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Wednesday, April 1, 1992

A Tale of Infamy: The Air Associates Strikes of 1941


Charles W. Baird is Professor of Economics and Director of the Smith Center for Private Enterprise Studies at California State University, Hayward, California.

The American labor union movement enjoys much more respect than it deserves. The politicians who, in the 1930s and 1940s, empowered and then kowtowed to the movement have never received enough blame. The following true story is an excellent illustration of these propositions.

Shortly before the Japanese attacked Pearl Harbor, Earl Harding wrote a manuscript for The Saturday Evening Post describing the violent 1941 Air Associates strikes and the federal seizure of the firm’s facilities. The article, “It Is Happening Here,” was scheduled to appear the week following December 7, 1941. In the aftermath of Pearl Harbor, the article was canceled. The galleys and other materials were sent to me by Mrs. F. Leroy Hill, widow of the president of Air Associates. I obtained additional information from microfilm records of The New York Times.

Air Associates was a private firm with its main plant in Bendix, New Jersey. It manufactured airplane equipment and parts. The company had five branch plants and two warehouses in Lodi and Belleville, New Jersey; Chicago and Rockford, Illinois; Marshall, Missouri; Dallas; and Los Angeles. During 1941 it employed 600 to 800 people in Bendix and 250 to 300 at its other sites. In mid-1941 it was working on $5 million in War Department contracts. The president of Air Associates was F. Leroy Hill, and its chief legal counsel was Walter Chalaire.

Although the United States was not formally at war, President Roosevelt had declared a defense emergency. American military goods were being sent to England and the Soviet Union, and the U.S. Army and Navy were gearing up for war.

In March 1941, President Roosevelt created the National Defense Mediation Board (NDMB). It was a tripartite committee of 11 members—four to represent unions, four to represent employers, and three to represent the federal government. This tripartite structure was modeled after Mussolini’s plan for running the Italian economy.

The NDMB was charged with the task of trying to settle labor disputes in businesses with defense contracts. Its power was skewed: It could impose its will on employers, but it could only try to persuade union leaders to accept its recommendations. It rarely was able to do the latter. The NDMB collapsed at the end of 1941 in a capitulation to John L. Lewis, president of the United Mine Workers, in his strike in the “captive mines” (coal mines owned by steel firms that used the coal).

The Air Associates story involves two strikes, two apparent settlements, a threatened third strike with an attempted forced settlement, and the final seizure.

The First Strike

In early June 1941,12 Air Associates employees formed an organizing committee at the behest of the United Auto Workers-CIO, Aircraft Division (UAW-CIO). The committee met with Leroy Hill on June 17; all voices were recorded. Although the union hadn’t collected more than 20 authorizing signatures, the organizing committee asserted that it represented a “vast majority” of the 650 employees at the Bendix plant, and demanded that Air Associates immediately recognize the UAW-CIO as exclusive bargaining agent for all non-manage-rial workers. After brief negotiations, the committee also demanded that Hill consent to a union shop (wherein all employees are required to become union members as a condition of continued employment) and a higher wage scale.

Hill refused instant recognition but did offer to settle the representation question by a certification election supervised by the local office of the National Labor Relations Board (NLRB). This was a major concession because the 1935 National Labor Relations Act (NLRA) did not require a certification election in the absence of a showing by the union that it had collected authorizing signatures from at least 30 percent of the non- managerial employees. The union had not come close to meeting that threshold.

One of the functions of the NLRB in such elections is to determine the appropriate “bargaining unit.” That is, it determines who can and who cannot vote in the election.

The NLRB can significantly affect election outcomes by gerrymandering, and it did so in this case. One-third of the non-managerial employees were excluded. The organizing committee tried to identify the pro-union and anti-union workers. (It is legal for unions to do this, but it is “an unfair labor practice” if management does it.) At the behest of its union client, the NLRB then defined the bargaining unit such that a majority of those in it were pro-union. Unit determination had nothing to do with job description. For example, the receiving department was excluded and the shipping department was included. The job descriptions for the two departments were practically identical, but a majority of the shipping department were thought to be pro-union and a majority of the receiving department were thought to be anti-union.

