The president vs. the producers
One of the more tumultuous political battles of the postwar era against Big Business drew to a close on April 13, 1962, when President John F. Kennedy emerged victorious against the nation’s steelmakers. The New York Times reported on Kennedy’s victory:
For three days the great forces at the command of the President of the United States had been brought to bear on the steel industry.
Some of the effort was exerted in the open — the President’s open denunciation of the [steel] companies, calculated to arouse public opinion against them; the opening of grand jury proceedings leading to possible antitrust action, and the threat to divert orders to companies that had not raised prices.
But privately as well, the President and his advisors were bringing every form of persuasion to bear on the industry, trying to hold back the companies that had not yet raised prices and induce the others to roll back the price increase.
Kennedy’s offensive against U.S. Steel, Bethlehem Steel, and several other large steel companies over surprise price increases of roughly $6 per ton had caused turbulence in the markets during a rare period of weakness for the Dow Jones Industrial Average in the postwar years. The Dow had spent the previous five months meandering a few percentage points lower from its 1961 highs. Investors feared that Kennedy’s pressure on the steelmakers might undermine industry profits or weaken the American defense sector, already operating at a high level of production in the aftermath of the Bay of Pigs fiasco at the depths of the Cold War.
Kennedy’s administration had clearly learned a lesson in dealing with the steel industry from the failed efforts of President Harry Truman, who had attempted to bend steelmakers to his will a decade earlier. Truman’s bold seizure of industry operations was overruled in the courts — but by all measures, Kennedy had less of a problem to deal with. His victory, however, could not stop the Dow’s slide. Its worst days would be in the two months ahead, and it would finish more than 20% lower than its April 13 close before bottoming out.
The article J.C. Penney’s Been a Survivor Before originally appeared on Fool.com.
Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.The Motley Fool has no position in any of the stocks mentioned.
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