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Chapter 5 Postwar Downturn, Labor Unrest, and New Management Soon after the armistice, demand for textiles declined as the government canceled contracts. The War Industries Board announced that when possible , the government would not cancel contracts, and that certain criteria would be considered before orders were canceled. These included the effects of the cancelation on the industry, labor, the community, and the textile firm. In spite of some reassuring words, the government immediately began to cancel orders placed after October 1, 1918. Furthermore, the War Industries Board announced that modifications or adjustments could be made to contracts amounting to more than $100,000.1 Cannon’s firm soon had more than $3.5 million in canceled government contracts. The consumer market failed to take up the slack.2 By 1919, the industry had entered what Cannon called a “depression.” Cannon Manufacturing received few new orders as the firm sold existing inventories. Profits fell to $848,051, a loss of more than $860,000 from 1918.3 Taxes for the year 1919, totaling more than $850,000, were more than the year’s profit.4 Cannon bitterly complained, “I think our friends in Washington went just a little too far in their tax record. In my opinion it is going to hurt the industries in our country insomuch as it leaves them so little with which to follow the decline downward.”5 Congress did repeal the excess profits tax in November 1921, three years into a decline for the textile industry. In the immediate postwar business environment, cost became an important issue for textile mills. Profits were being squeezed by the high costs of labor and material. Of particular concern were the high wartime wages. The 48 @ Postwar Downturn, Labor Unrest, and New Management costs for raw materials would drop after the war because of lower demand, but lowering wages would be a different matter. Workers were accustomed to the higher wages and would resist wage cuts. Textile mills could not maintain the bonuses and continue paying the high wages workers had acquired during the labor shortages of the war.6 With few orders being placed with the mill, the Cannon Manufacturing Company, along with most of the mills in the area, went to a four-day work week.7 The textile manufacturer knew it was not “wise to continue the present high bonus under the conditions of trade today.”8 James Cannon and other manufacturers considered how to reduce wages without causing labor unrest. He believed that the best course of action was to work in concert with other mills of the area. Workers would be less likely to quit Cannon Manufacturing Company after wage cuts if the surrounding mills also cut wages. Following the lead of the Cone and Spray mill owners, who reduced their bonuses on January 1, 1919, Cannon reduced the bonuses to his workers by 50 percent for full-time and 25 percent for part-time workers.9 Cannon kept in communication with H. R. Fitzgerald of Riverside Cotton Mill and Dan River Cotton Mill in Danville, Virginia, because Cannon believed “we should work as closely together as possible in arriving at adjustments that are vital to us all.”10 Fitzgerald informed Cannon that Riverside and Dan River planned to reduce bonuses to their workers in March.11 In addition, the two mill men shared information on bonuses and wages for various jobs in their mills. Cannon also worked with other mills in reducing wages since his mill workers seemed to “keep well posted as to what other mills are doing.”12 In addition to working in concert with other mills, Fitzgerald took another step to forestall labor unrest at Riverside and Dan River. In 1919 he introduced industrial democracy, a scheme involving the writing of a constitution and the creation of a cabinet composed of company executives, a senate comprised of supervisors, and a house of representatives chosen from among the workers. “Bills” or proposals had to be approved by both the house and senate but could be vetoed by the cabinet. Based on John Leitch’s ideas in his book Man to Man, Fitzgerald believed that a more evenhanded treatment of his workers would smooth out relations between management and labor and lessen strife at his mills.13 Since industrial democracy weakened the paternalistic structure in the mill village, Cannon had no interest in instituting it in his mills. In spite of the effort to avoid labor unrest, the years immediately following the war...

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