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Walter Reuther

Walter Reuther, president of the United Auto Workers, talks to Wallace about his plan for profit sharing for auto workers, which was being attacked as a "giant step toward socialism."

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Guest: Walter Reuther

WALLACE: Good evening. Tonight from Detroit, we go after the story of conflict between big business and big labor, between the automobile companies and the United Auto Workers. A struggle that promises to shape the future of our entire economic system. Our guest, is the president of the United Auto Workers Walter Reuther. His new profit sharing plan for union working men is being attacked by big business as a giant step towards socialism. Mr. Reuther in a moment I shall ask you to answer that charge, we'll get your opinion of the men who make it, and we'll get your views on unemployment now and in the year ahead. My name is Mike Wallace. The cigarette is Parliament, another fine product of the Philip Morris Company.


WALLACE: We'll talk with Walter Reuther in just a minute.


WALLACE: And now to our story. Yesterday, here in Detroit, Walter Reuther and his United Auto Workers, finished hammering out their plans for upcoming contract negotiations. The demands will include increased unemployment benefits, an undisclosed but apparently substantial hourly wage hike, and most controversial, a profit sharing plan that has outraged the big three: Chrysler, Ford and General Motors. When contract negotiations begin this spring, Mr. Reuther will demand that the big three, share twenty-five percent of what he calls, "their excess profits" with the union rank-and-file. He will also suggest, that the corporations take another twenty-five percent of these excess profits and distribute them to car buyers at the end of the year in the form of rebates. And so, Mr. Reuther, the first question I'd like to put you is this, what is the idea the philosophy behind this profit-sharing demand? If your union wants more money, why doesn’t it simply ask for higher wages, the way that unions have been doing all along? Why profit sharing?

REUTHER: Well, we have proposed profit sharing for 1958, because we believe this is the most effective way to expand purchasing power. And purchasing power, is the key to the economic future of the American economy. Our economy is in trouble. There is a serious and growing imbalance between expanding productive power and lagging purchasing power. And we believe that workers, consumers and farmers are being short-changed and that they are not getting their fair share of the fruits of our developing technology...

WALLACE: Well... I am...

REUTHER: The giant corporations are getting more than their share, they're getting a disproportionately large share. And because they are keeping more than their proper share, this is creating a serious imbalance out of which unemployment and recession is developing.

WALLACE: Yes, but Mr. Reuther, you could get your proper share, or what you call your proper share, by a higher wage rate but I'm asking you to tell me is, what is the philosophy behind instead of a higher hourly wage rate? What's behind the idea of sharing in the profit...


WALLACE: ...At the end of a year?

REUTHER: It's a very simple idea, what we are saying in effect to the General Motors Corporation, to Ford, to Chrysler to other corporations. We have devised a two-pronged approach to collective bargaining in 1958, we want a minimum economic demand which we know can be paid out of the increased productivity measured by the level of productivity in the total economy, that's the way of measuring the economic progress that every worker is entitled to make based upon the growth of our economy, based upon the progress in our technology. Now we say, we will defer the balance of our equity until the end of the year, so that, realizing the balance of our equity will not create inflationary pressures on the price structure, the prices will have been paid, the profits will have been made and at that point we say that workers, consumers, and stockholders should share in getting their equity out of the fruits of advancing technology.

WALLACE: All right.

REUTHER: Now, this is not only a matter of economic justice, this is a matter of economic necessity because our free economy will not work, unless we maintain an expanding and dynamic balance between higher productive power balanced by higher purchasing power and when one gets out of joint with the other, we get in trouble.

WALLACE: All, right. Now Mr. Reuther, if I may, for the rest of these questions can I ask you to be just a little bit less lengthy...

REUTHER: I'll try...

WALLACE: ...In your, in your answers... I don't want you to shorten them so... that there will not be sense within them... but if you can be just a little bit shorter in your answers. Mr. Brisch of the Ford Motor Company has suggested there are some hooks in your profit sharing plan. And I'd like to put to you some of some of the hooks that possibly been... maybe, er... within your plan and see if you can answer them. First of all, what does it do to of the principle of unionism a profit-sharing plan? Won't you be creating economic and class distinctions as between your own workers, let's say a man at Ford, is a lathe operator a man Studebaker Packard is a lathe operator: Ford, because they have a more attractive grill or for whatever reason, has a profitable operations Studebaker Packard let us say does not this year or next year have a profitable operation equal pay for equal work is supposed to be one of the tenets of unionism and yet the Ford man may make as much of a thousand dollars a year more than the Studebaker Packard man for doing exactly the same job.

