Episode 618: The Square Deal : Planet Money In the early 1900s, the president of the largest shoe company in the world tried to create a Utopia for his workers. He called his big experiment in welfare capitalism: The Square Deal.
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Episode 618: The Square Deal

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ROBERT SMITH, HOST:

If you wanted a spiffy, new pair of shoes a hundred years ago, odds were good that you had to get them from The Endicott Johnson Company of upstate N.Y.

DAVID KESTENBAUM, HOST:

They were like the Nike from way back.

SMITH: Only probably more patent leather.

KESTENBAUM: They had 52 million pairs of shoes a year. Is that right?

SMITH: Yeah, they had enough to literally outfit an army. They made the boots that U.S. soldiers marched in in World War I and World War II.

KESTENBAUM: The president of the company was a guy named George F. Johnson, who is famous in this country for another reason. He had this vision and he created a kind of crazy town where all kinds of things were provided for the workers. The workers would live there, and he built libraries and parks and hospitals and carousels.

SMITH: And every baby born to an employee of The Endicott Johnson company got a bank book with a $10 deposit and, of course, a new pair of shoes.

KESTENBAUM: Workers only had to work eight hours a day. That was a big deal back then.

SMITH: Yeah, and they got free health care.

KESTENBAUM: This was part of a movement a hundred years ago to create these company towns, almost like this utopian vision of a place where workers would be free from all worries - all worries except, of course, making shoes.

(SOUNDBITE OF SONG, "NOAHS STARK")

KESTENBAUM: Hello, and welcome to PLANET MONEY. I'm David Kestenbaum.

SMITH: And I'm Robert Smith. Today on the show, the story of one company that thought it had come up with the secret to finding happiness at work. And we'll hear from the people there about how that experiment worked out.

(SOUNDBITE OF SPONSORSHIP)

UNIDENTIFIED WOMAN: Support for PLANET MONEY and this message comes from Dropbox, trusted by people and over 4 million businesses worldwide to keep their files safe, synced and easy to share with anyone. Dropbox for Business helps team members work together no matter where they are or what tools they use. Get your whole team on Dropbox for Business today to keep your information easy to manage and secure. Try it free at dropbox.com/business.

SMITH: The story of the shoe guy, George F. Johnson, comes from a podcast we love called Radio Diaries. The great Joe Richman makes it. And it features stories told by the people directly involved - no reporters, no narrators, just people telling their own stories.

KESTENBAUM: Johnson's idea of building a community for his workers is sometimes today called welfare capitalism. But Johnson had a different name for it. He called it the Square Deal. Here's the Radio Diary story.

(SOUNDBITE OF RADIO DIARY PODCAST)

SAL POLIZIANO: My name is Sal Poliziano and I worked for The Endicott Johnson Corporation for close to 40 years. When I first came up here, I looked around, I says, well, look at this. People are so friendly, and they sit on their porches, and they're listening to band concerts. And they'd greet me, you know - hello, how you doing, son? Everything was camaraderie stuff up here.

And everything evolved around this George F. Johnson man. Everything was George F., George F., George F. I'm wondering who in the world is this man? Who is he?

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #1: Noted throughout his brilliant career for his progressive policies, which have been applied particularly to improving working conditions, Mr. Johnson is deservedly called a great humanitarian.

GEORGE F. JOHNSON: I want you to understand, everything you have done has made everything that I have done possible.

(APPLAUSE)

MELVYN DUBOFSKY: George F. Johnson, he was one of the earliest and largest promoters of welfare capitalism.

My name is Melvyn Dubofsky. I'm a retired professor of history at the State University of New York.

Johnson believed that it was the responsibility of the modern progressive, up-to-date employer to provide for the workers' welfare. He offered a bargain to his employees, the concept of the Square Deal.

(SOUNDBITE OF RUSTLING PAPER)

POLIZIANO: Now what we have here, any new employee received a copy of this pamphlet called "An EJ Worker's First Lesson in the Square Deal."

To the new EJ worker - if you are faithful, loyal and reliable, you will earn a good living under fair conditions. You are indeed a part of the company…

GERALD ZAHAVI: …You are indeed a part of the company. Remember that you are cared for when sick, medical and hospital services are yours, privileges of many kinds are yours. Your friend, George F. Johnson.

