can give an entire industry a black eye, and do damage to its image that will be difficult to repair, and it may take too long to hold an impressionable public.

There is a lesson to be learned from the drug industry. When it failed to police its own ranks carefully enough public pressure demanded Federal regulations.

I think it is unfortunate that this has to happen, because I believe in as little Government regulation as possible. I think individuals and industries should set their own high standards of conduct and see to it that those standards are followed. Still, the past has shown that this cannot always be. Thus we have laws and regulatory agencies such as the Federal Trade Commission, the Security and Exchange Commission, and the Food and Drug Administration.

I would like to point out, too, that much of what the consuming public sees as clear-cut misconduct, is not necessarily so. The deliberate attempt to deceive by any firm or industry is, I am sure, much less prevalent, than newspaper headlines or certain consumer groups would lead the public to believe. We must take into account the complicating factors arising out of the shifting face of competition, rapidly changing marketing patterns and a great diffusion of responsibility in all of these areas. For while I am talking to you of the Packing Institute about packaging practices, I am fully aware that a vast array of merchandising and marketing people help in determining the practices in our industry.

It seems to me at this point, that because responsibility is so widely distributed and hard to pin down, that some basic legislation might do a great deal of good in your industry. If an entire industry is required to comply with certain basic standards, no one segment, or handful of companies would need fear competitive reprisals. This basic legislation could eliminate the fear that the refusal of contracts would lead to a ruinous loss of sales, and could go far toward restoring public confidence.

Senator Hart has introduced such legislation and plans to reintroduce it next year. Senator Hart pointed out that in addition to protecting and saving the housewife money, his bill "provides many benefits for the manufacturer, too. Above all it will provide him with greater security in marketing packaged and labeled goods-a security derived from a clear understanding of how basic information should be presented on the package and from the conforting knowledge that all his competitors must abide by the same standards."

And the President in his message on protecting consumers' interest stated: "Under our system, consumers have a right to expect that packages will carry reliable and readily usable information about their contents. And those manufacturers whose products are sold in such packages have a right to expect that their competitors will be required to adhere to the same standards."

If Senator Hart had any doubts that some legislation was needed, it was dissipated when his bill was first offered. Of 150 letters received from people in all walks of life, only 1 was against it.

But legislation is at best only part of the answer to the ethical problems that face us. The foundation of business conduct must come from businessmen themselves, as, indeed, it frequently has in the past.

We have come a long way from the turn of the century when the philosophy of "Let the buyer beware," was prevalent. Pressure from within business brought many of the statutes now on the books. Leadership as far back as the pioneering work of Edward Filene and Marshall Field, did much to improve the moral climate.

Industry has it within its power to stop many abuses before they reach a critical stage. It can provide the force for a growing public confidence. It has indeed already made strong contributions through its trade associations, the Better Business Bureau, and the individual efforts of its members. Some of your leaders have talked to me reassuringly as to the plans your industry has to improve the situation. I hope the industry will back its leaders. The interest in ethics has made itself felt in a multitude of ways. schools of business administration are adding courses on the interlocking of economic and noneconomic factors, on the economic consequences of the conflicting claims of profits and ethics. Here students study and are taught not theory, not platitudes, but the problems that arise from real situations.

Graduate

In the churches, ministers are coming to realize that they must place the knotty questions of morality in the very real background of experience, and

for the businessman that background is business. In order to handle this more competently, many ministers have actually enrolled in graduate business courses. The American Management Association has worked hard and diligently with meetings, lectures, articles, and seminars. The Danforth Foundation seminars, in which religious, business, and education leaders get together and analyze the problems that daily best the businessman are impressive.

It is hardly strange that ethics should occupy so much of our time and attention. We live in a rapidly changing world, and it becomes increasingly difficult but increasingly necessary to restate principles of conduct to fit constantly shifting circumstances.

The need to make a profit, and the avoidance of breaking the law where the law is clear, are simple principles to grasp. There is, however, a vast, growing gray area in which there is no clear violation of the law, and in which the guidelines become snarled.

