March 22, 1972
Page 9475
MONOPOLY AND CORPORATE POWER
Mr. HARRIS. Mr. President, the issue of monopoly and corporate power is becoming increasingly important in the 1972 presidential campaign. When I introduced the Concentrated Industries Act last September, some people wondered whether Americans were really concerned about the dangers of unchecked corporate power. Since that time a number of things have shown that people do want action to protect their interests as consumers, workers, and citizens. The Federal Communications Commission responded to public pressure to reopen its investigation of A.T. & T.'s rates. The Federal Trade Commission has moved to break up the shared monopoly in the breakfast cereal industry. And every American has witnessed the sordid spectacle of high officials of the Justice Department and top executives of ITT explain on national television how big business gets its way with big Government.
In an effort to help stimulate thoughtful debate on these issues, Ralph Nader and Mark Green, two outstanding young advocates of the public interest, wrote to each of the presidential candidates – except President Nixon – asking for their views on monopoly and corporate abuses.
I ask unanimous consent to have printed in the RECORD a summary of the responses they received, a copy of their request, and the full statements by the candidates. These statements indicate, I believe, that most of the candidates do appreciate the problem we face in this area and are increasingly willing to face up to the necessary solutions. I hope to hear a great deal more from them on these issues in the months ahead.
There being no objection, the items were ordered to be printed in the RECORD, as follows:
VIEWS ON MONOPOLY
"Why does the American public 'tolerate' the degree of monopoly we now have," the editors of the Antitrust Law and Economics Review recently asked; "[t]he answer is they don't know about it."
In an effort to inform the American public about the degree and costs – both economic and political – of monopoly, and to try, as individual citizens, to help broaden a campaign dialogue, we sent a letter containing a series of questions concerning antitrust and corporate power to every announced Presidential candidate on January 14, 1972 (sample copy attached). Since President Nixon had already stated that he would not become involved in any campaign statements, he was not included. Enclosed are replies from eight candidates: Senators Humphrey, McGovern and Muskie, Mayors Lindsay and Yorty, Representatives Chisholm and McCloskey, and former Senator McCarthy. Those not replying included Senators Hartke and Jackson, Governor Wallace (his letter is enclosed), and Rep. Ashbrook.
The issue of corporate power has recently threatened to become the equivalent of race in the 1950s and ecology in the 1960s – problems of great magnitude but all avoided in that time.
Instead of ignored, the extent and impact of corporate power should be the issue of the seventies. Some towns or counties are developed while others are abandoned; trade tariffs or quotas are written; inflation worsened or eased; technology implemented or suppressed; political campaigns decisively affected; American style and taste manipulated by advertising campaigns; consumers and employees damaged by product or industrial environment hazards – all are issues intimately affected by aspects of corporate power and antitrust.
For the first time within recent memory, major candidates for the Presidency are here taking positions on these subjects. Among others, Mayor Lindsay wrote that, "The real need is for a declaration of independence – independence of government from corporate domination."
Senator McGovern noted that:
"I agree with both of your premises – that the accumulation of corporate power is among the most critical issues to be addressed in 1972, and that the American people deserve to know how the candidates stand, and what they propose to do, on issues of this kind.
As a practical matter, the decisions made in the board rooms of these companies (the top 200) can have as much influence on the country's directions, and perhaps more, than decisions made in the United States Congress or in the White House."
According to Senator Muskie, "the fundamental question raised by this issue must be faced by our political leadership. . . . I intend to speak to these issues in a thoughtful and comprehensive manner during the forthcoming campaign."
Considering the replies as a whole, it seems to us significant that of seven replies concerning federal chartering as a mechanism for corporate accountability, all seven said they would support the concept or seriously consider supporting it as President; of six candidates addressing themselves to the issue of corporate secrecy, all urged that corporations disclose more of their activities to the public; of five commenting on shared monopolies (oligopolies), four favored either de-concentration suits or legislation.
The ITT-Kleindienst hearings have begun to make antitrust a word of common currency. Perhaps with the aid of this dialogue, antitrust can become more of a subject of uncommon interest to decision-makers charged with implementing or shaping the national policy for a competitive economy.
[Identical letter sent to all announced candidates]
WASHINGTON, D.C.,
January 14, 1972.
Senator EDMUND MUSKIE,
Old Senate Office Building, Washington, D.C.
DEAR SENATOR MUSKIE: As the 1972 Presidential race begins, we consider it appropriate to raise with each of the announced candidates an issue whose importance is only matched by its omission during campaigns: corporate power and antitrust policy. It is a problem of intimate impact on all Americans, touching as it does the pocketbooks of all consumers. It decisively affects the level of innovation, the level of inflation, the quality of goods and services, the extent of pollution and product hazards, the role of small business and professionals, the health and safety of employees, and, of course, the prices we pay. These are all issues of magnitude and moment and all are affected by corporate power and antitrust enforcement.
Corporations are clearly a dominant presence in our lives. They account for 56% of national income; listing the top corporations by sales and the top states by general revenues, 21 of the first 25 are corporations. One hundred and eleven industrial firms have over one billion dollars in assets while six hundred have over a hundred million in assets. Our top one hundred firms control about 50% of all industrial assets, or more than what the top two hundred held in 1950, the year Congress enacted the Celler-Kefauver Act; and today's two hundred largest firms control about two-thirds of industrial assets, the same share as was held by the 1000 largest in 1941, the year the Temporary National Economic Committee (TNEC) submitted its final report to Congress recommending an "Investigation of Concentration of Economic Power."
Even more troubling than this extent of so-called aggregate concentration has been the level of actual market domination by a few firms. The best estimates put the proportion of manufacturing value added occurring in monopoly or shared monopoly industries at over 60%. And a monopoly or shared monopoly means, by definition, that competition has ceased to function; a few corporate managements, either by explicit collaboration or by cue, act in unison to keep prices high and to reduce the consumer's moneys’ worth. Examples of such industries are many: automobiles (GM, Ford and Chrysler), aluminum (Alcoa, Kaiser and Reynolds) rubber tires (Goodyear, Firestone, U.S. Rubber and Goodrich), Steel (U.S. Steel, Bethlehem, National and Republic), soaps, detergents (Procter & Gamble, Colgate-Palmolive, Lever Bros.) and cereals (Kellogg, General Foods).
A secret staff report now at the Federal Trade Commission estimates that "if highly concentrated industries were deconcentrated to the point where the four largest firms control 40% or less of an industry's sales, prices would fall by 25% or more." Such problems go far beyond the esoterica of economic data. They impose real costs on real people. For example: there were once numerous competing milk firms in Minneapolis-St. Paul in the mid-sixties, but only three big milk firms in neighboring Duluth-Superior; although costs were similar in both markets, the half-gallon wholesale price in 1967 was 33.8 cents in Minneapolis-St. Paul, 45 cents in Duluth.
While there was once as many as 88 competing auto manufacturers in 1921, today the "Big Three" produce 83% of all cars sold in the United States and 97% of all domestic models; industrial economist Leonard Weiss, of the University of Wisconsin, has estimated that the noncompetitive state of the auto industry costs consumers $1.6 billion. The oil import quota, by keeping out much foreign competition, permits domestic oil firms to overcharge by an estimated $5 – $7 billion per year; for the family of four in New York, it means an average of $102.32 added to gasoline and home heating bills every year. While all Americans paid an average of 20 cents for a loaf of bread in 1964, consumers in Seattle paid 24 cents, or 20% more, due to a local price-fixing conspiracy.
In the aggregate, the economic cost inflicted by industrial concentration can only be described as staggering. Monopoly tends to misallocate resources and depress production. As a result, our Gross National Product is smaller than it would otherwise be. It has been recently estimated by two eminent economists, William Shepherd and F. M. Scherer, that the overall cost of monopoly in terms of lost product (or "lost GNP") is between $48 billion and $60 billion annually. Further, Shepherd has estimated that monopoly redistributes wealth regressively by $23 billion annually.
How? Scherer explains that "monopoly profits realized by industrial corporations transfer income from the average consumer to the relatively rich," since it is the wealthy who own the lion's share of all publicly held stock.
"Why does the American public 'tolerate' the degree of monopoly we now have," asked the Editors of The Antitrust Law and Economics Review; "The answer is they don't know about it."
The fault, to an extent, must lie with public officials who have failed both to bring it to public attention and to take a stand on it. Whatever the reason, it can no longer remain hidden. The results are too expensive: they provide the superstructure for much of our present inflation; they lead to Lockheed-bailout situations, where firms become so big and important that they cannot be permitted to fail; they cause the retardation of pollution technology for which we all pay the piper; they lead to the consolidation of political power with economic power; and they inspire the expansion of government controls to deal with noncompetitive and hence unaccountable markets, viz. Phases I and II.
Attorney General John Mitchell recognized verbally the dangers in a widely reported June 1969 speech: "I believe that the future vitality of our free economy may be in danger because of the increasing threat of economic concentration by corporate mergers.... The danger that this super-concentration poses to our economic, political and social structure cannot be overestimated."
More recently, Congressman Emanuel Celler has introduced a bill to consolidate and enhance the antitrust enforcement powers of the Justice Department and the Federal Trade Commission.
