CHAPTER 3

The Birth of the Business Roundtable

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776)

THE LINKS CLUB IS ONE OF NEW YORK CITY’s most exclusive and elite social organizations. Although officially a golf club and a part of the United States Golf Association, it has no course of its own but occupies a stately four-story brick townhouse between Park and Madison, two blocks east of Central Park. The building, located at 36 East 62nd Street, was built in 1890, and the Links Club took up residence upon its founding in 1916 by Charles Blair Macdonald, a golf booster and course architect. The club’s first members were Macdonald’s close friends, members of the Progressive Era New York bourgeoisie who counted in their number several bank presidents, prominent attorneys, and “men of leisure.” Like all of the city’s esteemed “gentleman’s clubs” (not to be confused with the other kind of “gentleman’s club”), the Links Club remained in the decades after its creation a beacon for economic elites.

From its earliest years, the Links Club catered to the city’s business leaders. Slipping through an unmarked door below street level, corporate executives would enter the main foyer to find a welcoming fireplace and, to the rear of the first floor, a private dining space called the Oak Room. Before them lay an ornate staircase that spiraled counterclock-wise to the top floor of the townhouse. The pale green walls (in homage to golf links) gave off a warm glow, and herringbone patterns marked the hardwood floors of the long halls. The club’s second floor held the library, which featured wood panels brought from a room in England designed by Sir Christopher Wren, cornice molding, leather chairs, and a Rembrandt Peale portrait of George Washington. The dining room, one floor up, housed a painting of former member Dwight D. Eisenhower.¹

By the 1960s, the Links Club had become a preferred social gathering spot for America’s most powerful chief executives. Many corporations, such as General Electric, AT&T, and major airlines, had their headquarters in New York, as did the commercial banks and investment houses on whose financing those giants depended. Moreover, other big companies operated within striking distance of the big city, from DuPont in Delaware to Xerox in Connecticut. And although the heart and soul of American industrial manufacturing lay in the heartland, industrial leaders knew that their corporate interests lay as much in East Coast power centers as in their traditional home bases. General Motors CEO Richard Gerstenberg, for example, received mail both in Detroit and at the GM Building on Fifth Avenue. In the age of the corporate jet, steel executives from Pittsburgh, automakers from Detroit, and rubber and tire chiefs from Ohio frequently and easily made their way to the Big Apple—and to the Links Club. Retreating to this oasis, away from the bustle of the city crowds and the demands of their corporations, executives could relax at the bar and enjoy each other’s company.

The simple brick façade of the modestlooking townhouse thus disguised the monumental power brokering that occurred behind its hardwood doors. Most of the time, business leaders came to socialize—to complain about the government and make plans to play golf. Indeed, house rules barred members and their guests from conducting business in the dining rooms and other “public” spaces within the club. On the upper floors, however, private meeting rooms provided the perfect location for privileged, off-the-record conversations.

One such room hosted a gathering on the night of March 27, 1973, that included the incoming and outgoing chief executive officers of General Electric, the heads of AT&T and aluminum giant Alcoa, and the retired CEO of U.S. Steel, Roger Blough, by then a partner at the Manhattan corporate law firm White & Case. All five men served on the governing Executive Committee of the “March Group,” a loose affiliation of big-business CEOs that had officially formed at the Links Club just one year earlier. They also all sat on the leadership board of an even newer organization called the Business Roundtable, created just six months earlier by the merger of two slightly older groups that handled labor relations and inflation issues, particularly in the construction industry. Given the pronounced overlap in leadership between the March Group and the nascent Business Roundtable, Blough and the other four executives concluded that the two organizations should formally join forces. A month later, again in an oak-paneled conference room of the stately brick townhouse on 62nd Street, a larger group of businessmen voted their agreement, and the leaders of American industry put the Business Roundtable into its final form. In the months and years ahead, the chief executives of the March Group quietly but unmistakably took over the Roundtable from the inside, completing a half-decade’s work of uniting the CEOs of the country’s largest corporations into a singular political powerhouse that would make an indelible imprint on the history of business and politics in the United States.²

The Business Roundtable, a consortium of chief executive officers from approximately 150 of America’s largest publicly and privately held corporations, holds a unique place in the history of business lobbying. It emerged in direct response to business’s crisis of confidence and quickly became a powerful symbol of business leaders’ desire to shape politics as well as an expression of their collective power. Unlike older business associations, the Roundtable faced no institutional obstacles from an entrenched culture or obstructionist reputation. In addition, the Roundtable took center stage in the world of business lobbying during a key moment of economic realignment that both bolstered its ambitions and ultimately limited its range of influence. During the late 1960s and early 1970s, global capitalism underwent profound and irrevocable changes, and American industrial manufacturing began to lose its global dominance. The first decade of the Roundtable’s activism coincided with the dramatic shift of production away from the United States, the permanent decline of both productivity growth and unionization, and the supplanting of manufacturing by financial services as the nation’s most important industry. The specific policy threats that drove the leaders of American big business to create the Business Roundtable reflected these shifting dynamics, even if few executives accurately understood the degree of change they faced. Indeed, while the first generation of Roundtable leaders exuded optimism that they could confront the challenges industrial manufacturing faced through better domestic policymaking, their organization in many respects represented a last-ditch gambit by the long-established multidivisional industrial firms that had formed the heart of industrial capitalism since the late nineteenth century. Its birth reflected their collective insecurities and anxieties, and its political strategies shaped how American industrialists would confront the new world order.

FOUNDING BROTHERS

Although the Roundtable would eventually become one of the most powerful members of a broad-based corporate mobilization that lobbied for a wide range of “pro-business” policies, its origins lay in a subset of American industry that faced very specific economic concerns by the late 1960s. The original Business Roundtable—before it absorbed the March Group in the spring of 1973—formed in October 1972 through the merger of the Labor Law Study Committee (LLSC) and the Construction Users’ Anti-Inflation Roundtable (CUAIR). The former brought together lawyers and public affairs professionals dedicated to employment and union issues, while the latter united companies who shared a common interest in reducing the costs of construction and the strength of the building trades unions. Both constituent groups, therefore, reflected the political struggles of America’s oldest, largest, and, by the 1970s, increasingly imperiled industries.

