On this day in 1944, the federal government seizes Montgomery Ward. It was the second time that the government seized the company during FDR’s administration.
The use of federal power was brazen, to say the least. But FDR had spent his entire presidency expanding the scope of federal power. Perhaps his audacity wasn’t so surprising after all.
During the war years, FDR reinstituted a WWI-era War Labor Board. He didn’t want worker strikes to affect the war effort. His Labor Board was supposed to prevent such a situation by helping to arbitrate labor disputes.
At Montgomery Ward, none of this went over so well. Indeed, there was a dispute about whether the company’s products even affected the war—at all. Should they really be subject to the decisions of this Labor Board?
The retailer had its own set of problems to deal with, even without FDR’s demands.
Montgomery Ward had survived the Great Depression, but the company had struggled to keep up with competitors such as Sears. In order to save his company, CEO Sewell Avery took many cost-cutting actions: He saved the company financially, but his actions also led to a series of disputes with the company’s workers. By April 1944, the company’s labor agreements were expiring, which meant the workers could again go on strike. FDR jumped in, ordering Avery to sign a new contract or to have his company seized. Avery refused.
He was literally carried out of his company, feet first, by soldiers. Just before he was carried out, he snapped at the U.S. Attorney General: “I want none of your damned advice. . . . To hell with the government!”
The Attorney General was “deeply shocked,” as historian Thomas Fleming explains. “He later claimed he saw Avery’s defiance endangering the entire war effort. Exactly how, the attorney general never adequately explained.”
The company was returned to Avery’s control in early May, but Avery still refused to accept the Union contract. Matters simmered again for a while, then came to a head in December when Montgomery Ward’s workers went on strike. On December 27, FDR again ordered seizure of the retailer. He told the country: “The Government of the United States cannot and will not tolerate any interference with war production in this critical hour.”
The second time around, Avery was not carried out of the building. He stayed in his office while Major General Joseph Byron used an office nearby. It would be nearly a year before the government would relinquish control of the company back to Avery.
The retail giant was never the same again, partly because Avery became so suspicious of the government that he sat on hordes of cash. Other retailers, such as Sears, were investing in their companies and growing. Avery was not. The free market, finally back at work again, did not reward Avery’s decision. Eventually, as we all know, Montgomery Ward could not stay afloat, and it went out of business.
Diana B. Henriques, The White Sharks of Wall Street: Thomas Mellon Evans and the Original Corporate Raiders (2000)
FDR has made colossal blunder in seizure of Montgomery Ward (Toledo Blade; Apr 28, 1944)
Franklin D. Roosevelt, Executive Order 9508 on the Seizure of Montgomery Ward Co. Properties (Dec. 27, 1944)
Franklin D. Roosevelt, Statement on the Seizure of Montgomery Ward Co. Properties (Dec. 27, 1944)
Kenneth Lipartito, When the Army Invaded Montgomery Ward (Dec. 7, 2012)
Richard Polenberg, War and Society: The United States, 1941-1945 (1980)
Robert H. Zieger et al., American Workers, American Unions: The Twentieth and Early Twenty-First Centuries (2014)
Thomas Fleming, The New Dealers' War: FDR and the War Within World War II (2001)