Senator Fred Harris has introduced a bill to decentralize our major monopolies into more efficient and competitive units. Senator Philip Hart, Chairman of the Senate Antitrust and Monopoly Subcommittee, has announced that he intends to submit his own version shortly. The Federal Trade Commission is on the verge of issuing a complaint charging the three biggest cereal companies with being an illegal shared monopoly. All the foregoing, however, are just proposals. There are other proposals pushing in the pro-monopoly direction. The Nixon Administration has hinted for months that antitrust laws should be eased in order to permit mergers of domestic firms to improve their competitive position with their foreign competitors. It is anticipated that President Nixon will make just that recommendation in his State of the Union Address. But it has already been done for him by Senators Warren Magnuson and Daniel Inouye, who have introduced a bill which basically exempts export cartels from the reach of the Sherman Antitrust Act.
These and related issues all warrant the response of those public officials who seek the Presidency, that office best situated to change the thrust and pace of our antimonopoly enforcement. A Presidential campaign should candidly bring to the citizenry the great issues of the day and citizens, as well, should have an opportunity to stimulate such a response. We respectfully request, therefore, that you reply to the following questions. Our purpose is to compile the answers for distribution to interested citizens and press. We believe that the compiled answers will prove helpful to the American consumer in evaluating this vitally important matter.
(1) What our your views on the legislation proposed by Congressman Celler (H.R. 12004), and Senators Warren Magnuson and Daniel Inouye (S. 2754)? Do you favor the de-concentration of large shared monopolists – General Motors, for example – as would be accomplished by Senator Fred Harris' bill 5.2614?
(2) Do you agree with the antitrust enforcement policy of President Nixon's Justice Department that conglomerates can and should be sued under prevailing antitrust doctrine but that shared monopolies cannot and should not be?
(3) Senator Nelson is holding a series of hearings inquiring into corporate secrecy. Do you think corporations should systematically make public, except in limited trade secret situations, the following information:
Profit and loss statements by product line;
Amount of pollution emissions and effluents for all product lines and plant facilities; Occupational injuries and diseases suffered each year by type and number of employees affected;
Listing on the container or product the name and amount of all ingredients in the product;
Product testing, including test methodology, selection process and results, for every product marketed;
Public files of all consumer complaint letters, and documentation pro and con for all product hazards discovered internally or identified and alleged by outside parties;
Factual substantiation of all advertising claims.
(4) Do you think a new TNEC investigation should be called to probe and publicize economic concentration in America today?
(5) If elected President, would you consider supporting a Federal Chartering Act, which would require that large corporations doing interstate business get their corporate charters from the national government, rather than from the individual states as now?
(6) What are your general views regarding problems and solutions to corporate power and monopoly? What do you think of the following mentioned methods to achieve corporate accountability:
More "corporate democracy" and "shareholder rights";
Stronger and more frequently imposed white collar criminal sanctions;
More and better antitrust enforcement;
More and better health, safety and rate regulation;
"Public enterprise" (Comsat, Amtrak) or nationalized industries;
Appeals to corporate responsibility on the part of corporate managers;
Internal corporate due process to protect dissenters and to preserve constitutional rights of all employees.
Thank you for your considered responses. Sincerely yours,
RALPH NADER, MARK GREEN.
U.S. SENATE,
Washington, D.C.,
February 29,1972.
Messrs. RALPH NADER and MARK GREEN, Washington, D.C.
DEAR SIRS: Your letter concerning corporate power and antitrust policy asks pointed and probing questions on a subject of great importance that has been of concern to me for many years. Although I have not been able to analyze the details of all the statements in your letter, I am in basic agreement with the view that there must be limits to concentrations of economic power and that antitrust enforcement should be a major means of limiting such concentrations of power. Furthermore, I agree with the premise that the maximization of consumer welfare is the talisman – not the value of small or big enterprise for their own sakes, but the production and delivery of a diversity of quality goods at low prices.
The subject is a vast, technical and complex one (as the length of your study report indicates) and would require a lengthy analysis for complete discussion. I am unable to provide that. I can, however, provide you with relatively brief answers to your specific questions.
(1) Your first question refers to three altogether different legislative proposals. H.R. 12004 was introduced by Congressman Celler to deal with economic concentration by setting up an administrative organization to control large corporate mergers, acquisitions and interlocking relationships. Your letter refers to this as "a bill to consolidate and enhance the antitrust enforcement powers of the Justice Department and the Federal Trade Commission." That conclusion is in question. The bill creates a new Office of Industrial Organization under a cabinet level Administrator; it repeals Section 2 of the Sherman Act, Section 11 of the Clayton Act, and all of the major regulatory statutes. The net effect of these changes is to take a very substantial part of the antitrust enforcement power away from the Department of Justice and the Federal Trade Commission and lodge it in the Administrator of the new office of Industrial Organization.
It is open to question whether this will increase the efficiency or effectiveness of antitrust enforcement or merely add a third agency to the two now engaged in antitrust enforcement. There have been no hearings on this bill yet, so we do not have the benefit of comments from the Department of Justice or the FTC. In any event, I would want the comments of my Attorney General in the next administration and other experts before approving such a major reduction in the enforcement powers of the Department of Justice.
The substantive provisions of the Cellar Bill are similar in many respects to existing antitrust statutes, but do contain some provisions that may be an improvement in existing law. The proposed prohibitions on interlocking directorships and officerships, for example, go considerably beyond the present provisions of Section 8 of the Clayton Act and seem to be a distinct improvement. On the other hand, the provision for direct appeal of antitrust cases exclusively to the Supreme Court is retained.
Nearly all scholars who have studied this subject, including the Supreme Court itself and the Assistant Attorney General in Charge of the Antitrust Division under both Democratic and Republican administrations, have all concluded that this is an outmoded procedure which actually handicaps antitrust enforcement. In most cases, a Court of Appeals is able to give more expeditious and thorough review to a case than the Supreme Court, and for many years the Department of Justice has advocated eliminating or modifying this provision. This is a technical matter that illustrates the difficulty of now stating before hearings an overall judgment on this bill in its present form.
S. 2754, introduced by Senator Magnuson and Senator Inouye, is a very long and comprehensive proposal to expand U.S. exports. The bill, I notice, has 13 titles relating to such subjects as the establishment of an International Commerce Service (similar to the State Department Foreign Service), establishment of a Trade Development Corps, grants to state and local governments, an export trading program, regional American merchandise centers, export commercial paper, ocean freight rate disparities and other related matters. Many of these provisions seem worthwhile and the sections dealing with ocean freight rate disparities strike at a long standing abuse.
However, since the focus of your letter is on antitrust, I assume that you are concerned with the provisions dealing with chartered export associations. This title would give exemption from the antitrust laws to chartered export associations. This title would give exemption from the antitrust laws to chartered export associations approved by the Secretary of Commerce. It is similar to but broader than the present Webb-Pomerene Act. I am told that the Department of Justice has presented testimony on this bill criticizing provisions of Title VII and opposing their enactment.
I am inclined to oppose these provisions, but neither my staff nor I have been called upon to study the bill since it has not yet reached the floor, and I would want to see if there is persuasive evidence that the bill is in the national interest by stimulating trade and assisting our balance of trade position. The notion that there should be a favorable balance of payments is, of course, at the root of the Magnuson proposal, but reducing competition and hence output and efficiency is neither the means to the end nor a price worth paying. Reducing competition is simply not the way to make industry capable of producing efficiently, having effective research, adopting dynamic marketing techniques, and so on.
S. 2614, introduced by Senator Harris, is a bill which embodies recommendations of the White House Task Force on Antitrust Policy.
In introducing the bill, Senator Harris said that in his view all of the evils at which the bill is aimed are "already illegal under existing antitrust law." The FTC has recently brought suit against the four largest manufacturers of breakfast cereal on what is reported to be a theory of "shared monopoly" or oligopoly in action. There will, of course, be hearings on this bill before it is presented for legislative action. I will want to study and weigh the testimony and evidence of the hearings on the bill, as well as observe legal and economic developments in this area, in order to determine the need and desirability of such legislation before it is presented to me for action.
(2) The conglomerate problem involves primarily a concern for bigness and for concentration of wealth and the political and social power which accompanies such concentrations. And, the present Attorney General and the recent Assistant Attorney General in charge of the Antitrust Division have made some stirring speeches about the dangers of monopoly and economic concentration. However, their record has been considerably less impressive than their speeches. It has been a record of lost motions, moot questions, consent decrees, lost cases. The present Department of Justice has demonstrated that it can start antitrust suits against conglomerate mergers.
The FTC has recently shown that it can start proceedings against companies having "shared monopolies," hardly a new doctrine. It seems to me that the facts speak for themselves. The antitrust laws, like most other laws, are enforced effectively not by speeches or filing a few headline making cases, but by continuous, vigorous, fair and effective enforcement, day after day and month after month. This is the kind of antitrust enforcement I favor and will provide, and, in the long run, this is the only way to make the laws effective.
