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"Change at the Department of Labor during
the Truman Administration, 1945-1950"


By Judson MacLaury, U.S. Department of Labor Historian

Based on Paper Delivered at Annual Meeting, Society for History in the Federal
Government
Washington, D.C., April 3, 1997

The subject of my talk is "Change at the Department of Labor during the Truman Administration, 1945-1950," or "The Rocky Road to Recovery." By 1945, the Department of Labor was in a seriously weakened state. Of the four bureaus that made it up when it was created in 1913, only the Children's Bureau and the Bureau of Labor Statistics remained. The Bureaus of Immigration and Naturalization, the largest chunk of the Department, had been transferred to the Department of Justice in 1940. While a few new functions, such as the Wage and Hour Division enforcing the Fair Labor Standards Act, had been added over the years, others, such as the National Labor Relations Board, had been created outside the Department. In addition, the Department's U.S. Employment Service, created in 1933, had been transferred to the Social Security Board in 1939, and then to the War Manpower Commission in 1942.

One of President Truman's first domestic priorities was to restore the Department as the central administrator of all national labor programs, as a matter both of government efficiency and of fairness to working people. He had developed an interest in efficiency and a sympathy for the Department during his years in local government in Missouri. In 1933 he was appointed to oversee Missouri's operation of the Department's National Reemployment Service, which placed workers in relief jobs. At the behest of state labor commissioner Mary Edna Cruzen, an enthusiastic Truman supporter who wanted to see him elected to the Senate, every worker placed by the NRS received a postcard with Truman's name on it. Boosted by this free publicity, he indeed won election to the Senate in 1934.

To lead the Department in the anticipated era of restoration, Truman nominated an old friend and former Senate colleague Lewis B. Schwellenbach as Secretary of Labor to replace Frances Perkins, who resigned in June 1945. An ardent New Dealer, Schwellenbach had been serving as a federal judge in Washington State. Energetic and brainy, he appeared to be the right person for a difficult task.

With Schwellenbach's swearing in on July 1, 1945, the essential elements for the Department's restoration were in place. What ensued, however, was not a steady, smooth march to reconstruction, but a complex, turbulent five years in which agencies were transferred in and out, functions were added, altered or removed, and internal administration, from the Office of the Secretary down to the mail room, was profoundly changed. Complicating the effort was political turmoil resulting from high inflation and from a massive strike wave, which was fueled by pent up demand for wage gains after war time restrictions ended. As a result of this turmoil, the Republican Party took over control of Congress from the Democrats in the elections of 1946. The new 80th Congress impeded many aspects of the restoration, but Truman's reelection in 1948 put the effort on track once again. Beyond the numerous structural changes, the Department, prompted by the conflicts and reorganizational energy of the period, also engaged in an unprecedented institutional self examination, as revealed in its records here in the National Archives.

Soon after Schwellenbach was sworn in he held his first meeting with the Bureau chiefs, all holdovers from the Frances Perkins era. When he told them "I don't know anything good about you, I don't know anything bad," reportedly none of them said a word, but it was clear that, however brainy, the new Secretary was somewhat lacking in human relations skills.

Early on he announced that within 30 days he wanted a blueprint for an initial reorganization scheduled to take place in September 1945. To that end he appointed six consultants to survey the Department and lay the groundwork. Quickly dubbed by the career people the "Secret Six," the existence of this fairly innocuous task force did little to reverse plummeting staff morale.

Secret Six member John R. Steelman, a former Director of the Department's U.S. Conciliation Service, greatly impressed Schwellenbach. He got Steelman a job in the White House, in the hope that he would represent the Department's interests there. Unfortunately, Steelman proceeded to get the White House involved in settling labor disputes and he used his position to influence the Department instead of the White House. All of which obviously detracted from efforts to centralize labor programs in the Department.

Schwellenbach attempted to assuage business's criticism that the Department always favored the interests of organized labor. On his first day, he issued a General Order which stipulated that the Department's duty was to enforce laws exactly as written by Congress without interpreting them to favor any particular group. The Department issued the order with Truman's approval and it was announced at the White House. Business was favorable at first, but its criticisms resumed during the strike wave.

In August 1945 the Department, working with the Bureau of the Budget, completed its first reorganization proposal. It was a thoughtful document that serves as a useful benchmark for the restoration. It defined a four part Departmental mission of employment services, labor relations, information and statistics, and wartime activities. The centerpiece was to be the return of the Employment Service so that it could work more effectively with other Departmental agencies and better serve the post war goal of full employment. It also called for the addition of the Unemployment Insurance function because of its close relation to the Employment Service's job placement programs, for abolition of the Women's Bureau, presumably on the basis of efficiency, and for removing the Children's Bureau (except for child labor functions).

