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Senator HARTKE. I hope we don't get off onto the matter of morality. You are dealing partly with legality. Legality certainly is a matter of law. In other words, traditionally we had a legislative field of specific areas of concern, such as pollution, occupational safety. That was a question of making these things work, but they haven't worked that well.

I don't want to make the assumption that you say that all corporations or any of them, in specific, are violators; but there is a general conclusion, which' I think cannot be denied, that the laws themselves are not working effectively and efficiently in the interests of all the people.

What we are looking for is some way to define that corporate responsibility within the context of the law, which is not complete at the present time. In fact, there are some cases in which the stockholders seem to benefit from the corporate violation of the law; I think you recognize that.

I don't think you would recognize that as necessarily being a procedure which you would want to continue.

Now just merely to have congressional oversights, I am a great believer in that; but what about corporate oversight! Looking at the directors and managers themselves, how do you determine what type of discipline to set ? Regarding self-discipline, if you follow the so-called five points you spoke of, maybe that is an answer. But what kind of assurance do you have that there is even a recognition of such a responsibility by the corporate directors and the managers and the stockholders even under the present situation, let alone an attempt to follow up on any program of that kind ?

I have been hearing-listening to business folk; and I hope you don't mean to characterize business simply as being the manufacturing business.

Mr. RIEHM. No, no.

Senator HARTKE. I noticed that in your citation of the profit figure, that you said business profits are not that high.

Take an automobile safety law which I was very instrumental in drawing up. I said that if there was an absolute intentional violation of the law, then criminal penalties should attach. The answer from the chamber and others was, "That assumes that the people are crooks."

Well, all I said was that if there is an intentional violation of the law, he is a crook. That is what I assumed. A criminal penalty should attach. They said, “No, no, no, don't do that.”

Mr. RIEHM. I would respond, sir, with that I could not agree, and I would agree with you.

Senator HARTKE. The point about it is that we got beat in the committee by virtue of the fact that the so-called chamber and the business community and the manufacturing people opposed it; even though there was already a law dealing with the dilution of motor oil that was a criminal violation, to water motor oil.

If you diluted motor oil, it was a criminal violation. When we came back to try to reestablish that into the automobile safety law, even that was wiped out. So the fact of it is now if you want to put in a half gallon of motor oil and a half gallon of water—which absolutely would be a violation and you knew you did it, there is still no criminal penalty that attaches.

That is an extreme example. What I am saying to you is that Congress just has not met the question. There is a bigger question out there. What I am trying to find out is that when you do see that there are violations of the law, and that there is no incentive for those directors to make sure that there are no further violations of the law,

then we are faced with the proposition of how to deal with it?

Mr. RIEHM. If I may respond to that, Senator, it cannot be in a simple manner, in a simple direction, but a rather complex one, because you, too, are confronted with a problem, which relates to the executive branch of the Government and the judiciary. We have heard much in recent times with respect to the ease of penalties that have been placed upon people who have been found guilty of particular crimes.

But essentially I suggest that the problem is not to be solved by throwing more legislation against it, and that is what worries me. 1 have sympathy. Were I in the position of a member of the executive branch or a regulatory agency, that if the Congress asked me, “Would you not like some more tools and weapons with which to fight a problem?" I would be a fool not to say "yes.” But in large measure I think the kind of initiative and determination that ought to be existing in these departments and agencies in pursuing matters seriously is not going to be generated simply by giving them more laws.

I think, again speaking in a more complex manner, jurisprudentially one of the problems you are confronted with is that when you engage in great specificity in legislation, you are automatically pointing out to the person who would circumvent the legislation how to circumvent it.

When we had simpler, general, broader statements of law that were being interpreted by the courts in general language, the man who was bent on misbehavior was not sure but what he might get caught; but if today you say, you know-to use your example concretely-you may put 5 percent water in your oil, but no more than that, you have offered the opportunity for somebody to do precisely that and know that he can get away with it.

Now I grant very much that I don't like to speak only on the subject of morality. But if I might offer a generalization that is applicable not only to business but to all of our society, it is the fact that we must all engage in more self-discipline and morality; and if we expect it to be provided by the Congress or all of the legislative bodies, then we are going to pieces as far as our moral fiber is concerned.

