Steel and the Powers of the Presidency

The announcement yesterday that the US would be imposing a 10% tariff on imports of aluminum and a 25% tariff on imports of steel got me thinking about another time that steel became a cause célèbre of the man in the Oval Office, and what that episode taught us about the powers of the US Presidency.

On 10 April 1962, head of US Steel Roger Blough announced that steel prices would be increased by $6 per tonne or 3.5%, effective immediately.  Six other companies followed suit.  The next day, President John F Kennedy - barely a year into what would be his only term - held one of his most famous press conferences, calling the increase "a wholly unjustifiable and irresponsible defiance of the public interest", expressing outrage that "a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans."  Full text and audio of the speech are available from the JFK Library.

 JFK makes his case against US Steel and other manufacturers, 11 April 1962.

JFK makes his case against US Steel and other manufacturers, 11 April 1962.

His speech went on to excoriate the industry for taking what he viewed as pro-inflationary actions, in spite of flat wages for workers, rapid increases in productivity, sharp declines in labour costs, and industry earnings that were nearing record highs.  The price increase also violated an agreement between the AFL-CIO and steel industry that Kennedy's Secretary of Labor had negotiated less than two weeks earlier.  There were widespread fears that the move would not only cause inflation, but also trigger a repeat of the devastating steelworkers' strike, which had shut down all production nationally.  Privately, the President was even angrier at the US steel industry than his speech had conveyed; he had his top aides making phonecalls non-stop, the Defense Department switched it steel orders to a much smaller company which had not followed suit in raising prices, and the Department of Justice began an investigation into steel price fixing which would eventually result in a nolo contendere plea under anti-trust laws.  By April 13, every US steel manufacturer had retreated on its price increase, and the President had won.

The confrontation between the President and American steel manufacturers has since become a key case study in American political science, used to illustrate the real powers of the presidency.  A few years before the US Steel incident, academic and eventual JFK advisor Richard Neustadt had written a seminal work called, simply, Presidential Power.  In it, he argued that US Presidents are expected to wield far more power than the Constitution actually grants them, and so they must rely upon alternative levers of influence.  If the President cannot convince others that they are capable and willing to use whatever advantage they have as leverage, and that the public will be on the President's side in any conflict, then the President has very little actual power.  In short, the real power of the US President is the power to persuade.

In the fight with US Steel and other manufacturers, Kennedy had no authority to intervene, yet he assumed authority by framing the issue, and making a credible threat to use his professional reputation to influence others.  His victory was due to his ability to bargain and convince others that his interest was the national interest, and the national interest was their interest; when a President resorts to commands, he is in fact showing how weak the office actually is.

As the debate progresses over the recently announced steel and aluminum tariffs, the question will arise: is the President a credible authority on this issue, and will he be able to convince those around him that his stance is the right one?