and another chairman of the Forestry Committee.

T h e Pennsylvania Manufacturers' Association

330

C . 1939 Legislature 1. There were three senators who could be classified as businessmen or manufacturers, one of whom was John S. Rice, Democratic candidate for governor in 1946. One was chairman of the C o m mittee on Public Utilities, and one was chairman of the Committee on Agriculture. 2. There were five representatives who could be termed businessmen or manufacturers. One was chairman of the Committee on Law and Order, four were vice-chairmen of the following committees: Constitutional Amendments, Ways and Means, Printing (which seemed appropriate as he was Benjamin F. James, a director of the Franklin Printing Co. and the Phila.-Weeks Engraving Co.), and Corporations and Industry. D . 1947 Legislature 1. O f the four senators who could be classified as businessmen or manufacturers, one was chairman of the Committee on Agriculture, three were vice-chairmen of the following committees: Game and Fish, Executive Nominations, and Banking. 2. O f the four representatives who could be classified as businessmen or manufacturers, none held any important committee posts. E . 1951 Legislature 1. There were four senators who were associated with manufacturing. Senator George B. Scarlett, who had been chairman of the Committee on Agriculture since 1939 and had been in the Senate since 1936, was chairman of the Committee on Agriculture and vice-chairman of the Committee on Labor and Industry. The others were chairman of the Finance and Military Affairs Committees and vice-chairman of the Public Health & Welfare Committee. 2. In the House there were six representatives connected

with

manufacturing;

one

was

who

chairman

of

were the

Fisheries Committee, and one chairman of the Law and Order Committee.

Appendix

331 CHAPTER

12

1. Mr. Grundy stated that he personally was most interested in having Andrew Mellon as secretary of the Treasury and that he persuaded Senator Penrose that Mellon would be an excellent choice. According to Mr. Grundy, he then contacted Harding at his home in Ohio and gained his approval and then stopped in Pittsburgh to tell Mellon of his conversations with Harding and Penrose. In the Bowden biography of Penrose, he writes, on page 259, that Penrose had not approved the selection of Mellon when it was mentioned to him by John T . King, chairman of the National Republican Committee. Later, however, Senator Penrose called Mellon and told him he wanted him to be secretary of the Treasury. Bowden makes no mention of Mr. Grundy's role in this transaction. While the accuracy of neither story can be proven, this writer suspects that Mr. Grundy's story is correct and that he did persuade Senator Penrose to favor Mellon after King failed. 2. The famous Whitaker-Spangler fight over the House speakership in 1921 during the last part of the administration provides the most amusing example of the method of having a friendly speaker. Governor Sproul's primary ally in the Senate was a state senator, William E. Crow, an old Grundy enemy. Their choice for speaker was Samuel A . Whitaker, and he had lost to Robert S. Spangler who was supported by Mr. Grundy, George S. Oliver of Pittsburgh, a publisher, related to the Oliver steel family, and a political foe of Governor Sproul. The Governor's program contained several bills opposed by Grundy and Oliver, including bills to increase appropriations for road building, improvement of the public school system; to establish a state Department of Public Welfare, and an increase in revenues. The Governor was also interested in a repeal of the nonpartisan election laws of 1913 that allowed representatives from the minority party to be represented on the county election boards. This practice frequently resulted in a rival faction in one party capturing control of the minority party leaders, including the representative on the county election board, This was occurring at

332

The Pennsylvania Manufacturers' Association

the time in Allegheny County; the Oliver faction was successfully fighting a political leader friendly to Governor Sproul. Through their "friendship" with the House speaker w h o referred the Governor's bills to various committees whose chairmen were friendly to the Grundy-Oliver faction, the Governor's program was being "pickled." On the day before adjournment, the GrundyOliver forces began a filibuster which they planned to continue until the end of the legislative session the following day. Shortly before midnight the chairman of the Rules Committee invoked a rule never before followed. The rule was that at 10 P.M. the order of the day was to adjourn until morning. Speaker Spangler declared the House adjourned and left. The Governor's floor leaders asked others to remain, ordered the doors closed, and asked the chief clerk to preside and call for a quorum. A quorum was found to be present, and Samuel Whitaker was elected as speaker pro tempore and he proceeded to bring the Governor's bills out of their respective committees by a majority of quorum vote and passed them through the first reading. The House was adjourned until the morning at 10 A.M. When it met then, the speakership was declared vacant, Whitaker was elected permanently, Spangler and his followers were locked out of the House, and the Governor's bills were passed finally. (Edward T. Paxton, "Feuds and Politics in Pennsylvania," National Municipal Review, X , N o . 7 [July, 1 9 2 1 ] 366-68.) 3. Pinchot did not make a practice of personally pushing his legislative program. He relied on friendly leadership in the House of Representatives, especially in 1923, and on friendly committee chairmen instead of his patronage power. He generally appointed men in both his administrations whom Mr. Grundy favored or who were favored by county organizations with w h o m Mr. Grundy was friendly. Regarding his highway building program, one observer wrote in 1933: "His [Pinchot] love of highway building is not unconnected with the fact that it provides excellent patronage for rural lieutenants in strengthening the Pinchot-Grundy machine." (Isador Feinstein, " A Gentleman in Politics," American

Mercury,

Appendix

333

X X I X , N o . 1 1 3 [May, 1933], 84; Also Edward T . Paxton, " G i f f o r d Pinchot's First Legislature," National Municipal Review, X I I , N o . 1 0 [October, 1 9 2 3 ] , 5 6 7 - 7 1 ; and " W h o W o n in Pennsylvania,"