How does a businessman decide when entertainment is a legitimate expense, when it is just wasteful, and when it is downright bribery? What does he do about the growing complexity of taxes? He requires an army of lawyers and accountants to help in this field alone.

There are others of these gray areas that encompass such factors as corporate relationships to social responsibility. Such questions arise as the unemployment that results when plants are moved and men are displaced by automation.

These are complex situations, and they cannot be completely solved by laws. They illustrate a few of the many judgments required of businessmen every day, but in which they have had little but their own commonsense and decency to guide them.

The business community has tackled these problems many times in many ways with varying success. Their interest is illustrated in a survey of executive opinion on business codes made by the Harvard Business Review. It reported that 71 percent believe a code would raise the ethical level of their industry; 81 percent disagree with the idea that codes protect inefficient firms; 88 percent would welcome a code as a useful aid when they want to refuse an unethical request impersonally.

Most important, I think, 81 percent agree that a code would help executives by defining clearly the limits of acceptable conduct.

It must be pointed out, however, that executives split over whether a code would reduce sharply practices in tough competitive situations, and 87 percent believe that a code would not be easy to enforce.

The hard fact is that the conduct of any organization can be no better than that of its individual members. The uprightness of everyone counts, but most especially the top executives of a firm must assert the need for morality, establish patterns, and set the examples.

Association executives are able to make a unique contribution without which, perhaps, no progress at all can be made. They can set the industry's moral climate. tI starts with asking their membership to establish an ethics committee for the purpose of developing for the association an industry code of ethics or of updating an existing code.

Even if such a code sets only minimum standards, it will provide the ethical climate within the industry that is the essential first step, as long as it includes a procedure for enforcement. An individual company executive can thus feel a degree of assurance that the development of an ethics program will not necessarily place him in an adverse position relative to his competitors. He can then concentrate on designing a program to raise the moral level of his own company's behavior and deal with specific company problems.

Henry Ford II said, “I recognize that no amount of law, no amount of written codes of ethics or pious promises will take the place of a rigorous and unshakable integrity in the total conduct and in the ideals of industrial management."

As a result of some discussions we had with President Kennedy the Department of Commerce established the Business Ethics Advisory Council. A committee, made up of distinguished public leaders from education, religion, and business has prepared a statement of philosophy and a set of typical questions for businessmen to ask themselves in regard to their operations.

The Council first met in May of 1961. In this and succeeding meetings, it hammered out a statement on business ethics and a call for action, together with a set of questions for businessmen to use in examining their ethical standards and behavior.

To date the Council has arranged with the American Management Association to put into effect a series of seminars with business leaders throughout the United

States. otherwise.

The Commerce Department is supporting this effort financially and

The Council has undertaken a survey of the teaching of ethics at collegiate schools of business. A questionnaire has been sent to deans of these schools to determine what the situation is, and what can be done to improve and intensify the teaching of business ethics.

A nationwide program of social action has been broached to religious leaders that will embrace retreats, study groups, and seminars with the clergy and business members of the congregation dealing with ehtics.

Finally, preliminary work has been undertaken looking to foundations and universities to set up studies in depth of current problems in business ethics. We hope to explore such problems as the extent to which business groups can establish ethical standards and deal with unethical members without running afoul of the antitrust laws.

I would like to make it abundantly clear that the Government is not sitting in judgment on the business community, or casting any reflections on its general character or the way in which businessmen as a whole conduct themselves. I felt when we were setting up the Ethics Council as I feel now that only a small percentage of businessmen were violating ethical standards, and that the public might lose faith in our free-enterprise system. Quite the contrary, it should be quite obvious that moral standards at the business level are on as high a plane as those of individuals of the community. But we must demonstrate that we are just as responsible in the highest possible sense to the needs of the community as we are astute in business and brilliant in management.