REUTHER: (CLEARS THROAT) The question here is this: that if we formulate a set of economic demands, based upon the unfavorable economic position of some small company then we turn over the gravy train to the General Motors Corporation and workers and consumers are denied the equity that they have out in the greater productivity and the greater efficiency of the General Motors Company because, they are able to employ the most advanced technology in terms of automation, etcetera.

WALLACE: Well, still...

REUTHER: On the other hand if we have a uniform demand based upon the economics of GM we then inflict hardship upon the small company. And we say that, if a big company, because of the volume of production, because of the advanced technology they employ, if they make bigger profits. then why shouldn't the worker and the consumer share in those greater profits?

WALLACE: When you say that the consumer should share in those greater profits, and we'll come to the philosophy behind it in just a minute, but... won't car buyers, who'll be looking for the biggest rebate, go to the company with the best financial record? Let's say that the Ford has had a particularly, well, let's change it now, the General Motors has has a particularly good year last year. Chances are, that, if I am buying a car, I'll go and buy a General Motors car 'cause my hunch is that I'm going to get a rebate at the end of the year. As a result of which, you'll be operating against the companies, which are not as good financial shaped as the companies, which are...

REUTHER: But that argument...

WALLACE: ...which are in an extraordinary good shape...

REUTHER: That argument taken to its logical conclusion, would... lead you to believe that you are in favor of the American public subsidizing by higher prices ninety-seven percent of the production, which is made by General Motors, Ford and Chrysler in order to keep three percent of the production made by the independents into being. Now I say...

WALLACE: I'm in favor of supply and demand and free private enterprise... Mr. Reuther...

REUTHER: And if you had a rebate, then you would have a competitive price rather than a rigged administered price. The prices in the automotive industry have nothing to do with the law of supply and demand: the Ford Motor Company on their fifty-seven models, they set the price in their cars. GM set the price a little higher Ford responded by making a further adjustment. We have an administered prize structure that has nothing to do with the law of supply and demand. That's been the trouble with America. We have gotten into trouble under a most unusual economic situation. Inflation is supposed to be the result of where the demand for goods and services exceeds the available supply of goods. We've had inflation under circumstances where we had much greater productive capacity than we had consumers available, because we had rigged inflation, rigged by powerful corporations who exercise monopoly control of basic industries and who can arbitrarily set aside the law of supply and demand and fix the price. And what we're saying is, that the consumers of America and the wage earners have both been shortchanged and the only way we can get them their equity, is to get it out of profits after profits have been made.

WALLACE: What about tax money? This is another hook. Senator Butler of Maryland has pointed this out, that if your plan had been adopted in 1956 for example, General Motors' profits would have been considerably less, about five-hundred and seventy million, and they would have to pay to the government about three-hundred million dollars less in taxes. If universally adopted, the profit sharing plan -- I imagine of what you have in mind -- is that it be the universally adopted because you want, all workers and all customers to share in this... er... golden cornucopia. Er... if universally adopted, he says the drop in government revenue would be four to five billion dollars annually. Now, we need big budgets now, we need big revenues, now... What's going to happen to the tax structure?

REUTHER: Well, you see the trouble with the economics of Senator Butler, Mr. Brisch and these people, they are dividing up economic scarcity and what we propose to do, is to share of the fruits of our advancing technology so that we can share economic abundance. In 1955 our industry was operating roughly at ninety-five percent of capacity. Today it is operating at sixty percent, the steel industry less than sixty percent, the home appliances industry less than sixty percent. The tax base that we need to finance a stronger defense posture, to overcome our deficits in education and science, to also meet the Soviet Union's offensive on the economic and political front... What we need is a full employment, full production economy, in which we are getting out of the American economy its maximum potential output. And then spread the tax based on that broader economic base.

WALLACE: Are you suggesting then that we lower the fifty-two percent rate on corporations is that the point?

REUTHER: No, what I'm proposing is to give the American consumers...

WALLACE: Wait a moment, Mr. Reuther...

REUTHER: Why haven't we got more purchasers...

WALLACE: Mr. Reuther, you’re not answering the specific questions that I put. Now, you know as well as I, that fifty-two percent is the tax rate on corporation earnings over twenty-five thousand dollars, is that not so?


WALLACE: And when you take half of what you call excess profits away, from the corporations than fifty-two percent of that half is not going to go in taxes to the government. And that tax money is going back to the individual consumer, who will pay a much lower rate, thus depriving the government of tax money, if your profit-sharing plan goes into effect. And it seems to me that is simply arithmetics.