New

Republic, L X I I I . N o . 809 [June 4, 1930], 59.) 4. Mason Owlett, in referring to Weldon H e y b u m , obviously regarded him as a friend of the Grundy-Owlett group in 1947, regardless o f his alliance with M r . Pew in 1 9 4 1 . Regarding his favoring Heyburn's candidacy in 1947, Owlett stated candidly, " W e felt w e had to do something for poor old W e l d o n . " 5. The Pennsylvania State Authority Program was a means to circumvent the constitutional limitations of the state debt that required a referendum before any debt over one million dollars could be incurred. Simply stated, these authorities, of which there were three (General State Authority for construction o f mental hospitals, and other such public building projects, the H i g h w a y and Bridge Authority for highway and bridge projects, and the Public School Authority) operated independently of the state, borrowing and building on their own. Each authority issued bonds (not backed by the state) and the money to retire these bonds came f r o m the rental paid to the Authorities for use o f their projects. W h e n the cost o f the project has been paid for through the rent, the state will take title to the various projects. The rentals are paid for by the state out o f appropriations f r o m the General Fund. It is obvious that this ingenious scheme places a long-term obligation upon the state that must be met by current revenues. It decreases the possibility o f any debt reduction on corporations or any present sources o f state income for that matter, and thus was never regarded with great enthusiasm by the P M A . 6. In Bruce Brumbaugh's A . B . thesis f o r Princeton University, " T h e G r u n d y Movement in Pennsylvania," he writes of the D u f f Fine break that began before Fine's election. His information is based largely upon interviews with M r . Fine and M . Harvey Taylor. B r i e f l y , the Duff-Fine forces were l o w on campaign funds after the primary campaign. Messrs. Fine and Taylor met with D u f f in the

334

The Pennsylvania Manufacturers' Association

Governor's office and Taylor suggested that Duff invite Mr. Jay Cooke to Indiantown Gap to discuss the matter. Mr. Cooke then reportedly suggested that a Duff representative be sent to confer with Owlett. At a subsequent Duff-Fine-Taylor meeting, it was decided that Mr. Fine should go to see Owlett and this he did. During the campaign in October 1950, a call came from Duff's office in Harrisburg saying that Owlett had arranged for Fine and a group of Mr. Grundy's men to meet at the Union League Club in Philadelphia. Duff, according to the Brumbaugh report, was reluctant but Fine was anxious to go. The result of this meeting was that an agreement was reached between Fine and Owlett that the Grundy-Owlett group would support the Duff-Fine ticket if Fine agreed to carry out no punitive action against office-holders friendly to the Grundy-Owlett group. This agreement represented the beginning of the ensuing Duff-Fine split. CHAPTER

14

1. Of the senators from Pennsylvania during the lifetime of the P M A , the following would have been considered "friendly": (aside from Senator Penrose 1904-21) a. Philander C. Knox 1904-9 (Rnox and Mr. Grundy were both Penrose allies). b. George T. Oliver 1909-17 (The Oliver group at this time was allied with Senator Penrose and Mr. Grundy against the Progressives). c. David A. Reed 1922-35 (While Senator Reed was not always anxious to have Mr. Grundy's support, he always received it even though he was more closely allied with the Mellon group in Allegheny County). d. Edward Martin 1941-58 (Senator Martin was the last " P M A Senator." While Mr. Martin and Mr. Grundy were not always political allies, especially during the 'twenties and the early 'thirties, they became closely allied during the 'forties and have remained so since that time. During the senatorial primary battle in

Appendix

335

1950, Senator Martin turned a w a y f r o m M r . D u f f to support the Grundy-Owlett candidate, M r . Kunkel.) The following w o u l d have been considered definitely

"un-

friendly" or "indifferent." a. William E . C r o w 1 9 1 7 - 2 1 ( C r o w was allied with Governor Brumbaugh and the Progressives and was always a political foe of Mr. Grundy.) b. George Wharton Pepper 1 9 2 2 - 2 7 (Mr. Pepper should not be considered either friendly or unfriendly. While M r . Grundy did support his candidacy in 1 9 2 1 , M r . Pepper was always more closely allied in the state with the Allegheny County organization and, to some extent, with the Vare organization of Philadelphia.

Mr.

Pepper had best be described as more o f an independent than any group's particular " f r i e n d . " ) c. James J . Davis 1 9 3 1 - 4 5 (Davis received the bulk o f his support f r o m the Allegheny C o u n t y organization, the Philadelphia organizations o f William S. Vare and succeeding groups, and, especially, independent county organizations. He was always opposed by M r . Grundy.) d. Joseph F. G u f f e y 1 9 3 5 - 4 5 , Democrat e. Francis J . Myers 1 9 4 5 - 5 1 , Democrat f. James J . Duff 1 9 5 1 - 5 5 (Mr. D u f f ' s main support came f r o m western Pennsylvania and some up-state independent organizations. W h i l e Grundy and Owlett officially supported him, he was still regarded by P M A leaders as politically unfriendly.) 2. O f the recent Republican representatives from Pennsylvania, most o f them are regarded as " f r i e n d l y " to the P M A (personal interview with M r . Thomas P. O ' N e i l , March 25, 1955). A m o n g them are the f o l l o w i n g : 1. Benjamin F . J a m e s — R o s e m o n t — 7 t h District 2. Karl C . King—Morrisville—8th

„

3. Paul B . D a g u e — D o w n i n g t o w n — 9 t h

„

4. Joseph L. Carigg—Susquehanna—10th

„

5. Edward I. B o n i n — H a z e l t o n — 1 1 t h

,,

The Pennsylvania Manufacturers' Association

336

6. 7. 8. 9. 10. 11. 12.

Ivor D. Fenton—Mahanay City—12th District Walter M. Mumma—Harrisburg—16th „ Alvin R. Bush—Muncy—17th RichardM. Simpson—Huntingdon—18th,, S. Richard Stauffer—York—19th „ James E. Van Zandt—Altoona—20th „ John P. Saylor—Johnstown—22nd „ (While PMA members supported him. the labor element in the area requires that he considers their interests also.) 13. Leon H. Gavin—Oil City—23rd „ 14. Carroll D. Kearns—Farrell—24th ,, 15 Louis E. Graham—Beaver—25th „

The following were regarded as "independent": 1. Hugh Scott—Philadelphia—6th District 2. Samuel K. McConnell, Jr.—Wynnewood—13 th District The following were regarded as "unfriendly" and allied to Senator Duff: 1. James G. Fulton—Pittsburgh—27th District 2. Robert J . Corbett—Pittsburgh—29th CHAPTER

16

1. From Mr. Seeton's 1953 address, reasons why people would join an association like the P M A : a.

T h e y believe in the objectives o f the Association.

b.

T h e y want to secure inside information on new developments.

c.

T h e y like to attend meetings.

d.

T h e y appreciate contacts and companionship.

e.

T h e y want to use the services of the Association.

f.

T h e y want to fight unfair legislation and taxation.

g.

T h e y want to support advantageous legislation.

h.

T h e y want to join because their friends belong.

i.