I am pleased that the Packaging Institute was one of the first of the industry groups to come forward and ask to work with the Council in working out a code of conduct for their industry. I am sorry that you have not yet been able to come up with a code-I had hoped, as had the members of the institute, that we could use this occasion to announce such an accomplishment. I don't think we should allow the delays that have been encountered to discourage us. This is, of course, up to you as members of the Packaging Institute.

As I have tried to point out, we are dealing with complex problems for which we should not expect to find quick and easy answers. I would like to ask you this afternoon, though-all of you here to give your support and help to our efforts.

This movement toward policing ourselves must come from the grassroots of business, nurtured in the native soil of American decency and fair play. It can't be forced from outside or legislated. It must come from within.

The Ethics Council is trying to create an atmosphere to provide a modelfor the business community to develop its own set of codes, codes which will grow out of the needs and background of each particular industry and company. This is real action on the part of Government, business, and intellectual leaders to improve the business practices of those few who don't observe the standards that I am sure your industry wants to uphold. May I challenge all of you to do whatever is necessary to restore complete confidence in our system of competition and free enterprise which has made this Nation great. Thank you.

[From Modern Packaging, editorial memo, February 1963]

ANOTHER MOUSE

Once again the Packaging Institute has labored and brought forth a mouse. Its one-paragraph credo issued on December 28 does little more than restate the same lofty generalities contained in the four-paragraph statement of October 1961, which was the net result of Packaging Institute's first attempt to wrestle with the greatest packaging problem of the day-deceptive packaging and the impending Hart bill which proposes to regulate it with a straitjacket.

Does anyone really believe that the credo will have the slightest effect on the Hart bill?

Does anyone really believe that it answers Secretary Hodges' challenge to the Packaging Institute forum to come up with a voluntary code of packaging ethics to thwart the bill?

Does anyone really believe that it answers the mandate from the Packaging Institute membership, voted overwhelmingly after the forum, to "accept Secretary Hodges' challenge" and "formulate a broad code of packaging ethics"?

Does the Good Packaging Committee itself believe that it has fulfilled its directive from the institute's board of directors, which was to formulate a code and to implement it, by December 31, with specific proposals?

We understand that the committee deliberated for hours. But it was unable to agree on any specifics of implementation.

This is a sad state of affairs. We suggest five simple rules which, as a basic code of conduct, could answer all the legitimate consumer criticisms against packaging and take from the Hart bill its air of necessity:

1. Agreed: That the statement of weight or quantity of contents must appear with unquestionable legibility on the main label panel, without qualifying adjectives.

2. Agreed: That size and shape of package must be kept in reasonable ratio to the contents consistent with economical filling, convenient handling, and product protection.

3. Agreed: That product illustration should show nothing that is not contained in the package unless accompanied by an explanatory line.

4. Agreed: That “cents off" the "regular price" should not be used on labels unless the regular price is also stated on the label.

5. Agreed: That "economy size" should be banned from manufacturers' labels, since the retailer's pricing may make the statement untruthful. What responsible packager would not welcome these simple rules--if he knew that his competitors also would have to observe them? The abuses that have laid all packaging open to criticism have grown from the excesses of competition. If the Packaging Institute will not act, then thoughtful packagers must speak up, individually or in groups, to express a positive rather than a negative attitude as the Hart bill goes through the legislative mill.

(Message from the President of the United States relative to consumers' protection and interest program)

To the Congress of the United States:

Consumers, by definition, include us all. They are the largest economic group in the economy, affecting and affected by almost every public and private economic decision. Two-thirds of all spending in the economy is by consumers. But they are the only important group in the economy who are not effectively organized, whose views are often not heard.

The Federal Government-by nature the highest spokesman for all the people has a special obligation to be alert to the consumers' needs and to advance the consumers' interests. Ever since legislation was enacted in 1872 to protect the consumer from frauds involving use of the U.S. mail, the Congress and executive branch have been increasingly aware of their responsibility to make certain that our Nation's economy fairly and adequately serves consumers' interests.

In the main, it has served them extremely well. Each succeeding generation has enjoyed both higher income and a greater variety of goods and services. As a result our standard of living is the highest in the world—and, in less than 20 years, it should rise an additional 50 percent.

