Labor, Civil Rights, and the Hughes Tool Company

Chapter Three: Labor at Hughes Tool, 1929–1934: hard times, Jim Crow, unions, and Uncle Sam

chapter three Labor at Hughes Tool, 1929–1934 hard times, jim crow, unions, and uncle sam THE ONSET OF THE GREAT DEPRESSION following the 1929 stock market crash upset the paternalistic management environment cultivated by Howard Hughes Sr. and Col. Rudolph Kuldell. The Depression caused a downturn in the drilling industry, forcing Hughes Tool to lay off workers and slash wages. Falling revenues also forced the curtailment of welfare benefits. Management now told employees, “you are lucky to have a job.” The company’s remaining workers toiled under the crushing psychological burden of imminent unemployment as they worked fewer hours and took home less money. Houston’s 22 percent unemployment paled in comparison to Hughes Tool’s 50 percent workforce reduction.1 Hughes Tool survived the Depression, in large part, at the expense of its employees. Lowered wages, reduced hours, speedups (increased production quotas), stretchouts (operating several machines simultaneously ), foremen doling out work to management’s favorite employees , and an increasingly autocratic managerial attitude all helped rein in costs but fostered employee restlessness, distrust, and frustration. Despite the Mutual Welfare Organization’s (MWO) general powerlessness before its demise, its shop committee had acted as a safety valve in airing aggrieved employees’ complaints. No such venue existed during the Depression, and employee complaints festered, causing a growing sense of resentment among a sizable number of employees. After their defeat in the 1918–19 strike, employees at Hughes Tool abandoned their union militancy in exchange for the company’s paternalistic welfare capitalism. The extraordinary expansion of the 1920s meant that relatively few of the employees in the 1930s had experienced the brief period of World War I militancy. During the 1920s, Hughes 59 Tool’s welfare capitalism succeeded in circumventing unionization, worker discontent, and strikes in large part due to management’s ability to guarantee the economic well-being of its employees in return for their loyalty and goodwill. The economic collapse of 1929 upset that status quo. The Depression ended Hughes Tool’s good wages and steady employment, destroyed the social contract between the company and its employees established by welfare capitalism, and nurtured disillusionment and resentment in those not laid off.2 White and black employees both suffered the effects of the economic catastrophe and management’s response to it. Black workers lost less because their benefits never approached the level of white employees . Hughes Tool eliminated its welfare program and the whitesonly Mutual Welfare Organization. White employees who escaped layoff were subjected to intense pressures from management that included speedups, stretchouts, reduced pay, and short hours. Machine operator J. B. Harris noted that during the 1930s employee morale plummeted. Full-time employment at Hughes Tool “meant working a week, being off a week” and gave many employees a “good reason to rethink [their opposition about] joining a bona fide union.” Harris ’s observation reflected the views of many employees who had lost faith in Hughes Tool’s management during the Depression and began questioning its absolute authority over their terms of employment. For black employees who escaped layoff their traditionally inferior job status worsened.3 In addition to reduced wages and shorter hours, management discontinued liability insurance, their only companyprovided welfare benefit. But the Hughes Tool Colored Club (HTC) continued to function as a welfare organization, independent of the company, dispensing what sick benefits and charity it could to its members. Hughes Tool and Houston had prospered in the 1920s thanks to the booming oil industry. The Great Depression devastated employment in the oil industry in general and Hughes Tool in particular. The company suffered severe financial reverses between 1929–33 primarily for three reasons: the desperate national economic situation, an oil glut exacerbated by the discovery of the huge East Texas oil field in 1930, state and federal oil prorationing designed to save the oil industry by cutting back production and bringing output in line with demand.4 The volatility in the oil economy brought dramatic drilling cutbacks. Between 1926 and 1929 the total number of oil and gas wells drilled in the United States numbered 102,149 but in the following four years 60 chapter 3 dropped to 61,024 indicating the magnitude of the nation’s oil glut. Wellhead prices dropped so low in comparison to production costs that they threatened to ruin oil producers and further devastate the national economy.5 The oil industry’s economic turmoil trickled...