Industry After the Revolution: A Case Study

Industry After the Revolution: A Case Study ​

The terms of the National Industrial Recovery Act gave the central government plenipotentiary powers to restructure the American economy. The National Recovery Commission, also known as the Scott Commission after its chairman, Howard Scott, had been given generous resource grants by the government, and had the active cooperation of Premier Foster and the heads of the many cabinet secretariats.

With this carte blanche, the Scott Commission acted zealously to “rationalise the system of industrial production through scientific management and proletarian power.” The new industrial system would avoid the duplication of effort in capitalist competition, and the squandering of labor in unproductive busy work to drive sales and promote products.

On the high level, this involved the all-union government taking a direct role in the planning of both major infrastructure as well as the control of basic commodities. A system of emulation and incentives developed by Polish emigre economist Oskar Lange and others from the University of Chicago had been theorized, and was now being progressively put into practice. Using mathematical techniques such as linear algebra, the State Planning Commission guided research and development to streamline and economize production and resource use.

The Scott Commission also worked to reform and rationalize many industries, guiding mergers and liquidations with an eye to serving the needs of both the civilian and military economy. We shall focus on the reorganization of the automotive industry to serve as a case study in how the new economy was reorganized.

The automobile had played a decisive role in the Civil War. For every tank or plane that captured the world’s attention in photos and news reels, there had been dozens of trucks hauling the food, fuel and munitions to keep the army moving. The infantry kept pace with rapid tank manoeuvres by riding in the back of cargo trucks or commandeered passenger cars. Makeshift armored cars had performed the reconnaissance and screening role previously occupied by the cavalry, and some hastily assembled armored trucks had protected mechanized infantry in the advance.

The automobile had major importance in the civilian economy, supplementing the trains by carrying goods in the final miles to their destinations. Passenger cars were common among the more affluent, particularly in more rural and suburban contexts. The key to agricultural productivity had been the automotive tractor, enabling American farmers to produce far more food with less labor than anywhere else in the world.

The automobile industry had been one of the hardest hit by the Depression. Dozens of small firms competed in the market, and the supply chains of the Red Army had been a bedlam caused by unreliable models, innumerable incompatible spare parts and the devilry of trade secrets.

Many of these firms existed in name only by the end of 1933. Their machine tools had been appropriated for other purposes by the workers’ soviets and factory committees, particularly the manufacture of small arms and military necessities. Others had been shuttered by the soviets to free up labor for more war critical work, and concentrate trained automotive workers at the largest and most efficient firms.

In this sense, the reorganization plan crafted by the Scott Commission in the Fall of 1934 was a fait accompli.

The Ford Motor Company had been the largest and most well known of the automakers, and had the most international presence.The revolution had essentially split the company into three parts: the Canadian factories had come under the control of a reorganized Ford Motor Company following receivership proceedings, with Edsel Ford as president and largest shareholder. European assets had remained under Henry Ford’s control under the Ford-Werke GmbH name.

The factories in the former United States, representing the largest share of the assets had been seized by their workers following the Putsch. During the Civil War, the company’s largest and most advanced plant, the River Rouge Complex, had been converted to a tank plant under the supervision of J. Walter Christie. Thanks to the ingenuity of the plant staff and the around-the-clock effort by the workers, the plant had begun production within six-weeks, and would produce the bulk of the Red Army’s tanks for the summer and fall campaigns.

This feat would earn the workers of Rouge River a collective awarding of the Order of the Red Banner of Labor in 1935. And as part of the possibly vindictive efforts of the Scott Commission, the Ford Motor Company would be transformed into the Detroit Arsenal to humiliate the already infamous Ford Sr. in his exile. Detroit Arsenal would be the primary supplier of tanks and other ground combat vehicles, controlling a growing network of assembly plants and supply chains.

As a “state defense corporation”, Detroit Arsenal would be wholly owned by the all-union government. Day to day operations at plants would be administered by elected factory committees, and workers would collectively bargain their conditions, but policy would primarily be dictated by an appointed executive committee, though workers would soon earn representation on this committee.

Like all state enterprises, investment, capital goods and R&D would be paid for by appropriations from the single state budget. Accounting was open and subject to inspection by the Workers’ Inspectorate, though the national security juries would censor documents to prevent the disclosure of state secrets. All products would be sold at cost.

Ford’s largest rival, the giant General Motors conglomerate, would undergo its own major reorganization. Financially, it had been one of the best suited automakers to ride out the Depression, but internally the corporation was a morass of competing fiefdoms and a bewildering array of different marques catering to different market price points.

Renamed the Dynamo Collective by a vote of the workers in September 1934, most of the many smaller firms the conglomerate had accumulated would be liquidated in the change. The survivors would be reorganized to serve the needs of proletarian society.

Dynamo would be subject to regulation under the Lange system like most large firms, and the state would take a major ownership stake. But to reward dynamism and trial different management systems, most of the corporation’s stake would be owned by its workers in association. Many other firms would trial similar arrangements with varying details; the unifying features were some form of democratic administration by a mix of the workers themselves and the governmental soviets.

Cadillac, the old luxury marque of General Motors, would survive the reorganization by serving as the racing and research division. Motorsports had proven to be quite popular, and the Scott Commission hoped to promote it further as a means to drive the cutting edge of automotive technology.

This had become all the more important with the liquidation of the tetraethyllead industry in early 1935. This lead compound had been introduced by General Motors researchers in the 1920s as a means of solving the engine-knock problem and allowing gasoline engines to gain power and efficiency through higher compression ratios. Engine-knock occured when the fuel/air charge would prematurely detonate during the compression stroke of the engine before it could be ignited by the spark plug. These energetic detonations were not only mistimed and thus robbed energy from the delicately timed engines, but also caused major stress to the engine components.

