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Maeva Marcus is Director and Editor of the Documentary History of the Supreme Court of the United States, 1789–1800.
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Truman and the Steel Seizure Case
The Limits of Presidential Power
By Maeva Marcus
Duke University PressCopyright © 1994 Duke University Press
All rights reserved.
Limited War and the Economy
The steel seizure crisis originated in a specific set of historical circumstances which affected both the course of President Harry S. Truman's actions and the decision of the Supreme Court. In the spring of 1952, the Korean War, the problems of the economy, and the political imperatives of an election year provided the framework within which the Truman administration had to act. The most fundamental of these factors was the cold war, suddenly turned hot in Korea.
Despite years of talk about the threat of Communist aggression, the nation was shocked to learn that on June 24, 1950, the North Koreans had invaded the Republic of Korea to the south. Although President Truman and Secretary of State Dean Acheson assumed that the Soviet Union had instigated the North Korean attack, they were wary of action that might enlarge the area of conflict. The administration believed that the Communists had to be repelled in Korea, however, in order to discourage them from using force elsewhere. Hence the United States chose to employ its power, but in a manner limited so as to avert the outbreak of a third world war. In a matter of days, the Truman administration had resolved to support the Republic of Korea and to do so under the aegis of the United Nations if that organization would take the responsibility. To avoid any delay in sending help to the South Koreans, the President decided not to consult with Congress. Thus the United States became involved in a protracted armed conflict, to which a large number of American ground troops would eventually be committed, without a formal declaration of war.
Although Truman did not think it necessary to obtain the explicit approval of Congress for his resolves, on June 27 he met with congressional leaders to explain the development of American policy in Korea. According to Democratic Senator Tom Connally, the reaction of the congressmen was favorable: they agreed that the United States had to assist in the defense of South Korea and that the United Nations was the proper authority to direct a cooperative effort. Democrats and Republicans appeared to be satisfied with the measures Truman had taken thus far.
Anticipating a quick end to hostilities, the President sought to minimize the seriousness of the course upon which he had embarked. At a press conference soon after the North Korean invasion, Truman stated emphatically, "We are not at war." He described the conduct of the United Nations members as "going to the relief of the Korean Republic to suppress a bandit raid on the Republic of Korea." It was only in answer to a reporter's question as to whether the United Nations operation might be characterized as a "police action" that Truman acceded to the use of that term. As the Korean conflict turned into a war in every practical sense of the word, it became obvious that "police action" was an infelicitous description. One congressman's reaction to the use of the term was typical:
Our countrymen are fighting and dying every hour of the day and the night. If we are not technically at war, pray tell me by what right doth the President of this country, the Commander in Chief of our Armed Forces, send the youth of this Nation 7,000 miles from their homes and firesides to fight, to bleed, and to die in a foreign land? ...
Yet we sit here and seem to think that we are engaged in a kind of "police action." Certainly my son is not a policeman nor is he a member of a police force. Neither is your son, and sons of other Americans who are now getting ready for the eventualities of a war which is being waged seven or eight thousand miles from home.... Let us face up to the fact: This is no police action. It is nothing short of war.
When the gravity of the Korean situation became evident, a number of Senators and Representatives asked why the President had not sought congressional ratification of his actions. But few went as far as Senator Robert Taft in categorically stating that the war was illegal. As military circumstances in Korea worsened, however, more congressmen joined Senator Taft in charging the administration with improperly neglecting to seek the consent of Congress to American participation in the defense of Korea. Republican Senator William Knowland, who immediately after the outbreak of hostilities had asserted that the President had legitimately used his powers to take "the necessary police action," reversed himself a year later and accused the administration of leading the country into war, "but without a declaration of the Congress of the United States."
Throughout the course of the Korean War, the Truman administration was to be plagued by this charge. The lack of a congressional declaration of war put the administration in the difficult position of having to fight a full-fledged war without acknowledging its total dimensions. When President Truman requested legislation to implement the decision to fight in Korea, some congressmen questioned the need for such laws when technically the United States was not at war. The administration thus was deprived of the whole-hearted cooperation of Congress, many of whose members were unwilling to act as if the United States were involved in an acute wartime emergency. In the Steel Seizure case, the President would face the consequences of his determination to proceed with the war without formal legislative approval.
When the Chinese Communists intervened in support of the North Koreans in November 1950, the Truman administration realized that it would have to plan for a much lengthier conflict. Greater numbers of men and more materials would be needed. But the President still thought that total mobilization was unnecessary. Thus, on December 16, 1950, Truman declared a "limited" national emergency in order to trigger the application of a number of statutory provisions giving him additional powers to face the crisis in Korea.