The Labor Law Study Committee had its roots in the politics of labor, particularly the aftermath of President Lyndon Johnson’s 1964 landslide victory over Republican Barry Goldwater that brought the Democratic Party overwhelming majorities in both houses of Congress (68 members in the Senate; 295, or 57 percent, in the House). Taking office in January 1965, the 89th Congress launched a juggernaut of liberal reforms, including the most important elements of Johnson’s Great Society program—Medicare, Medicaid, the Voting Rights Act, the Immigration and Nationality Act, and various War on Poverty and housing measures. Yet even though the AFL-CIO pronounced that term “the most productive congressional session ever held,” organized labor failed to achieve one of its most critical goals: the repeal of section 14(b) of the Taft-Hartley Act of 1947. This provision, for two decades the greatest thorn in labor-liberalism’s side, permitted state legislatures to ban certain types of employer-union agreements, including the union shop. A total of nineteen states, mostly in the South and West, had enacted such bans and effectively ground unionization efforts there to a halt. Despite months of intense lobbying by national and local labor organizations as well as liberal allies in and out of Congress, proponents ultimately failed to overcome a Senate filibuster and the repeal died in the fall of 1965. In the end, the measure was doomed by President Johnson’s decision to place a higher priority on Medicare and other Great Society programs, as well as by the intransigence of southern and western Democratic senators who feared a business backlash in their right-to-work states.³

As those senators predicted, labor’s push to repeal 14(b) sparked a massive organizational response by employers. The National Right to Work Committee, formed in 1955 to combat unionization, certainly received an organizational boost from the struggle, but so did smaller organizations, including the newly formed LLSC. This group of public affairs and labor relations executives took shape in 1965 when three corporate vice presidents—Fred Atkinson of Macy’s, Doug Soutar of American Smelting and Refining, and Virgil Day of General Electric (GE)—met informally for lunch in New York City. Commiserating over labor’s political offensive, the men agreed that managers from across the industrial spectrum needed a formal outlet to collectively voice their opposition to the repeal of 14(b). Once that legislative threat subsided, according to Virgil Day, the executives kept alive the concept of a labor-oriented managers’ group. Most important, they sought a means to take the political offensive and “reverse the process of always waiting until [they] had to meet some union pressure.” Day, who had long represented GE in labor negotiations and hearings before the National Labor Relations Board (NLRB), hired the top three management-oriented labor attorneys in the country to conduct an intense study of the National Labor Relations Act and report back with what Day called “an analysis of the labor problem from the standpoint of potential legislative remedies.”⁴ Some months later, those lawyers offered a series of specific amendments to the law that would benefit management, suggestions that Day immediately presented to the now officially constituted LLSC that he headed.

In the years after the 14(b) repeal battle, the LLSC expanded both its operations and its membership. It quickly grew to include approximately sixty member companies, typically represented by public affairs and labor relations executives, usually at the rank of vice president (like the group’s founders). Following the recommendations of Day’s lawyers, the group called for specific changes to labor law, including an expansion of right-to-work laws, tighter rules for secret ballots in union elections, and requirements that employees vote before launching a strike. In addition to working with sympathetic politicians to craft legislative proposals, the LLSC also conducted legal research and raised money for employers embroiled in cases before the NLRB. By the early 1970s, the organization counted among its members a wide range of industrial powerhouses, from steel and aluminum producers to utilities and airlines to automobile and chemical manufacturers. Despite their disparate markets and operations, these companies found common cause both in their large size and in their intimate dealings with organized labor.⁵ Far removed from its origins as an informal lunch group, the LLSC formalized its research and advocacy operations and opened a Washington headquarters. In 1972, it hired a full-time executive director, William Beverly Murphy, a sixty-five-year-old Wisconsin native and former chairman of the Business Council (1965–66) who had recently retired as CEO of Campbell’s Soup.⁶

Between 1965 and 1972, the LLSC expanded its focus beyond labor law to the larger question of union power and its effects on the national economy, particularly through the increasingly visible problem of inflation. The Consumer Price Index, which tracked the cost of a standard basket of goods, increased at an annual rate of 1.3 percent in 1964 but more than 6 percent in 1970.⁷ During the LLSC’s early years, the relationship between rising prices and the power of organized labor came to dominate the group’s mission.

During the 1960s, public debates about the causes of inflation largely revolved around two distinct, though not mutually exclusive, explanations known as “demand-pull” and “cost-push.” According to the demand-pull model, inflation resulted when aggregate demand increased faster than the overall economy’s capacity to produce goods and services, most often because of deficit spending by the federal government. Cost-push explanations, on the other hand, attributed higher costs of finished goods to increases in the costs of factors of production (such as labor and raw materials). Today nearly all economists agree that while supply shocks can drive up prices in the short run, long-term inflation is fundamentally a monetary issue: excessively rapid growth of the money supply leads to higher prices. (The classic, if oversimplified, formulation is “too much money chasing too few goods.”) Indeed, in the 1950s and 1960s, many economists took an essentially monetarist view—only when the money supply expanded, they argued, could increases in factor costs or aggregate demand lead to higher prices.⁸ Nonetheless, such theories remained largely confined to economists and specialized policymakers until the mid-1970s, when entrepreneurial public intellectuals—chief among them Milton Friedman—succeeded in popularizing monetarist arguments. The public affairs executives at the LLSC, like most Americans in the late 1960s, still viewed inflation primarily in terms of demand-pull and cost-push models.

Arguments about demand-pull inflation reflected the widespread acceptance of the central tenet of Keynesian economics. In 1936, British economist John Maynard Keynes published his General Theory of Employment, Interest, and Money, beginning a decade-long process of convincing the non-communist world that in times of recession or depression, the government’s proper role was to stimulate economic activity by spending more money. So well entrenched was Keynes’s theory by the late 1960s that most observers blamed inflation on the Johnson administration’s “guns and butter” policy—increased spending on the war in Vietnam after 1965 combined with greater outlays for Great Society initiatives at home. Such spending, without any offsetting increases in taxes (until the 1968 tax surcharge, which proved too little, too late), led to significant growth in the federal budget deficit: the shortfall between the government’s revenue and its expenses rose from $3.7 billion (or .5 percent of GDP) in FY 1966 to $25.2 billion (or 3 percent of a larger GDP) in FY 1968. Adjusting those figures as a share of the total economy, those deficits totaled approximately $70.9 billion and $418 billion, respectively, in 2011 dollars. (In 2011, for comparison’s sake, the U.S. federal budget deficit was approximately $1.5 trillion and 11 percent of GDP.)⁹

Most business leaders considered themselves fiscal conservatives; they relished the idea of pinning inflation on an expansive federal bureaucracy and saw the link between deficit spending and inflation as only natural. Even so, many executives entrenched in labor negotiations saw the demand-pull explanation as incomplete. As prices continued to rise in the late 1960s, many in the business world cried out against what they viewed as an equally important factor: cost-push inflation, which arose when the costs of production increased. For most industrialists, the chief villain was the price of labor. When powerful unions won new contracts that raised workers’ pay faster than productivity increased (i.e., when firms paid workers more for the same output), industrial executives claimed that they had no choice but to pass along the higher costs by raising the end prices of their products. They described this phenomenon as “wage-push” inflation, a specific flavor of cost-push. Most industrial affairs executives openly rejected the possibility that companies could actually absorb higher labor costs without raising their prices by cutting other types of expenses. In his memoir, corporate attorney Haliburton Fales recounted a conversation with his boss, U.S. Steel CEO Roger Blough, in which Fales was “sufficiently naïve to suggest to Roger that CEOs … voluntarily limit[] their own compensation.” In response, Blough explained that “boards of directors had to have the flexibility to attract the best possible executives and that limiting their options would be disastrous for U.S. business.”¹⁰ For members of the LLSC as much as for Roger Blough, such reasoning reigned unquestioned. The “excessive power of unions,” committee members declared, was “a potent-factor in the wage-price spiral” that wracked the economy by 1971 and “helped bring on recession and rising unemployment.”¹¹

