Thursday, September 01, 2011

Gibson Guitar and the Resurrected Blue Eagle

In April, 1934, a 49 year old Polish immigrant, Jacob Maged, who had been operating a one man tailor and cleaning shop in Jersey City, New Jersey, was jailed for three days and fined $100. His crime? He had refused to comply with the National Recovery Administration’s “code of fair competition,” which dictated that no one in the cleaning business could charge less than 40 cents for pressing a suit.

The codes had been drawn up by the larger drying and cleaning businesses, in cooperation with the bureaucrats operating under the control of Hugh Johnson, the hard drinking profane administrator of the agency authorized by Franklin Roosevelt to implement the National Industrial Recovery Act, one of the cornerstones of the First New Deal. Compliance with the codes was signfied by the placement of a placard with a Blue Eagle–the symbol of the power of the NRA–displayed in the windows of businesses that voluntarily agreed to accept the codes.

For those independent businessmen who refused to voluntarily comply with the code, it was tough luck. The law allowed the Federal Government to imprison and impose stiff fines on “ruthless competitors” like Mr. Maged who wouldn’t play ball. The uncooperative Maged insisted on charging 35 cents –a pricing policy that had kept him in business for 22 years–and Hugh Johnson and his local minions were upset. How dare this independent operator defy the authority of the Federal Government? As a reward for his defiance, Mr. Maged, who was barely making a living to begin with, was jailed for 3 days and fined $100. He only earned his freedom by meekly accepting the government’s pricing rules.

Last week, when agents of the Federal Government raided the Nashville, Tennessee plant of Gibson Guitar, the premier guitar manufacturer in the world, memories of similar tactics of intimidation designed to force independent businesses into compliance came to mind. The circumstances were significantly different, but the tactics were the same.

You can read the rest of this article at Broadside Books' Line of Fire here.