The election took place on July 1. Election campaign rules were then, and still are, rigged in favor of the union. The NLRA permits unions to promise workers all kinds of benefits, but forbids management to make such promises. Moreover, although management is forbidden to contact eligible voters at home or in any other non-public place during campaigns, unions are free to do so. Many Air Associates employees stated that intimidation and misrepresentation took place during such union contacts. In the end, the gerrymandering and the biased election rules produced a vote of 206 to 188 in favor of the union. The UAW was certified as the exclusive bargaining agent for all bargaining unit workers—those who voted yes, those who voted no, and those who didn’t vote. The next step was for the union and management to begin bargaining on the terms of a first contract.

On July 3 management temporarily laid off 12 workers because of a shortage of aluminum. These were not members of the union organizing committee. The workers were told that the layoff was temporary and that they would be recalled as soon as aluminum was procured. They were recalled in two stages, some on July 16 and the rest on July 21. The union did not protest the layoff when it happened.

Under the National Labor Relations Act, it is an “unfair labor practice” to fire an employee because of union activity. This often provides job security for incompetent workers. During the early years of the NLRA, a common union tactic was to get a few known union sympathizers fired, allege an unfair labor practice, and appeal to the government to prosecute the employer. A union would merely threaten to keep management tied up in costly legal defense procedures until management capitulated. This had happened to Air Associates in 1938 before it moved to New Jersey.

A New Tactic

During the 1941 defense emergency, unions added a new tactic in disputes involving companies with defense contracts. Early in the year, at North American Aviation Company in Inglewood, California, and at Federal Shipbuilding and Dry Dock Company in Kearny, New Jersey, unions used strikes that allegedly impeded defense production as a pretext for President Roosevelt to seize the plants and assign the War Department to operate them in accordance with union wishes. These two incidents were not ignored by the UAW-CIO at Air Associates.

On July 8 the union proposed a contract that included a union shop. Mindful of the North American Aviation and Federal Shipbuilding precedents, Leroy Hill wanted to avoid a strike and so was willing to bargain immediately. A UAW-CIO shop committee met with Hill in his office on July 11. Hill, wary of possible allegations of unfair labor practices during bargaining, insisted that the bargaining sessions be recorded. He offered to let the union check the transcripts for accuracy and to post them to keep the workers informed about the progress of bargaining. The union balked. It insisted that bargaining be off the record. Hill turned on the recorder, and the shop committee stalked out of the office and went outside the plant.

Earlier in the day there was a heated verbal dispute between a union organizer and an anti-union worker, and there were rumors that union sympathizers were going to try to blow the quit-work whistle and cut off power in the plant to try to shut it down. To avoid this, management had the steam cut off from the quit-work whistle and had all the unguarded entrances locked.

After lunch, the shop committee returned to the plant through one of the guarded entrances. They asked to go back to Hill’s office to resume bargaining. There was a short, recorded meeting wherein, according to Earl Harding, the unionists asserted “that the government had granted them an interest in the business which they were going to protect,” and “that the company must prevent other employees from opposing the CIO.”

The bargaining seemed to be going nowhere, so the committee left Hill’s office and headed back to work. But they assembled near the quit-work whistle and attempted to set it off. When it didn’t work, they ran through the plant, turning off power, yelling “strike,” and attempting to pull workers away from their machines. At most 50 workers left the plant and began to demonstrate outside. One policeman was sufficient to restore and maintain order.

In the evening of July 11, the union visited employees’ homes and urged them to stay away from work the next day, which was a Saturday. Many workers later reported being intimidated during these visits. On July 12 there were about 60 absentees out of approximately 700 workers. The union first claimed that they had been locked out, notwithstanding that management had telegraphed all workers, including those who had demonstrated the day before, that the plant was open and their regular jobs were available.