My name is Gerald Zahavi and I wrote a book about George F. Johnson titled "Workers, Managers And Welfare Capitalism."

DUBOFSKY: Johnson's idea was if he provided the employees with what he thought they wanted, they would be loyal and they would show that loyalty. And with less labor turnover, he could out-produce and undersell competitors. And for a lot of working people it was a remarkably good deal.

POLIZIANO: The first job that I had was, of course, you got to start at the bottom and it was on a freight gang. All of a sudden, I was part of the family and they would take care of you.

DUBOFSKY: The company provided shoes for the children, health care.

ZAHAVI: Their medical plan was the most extensive in the country.

DUBOFSKY: The company had its own housing corporation that built homes, financed them.

POLIZIANO: And they were very cheap, 2200, $2500; and if you wanted a garage, another four, $500 for a garage.

DUBOFSKY: Johnson provided playgrounds, parks, a golf course, theater.

POLIZIANO: Swimming pools, merry-go-rounds. Well, you can go down and ride the merry-go-round as many times as you want.

SANDRA SCANLON: I'm Sandra Scanlon, and I'm the granddaughter of George F. Johnson. Grandpa had built six carousels in the area. When he was a little boy, he went to the fair and he didn't have a nickel or a dime to get in to the carousel. And he never forgot that. And so he made all the ones here free. It was written into the law, they were not allowed to charge. And to this day, you ride free.

(SOUNDBITE OF SONG, "MARCH ALONG TOGETHER")

DUBOFSKY: George F. Johnson, he liked to think of himself as the father of the community.

(SOUNDBITE OF SONG, "MARCH ALONG TOGETHER")

ZAHAVI: They would have these concerts on Sunday evenings, and the final song would be "Marching Along Together." And Endicott Johnson workers and managers took this as sort of an anthem.

POLIZIANO: People were singing it on the way home.

(Singing) Marching along together. Da-dada-da-da-da.

(SOUNDBITE OF SONG, "MARCH ALONG TOGETHER")

BOB JOHNSTON: There is an opposite side - an opposite of the coin. My name is Bob Johnston. And my concept of it was that all of the benefits, this is a way to make people feel as though they had to be grateful to their leaders, the Johnson family. And I felt that this was wrong. The workers worked hard. We shouldn't have to be grateful to somebody for whom we work, for whom we're making money for them.

DUBOFSKY: It was hard work. They were paid not by the hour but the piece. And the worst work was in the tanneries.

SCANLON: Grandpa said, come with me, I want you to see this. I went into the tannery with him and they had these great, big, huge vats of acid that stripped the hair off the hides; and these men with huge, huge wooden paddles stirring it, with arms on them like fighters.

So I'm right behind him and the stench was horrible. I held my nose and he turned around and saw me. Young lady, you take your fingers right down from your nose. That's your bread and butter.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #2: America in 1932, the land of lost homes and shattered dreams, millions of Americans homeless, hungry and without hope.

DUBOFSKY: When you come to the Depression and the company falls on hard times, Johnson and the company, they have to begin to cut wages.

ZAHAVI: About 30 years ago, I interviewed around 80 or 90 workers about life and labor at Endicott Johnson, and I still have those old recordings.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #3: During the Depression, our work went down to, well, three half days a week, three days a week. And it was really rough times.

UNIDENTIFIED MAN #4: There was one time I brought home a check for 13 cents. That was my pay for that week.

UNIDENTIFIED MAN #5: I remember George F. Johnson coming into the factory and making a speech one time. Well, he says, times are tough. We're not going to lay nobody off. We're all going to take what little we got. And there's lots of dandelions on the hills and fish in the rivers, so we'll have to, I guess, live on that for a while.

DUBOFSKY: At the end of the 1930s, the company was threatened with a union organizing committee.

ZAHAVI: There was a strike by workers. And George F. Johnson went and tried to talk to them.

ELMER KNOWLES: We was out there in the street fighting for more money. And he went down and he parked his car in the parking lot, and he tried to talk to us on the loudspeaker. And I'll never forget there was tears in his eyes. He drove away in tears.

POLIZIANO: He kept preaching you don't need a union. They can't give you anything better than what I'm giving you.

DUBOFSKY: Johnson tried to ferret out union organizers from the company, alleging they were subversives.

ZAHAVI: He employs private detectives, the Pinkertons, to spy on his own workers to find out what conversations are going on in local taverns and bars behind his back. He's getting paranoid.