REUTHER: Well, it seems to me you haven't been thinking about this problem very clearly. That's fifty-two percent of what tax base. Is it fifty-two percent of an industry operating at sixty percent of capacity or fifty-two percent of the industry's profits operating at full production, this is true of steel, it's true of every basic industry, the only way we can meet our tax needs, is to base the tax thing upon a full employment economy. When General Motors makes half as many cars, in 1958 as she did in 1955, she will pay only half as much taxes, perhaps even less than half taxes. What I'm suggesting is, the key of the economic situation is to expand purchasing power, because that will get us into dynamic balance between productive power and purchasing power. And on a full employment, full production economy the government can get more taxes than on an economy based upon scarcity.

WALLACE: Mr. Reuther, you think that GM is only going to make half the cars in '58 than they did in '57?

REUTHER: I know the industry is going to make... er... at least three million cars less.

WALLACE: Well, under those circumstances, why did you junk your four-day workweek? Forty hours... er... paid for thirty hours work, that was talked about in your union meetings for so long and so loud?

REUTHER: First of all, we never had such a demand, that we just in the headlines in the propaganda. What we talked about was that has automation made it possible to create greater economic wealth with less human effort, we wanted not the the... the destructive idleness of unemployment, we wanted creative leisure, where people could use their leisure creatively and constructively

WALLACE: You told our reporter...

REUTHER: What we said was, we wanted to try to work out, a system and as automation made it possible to create more wealth with less manpower, we wanted to absorb the difference by reducing the workweek.

WALLACE: Well, there are a good many people at your convention, here in Detroit this... this week, who where somewhat disgruntled at the fact that the thirty-hour or the four-day workweek was junked, but... You told my reporter this week that you expected at least five million unemployed this year, correct?

REUTHER: Unless something is done to correct the present threats: now something has got to be done to correct the imbalance, between productive power and the lack of purchasing power.

WALLACE: You've also said that you want to forget about the five-day - the four-day workweek for the time being, because since Sputnik went up --we need all of our resources and we need all of our men at work. Is that not also correct.

REUTHER: And you will find that every delegate at our convention who talked about the short workweek was concerned not with more leisure; he was concerned with getting the unemployed back to work.

WALLACE: Well, that's the point!

REUTHER: That's what we want to do.

WALLACE: If we need these men in our industry, and we can't afford, a four-day week for that very reason, because we got to put these men back to work. you must agree with the Republicans, that come May or June or July there's going to be a considerable upturn and that the economy will be in pretty good shape by, let's say the middle of this year.

REUTHER: I do not agree with that. Because where is the purchasing power going to come from to stimulate the purchases of cars, to purchase the appliances to do all the other things necessary to stimulate a full employment, full production economy...

WALLACE: Uh-hum...

REUTHER: The defense program will not feed new jobs into the economy for many many months, because they haven't made up their minds what they want. And they've got to engineer them, and they've got to tool them before our workers can be employed. The only way that we can stimulate full employment and full production is by expanding purchasing power in the hands of people, so that they can buy the goods that we have the capacity to create.

WALLACE: Mr. Reuther, let's come to the nub of the profit sharing discussion which is... in the minds of a good many people, it's been suggested by the heads of the big Three, and by numerous newspapers across the country that this is, a Reuther-giant-step towards Socialism. How do you react toward that charge?

REUTHER: Well, I react this way: I think this is perhaps the most pro-free enterprise demand that we have ever made. Because the only way you could make free enterprise secure, is to give every American a stake, in the fruits of its technology. And what we're proposing here, is not a new idea, nothing revolutionary about it; there are more than twenty-thousand companies in America that have profit-sharing plans: two members of the Eisenhower cabinet: Mr. McElroy, for Procter & Gamble, Mr. Fossem of Eastman Kodak, both of those companies have profit sharing.

WALLACE: But, they were granted freely by the company, not asked for in... order to demand...

REUTHER: That doesn't change the basic principle. What's the difference? Whether our worker shares in profits, because the management thought about it, or whether he shares in profits because he thought about it. Does that change the principle?

WALLACE: Yes... Indeed it does!

REUTHER: How does it change the principle?

WALLACE: ...And I think this comes to the principle of the whole thing. A man opens a store or a man opens a company. He risks the money; he has the privilege under our system of free private enterprise, does he not, of deciding what he's going to do with that money. It is not up to his workers to tell him what he should do?

REUTHER: Well, you'd have a very difficult job convincing Ford workers and Chrysler workers and General Motors workers, who are unemployed that they don't risk anything, that they don't suffer loss when the company is in... bad condition, they also suffer. But here's the thing you need to understand, that this principle is being applied in Ford, in General Motors in Chrysler's. The executives are sharing in the profits. Now, they are not sharing in the profits as stockholders: they're sharing in the profits as employees.