T h e y seek personal preference and recognition.

Appendix

337

j. They are just "joiners." k. They want to improve the efficiency of their plants. 1. They like floor shows and recreational activities afforded, m. They want to work with competitors and other business people on mutual problems. n. They believe it will save them money. 0. They think it will give them personal prestige. Reasons w h y people do not want to join associations like the PMA.: a. They don't believe in organized efforts or that they can accomplish anything. b. They don't want to spend the money for dues. c. They think they can get the benefits anyway without joining. d. They like to be individualistic. e. They are broke. f. They have had bad past experience with associations. g. They are non-mixers. h. They have an exaggerated opinion of their own ability. 1. They have obtained all they wanted from the Association and are leaving it. j. They can't dominate it so they won't touch it.

Bibliography BOOKS

Alderfer, H. F., and Luhrs, Fannette H. Gubernatorial in

Pennsylvania,

¡922-1942.

State

College,

Elections

Penna.:

The

Pennsylvania Municipal Publication Service, 194.6. (A publication of the Institute of Local

Government,

Pennsylvania

State

College.J Bentley, Arthur F.

The Process of Government.

Bloomington,

Indiana: The Principia Press, 1935. Bonnett, Clarence E. Employers Associations in the United States. N e w Y o r k : Macmillan Co., 1922. Bowden, Robert D. Boies Penrose: Symbol of an Era. N e w Y o r k : Greenberg, Inc., 1937. Cochran, Thomas C., and Miller, William. The Age of Enterprise: A Social History of Industrial America. N e w Y o r k : Macmillan Co., 1943Davenport, "Walter. Power and Glory [a biography of Boies Penrose]. N e w Y o r k : G. P. Putnam Co., 1 9 3 1 . Harter, D. Lincoln, and Sullivan, John. Propaganda

Handbook.

Philadelphia: Twentieth Century Co., 1953. Herring, E. Pendleton.

The Politics oj Democracy. N e w

York:

Norton Co., 1940. Hocker, Edward W . "Bucks County," Southeastern Pennsylvania: A History of the Counties of Berks, Bucks, Chester, Montgomery, Philadelphia and Schuylkill,

Delaware,

edited by J. Bennett

Nolan, Vol. I. Philadelphia: Lewis Historical Publishing Co., 1943K e y , V . O., Jr. Politics, Parties and Pressure Groups. 3rd ed.; N e w Y o r k : T. Y . Crowell Co., 1952.

T h e Pennsylvania Manufacturers' Association

340 Lowe,

Herman

A.

"Pennsylvania:

Bossed Cornucopia,"

Our

Sovereign State, edited by Robert S. Allen. N e w Y o r k : The Vanguard Press, Inc., 1949. Michels, Roberto. Political Parties: A Sociological Study of the Oligarchical Tendencies of Modern Democracy. Glencoe, Illinois: The Free Press, 1949. (Translated by Eden and Cedar Paul, London: Jarrold & Sons, 1915.) Odegard, Peter. Pressure Politics: The Story of the Anti-Saloon

League.

N e w Y o r k : Columbia University Press, 1928. Pepper, George Wharton. In the Senate. Philadelphia: Lippincott Co., 1930. .

Philadelphia

Lawyer:

An

Autobiography.

Philadelphia:

Lippincott Co., 1944. Roper, Daniel C . Fifty Years oj Public Life. Durham, N . C . : Duke University Press, 1941. Stackpole, E. J . Behind the Scenes ivith a Newspaper Man. Philadelphia: Lippincott, 1927. Stevens, Sylvester K. Pennsylvania,

Titan oj Industry. N e w Y o r k :

Lewis Historical Publishing Co., 1948. Stokes, Thomas L. Chip Off My Shoulder. Princeton, N . J . : Princeton University Press, 1940. Truman, David B . The Governmental Process. N e w Y o r k : Alfred A . Knopf Co., 1951. Vare, William S. My Forty Years in Politics. Philadelphia: Roland Swain Co., 1933. Winslow, C . L. State Legislative Committees. Series X L I X , N o . 2, of the "Johns Hopkins University Studies in Historical and Political Science." Baltimore: Johns Hopkins Press, 1 9 3 1 . ARTICLES

Bailey, George S. "Mellonism Takes the Count," The

Nation,

C X X X I I I , N o . 3465, December 2, 1 9 3 1 . Bendiner, Robert. "Pennsylvania Portents," The Nation, CLXIII, N o . 18, November 28, 1946.

Bibliography

341

—. " A n y t h i n g Goes in Pennsylvania," The Nation,

CLXXI,

N o . 18, October 28, 1950. Bliven, Bruce, Jr. "Pennsylvania Under Earle," New

Republic,

X X X X I I , N o . 1 1 8 5 , August 18, 1937. " G o v e r n o r D u f f ' s One-Quarter Billion Dilema," Business

Week,

N o . 1072, March 18, 1950. Chute, Charles L. " C h i l d Labor in Pennsylvania,"

The

Survey,

X X I X , N o . 17, January 25, 1 9 1 3 . Davenport, Walter. "Double-Cross Marks the Spot,"

Collier's,

October 25, 1930. . " B e e r and Vare Will W i n , " Collier's, L X X V I I , N o . 20, M a y 1 5 , 1926. Durham,

Arthur.

"Pennsylvania

Social Service Review,

and

Unemployment

Relief,"

VIII, N o . 2, June 1934.

Evans, Burtt, and Botsford, Samuel. "Pennsylvania After the N e w D e a l , " New Republic, CII, N o . 19, M a y 6, 1940. Everett, George. " T h e R o m i g Decision," American

Federationist,

X X X X I , N o . 10, October, 1934Epstein, Abraham, " A f t e r Four Lean Years," New Republic,

LI,

N o . 652, J u n e 1, 1927. Feinstein, Isador. " A Gentleman in Politics," American

Mercury,

X X I X , N o . 1 1 3 , M a y , 1933. Fox, William T . R . "Legislative Personnel in Pennsylvania," The Annals, V C C , January, 1938. Gentleman at the Keyhole. " A l l or N o t h i n g , " (political comment column), Collier's. L X X X V , N o . 20, M a y 17, 1930. Gosnell, Harold F., and Colman, William G . "Political Trends in Industrial America: Pennsylvania an E x a m p l e , " Public

