Public Policies for Countering Deindustrialization in Postwar Massachusetts

The decline of traditional industries, or "deindustrialization," has been a topic of growing interest among American historians. Most of the existing literature illuminates the experiences of individuals, communities, and companies directly affected by plant closures.¹ Historians have recently begun to explore public policy responses to industrial decline, although policymaking on this issue at the state level has received almost no attention.² State government has nevertheless been an important locus of activity for dealing with deindustrialization. This is not surprising, considering the importance of the states in the American federal system and the fact that industrial decline often concentrates in particular areas of the country at a given time.

This article examines state policies for countering deindustrialization in the years after World War II, with a focus on Massachusetts and added information on other jurisdictions in the Northeast. The piece identifies the primary policy proposals put forward at the state level in response to industrial decline, the groups that backed these approaches, and the outcomes of this activity. The interplay that emerged between the different state deindustrialization policies is also explored. Attention focuses on Massachusetts events of the early 1950s. Deindustrialization was at the center of the state's political debate at that time.

The commonwealth of Massachusetts, the Bay State, saw significant factory closures in the late 1940s and 1950s, continuing a decline in traditional manufacturing that dated back to the early 1920s. After World War II, as before, downsizing was most dramatic in textiles. Employment in Massachusetts' woolen and worsted sector plummeted from 49,000 in 1946 to 25,000 in 1953. In cotton goods, the number of jobs sank from 35,000 in 1946 to 19,000 in 1953. Due largely to declines in these industries, total factory employment in the commonwealth fell from 582,000 in 1947 to 531,000 in 1955, a drop of 9 percent.³ Other states in the area also lost manufacturing jobs during these years. The economic difficulties of the region were known as the "the New England problem," a subject that inspired considerable contemporary study and comment.⁴ The textile industry downsized in Massachusetts and other northeastern locations as output shifted to the Piedmont states of the South. The expense of manufacturing was less in Dixie primarily because of the area's low wages and weak unions. Southern producers also benefited from less stringent social legislation and a smaller tax bite.⁵

Deindustrialization in Massachusetts produced two principal policy responses at the state level. Business associations worked to cut back government social programs and reduce corporate taxes so as to reduce production costs. These efforts can be grouped under the heading of "retrenchment." At the same time, a range of interests sought government action to strengthen the commonwealth's existing industries and foster the emergence of new ones. This initiative can be dubbed "economic development." The two approaches to deindustrialization policy in Massachusetts had differing outcomes. Despite determined lobbying by business organizations, little retrenchment occurred. This was the case even though lower expenses for social programs and taxes contributed to the competitive advantage of southern textile manufacturing—lending plausibility to the claims of business organizations that cutbacks in these fields were necessary. More substantive action resulted from the push for economic development. Massachusetts set up a number of growth-promoting institutions at this time that helped revitalize the commonwealth economy.

An interesting interplay was evident between the two state-level responses to deindustrialization in Massachusetts. As attention focused on the issue, a Republican took over as governor after an electoral campaign highlighting the Democratic incumbent's halting response to industrial downsizing. Although the new state executive talked repeatedly about the need for retrenchment, in practice he mostly pursued economic development. In the process, he reshaped what was meant by action to improve a state's business climate. While many at the time believed that this necessarily entailed retrenchment, the GOP governor put forward a new definition in which vigorous economic development activity qualified as well.

Politics had much do with the Republican executive's semantic emphases and policy choices. Massachusetts at this...