Convinced of the clear link between labor power and inflation, members of the LLSC decided by the early 1970s that real success required a concerted effort to target public opinion. Like most other politically engaged businesspeople, the LLSC leaders believed that the public tended to lionize labor and demonize management and that such poor public relations played a significant role in labor’s superior political organization and legislative successes. Yet macroeconomic events appeared to create a new opening when, in the summer of 1971, an international monetary crisis combined with rising inflation compelled President Nixon to impose a mandatory freeze on wages and prices, followed by a system of strict price controls. (See chapter 4 for a detailed account of the price control program.) According to a consultants’ report to the LLSC, threequarters of Americans—including nearly two-thirds of union households—supported the administration’s wage and price controls in the name of fighting inflation, despite the fact that the program severely limited the possibility of pay raises for workers. Such apparent willingness to share the sacrifice created what the LLSC’s consultants called “the most favorable climate in years for the mobilization of public opinion towards fair and constructive action for labor law reform.” The LLSC thus placed a particularly high priority on “expos[ing] the fact of labor power and its impact on the average citizen” to garner support for the National Labor Relations Act amendments it proposed, reaffirming its commitment to using public opinion as a political strategy.¹²

ROGER’S ROUNDTABLE

The belief that cost-push inflation stemmed from “excessive union power” extended far beyond the LLSC. Indeed, it had been an article of faith within antilabor rhetoric from the nineteenth century through the New Deal. During most of the postwar period, inflation remained mild by historical standards, although it certainly aroused passions in the aftermath of World War II and the Korean War.¹³ Nonetheless, although inflation would not become the nation’s dominant political issue until the mid-1970s, the notable rise in the cost of labor and materials starting in 1965 proved essential for the mobilization of the businesspeople who were most directly affected by that inflation. And no industry protested rising costs as vehemently as the construction industry. In the late 1960s, pitched debates raged over the power of building trades unions in the construction industry, spawning the second organization that would ultimately form the Business Roundtable: the Construction Users’ Anti-Inflation Roundtable.

Construction workers—carpenters, welders, electricians, pipefitters, and so on—possessed higher skills than average manual laborers and their wages traditionally outpaced those in manufacturing as a whole. By the late 1960s, as the business magazine Fortune argued some years later, “construction wages began to get out of line” with the rest of the economy.¹⁴ Beginning with the recovery after the 1960–61 recession, the construction industry boomed; profit rates nearly doubled between 1960 and 1966, and wages rose accordingly. Yet when the economy slowed again later in the decade, construction wages continued to rise significantly faster than manufacturing wages. Labor-oriented economists and policymakers suggested that the discrepancy arose from a disproportionate boom in private, commercial, and highway building in the late 1960s, as well as the fact that high unemployment rates in construction mitigated the long-term costs of higher hourly wages.¹⁵ For industrial executives and managers, however, the only explanation for high construction wages lay in the overwhelming and outsized strength of the construction unions, which the Chamber of Commerce’s economist called “the most powerful oligarchy in the country.”¹⁶

In November 1968, just two weeks after Richard Nixon won the presidency, the Chamber of Commerce convened a two-day National Conference on Construction Problems to which it invited construction firms and other large industrial companies, including representatives of the Ford Motor Company, U.S. Steel, and First National City Bank.¹⁷ The Chamber’s president for 1968, Winton M. “Red” Blount, declared that labor relations in construction were “chaotic,” if not “despotic,” and hoped that a national conference would galvanize a response. Founder and president of Alabama-based Blount Brothers Construction, Red Blount knew from his long experience in the booming Sunbelt South the challenges of negotiating with building trades unions. The threat of strikes had led to “unbelievably high” wage settlements even as “productivity [was] declining at an alarming rate,” he told the assembled conference-goers. Most important, he explained, individual construction firms could not deal with the industry’s “major and chronic problems that could spell its very extinction as we know it.” Acting alone, Blount claimed, contractors too often felt such intense pressure simply to finish a given project that they bowed to union demands, acquiescing to higher wages that drove up prices down the line. Rectifying this dynamic required what Blount called a “joint cooperative effort” among all interested parties, including “contractors, builders, owners, trade association representatives, economists, [and] government experts.”¹⁸

Blount’s conference piqued the interest of industry professionals, and the Chamber of Commerce immediately appointed a special task force to formulate specific recommendations. That task force included many of the labor relations executives already active on the LLSC, such as Virgil Day, and worked with a similar group established by the NAM, ultimately recommending a new organization to strengthen business’s bargaining power. The secret to reducing union clout, the task force reasoned, lay in uniting construction companies and another vital constituency: construction users. “Users” was the term business leaders employed to denote construction firms’ biggest clients: large corporations that commissioned major building projects—including factories and retail space—and thus paid the higher prices that resulted (so the thinking went) from excessive construction union power. Uniting the buying power of industrial titans like General Motors, Alcoa, and U.S. Steel, the task force concluded, would strengthen construction firms’ resolve and help them resist wage demands from their unions.¹⁹

The Construction Users’ Anti-Inflation Roundtable (CUAIR) thus emerged from the suggestion of the Chamber’s task force in the summer of 1969. At its head stood Roger Blough, former steel chief and a man whose very name had a visceral effect on supporters of labor. According to some sources, Blough initially rebuffed the call to head a new business group until several chief executives prevailed upon him to take charge. His own attorney contradicted that assessment, however, and claimed that Blough had been angling to head up exactly such a construction users’ group since retiring as CEO of U.S. Steel earlier that year.²⁰ In either event, Blough represented the perfect pick for the job in many ways. A former chairman of the Business Council, he was one of the best-known corporate executives in the country, in both business and political circles. Tall and lean, vibrant at age sixty-five, he exuded a strength and confidence that came not only from his experience as a top executive but also from his poor upbringing in rural Pennsylvania, where he worked his way from a one-room schoolhouse to Yale Law School.²¹ In another sense, however, Blough made for a somewhat ironic inflation fighter. The 1962 steel showdown with President Kennedy, after all, had begun when Blough insisted on raising U.S. Steel’s prices, despite the administration’s warning that such a move would spark cost-push inflation. Ironic or not, however, Blough demonstrated an ironclad commitment to curbing construction industry wage demands, and he brought that steadfast zeal to the newly formed CUAIR.