Opinion

Quarterly, I V , N o . 3, September, 1940. K a u f f m a n , Reginald W . "Pennsylvania Still a Keystone State," The Nation, C X V I , N o . 3009, March 7, 1923. K u l p , C . A . " W o r k m e n ' s Compensation in Pennsylvania," American Labor Legislative 1934-

Review,

The

X X I V , N o . 4, December,

342

T h e Pennsylvania Manufacturers' Association

Lewis, John. "Pennsylvania's Hidebound Revolutionary," Saturday Evening Post, C C X V I I I , N o . 19, November 10, 1945. Lewis, William Draper. " T h e Proposed Minimum W a g e A c t , " The Annals, XLVIII, N o . 7, J u l y , 1 9 1 3 . " A Grudging Senate Seats 'Uncle J o e ' G r u n d y , " Literary

Digest,

CIII, N o . 13, December 28, 1929. "Pennsylvania to Pension the A g e d , " Literary Digest, L X X V I I , N o . 8, May 26, 1923. "Pinchot's Party-Blasting Battle," Literary Digest, CVII, No. 4, October 25, 1930. "Political Portents of the Pennsylvania Primaries," Literary Digest, XLVIII, No. 22, May 13, 1914. " W h y Pennsylvania Picks Pinchot," Literary Digest, L X X I I I , No. 9, May 27, 1922. Margiotti, Charles J . " W h y W e must Revise the Pennsylvania Constitution," The Annals, C L X X X I , September 1935. Matthews, Orus J . "Pennsylvania's Commerce Department," State Government, X X I , N o . 2, February, 1948. McGreary, M. Nelson. " T h e Governor's Veto in Pennsylvania," American Political Science Review, X L I , N o . 5, October, 1947. "Grundy and U s , " The Nation, C X X I X , N o . 3358, November 13, 1929. " M r . Hoover and Mr. G r u n d y , " The Nation, C X X V I I I , N o . 3320, February 20, 1929. " O h , Poor Mr. M e l l o n ! " The Nation, C X X V I I I , N o . 3320, February 20, 1929. "Pennsylvania's G O P is Worried," The Nation, C L I X , N o .

11,

September 9, 1944. The Nation, C X X X V I I I , N o . 10, October 1934. (Re: Governor Pinchot's last legislature.) " W h o W o n in Pennsylvania?" New

Republic,

LXIII, N o . 809,

June 4,1930. "Pennsylvania:—Bosses, N o t the People, Pick the Candidate," Newsweek, X X X I X , N o . 16, April 2 1 , 1952.

Bibliography

343

"Pennsylvania: D u f f Carrying the Ball," Newsweek, X X X V I , N o . 17, October 23, 1950. "Pennsylvania W a y , " Newsweek, X V , N o . 1 1 , March 1 1 , 1940. "Backstage in Washington," The Outlook, CLII, N o . 2, M a y 8, 1929. "Pennsylvania Politics," The Outlook, C L I V , No. 13, March 26, 1930. Payne, Kenneth W . " T h e Tide of the Times," North American Review, C C X X I X , N o . 1, January, 1930. Paxton, Edward T. " G i f f o r d Pinchot's First Legislature," National Municipal Review, XII, No. 10, October 1923. Pray, Kenneth L. M . "Glimpses of the Social Spirit,"

Survey,

X L I I , N o . 24, September 13, 1919. Salter, J . T . " T h e End o f V a r e , " Political Science Quarterly, L, N o . 2, June, 1955. Spaulding, Richard C. "Loosening the Purse Strings,"

National

Municipal Review, X X X I X , N o . 1, January, 1950. "Pay-as-you-go Pinchot," The Survey, X L I X , No. 10, February 15, 1923. " P a y or Quit in Pennsylvania," The Survey, LXII, No. 8, July 15, 1923. " B i g Red and the Standpatters," Time, LI, N o . 25, June 2 1 , 1948. " F r o m Joe to J i m , " Time, X L I X , N o . io, March 10, 1947. " O n e of Those Mornings," Time, LI, N o . 19, May 10, 1948. "President Maker?" Time, L I X , N o . 26, June 30, 1952. " T h e Passing of High-Button Shoes," Time, L V , No. 22, M a y 29, 1950. " W h a t Kind of Party?" Time, L V , N o . 9, February 27, 1950. "Republicans Look to the L e f t ? " U.S.

News and World Report,

X X V I I I , N o . 2 1 , May 26, 1950. Woodward, George. " M y Day in the Legislature," State Government, XII, N o . 9, September, 1939. -. "24 Hours in April," State Government, X , No. 6, June, '937-

The Pennsylvania Manufacturers' Association

344

PUBLIC

DOCUMENTS

Laws of Pennsylvania. Harrisburg: Commonwealth of Pennsylvania, 1913-1951. History of Bills and Resolutions of the Pentisylvania General Assembly. Harrisburg: Commonwealth of Pennsylvania, 1937, 1939, 1941, 1943. 1945, 1947, 1949, 1951Pennsylvania Manual. Harrisburg: Commonwealth of Pennsylvania, 1927-1954. Pennsylvania Statutes. 1552, 1937. Subcommittee of the Judiciary Committee of the United States Senate: Hearings (pursuant to Senate Resolution 20), Part II, Washington: United States Government Printing Office, 1930. R EPORTS

Franey, H. "Report of the President," Minutes of the Convention of the Pennsylvania Federation of Labor, 1927. Jones, E. N. "Report of the Secretary of Labor and Industry of the Commonwealth of Pennsylvania," Minutes of the Convention of the Pennsylvania Federation of Labor, 1935. Tax Study Committee. The Tax Problem: Report of the Tax Study Committee. Harrisburg: Commonwealth of Pennsylvania, May, 1953UNPUBLISHED

MATERIAL

A. P M A Material Minute Books Vols. I and II containing the minutes of the Annual Meetings and the Executive Committee (now Board of Governors) meetings of the Pennsylvania Manufacturers' Association from 1909 to 1953. Minute Books of the Pennsylvania Manufacturers' Association Casualty Insurance Company and the Fire Insurance Company from 1917 to 1953. Legislative Bulletins, 1917-1953. Monthly Bulletin, 1917-1953.