Under the proposal, all changes would be temporary ones made by Executive Order under the War Powers Act, which would cease to be operative after the official end of hostilities. This approach allowed quick action and also allowed a trial period before instituting permanent changes. After eagerly sending his proposal forward, Schwellenbach apologized to Truman if he seemed "an old friend who has gone berserk on you.... It is only that intense feeling upon my part which causes me to become so alarmed and insistent."

On Sept. 17, 1945, the President acted on Schwellenbach's proposal by issuing, as recommended, an Executive Order (number 9617) under the War Powers Act. A stripped down version of the proposal, EO 9617 transferred the Employment Service and several war related agencies to the Department, but did not include the Unemployment Insurance function or remove any bureaus from the Department. Still, the press heralded it as a "Labor Czardom Order" widening the authority of the Secretary of Labor. While putting the order into effect, a task which was completed by January 1946, Schwellenbach promoted better integration of the work of the bureaus with the Office of the Secretary by giving broad administrative powers to an Assistant Secretary.

Also in September 1945, as part of a broad 21 point program of progressive social legislation, President Truman called for a law authorizing permanent government reorganizations. Congress acted promptly on this and under the resulting Reorganization Act of 1945, the President could put reorganizations into effect unless both Houses of Congress voted against them. The Budget Bureau asked all federal agencies to submit permanent proposals by January 1946.

The Department of Labor's proposal, however, didn't arrive until April. In addition to the previous recommendations, Schwellenbach sought to have the powers and duties of the heads of several agencies vested directly with him, as the Secretary, a move which he felt was "essential, if the Department of Labor is to function as a Department." Truman agreed with most of the recommendations but since he received them so late in the legislative year he decided to wait and submit them in the next Congress.

As the Department and the Budget Bureau continued together to explore the "reorganization problem," Bureau Director Donald Stone suggested that Schwellenbach set up staff groups to improve departmental management and to analyze the long term mission of the Department. In response, Departmental staff prepared a thoughtful, wide ranging "Preliminary Report and Recommendations on Reorganization." Its principal proposal was that the Department, as labor's voice in the government and the preferred administrator of government labor functions, should strengthen its machinery for liaison with organized labor and all other interest groups.

Meanwhile, things of a more concrete nature were happening. In April 1947 Congress enacted a Schwellenbach recommendation to replace the old top structure of two assistant secretaries with an expanded staff of an Under Secretary and three Assistant Secretaries. The Department sought this partly because of demands from the American Federation of Labor and the Congress of Industrial Organizations, which were still separate, that each be represented by an Assistant Secretary. The Under Secretary was to act for the Secretary when necessary and to be responsible for the internal operations of the Department. The functions of the Department were divided into three groups, one under the oversight of each Asst. Sec. Schwellenbach also established a Secretary's Staff Committee, composed of himself and his top four officials. This comprised the first formal policy making body in the Department's history.

As the strike wave accelerated, Schwellenbach appointed Edgar Warren to revamp the over burdened, inefficient Conciliation Service. Unfortunately, a movement soon began in Congress to remove that agency from the Department and unseat Warren, who was unfairly accused of being a Communist.

Reflecting the enlarged U.S. involvement in foreign affairs, Schwellenbach created an Office of International Labor Affairs to handle the Department's growing effort in this area.

In 1946 Congress transferred the Children's Bureau to the Federal Security Agency, leaving only the child labor functions in the Department. At this point, of the original bureaus of the Department, only the Bureau of Labor Statistics remained.

I would like to digress somewhat from the theme of restoration for a moment to mention two primarily internal employee rights issues in which the Department was involved: employee loyalty and civil rights. In response to Truman's efforts to deal with the issue of loyalty among federal employees in the increasingly anticommunist atmosphere of Washington, the Department instituted its own loyalty program in 1946. A Committee on Employee Investigations was set up to deal with employees accused of being subversive. The Committee had broad powers to investigate, but it also provided that any accused employee "shall be furnished with a statement indicating the nature of the evidence against him and shall be provided with an opportunity to explain the matter in writing and in person, or by counsel." The Department prohibited recording employee telephone conversations unless the employee was notified first. After Truman instituted the "Federal Employees' Loyalty Program" by EO 9835 in 1947 Schwellenbach created the Department of Labor Loyalty Board and was the first Cabinet member to be fingerprinted under the EO.