(3) I favor full disclosure of all information that may be significant or useful to consumers and to those concerned with effective operation of the economy. There should certainly be encompassing and effective laws or regulations requiring the disclosure to consumers of the identity, ingredients and significant characteristics of products. We must recognize that implementation of this principle is complicated and difficult, but we have made substantial progress in this area over the years and I'm confident that a new administration, truly responsive to consumer needs, can secure the promulgation and enforcement of effective laws and regulations requiring factual disclosures to consumers on labels and containers and substantiation of factual advertising claims.
With respect to a financial statement by product lines, such information may in fact enable the government better to ascertain where markets are monopolistic. With respect to the amount of pollution emissions and effluents for all product lines and plant facilities, this kind of information should be made public. Occupational inquiries, product ingredients, and product testing information should be made public. Public files of consumer complaints and factual advertising substantiation ought to be made public.
But we must recognize that the way to get disclosures on all of these categories is by having an administration dedicated to the public interest which will staff the departments and agencies with energetic and like-minded officials. If new laws should be needed to require disclosures necessary to protect consumers, workers or the public, I will not hesitate to advocate and actively seek appropriate legislation.
(4) A White House Task Force on Antitrust Policy was appointed by President Johnson and rendered a report in July 1968. A Task Force on Productivity and Competition was appointed by President Nixon and rendered a report in February 1969. Neither report has received much attention or study and from all appearances the present administration has sought to bury both reports. There has been no discussion of either report by a responsible spokesman of the present administration.
It seems to me that there has been too much of a tendency to appoint a study group and thereafter ignore it altogether. Certainly that has been the case in this administration. On the other hand, the two White House Task Forces have engaged only in surveying published work and rendering their own analysis and expert opinion. Although a great body of literature does exist, I do think that there should be a new effort to gather factual evidence regarding the question of economic concentration in the United States today.
More studying, however, ought not to hold up taking action when evidence is clear. I do not have a firm opinion whether this additional investigation can best be done by establishing a new commission, on the model of the TNEC, or by utilizing some one or more of the existing agencies on Congressional committees. I think that this is a subject for investigation and would certainly insist upon having current factual evidence on this subject gathered as a basis for decision and action by federal agencies.
(5) The question as to whether there should be a Federal Chartering Act for large corporations doing interstate business implies that the powers of the federal government to regulate corporate activity in interstate commerce are subject to legal limitations. I am not a lawyer, but it seems to me that the decisions of the Supreme Court in recent years have held that the federal government has all the authority that it needs to achieve any social objectives with respect to corporations engaged in interstate business. Is there a special purpose in having a corporation chartered by the federal government rather than by one of the states?
The important issues involve substantive matters with respect to conduct that is permitted, required or forbidden. The substantive laws are, of course, enacted by Congress and the issues have not concerned the power of the federal government to act but rather the desirability of proposed kinds of government action. I am not aware that any of the substantive problems will be simplified by the adoption of a Federal Chartering Act. If that should prove to be the case, and if it appeared that there were problems which required the federal chartering of large corporations, I would certainly support such a statute.
(6) In general, as indicated above, I believe that there must be limits set to the concentration of economic power and monopoly and that we must have sustained and vigorous enforcement of the antitrust laws in order to achieve this. However, the antitrust laws are not, by themselves, adequate to insure either the structure or the performance that we desire in our economy. There are many other provisions of law and government action that are also important. For example, the tax laws have done much to encourage mergers and acquisitions. It is quite possible that appropriate revisions in the tax law may be as effective, or more effective, than antitrust prosecution, in determining large corporate mergers.
Certainly corporations, as large aggregations of economic power, should have internal due process to protect the rights of their employees as well as their stockholders, and we should have more corporate democracy and greater legal concern for the rights of both employees and stockholders.
I am in favor of more and better health, safety and rate regulation, as well as more and better antitrust enforcement. Ultimately we must have a widespread recognition by the majority of corporate managers that business has a social responsibility, as well as the opportunity to earn a profit. We can accomplish much by laws and law enforcement. However, there are limitations to what can be accomplished by laws and law enforcement. In order to achieve the best of which we are capable, we must have leadership by the government together with an active sense of social accountability by responsible citizens and business leaders. Business, business leaders and other citizens must demonstrate a willingness to assume the full burdens of social responsibility in achieving the social goals which most of us share.
Sincerely,
HUBERT H. HUMPHREY.
U.S. SENATE,
Washington, D.C.,
February 29,1972.
Mr. RALPH NADER and Mr. MARK GREEN,
Corporate Accountability Research Group,
Washington, D.C.
DEAR RALPH AND MARK: Thank you very much for your letter inviting my views on the trend toward economic concentration in the United States.
I agree with both of your premises – that the accumulation of corporate power is among the most critical issues to be addressed in 1972, and that the American people deserve to know how the candidates stand, and what they propose to do, on issues of this kind. I am, therefore, presently preparing a detailed series of recommendations to deal with economic concentration. I hope you will regard what I have to say now as an interim response to your questions, and that you will also examine the more detailed recommendations I will be making in the weeks ahead.
(1) The Celler Bill to bring the anti-trust enforcement powers of the Justice Department and the Federal Trade Commission into a single unit would be a useful step, and I support it. However, this must be done under terms assuring that the new agency will be completely independent of political pressures.
I am opposed to a special anti-trust exemption for export firms, as Senators Magnuson and Inouye have proposed, first because it would deny protection to our own consumers and domestic competitors and, second, because it could create as many problems as it would solve with respect to foreign competition. We have sufficient experience to know that monopoly power tends to worsen problems of inefficiency.
I have joined as a cosponsor of S. 2614, and it has my full support.
(2) I do not. Shared monopoly is much more of a threat to competition than the conglomerate, and that, rather than artificial organizational distinctions, must be the ultimate test in determining whether anti-trust enforcement should be applied.
(3) Yes. Corporate secrecy should be sharply limited to cases in which the information bears on trade or marketing secrets and in which release would deny the company a competitive advantage it has earned. All of the subjects listed are appropriate for shareholder and public review. As you may know, I have introduced legislation requiring substantiation of advertising claims and product testing.
(4) Yes. Although there may be better vehicles than the Temporary National Economic Committee used in 1941, I would support a current thorough investigation of economic concentration and its implications.
(8) Federal chartering would be of limited value in the abstract, but it could serve as an important vehicle for enforcing public interest limitations on corporate activities. Unlike the extremely liberal acts of most states, a Federal Chartering Act would have to be carefully drawn to achieve those results. In addition, I would consider federal chartering as a supplement to state statutes, rather than a substitute, to permit state regulation as well.
(6) The trend toward economic concentration raises at least two issues for serious debate and action.
First is the decline in competition itself, and the harmful consequences which follow from that trend – rising prices, a lack of innovation, inefficiency, and industrial stagnation. We have long since made the value judgments on this issue, and we have chosen in favor of protecting free enterprise against monopoly and monopolistic practices. The priority need here, therefore, is for better enforcement of existing anti-trust laws and for new legislation, where necessary, to account for changes in the nature of the economy and for methods of bringing about the results of monopoly which could not have been contemplated during consideration of the original Sherman and Clayton Acts.
On the second issue we have really made no value judgments, except by default. I refer here to the role played by the large corporations in both defining and shaping our political and economic institutions, and it is an issue which should concern us regardless of whether or not competition can be preserved.
Government thus far has made no attempt to regulate or discourage bigness per se; in fact the most passionate arguments have been made against efforts of that kind.
But it seems to me that there are profoundly important reasons for at least examining what it means when just six firms receive one quarter of all manufacturing profits, or when 200 firms control two thirds of all industrial assets. As a practical matter, the decisions made in the board rooms of those companies can have as much influence on the country's directions, and perhaps more, than decisions made in the United States Congress or in the White House. Further, because of traditional methods of political financing, those companies have had the power to assure that their interests will be protected regardless of what else government does, and regardless of which party is in office. And protection of their interest can easily mean neglect of important public needs.
One way to respond to this growing corporate power is for the Federal government to use its own considerable influence as the country's biggest consumer, as has been done to some extent with respect to automobile safety standards. Federal procurement standards can certainly influence corporate priorities. They could also have a bearing on corporate size, and on such problems as runaway industries.
But in any case, considering the whole of our economy, I am not philosophically ready to say that such bigness is either inevitable or acceptable. I do not welcome the trend toward proportionately fewer independent entrepreneurs and proportionately more dependent employees because I think it has a negative impact not only on the goal of a free economy but also on the nature of our political and social systems.
On the specific points you raised:
(a) There is certainly room for improvement in the area of shareholder rights, including access to information of the kind discussed in an earlier question. At the same time, however, I do not see much of value to be gained by attempts to remake the corporate structure in the image of political democracy, in order to influence its decisions in favor of the public interest. Certainly the public interest should be raised in corporate decisions, and that is one reason for favoring the inclusion of public directors on corporate boards. But we have to recognize, too, that the essential purpose of these institutions, and the reason shareholders invest in them, is to make money. It is probably futile and also unreasonable to expect them to perform the government's role as well. If government offers profits in exchange for the production of napalm, for example, I think it misses the mark to assign the primary blame to the corporation rather than to the government. To cite another case, it is at best a chancy proposition to expect that an industry which pollutes air and water will voluntarily end those practices so long as they are permitted by government. We urgently need government that is more responsive in these areas, and I intend to press for that goal. It is more realistic and more attainable than seeking corporations which are willing to regulate themselves.