WALLACE: Because they run the company.

REUTHER: But they're still employees, they're high paid employees, but they're not getting profits, they are not getting their profit bonus as stockholders; they're getting it as an employee.

WALLACE: Harlow Curtis, makes his profits in a free enterprise system, manufacturing goods the public wants. Now, who is to decide what is to be done with that money? These profits in Harlow Curtis's pocketbook, is the union to decide that? Or is Harlow Curtis and the management of General Motors to decide?

REUTHER: But they are not the property of Mr. Curtis. Mr. Curtis, in 1955, in addition to his two-hundred thousand dollar salary, got a bonus out of profits, of five-hundred and seventy-five thousand dollars. Now, what we would have gotten was roughly six hundred dollars. And I say that Mr. Curtis because of his greater contribution, is entitled to an addition to his salary of a bonus out of excess profits of five-hundred and seventy-five thousand. Now, this he doesn't get as a stockholder, he get as an employee. Then, why shouldn't a GM worker also share in the equity? Because he also contributes. Perhaps not in the same measure...

WALLACE: But what does he contribute? No, wait just a second...

REUTHER: He contributes, with his skill, his sweat, intelligence...

WALLACE: Wait just a moment...

REUTHER: His sweat...

WALLACE: ....I'm acting...

REUTHER: His intelligence...

WALLACE: Of course he does, of course he does, and I'm acting only as the devil's advocate here for just a moment... But I would like to put to you sensibly, this question: a manager first of all, collects the money, risks the money, has the imagination, has the courage, has the initiative and then hires the workers to work for him. And what you're asking is, that the workers who work for him, should to have the privilege of sharing in his...

REUTHER: Sure, but you're confusing the manager with owner. Mr. Curtis doesn't own General Motors, he just works for it, he doesn't own the General Motors Corporation.

WALLACE: Up to now, I haven't seen the stockholders of General Motors suggesting a profit-sharing a plan for employees, and they have the perfect right to... to... to suggest that Mr. Curtis that he not give himself that bonus. I imagine the stockholders of General Motors are very pleased with the way the General Motors has been operated under Mr. Curtis.

REUTHER: Well, this just so happens, that every time we've asked for a new idea we've been rejected. They rejected the pensions that we asked for several years ago. Why? Because they have operated on a double standard, economic and moral. We had a situation where we asked for a dollar and a half per hour employee, get a hundred dollar per... for month pension. And they said it was wrong it was morally wrong, it would undermine the independence and the self-respect of the worker.

And yet, at that very time, the president of the General Motors Corporation, was averaging with a salary and his bonus, three-hundred and thirty-two dollars per hour based on the forty hour week. Now, the company didn't think, he could save on a measly three-hundred and thirty-two dollars an hour and they had created a pension of twenty-five thousand dollars a year for him. Now, what's the difference?

WALLACE: Mr. Reuther, you seem almost... you seem almost more interested in cutting down Harlow Curtis' take than increasing the take of the workers in the big Three.

REUTHER: That is not true. The difference is this; I do not begrudge one penny Mr. Curtis gets. What I resent is, that they try to deny the worker his fair equity and they try to deny the consumer. And when they deny the worker and the consumer their equity, the system gets in trouble gets in trouble; it's in trouble now. Unemployment is on the increase. The industries operating at sixty percent. The steel industries are operating sixty percent. At the very time when America ought to have full employment and full production, making the things we need to meet the challenge in the world front and overcoming our domestic problems, we're limping along. So this is not just a matter of justice, this is a matter of the system won't work. When the people do take more than they're entitled to...

WALLACE: When the system won't work you're talking about capitalism,

REUTHER: That's right...

WALLACE: You don't want socialism. I gather?

REUTHER: That's right...

WALLACE: What you do want then is a kind of Reutherism. Now, this afternoon, a few of us were sitting around, and an automobile executive suggested this definition of Reutherism; He said, "Reutherism is ruthless exploitation of the capitalists by the workers" He said it, believe me with "tongue-in-cheek." But in just a minute I would like for you, if you can, to define Reutherism. And we'll get Walter Reuthers' reaction to that question in just 60 seconds.


WALLACE: All right, Walter Reuther. What is Reutherism?

REUTHER: Well, I'm not sure what Reutherism is, but I can tell you what I believe. I believe to begin with, that free labor and free management have a great deal more in common than they have in conflict. And I believe that freedom is an indivisible value, that you can't have free labor without free management, and that we both need to learn to work and cooperate together to preserve our free society in a free world. Now, we reject the whole concept of Marxism and the class struggle. Because that philosophy was based essentially upon the struggle to divide up economic scarcity.