Fortunate as we are, we nevertheless cannot afford waste in consumption any more than we can afford inefficiency in business or Government. If consumers are offered inferior products, if prices are exorbitant, if drugs are unsafe or worthless, if the consumer is unable to choose on an informed basis, then his dollar is wasted, his health and safety may be threatened, and the national interest suffers. On the other hand, increased efforts to make the best possible use of their incomes can contribute more to the well-being of most families than equivalent efforts to raise their incomes.

The march of technology-affecting, for example, the foods we eat, the medicines we take, and the many appliances we use in our homes-has increased the difficulties of the consumer along with his opportunities; and it has outmoded

The

many of the old laws and regulations and made new legislation necessary. typical supermarket before World War II stocked about 1,500 separate food items-an impressive figure by any standard. But today it carries over 6,000. Ninety percent of the prescriptions written today are for drugs that were unknown 20 years ago. Many of the new products used every day in the home are highly complex. The housewife is called upon to be an amateur electrician, mechanic, chemist, toxicologist, dietitian, and mathematician-but she is rarely furnished the information she needs to perform these tasks proficiently.

Marketing is increasingly impersonal. Consumer choice is influenced by mass advertising utilizing highly developed arts of persuasion. The consumer typically cannot know whether drug preparations meet minimum standards of safety, quality, and efficacy. He usually does not know how much he pays for consumer credit; whether one prepared food has more nutritional value than another; whether the performance of a product will in fact meet his needs; or whether the "large economy size" is really a bargain.

Nearly all of the programs offered by this administration-e.g., the expansion of world trade, the improvement of medical care, the reduction of passenger taxes, the strengthening of mass transit, the development of conservation and recreation areas and low-cost power-are of direct or inherent importance to consumers. Additional legislative and administrative action is required, however, if the Federal Government is to meet its responsibility to consumers in the exercise of their rights. These rights include

(1) The right to safety-to be protected against the marketing of goods which are hazardous to health or life.

(2) The right to be informed-to be protected against fraudulent, deceitful, or grossly misleading information, advertising, labeling, or other practices, and to be given the facts he needs to make an informed choice.

(3) The right to choose to be assured, wherever possible, access to a variety of products and services at competitive prices; and in those industries in which competition is not workable and Government regulation is substituted, an assurance of satisfactory quality and service at fair prices.

(4) The right to be heard-to be assured that consumer interests will receive full and sympathetic consideration in the formulation of Government policy, and fair and expeditious treatment in its administrative tribunals.

To promote the fuller realization of these consumer rights, it is necessary that existing Government programs be strengthened, that Government organization be improved, and, in certain areas, that new legislation be enacted.

I. STRENGTHENING OF EXISTING PROGRAMS

This administration has sponsored a wide range of specific actions to strengthen existing programs. Major progress has already been achieved or is in prospect in several important areas. And the 1963 budget includes recommendations to improve the effectiveness of almost every major program of consumer protection.

(1) Food and drug protection.-Thousands of common household items now available to consumers contain potentially harmful substances. Hundreds of new uses for such products as food additives, food colorings, and pesticides are found every year, adding new potential hazards. To provide better protection and law enforcement in this vital area, I have recommended a 25-percent increase in staff for the Food and Drug Administration in the budget now pending before the Congress, the largest single increase in the agency's history. In addition, to assure more effective registration of pesticides, a new division has been established in the Department of Agriculture; and increased appropriations have been requested for pesticide regulation and for meat and poultry inspection activities.

(2) Safer transportation.-As Americans make more use of highway and air transportation than any other nation, increased speed and congestion have required us to take special safety measures.

The Federal Aviation Agency has reexamined the Nation's air traffic control requirements and is designing an improved system to enhance the safety and efficiency of future air traffic.

The Secretary of Commerce has established an Office of Highway Safety in the Bureau of Public Roads to promote public support of highway safety standards, coordinate use of highway safety research findings, and en