Headquartered in New York City, the CUAIR comprised representatives from more than one hundred major corporations from the mining and extractive (Bethlehem Steel, Alcoa), chemical (Dow, DuPont), automotive (GM, Ford), food (Heinz, Nabisco), and retail (Macy’s, J. C. Penney) industries, among others. (See appendix 3.1.) Affectionately known as “Roger’s Roundtable” in a nod to Blough, the group became an important nexus for information sharing and political organizing for a network of “local user groups” in cities across the country. As contractors’ associations and construction companies confronted strikes, work stoppages, and contract negotiations, they benefited from logistical support from CUAIR member firms. From New York, where its leaders could enjoy dinner meetings at the Links Club, Blough’s CUAIR coordinated negotiating strategies for these local user groups and facilitated dialogue among member firms.²²

Roger Blough’s commitment to working with the large companies that made up the bulk of the organization’s national membership led him to effectively cut smaller contractors—companies like Winton Blount’s—out of the planning process. According to General Electric CEO Fred Borch, Blough’s strategy reflected his assessment that contractors were simply “pawns of the unions” and that user companies could do better on their own.²³ Blough’s preference for nonconstruction companies became especially apparent as he expanded the CUAIR’s strategies and began to advocate on national policy issues in addition to supporting local user groups in their struggles with construction unions. No stranger to high politics, he drew on his experiences advising Kennedy on tax policy as a member of the Business Council’s Treasury Consultant group and working with Johnson on housing and urban employment.²⁴ Early in 1971, Blough appeared before Congress to present the CUAIR companies’ case against the Davis-Bacon Act, the Depression-era law that required construction workers on government projects to receive the prevailing local wage. By preventing contractors from importing cheaper labor and guaranteeing federal support for local economies, Blough declared, Davis-Bacon served as “an engine of inflation” that “spread high city rates to rural communities.” When Richard Nixon temporarily suspended Davis-Bacon in an effort to stem rising inflation shortly thereafter, Blough quickly took credit (although his testimony was by no account the deciding factor) and told a local user group: “We’ve made progress, but too little.”²⁵

Determined to do more, Blough turned his attention to the CUAIR’s organizational strategy via a bit of old-fashioned horizontal integration. Given the group’s focus on national legislation and the important role large corporations played in its activism, Blough concluded that his goals and methods overlapped considerably with those of the LLSC. Since each organization worked to embolden management in labor negotiations, they naturally appealed to the same constituencies, a conclusion supported by their overlapping memberships. Thirty-seven of the 58 LLSC companies had also joined the CUAIR, which included 113 member firms. Moreover, firms that participated in both groups held a disproportionate number of leadership positions. Beverly Murphy, who became the LLSC’s first full-time director in 1972, had served on the CUAIR before he retired from Campbell’s Soup; and the CUAIR’s chairman was none other than GE vice president and LLSC founder Virgil Day. Indeed, once the two groups combined, six of the ten men on the Executive Committee represented firms that had belonged to both groups. (See appendix 3.1.)²⁶

In August 1972, Blough began advocating loudly for a merger. Given their common goal, as Blough put it, to “creat[e] a better industrial relations climate and … more constructive national policies,” joining forces seemed eminently sensible.²⁷ But bringing together the unified voice of major corporations promised more than efficiency gains in organizational politics. The merger carried symbolic importance as well, representing a long-awaited step toward putting business on par with organized labor. Like the failed merger between the NAM and the Chamber of Commerce a few years later, the union of the LLSC and the CUAIR called to mind the 1955 merger of the AFL and CIO, a move that—for many top executives and conservative politicians—had marked the arrival of “Big Labor” in American politics. Hailing the combination of the two groups as “a step in the right direction,” a Republican congressman from Illinois declared that labor had long coordinated its political activities through the AFL-CIO, and now business had finally put itself in a position to “make its point more effectively by doing likewise.”²⁸

The merger of the LLSC and the CUAIR resembled the creation of the AFL-CIO in other ways as well. The union of the two labor giants, which had been rivals since 1935, ultimately shifted power to the larger and less radical AFL, largely by installing its head, George Meany, as the president of the combined federation. Meany’s ascent had confirmed CIO members’ fears that their specific agenda and more aggressive strategies would take a backseat in the new organization.²⁹ In much the same way, some labor law experts at the LLSC warned that despite the leadership overlap, the two groups in fact employed very distinct agendas. DuPont’s public relations chief, for example, wrote to his CEO that “the ‘anti-inflation’ thrust of the Roundtable [CUAIR] contrasted to the ‘union-management power balance’ objective of the LLSC.” That is, the LLSC prided itself on working within the legal system to restrain union abuses, but the CUAIR’s jawboning and Roger Blough’s vehement rhetoric could come off as an affront to unions in general. Like a good PR man, the DuPont executive fretted about the optics and warned that being associated with the hard-headed CUAIR could compromise his lobbying efforts with Congress and the LLSC’s campaign for specific labor law reform.³⁰

Blough and his LLSC counterpart Murphy papered over such reticence by creating a power-sharing agreement between the two organizations. Each group appointed a full-time executive director, one to head the “construction committee” and the other to lead the “labor-management committee.” Having ironed out those technical details, Blough made good on his longstanding desire to create a singular lobbying voice for large industrial corporations and to take the fight over inflation directly to the unions. On the evening of October 16, 1972, several dozen well-heeled corporate executives met privately deep in the Links Club and voted to combine the two organizations into “The Business Roundtable—For Responsible Labor-Management Relations.” (The clunky subtitle disappeared within a year.) Perhaps to mollify LLSC members who still worried they would lose clout, Beverly Murphy became the group’s first chairman, while Blough and Fred Borch, the soon-to-retire CEO of General Electric, took the title “co-chairmen”—one notch down. The rest of the Executive Committee included: John deButts (CEO: AT&T), Richard Gerstenberg (CEO: General Motors), John Harper (CEO: Alcoa), Shearon Harris (CEO: Carolina Power and Light); J. K. Jamieson (CEO: Exxon); Charles B. McCoy (CEO: DuPont), and David Packard (CEO and founder: Hewlett-Packard). These CEOs not only represented the inner circle of American industry. Nearly to a man, they also all headed yet another consortium of executives—known as the March Group—whose ultimate incorporation into the Business Roundtable would define the organization’s unique strategy and policy agenda well into the future.

THE MARCH GROUP

On March 22, 1972, a handful of men led by Alcoa CEO John Harper and GE chief Fred Borch met privately at the Links Club to make official what had until then been a haphazard tradition of get-togethers by chief executives. In a gesture toward their nonchalance, they named the group after the month in which they met. Far less structured and hierarchical than the LLSC or the CUAIR, the March Group met at the Links Club irregularly, when members could get together, about once every six to eight weeks. While Harper and Borch provided the organizational impetus for the initial meeting, Borch later recalled that the group “was very informal…. Titles meant nothing.” Roger Blough was nominally the secretary; he took minutes and collected dues from the individual participants who financed the meetings themselves. As a group, they issued no publications and hired no permanent staff. In some respects, the March Group was little more than a small cohort of friends who socialized and talked business. But these were more than just beer buddies. They happened to run forty-six of the country’s largest corporations, and the agenda-setting Executive Committee included a dozen of the most economically influential industrial leaders in the world.³¹

The March Group lasted only a year as an independent entity before it merged with the Business Roundtable in the summer of 1973. But its fleeting official existence belied the long tradition of overt political strategizing by industrial CEOs at a certain social club on 62nd Street in Manhattan. Indeed, the origins of the March Group, and thus also the Roundtable, extended back many years to a regular set of meetings convened by Ralph Cordiner, General Electric’s chairman and chief executive officer in the 1950s.

