We the Corporations

by Adam Winkler

  Nader became America’s most famous anticorporate crusader thanks to the bumbling way that General Motors, America’s biggest car company, tried to silence him. Nader had first written about automobile safety in a student paper at Harvard Law School, which he expanded into a book after graduation. Published by a startup publisher in 1965, Unsafe at Any Speed was a wonky policy book filled with data about what Nader called the “designed-in dangers” of American cars. The book was an exhaustive muckraking critique of one of the nation’s iconic commercial products. It showed that carmakers spent millions of dollars on comfort and styling but did little to improve car safety, despite nearly 40,000 fatalities and 1.5 million injuries per year. Most damning was Nader’s accusation that executives and engineers of the car companies knew of their cars’ design flaws and yet, driven by profit, failed to correct them.10

  One of Nader’s featured examples was the Corvair, a popular sports car manufactured in the 1960s by Chevrolet, a division of GM. After Nader’s book was published, the carmaker hired a private detective agency headed by Vincent Gillen, a former FBI agent, to find dirt on Nader, who was preparing to testify before a Senate subcommittee on automobile safety. In 1966, Gillen sent out agents to look into Nader’s personal life, to see if the crusader was into “women, boys, etc.,” and to determine if he liked “drinking, dope” or anything else scandalous.11 When Morton Mintz of the Washington Post reported that Nader was being tailed, Senator Abraham Ribicoff, the chairman of the Senate subcommittee, was outraged at the apparent harassment of a congressional witness. He demanded GM president James Roche appear before the Senate, where the humiliated car executive was forced to apologize repeatedly.12

  The incident made Nader famous overnight, much as Charles Evans Hughes was catapulted into the public limelight by George Perkins’s revelations of corporate campaign contributions in the Great Wall Street Scandal of 1905. Sales of Nader’s book skyrocketed, and Congress soon after passed two major auto safety laws. The Washington Post called Nader the “one-man lobby for the public” who had “prevailed over the nation’s most powerful industry.” Nader, however, would soon have help; this being the apex of political activism in the 1960s, young adults from around the country volunteered to work for him. Called “Nader’s Raiders,” they were charged with exposing the harm and corruption of other industries as Nader had done for automobiles: collect reams of data, write detailed investigative reports, and advocate for reform. In the ensuing years, Nader’s acolytes published devastating indictments of the corporations that polluted the air, dirtied the water, and exposed people to deadly chemicals. Not surprisingly, then, Powell’s Memorandum identified Nader as “the single most effective antagonist of American business.”13

  Under the title “Attack on American Free Enterprise System,” the Powell Memorandum insisted that “no thoughtful person can question” whether capitalism was under siege from within. The “extremists of the left,” including “Communists, New Leftists and other revolutionaries” in the universities and the media were “waging ideological warfare against the enterprise system.” To counter Nader and his powerful reform movement, the Powell Memorandum advised that “it is essential that spokesmen for the enterprise system—at all levels and at every opportunity—be far more aggressive than in the past.” Like the Southern Pacific Railroad back in the 1880s, corporate America had to assert itself aggressively and creatively against populist reform. In Orwellian tones, Powell wrote that the battle should be waged on all fronts: liberal professors teaching the youth to “despise the American political and economic system” must be challenged; textbooks “should be kept under constant surveillance”; the “national television networks should be monitored” and “equal time” for pro-business views demanded; and “scholarly articles” on the benefits of capitalism should be produced and disseminated widely to shape Americans’ attitudes.

  RALPH NADER CAME TO REPRESENT THE MOVEMENT TO REFORM AMERICAN BUSINESS IN THE 1960S AND 1970S.

  To win this war of ideas required business to greatly enhance its political organization and advocacy. Corporations “must learn the lesson learned by labor and other self-interested groups. This is the lesson that political power is necessary; that such power must be assiduously cultivated.” Too often, businessmen were reluctant to speak out on policy, fearing their companies would be tainted by the perception of partisanship. When they did engage the public, they tended to misplay their hands—as Powell’s friend Joe Cullman knew all too well.

  LEWIS POWELL’S CHILDHOOD FRIEND AND PHILIP MORRIS CEO, JOSEPH CULLMAN, BECAME A LEADING, IF INEFFECTIVE, SPOKESPERSON FOR TOBACCO COMPANIES.

  As a spokesperson for the tobacco industry, Cullman was one of the rare businessmen of his era who had long been willing to participate in public debates over policy. He testified on Capitol Hill against health warning labels on cigarette packages and took to the airwaves to defend tobacco. He had the passion but not the judgment to be an effective messenger. In January 1971, only months before Powell wrote his memorandum, Cullman had appeared on the national television news program Face the Nation and insisted, contrary to all evidence, that cigarettes were neither addictive nor a health hazard. When one of the show’s panelists asked him about a study finding that smoking during pregnancy led to reduced birth weight, a tone-deaf Cullman replied, “Some women would prefer having smaller babies.”14

  Powell was certain corporate America could do much better. Businessmen had to recognize their shared interest in defending the free enterprise system, rather than just fighting for their own company or industry. “Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.” Joe Cullman should not be the only one on television arguing against tobacco regulation; every businessman had an interest in curtailing burdensome government mandates, no matter which industry was targeted this time around.

