Beth Tompkins Bates: What Happened the Last Time Detroit Faced Bankruptcy

Today we welcome a guest post from Beth Tompkins Bates, author of The Making of Black Detroit in the Age of Henry Ford.  In the 1920s, Henry Ford hired thousands of African American men for his open-shop system of auto manufacturing. In her book, Bates explains how black Detroiters, newly arrived from the South, seized the economic opportunities offered by Ford in the hope of gaining greater economic security. As these workers came to realize that Ford’s anti-union “American Plan” did not allow them full access to the American Dream, their loyalty eroded, and they sought empowerment by pursuing a broad activist agenda. This, in turn, led them to play a pivotal role in the United Auto Workers’ challenge to Ford’s interests. In the process, Henry Ford and his company helped kindle the civil rights movement in Detroit without intending to do so.

In a previous post, Bates discussed how Frank Murphy formed a coalition of African American and Catholic voters to support a progressive agenda in 1920s Detroit as a judge. For today’s post, Bates describes how Murphy went on to become mayor and how he handled the threat of the city’s bankruptcy during the Great Depression.

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Recently, as experts across the nation analyzed Detroit’s current crisis, the Detroit Free Press asked: What would Frank do? While most readers probably had no idea who Frank was or why his assessment might matter, it was a great question. Frank Murphy, Mayor of Detroit from 1930 to 1933 led the city when it had the highest level of unemployment among the nation’s largest cities, bankruptcy was imminent, racial tensions were high, and organized crime seemed invincible to law enforcement. Nevertheless Murphy successfully raised the city out of the ashes with policies that launched a new era in Detroit and were a model for the New Deal.

Murphy was elected mayor after enraged voters recalled Mayor Charles Bowles in July 1930 for his association with the underworld. Prohibition had turned Detroit into a haven for illegal liquor, the city’s second largest business in 1929, employing more than 50,000 people. During Bowles’s tenure organized crime held much of the city hostage. Bowles connection with the Ku Klux Klan (KKK), which supported his mayoral campaigns, also did not serve him well when the KKK charged that the voter recall effort was the work of Catholics. Despite losing the recall election by a vote of 120,862 to 89,907, Bowles sought re-election and was supported by white Protestants. Bowles lost to Murphy, an Irish Catholic.

Murphy’s campaign promised a “new deal” for common men and women, those “plain folks . . . upon whose shoulders and bent backs this city rests.” In his first campaign speech, Murphy announced, Bowles left Detroit “dead broke” and “in ashes, a political ruin, burned to the ground, by hate, by discord, by selfishness, by government put to corrupt and selfish ends.” Building on his “new deal” philosophy, Murphy drew a clear line between the haves and the have-nots. Just as Roosevelt was later to attack the economic royalists, as Sidney Fine shows, so Murphy went after the “royalists of Detroit,” those “rich people downtown,” who ignore the needs of ordinary people and oppose social and economic reforms. He vowed to sweep away the “old machines” and the power brokers who ran them. Drawing support from the same coalition of African Americans, immigrants, and Catholics that supported him in the 1920s, his campaign served as a model for Franklin Roosevelt in 1933.

Murphy’s commitment to social justice drove his politics. Government “should penetrate through . . . mere business enterprise,” he said, and embrace the problems of the “multitude . . . who face eviction and starvation.” To deliver on his promise, Murphy studied unemployment policies and consulted with Professor William Haber, one of the country’s first experts on unemployment. Within days of his election, Murphy put the Haber plan into action and formed his Mayor’s Unemployment Committee (MUC). As the depression deepened, Murphy sought to provide welfare to the indigent.

By spring 1931, the mayor and the Welfare Department had their feet put to the fire as unemployment soared and tax delinquencies threatened to throw the city into bankruptcy. At the same time, the corporate elite pressured the city to reduce its caseload and its welfare payments, accusing the Murphy administration of liberal policies that attracted “derelicts from all parts of America,” which were living off Detroit’s tax dollars. At that point Murphy attacked Ford Motor Company after the city discovered that over 5,000 welfare recipients were its former employees. Henry Ford, who cared so “well for idle machinery,” was accused of turning “idle men into the streets to care for themselves.” Ford initially refused to acknowledge he had any responsibility toward unemployed Ford workers living in Detroit, for his facilities, with one exception, were located outside Detroit.

Murphy took his grievance to the court of public opinion, making national headlines by exposing the chicanery of Ford’s claims to be his “brother’s keeper” while Detroiters starved. Known as the “Duel over the Dole,” the showdown between Murphy and Henry Ford raised the question of who was responsible to those in distress—the public or the private sector—at the national level. This inspired Ford, despite his loathing of philanthropy, to make a short-term loan to city government for $5 million.

Murphy was easily re-elected in November 1931 for two more years filled with fiscal problems of formidable proportions. In May 1932, the Department of Public Welfare was broke. No longer able to provide relief through local agencies and having failed to persuade either Wayne County or the state of Michigan to assist, Murphy looked to Washington as he helped shape a new relationship between municipalities and the federal government.

In the end, it was the federal government that made the difference between bankruptcy and emerging out of the crisis, as Murphy put it, with credit and honor. Throughout the crisis, Murphy practiced his belief that government’s primary responsibility was to serve the social and economic welfare of people, whose basic needs must not be subordinated to corporate America’s agenda.

Beth Tompkins Bates is professor emerita at Wayne State University and author of The Making of Black Detroit in the Age of Henry Ford and Pullman Porters and the Rise of Protest Politics in Black America, 1925-1945.