Government relationships and corporation survival *

Growth of government

Every time a person pays a tax–local, state, or Federal–he re-establishes, in a direct and tangible way, a relationship between himself and government. When he encloses his check with his income-tax return, or when he lays down his money at the local tax-collector's window, he becomes aware anew that government exists.

There are some who regard with considerable concern government's continuing growth. It is estimated that one-thirteenth of the population of the United States is on government's payroll today. In Canada, also, a large number of people are recipients of government money. Rightfully regarding government, not as a power superior to the people, but as a service established by the people in their own interest, some people wonder whether the huge governmental establishment which they help to support really returns to the people –including themselves–the service that the people are entitled to expect.

This question is worth considering, not with the hope of arriving at a rational answer, but rather for the purpose of looking at the other side of the picture –at government's own conception of its functions and responsibilities. It is well recognized that there is encompassed within government's obligation to serve the people the obligation to establish and exercise what are called police powers; and these powers government is expected to exercise for the people's protection. In a simple society, these powers could easily be put into workable practice. Today, it is a different matter because society has become exceedingly complex.

Government's role changes with economic evolution

In an annual report to his stockholders, Winthrop W. Aldrich, chairman of the board of the Chase National Bank, made the following observations in regard to the role of government:

Obviously, the role of government has had to change with economic evolution. We have had to pass laws to prohibit predatory actions on the part of small but powerful minorities, such as laws against combinations in restraint of trade, laws setting socially desirable levels of competition, laws that make it possible for one who is strongest and most efficient to attain success rather than the one who is merely the smartest or the most unscrupulous.

We have had to legislate against fraud, against unfair advertising, against deceptive labeling and other practices that take advantage of either the ignorance or the confidence of consumers. We have had to pass laws for the maintenance of healthful and safe working conditions. We have been obliged to pass laws regulating the sale of securities, the banking business, the transportation business, and many other interstate activities. Such laws and regulations, passed in order to maintain a sound, well-functioning economy, are not incompatible with democratic principles, despite the fact that they interfere with the freedom of many individuals.

C. Donald Dallas, chairman of the board of Revere Copper and Brass Incorporated, carried this thought a step forward when he said: "You can make laws to protect freedom but you cannot control freedom and retain it."

Government as the umpire

As a result of the enactment of many laws affecting business, it has become a function of government to serve as umpire–as an interpreter of the rules and regulations under which the game is to be played. Government in the United States fulfils that function primarily through such administrative agencies as the Interstate Commerce Commission, the Federal Trade Commission, the Federal Communications Commission, the Food and Drug Administration, the Securities Exchange Commission, the Civil Aeronautics Authority, and the utilities commissions of the various states. In Canada, there are similar administrative agencies, such as the Board of Transport Commissioners.

Other governmental functions. In modern-day society, government affects business in other ways than merely regulating it. For example, government affects business by competing with it through such agencies as the Tennessee Valley Authority, municipally-owned utilities, and the Reconstruction Finance Corporation. Government also affects business by taking on the role of economic planner in the use of lands, at least in war time, by controlling prices and credits.

In some of the areas of governmental thinking, it is considered the function of government, not merely to regulate the national economy, but also to direct it. That kind of thinking is based on a philosophy which envisions the "nationalization" of those public utilities that now are privately owned, as well as the "nationalization" of other industries not commonly regarded as public utilities at all, such as coal mining and the production and processing of food.

Industry's "climate"

It is within the "climate" created by present-day governmental functioning that industry must now operate. Whatever industry may think of this "climate," industry has come to recognize the fact that it confronts an actually prevailing condition. Consequently, to that condition, industry must adapt itself. To that "climate," industry must acclimate itself and, as well as it may, live and prosper. To an individual, government may be an entity that he encounters only once in a while–specifically, perhaps, only when he pays his taxes. This is not so, however, with a fairly typical business enterprise which finds itself in contact with government virtually all the time.

