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In 1893, the gross receipts of the Pullman Company fell drastically. Income from operating its sleeping and dining cars held up well, but much of the undertaking's manufacturing activity consisted of filling orders from other firms. These outside orders now almost completely dried up. George Pullman responded vigorously with a program of lay-offs, reduced hours, and wage cuts. The wages were cut at an average of 25 percent, but some claimed their wages had been reduced more than 70 percent. The policies proved extremely effective; wages were reduced and dividends were increased.
But during all this time, rents in the model town of Pullman were not reduced. These rents were already 20 to 25 percent higher than those in similar accommodations in surrounding areas. In December, the company issued a statement denying that the residents of Pullman were in extreme distress. But in fact, many families suffered greatly during the winter. The town had no institutions for public relief, which was contrary to the owner's ideas of individual self-help. Still the typical worker was hesitant to move elsewhere, even after having been fired. Rents in Pullman were higher, but unemployment was everywhere, and many believed that residents of Pullman would be the first to be rehired. Desperation grew, yet there was little to be done about it. In some families the children lacked the shoes and coats needed to attend school in the harsh Illinois winter. Others were kept in bed all day because there was no coal in the house.
The voice of hope was Eugene V. Debs's American Railway Union. In the spring of 1894, at the time of the victory over the Great Northern, the Pullman laborers began to take Debs's advice that "labor can organize, it can unify, it can consolidate its forces. This done, it can demand and command.[64] " The Pullman workers were eligible for ARU membership because the company operated a few miles of railroad leading to its shops. So man after man, they joined, because they had no money and no patience left.
The workers presented their demands to the vice-president of the company. The official promised to investigate, and the grievance committee held a meeting. Against the advice of the ARU top officials, the committee voted a strike. Of the 3,300 workers in the factory, over 90 percent walked out on May 11. The company promptly fired the others. Three days later, Debs came to Pullman. He had advised against the strike, but understood it had been an act of desperation after walking through the town and hearing the stories. The strike dragged on until June 12, when the first national convention of the ARU was held in Chicago. A committee from Pullman appeared before the convention and made a plea. It was suggested that the convention declare a boycott of Pullman cars, but Debs disagreed. He suggested that a committee from the convention would confer with the Pullman Company. Twelve men, including six strikers, were chosen to go and propose arbitration of the wage dispute.
But the next day, the committee returned with the news that the Pullman Company had refused to confer with any members of the ARU. A boycott was proposed again, and blocked by Debs again. A committee went back and forth a few times, but the company would concede nothing. It held that wages and working conditions should be determined by management, with no interference by labor. Then finally the ARU convention unanimously voted the boycott. Debs devised the tactic: switchmen in the ARU would refuse to switch any Pullman cars onto trains. If the switchmen were fired or disciplined for this refusal, all ARU members on the line would promptly cease work.
The boycott started at noon on June 26 and was immediately opposed by the railroads, unified in the General Managers Association. This association, consisting of twenty-four railroads running out of Chicago with a combined capital of $ 818 million and 221,000 employees, declared that their contracts with Pullman were sacred and that they would operate no trains without Pullman cars. This caused a deadlock, and by June 29, twenty railroads were tied up. About 125,000 men had quit work and agents of the General Managers were busy in Eastern cities hiring unemployed railroaders as strikebreakers. Leaders of the Railroad Brotherhoods were denouncing the ARU. Debs was sending telegraphs across the Great Plains advising his members to use no violence and to stop no trains forcibly; thy should simply refuse to handle Pullmans. Things were not getting out of hand yet: there were no major riots and no mail had accumulated in Chicago.
Still, the facts were misrepresented. The Federal district attorney in Chicago wired Washington on June 29 that conditions were so bad that special deputies were needed. The newspapers used hysterical headlines like "Mob Is In Control", and "Law Is Trampled On". The Chicago Herald stated that " if the strike should be successful, the owners of the railroad property � would have to surrender its future control to the class of labor agitators and strike conspirators who have formed the Debs Railway Union.[65]" The press frequently referred to 'Dictator Debs'.
What followed was a series of federal interventions. The General Managers wired the Attorney general of the United States, Richard Olney, urging him to appoint Edwin Walker as special federal attorney to handle the strike. On July 2 in Chicago, Walker and the Federal district attorney drafted an application for an injunction against the strike leaders. The result was that the strike leaders were forbidden to encourage the boycott in any way. They could not send telegrams about it, talk, or write about it. If the ARU leaders obeyed the injunction, the boycott would collapse, for it depended on central coordination. But if they chose not to obey it, all strikers would be in active opposition to the federal government, and the leaders might end up in jail for contempt of court. Debs and his colleagues decided not to obey. Debs declared bitterly: "the crime of the American Railway Union was the practical exhibition of sympathy for the Pullman employees[66]". This kind of sympathy was dangerous.
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