UNIDENTIFIED MAN #6: So the day comes for election. What a day that was, though. Oh, boy.

ZAHAVI: A vote was scheduled for early January of 1940, with over 15,000 workers casting a vote for a union or against a union.

UNIDENTIFIED MAN #6: The workers were all given the time off to go and vote. And they went over there to vote with full intention to vote the union in. They went in and voted them out. That's what happened.

ZAHAVI: When push came to shove, 80 percent of the workers voted against the union. They did enough. They held onto enough of the Square Deal to hold on to the loyalty of their workers.

DUBOFSKY: And when the remainder of the country was boiling over with strikes, riots, labor violence, Johnson could proudly say: It doesn't happen here.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #7: Mr. George F. Johnson will now say a few words.

(APPLAUSE)

JOHNSON: We have proven in this valley that it's possible that labor and capital may live in peace and in harmony. And I hope that great good will come from this demonstration. I thank you.

(APPLAUSE)

UNIDENTIFIED MAN #8: In the 1940s, Endicott Johnson grew dramatically. In World War II, the company was one of the largest providers of shoes to the U.S. military, and at its height, it employed something like 24,000 workers. Ironically, as the economic health of the company was improving, the health of its patriarch, George F. Johnson, was deteriorating.

(SOUNDBITE OF MUSIC)

UNIDENTIFIED MAN #9: New York Times, 1948, Endicott, New York. George F. Johnson, chairman of the board of the Endicott Johnson Corporation died today here at his home.

(SOUNDBITE OF MUSIC)

UNIDENTIFIED MAN #10: The passing of George F. Johnson...

SCANLON: The funeral was held, you know, at the stadium. The place was just packed with people, thousands and thousands of people. And you could have heard a pin drop.

ZAHAVI: 1948 probably represented the last peak for the company. And from 1948 on, the story essentially is one of decline.

UNIDENTIFIED MAN #11: You have to remember that by the end of the 20th century, a good 70 percent of shoe production was in China. So that was the real challenge, is foreign imports.

POLIZIANO: All of a sudden, they were bringing in this vice president and this new president. You know, we're not making any money on that, let's shut that department. And then you’ve got people saying, now wait a minute, it wasn't like that when George F. was here.

ZAHAVI: I think the Square Deal is an anachronism today. Now, I don't think that workers expect very much from corporations, period.

(SOUNDBITE OF MUSIC)

POLIZIANO: My father-in-law worked for Endicott Johnson, my sister. I have nieces and nephews, and all my children worked there, uncle, uncle, aunts. If I could just close my eyes, I could just picture the whole thing in front of me.

(SOUNDBITE OF SONG, "MARCH ALONG TOGETHER")

UNIDENTIFIED GROUP: (Singing) Marching along together...

POLIZIANO: It's changed. It's changed. I notice the merry-go-round is still there, but nobody uses it. As I go by I just see it going around and around and around and around like something out of the past.

(SOUNDBITE OF SONG, "MARCH ALONG TOGETHER")

UNIDENTIFIED GROUP: (Singing) Marching along together, the Endicott Johnson Workers Band.

UNIDENTIFIED MAN #12: That is a beautiful song, you know. Next week will be better.

SMITH: Our story today was produced by Joe Richman, Samara Freemark and Sarah Kate Kramer from Radio Diaries. Also, Jonathan Miller of Homelands Productions. It was edited by Deb George and Ben Shapiro. You can find more stories like this at the Radio Diaries podcast. I highly recommend it - or at radiodiaries.org. Radio Diaries is a member of Radiotopia, a podcast collective at PRX.

KESTENBAUM: And if you're looking for another great podcast, check out Snap Judgment with Glynn Washington. It’s an hour-long show of stories. There’s always great stuff on it. You can find it at npr.org/podcast.

SMITH: Today’s show was produced by Nadia Wilson. I'm Robert Smith.

KESTENBAUM: And I'm David Kestenbaum. Thanks for listening.

(SOUNDBITE OF SONG, “CAROUSEL RIDE”)

RUBBLEBUCKET: (Singing) Round and round and round I go, hoping for a miracle. I got no place to run and hide. I guess I’ll take a spin on the carousel ride. Just the way the stars align, it’s not a reason to get blind. So take another spin on the carousel ride.

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