Taxation problems

An enterprise must pay a Federal or Dominion tax, and possibly, in addition, a state or provincial tax, on its corporate income. It must also pay local taxes of several different kinds, including, perhaps, a "business franchise" tax, and a sales tax on its "imports" of materials and supplies. Furthermore, if an enterprise does not confine itself to operating locally, but operates in interstate commerce, with plants or merchandising outlets in several states, it must pay state taxes within those states also. In connection with the payment of these various taxes, controversies may arise between the enterprise and government, since the present taxation system is such an involved matter that it has become a vocation for specialists. Consequently, the enterprise may find itself in the position of having to deal with official opinion and, perhaps, official prejudice in settling tax questions.

Other dealings with government

In addition to tax questions, the solution of various other corporate problems may be affected by official opinion, and perhaps by official prejudice. One example has already been cited earlier in this Text, namely that of the manufacturing enterprise which found itself involved with local officialdom and, incidentally, with local politics, when it confronted the problem of finding a new factory site.

Many similar cases frequently arise where purely local enterprises find themselves talking across the desk with local public officials about possible amendments of zoning ordinances and of other forms of local restriction on industrial development. For instance, a manufacturing enterprise may find that it would be wise to connect two of its plant buildings with a bridge that would cross a city street at a sufficient height to provide ample overhead clearance for vehicular traffic. In order to erect this bridge, the company's management has to argue its case at the City Hall where it first has to be decided whether the matter can be handled quite simply by the local councilmen or city trustees, or whether it will have to go to a referendum. In any case, government has to be brought into the picture before the project can be undertaken.

As another example of how a company may run up against government, take an enterprise whose operations, either physical or fiscal, extend beyond the state borders. If the enterprise ships its products in interstate commerce, those products and the policies under which they are distributed will come under the scrutiny of interstate regulatory bodies of various kinds, such as the Interstate Commerce Commission. If the enterprise seeks to raise funds by the marketing of its securities, its prospects and proposals and propositions will come under the scrutiny not only of its own state securities commission, but also, perhaps, of the Securities and Exchange Commission.

In fact, whether an enterprise is small or large, and whether it makes costume jewelry for the adornment of women, or provides transportation service for a great city, no enterprise can escape some degree of relationship with the Makers and the enforcers of law. In case of the bigger enterprises, relations with government are complex and so exacting that they usually demand the full-time attention of specially-assigned personnel. In smaller enterprises, relations with the governmental "public" may be assigned as a part of an over-all public-relations program.

Public officials are people

Regardless of cut and dried law, the public-relations worker will find, in his dealings with government, that public officials are people. Moreover, he will find that public officials are human. Furthermore, public officials react psychologically to stimuli that impinge upon them. In a democracy, public officials reflect, over the long run, the will and the attitudes and opinions of the people.

For example, take the legislator, whether he be a community councilman, a member of a state legislature, a member of the House of Representatives, a member of the United States Senate, or a member of Parliament in Canada. Such a legislator holds his office because he has been elected by one of the public's segments—his constituency. If he is a politician, he knows that he must look to that constituency for reelection. If he is a statesman or, as most lawmakers are, a combination of politician and statesman, he will recognize that he owes his first allegiance to his constituency.

Constituents, too, are people

The legislator's constituents are the "folk back home." They, too, are people and, as the legislator well knows, they definitely fall in that category. With those people, who are his people, he keeps closely in touch. As often as possible, and to the extent that he may do so, he talks with them in person. While the legislature is in session and he is in the capital, he keeps his ear to the ground by reading his people's letters and by closely scanning, with the aid of his secretarial staff, the news columns and the editorial columns of his constituents' newspapers.

In the main, his constituents' opinions are his opinions. Their will is his will. Their attitudes toward such matters as the policies and methods and aspirations of business enterprises within their communities, or of other enterprises by which they are affected, are his attitudes.

In a like manner, although possibly to an extent less marked, are formed the opinions and attitudes of administrative officials, who consist of both officials elected by the people, and executives appointed to governmental agencies, bureaus, commissions, and authorities. They, too, are public servants, and although occasionally one or another of them may run off on some highly individualistic tangent of his own, they, too, reflect how people feel and what people want. It seldom happens that one of them embarks upon a line of official conduct that is counter to the public interest.