(b) It is ludicrous to expect maximum fines of $50,000 to deter crimes which can net millions of dollars. It makes far more sense to deny the violator any benefit than to levy fines of treble damages, or, where appropriate, to impose prison terms on top of economic penalties. The fact that prison terms have been given on only three occasions in the entire history of anti-trust enforcement clearly documents the need for more rigorous application of existing sanctions.
(c) The consolidation of anti-trust law enforcement agencies could accomplish a great deal within the context of existing law. Since the decision as to whether or not to prosecute these cases is so obviously susceptible to political pressures, such decisions should not be made by political appointees serving at the pleasure of the President.
(d) I agree on each point. The Occupational Health and Safety Act has been a severe disappointment thus far from the standpoint of all parties, and it needs both revision and more vigorous implementation. Similarly, existing regulation on rates is exceedingly uneven at best. In many cases it appears that regulatory commissions exist to ratify and legitimatize, rather than to prevent, excessive rates.
(e) This may be appropriate in some areas, particularly in the few instances – such as power generation and transmission – where competition is not a practical alternative, and where the public interest is deeply involved. I would, however, generally prefer steps to preserve and restore competition where that can be done.
(f) Such appeals should certainly be made, but they cannot effectively substitute for government steps to remove the profitability from or prohibit activities which are contrary to the public interest.
(g) The nation's labor unions have accomplished a great deal in this respect. I am still studying the question of whether it would be appropriate for the Federal government to adopt legislation extending similar rights to that proportion of the work force which is not unionized, and I have not yet reached a conclusion.
With every good wish, I am sincerely,
GEORGE MCGOvERN.
U.S. SENATE,
Washington, D.C.,
January 27, 1972.
Messrs. RALPH NADER and MARK GREEN,
Washington, D.C.
GENTLEMEN: Thank you for your letter of January 14 concerning economic concentration in the United States. I am glad you have raised these issues of paramount importance to our society. I, as well as you, feel that the fundamental question raised by this issue must be faced by our political leadership.
I have been concerned about these issues and my staff has been doing intensive research on them. I intend to speak to these issues in a thoughtful and comprehensive manner during the forthcoming campaign.
I also shall answer your detailed questions in the very near future, as soon as I can give some thought to them.
Sincerely yours,
EDMUND S. MUSKIE,
U.S. Senator.
U.S. SENATE, Washington, D.C.,
February 4, 1972.
Messrs. RALPH NADER and MARK GREEN,
GENTLEMEN: I would like to respond to the questions you raised in your letter of January 14 concerning my position on the concentration of industry and on antitrust policy. Because you have asked specific questions, I shall make my response to them as brief and to the point as possible.
As I noted to you in my interim response to your letter, I intend to discuss the question of competition and monopoly in the forthcoming campaign.
In answer to your specific questions:
1. Congress clearly needs to reexamine the antitrust laws in the light of present day realities and revise them as necessary to provide the tools to deal with the problems of economic concentration. Also enforcement of present antitrust laws must be more vigorous and more consistent. I feel that Section 2 of the Sherman Act and Section 5 of the Federal Trade Commission Act can be used effectively to combat the problem of concentration. I have under study proposals that will address the need of further legislation to deal with the problem of economic concentration.
2. I feel that prevailing antitrust doctrine permits suits against conglomerates as well as the so-called "shared monopolies" or oligopolies. The present action of the FTC against cereal manufacturers is a good example.
3. I agree that corporations should make public, subject to the limitations to which you refer in your question, all of the seven categories of information you list in your third question.
4. I very much favor a new TNEC investigation to focus public attention on the question of economic concentration.
5. If elected President, I would consider supporting a Federal Chartering Act.
You know of my commitment to increased corporate responsibility. The methods you suggest are useful tools toward that end, although public ownership may be appropriate in particular cases, like Comsat, but not in others.
Sincerely,
EDMUND S. MUSKIE,
U.S. Senator.
THE CITY OF NEW YORK,
OFFICE OF THE MAYOR,
New York City, N.Y,
March 7, 1972.
Messrs RALPH NADER and MARK GREEN,
Washington, D.C.
DEAR MESSRS. NADER AND GREEN: Enclosed is my response to your questionnaire on Corporate Power.
With best wishes.
Sincerely,
JOHN V. LINDSAY.
STATEMENT BY JOHN V. LINDSAY ON CORPORATE POWER AND ECONOMIC CONCENTRATION
During the six years I have served as Mayor of New York City, I have become increasingly aware of the costs of concentrated power in America – public and private. Unchecked private power, no less than arbitrary public power, seriously threatens a free society. The antidote for both involves diffusion of power, disclosure of information needed to make intelligent choices in the public and private marketplace, and access to decision-making by those most directly affected by it.
In the last five years New York City has pursued more vigorously than any government in the nation a campaign to protect the public and the consumer from unfair or unwarranted actions of business.
We have established the first Department of Consumer Affairs in the nation, which has enacted tough regulations to give consumers the information and tools needed to stand on an equal footing with industry. These include strong rules against deceptive advertising, the country's first municipal unit pricing law to enable consumers to shop comparatively, and an open-dating law to give consumers full information about food freshness.
We have established in that Department an Office of Consumer Advocacy, authorized to bring class actions on behalf of aggrieved consumers.
We have been the first City in the nation to establish a Consumer Protection Division within its Department. We have instituted over 20 anti-trust cases and secured millions of dollars of refunds for consumers, including $37 million from price-fixing drug companies.
We have brought suit against unjustified telephone rate increases and demanded that any such increases be linked to service.
We have established a cabinet-level committee, with full time staff, to monitor the City's public utilities and represent users before regulatory commissions, the first effort of its kind by any city in the nation.
We have brought consumer protection programs to the people through neighborhood offices to assist individual consumers in gaining redress from offending businesses.
We have scrutinized, scaled down, and, in some cases, rejected plans for construction of electric power plants, in order to preserve the quality of New York's environment.
We have cast the shares in New York City's pension fund on behalf of the corporate responsibility proposals submitted by Campaign GM, the only government in the nation to do so.
Many of the needed reforms of big business, however, are beyond the range of even the most active local government. The growing concentration of economic power has become one of the root problems of the American economy. In industry after industry, the basic decisions that shape our economic lives – decisions on wages, prices, product quality, product safety, and pollution – are made not by the anonymous forces of the marketplace, but by a handful of corporate executives.
Instead of acting as a check on big business, the federal government has too often acted as its silent partner. One by one, steps taken to control private power have been undermined and diluted. The anti-trust laws have never been systematically directed against "shared monopolies."
The securities acts of the New Deal have made corporations disclose information needed by investors, but have left vital public questions unanswered. The regulatory agencies have shielded some industries from competition rather than subordinating them to the public interest.
Last year, President Nixon spoke of a "New American Revolution" which turned out to be no more than a reshuffling of federal bureaucracies. The real need is for a declaration of independence – independence of government from corporate domination. It must include the following guarantees–
1. Corporate Information and Disclosure: The executives of some of our largest corporations have as much discretionary power over the lives, lungs, and pocketbooks of American citizens as do our Governors. Yet it is often impossible for public officials and private citizens to probe the soundness of those decisions because they are cloaked in secrecy. Corporations should, of course, be permitted to preserve legitimate trade secrets. However, they should be required to disclose information dealing with the public impact of their private decisions.
Specifically, I propose a Corporate Freedom of Information Act which would require an annual report to the public with the following information:
1. Profit and loss by product line;
2. An Environmental Impact Statement specifying the amounts and kinds of pollution discharged;
3. Job-related employee health and safety data;
4. Contents of each product as well as the unit price where appropriate (which would also be listed on the product container) ;
5. Results of product testing;
6. Factual substantiation of advertising claims;
7. Consumer complaints, recognized product hazards, and records of recoveries by consumers in defective product suits;
6. Corporate lobbying expenses and all contracts with government officials involved in decisions affecting the company.
In addition to opening up corporate decision-making to public scrutiny, government decision- making involving the regulation and supervision of business should be taken from behind closed doors. Anti-trust settlements, private rate-making, and the formulation of regulatory policies are particularly susceptible to political interference and should therefore be placed on the public record.
2. Anti-trust and deconcentration: The anti-trust laws must be made to apply to the giant "shared monopolies" – great corporations which co-ordinate their prices and thereby extract a premium from the consumer's dollar.
There is considerable support for the proposition that existing anti-trust laws can be effectively employed to proceed against oligopolistic industries. However, to the extent that existing legislation is inadequate, I support new legislation to give the government a clear mandate to proceed against "shared monopolies." I support the recommendations of the Neal Task Force on Anti-Trust, empaneled by President Johnson, that the growth of the handful of mammoth corporations which control some of our most critical industries should be stopped and their power reduced. I subscribe to the basic objectives of the Harris bill.