The plant was routinely closed on Sunday, but on both Saturday and Sunday roofing nails were scattered over all roads leading to the plant. Employees were threatened with “dire consequences” to themselves, their families, and their homes and cars if they showed up for work on Monday.

When the plant opened on July 14,150 employees were absent. One hundred called in saying that they were too frightened to come to work. There were only 44 Air Associates employees on the picket line. The CIO called in non-employee unionists to bolster the picket line. Inasmuch as the dispute was obviously not a lockout and the company was willing to continue bargaining on the record, the union needed a pretext for its actions. It seized upon the 12 workers who were temporarily laid off on July 3 and asserted that the layoffs were discriminatory anti-union firings. Between July 3 and July 14 it had made no such claim.

On July 15 approximately 600 pickets, at most 50 of them Air Associates employees, wielded clubs, stones, and other weapons. They stoned cars that tried to enter the premises. They pulled drivers and passengers out of cars and beat many of them. Sheriff William Browne said that his forces were too small to maintain order, but he refused to ask Governor Charles Edison to send in state police. Thus Hill telegraphed Governor Edison to ask for help in maintaining order. The approximately 500 Air Associates workers who were eager to work asked Hill to hire private guards to help the sheriff protect them and their right to work. He did so, and on July 16 private guards escorted willing workers in and out of the plant. The unionists were outraged and threatened to bring 1,000 additional non-employee pickets to “clean up” the guards.

On July 17 over 500 employees assembled in nearby Hasbrouck Heights to go to work in groups. A bus was provided, and, together with several cars, proceeded to the plant in a caravan. Between 1,000 and 1,500 pickets stopped the caravan, broke all the windows on the bus, smashed cars, dragged people out of vehicles, and beat them. Finally, Sheriff Browne joined Hill in requesting assistance from Governor Edison. Moreover, Hill threatened to seek help from the U.S. Army “if law enforcement officials are unwilling or not equipped to act.”

It is important to understand that there was no legitimate strike. There had been no refusal to bargain, and neither side had declared a bargaining impasse. The union had claimed discriminatory firings, but some who were allegedly fired were already back at work in spite of the union’s picket line. Walter Chalaire, Air Associates’ legal counsel, met with representatives of the federal government’s Office of Production Management on July 14, 15, and 16, where he reiterated the company’s willingness to bargain toward a first contract. He did insist that the bargaining be on the record, but he didn’t rule out any topic. It was the union that refused to bargain if a record was kept.

Apparently cowed by Hill’s threat to call for the Army, the union ceased its violence on July 18 and 19. Willing workers were at their jobs, undeterred by the few pickets outside the plant. Production resumed to 85 percent of normal. For all of July, production was 90 percent of normal.

However, on July 19 the National Defense Mediation Board got involved. The Department of Labor assigned the NDMB to mediate the Air Associates dispute, and the Board ordered management to appear in Washington on July 22 to begin mediation. Irving Abramson, chairman of the New Jersey CIO Council, demanded that the company shut down until the mediation was complete. On July 20 the union asked President Roosevelt to seize the plant “in the interest of national defense.” On July 21, 350 Air Associates employees petitioned the NDMB demanding protection for their right to work and asking for a new election.

Mediation began on July 22. On the next day, the NDMB recommended a three-part solution. First, all workers were to be allowed to return immediately without discrimination. Hill already had made this offer. Second, all questions involving back pay were to be submitted to an arbitrator. Third, negotiations toward a first contract were to begin immediately. If agreement were not reached by August 9, the contract would be set by binding arbitration.

On July 27 Leroy Hill accepted all the Board’s recommendations except for binding arbitration on the first contract. On July 28 the NDMB issued a statement that Hill’s response was a “substantial acceptance” of the Board’s recommendations. On July 29 picketing ceased and all Air Associates employees went back to work. The first apparent settlement had been reached. However, Loren J. Houser, UAW-CIO Eastern Regional Director, demanded that Hill ultimately submit to binding arbitration.