Difference between public-relations practice and lobbying. Since the attitude of government officials reflects the attitude of the public, it follows that if a public-relations worker desires to persuade government, as represented ,by its officials, to accept and approve some line of corporate conduct in which his company is interested, he can best hope for success if, over a period of time, he has caused his company to occupy a position of favor in public esteem. Public-relations work thus differs sharply from what is called lobbying which is the practice of bringing to bear upon public officials, not public influence, but personal and private influence.

To illustrate the method of approach used in public-relations work to influence government officials, the story may be extended about the hypothetical company which, as was previously stated, wished to facilitate its operations by connecting two of its plant buildings with a bridge over a public street.

In addition to taking up the proposal with the public officials, the company uses the newspapers and other channels of communication to explain to the public why the bridge is needed. Interpreting the matter in the terms of public interest, the company addresses the public through the "you angle." It points out that the thoroughfare over which it proposes to build a bridge is a busy one. Consequently, as matters stand, the thoroughfare's traffic or, in other words, the community's traffic is often unavoidably impeded by the company's interplant traffic. The company emphasizes the fact that this is a dangerous situation. The company then pro ceeds to describe its proposed bridge. It gives assurance that the bridge will be placed high enough to allow ample highway clearance. Furthermore, the company states that, because it has been carefully designed by competent architects, with an eye to its aesthetic virtues, the bridge will prove to be a community ornament. To prove that point, the company publishes a picture of the bridge, based on the drawing made by the architect.

On seeing the story in the newspapers, the community's officials give heed to the public's reaction. The reaction proves to be favorable, especially since, over the years, the company has been careful to build good and constructive public relations, with the result that the public has come to regard the company as a good citizen and a good neighbor. By thus influencing public opinion, which in turn influences the community's officials, the company succeeds in obtaining permission to build its bridge.

Presenting information to government officials

The fact that lobbying is not included in the practice of sound public relations does not mean that public-relations workers avoid all direct contacts with government officials. It is a proper public-relations function to see that public officials are provided with information on current issues. Generally, this is a procedure of marshalling data and presenting these data to legislative committees or executive officials by means of written documents, illustrated perhaps with charts, graphs and other exhibits.

Procedure adopted by General Motors

For presentation before a Congressional committee, General Motors drew up a comprehensive statement of the relation between profits, prices, and product quality. Since this is illustrative of the right procedure for the public-relations worker to follow in his direct relations with government officials, it deserves consideration.

First, the corporation appointed a committee of three financial men and three public-relations men to gather, write and document the material for presentation. Then, for these men's guidance, the management drew up a kind of "platform" into which were written the following stipulations:

1. In the presentation of its case, the corporation would avoid entanglements in politics.
2. The corporation would avoid entanglements in economic, philosophical, or ethical discussion about free enterprise.
3. The corporation would talk, not about industry in general, nor about the automotive industry, but only about itself.
4. The corporation decided that, "burn what candles we must," it would prepare a full advance statement, and the statement would be in the committee's hands well in advance of the corporation's appearance at the committee's hearings.
5. The corporation decided that, rather than consume time at the hearing by reading the weighty volume in full, "we'd just go down there and talk about it."

A touch of drama

General Motors builds automobiles, from the manufacture of which General Motors realizes a profit. Over the years, improved methods of manufacturing have produced better and better cars, and–at least in normal times–better cars at lower prices. That was to be the gist of the General Motors story.

To demonstrate and dramatize the story, General Motors decided to employ two of its own products–a Buick of 1928 and a Chevrolet of twenty years later. While the hearings were in progress, those two automobiles stood side by side in the shadow of the Capitol, and the pictures and comparative descriptions of these cars were included in the information laid before the committee.

The comparative descriptions revealed that although the new Chevrolet sold for less money than did the Buick of twenty years before, the Chevrolet was a much better car than the old Buick in every respect–in horsepower, in design, in comfort, in safety features, in accessories and in actual road performances. As General Motors' presentation pointed out, "These things and many more represent increased value for the customer. They represent 'profits' for the customer that have been steadily added by General Motors over twenty years."