With the prospect of greatly increasing defense expenditures, the Truman administration had to reevaluate the economic policy it had propounded soon after the United States entered the Korean conflict. At the outset of the war, the President did not ask Congress for direct controls over the economy: the administration's expectations as to the nature of the Korean hostilities led it to believe that the economy would not be seriously dislocated and that inflation could best be handled by indirect controls. Moreover, Truman feared that the nation, and the world, might interpret strict economic controls as preparation for another global war. Within the administration, Leon Keyserling, chairman of the Council of Economic Advisers, was the strongest advocate of this indirect controls policy.
Keyserling proposed to meet the demands of the Korean campaign by fostering a tremendous growth in production, by giving priority to defense and essential civilian requirements, and by reducing the pressures of inflation. He emphasized industrial expansion as the major goal of the administration's economic policy as well as the best means of achieving the other two objectives. To implement this plan, Keyserling recommended a system of government priorities and allocations for necessary materials and facilities, accelerated amortization and long-term loans as incentives to enlarge industrial capacity, reduction of federal expenditures in nondefense areas, tax increases, and credit restrictions to inhibit the inflationary trend. Keyserling thought that short-run inflation would occur regardless of whether direct or indirect controls were imposed, but he believed that direct price and wage controls might hinder the more important aim of economic expansion. He convinced the President that, in the interest of increased production, the administration should fashion a policy based on indirect controls to reduce inflation.
As a result, when Truman requested congressional action to enable the government to put its economic program into effect, he did not ask for power to impose price and wage controls. Indirect restraints, coupled with the voluntary cooperation of citizens, would be sufficient to curtail inflation, the President advised. Truman indicated, however, that if prices rose excessively, he would be prepared to recommend more "drastic" measures. At a press conference several days later, the President reiterated his intention to avoid wage and price restrictions "because there is no necessity for it."
There were, undoubtedly, some political considerations that influenced Truman's acceptance of Keyserling's economic theories. Price control and the Office of Price Administration (OPA) had been very unpopular during World War II. In the years 1947-1949, when the administration had considered imposing price controls again, Congress had shown that it was not receptive to such a move. Hence Truman decided that it would be easier for a defense production bill to be passed if it contained no provision for price and wage restrictions.
Much to his surprise, however, Congress and the public did not share the President's confidence that inflation could be effectively curbed without direct controls. They were obviously disturbed by reports of greatly increased prices. Immediately after the North Korean invasion of South Korea, a round of scare buying occurred, in which consumers and businessmen stocked up on goods and materials that they expected soon to be in short supply. This led to a sharp rise in the Wholesale Price Index, from 157.3 in June 1950, to 162.9 in July, and to 166.4 in August. The Consumers' Price Index also rose, although at a slower pace: in June 1950, the Index stood at 170.2; by August it had reached 173.0. At Senate hearings on the administration-supported Defense Production Act late in July, Bernard Baruch, a highly respected authority on economic controls, testified that the administration bill—which contained no price and wage controls—was self-defeating. The former chairman of the War Industries Board claimed that no system of priorities could work effectively or for long without price control. "That was learned during World War I. It was forgotten and had to be learned anew, at what bitter cost, in World War II. Must we persist in repeating the mistakes of the past, even to inviting disaster?" Set against the rise in prices, Baruch's testimony struck a responsive chord both in Congress and among the public. Speeches were made on the floor of the Senate and the House advocating, at the least, standby authority for the President to impose price and wage controls, and congressmen were inundated with constituent mail urging the passage of such legislation.
In answer to the clamor for controls, the President submitted to the congressional committees considering the Defense Production Act a draft of price and wage control legislation that would be acceptable to the administration. But, in a letter to the chairmen of these committees, Truman made it clear that he still did not favor direct controls. If the Congress found it necessary to pass such legislation, he stated, the authority granted should be available for use at the discretion of the President. He must be allowed to decide when, where, and how price and wage controls would be instituted.
The Defense Production Act of 1950 was passed by overwhelming majorities and was signed into law on September 8, 1950. It contained all the provisions the President had requested—power to establish priorities and to allocate strategic materials, inducements for the expansion of productive capacity and supply, power to control consumer and real estate credit and authority to requisition—and some additional ones as well. Most important of these were Titles IV and V, dealing, respectively, with price and wage stabilization and the settlement of labor disputes. To understand the choices of action open to the administration when the steel dispute arose in 1951-1952, Titles IV and V together with Title II, the authority to requisition, must be briefly examined.