The Second Strike

Bargaining sessions under the auspices of the NDMB took place on July 30-31, and August 1, 4, 5, 7, and 8 at the Hotel Pennsylvania in New York City. Anthony Grimaldi, a member of the original union organizing committee and now leader of the UAW-CIO local at Air Associates, was the chief union spokesman. Leroy Hill and Walter Chalaire spoke for the company. The union demanded a union shop, mandatory dues checkoff, a grievance system that prohibited workers from working out even small misunderstandings directly with super visors, and binding interest and rights arbitration. The company agreed to accept binding arbitration if the union would accept binding arbitration on the questions of compensation for union-caused property damages during the first strike and the legitimacy of the July 1 certification election.

On August 8 a formal impasse was declared. Harry P. Shulman, a Yale University law professor, was appointed arbitrator, and he undertook an investigation of the dispute toward the end of recommending the terms for the first contract. Both sides were notified that the Shulman report would be made available before the NDMB made its final recommendations.

On September 19 the union voted to authorize a strike if the Shulman report, the NDMB, or Air Associates didn’t give in to its demands. No date for the strike was set. On September 30, before the Shulman report was made public, the strike was called.

We don’t know for sure why the union did this. Chances were that Shulman would have made rec ommendations that the union would have liked, and the NDMB would have backed them up. My own conjecture is that by this time the union was resolved to bring about a War Department seizure of the company. Whatever Shulman and the NDMB would recommend would not be as favorable as the unions at North American Aviation and Federal Shipbuilding had won by plant seizure.

There were approximately 400 pickets on the morning of September 30. At most only 70 of them were Air Associates employees. At least 180 employees called in to explain they were absent due to intimidation. Rocks were thrown, and police, workers, and strikers were injured. Hill immediately advertised for replacement workers. The advertisement brought in 2,500 applications, and all striking workers were replaced. Production at the Bendix plant increased to record levels.

In 1938 the U.S. Supreme Court, in NLRB v. Mackay Radio and Telegraph Company (304 US 333), upheld the fight of employers to hire permanent replacements for strikers in economic strikes. An economic strike is one called for any reason other than illegal acts by the employer. Air Associates had committed no illegal acts which caused the September 30 strike. Indeed, it was, in accordance with the law, waiting for an NDMB recommendation when it was struck. Hill was clearly within his rights to hire the replacement workers and to consider the jobs vacated by the strikers to be filled.

Frank F. Graham, chairman of the NDMB, summoned Hill and Chalaire to Washington, and between October 6-8 Hill and Chalaire negotiated with the Board to try to find a reasonable settlement. The NDMB, however, following the now-available Shulman recommendations, insisted that Hill sign a contract that gave the union all it wanted. Most important, the NDMB demanded that Air Associates put all striking workers back in their regular jobs even if that meant firing replacement workers. According to Earl Harding, Hill and Chalaire were told that a contract acceptable to the union must be signed “whether the company agreed or not . . . and the Mediation Board proceeded to frame one itself.”

Hill and Chalaire left Washington without an agreement, and on October 10 the NDMB announced its final recommendations—complete capitulation to the union, including immediate reinstatement of all strikers. In its official statement the Board said that it “feels obliged to observe that this company has not exhibited toward either the certified union or the NDMB that attitude of cooperation to which the public is entitled on the part of a company whose operations are essential to the defense of the nation.” (The New York Times, October 11, 1941)

It is important to note that defense production had not been impeded by the September 30 strike. The replacement workers were more productive than the strikers. As to cooperation, in a last ditch attempt to settle the dispute, Hill agreed to all the union’s demands except for a union shop, and he agreed to place strikers on a preferential re-hire list and reinstate all of them within 30 days. He continued to refuse to fire replacement workers to make room for returning strikers. The NDMB stated that this amounted to a “rejection” of its recommendations.

On October 11 the NDMB declared that the case was out of its hands, and threatened to turn it over to the executive branch of government. This was code for recommending War Department seizure. On October 18 the NDMB appealed to the Air Associates board of directors to force Hill to capitulate. The directors refused. On the same day the UAW threatened mass picketing of Air Associates by 21 union locals and also threatened to shut down all aircraft plants in the eastern United States unless Hill acquiesced.