Although General Electric had enjoyed a reputation for liberal, even progressive, leadership since the early twentieth century—counting among its chiefs pro-Roosevelt Democrats like Gerard Swope and Owen Young in the 1930s—Ralph Cordiner did not fit that mold. Born on a wheat farm in Walla Walla, Washington, Cordiner worked his way toward an economics degree at local Whitman College by selling washing machines before graduating in 1922 and beginning a career with General Electric. After stints at Schick, Inc., and the War Production Board in the early 1940s, he returned to GE, where he became president in 1950 and chairman of the board in 1958.³² His years among the electronics giant’s leadership made him a fierce partisan for business, opposed to labor and any governmental restrictions on corporate prerogatives. In 1959, GE joined twenty-eight smaller electrical manufacturing companies in pleading guilty to price-fixing and bid-rigging. Although Cordiner himself narrowly escaped prosecution, seven executives received one-month jail sentences and the company paid nearly half a million dollars in fines. The episode cemented Cordiner’s ardent opposition to conciliation between business and liberal government; he became so antagonistic, in fact, that the Business Council removed him as its head in 1961.³³

In addition to the bid-rigging charges, Cordiner faced major labor relations problems as well, particularly during the strike wave that followed World War II. As newly empowered labor unions fought for wage increases to compensate for the end of wartime price controls, GE’s executives hired an aggressive labor relations specialist named Lemuel Ricketts Boulware. Under the so-called Boulware regime, GE established a reputation for taking a hard line in labor negotiations and successfully restrained many union demands.³⁴ Cordiner, however, worried that other industries would not prove as skillful in their labor negotiations and that the downstream consequences for his company could be severe. If car manufacturers, for example, acceded to union wage demands and raised their prices, Cordiner believed, the resulting inflation would drive up GE’s supply costs. Although car companies themselves might weather the storm, consumer electronics manufacturers, which faced greater foreign and domestic competition and higher price sensitivity among their customers, could suffer a major loss of sales. As Cordiner’s successor as CEO, Fred Borch, put it, “Auto labor rates could have killed us.”³⁵

Since excessive labor power in any industry threatened all industries, Cordiner reasoned, the solution lay in pan-industrial collective action, which led him to New York and the Links Club. During his tenure atop GE, Cordiner began calling regular meetings of fellow chief executives who also faced tense negotiations with CIO-backed unions. (Even after the AFL-CIO merger in 1955, business leaders maintained their stigma against “CIO unions”—those heavy industry and manufacturing unions that assumed greater strength during the Depression and developed a reputation for radicalism and intransigence.) The “Links Group,” as Cordiner described his circle of associates, included chief executives from automotive and machinery manufacturers, communications, and rubber, steel, and aluminum companies. Believing that they could not trust newspaper coverage of ongoing negotiations in other firms, the executives met in the privacy of the club to share, according to Borch, “the honest story on what labor offers really were and what the real settlements were.”³⁶

Much of the impetus for the informal Links Group arose from industrial leaders’ growing frustration with the Business Council, an association to which they all belonged and that supposedly represented large corporate interests in Washington. Although the Business Council had formally declared its independence from the Commerce Department in 1961, largely to gain a freer advocacy hand, many CEOs still complained that it remained merely an advisory body. By tradition, the council did not take political positions, endorse candidates, conduct research, issue policy statements, or participate in lobbying (although its member companies could and certainly did do all those things individually).

Although the Business Council’s political role may have been too limited for some members, it nonetheless constituted an important forum for bringing high-powered executives together, typically in lavish surroundings. For example, a group of executives prevailed upon Roger Blough to head up the CUAIR at one of the group’s “work-and-play” weekends at the posh Homestead Resort in Hot Springs, Virginia. At the same time, the council also performed a socializing function for executives as they made their way up the corporate ladder, a dynamic illustrated by Charles B. McCoy’s reception after his promotion to CEO and chairman of the board of directors of the E. I. Du Pont de Nemours Company late in 1968. At the council’s next retreat weekend at the Homestead, the group’s chairman (who happened that year to be Fred Borch of General Electric) reserved a special place in the receiving line, “[i]n order that you [McCoy] and Mrs. McCoy may meet the members and their wives.” In that way, during the Chairman’s Reception in the resort’s Empire Room, McCoy officially joined the club.³⁷

In the late 1960s, the Business Council boasted approximately 150 members, all chief executive officers, most of whom regularly attended the group’s meetings—both in Washington and, twice a year, at the Homestead Resort. Although not all the council executives shared the same degree of enthusiasm about political activism as the members of the Links Group, nearly all major industrial CEOs who were interested in politics actively participated in the Business Council. Between 1969 and 1972, two sets of factors converged to push to the breaking point the frustrations of exactly those men, who had been meeting for years at the Links Club, grousing at the Homestead, or, in some cases, working on Roger Blough’s CUAIR. The first was the downturn in the national economy—shrinking profits, recession, declining productivity growth, and, of course, inflation. The second was Republican president Richard Nixon’s apparent inability to do anything to halt the economic and regulatory policies of his liberal Democratic forebears. While Johnson had been president, corporate leaders had been able to blame the budget deficits and new regulations on party politics. Nixon—nominally the head of the “pro-business” party—offered no such cover. Convinced that sounder fiscal and monetary policy, as well as less costly regulations, could reverse the decline, many executives began to demand direct action. “I think we all recognize,” wrote Alcoa CEO John Harper to his fellow industrialists, “that the time has come when we must stop talking about it, and get busy and do something about it.”³⁸

In the early 1970s, Harper and Borch emerged as galvanizing leaders of a growing coalition of like-minded executives. In the twilight of their respective careers, the two men shared similar life stories that shaped their politics. Borch, the son of an electrical engineer and born in Brooklyn, grew up in Ohio and studied economics at Western Reserve University (later known as Case Western) in Cleveland; he joined General Electric at age twenty-one with his newly minted degree in hand.³⁹ Harper grew up in Louisville, Kentucky, where he started to work for an Alcoa facility at the age of fifteen. (He earned $12 a week for a summer job in 1925, or somewhere in the neighborhood of $600 a week in 2013 dollars.) Still working for the company to which he would dedicate his life, he put himself through college at the University of Tennessee, graduated with a degree in electrical engineering, and joined Alcoa full time in 1933.⁴⁰ Harper and Borch typified a generation of men who spent their entire careers with one employer, rising through the ranks to top management as their corporations grew ever larger in the mid-twentieth century. Their professional lives also coincided fully with the New Deal order, and by the time they approached retirement, their frustrations with business-government relations had boiled over.

Harper and Borch fully endorsed the complaints that echoed among members of the Links Group, the LLSC, the CUAIR, the Business Council, and myriad trade associations by the late 1960s. Harper in particular seized on the old saw that business failed at “telling its story,” particularly when compared to organized labor. Unions, these men believed, simply played all aspects of the political game better. Labor PACs dominated the campaign finance world, while BIPAC, the only major corporate PAC before 1970, struggled to make a difference. Labor likewise dominated the lobbying front. Policy battles were won and lost in the cloakrooms of Congress, but despite greater reliance on Washington Representatives, large corporations felt organizationally outmatched, as their lobbyists frequently reminded them.