I also endorse the general approach of the proposals to shift the burden of justification to corporations proposing mergers with significant economic impact. This will provide a useful tool for anti-trust enforcement.
I am not convinced however, that removing enforcement power for structural antitrust offenses from the Justice Department and the FTC and establishing a new Office of Industrial Organization, will provide substantial benefits. The only guarantee of a vigorous anti-trust policy is a President thoroughly committed to one and a public that is aware of its stake in anti-trust enforcement. An anti-trust President will appoint an anti-trust Attorney-General and ensure an anti-trust Justice Department.
I oppose any effort to broaden the antitrust exemption for export cartels and, instead, call for repeal of the special provisions allowing such cartels.
The alarming concentration of two particular industries – energy and agriculture – deserve special attention. Oil, gas, coal and atomic fuel ownership is becoming increasingly mingled, under the benevolent gaze of the Federal Power Commission. New legislation may be necessary to divest this common ownership wherever feasible. The entry into agricultural production by giant, non-farm conglomerates threatens the existence of the small and efficient independent farm in America. I support the legislative proposals to prohibit vertical integration into agriculture by large, non-farm corporations and force the divestiture of existing agricultural holdings by these corporations.
The Nader questionnaire suggests a new set of national hearings modeled on the TNEC hearings on economic concentration held in the late 1930's. I propose a broader investigation, into the nature and extent of corporate power, not simply within particular industries but in the economy as a whole. The investigation should encompass:
1. The conglomerate merger movement;
2. Economic concentration through vertical and horizontal integration;
3. Economic effects of state and federal regulation in communications, power, oil, agriculture, shipping, ground transportation, airlines, professional regulation, and other fields;
4. Corporate involvement in government decision-making, including the extent of corporate lobbying and expenditures in political campaigns;
5. Tax, subsidy, and tariff concessions enjoyed by corporate interests.
Such hearings should be – as a matter of law – undertaken every ten years.
1. Regulation and subsidization: A Senate committee recently estimated that the federal government gives out $63 billion in subsidies every year – a major fraction to narrow business interests. These subsidization policies have often developed without extensive public debate and are often maintained long after their original purpose has been exhausted. As a result, they are often contradictory, dysfunctional, and counterproductive. Oil companies, shipping companies, agribusiness corporations, and trucking firms are among those who receive a generous boost from the American taxpayer.
Other regulatory policies have the effect of transferring money directly from the consumers’ pocketbook to the bank accounts of favored industries. Government-imposed oil import quotas nick every American family for over $100 a year. A government-sponsored price fix for truck transportation raises the cost of virtually everything we buy and use. Airline tickets cost more because the government fences out competition. Telephone charges increase constantly while a basic re-examination of the phone company by government gets bogged down in intragovernmental buck passing.
I propose the following:
The abolition of oil import quotas as recommended by President Nixon's own Task Force and vetoed by the White House.
A thorough and comprehensive review of federal subsidies – direct payment, tax loss, and in-kind services – to determine which are essentially private windfalls and must be abolished or modified.
Elimination of minimum rate regulation and entry controls for all forms of transportation – air and surface.
A strengthened FCC investigation of ATT rates with the full cooperation of all government agencies.
Tighter regulation of large, national corporations is imperative. Because of their pervasive impact on our lives and their deep involvement in government, they have become, in many cases, essentially "quasi-public" entities. Such regulation – over the social impact of corporate decisions, over the scope of shareholder rights, and over public access to corporate information – can only be accomplished on the federal level. It can be carried out either under the rubric of federal chartering or by special legislation, such as the Corporate Freedom of Information Act, the "shared monopoly" legislation and the other legislative proposals I have suggested. The practicality and value of federal chartering as the method to achieve tighter regulation deserves serious consideration.
Effective Consumer Remedies: As long as the marketplace is an ineffective mechanism for protecting the consumer, new methods must be devised to ensure that he will not be victimized by excessive corporate power. I support:
Legislation to facilitate the initiation of consumer class actions.
A Federal Consumer Protection Agency, with the power to intervene on behalf of consumers before all federal agencies and the ability to bring class actions on behalf of consumers.
The encouragement of public interest advocates by permitting the deductibility of contributions to such tax exempt entities and permitting public interest law firms to pursue litigative strategies without endangering their tax exempt status.
HOUSE OF REPRESENTATIVES,
Washington, D.C.,
February 18, 1972.
Mr. RALPH NADER and Mr. MARK GREEN, Washington, D.C.
DEAR MESSRS. NADER AND GREEN: I am pleased to respond to your letter of January 14, discussing corporate power and antitrust policy in America. I am, of course, very familiar with your work in this area and want to take this opportunity to note how great a debt is owed to you by the unemployed, the working man and the consumer of this nation.
My campaign is based on many of the assumptions which your previous work and your letter support. At the heart of my campaign is the conviction that the concentration of economic power and wealth in America is largely responsible for many of the internal social problems we face today, and that the Nixon Administration, so closely allied to and dependent on big business, is either unwilling or unable to act effectively for the public benefit.
My position papers will elaborate on this theme. In the enclosed copy of my economic policy position, I have called for increased corporate income taxes as part of major tax reform. The enclosed position paper on our criminal justice system calls for greater attention to white collar crime including price-fixing, perjury, bribery, and antitrust policy, and the environmental policy paper documents the servile knuckling under of the Nixon Administration on pollution matters. Other position papers on health and consumer affairs will similarly show how great is the influence of big business on all facets of American society and our foreign policy as well. Copies of these papers will be forwarded to you as soon as they are published.
I stand on such a platform with the knowledge that the leading candidates for the Democratic nomination, according to the polls, may well eventually find themselves beholden to wealthy, corporate contributors whose influence could remain considerable during their administrations. I offer my candidacy without the endorsements or support of the rich, feeling myself to speak out candidly and realistically on the key issues.
I address myself to your specific points, which rightly provide for the dispersal of economic power and greater governmental authority to force changes in the structure of our economic institutions.
(1) I support and will vote for Congressman Cellar's Corporation Control Act, H.R. 12004. I expect to oppose S. 2754. I most emphatically support Senator Harris' bill, S. 2614, and will work for the deconcentration of large shared monopolists.
(2) No.
(3) Yes.
(4) Yes.
(5) Yes.
(6) I support each and every one of the methods you suggest. May I note that I have doubts about the likely success of our "public enterprises" such as Comsat and Amtrak. The superior performance of the nationalized railroad system in Europe suggests that nationalization be seriously considered for such enterprises here. You have proposed, I believe, that corporate managers be made personally liable for corporate responsibility. To some extent, as you may know, this idea is already in practice in Italy where I understand owners and managers have been jailed for pollution offenses. I feel this proposal has real merit.
May I close with the comment that I am devoting my political career to turning this country around, to reversing its priorities and ending the unfairness, injustice and inequality which permeates our national life. In dedicating yourselves to the same cause, you give me the confidence to believe that this effort can succeed, despite the enormity of the task. I earnestly hope your letter and related activities will encourage more political figures to begin to challenge the political and economic power of the corporate state, and its ability to impose its will on the Nixon Administration and its distorted values on the American people.
Sincerely,
SHIRLEY CHISHOLM, Member of Congress.
SHIRLEY CHISHOLM SPEAKS OUT
PRESIDENTIAL CAMPAIGN POSITION PAPER NO. 4 – THE ECONOMY
The disastrous performance of the economy under the Nixon Administration can be largely understood as the result of the Big-Business orientation of this government and its utter disregard for critical problems of the consumer, the worker, and the unemployed poor. Millions of low-income Americans have deeply suffered from the Nixon Administration's callous handling of the economy. The Nixon recession has, of course, created tragic side effects – increased crime, increased welfare rolls, and widespread despair among the poor and unemployed of America over the moral intentions of this Administration.
More and more Americans now realize how close is the Nixon Administration's alliance with the huge corporate interests of this country. They remember clearly when, six days after his inauguration, President Nixon announced that the government would not intervene in price and wage discussions. They remember very clearly when the Administration calmly admitted that an increase in unemployment in America would be necessary to reduce inflation. The result of this passivity towards the rich, on the one hand, and this incomprehensible cold-bloodedness toward the worker and the poor on the other, has been the worst possible economic crisis – virtually complete economic stagnation, increased and continuing inflation, record-high unemployment, the first trade deficit since 1893, a huge balance of payments deficit, a world monetary crisis and forced devaluation of the dollar.
The economic record of this Administration is very clear, and its statistics are appalling for the average American taxpayer. The cost of living in America has risen under this Administration at a rate double that during the previous Administration. Food prices have skyrocketed, the cost of owning a home has soared, medical and hospital costs have shot beyond control. Local transit fees have gone up 18%. Basic commodities such as copper and steel mill products increased in the first year of this Administration to the percentage increase during the entire eight-year period from 1961-8.
Nixon policies have caused the largest increase in unemployment in over a decade, an increase from 3½ % to over 6% of the labor force, or 2 million jobless workers. The unemployment rate for construction workers has more than doubled. The unemployment rate for manufacturing employees has almost doubled. The number of workers forced to live on unemployment compensation has doubled. The unemployment rate for Black Americans has climbed to over 10%. Black teenage unemployment is at an intolerable 38%. There is little sign that this aloof Administration has any real concern for the personal impact of unemployment in terms of relatives out of work, or for its social impact in terms of Black and youth unemployment.