On October 17 Sheriff Browne declared that only 45 pickets would be allowed at the Bendix plant, and that only striking Air Associates employees would be allowed to picket. Only 25 pickets showed up, and the plant continued normal operations.

The next day the union called for 250,000 pickets to assemble at Bendix and gave Hill until October 20 to yield or face the consequences. The NDMB asserted that the union would be able to assemble at least 20,000 to shut the plant down. Sheriff Browne made plans to deputize World War I veterans to maintain the peace.

On October 19 Leroy Hill issued a public statement:

 

Now it remains to be seen whether the Defense Mediation Board is out to get production or universal compulsory unionization. If it pursues its recent policies it can, of course, force the company to capitulate to the private army of 8,000 or more pickets which the CIO proposes to mobilize to close the plant unless its terms of unconditional surrender are met. Or the Defense Mediation Board can call on the State of New Jersey, and if need be, the Federal Government to protect the right to work of the 800 employees who fully man the plant and have it in full production. If we are let alone and if our employees are protected in their right to work, our defense production will mount steadily and the strikers who want to work can be re-employed long before the thirty days expire. (The New York Times, October 20, 1941)

 

On October 21 the Times, in an editorial entitled “One Way Compulsion,” referred to the North American Aviation, Federal Shipbuilding, and Air Associates cases and declared, “The conclusion is inescapable that the Government has deserted its true function as an impartial arbiter and become more and more frankly partial to ‘labor.’”

On October 22 the union announced that there would be mass picketing the next day. Hill issued a bulletin to all employees warning them of potential violence and explaining that the police had requested that no one try to enter the plant until the police had cleared the roads. He requested that all willing workers assemble at the Bergen County Court House in Hackensack, check in for work, and wait until the police said it was safe to try to enter the plant.

On October 23, 2,000 pickets tried to shut down the plant. Sheriff Browne declared that because he was unable to guarantee the safety of the workers he would cooperate with the union to keep workers away from the plant. Some workers sneaked in through a rear entrance. The workers who had assembled at the court house sent a telegram to President Roosevelt asserting that “Lawless CIO picketing is keeping us from work. Do your duty and protect our constitutional right to work.” (The New York Times, October 24, 1941)

When the sheriff discovered the unguarded rear entrance, he shut it, leaving some workers blockaded in the plant. The next morning the sheriff asked the union for permission to allow the workers in the plant to send out for food. Anthony Grimaldi, the local union boss, acquiesced, but when the messenger returned with the food, pickets refused to allow him into the plant. The police protested, but, according to Earl Harding, Grimaldi exclaimed: “Who the hell is running this show? I’ll say who’ll go in and who won’t go in.” The food delivery was never made.

Hill and non-striking workers sent a telegram to Governor Edison requesting assistance from the state police. Edison responded by sending a telegraph to Air Associates wherein he blamed Hill for all the trouble. He recommended that Hill resign as president and that the New Jersey Chamber of Commerce nominate a successor. The Chamber demurred, stating that the governor had no right to determine who should be president of a private company. The Times editorial of October 21 was right. Government had “deserted its true function as arbiter.” The state government, at least, had become an agent for the union.

Meanwhile, in the evening of October 24, Hill and Chalaire held a six-hour meeting in Washington with Robert Patterson, Undersecretary of War, and William S. Knudsen, Director of the Office of Production Management. In that meeting Hill gave even more ground. He agreed to place the 50 to 60 remaining strikers immediately on the payroll. That is, the strikers would be paid their normal wages even if they didn’t work while waiting to be reinstated. Hill repeated his promise that all of them would be back at work within 30 days.

The next day The New York Times ran a frontpage story with the headline “Strike Is Settled at Air Associates: Plant Officials Accept NDMB Formula After 6-hour Talk With Knudsen, Patterson.” According to the Times, Patterson and Knudsen “expressed their appreciation of the company’s cooperative attitude and request all returning employees to cooperate with the management in order that full production can be maintained in the interest of national defense.” The second apparent settlement had been reached.