  One battlefront Powell believed to be especially important was the courts. With the Warren court still fresh in memory, Powell reminded readers of his memorandum, “Under our constitutional system, especially with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic and political change.” Nader and the organizations on the left understood this. “Labor unions, civil rights groups and now the public interest law firms are extremely active in the judicial arena,” the memorandum explained, “often at business’ expense.” The courts were a “neglected opportunity” for business corporations to assert their own rights.

  Sydnor was thrilled with Powell’s memo. In a thank-you note, Sydnor complimented Powell for his “excellent presentation of the vitally important case for American Business to go on the offensive after such a long period of inaction and indecision.” In a sign of how seriously Powell and Sydnor took the memo and its goals, the men soon after drove two hours from Richmond to Washington, DC, to present the plan in person to a vice president of the US Chamber of Commerce. They hoped the memorandum might make a difference, and they likely expected the Chamber to take up at least some of Powell’s recommendations. What they could not have imagined, however, was how influential the Powell Memorandum would turn out to be for both the Chamber and the country.15

  * * *

  IN 1969, AT THE HEIGHT of Ralph Nader’s popularity, his father Nathra, a Lebanese immigrant, was asked about the activist’s exceptional record of defeating America’s most powerful corporations. “We’re very proud of Ralph,” Nathra answered. Yet not even a populist icon featured on the cover of Time and Newsweek could skirt the universal lament of parents: “But we wish he would get married soon.”16

  The consumer crusader’s only marriages would be professional—and none was more successful than the one to Alan Morrison, the intense, steely-eyed New York lawyer with whom Nader cofounded Public Citizen’s liti
gation arm, the Public Citizen Litigation Group, in 1972. Morrison was an unabashed liberal who had become a lawyer so he could work to improve society. The “big guys didn’t need representation,” Morrison explained. “The little guys did.” When Morrison was working as a government attorney, one of his interns, who had been a Nader’s Raider the summer before, introduced the two Harvard Law graduates.17

  Nader brought Morrison into Public Citizen to set up a litigation shop. Reform through legislation was valuable, but Nader wanted Public Citizen to pursue lawsuits to protect the interests of consumers too. Often the law was already on the side of consumers but simply was not being properly enforced. Government agencies had the power but, due to industry capture or influence, not the will. Nader sought out what he called “a corps of . . . public-interest lawyers” who could pursue a case “year after dreary year as it proceeds through the regulatory agencies, the Congress, the courts, the executive branch bureaucracy.” The Public Citizen Litigation Group would serve in that role and find considerable success—even though one of Nader and Morrison’s greatest triumphs would redound largely to the benefit of big business.18

  At the top of Morrison’s agenda when he joined Public Citizen was to free up competition in the professions. Lawyers, doctors, opticians, accountants, and other professionals operated under long-standing rules that restricted their ability to advertise, limited how they could solicit clients, or required them to charge minimum fees. Although the rules were justified as measures to protect consumers, Morrison believed they did the opposite. Adopted by state licensing authorities and professional associations, such rules resulted in artificially high prices and made it harder for the poor to find adequate services. Instead of helping consumers, the rules, according to Morrison, served the interests of “lawyers who already had clients and who were probably the ones who wrote the rules.”19

  Lynn Jordan was one of the consumers hurt by the rules. A middle-class woman in suburban Virginia, Jordan suffered long-term health problems that eventually resulted in a hysterectomy. Her diet of prescription medicines was expensive, so she set out to find the best prices from the local pharmacies. The information was difficult to come by. Pharmacists in Virginia, like those of thirty-three other states, were prohibited from advertising the prices of prescription drugs. Many refused even to give customers prices over the telephone for fear of having their licenses revoked by the Virginia State Board of Pharmacy for “unprofessional conduct.” Jordan was not deterred. It was the age of Nader and everywhere around her the law was bending toward the protection of consumers and away from corporate interests. Together with a group of like-minded amateur consumer activists, Jordan organized a survey of prescription drug prices in northern Virginia and Richmond. They found that prices for the same dosage of medicine varied wildly. For forty tetracycline tablets, a patient could pay $1.20 in one pharmacy and $9.00 in another—a difference of almost 650 percent. Without going from pharmacy to pharmacy, patients would never know there was a cheaper alternative.20

  ALAN MORRISON (LEFT), WHO LED RALPH NADER’S CONSUMER ADVOCACY LITIGATION GROUP, DEVELOPED AN INNOVATIVE AND INFLUENTIAL THEORY OF FREE SPEECH THAT ULTIMATELY HELPED COMMERCIAL SPEAKERS.