Yet the problem, Harper and Borch argued, was not a shortage of business associations. To the contrary, they believed that Washington had too many business lobbyists and that the cacophony of voices drowned out the central message. Moreover, the plethora of business groups, trade associations, and ad hoc committees, not to mention the proliferation of firm-specific Washington Representatives, created real risks of wasted effort. “We must,” John Harper argued, “use more effectively the vast time, talent, and resources of the business community.”⁴¹ The Committee for Economic Development, a nonprofit research organization in the “corporate liberal” model that included both business leaders and economists, was, for Borch, “largely academic” and lacked “the clout we wanted on fast moving issues.” For their part, the NAM and the Chamber of Commerce tended to draw leaders from their small and midsized constituents, leaving the Links Club firms without the influence they wanted and, because of graduated membership dues structures, felt they paid for. Finally, the Business Council, however helpful in greasing social wheels, could not lobby directly and retained a focus on the White House that, particularly by 1970, appeared increasingly misguided. Although Arthur Schlesinger Jr. coined the term “imperial presidency” to describe the modern executive branch, Congress in fact exerted a far greater degree of influence over domestic economic and regulatory policy in the mid-twentieth century. (Schlesinger’s critique largely concerned foreign policy.) Since the 1930s, however, Business Council members had prided themselves on working with the president, chief executive to chief executive. To truly take action in politics would require breaking away from a president-focused strategy and working actively with Congress to propose, shape, and frequently curtail legislation.⁴²

This panoply of failed models left Harper and Borch deeply frustrated. Despite widespread agreement about the need for collective business action, the exact method for creating a united business movement looked anything but obvious. In 1971, the two men found themselves spending significant time in Washington on a variety of projects and began meeting regularly with other interested parties to discuss ways to increase big-business executives’ direct clout with Congress. Harper organized planning sessions with several of the most prominent and well-placed Washington Representatives, many of whom had begun forming ad hoc coalitions to combine their resources, staff, and strategies on specific legislative issues. “The principal ingredient missing in these ad hoc groupings,” the Washington Representatives insisted, “is the direct involvement and guidance of the chief executive officers.”⁴³ Members of Congress and other Washington fixtures concurred. Secretary of the Treasury John Connally and Federal Reserve chairman Arthur Burns, for example, each conveyed to Harper and Borch early in 1972 their belief that the voices of business leaders themselves had insufficient weight in policy debates. (Early reports on the creation of the Business Roundtable suggested that Burns and Connally in fact instructed the CEOs to create the group. In reality, the plans were already in the works when the officials met. As Borch put it, somewhat evasively, Burns and Connally “appreciated our effort.”)⁴⁴

Most of the executives at Harper and Borch’s meeting at the Links Club on March 22, 1972, had attended such meetings since the Cordiner/Boulware days, but at long last they had created something official. The March Group aimed to fundamentally revolutionize the practice of corporate lobbying by involving CEOs in political strategy and coordinating the operations of Washington Representatives. Indeed, only corporations that retained permanent paid lobbyists could join, a policy that excluded the small and midsized companies that relied on trade associations or hired-gun lobbyists. Believing so strongly that disorganization among large corporations led to legislative weakness relative to labor and other interest groups, the March Group leaders worked to streamline communication and strategy between lobbyists and chief executives. Although they recognized the importance of traditional methods of influencing politics, particularly funneling donations to political campaigns, the March Group members’ real innovation was their commitment to using chief executives as lobbyists themselves. Only through direct involvement and clear top-down coordination could they change the dynamics within the nation’s capital.⁴⁵

To that end, the March Group CEOs divided themselves into four task force committees, each devoted to a specific legislative area: taxation, international trade, consumerism, and environment. At the head of each task force sat a particularly motivated chief executive who not only coordinated activities among Washington Representatives but also worked to “rally support within the business community” for the issues under his purview. Task force chairmen contacted fellow CEOs, arranged group meetings with lawmakers, and wrote policy white papers that helped executives explain their policy preferences to their employees and local communities. This structure established the groundwork for both direct and indirect lobbying: by reaching out to employees and local media in their corporate hometowns, March Group members could generate grassroots-level enthusiasm for their policy preferences; chief executives could then provide evidence of that local support directly to lawmakers whom they met in person.⁴⁶

The March Group also provided an institutional forum for executives to finally take action on their long-held complaints about the climate of public debate. “The business community,” John Harper said, “just has not been communicating effectively, and this has led to a poor understanding of our economic system; and this had led to unwise laws and regulations.” Men like Harper and DuPont’s Charles McCoy echoed the NAM and the Chamber’s desire to create economic education projects that would “tell business’s story” and bolster executives’ public standing. McCoy, for example, called for using the combined financial and logistical resources of the March Group companies to promote better training in business and economics in the nation’s secondary schools.⁴⁷

Many Washington Representatives agreed in principle with the importance of improving business’s public image, but they worried that the collaboration represented by the March Group would itself add fuel to the fire and lead to severe “public relations hazards.” “We believe that business has very serious problems with the intellectual community, the media and youth,” a group of professional lobbyists told their March Group bosses, “[and] that the continuing hostility of these groups menaces all business.” Especially given the “supercharged political climate” leading up to the 1972 election, the PR-savvy Washington Representatives urged the CEOs to keep their efforts “informal and as private as possible.” As a result, the organization issued no press releases to herald its arrival, and the executives conducted their meetings quietly.⁴⁸

Finally, the March Group explicitly avoided partisan politics, not least because its leaders included proud Democrats like Harper as well as steadfast Republicans like Roger Blough. More important, however, the executives believed that their ability to influence sitting members of Congress depended on building relationships of mutual trust and respect; embroiling themselves in the thick of election battles would certainly strain those ties. Following the same logic, the March Group did not coordinate campaign giving to groups like BIPAC or individual candidates, setting a precedent that the Business Roundtable perpetuated. Indeed, although the Roundtable’s member corporations used PACs and other vehicles to influence campaigns, the organization itself has never formed or directly contributed to a political action committee. Ironically, the men whose explicit goal was to increase big business’s “voice” took great steps to appear silent. A combination of insecurity and keen strategizing led to the first rule of the March Group: you don’t talk about the March Group.

UNITING THE VOICE OF BIG BUSINESS

In April 1973, just one year after it formed, the March Group integrated its task forces into the structure of the Business Roundtable. The redundancy in leadership and resources convinced the March Group CEOs that a merger made good sense. “No one wanted to create just another organization,” John Harper explained. At the same time, Borch and other executives worried that merging with the Roundtable could potentially hamper its “longer-range public-economic-education effort” if the combined group acquired the “antilabor image” associated with the CUAIR and LLSC.⁴⁹ As the combined voice of America’s largest industrial corporations, the executives knew, the Business Roundtable ran the very real risk of embodying the public’s fears of corporate malfeasance and collusion. In the end, however, Roger Blough managed to convince his fellow industrial executives that the logic of integration outweighed the potentially negative optics of affiliation. By the summer of 1973, Harper replaced Beverly Murphy as the organization’s chairman and the March Group dissolved into the ether from which it had come.