The Threatened Third Strike and Forced Reinstatement

On October 27 the union threatened to call for a general strike throughout the eastern United States unless Hill agreed to immediately reinstate all strikers to their regular jobs even if some replacement workers had to be fired. The union’s alleged reason for this new threat was that although the 50 to 60 strikers were being paid full-time at their normal wage rates while they were waiting to be reinstated, they weren’t being paid overtime. Replacement workers were getting overtime pay. Justice, therefore, required immediate reinstatement.

In my judgment this was a smoke screen. The union didn’t want a settlement. It wanted a seizure. It realized that the dispute had to be kept going to get President Roosevelt to seize the company.

As The New York Times editorialized on November 25, “[W]hile it has been demonstrated—as the cases of the Federal Shipbuilding Company and Air Associates so vividly illustrate—that no employer may reject a Mediation Board ‘recommendation’ without being immediately cracked down upon, it has also been demonstrated that if a labor union leader does not like the board’s decision the Administration will get him another board.”

The captive mines strike later proved the Times was right. On November 15 John L. Lewis initiated the strike. He wanted a union shop in the captive mines, as he already had in the commercial mines. The NDMB recommended a settlement that did not include a union shop, whereupon President Roosevelt dismissed the NDMB from the dispute and appointed an arbitration panel which, on December 7, gave Lewis all he wanted. The Air Associates union had good reason to expect that Roosevelt would give it much more than it could get from negotiating with Leroy Hill.

On October 28 Richard T. Frankensteen, National Director for the Aircraft Division of the UAW-CIO, threatened to use his “economic strength” to shut down all UAW work in New England, New York, New Jersey, and Pennsylvania unless Hill gave in to the union’s demand for immediate reinstatement. Frankensteen explained, “We are not interested in any back door agreements of Mr. Patterson or Mr. Knudsen.” (The New York Times, October 29, 1941)

Walter Chalaire explained his view of the new strike threat in the same Times article: “If the call for the general strike is met, there is a real question of ‘who is the government.’ We had wasted day after day with the Mediation Board. Its principal concern in our case was not defense production but promotion of compulsory unionism. We found a different atmosphere in the office of Undersecretary of War Patterson. In that conference we soon reached an agreement. Naturally the CIO wants to throw the controversy back to the Mediation Board.”

On October 29 President Roosevelt repudiated the Patterson-Knudsen agreement and ordered Hill to reinstate the strikers immediately. The War Department issued a statement:

The Undersecretary of War announced today that the War Department was sending a representative to the plant of Air Associates at Bendix, New Jersey to supervise the reinstatement of the strikers there . . . . The War Department expects that . . . the strikers will . . . be immediately placed in the jobs which they formerly held, regardless of the fact that new employees have been hired by the company to fill such jobs. New employees displaced from the jobs which they presently occupy as a result of the foregoing reinstatement of the strikers may be given other jobs if the company so desires, or the company may make such other disposition of such new employees as it sees fit. (The New York Times, October 30, 1941)

So much for equal protection under the law. All workers are equal, but some are more equal than others. Frankensteen called the Patterson-Knudsen agreement a “thing of the forgotten past” and left to “exchange felicitations” with President Roosevelt at the White House.

On October 30 Anthony Grimaldi looked over the shoulders of Colonel Roy M. Jones and Major Peter Beasley as they supervised the forced reinstatement of the strikers. Hill was ordered to stay in his office and out of the way. The chain of command was embarrassingly obvious, but the non-strikers would have none of it. W. C. Morton, a spokesman for the non-strikers said, “If these men are returned to work and the men on the machines are displaced by strikers everyone in this plant will walk out, not with the idea of going on strike, but for the purpose of a demonstration.” (The New York Times, October 31, 1941)

And so they did. The non-strikers undertook a 30 minute work stoppage and two separate one hour sit-down demonstrations. There was some physical violence. A striker confronted a non-striker with a lead pipe, and several other non-strikers grabbed the striker and punched him.