Bibliography

345

General Bulletin, May, 1953. Statement of the P M A submitted to the Health Subcommittee of the Labor and Public Welfare C o m mittee of the United States Senate, March, 1953. General Bulletin, May, 1953. Statement of the P M A submitted to Subcommittee #2 of Select Committee on Small Business of the House of Representatives of the United States Congress, March, 1953-

Grundy, Joseph R. Address before the Union League Club of Philadelphia, November, 1949 (mimeographed copy from P M A fdes). . "Pennsylvania's Relationship to the Protective Tariff Principle," statement before the Subcommittee of the Judiciary Committee of the United States Senate investigating lobbying, October 24, 1929. (Printed booklet from P M A fdes.) . T w o undated memos regarding the candidacy of Mr. J a y Cooke for the Republican nominee for United States senator, 1940 and 1942. (Mimeographed copies from P M A fdes in Mr. Grundy's portfolio.) . Letter written by Mr. Grundy to P M A members during the Duff-Kunkel senatorial primary contest in 1950. (Mimeographed copy from P M A fdes.) Also enclosed with the letter were t w o pamphlets, one containing a reprint of an editorial from The Bristol Courier, March 27, 1950, and one containing a reprint of an editorial from the same paper of March 20, 1950. (Mimeographed copies from P M A fdes.) " W h o is Joseph R. Grundy?" Campaign pamphlet issued by the Republican Committee for Joseph R. Grundy for United States Senator, 1930. (From P M A files on Mr. Grundy.) Special mimeograph on M r . Grundy's background from P M A fdes on Mr. Grundy. Seeton, John H. " T h e Value of a State Manufacturers' Association." Address before the P M A organization members and officers, October 22, 1953. (Mimeographed copy from P M A fdes.) . Address to P M A organization members and officers, 1950.. (Undated mimeographed copy from P M A files.)

The Pennsylvania Manufacturers' Association

346

. Memo to all Executive Committee members regarding membership and dues, 1949. (Typewritten copy from P M A files.) B . Theses Brumbaugh, R. Bruce. " T h e Grundy Movement in Pennsylvania." Unpublished thesis for the Bachelor of Arts degree, Department of Politics, Princeton University, 1953. Humes, Samuel. " T h e Role of G.O.P. Leadership in the Keystone State." A n unpublished thesis for the Bachelor of Arts degree, Politics Department, Williams College, 1952. Owlett, Edward N . " T h e Pennsylvania Manufacturers' Association: A Study of Business in Government." An unpublished thesis for the Bachelor of Arts degree, Department of Politics, Princeton University, 1948. NEWSPAPERS

Bethlehem Vindication. June 25, 1952. Butler Eagle. June 1948 and 1952. Evening Public Ledger. 1920-1942. Harrisburg Patriot. June 8, 1952. Johnstown Democrat. June-July 1948, and June-July 1952. New Castle News. June-July 1948, and June-July 1952. New York Times. 1 9 1 3 - 1 9 5 4 . Philadelphia Inquirer. 1920-1955. Philadelphia Public Ledger. 1920-1934. Philadelphia Record. 1920-1947. Pittsburg Post-Gazette. June-July 1948, and June-July 1952. Pittsburg Press. June-July 1948, and June-July 1952. Pittsburgh Sun-Telegraph. June-July 1948, and June-July 1952. Scranton Times. June-July 1948, and June-July 1952. Williamsport Sun. June-July 1948, and June-July 1952.

Bibliography

347 PERSONAL

INTERVIEWS

Mr. Stanley Atkiss, Assistant Underwriter and Assistant Production Manager of the P M A Casualty Insurance Co., July 8, 1954. Mr. Harry M. Engell, Secretary of the P M A Insurance Companies, October 30, 1953. Mr. Lew Hotchkiss, May 4, 1953. Mr. Joseph R. Grundy, May 12, 1953, and by telephone, December 17. 1953Mr. Thomas P. O'Neil, Public Relations Manager of the P M A , October 30, 1953, March 1 1 , 1954, and March 25, 1955. Mr. G. Mason Owlett, President of the P M A , October 13, 1953, October 19, 1953, December 17, 1953, May 4, 1953, June 23, 1954. M r . John H. Seeton, Secretary of the P M A , October 13, 1953, October 30, 1953, March 25, 1955, and by telephone March 22, 1955-

Index A

B

Access : for a political interest group

Baker, Harry W . , 215, 221, 227,

o f the Pennsylvania State govern-

238,273

ment, 186-187, 195-197; to the

Baldwin, Richard J., 2 1 7 - 2 1 9

Republican Parry, 197-200; and

Bausher, J. Lee, 40

the role o f "status", 198-199; to

Beidleman, Edward, 215, 218, 222,

Senators and Representatives from

238

Pennsylvania, 200-202, 205 ; to

Berger, James S., 259

Governors o f Pennsylvania, 2 1 9 -

Bethlehem Steel C o m p a n y , 55, 161,

220; relation to specific lobbying methods o f the P M A ,

260-266;

analysis o f P M A methods to gain access to accomplish

legislative

goals, 282-290; P M A policy

of

balancing points o f access, 286-

278 B l o o m , George J., 215-216, 294 " B l u e Bell B o y s , " 250, 295 Bluett, Thomas, 225 B l u m , Herman, 274 Board o f Governors, o f P M A , 5961, 66, 70, 80-81

290; as a criterion o f P M A success,

Bohlen, Professor Francis H., 274

312

Boorse, H o w a r d C . , 260 Borah, W i l l i a m E., 160

Alter, George E., 225-226 Ambler, Charles A . , 217

B o w e r , A d a m T . , 259

American Federation o f Labor, 15

Bristol Courier, 164, 168

American Tariff League, 164, 274 Annenberg, Moses, 234 Articles o f Agreement, o f the P M A , 21-22;

amendments

to,

28-29,

39-41, 53-54 Associated Petroleum Industries o f Pennsylvania, 56 Atterbury, Gen. W . Wallace, 227, 230-231,277

B r o m l e y , Henry S., 92 B r o w n , Francis S., 229-230,275-276 B r o w n , C o l . Millard D., 44, 66, 80, 304 Brumbaugh, Martin G., 118, 125, 217-218, 256-257 Bureau of W o r k m e n ' s Compensation

o f Pennsylvania,

120-121;