Schwellenbach was also a strong supporter of Truman's civil rights legislation and spoke passionately on the "moral obligation . . . to insure to all of our people the inalienable right . . . to work." In 1946 the Department banned discrimination against its employees based on race, sex, color, national origin, religion, or political affiliation. Employees were granted the right to join a union and the Department established a grievance procedure. After failing to win passage of the Fair Employment Practices Act, in July 1948 Truman issued EO 9980 establishing a FEP program for all federal employees. The NAACP asked that the Department's FEP program go beyond dealing with specific complaints to taking "positive action," which as they described it sounded very much like affirmative action. They called for Departmental agencies to increase opportunities for "colored" persons through new hires or upgrading from within, without "unjustly depriv[ing] qualified white persons of chances for employment." The proposal, however, was not accepted.

In 1947 Congress created a Committee on the Executive Branch whose nominal purpose was to make recommendations on improving the efficiency of federal agencies. However, the real legislative intent of this body, known as the Hoover Commission after its chairman Herbert Hoover, was to cut back the size and scope of government. The Hoover Commission was greatly feared at the Department.

More immediately damaging to the Department was budget slashing that decimated whole programs with cuts of up to 40 percent. In addition, Congress thwarted efforts to permanently return the Employment Service to the Department, allowing it to revert to the Federal Security Agency with the expiration of the War Powers Act in 1948. As Assistant Secretary John Gibson remarked, "If it hadn't been for the fighting we did on the Hill, there wouldn't have been any bricks left in the Department of Labor Building." The Taft-Hartley Act of 1947 restricted organized labor in various ways and removed the Conciliation Service from the Department, establishing it as an independent Federal Mediation and Conciliation Service (FMCS). Part of the motivation for the Act was a vendetta by Congressman Frank Keefe, a powerful committee chair who led the campaign against accused Communist Edgar Warren.

In an effort to appease Congress, Departmental staff proposed amending the Department's Organic Act to shift the mission toward serving the public interest rather than just, as is stated in the Act, "the welfare of the wage earners." However, Schwellenbach decided the Department should not propose amending the Act until the political climate became more favorable.

Lewis Schwellenbach died in office on June 10, 1948, the only Secretary of Labor ever to do so. His health had been poor for some time, but, as John Gibson commented, "the pressures of that period would have killed an iron man."

The vacancy created by Schwellenbach's death acquired great political importance because of the upcoming Presidential election, in which Truman was trailing. An ideal political choice was made with the selection of the popular governor of Massachusetts, Maurice Tobin. An adept politician and well liked in the labor movement, Tobin became Secretary of Labor on August 13, 1948. He campaigned tirelessly for Truman, probably delivered Massachusetts, and may have swayed a few other states into the Democratic column. He made the 80th Congress a major campaign issue, at one campaign stop describing the Department as "ripped in halves by the Republican Congress."

After Truman's victory swept the Democrats back into control of both Houses of Congress his Administration prepared to complete the Department's rebuilding. Tobin's outgoing personality, movie star good looks, and political nature augured well for the Department's fortunes and were strong assets for him in dealing with the staff and outside groups. Before the election Tobin reaffirmed the basic rebuilding plan developed by his predecessor, including the transfer in of the Employment Service and the Unemployment Insurance function.

The much feared Hoover Commission had been defanged by the elections. It now endorsed many of the Administration's reorganization goals. After the Reorganization Act of 1949 renewed the Administration's authority, Congress approved the transfer of both the Employment Service and the Unemployment Insurance function permanently back to the Department. The principal restoration goal had at last been realized.

The restoration of the Department was basically completed in 1950. In that year Congress approved a reorganization plan that embodied the Department's goal of vesting the functions of all agencies of the Department directly with the Secretary of Labor. Tobin stressed that this made it clear that "the head of the Department of Labor has full authority, as well as responsibility, to organize and control his Department."

Tobin's main disappointment was the failure to recapture the conciliation function, removed in 1947 by the Taft-Hartley Act. Truman and Tobin tried desperately to fulfill a campaign promise to repeal the entire law, but the resistance was insurmountable. The main obstacle to repeal in the Congress was, in fact, the return of the FMCS to the Department, and the opposition of FMCS Director Cyrus Ching didn't help matters. This factor, coupled with continuing Congressional concerns over prolabor partiality at the Department, contributed to the defeat of repeal.

Despite this failure, by 1950 the Department had largely achieved its, and Truman's, goal of gaining control over the major labor functions of the federal government, excepting those involved in labor disputes. The timing was fortunate because 1950 marked a watershed in the political landscape. Alger Hiss was convicted in his second trial; Senator Joe McCarthy made ugly allegations about Communist influence in the federal government; and on June 25 North Korea invaded South Korea. Washington's attention now turned to the suddenly hot Cold War and the domestic agenda took a back seat.