The forced reinstatement settlement had failed. Late at night on October 30 President Roosevelt, certainly with the concurrence, and probably at the urging, of his White House guest, Richard T Frankensteen, ordered the War Department to seize the Bendix plant of Air Associates.

The Seizure

On October 31, 2,100 to 2,500 fully armed troops took over the Bendix plant. Colonel Roy M. Jones was ostensibly in charge, and he declared that the Army had “reopened” the plant. Actually it never had been closed except on October 24 when Sheriff Browne helped the union close it. President Hill and Executive Vice President Harold I. Crow were ordered off the premises. Union leader Anthony Grimaldi was allowed to stay.

Only Air Associates’ Bendix plant was involved in the dispute, so Hill naturally assumed he was still in charge of all the branch operations. He was wrong. On November 5 the Army seized the seven branch plants. The excuse given was that the branch operations had to be coordinated with the Bendix plant. Colonel Jones claimed, “The Army is in here to get out production and until the labor situation is cleaned up, Hill and the others are not in the picture at all.” (The New York Times, November 6, 1941)

It got worse: On November 18 the War Department instructed the board of directors of Air Associates to fire President Hill. Undersecretary Patterson, who had helped produce the Patterson-Knudsen agreement on October 14, said, “We will return the company to private management just as soon as we figure that they have a management there that will not have labor problems.” (The New York Times, November 20, 1941) In other words, a management that would take its orders from Anthony Grimaldi.

The board of directors was instructed to submit all names of potential successors of Hill to the War Department for its approval. On November 26, with the permission of the War Department, the Air Associates Board elected Frederic G. Coburn, then chairman of the board of McLellan stores, president of Air Associates.

To add insult to injury, on November 26 the War Department tried to depict Leroy Hill as an incompetent businessman by asserting, “On taking possession the Army found that the company did not have the means to meet maturing obligations to banks and to trade creditors.” The government advanced $500,000 to the company, and a spokesman said: “When it agreed to extend financial aid to the company the War Department took the same measures that any bank would take under similar circumstances. It insisted that the company give assurance of satisfactory management and continued production.” (The New York Times, November 27, 1941)

However, as Hill explained, $500,000 was the standard down payment the War Department made on new contracts. He had been expecting it. Moreover, since the company’s inventory had been seized and its ordinary customer receipts had been impounded by the War Department, it was no surprise that banks and trade creditors were complaining about the lack of payments since the end of October.

On November 30, 502 out of 800 Air Associates employees petitioned President Roosevelt to reinstate Hill. According to the petition: “[The] takeover was a capitulation to the dictates of selfish labor union leaders against the wishes of 85% of the Air Associates employees. We further believe the stipulation of the government that the former management be replaced as a condition for the return of the property to its rightful owners is an act of governmental coercion threatening the destruction of free enterprise.” (The New York Times, December 1, 1941)

On December 26 President Coburn signed a contract with the UAW that included a union shop and everything else Anthony Grimaldi demanded. Only 250 out of 800 employees participated in the contract ratification vote. They all voted yes. On December 29 the War Department turned Air Associates back over to its board of directors and President Coburn.

Postscript

E. Leroy Hill moved to Rockford, Illinois, in 1942. There he founded the Aircraft Standard Parts Company and Aero Screw Company, both of which supplied parts for military aircraft during World War II. After the war he formed Hill Machine Company, which later became Hill-Rockford Company, a manufacturer of assembly machinery. He became a member of the Mont Pelerin Society. Although he retired in 1975, he remained an energetic defender of the right of every person to work free of compulsory unionism. He died from a heart attack at his summer home at Francestown, New Hampshire, on July 7, 1981.

After the war Air Associates specialized in electronics. In 1957 company headquarters were moved to St. Petersburg, Florida, and its name was changed to Electronic Communications. It became the ECI Division of E- Systems, a subsidiary of NCR, in 1976.


  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.