W o r k m e n ' s Compensation Board of, 195

Index Businessmen in politics, 101-102, 190-191, 264-265, 291, 302

C Capital Stock tax in Pennsylvania, 107-109, 116, 235, 241, 247-248, 254-255, 296-297 Caraway, Thaddeus H., 160-161, 201-202, 210 Coles, Charles A., 253 Committee on Forests, Water, Game and Fish (Pennsylvania State Senate), 252-253 Committees and their Chairmen of the Pennsylvania Legislature, 185188, 196, 255, 260; and lobbying, 262-266 Committee to Investigate Campaign Expenditures, of the United States Senate, 1926, 211-212, 222223 Committee to Investigate Lobbying of the United States Senate, 1929, 158-161, 202-203, 269-270 Committee on Insurance (Pennsylvania State Senate), 255 Committee on Finance (Pennsylvania State Senate), 255 Committee on Labor and Industry (Pennsylvania State Senate), 258259 Committee on Municipal Corporations (Pennsylvania State House of Representatives), 260 Committee on Public Health (Pennsylvania State Senate), 253

349 Committee on State Government (Pennsylvania State Senate), 259 Committee on Workmen's Compensation (Pennsylvania State Senate), 253; (Pennsylvania State House of Representatives), 258259 Cooke, Jay, 201, 205, 215-216, 233,250,283,293-294 Coolidge, Calvin, 172, 268, 270 Corporate Net Income Tax in Pennsylvania, 109-110, 116, 254, 312,314 Coyne, State Senator, 227, 255 Cunningham, Thomas W . , 229 D Davis, James J., 83, 201, 230, 234, 274-276,286-288 Dawson, Miles, 256 Delaware River Basin Pact of 1945, 252-253 DeLong, Paul A., 259 Democratic Party, 117, 133 ; and the PMA, 202-205; 2 2 3. 2 3 2 . 2 79. 286, 297, 300 Department of Industry of Pennsylvania, 192-194 Department of Internal Affairs of Pennsylvania, 183 Department of Labor and Industry of Pennsylvania, 138, 142, 194195,232 Devlin, Buck, 226 Dewey, Thomas E., 216, 243-247, 268,289 Diehm, Graybill, 250

Index

350 Fox,

Dietrick, George H., 252

William

Dodge, K e m , 231

Pennsylvania

Duff,James, 138, 1 5 0 - 1 5 1 , 1 9 2 , 2 1 5 -

by, 189

T.

R.,

State

study

of

Legislature

216, 2 3 8 - 2 5 1 , 258-260, 287-288, G

293-294 General

Durham, Israel, 18

Assembly

(Pennsylvania

State Legislature), 18, 109, E Earle, George H., 123, 137, 1 4 2 - 1 4 4 , 146,

149, 204, 2 1 4 - 2 3 2 ;

PMA

opposition to legislation during administration of, 2 5 4 - 2 5 5 ; 287, 299 Eisenhower, D w i g h t D., 174, 2 1 5 216, 268, 280 Advisory

Council

of

P M A , 47, 56, 63-^4, 72, 74 Employers'

tion of, 184-188, 219, 228, 232, 238, 240, 244, 252, 257, 258, 260, 282, 285-286, 290 Governor of Pennsylvania : powers of, 1 7 9 - 1 8 4 ; access to, 219-220, 228;

importance

of

to

PMA,

282-286 Green, C . Edward, 234

Eisenlohr, Otto, 20, 27 Employers'

117,

138, 140, 180; general descrip-

Association

of

Pitts-

burgh, 30

Grundy, Joseph R. : as founder of P M A , 1 9 - 2 1 , 3 0 1 - 3 0 2 ; 24-25, 27, 29, 32, 36, 40-44. 47, 53. 6 1 , 72-73, 79; political and economic philosophy of, 8 1 - 9 0 ; 92, 125,

Engell, Harry M., 66

I 3 4 - I 3 Î . 1 3 7 . 140, 144. 150, 153.

Estes, Carl, 237

157;

Executive Committee of P M A , 2 1 -

tariff, 1 5 8 - 1 6 2 ; 164, 1 6 8 , 1 7 0 , 172,

22, 24-47, 164

views

on. the

protective

1 9 0 - 1 9 2 ; and the national organization of the Republican Parry, 199-200; and the Senators and

F

Representatives

Farrcll, James A., 278 Feeny, Frank, 275 Fine, John, 1 1 3 , 1 9 3 - 1 9 4 , 246, 249, 2 5 1 , 289, 291 Fisher, John S., 83, 2 1 1 ,

220-225,

229, 2 7 1 , 273, 283, 294 Flynn, Hon. John M . , 38, 42; as P M A president, 9 1 , 93, 125, 162, 172, 204, 265, 292 Folwell, Nathan T . , 2 1 2

from

Pennsyl-

vania, 200-202, 205, 209; and the Vare organization, 2 1 0 - 2 1 3 ; and Mr. Joseph N . P e w , Jr., 2 1 4 - 2 1 5 ; electing friendly legislators, 2 1 6 219;

relations

with

Fisher, 2 1 9 - 2 2 9 ;

Governor

relations

with

Governor Pinchot, 2 2 5 - 2 3 2 ; relations

with

Governor

James,

2 3 2 - 2 3 8 ; relations with Governor

Index

351

Duff,

238-251;

255;

and

the

Hinrod, Ray, 20, 38, 257

passage of the Workmen's C o m -

Homshcr, John G., 254

pensation Act of 1 9 1 5 , 2 5 5 - 2 5 8 ;

Hoover, Herbert, 2 6 8 - 2 7 1 , 2 7 4

and P M A lobbying methods, 260 -266; 268-269; personal

lobby-

ing for the tariff, 268-273; and the Republican

Senatorial

pri-

mary

273-279;

280;

of

1930,

analysis of methods to accomplish legislative policies, 282-290; use of national politics to strengthen