Senator HARTKE. The one thing that disturbs me about this approach is the fact that you make the basic assumption that there somehow is an antagonism between good government and good business.

Mr. Rieum. No; I don't believe so.

Senator HARTKE. I hear you, but, aren't you saying that somehow regulation is bad, and planning is bad, and concern is bad if it is done by the Government—but it is good if done by business?

I never understood that peculiar, what I call schizophrenic approach–I am not being nasty by saying that-I am just saying there are two sets of standards on the same general goal.

It is not my intention and I know it is not the intention of these hearings to go ahead and do anything detrimental to good business practices. What we are really trying to see is how to deal with some known abuses in this field and how to deal with people who do not seem to be immune to those abuses, but really in some cases seem to be almost encouraged to persistently follow that course of action, or at least move in this field with impunity.

Now, I think that is what we are dealing with. Like in so many fields—and I think this generalization is true—that you have some States which have attempted to deal with some of these problems, but the people complain generally about the lack of action that they desire on the part of the Federal Government; and they say that some places that it should be done, they really don't want it to be done on any level. They don't want it done on the Federal level, the State level,

the local level, or on the private level. They would rather go ahead and put blinders on; and yet, you know, it is like the king who wears no clothes. Everyone sees it, it is obvious that something is askew, and that somebody ought to move.

Mr. RiEhm. Well, I would not deny, sir, that there are those who advocate that kind of approach. But I think at the same time what we must recognize is that there is a continuing problem of tradeoff and balance here, that you place these burdens on at a price; and the question is whether or not, with the net you throw out to catch the scoundrel, you burden the rest of society unduly for having caught the scoundrel.

I think the basic concern that-I am speaking personally nowthat I express here is that the approach of the detailed drafting and specificity is not the way to go about it, but to state the general principles and lean on the executive branch for vigorous enforcement of them, because the main—I think the main concern that business expresses about Government involvement and Government regulation, to respond to the earlier portion of your observation, is really that of speed of response and certainty.

If they felt that there was quick reaction and a stick-to-itiveness by the decision made, there would be a good deal less concern. But they have a terrible time in carrying on for extended periods under conditions where there is grave uncertainty.

Let me use one concrete illustration of a problem that we face in our operation at the moment in which one agency, one regulatory agency, OSHA, is saying that floors must have a rough surface so that when water is used in the area that people will not slip on them.

Our friends in the Department of Agriculture, however, who license our plants in which meat is processed, insist that the floors must be smooth and clean for ease and facility of cleaning, for sanitary purposes. We have talked to them both about those kinds of things endlessly and yet we get no decision.

In one place OSHA says that you shall use wooden ladders because of the danger of somebody laying something against an electric wire that will cause a short, and the group on the other side says, “No, you must use metal ladders," again for sanitary purposes.

It is the problem of resolution of these kinds of things that I think in large measure causes great exasperation on the part of business, and when they see the prospect for further legislation, it has become almost a Pavlovian reflex to throw up one's hands and say, “Please, no more !”

Senator HARTKE. I have heard that so often. I agree with you. Maybe it is an exasperating thing for business. Let me sav on the other side of that coin, occupational safety, if it affects your family, if it affects you, is going to be a matter of great concern.

You are complaining about the fact there is no such thing as certainty. Let me just come to another thing.

What about Mr. Petrie's suggestion, for example, about paying for the right to campaign for a stockholder? That is not a burden. It is a question of right. For example—I am going to give this rhetoricallyis it right for the corporation to use its funds against another part of the corporation—its stockholders?

Let me just say to you on the occupational safety thing I have to go vote, I have no choice—this is something on which there is no alternative. I will let you answer the question for the record.

Mr. RIEHM. That vote is certainly, right?

Senator HARTKE. Well, maybe. If I don't vote, I don't think the world will come to an end.

The other thing is you do have a case where execution of laws may be wrong, difficult, and sometimes inefficient. I don't deny that. That is a question of executive failure.

Let me come back to this other matter, to deal with problems and not creating that type of conflict. We will adjourn the hearings and I will go vote.

Mr. Richm. I have appreciated the opportunity to have appeared.

[Whereupon, at 1:05 p.m. the committee recessed, to reconvene at 10 a.m., Thursday, June 17, 1976.]

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