AUTOMOTIVE HISTORY – SEPTEMBER 7, 1979 - Chrysler Asks the US Government for a Bailout

In 1979, Chrysler Corporation, the third largest US automaker, hovered on the verge of collapse, a victim of sharply declining revenue and cash-on-hand that had reached the level of threatening daily operations. In August 1979, President Jimmy Carter’s Treasury Secretary, G. William Miller, proposed a government intervention in the form of $1.5 billion in guaranteed loans. The sum was considered an astonishing total. It was by far the largest government bailout in US history. On September 7, 1979 Chrysler formally petitioned the US government for the loans, and on December 20, 1979 Congress ratified the appropriation in the “Chrysler Corporation Loan Guarantee Act,” which Carter subsequently signed into law.

The loans stipulated major concessions from Chrysler’s workers, represented by the United Autoworkers Union (UAW). The political and media elite had successfully shifted blame for the corporation’s collapse—and by extension the overall decline of US capitalism—onto the working class. The UAW and the AFL-CIO buckled to the concession demands, a capitulation that cleared the path for an onslaught on working class living standards that has continued to this day.

There were profound pressures at play in the near-bankruptcy of Chrysler. The reemergence of the US’s capitalist rivals, especially Japan and Germany, was felt keenly in the auto industry through declining market share. Even the more immediate cause of Chrysler’s demise—the oil shocks of the 1970s that reduced demand for the large and inefficient vehicles that had been Chrysler’s stock-in-trade—testified to the declining influence of the US, which was reflected in its inability to dictate production quotas to the oil states.

Now, in the midst of the proposed bailout of the entire US financial industry, the experience of Chrysler in 1979 holds critical lessons for the working class.

The Chrysler bailout set in motion processes that have only intensified to this day. First, the working class would henceforth have to foot the bill for the decline of US capitalism through its own impoverishment, carried out in the name of “competitiveness.” Second, the corporate and financial elite, who bore primary responsibility for this decline, would henceforth reap windfall profits not only in spite of this decline, but precisely because of it.

These processes found embodiment in Chrysler CEO Lee Iacocca, who soon after the bailout was making millions of dollars, even as he ruthlessly axed tens of thousands of jobs.

A special place of shame must be given to the national media and political elite. In 1979 they raised a hue and cry about the need for Chrysler’s workers to “sacrifice” and extolled the virtues of the free market. Today they offer few such sermons to the financial elite responsible for the current crisis. But they continue to insist, as they did in the days of the Chrysler bailout, that the working class must pay the bills for the failures of American capitalism. The working class is being asked to fork over trillions of dollars—the sum would have been unfathomable in 1979—to bail out a criminal financial aristocracy that has bankrupted American capitalism, and very nearly the state itself.

Make It A Champion Day!