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The American Workers Party was established in December 1933 by activists in the Conference for Progressive Labor Action. The figurative leader of the AWP was A. J. Muste, although the organization had a structure and values that lent its radicalism a highly democratic and collaborative quality.
The AWP sought to find what it called "an American approach" for Marxism at the depth of the Great Depression. The group published a popularly written newspaper, Labor Action, and created Unemployed Leagues that attracted tens of thousands of members and ought not be confused with the Communist Party's Unemployed Councils.
The AWP is best known in labor history for its leadership of the successful 1934 Toledo Auto-Lite Strike, a forerunner that contributed to the creation of the United Auto Workers union. Exerting influence through its Unemployed League chapter, the AWP in Toledo kept the Auto-Lite strike from being broken by desperate job-seekers. Instead, the AWP brought the mass of unemployed to bear as a powerful vehicle for solidarity with the auto parts factory workers on the picket lines. The Auto-Lite strike—along with the Minneapolis Teamsters Strike of 1934 (led by the Trotskyist Communist League of America) and the 1934 West Coast Longshore Strike led by the Communist Party USA—was an important catalyst for the rise of industrial unionism in the 1930s, much of which was organized through the Congress of Industrial Organizations.
While it never numbered more than a few hundred members, the AWP attracted a number of prominent labor activists, such as J. B. S. Hardman of the needle trades. It also attracted a number of intellectuals, many of them former members of the CP who rebelled against its strictures while remaining radical. The latter included James Burnham, Sidney Hook, James Rorty, and V. F. Calverton.
In December 1934, the AWP merged with the Trotskyist Communist League of America to form the Workers Party of the United States. This was the fusion of two revolutionary socialist organizations that had both successfully led two militant strikes to victory. Most AWP members were absorbed into the mainstream Trotskyist movement, with some, like Burnham, becoming major figures in the subsequent Trotskyist movement of the 1930s. A few others, such as Louis Budenz and Arnold Johnson, did not accept the rapprochement with Trotskyism and instead joined the CP, considering its adoption of the Popular Front to be analogous to what the AWP had tried to accomplish with its "American approach." Others, such as Hook and Rorty, became political independents but remained, for a time, largely sympathetic to the successor organization.