While prices have soared and the low-income worker has lost his job, the Nixon Administration's bungling has virtually halted this nation's economic growth. The industrial production index fell steadily during the past 3 years and the real Gross National Product declined. The cost of borrowing has risen at an alarming rate with interest rates soaring to the highest level in 100 years. Housing construction has fallen more than 20%. State and local governments have been unable to borrow for vital public projects, so they have had to close schools or saddle taxpayers with burdensome interest costs.
The Nixon recession represents the fourth major recession of the past 20 years – all having occurred under Republican Administrations. At the root of it all is the unique, privileged relationship which these Administrations have enjoyed with this nation's giant corporate and industrial interests, whose arrogant power has for too long been permitted to control Washington and thus, all our lives. In the time-honored Republican tradition of "what is good for General Motors is good for the country," this Administration refused to act when, at the outset of its first year in office, big business coolly and confidently proceeded to announce huge price increases on a wide range of products. As prices began to rise along the entire economic front, the Administration then began to cut back on government spending in an effort to cool the inflation.
Which were the federal programs to be cut? Federal assistance to libraries and related community services, education centers, aid for handicapped children, bilingual education, community health centers, medical libraries, and health research facilities, assistance to medical schools, and consumer assistance. Jobs in these vital fields were abolished, and people were thrown out of work. The Job Corps Program has been substantially reduced and the Office of Economic Opportunity is being gutted.
At the same time, this Administration energetically pushed those wasteful and enormously expensive programs benefitting its big business constituency – the ABM, SST, the C5A, Lockheed, highway construction, and unjustified subsidies for corporate farms.
By slashing domestic programs, by continuing the 10% income tax surcharge, and by its tight money policy of high interest rates, the Nixon Administration sacrificed the ambitions and energies of millions of low-income Americans, those who could least afford to bear the burden of such a sacrifice.
We had heard much in the 1968 campaign of Nixon promises of jobs and training for Black Americans, and of his "firm" support for "Black Capitalism." One look at the record and at the ghettos of America's cities shows the utter emptiness of those campaign promises. The only action by the Administration to promote "Black Capitalism" was the creation of an office of Minority Business Enterprise in the Commerce Department, an office with no authority to make loans or to fund or supervise programs. One after another of the helpless officials of this program have, not surprisingly, been forced to quit.
With the Nixon Administration having virtually destroyed any hope for improvement in the miserable economic position of the poor and the low-income worker, Congress acted. It passed a law to provide hundreds of thousands of immediate jobs to the unemployed – and the President vetoed it. Congress passed a bill providing Day-Care Centers for children, whose mothers could then join the work force, and the President vetoed it too.
The Administration then turned around and, showing where its real interests lay, acted to give billions of dollars of tax relief to business via the 10% investment credit, on tap of its $4 billion a year depreciation "reform." The President killed an effort to limit political campaign contributions by the rich, in full knowledge that he will count on these huge sums to buy his re-election next November. So this incredible story ends – with the chairman of the board of General Motors earning a salary of ¾ of a million dollars in 1971 at the same time that the unemployed in Seattle have so little to eat that Japan feels obligated to ship food to help them survive.
More and more thoughtful Americans, including a growing number of businessmen, have been shocked to learn of the economic inequality and exploitation which are destroying the very fabric of American society. They have came to realize that this is a government of, by, and for big business. The Nixon Cabinet and other top officials in the Administration represent one of the greatest concentrations of individual wealth in the world, and, as such, they predictably resisted for so long the use of the powers of the Presidency in curbing the inflationary pressures that have been destroying the value of the American dollar. This country can no longer stand the Nixon Administration's divisive and incompetent economic policies.
The economic philosophy of the Nixon Administration is based on the principle that the business of America is business. This being the case, the economic reality for the inexperienced and untrained Black man and the poor will be "last to be hired and first to be fired." This is an Administration which ignores the social and psychological costs of its policies to the common man. It is an empty shell, the tool of slick advertising techniques, the prisoner of narrow political allegiances, and the faithful servant of those privileged and selfish economic interests which systematically block every attempt to narrow the great gap between the rich and the poor in this country.
If this Administration again triumphs at the polls in November, we can expect further abuse of the poor. We may expect new regressive taxes, such as a national sales tax (value added), which will fall on those least able to afford. There will be substantial, new increases in defense spending, new space shuttle, and fat new contracts for the war industry. Those programs tending to eliminate some of the intolerable inequities of our economic system will continue to be vetoed. Funds for an adequate family assistance program will be cut and slashed.
Rebuilding and revitalizing the society after four traumatic years of the Nixon Administration depends more than anything else on meaningful changes in our economic priorities, and this, the Nixon Administration, by its very nature, can never accept. This Administration's values and sense of social relations constitute a fatal obstacle to any hopes for real social and economic progress in America. A government so heavily dependent on a small clique of corporate millionaires, industrial polluters, and privileged power brokers can never be seriously expected to concern itself with the daily problems of the poor, the working man, the unemployed, the black, the young, or the elderly pensioner.
No Administration can be so indissolubly connected to the interests of big business and special interests and still work to eliminate its crisis or credibility and intent among millions of Americans.
I believe that the future of our great society depends upon the ending of government by the conservative, repressive, and selfish. It depends upon the ending of the economic exploitation of the common man, black and white, by those privileged powers which now rule Washington.
My Administration will move emphatically to assist those Americans presently estranged from the American economic system. It will seek representation for those performing vital services, such as domestic workers, while gaining miserable compensation. It will devote itself to the creation of an ultimately more balanced economy and to the final elimination of the intolerable inequality and poverty which we should all be ashamed to admit exists in this, the wealthiest nation in the history of man. Some of the principal means which I support toward these ends are as follows:
1. Ending the billion dollar cost of U.S. military involvement in Indochina;
2. Creation of a Federal Family Assistance Program to replace the present Welfare Program and the Food Stamp Program which is a failure. The initial minimum guaranteed income for a family of four would be $6,400.
3. Tax Reform. The tax proposals of the Nixon Administration have consistently favored business over the low-income consumer. State, local, and city taxes are increasing while the progressive, graduated income tax has been reduced. My Tax Reform Program will reduce unfairness and special privilege in the following ways:
(A) Increased individual and corporate income (even a 1% increase would raise $6 billion) ;
(B) Elimination of the oil depletion allowance;
(C) Elimination of the capital gains tax;
(D) Elimination of regressive federal payroll taxes;
(E) Establishing of excess profits tax;
4. Reductions in Federal spending;
(A) Elimination of the huge federal subsidies paid to rich farmers not to grow crops;
(B) Reduced spending on federal highway construction;
(C) Reduced defense spending, including the closing of unnecessary military installations and the reduction of our troop levels abroad by 50%;
(D) Reduced spending on space programs and cancellation of the space shuttle project;
5. Expansion of job opportunities through creation of useful 500,000 public service jobs, with preference to the 350,000 unemployed veterans. Greater federal assistance for labor manpower training programs. Increased federal programs to put highly skilled unemployed engineers to work in mass transit, air and water pollution control programs; maintenance of some form of wage-price controls, particularly on rents;
6. Federal legislation to guarantee equal opportunities for women in attaining jobs, equal pay, and promotions.
7. Creation of a comprehensive national day-care system to permit more mothers to work.
8. Greater federal support for O.E.O., E.E.O.C., O.M.B.E., and S.B.A. – greater support for minority enterprise and employment.
Shirley Chisholm for President Headquarters,
20 E Street, N.W., Washington, D.C. 20001.
HOUSE OF REPRESENTATIVES,
Washington, D.C.,
January 24,1972.
Mr. RALPH NADER,
Washington, D.C.
DEAR RALPH: This is an initial response to your letter of January 14.
I would like to comment more fully in the future, but thought you might get at least a partial idea of my thinking from the enclosed speech I gave at Dartmouth.
Keep up the good work. Best regards,
PAUL N. MCCLOSKEY, Jr.
REMARKS BY CONGRESSMAN PAUL N. MCCLOSKEY, DARTMOUTH COLLEGE, NOVEMBER 29, 1971
I would like to discuss tonight two or three fundamental issues in the 1972 campaign. The issue is what John Gardner recently referred to as "The Dirty Little Secret That Everyone Knows" – the vast influence of money in politics.
The influence of money in political decision-making is not new – it has been with us since the inception of Democratic self-government. Under the Nixon administration, however, the threat of concentrated wealth, working secretly to influence governmental decision-making, has reached crisis proportions, and threatens the very existence of the nation itself.
Why should this be so? The reason lies in the fact that the faith of our people is the strength of our system of government. It is not just a desired aspect of our national stability and security – it is essential to that national stability and security.
We can never forget that we are a nation which operates by the consent of the governed. Our people must consent to file honest tax returns, consent to give honest judgment in jury cases, consent to serve in the armed services in time of conflict. That consent is and can only be based on faith in government – faith that the government is honest and faith that it is truthful.
