Fifty-seven years ago today, on April 8th, 1952, President Truman ordered his Secretary of Commerce to seize the nation’s steel mills, ostensibly due to a strike that threatened national security. The nation was fighting a "police action" in Korea at the time and the war was not going well. The United Steel Workers went on strike and America’s steel industry came to a halt. This was President Truman’s very vague justification for his seizure. The industry took the president to court and won, but the case was decided on such narrow grounds that no general precedence was established. This is the story that most historians understand.
But a larger story exists. It is the story of unintended adverse consequences that stem from a trail of government interventions that are not found in the Constitution. This is a common theme that reverberates to an even greater extent today, for today we are witnessing an interventionist government that seems to know no legal bounds to its exercise of power for the most specious of reasons.
The real story and the real lesson is that when property rights have once been violated, there is no end to the trouble that ensues and no real satisfactory answer that will end the controversy. When the principle of the sanctity of property has been violated, we are reduced to the pure exercise of power rather than the rule of law to determine right and wrong.
The early twentieth century saw the rise of militant labor unions. Now there is nothing wrong with men organizing to form a union of workers for the purpose of offering their labor en mass to employers. But the law should not require any employer to recognize or negotiate with such a union.
As it says in the famous passage from the Declaration of Independence, which was borrowed form the 17th century philosopher John Locke: "All men are endowed by their Creator with life, liberty, and the pursuit of happiness." An 1850 book by Frederic Bastiat, titled The Law, gives the clearest and simplest explanation of this phrase. Bastiat contends that we own ourselves and the definition of "ourselves" must extend to include our property, for without property we cannot survive and, therefore, will be reduced to slavery.
But the Orwellian-named "Progressive Movement" weakened the sanctity of both self-ownership and property ownership. Included in its poisonous philosophy was the idea that labor unions had a right to force workers to become members and to force employers to contract for labor exclusively through the union. The Depression era "National Labor Relations Act" of 1934 (Wagner Act) created a means for sympathetic politicians and courts to defend unions’ forceful occupations of factories with violence to the owners and non-union workers. This law exacerbated union violence and labor unrest during the Great Depression.
The act ignored the fact that labor and capital have harmonies of interest and will tend to resolve differences peacefully as long as property rights are not violated. This means that men may offer their services individually or via a union and that the owners may employ labor either individually, through a union, or through some combination of both. The competitive market place ensures that owners pay the workers according to the value of the skill they bring to the work place. This same market ensures that the owners are not forced to deal with a legally protected and uncompetitive labor force. But the Wagner Act intervened in this basically peaceful and fruitful process.
The Wagner Act had been passed during the Depression by a Democratic Congress and signed into law by a Democratic president-FDR. After the war, a Republican Congress sought an end to labor violence and unrest, but instead of simply repealing the Wagner Act and taking measures to restore the rule of law to its rightful place as protector of property rights—which includes the right NOT to belong to a labor union plus the right NOT to negotiate with one—the Republicans passed the "Labor Management Relations Act" of 1947 (Taft-Hartley) over the veto of another Democratic president-Harry S. Truman. Taft-Hartley gave Congress the power to force workers to continue on the job AFTER their contract had expired. In other words, the union would not be allowed to strike as long as Taft-Hartley had been invoked. Labor rightly saw this as slave labor and called it so.
This is the state of things even today. Whereas the market would tend to resolve labor disputes in a peaceful manner, due to the inherent harmony of interests between labor and capital, conflicting laws perpetuate and aggravate labor strife. It seems to be a law of nature that one bad law generates a second bad law that generates a third bad law…on infinitum. Without first the Wagner Act, that attempted to side with unions, and then Taft-Hartley, that attempted to deal harshly with unions, there would have been less labor strife overall and possibly no labor strife during the Korean War that spurred HST to seize the mills. What is so complicated about protecting life, liberty, and property?