Knowing the "right people"

To say that good relations with government can be maintained solely by

1. Maintaining good public relations generally
2. By presenting an enterprise's side of the story on occasion and upon invitation to public officials is to over-simplify the matter.

Frequently, good practice also requires that the enterprise make its story abundantly clear long before it is called to the witness stand in a legislative committee's hearings. In fact, making that story abundantly clear to officialdom should be a continuing process. One requirement of such a continuing process is that, in the world of officialdom, the public-relations worker "knows the right people."

Consequently, the public-relations worker must contact the "right people." He must keep them informed. He must recognize that, with this "public" as with other "publics" with which the public-relations worker is concerned, a sound and cooperative relationship can rest only on understanding. In this area of his operations, the public-relations worker must recognize the fact that public officials also have public-relations problems. Consequently, he must try to understand those problems and their bearing upon official thought and official action.

The role of the lobbyist

Lobbyists are regarded with considerable disdain by many people. Yet in any dispassionate view of the relations of industry and government, it must be said that lobbyists perform an inescapable function, especially for a company with large national interests. Usually, a lobbyist is also a legal representative of a company. He is an expert on national business laws and regulations, as well as on the workings of the legislative, legal and administrative branches of the government. Such specialized knowledge, the public-relations counselor cannot hope to duplicate, unless he too is a lawyer and has worked many years in Washington.

A business, or an association of business men, has every right to present to the legislators its case for or against legislation affecting business. As a matter of fact, the legislators expect the case to be presented, and regard business sources as pertinent sources of information. The lobbyist who is the legal representative of a company at the capital is normally the individual to present the company's case, because he not only knows practices and personalities, but because he is versed in the law, and legal counsel is important. Although public-relations men determined the form and perhaps, to a large extent, the content of the General Motors presentation, legal counsel was no doubt employed at every step.

At this point, it should be understood that the opprobrium attached to the term "lobbying" is largely one arising from misuse of a constitutional right, that of petitioning the legislative arm. This opprobrium has been created by "bad" lobbyists who have gone beyond the factual presentation of a case and have tried to influence legislation through political threat or corruption of the legislators; or who have concealed the source of their interest.

It was for the purpose of taking care of the latter situation that a law was passed compelling people who seek to influence legislation to register as lobbyists and disclose the source as well as the amount of their income received for lobbying. Even a public-relations worker, if he 'is engaged in a legislative campaign, will do well to register because of the possibility that he might be held as a violator of this law.

In practice, a lobbyist who is a company's or association's Washington legal representative, will actually present a case, or prepare for its presentation by a top officer of the company or association involved, but in either case with counsel from public-relations men.

Presenting legislative matters to the public

In presenting legislative matters to the public, the public-relations worker must determine his public just as he does in connection with all other matters. In the case of many legislative matters affecting business, the interest of the general public is so incidental or removed that it is impossible to arouse public opinion. Consequently, limited "publics" must be found whose interests are importantly affected. For instance, there is a vast gap between the general interest in labor legislation, and the special interest in such a matter as a tariff on manganese. Literally, hundreds of pieces of legislation, actual or proposed, are considered by Congress without any noticeable attention by newspapers or radio.

In the case of a broad question, such as that involved in "yellow margarine," the public-relations worker seeks through every channel to arouse public support. He presents the case through the newspapers, radio, television, as well as by special booklets and movies addressed to special groups; he seeks to influence farmers, processors, retailers; he forms "voters' associations"; he calls for the support of clergy, educators, restaurateurs, consumers, women's clubs, parent-teachers associations and all others whom he can think of, because yellow margarine affects everybody in some way or another.

The "folks back home" the basic influence

The fact still remains that, in a democracy, official thought and official action primarily reflect the opinions and attitudes of constituencies. Consequently, the public-relations worker, in designing and constructing his platform for relations with government, cannot go far wrong if he sets it up as a basic and constitutional principle that the "right people" include the "folks back home"—the original components and the end-result beneficiaries of the democratic system.

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