As its leaders worked to codify the Roundtable’s organizational structure, institutional identity, and political strategies in the months after the merger, the exact nature of the organization remained in flux. Structurally, it contained a hodgepodge of committees and task forces, including the original labor law and construction committees, as well as the Public Information Committee (PIC). The first two adopted distinct tactical approaches although they shared an overriding concern with labor power and inflation, while the latter, a holdover from the LLSC, focused on business’s public image and thus adopted a distinct strategic objective. The inclusion of the March Group’s four task forces only muddied the waters further, since they focused specifically on pending legislation within tightly drawn categories (consumerism, taxes, environment, and trade). Further complicating matters, the combined Business Roundtable’s leadership core included a mix of chief executive officers, public affairs executives, and labor lawyers. The group also retained the CUAIR’s “local user groups,” the state-level consortiums of manufacturing companies that organized collectively to confront construction unions but generally refrained from direct lobbying on either the state or federal level. The Business Roundtable remained, as Blough described it in the spring of 1973, “an amalgam of loosely knit but highly professional committees.”⁵⁰

When John Harper took the reins that summer, everyone seemed to agree on the basic problems the new organization needed to confront, but members differed—sometimes heatedly—over how to structure the group and where to set their priorities. The CEOs still worried that the industrial relations people would tar the whole group with an “antilabor” brush, and the public affairs specialists complained that the CEOs focused too narrowly on policy to the exclusion of public outreach (pockets of enthusiasm for economic education notwithstanding). Consultants Commissioned by the PIC reported that the CEOs showed “little articulation of [the] basic problem” of business’s image, validating the complaints from the public affairs executives. The consultants’ report, however, was “not well-received” by the labor-management committee, according to its D.C.-based director, who felt slighted that the group had hired a permanent president to run the organization from New York. That turf battle only compounded tensions over strategies and priorities.⁵¹

Within a few years, however, Roundtable leaders replaced the complex system of committees with a more streamlined structure. The division between “labor law” and “construction” that had marked the original merger eventually dissolved, and the March Group’s model of issue-specific task forces predominated. That consolidation represented the ultimate triumph of the chief executive officers over the industrial relations executives and labor lawyers. By the late 1970s, the group’s structure and mission largely fell into sync and the Roundtable operated as the March Group had: a CEO chaired each task force and marshaled his own company’s personnel and resources to produce position papers and coordinate legislative action. The Roundtable itself maintained a very small administrative staff, did not register as a lobbyist in its own name, and did not actively coordinate fund-raising for political campaigns. The group dedicated most of its attention to issue-specific lobbying in national politics and, although it retained a New York office into the 1990s, it devoted the bulk of its efforts to Congress.

The one holdout to this organizational redesign was the PIC, which, under the leadership of AT&T Vice President for Public Relations Paul Lund, came to embody the conflict between idealistic proponents of public outreach and the executives who remained steadfastly concerned with direct lobbying. Based in New York, the PIC in 1974 and 1975 proposed a massive public relations blitzkrieg to target everything from children’s television to high school textbooks to radio talk shows. Tapping into the same spirit that animated “economic education” programs at other employers’ associations and think tanks, the PIC hoped to reshape the public’s negative opinions about big business in particular. Its most elaborate and expensive project was a collaboration with Reader’s Digest in 1975 for which the Roundtable paid approximately $1.2 million (or about 90 percent of its annual dues revenue; around $4 million in 2013 dollars) to run three-page advertisements each month. The advertisements, dotting the pages of an already fairly conservative magazine, extolled the virtues of big business, the importance of profitability, and the pitfalls of inflation and regulation.⁵²

Initially, the chief executive officers who increasingly held sway over the Business Roundtable felt optimistic about the Reader’s Digest project. Both John Harper and DuPont’s Charles McCoy, the Executive Committee’s liaison with the PIC, actively supported the plan, expensive though it was. But when public opinion polls showed no change in the public’s views of business after the program had run for several months, they balked and pulled the plug one year into a proposed three-year plan. Such a quick retreat from “pro-business” advertising suggests that the Roundtable’s leaders quickly realized their naiveté. Long-term changes in public perceptions of business and economics, no matter how essential to their political success, would not come quickly or easily. As more Roundtable leaders adopted this more realistic assessment, the PIC found itself increasingly marginalized within the organization. When its strong-willed chairman Paul Lund died at age fifty in 1975, its role faded rapidly; by the mid-1980s it had disappeared entirely from the group’s organizational structure.⁵³

Despite that retreat from an overt economic-education agenda, positive public relations remained a critical part of the Roundtable’s operations, albeit without the Pollyannaish expectation of instant gratification. Throughout the 1970s, Roundtable CEOs took deliberate steps to increase their media presence, offer reasonable and sympathetic explanations for their policy preferences, and reinforce their belief that society as a whole benefited when large corporations did well. Thus in 1975, six CEOs appeared on NBC’s Meet the Press in a panel conversation about the place of business in American society and politics. Representing a cross section of industries, from automobiles to banking to retail, the men bragged to moderator Lawrence Spivak that they were working hard to overcome their natural disinclination toward the media. “Most of us are relatively inarticulate,” quipped Reginald Jones, Fred Borch’s successor at GE, “as I think your viewing audience is probably already realizing.” Throughout the show, the executives made a real effort to portray themselves as civic-minded, honest, and patriotic, but their appearance was also somewhat disingenuous. Although all six executives held prominent positions at the Business Roundtable, that common allegiance remained unstated during the hour-long interview. Their failure to mention the work of their young lobbying organization reflected their continued concern that the American public would look askance at overt political collaboration by the country’s top industrial leaders. The impulse for silence, honed in the days of the Links Club and the March Group, still reigned. Even as they struggled to improve big business’s image and “tell their story,” Roundtable executives felt pressure to maintain a low profile.⁵⁴

THE BUSINESSMAN’S LOBBY ON THE CUSP OF A NEW ORDER

The Business Roundtable formed in the early 1970s in response to the widespread conviction that the industrial manufacturing community faced deep, existential threats. On one level, such pervasive anxiety among top executives may appear surprising. After all, the men who led corporations like DuPont, U.S. Steel, and General Electric universally enjoyed great wealth, considerable power, and extraordinary social and political connections. Many, as we have seen, had not been born to such privilege and had put themselves through school before ascending the corporate ranks. Along the way up, they became socialized into an elite universe of golf and tennis retreats and Manhattan social club dinners. Despite those privileged positions, however, their apparent decline in direct legislative influence signaled a broader pattern of political and economic vulnerability, pushing these men to new levels of collaboration. Powerful executives like John Harper, Fred Borch, Charles McCoy, and Roger Blough felt such concern for the future that they jettisoned their parochial corporate allegiances and worked hard—after hours and without direct compensation—to create a new vehicle for political influence.