  Morrison learned of Jordan’s survey of drug prices from a Naderite working across the hall from his office. Although Morrison’s focus had been on challenging restrictions on advertising by lawyers, he quickly saw that Virginia’s ban on advertising drug prices had several advantages as a test case. Drug prices were objective and verifiable, unlike subjective claims about the quality of a lawyer. “We knew that attacking lawyer advertising rules would be difficult, not just because they existed in every state, but also because they were so universally accepted,” Morrison remembered. And the judges who would be asked to rule on their lawfulness were chosen from among the “elite lawyers” who benefited the most from the advertising bans. Those judges, however, would not have the same stake in preserving restrictions on pharmacists.21

  Morrison still had to discover a viable legal theory to support his challenge to the restrictions on drug prices. Advertising was considered “commercial speech,” which the Supreme Court had said was not protected by the First Amendment in a 1942 case, Valentine v. Chrestensen. A natural showman, Francis Chrestensen owned a decommissioned US Navy submarine that he would dock in ports along the Atlantic coast, charging visitors 25¢ a tour. When war broke out in Europe, he sought to capitalize on the news by docking his submarine, dubbed the Fighting Monster, at a city-owned pier in lower Manhattan within sight of the Statue of Liberty. The city refused to grant him permission to use its pier, forcing Chrestensen to dock at an out-of-the-way spot up the East River. Without views of Lady Liberty, Chrestensen needed to stir up business, so he printed out handbills touting his Fighting Monster and offering visitors the chance to see “the only submarine used for exhibition purposes in the world.” The handbills, however, were illegal. New York police informed Chrestensen that distributing commercial handbills was prohibited by the city’s antilitter laws.22

  Chrestensen was not one to be easily deterred, as his ex-wife discovered a few years before the dispute with New York police. Along with a local constable in Montreal, she had tried to serve Chrestensen with legal papers relating to their divorce, only to see the crafty captain retreat to his submarine, raise the Stars and Stripes, and warn the constable that any trespass would amount to a hostile invasion of American territory. As the flustered constable tried to figure out what to do, Chrestensen set back out to sea on the Fighting Monster, leaving his wife ashore to complain to reporters, “Never let your husband buy a submarine.” In New York, that same creative streak led Chrestensen to seize upon an exception in the city’s antilitter laws that permitted handbills containing political protests. On the flip side of his advertisements, he printed up a diatribe accusing local officials of acting “in a dictatorial manner” by refusing to allow him to moor at the city-owned pier. The city’s police commissioner, Lewis J. Valentine, known to be a “stern” and “fearless police man, who hated dishonesty,” was not amused and warned Chrestensen to stop distributing the handbills or face arrest. Chrestensen sued, claiming infringement of his right to freedom of speech.23

  Like the police commissioner, the justices of the Supreme Court had little patience for Chrestensen’s antics. In a terse opinion only a few paragraphs long, the court dismissed the entrepreneur’s novel claim. “This court has unequivocally held that the streets are proper places for the exercise of the freedom of communicating information and disseminating opinion,” the court wrote. “We are equally clear that the Constitution imposes no such restraint on government as respects purely commercial advertising.” Unlike Huey Long’s tax on the Louisiana newspapers, the antilitter law was not designed to persecute political dissenters. Although the court offered little explanation of why commercial speech was categorically excluded from the First Amendment, Chrestensen and his Fighting Monster had nonetheless met their match.24

  Commercial speech—the advertising of drug prices—was precisely what Alan Morrison wanted the court to protect. And even if the court back in 1942 had not offered a thorough justification for excluding commercial speech from the First Amendment, Valentine remained good law and sound arguments could be made to support it. One of the traditional justifications for free speech, for example, was that it served democracy by enabling people to become informed citizens through the open discussion of ideas; advertising for commercial products, however, did not promote political self-governance in any obvious way. Another justification for free speech rested on self-realization, positing that individual expression helped people to develop their faculties and their identities. Most commercial speakers, however, were corporations or businesses for which advertising was simply about maximizing profit. Nevertheless, Nader had told Morrison “to test the outer limits of the law,” so in July of 1973 the Public Citizen Litigation Group filed suit in federal court against the Virginia Board of Pharmacy on behalf of L
ynn Jordan and others.25

  There was one aspect of Morrison’s case that would prove especially fateful: his plaintiffs were pharmacy customers, not pharmacists. Public Citizen’s mission was to help consumers, not the businesses that sold to them. Yet this posed a dilemma for Morrison. Consumers like Lynn Jordan were not being denied the right to speak in any way. The law did nothing to stop Jordan from paying to take out an ad in the newspaper listing the price of drugs. It was a professional regulation that applied only to licensed pharmacists, and none of Morrison’s plaintiffs were licensed pharmacists.

  Like the crafty Captain Chrestensen, Morrison came up with an innovative solution. He would frame the case around the rights of listeners. Instead of focusing on how censorship harmed the speaker who was silenced, he would focus on the harms to the audience deprived of the information. The ad ban, he would argue, restricted the right of the listeners to hear what a pharmacist might say. The recipients of speech had their own, independent constitutional “right to know” that was equally entitled to First Amendment protection, regardless of any rights of the pharmacists. The drug ban was a perfect vehicle for such an argument because the primary injury from Virginia’s law was not felt by pharmacists, who wrote the law and benefited from it. The people hurt the most were consumers, the would-be recipients of the censored speech.26