We believe that free men, free labor, free management, working together within free government, in a free economic system, have the glorious opportunity of cooperating in the creating and the sharing of economic abundance. We believe that this is the first time in the history of human civilization that we can solve man's economic and material needs: food and clothing. And we can facilitate the growth of every human being, as a social being, as a cultural being, as a spiritual being.

WALLACE: Mr. Reuther, you say you reject the class struggle between one class and another. Let me ask you this, I'd like to cite an article given a full-page spread on January 13th, in your own union newspaper, called Solidarity. The writer of this article Harvey Suato, says quote, "Factory workers... the factory worker's attitude toward his work is generally compounded of hatred, shame and resignation. The plain truth is that factory work is degrading." end quote.

Now... this is as I say, it was given a full-page spread, with no editorial comment, in your paper. When union men, working men, feel like this about the their work, and the union prints this kind of an article. Isn't it reasonable to assume that they, that their aspirations perhaps, are somewhat different, than management's... that there is some bitterness in them? And that they want to write that bitterness in whatever way they can?

REUTHER: (CLEARS THROAT) Well, I don't share the point of view expressed in that article I do believe that one of the really difficult problems of our free society, is to (CLEARS THROAT) how we find a way, as automation begins the mechanized production, and the worker's identity, his sense of creative expression is almost completely wiped out --a fellow, who works in the Cadillac plant; makes a beautiful car, but he has no sense of creative achievement. And I think that one of the great problems of our modern civilization is to enable us, to utilize the most advanced tools of technology. But in the leisure time of people find a way to give them an opportunity of creative self-expression. This is one of the great problems and I think resentment can develop if a person is denied the sense of creative satisfaction.

WALLACE: Under those circumstances, a profit-sharing plan might, just might in addition to the money involved, make them feel just a little bit more equal, a little less resigned.

REUTHER: You know, a few years from now, they'll be bragging about this, just as they brag about the pension plans, they did want to give us; just the brag about the other things they gave us at the bargaining table, only after we fought for them. I predict they'll talk about this one of these days in glowing terms.

WALLACE: Mr. Reuther, three short questions. We have just about a minute. Last November, on this program, Mrs. Eleanor Roosevelt suggested you might make a very good president of the United States. She said you have the qualities necessary; intelligence, knowledge of the world's people and the ability to grow. You think that you'd make a good president?

REUTHER: Well, I think that Mrs. Roosevelt is very gracious lady and a very generous friend. I have no presidential ambitions, whatsoever I'm going to devote what limited the ability I have to the service of the American labor movement.

WALLACE: Do you think that Governor Williams, would make a good president?

REUTHER: Well, I think there are a lot of Democrats who'd make good presidents and I think this is a choice for the Democratic Party.

WALLACE: I'm asking Walter Reuther, whether he thinks that the Governor Williams would make...

REUTHER: Walter Reuther does not have the choice at the moment.

WALLACE: Er.... er... obviously he doesn't have a choice I'm just asking whether you do or not?

REUTHER: I think, I think Governor Williams would make a good president.

WALLACE: You do?


WALLACE: Final question; John L. Lewis recently called you, "An earnest, Marxist, chronically inebriated by the exuberance of your own verbosity." Reaction if you please.

REUTHER: Well, I'm rather sad about John Lewis. He's made a great contribution to the American labor movement, but his ego really is larger than any mortal should have. He broke with Franklin Roosevelt, it's rather tragic that he spends his last days isolated and bitter.

WALLACE: Thank you very much, Mr. Reuther, for spending this half hour with us here tonight in Detroit, I wish we could have had another half-hour. Over the years, Walter Reuther has been attacked by big business more than any other labor leader. Yet, he continues to be elected by his UAW rank and file and a good many unions look to him for his inspiration. It's possible that the continuing conflict about Walter Reuther reflects conflict of far greater significance within our society itself.


WALLACE: Next week, a change of pace to turn from tonight's left-of-center views, to the far right Our guest... you see him behind me, will be Fulton Lewis Jr., the political commentator and columnist whom the liberals have called America's golden voice of reaction. If you're curious to know what a major spokesman for the far right, thinks of President Eisenhower, the New Deal, and labor leaders like Walter Reuther. And, if you want to hear why Fulton Lewis Jr. is still proud to call himself, an unreconstructed supporter of the late Senator Joe McCarthy, we'll go after those stories next week. Till then, for Parliament, Mike Wallace, good night.

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