I Industrial

Commission,

117-118,

256-258 Insurance Commissioner of Pennsylvania, 232, 250, 286 Iron League of Philadelphia and Vicinity, 56

state political position, 287-294; and

competition

with

can Party, 294-299; 305; effect of political activities on

J

other

groups for access to the Republieconomic

James, Arthur, 96, 126, 143, 2 1 5 , 2 3 2 - 2 3 8 , 2 5 2 , 293,295 Johnson, Alba B . , 224

interest of P M A members, 3 0 5 3n;3i3

K

Guffey, Joseph, 201

Klein, Frederick H., 70 Kressler, Kenneth F., 250

H

Kunkel, John, 250, 283

Haas, F. Otto, 56 Hall, Charles B . , 229 Hallowell, H. Thomas, Jr., 56

L Lawrence, David, 204

Harding, Warren G., 268

Lawrence, Harry C., 38-39

Harer, W . Clyde, 2 1 5 , 238

Leader, George, 204

Harman, William H., 2 1 5 , 238

Legislators of Pennsylvania General

Harris, Frank J . , 2 1 5 , 233-237, 238

Assembly: analysis of, 188-192,

Harris, J . M., 20-21

196; and P M A lobbying, 260-

Hatch Act, 298

266, 286

Hazlett, James M., 229

Lewis, Samuel S., 229, 234, 237, 274

Helm, W . Stuart, 258

Lichtenwalter, Franklin, 241

Hemphill, J o h n M., 230, 277

Livingood, William S.,Jr., 249

Herring, John B . , 252 Hctzel, George C . , 256

M

Hcyburn, Wcldon, 238, 255

Mahany, Rowland B., 259

Hill, Chester W . , 2 1 2

Mallery, Charles H., 259

Index

352 Malone, James F., Jr., 60, 80, 193, 250,268, 282 Manufacturers' Association of Beaver County, 257 Manufacturers' Association of Erie County, 38,257 Manufacturers' Association of Lackawanna County, 31 Manufacturers' Association of Lycoming County, 31, 49 Manufacturers' Association of Montgomery County, 30,49 Manufacturers' Association of York County, 3 8 Martin, Edward M., 1 5 0 - i j i , 171, 215, 238-239, 245-246, 279, 293 Maxey, Justice George W., 123-124, 246 McClure, John J., 215, 246, 250, 255 McDevitt, John J., 257 Meade, William F., 198,245-246 Meehan, Austin, 246 Mellon, Andrew, 83, 172, 214, 220, 223,268,275 Mellon, William L. (and political organization of), 220-221, 223228, 271, 273-279, 285-286, 292, 296 Murdoch, Mrs. Katherine, 216 N National Association of Manufacturers, 15, 46; National Industrial Council, subsidiary of, 46; relations with PMA, 69-71,267 National Child Labor Committee, 18

O O'Neil, Thomas P., 59,237 Owlett, G. Mason, 43, 56, 60, 62, 65, 79, 80-81; political and economic philosophy of, 95-103; 110, 1x3, 127; tariff views of, 162-164, 166-167, !73. x 9 8 . 214-216, 234, 236-238; relations with Governor Duff, 238-251; 2 53. 258-260; and PMA lobbying methods, 260-266; 280; analysis of methods to accomplish legislative goals, 282-290: use of national politics to strengthen the state political position, 287-290; political activities and PMA as a political organization, 290-294; 302, 307 P Pell, Herbert, 177 Pennsylvania Association of Dyers and Cleaners, 155-156, 290 Pennsylvania Bakers' Association, 153-155 Pennsylvania Employer—Wage Earner Job Protective Association, 279-281, 309 Pennsylvania Federation of Labor, 121-122, 257 PMA: analysis of success, 311-315 — as a political interest group: 222 3i 74-75; and the Republican Party of Pennsylvania, 197-198, 290-294; competition with other interest groups, 294-297; and the development of new interest

Index

353

groups, 297-299; role of leadership in,

301-302;

problem

— Monthly Bulletin:

of

special interest group of

PMA

organization leaders and

mem-

1 6 6 , 1 6 8 , 1 7 1 - 1 7 3 , 218, 279 — policies toward anti-stream pollu-

bers, 3 0 2 - 3 1 1

tion, 1 4 8 - 1 5 2 , 3 1 4

— Casualty Insurance

Company,

— policies toward F E P C

1 1 6 , 1 3 0 - 1 3 2 , 1 7 0 , 1 9 3 , 218

— policies toward

— financial contributions to political

hour legislation, 1 3 3 - 1 4 1 — policies toward national legisla-

ing of, 3 5 - 3 7 . 6 5 - 6 9 , 1 1 6 , 1 3 1

tion, 1 5 7 - 1 5 8

— internal leadership and cohesion,

—

toward

New

Deal

— policies toward old age pensions,

— Legislative Bulletin: founding of, 3 2 - 3 5 ; 46, 6 1 - 6 3 , 1 1 2 , 1 4 5 - 1 4 6 ,

152-153,223-224 — policies toward tariff legislation,

186, 218, 259, 261-262, 266 associations

of:

1 5 8 - 1 6 5 , 287-288 early

—

development of, 29-32, 38; relation to local political organizations, 2 1 0 - 2 1 1 ;

legislators,

analysis of purpose of, 290-291

in

compensation, 1 4 5 - 1 4 8 , 2 4 1 and

child labor, 261, 3 1 4 — policies toward workmen's compensation, 1 4 5 - 1 4 8 , 2 4 1

— methods used to gain access to Party

and

— political and economic philo-

to

Pennsylvania legislators and G o v -

sophy of leaders of, 79-103 — "sectionalist" policies, 1 7 0 - 1 7 2 ;

ernors, 209-251

toward T V A , 1 7 1

— methods used to influence legis267-281;

taxation

— policies toward women's

— membership, 48-57 Republican

toward

— policies toward unemployment

relation to the

of friendly

policies

Pennsylvania, 1 0 7 - 1 1 6 , 313

2 1 8 - 2 1 9 ; and lobbying, 262-266;

lation,

policies

legislation, 1 6 5 - 1 6 7

24-28, 4 1 , 45-46, 5 9 - 6 1 , 7 9 - 8 1 , 301-302

the

labor

— policies toward general wage and

organizations, 2 1 1 - 2 1 3 — Fire Insurance Company, found-

election

general

legislation, 1 4 1 - 1 4 5 , 3 1 4

— finances, 48, 57-58

local

legisla-

tion, 145

31, 3 3 ; founding of, 3 5 - 3 7 , 6 6 - 6 9 ,

—

founding of,

32, 34, 46, 6 1 - 6 3 , 92, 162, 165,

to

influence

tariff legislation, 269-272,

279-

—

structural

and

administrative

relations and changes, 36-47

2 8 1 ; testifying before legislative

— views on U . S . foreign policy, 172-175

committees, 267; political acti-

Pennsylvania

vities to P M A leaders, 268

Railroad,

198,

227,

2 3 1 , 245, 283-284, 297,299-300

Index

354 Pennsylvania State Fund for W o r k men's Compensation,

120,

128,

Commission

Pennsylvania

State

Government :

description of organizaition of, 179-197 Penrose, Senator Boies, 18, 82, 2 1 3 , 225-226, 256, 268, 3 1 0 Hon.