What is the present measure of the faith of Americans that their government is honest, truthful and worthy of trust? A recent poll taken by the Center for Political Studies at the University of Michigan reflects specifically the trend which I believe all of us have instinctively sensed in recent years.
Since 1958, the faith and trust of Americans has been diminishing rapidly. During the past seven years, the number of Americans trusting the government to do what is right all or most of the time dropped from 63.7 % in 1964 to 37.7 % in 1970.
During the same time frame, the question was asked: "Would you say the government is pretty much run by a few big interests looking out for themselves or that it is run for the benefit of all the people?" The percentage of Americans believing the government was run for the benefit of all the people dropped from 63 % in 1964 to 41 % In 1970. By 1970, the second year of the Nixon administration, nearly half of the people interrogated stated their belief that the government was being run by a few big interests looking out for themselves.
There was ample reason for that belief in 1970. There is even clearer reason today. An increasing concentration of wealth working secretly to support political candidates and to influence government decisions is not only welcomed but encouraged by the Nixon administration. Let me define precisely the three evils which so endanger the nation.
First, the new concentration of wealth primarily in big business;
Second, the new importance of wealth in electoral politics;
Third, the administration's encouragement of secrecy in the application of that wealth in political campaigns and in governmental decision-making.
With respect to the new concentration of wealth, there can be no question. Attorney General Mitchell recognized the problem over two years ago. By June 1969, 200 large corporations controlled nearly 60.7% of the manufacturing assets of the nation. Corporate mergers had more than doubled in the previous year. The Attorney General said in a speech in June 1969, "The danger that this super concentration represents to our. . . political . . . structure cannot be overestimated."
He went on to mention "the unacceptable probability that the nation's manufacturing and financial assets will continue to be concentrated in the hands of fewer and fewer people," – the very evil that the Sherman Act, the Clayton Act and other antitrust and anti-price-fixing laws were designed to combat.
What did the Attorney General mean when he used the words "danger to our political system" by the concentration of economic power? In effect, he was recognizing the basic fact that the concentration of economic power also meant the concentration of political power.
The whole thrust of our constitutional form of government was to restrain the accumulation of power. James Madison had said "the accumulation of all power, legislative, executive and judicial, in the same hands may justly be pronounced the very definition of tyranny. An accumulation of economic power sufficient to control political decisions can likewise create tyranny.
Senator Kefauver once said: "Through monopolistic mergers the people are losing power to direct their own economic welfare. When they lose the power to direct their economic welfare they also lose the means to direct their political future.
Why, then, has the Nixon administration failed to provide leadership to reduce this increasing concentration of wealth and power?
The answer may lie in the second evil. The influence of big money on the political process. This Administration is the primary beneficiary of the economic power of big business. This is the Administration which has placed primary emphasis on the profits of big business as the goal of our economy on the theory that those profits will ultimately "trickle down to the public at large."
This Administration resurrected the SST after it had been abandoned by the Johnson Administration, supported the bail-out of the Penn-Central Railroad and urged the granting cf a federal loan guarantee to Lockheed under conditions no small business in America could have hoped to obtain.
This administration's chief fund raiser, Maurice Stans, was named Secretary of Commerce. Now, for the next campaign, it is reported that he will resign his post in order to again raise funds chiefly from the big businessmen of America.
Who besides big businessmen can afford to attend $500 per plate dinners? The $5 million dollars raised from those nation-wide dinners several weeks ago was raised almost entirely from big businessmen. In Houston, Texas, nearly all of the 400 people in attendance (raising $200,000 for the President's reelection) were reported to be oil men. What does this bode for the hope of ending the oil import quota system as recommended by the President's task force over two years ago?
Three years ago, the Republican party was able to raise twice as much money from businessmen as was the Democratic party from all sources. As the administration in power, the Republican leadership is in a beautiful position to cash in on its enthusiasm for big business. A concentration of wealth unaccompanied by campaign spending and contribution reform merely makes it that much easier to raise more money than the opposition. The White House just announced that the President will veto the proposed public financing bill just passed by the Senate. Getting $1.00 from each of 20,000,000 is far less beneficial than getting $20,000,000 from a few thousand corporate executives and oil men, particularly when the opposing party cannot hope to raise equivalent sums.
This administration has not hesitated to respond swiftly and helpfully to those who make large campaign contributions.
Consider the great milk boondoggle of last spring finally disclosed in the newspapers only a few weeks ago.
The government has long had the power to guarantee the price of manufactured milk. Last March that guarantee was $4.66 per hundred weight. The dairy farmer leaders came to Washington to seek an increase. Secretary of Agriculture Hardin denied the increase, finding no evidence to support it.
The dairy farmers, then, ten days later, on March 12, paid $10,000 to four Republican campaign committees. The next day, March 23, the dairy farmer leaders were granted an audience with the President himself at the White House.
The following day, March 24, the dairy farmers paid $25,000 to ten Republican committees for the re-election of the President. Lo and behold, the following day, March 25, Secretary Hardin announced that he would grant a price increase of 27 cents per hundred weight on the basis that "continuing research" had turned up new information on rising costs.
Ten days later, April 5, $45,000 was given to nine additional committees. And by August 20, a total of $170,000 had been given to at least 68 committees, most if not all of them based in Washington, D.C. where a loophole in the law permits them to go unrecorded as to the source and amount.
On September 3, 40,000 dairy farmers met for the biggest and perhaps happiest dinner in the history of Chicago. The President dropped by to pay his respects, and no wonder.
The importance of money to politics can be easily recognized when we look at last year's Senate races in seven large states. Fifteen candidates (New York had three) ran in those seven States.
Eleven of the candidates were millionaires, and all seven of the winners were millionaires.
The cost of campaigning has skyrocketed. No candidate for public office today has even the remotest chance of winning unless he has either immense personal wealth or wealthy backers.
This is a tragedy for the democratic process. Only 2½% of our people earned over $25,000 per year in 1969. Who, earning less than that sum, can afford more than a few dollars for the candidate of his or her choice? The importance of campaign financing is threatening to subvert the whole process of democracy. The concentration of the wealth necessary to campaign financing threatens to subvert our whole concept of a government of separated powers and to destroy that most priceless asset of all, our faith that our government is not controlled by a few big financial interests.
Let me give you one additional example of the power of wealth and the power of generous campaign contributions to President Nixon. This example came to light only recently in testimony before my own House subcommittee on Conservation and Natural Resources.
ARMCO Steel was the 69th largest corporation in the United States in 1970. Its corporate officers were reported by the Washington Star to have given $14,000 to the Nixon campaign.
ARMCO Steel has also been one of the worst polluters of the Houston ship channel. Its Houston plant for years has been putting nearly a half ton of cyanide per day into the ship channel. Cyanide is one of the most toxic substances known to man.
On December 9, 1970, the EPA filed an action to force a termination of the cyanide discharge after all negotiations with the company had failed.
On September 17, 1971, the federal district judge issued an order requiring that the discharge of cyanide cease forthwith.
On September 28, the President of ARMCO, Mr. C. William Verity, wrote a letter to President Nixon at the White House, asking him to look into the Court's decision. On September 30, Mr. Verity was reported to have commented that Secretary of the Treasury Connally had been contacted and that through his influence, high level consultations were going on at that moment between the Justice Department and the EPA concerning the decision.
On October 4, the Houston Business Journal quoted Verity as saying, "I pray every night for John Connally ... if I could only have another son, his name would be John Connally Verity. At last there is reality in Washington and it changes the entire outlook for the steel industry and most gratefully ARMCO."
The letter Mr. Verity had sent to the President and the efforts of Mr. Connally were apparently successful, because a few days later on November 4, 1971, the EPA and the Justice Department stipulated to a modification of the Court's judgment of September 17, permitting ARMCO to continue the discharge of cyanide into July 1, 1972.
The seriousness of this set of circumstances lies in the fact that after a lawsuit was in progress, after a judgment was obtained, the posture of the prosecution was relaxed not by the arguments of counsel for ARMCO, communicated to the government attorneys and the court, but by the direct intervention by the steel company president with the President of the United States. This sort of conduct is reprehensible. Any ordinary litigant who sought personally to stop a lawsuit by the Justice Department would be condemned or prosecuted.
Only recently, a Justice Department attorney, Richard Kleindienst, testified against an aide of Senator Fong who had suggested that a large campaign contribution might be forthcoming if a particular prosecution against a constituent would be halted. This aide was convicted.
Since the inception of this country, attempts to interfere with the prosecution of the litigation by the parties themselves have been considered a violation of law and reprehensible. President Nixon is a lawyer. Nevertheless, his personal assistant Peter Flanigan admittedly contacted EPA and the Justice Department after the President received Mr. Verity's letter.
Mr. Flanigan is no stranger to big business. He was also a fund raiser for Mr. Nixon's 1968 campaign as the President of the Barracuda Tanker Corporation, owner of the Liberian flag tanker Sansinena. Under United States law, the tanker was ineligible for U.S. coastal shipping unless a waiver could be granted by the Treasury Department. Being ineligible for such trade, the Sansinena was worth an estimated $4.5 million; if the waiver could be granted, it would be perhaps worth $11 million.