Tetraethyllead solved the problem of engine knock more effectively than other known compounds. Unfortunately, it is highly toxic, and the manufacture of tetraethyllead had caused numerous worker deaths in high profile incidents, and growing long-term health problems for workers at these chemical plants. The revolutionary government had managed to keep the lid on worker resentment in these plants during the war, but with the defeat of the reactionaries it could no longer be contained.

On 7 February 1935, workers at the Ethyl division of the Bayway Refinery in Metropolis shut down production in a wildcat strike. While plant managers had sent workers from the rest of the refinery to convince their comrades to return to work, this backfired. With concerns about the toxicity of the chemical and the exposure that numerous workers down the supply chain would face, the strike began to spread. By day’s end, the whole refinery had shutdown.

The workers gained national attention, and after three days of consultation, Premier Foster announced a plan to phase out the production and use of leaded gasoline in all but the most critical of military applications, along with a comprehensive reform in safety in leaded gasoline supply chain safety.

Motor sports became the best tool to trial new automotive technologies and gasoline blends to improve power while resolving the issue of knock.

The “parent” of the General Motors conglomerate, Buick Motor Company, had served as GM’s premium marque, priced below the luxury Cadillac but offering style and sophistication above the more economical brands. It is perhaps for this reason that the Scott Commission opted to liquidate the marque, and transfer its assets to other divisions and firms. Most of the other marques would follow soon after: old names in American automobiles like Cartercar, Marquette, Oakland, and Oldsmobile were discontinued, and their divisions reorganized.

In place of divisions based on price point to cater to capitalist luxury and conspicuous consumption, the new divisions of Dynamo would fulfill specific purposes as part of a more managed system of competition. Pontiac would serve as the passenger car divsion, while Reliance would assume control of light duty trucks. Chevrolet would produce heavy trucks, buses and their engines for civil and military purposes. The Electro-Motive Diesel would continue the conglomerate’s growing rail business line. The young Caterpillar company, the last pre-revolution acquisition of GM, would build tractors and tracked vehicles for civil and military purposes. Nonetheless, these divisions would share expertise and components whenever possible to economize.

As a final part of the reorganization, the General Aviation division was nationalised, and reformed as a separate state defense corporation as North American Aviation.

The last of the “Big Three”, the Chrysler Corporation, had fallen on hard times during the Depression. Already functionally insolvent by election day 1932, workers spent the winter dealing with their pay being in arrears and frequent rumors that the plants would close entirely. Thus it is no shock that when the workers’ soviets began issuing the call to arms, the workers of Chrysler answered it with greatest enthusiasm.

Chrysler’s owners and their creditors had already taken steps to secure their assets, hiring the Pinkerton Detective Agency to secure important assets and avoid plant occupations. The resulting fighting was bloody, and several plants were deliberately wrecked by Pinkertons with explosive demolition.

The remaining plants contributed war materiel to the Red Army. Additionally, many workers volunteered for service and took used automotive expertise to keep the army’s motor pool functioning.

Because many of the upper echelons of Chrysler’s engineering and technical specialists were far more embittered by the layoffs and mistreatment by the company in its decline, the great majority had stayed, influencing Scott’s decision to reorganize the corporation into the Chrysler Technology Group, a state-owned research and development corporation that would advance the state of the art in automotive engineering and materials science.

The mid-sized automobile manufacturing firms scattered through the midwest would consolidated. Studebaker was perhaps the biggest winner from this process, picking up forty percent of Chrysler’s manufacturing infrastructure, including the unfinished Toledo Complex, and the Plymouth and Fargo marques. Plymouth would serve as the passenger car companion line to the Studebaker light and heavy truck lines, while Fargo would provide no-frills diesel trucks and tractors for agricultural duty.

Like Dynamo, Studebaker would be reorganized as cooperative, and as a core industry the state took an ownership stake as well as provided capital investment. Studebaker would compete with Dynamo and other cooperatives in the civilian market, offering a similar range of products for personal and commercial use. The state’s involvement, and the various technology groups supporting research would prevent inefficiencies caused by trade secrets and encourage the adoption of industry standards while still rewarding innovations.

The luxury Stutz Motor Company would be folded into Studebaker and reorganized into a racing and motorsport division. Like in the case of Cadillac, the liquidation of the luxury car market was not permanent. Demand for limousines re-emerged, both for official state uses as well as for the more privileged intelligentsia.

The smaller Auburn Automobile and Marmon Motors companies were similarly acquired and liquidated by Studebaker.

The struggling Packard Corporation would be divested of its failing passenger car, and rebuilt around its more successful engine, heavy truck and equipment lines. Most of the plant space and divested machine tools would be transferred to the Willys-Overland Co-operative, with passenger car operations consolidated under the Aurora Motors brand.

Others were transitioned out of the automobile industry into other areas, such as Hudson Motors’ transition to a marine-diesel company as Kenosha Marine, or Brewster & Co.’s reorganization as Long Island Aeronautics.

The consolidation of the automotive industry into a small number of more specialized firms that would share technology assets in turn for state guidance of research would arrest the trend towards oligopoly. The automotive firms would still have to compete foreign imports as well as internationally for exports. The Scott Commission’s reforms were largely successful in this era in both eliminating wasteful competition and extravagance as well as rent-seeking behavior. The new system did suffer from the potential problem of monopolistic competition, but automakers were disciplined by the complementary systems of public transport that were being constructed in most of America’s cities.

Dynamo was not just in competition with Studebaker or Willys-Overland; it was also in stiff competition with trains, subways, trolleys and buses. The public transport systems designed in the 30s and completed during the war were very robust and largely free at the point of use. Trains provided comfort for long distance journeys. The automobile, as always, was a useful tool, but it would not be allowed to rule American transport.