George

W.,

211,

2 2 1 - 2 2 2 , 236, 276, 287

Reed, Senator David A., 170, 226227, 256-257, 271, 276 Republican Party, 103,

202; national

organization

the

199-200;

PMA,

Philadelphia Electric C o m p a n y , 237 Philadelphia Inquirer, 280 131,

277,

222,

283-285,

308

235;

National

of

1940,

236-237;

Convention

of

1948,

2 4 3 - 2 4 7 ; Senatorial and Gubernatorial Primary of 1950, 2 4 7 protective tariff, 272; 277, 283, 286,

288,

290;

PMA's

close

association with, 2 9 1 - 2 9 2 ; P M A ' s influence over, 292-294; P M A ' s

Pinchot, Mrs. Gifford, 96

competition with other groups

Powell, Edwin, 28 pro

tempore

for access to, 294-299; 294-295; of

Pennsylvania State Senate,

the 184-

1 8 5 , 1 9 6 , 253, 263 Progressive movement, 1 6 - 1 7 , 1 1 7 , I2

233,

2 5 1 ; 254, 256; platforms and the

Phillips, Thomas W . , Jr., 229 239,

232,

National

239.255,293.295.298

225-232,

and PMA

methods to gain access to, 2 1 1 Convention

121,

192;

local political organizations, 1 9 7 -

Pew, Joseph N . , J r . , 150, 2 1 5 , 2 3 2 -

Gifford,

134,

interest groups and Republican

216;

President

on

American Tariff Policy, 1 6 4 - 1 6 5

Peters, Fred C . , 241, 250, 295

Pinchot,

Report

Rawle, J . W . , 43,90-99, 265

130,193

Pepper,

Randall

5 . 133—136, 2 1 7 , 228, 230, 256

Prohibition, 274-275, 277-279

and relations with P M A result

o f its leaders'

305-311;312-313 Rockwell, Willard F „ 56 Roosevelt, Franklin D., 279 Rowland, Roger, 279-280, 291

Public Utility Commission of Pennsylvania, 195, 237

Q Quay, Matthew, 1 8 - 1 9 , 2 1 3 R Rambo, Joseph R., 2 0 - 2 1 , 3 1 - 3 9

as a

activities,

S Salus, Samuel, 225 Sanitary

Water

Board

of

the

Department of Health of Pennsylvania, 192 Scott, Hugh D . , 216, 245 Scranton, Mrs. Worthington, 245

Index

3 55

Secretary of C o m m e r c e o f Penn-

Tax

Study

Committee

Sccton, J o h n M . , 52, 56, 59, 69; speech on P M A as a service and

Pennsylvania, 1 1 0 - 1 1 2 , 312

169, 267, 2 8 1 , 303-304, 3 1 5

Taxation

Shade, James E., 40, 59, 66, 279

on utilities in

259-260, Pennsyl-

vania, 1 1 2 - 1 1 3 , 1 1 6 , 235, 2 4 1 , 254

Shoemaker, Harry J . , 20, 3 1 , 2 1 5

T a y l o r , Hon. M . H a r v e y , 192, 2 1 4 -

Siggins,John,Jr., 237

2 1 5 , 2 3 3 , 2 4 6 , 249-250, 293

Simpson, Richard, 164, 239, 288

Textile industry, 1 5 , 19, 22, 50, 9 6 -

Smith, Alfred E . , 278

9 9 , 1 0 1 - 1 0 3 , 304

Smock, R a y F., 246 Tariff

Penn114-116

Taxation by local governments in

promotional organization, 7 1 - 7 5 ,

Smoot-Hawley

of

sylvania, Report of, 1953,

sylvania, 192

Torrance, James F., 238 Act,

83,

2 7 1 - 2 7 2 , 289, 3 1 0

T r u m a n , Professor D a v i d B . ,

26,

34, 60, 69, 307

Solcliac, E d w a r d A . , 2 0 - 2 1

T r u m a n , Harry S., 1 6 7

Sordoni, A n d r e w J . , 291

Turner, E l w o o d , 252

Speaker of the House of Representatives of the Pennsylvania State Legislature: powers of, 1 8 7 - 1 8 8 ; 196,263

U Unemployment

Compensation

Division o f P M A , 47, 56, 6 3 - 6 4 ,

Sproul, William C . , 225 State Authority Program, 247 State Fund for W o r k m e n ' s Insur-

72,74 United States Steel C o m p a n y , 55, 1 6 1 , 278

ance, 1 2 0 , 1 2 8 , 1 3 0 , 1 9 3 Status: of interest groups, 1 9 8 - 1 9 9 ; of P M A members, 2 1 1 ; 3 1 2

V Vauclain, Samuel, 230

Stead, Mitchell, 20

Vandenberg, Senator Arthur H., 244

Steel Boiler Institute, Inc., 56

Vare,

Stevenson, George B . , 259

William

S.

(and

political

organization o f ) , 18, 83, 1 5 2 , 1 9 7 -

Stotesbury, E d w a r d T . , 230

198, 2 1 4 , 2 1 7 , 2 2 1 - 2 2 7 , 2 2 9 - 2 3 1 ,

Strickler, General Daniel B . , 238,

2 7 3 - 2 7 4 , 283-284, 286, 292, 296, 308

246 Sun Oil C o m p a n y , 55 T T a f t , Robert A . , 174, 2 1 6 , 2 8 9 Tallman, O . J . , 239

W Walsh, T h o m a s J . ,

160-161,

210 Walter, Francis E., 204

202,

356

Warren, Earl, 246-247 Watkins, Harold, 250 Weigand, Benjamin M., 279 Williams, David, 279 Wilson, Henry I., 253 Winslow, C. L., study of legislative committees by, 185-187

Index Wood, John P., 21, 257 Wood, Lloyd S., 249, 294 Woods, Cyrus E., 222 Workmen's Compensation Act of 1915: passage of, 1 1 7 - 1 1 9 , 255258; amendments to, 119-128, 258-259