Tuesday, April 3, 2012

Montgomery Ward vs. the President

In 1944, World War II was in full swing, and American President Franklin D. Roosevelt was full aware that America's greatest advantage in the conflict was its capability for production. The President, asserted his use of the War Labor Disputes Act which allowed the federal government to seize production businesses and industries which were under the threat of a strike, despite the fact that the law had passed a year earlier over his veto. One of the main companies on his radar was the retail distribution giant Montgomery Ward.

Montgomery Ward's value was heavily invested in 1920, and as a result the company had lost a fortune during the Great Depression. In the years following, it continued to expand , opening hundreds of stores nationwide, but no longer turning a profit. In the meantime, U.S. Gypsum, headed by notoriously conservative Sewell Avery, had saved its money and laid off half of its staff during the Depression,and therefore watched its fortunes grow over the course of the 20's. J.P. Morgan, one of Montgomery Ward's prime investors, asked Avery to take over Montgomery Ward, and he agreed. By the time the U.S. became involved in World War II, Montgomery Ward was a crucial business to the war effort, supplying the Allies with a wide variety of necessary items. Sewell was, however, a rabid capitalist. He opposed Roosevelt at every opportunity, and was dead set against any kind of unionization, which would eat into his profits; he would, on occasion, call an opponent a "New Dealer", which he intended as an insult. He once said that "If anyone ventures to differ with me, of course, I throw them out of the window."

President Roosevelt ordered the War Labor Board to require that Montgomery Ward to be opened to unionization, and Sewell said no; 12,000 company workers then went on strike. President Roosevelt then ordered Under-Secretary of State Wayne Taylor to assume control of the company. Both participants were widely criticized for their roles; Roosevelt's interpretation of the War Labor Disputes Act stretched its intentions and limits, and Sewell was placing his own company's profit margin over the need for wartime production and supply. US District Court Judge Philip L. Sullivan was chief among the detractors, informing the President that his action was not supported by either the War Labor Disputes Act or previously established war power of the Presidency, but he also levelled charges of "selfishness, arrogance, [and] intolerance" at Avery, adding that "[t]he peacetime privilege of engaging in prolonged labor disputes should be voluntarily suspended for the duration" of the war.

When, on April 27, 1944, in the Montgomery Ward corporate offices in Chicago, an official from the US Department of Commerce handed Avery the Presidential order to step down, Avery refused to accept it. Two US Army soldiers, sent to enforce the order, then lifted Avery bodily and carried him to the elevator. Avery refused to step aboard, so they picked him up again and carried him inside. On the main floor, Avery once more refused to budge, and the two Army soldiers - who have never been positively identified - lifted him for a third time and carried him out to his waiting car. AP photographer Harry Hall was waiting, and captured a memorable photo of Avery, comfortable and serene, arms folded on his chest, as he was being carried out of his building. The soldiers set him down, Avery smiled, got in his limousine, and sped away.

Eight months later, President Roosevelt expanded the action against Montgomery Ward, and ordered that all of their properties across the nation be seized; the issue was taken to court, but was dismissed as moot when President Truman ended the action after Roosevelt's death in April of 1945. Sewell Avery remained Chairman of the Board of Directors for Montgomery Ward until 1954, spanning the majority of the post-war boom years. He remained convinced of a second coming Depression, and so the company was out-invested by other retail giants such as Sears Roebuck. Having never been able to recover from its lost potential income, Montgomery Ward declared bankruptcy and closed for good in 2001. Three years later, its name was purchased by another investor and it now exists as an online retailer.

U.S. Gypsum, on the other hand, is a Fortune 500 company with over 10,000 employees worldwide, and more than three billion dollars worth of sales in 2009.

Links and Sources:

"A Judge and the Law", in Life Magazine, February 12, 1945.

Faber, John, Great News Photos and the Stories Behind Them, Courier Dover Publications, 1978.
Farrell, Chris, The New Frugality: More to Consume Less, Save More, and Live Better, Bloomsbury Publishing USA, 2009.
Gordon, John Steele, The Business of America: Tales from the Marketplace, Bloomsbury Publishing USA, 2002.

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