For several years, Mr. Fred Hartley, President of the Union Oil Company, had reportedly been trying to obtain a waiver for the Sansinena. The waiver could be not be granted so long as U.S. tankers were available for the coastal trade. On February 25, 1970, Flanigan's 300 shares of stock in Barracuda were sold to others in the Barracuda venture. On March 2, the Treasury granted an unusually broad waiver for the ship, on the ground that the national security required it.
Senator Joseph Tydings disclosed these facts in a speech to the Senate on March 9th, stating that by a stroke of the pen, the government had made $6.5 million for Barracuda. My own Committee on Merchant Marine & Fisheries prepared to hold a Congressional inquiry on the subject, whereupon the White House called Treasury officials to the White House on the evening of March 9. The next day, Secretary of the Treasury David Kennedy announced that the waiver would be cancelled. The national security apparently no longer required the Sansinena for the coastal shipping of oil.
These examples merely illustrate the power of wealth applied to the governmental decision- making process.
By far the worst evil we face today is the secrecy of large financial contributions which are permitted by loopholes in the law. The Corrupt Practices Act passed in 1925 purports to limit both campaign contributions and spending. Yet, when I commenced this campaign for President, I found that the law has loopholes that a truck could be driven through. The law does not apply to primaries, for example. As mentioned earlier, it does not apply to committees based in Washington, D.C. One wealthy individual can give millions of dollars if he wishes, merely by limiting his gifts to a $5,000 contribution to separate committees. To receive the $170,000 kindness of the milk producers, for example, the Republican National Committee merely set up a whole series of Washington committees, with names like "The Committee for the American Dream," or "Committee for Sound Economy." But for the error of the attorney who thought the law applied, we might never have had the chronological relationship between the campaign contributions to the President and the Administration's change of heart on milk prices.
A funny occurrence in Chicago was disclosed recently. Vice President Agnew attended a $1,000 per plate dinner in Chicago in 1968. False listings of campaign contributors of at least $22,000 were then filed with the Clerk of the House of Representatives. Let me quote from the report of James R. Polk, a former Associated Press reporter who investigated 1968 campaign spending under a grant from the Fund For Investigative Journalism:
"Eighteen donors listed for $22,000 in the Victory '68 record confirmed in interviews that they didn't give the money. Bunched among the false listings were names of a dozen more persons who refused to answer questions, didn't remember, couldn't be found, or died."
Who did give the $22,000 in question remains a mystery. Chances are that they were big businessmen of considerable wealth. The examples of secrecy in campaign contributions are legion. Within six months of my own first election to Congress in 1967, lobbyists from three large industries or associations of industries dropped by my Congressional office to pay their respects and leave me an envelope filled with five or ten $100 bills. Being new to the business, I politely inquired of each one as to the names and addresses of the donors – the gift bearer
in each case indicated that the names would be furnished later, and in due course I received a list of names of people from Omaha to Baton Rouge who had each given me $100. I had the distinct impression my inquiry was not the usual practice.
In 1968, 181 Members of Congress filed statements that they had received no contributions and had spent no money on their campaign. Committees had done it for them.
The evil lies not in the gift, but in its secrecy.
I raise this issue tonight because the President has made it clear that he intends to veto the public campaign financing bill just passed by the Senate as he did the spending limitation bill a year ago. And only a few days ago his Congressional Liaison representative dropped by the Republican cloakroom in the House of Representatives to let it be known that the White House would not be unhappy if the campaign reform legislation now before the House is killed altogether this year.
This is a key issue to the future of America and the restoration of both the honesty and openness of government as well as public faith in government.
The answers are relatively simple. We need a new law which absolutely limits individual contributions, which provides a tax write-off for small contributions, which reasonably limits expenditures in the various media, which grants a reasonable chance for equal debate time to all candidates at the lowest available rates, and above all else requires complete disclosure of contributions and adequate enforcement powers and procedures. Many of these provisions are included in the Senate bill which the President has said he will veto and in the legislation now before Congress. As compared with the present system of secrecy and corruption, I strongly favor the Senate bill. If the President continues to oppose campaign contribution disclosure and reform, I believe he should be defeated on that basis alone in the March 7th primary. I hope, for the good of the country, he will withdraw his opposition.
OFFICE OF THE MAYOR,
Los Angeles, Calif.,
February 4, 1972.
Messrs. RALPH NADER AND MARK GREEN,
Washington, D.C.
GENTLEMEN: I welcome the opportunity you have given me to comment on the very important issue of corporate power and antitrust policy. Before responding to the specific issues raised by you in your letter of January 14, 1972, I would like to point out that our free enterprise system is one of the primary reasons that this country is so great. We must work hard to maintain our free enterprise system and instruct our children in its many merits and its relationship to our personal freedoms and liberties. We all have a stake in maintaining the free enterprise system and must not abuse it as is being done by the present administration which is using our credit rating based upon the productivity of our economy to borrow excessively thus producing unprecedented federal deficits and debt increases.
I favor competition as necessary to the survival and proper functioning of the free enterprise system and for the protection of the nation's consumers. I am not anti-business, large or small, but big power is subject to big abuse making necessary government intervention on behalf of the consumer-citizen. The "cue" or "follow the leader" system is obviously used by some to evade anti-price fixing statutes. When detected, this practice must be dealt with promptly. Also, when management representing a monopoly bargains with a monopolistic union, the consumer can be the victim of unfair prices, especially where foreign competition is not a factor in pricing policies.
Now, as to the specific issues raised by you: I favor vigorous enforcement of existing laws against monopolistic practices without fear or favor. I also favor legislation to insure competition, thus strengthening our free enterprise system and giving reasonable protection to the consumer.
As regards corporate secrecy, I feel that corporations should be required to disclose most of the information you mention. Reporting of such things as profit and loss by product line, pollution emissions by plant facilities, and documentation of consumer complaints, appear to be reasonable requirements. However, I do not feel that we should so burden industry with disclosure requirements as to unreasonably hinder their operations and raise the costs of production which would then have to be passed on to the consumer. These matters should be based on reason and not emotion.
Your suggestion that a new investigation be made similar to that conducted by the Temporary National Economic Committee (TNEC) to probe and publicize economic concentration in America may have some merit. You will retell that the original TNEC was formed by Congressional resolution prior to World War II (1938) to study the monopoly and the concentration of economic power in the United States. This Committee published some important monographs and had its effect on the American Economic System. Before another such a committee is formed, however, we should make a determination that existing agencies cannot and are not adequately. performing this function. Also, I would not want to see this type of activity degenerate into a "witch hunt" as is too often the case.
If I were elected President, I would definitely consider supporting a Federal Chartering Act requiring large corporations doing interstate business to secure their corporate charters from the federal government, rather than from the individual states as they now do. This would go a long way in securing needed conformity in reporting and accountability, and corporations would no longer find it possible to easily "escape" these requirements by obtaining their charters in one state as opposed to another.
Many of my general views regarding problems and solutions to corporate power and monopoly are outlined above. However, here again I feel that we must proceed in a reasonable manner. I cannot quarrel with many of the methods you propose for achieving corporate accountability but I do feel that as much as possible we should attempt to get voluntary compliance from industry on these matters. When that falls, of course, we must go to the courts. I do not believe in harassment of business or exaggeration of faults.
Thank you for this opportunity to express some of my views on this subject.
Very truly yours,
SAM YORTY, Mayor.
WASHINGTON, D.C.,
January 24, 1972.
Mr. RALPH NADER,
Washington, D.C.
DEAR RALPH: I have received your letter of the 14th including the questionnaire.
I am glad that you are raising this question. The corporation has been a matter of concern to me in public speeches since at least 1960 when I began to talk about its arbitrary power and to use the term corporate feudalism as descriptive of the institutionalization and the economic and political independence of the large corporations.
I have watched for 20 years the evidence of the ineffectiveness of our anti-trust laws. Whereas I do not despair of their having some effect, I am not very encouraged and am of the opinion that more direct regulation of the large corporations that are non competitive, and also of the large ones which have the appearance of competition such as the automobile industry, is the only available effective way of proceeding. I am not convinced that having 20 automobile companies rather than four major ones would move us any closer to the solution of the problem of the automobile.
On most of the issues you have raised, I have been making the record clear for 20 years.
I do think we should move toward federal chartering of corporations.
I am in favor of more corporate democracy and regulation in all critical areas, and possibly a public member on the board of corporations above a determined size.
With best wishes. Sincerely yours,
EUGENE J. MCCARTHY.
THE WALLACE CAMPAIGN,
Montgomery, Ala.,
March 6, 1972.
Mr. MARK GREEN,
Washington, D.C.
DEAR MARK: Due to our extremely heavy mail load, we received your letter only this morning.
Unfortunately, the Governor has been on a tour in Florida and we would not have been able to get to him by your deadline, anyway. Unlike other candidates, Governor Wallace answers these type questions himself. He does not allow anyone else to speak for him. He feels this is the only honest way to answer questions.
Please keep in touch with us and call us anytime.
We certainly appreciate your interest. Very truly yours,
JOE AZBELL, Director of Communications.