At the same time, those trepidations should not surprise us, since they emerged from the same environment that prompted a broader political mobilization among businesspeople, particularly the rejuvenation of the U.S. Chamber of Commerce and the National Association of Manufacturers, as well as the blossoming of economically conservative think tanks and aggressive business-oriented PACs. To review the story so far: Beginning in the mid-1960s, big-business executives eyed the newly robust regime of environmental and consumer protection regulation with increasing alarm. The new political strength of liberal reformers, both in Congress and within the community of organized interest groups, compounded their conviction that the political terrain many had navigated for a generation had shifted beneath their feet. Through its regulatory, appropriations, and taxing operations, the U.S. Congress came to exert a far greater influence over the national economy by the late 1960s, and corporate executives who had grown accustomed to dealing with the president through the Business Council increasingly recognized the need to work with the national legislature. Moreover, Congress in the 1960s became more partisan and its membership less secure. Conservatives wielded far less influence within the Democratic Party in the wake of the civil rights movement and many Republican legislators embraced more confrontational postures toward New Deal and Great Society fiscal policies and government programs. In that new political environment, a growing and self-identified “conservative movement” united grassroots groups, think tanks, and corporate benefactors on a platform of social traditionalism, economic libertarianism, and militant foreign policy, providing clear allies for organized business leaders. Finally, changes to campaign finance laws in 1971 and 1974 further destabilized the political order by encouraging the proliferation of political action committees that traded campaign cash for issue loyalty, encouraging congressional candidates to adopt less compromising positions on everything from environmental regulation to abortion and tax policy. The political mobilization of business, including the creation of the Business Roundtable, both emerged from and helped drive this vital moment of political flux.

This new dedication to Washington politics fundamentally changed business leaders’ approach to their longstanding struggle with organized labor. As this chapter has shown, the companies that constituted the Labor Law Study Group and the Construction Users’ Anti-Inflation Roundtable had deep roots in the politics of labor, especially in the construction industry. Rising inflation and the creeping productivity crisis of the late 1960s convinced increasing numbers of public relations and labor law specialists within the industrial manufacturing community that a company-by-company strategy would ultimately prove insufficient to tackle the threats posed by rising costs and strong unions. To be sure, corporate managers retained the traditional leverage that came from their place in the industrial political economy: the power to relocate plants both within and increasingly beyond national borders in response to divergent state and local conditions. Indeed, as labor historian Jefferson Cowie has shown, capital moves more easily than labor, and in the 1960s and 1970s increasing numbers of American manufacturers sought cheaper labor and weaker regulations by shipping their productive facilities away from the Northeast and Midwest.⁵⁵ Yet while industrial leaders continued to “vote with their feet,” the men who formed the Roundtable also worked deliberately and collectively to further nationalize their conflict with organized labor. As the following chapter shows, inflation and labor power continued to provide powerful organizational fuel for organized business interests. Indeed, by the late 1970s, Roundtable strategists largely abandoned efforts to mobilize “local user groups” to fight state and municipal battles with unions, choosing instead to lobby directly against labor-liberal legislation in Congress, where they achieved notable victories during the Ford and Carter administrations.

The Business Roundtable concentrated, in its early years, on labor power and inflation, particularly within the construction industry, because of the fragile position its member companies maintained within American capitalism. As the lobbying arm of large, vertically integrated industrial corporations, the Roundtable brought together a particularly vital group of corporations at a unique historical juncture. In the early 1970s, “big business” meant vertically integrated, highly capitalized firms that operated with remarkable stability in highly regulated markets and faced few threats from new technologies or upstart domestic competitors. Newfangled and often short-lived conglomerates, which burst onto the scene of American business in the late 1950s and early 1960s, were conspicuous by their absence in the ranks of the Roundtable. Moreover, although New York banks provided vital financing and strategic advice for Roundtable firms, including seats on their boards of directors, financial services companies did not form a major part of the Roundtable’s constituency. Rather the corporations that formed the heart first of the March Group and then of the combined Business Roundtable represented the lions of traditional American industrial capitalism, including aluminum and steel, automobile manufacturing, and chemical production.

The composition of the Roundtable is telling because, as the following chapters illustrate in greater detail, this industrial manufacturing community would not survive the economic crisis of the 1970s with nearly the level of economic dominance that it once boasted. Between 1965 and 1973, precisely the years in which the Roundtable’s constituent parts took shape and merged, the manufacturing sector’s share of total U.S. profits fell by 2.7 percent per year, and the return on capital investments in manufacturing likewise declined. The resulting crisis of profitability contributed to the long-term stagnation of industrial manufacturing in the United States and the rise of a service- and finance-oriented economy.⁵⁶ By the 1980s, as the final chapter of this book argues, the composition of the leadership structure of the Business Roundtable would shift to reflect the new prominence of financial services, pharmaceuticals, and telecommunications.

The industrial executives that put the Business Roundtable together readily professed the belief that their political clout had slipped since the early 1960s, yet they remained silent on—perhaps ignorant of—the international structural forces that underlay their weakening economic position. Top corporate leaders watched their year-to-year profitability decrease and clearly understood that rising foreign competition, particularly from Japan and Germany, applied new pressure to their bottom lines. But in the early 1970s, few businesspeople had a clear sense of the magnitude of this phenomenon, much less a name for it: deindustrialization. Indeed, the vagueness of the foreign threat both compounded executives’ anxieties and compelled them to focus their energies on domestic factors that, ostensibly at least, lay more firmly in their sphere of influence. Thus did most Roundtable executives earnestly believe that the root of their problems lay with federal policy and could thus be solved by greater political coordination at home. For these dinosaurs of the Fordist economy, the paramount concerns remained inflationary fiscal and monetary policy, labor power, taxes, and social regulations. With those problems addressed, they reasoned, manufacturing’s profitability and the strength of American industrial exports would take care of themselves. History would prove them wrong.

From the dark recesses of the Links Club to the halls of Congress, the executives who formed the Business Roundtable took pride in their young organization but insisted that the uphill struggle had just begun. “Overall, it becomes clear to me that business must take an active, aggressive role in developing understanding of and support for the free-market system by reestablishing the public’s confidence in business,” John Harper said in 1975. “Without question,” he added, “we have our work cut out for us.” Myriad policy battles loomed on the horizon, Continental Can CEO Robert Hatfield explained, as liberal politicians in Congress declared “a virtual open hunting season” on private enterprise. Powerful constituencies mobilized around labor law, environmental and consumer safety regulation, antitrust policy, and national economic planning. In the first years of its life, the young lobbying organization would confront some of the most intractable economic and political challenges of the twentieth century, including, as we will now explore, the most vexing economic beast to emerge in the 1970s: inflation.⁵⁷

Appendix 3.1: Original Member Corporations of the “The Business Roundtable—For Responsible Labor-Management Relations” upon the Merger of the Labor Law Study Committee and the Construction Users’ Anti-Inflation Roundtable, October 13, 1972

Source: Archives of the Business Roundtable.

CR = Member of Construction Users’ Anti-Inflation Roundtable

LL = Member of the Labor Law Study Committee

Appendix 3.2: Leadership of the Business Roundtable upon Incorporation of the March Group, Spring/Summer 1973

Source: Archives of the Business Roundtable.