Title II empowered the President to requisition property, or the use thereof, whenever he determined "that the use of any equipment, supplies, or component parts thereof, or materials or facilities necessary for the manufacture, servicing, or operation of such equipment, supplies, or component parts, is needed for the national defense." This broad power was limited only by a requirement of payment of just compensation to the property owner. Although Title II appeared straightforward, there were conflicting interpretations of what it authorized the President to do. During the Senate hearings on the Defense Production Act, administration representatives asserted that the main purpose of that section was to allow the President to obtain equipment and materials needed for the national defense. In addition, Title II permitted him to take over a plant, but the administration was unsure whether this authority entitled the government to operate such a facility. Some committee members were dubious about this distinction. Senator Homer Capehart, for example, asked incredulously, "What good is Title II? Why do you want the authority to take over every business in America if you do not have the authority to operate it?" In the Senate, Republican Senator John J. Williams indicated agreement with Capehart's view: "Under this bill as it now stands, the President could authorize the nationalization of our great steel industry, along with the nationalization of such of our other large industries, as he saw fit." In the House, Brent Spence, Democrat of Kentucky and chairman of the House Banking and Currency Committee which considered the Defense Production Act, asserted, in response to a question about whether the government could operate a plant it had seized, "Of necessity I think he [the President] could operate it. There would not be any point in seizing it if he could not operate."
Title IV of the Act, dealing with price and wage stabilization, allowed the President discretion in the imposition of controls. Congress declared its intention "to prevent inflation and preserve the value of the national currency; to assure that defense appropriations are not dissipated by excessive costs and prices"; and "to stabilize the cost of living for workers and other consumers." But it permitted the President, in Section 402, to choose the appropriate means of achieving these objectives. In the first instance, he was authorized to encourage voluntary action by industry, labor, agriculture, and consumers to impede the inflationary spiral. If voluntary means were unsuccessful, the President could then issue regulations establishing price ceilings on individual goods or services; at the same time, he had to stabilize wages in the industry producing the material or providing the service. When price ceilings had been imposed on a substantial part of the economy, the President was required to institute overall controls. If this became necessary, the President was directed by Section 403 of the act to create a new independent agency to administer the task of economic stabilization. The Senate committee report on the Defense Production Act noted, "It was felt that this provision was important because of the conviction that price and wage controls directed toward stabilization are so closely related that responsibility for both must be invested in a single agency responsible to the President."
In Title V, Congress asserted its desire that "effective procedures for the settlement of labor disputes affecting national defense" be established. It recognized that price and wage stabilization would put unusual strains on the normal processes of collective bargaining; Congress therefore authorized the President, in Section 502, "to initiate voluntary conferences between management, labor, and such persons as the President may designate to represent government and the public, and ... to take such action as may be agreed upon in any such conference and appropriate to carry out the provisions of this title." Apparently it was contemplated that the President might create a board similar to the War Labor Board of World War II, which, after the War Labor Disputes Act of 1943 was passed, had the statutory power to compel settlements. Title V did not specifically establish a board, because Congress wanted labor and management to cooperate in setting up the procedures such a board would follow. Any arbitration board would be dependent on the goodwill of labor and management for its success, and asking these groups themselves to establish the procedures appeared to be one way of obtaining it. Moreover, Congress undoubtedly hoped that when labor and management got together they would agree upon a "no strike, no lockout" pledge as they had in World War II. The only specific limitation on executing Title V was contained in Section 503, which stipulated that no measures inconsistent with the Taft-Hartley Act ITLπITL 1947 and other Federal labor standards statutes could be taken.
To some congressmen, Sections 502 and 503 appeared inherently contradictory: if the President had to follow the procedures set up by existing labor laws, what was the purpose of providing authority for the creation of new ones? Senator Taft was especially concerned with the meaning of these provisions:
Either it [Title V] is a reaffirmation of the statutes we have, or it goes very much further and authorizes the President to impose practically any terms he wants to impose in the settlement of labor disputes. If it is desired to impose compulsory arbitration in time of war—and it is perfectly possible that such a desire exists—then it seems to me that purpose ought to be spelled out. But the language is completely ambiguous, and appears to me to have no possible justification for being placed in the bill.
Excerpted from Truman and the Steel Seizure Case by Maeva Marcus. Copyright © 1994 Duke University Press. Excerpted by permission of Duke University Press.
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Table of ContentsContents Foreword - Louis Fisher Preface Acknowledgments 1. Limited War and the Economy 2. Truman, Labor, and the Politics of Limited War 3. The Steel Industry and the United Steelworkers of America 4. The Government Seizes the Steel Mills 5. The Country Reacts 6. The Steel Companies Go to Court 7. The Steel Seizure Case in the Court of Appeals 8. The Supreme Court Hears the Steel Seizure Case 9. Awaiting the Decision 10. The Supreme Court Rules 11. The Constitutional Significance of the Youngstown Decision Epilogue Abbreviations Used in the Notes Notes Bibliography Index