The Wary Allies

Far from being natural enemies, Government and business are natural allies.

--John F. Kennedy to the National Industrial Conference Board. Feb. 13, 1961

Though more businessmen opposed than supported John Kennedy in his bid for the presidency, many were cheered by what they heard and saw after he took office. In dealing with the recession, the President relied primarily on methods that Dwight Eisenhower had not hesitated to use before him. But as the weeks rolled by, the Kennedy Administration steadily began to play a much more aggressive role in private business than the Eisenhower Administration had ever done. Last week, as the nation witnessed the extraordinary exercise of the chairman of Big Steel publicly lecturing the President of the U.S. on basic economics (see below), the business community's growing lack of confidence in the Administration had become an open secret.

Jack Kennedy, who has stated his belief that no man who is anti-business can be a successful President, so far has sought to close the confidence gap by gestures rather than policy changes. The White House has been negotiating for him to address next year's convention of the U.S. Chamber of Commerce--an event he conspicuously boycotted last spring. More recently, Kennedy has summoned leaders of the C. of C., the National Association of Manufacturers and the Com mittee for Economic Development to ask: "What makes you think we are anti-business?" To that, U.S. business leaders last week offered many answers:

sbPUBLIC RELATIONS. Admits Presidential Economic Adviser Walter Heller: "Part of the problem is that contact has not been fully established." Jack Kennedy does not socialize with businessmen as Eisenhower did, and the pro-business Washington atmosphere of the Ike era has been replaced by what is, at best, watchful neutralism. Businessmen were angered when Attorney General Bobby Kennedy flailed them for "moral laxity" and again when Commerce Secretary Luther Hodges labeled the blue-ribbon Business Advisory Council "stuffy as hell."* To business leaders, who originally thought of him as one of their own, Hodges has been a particular disappointment. Last week, at the insistence of a powerful California businessman, Hodges' name was pointedly dropped from the invitation list to the big International Industrial Conference in San Francisco. Says President Mills B. Lane of Georgia's Citizens & Southern National Bank: "Businessmen feel they have no real effective voice in the Government."

sbTAXES. Nowhere has the breakdown in communication been more evident than in the Administration's vain effort to put through a $1.7 billion tax credit for plant modernization. Though intended as a gesture to business, it died because businessmen opposed it, figuring that it would only defer what they really wanted: a $5 billion across-the-board liberalization of depreciation allowances. Businessmen are also worried about the possibility of higher taxes in January and petty tax annoyances right now. An airline president gripes about the Internal Revenue Bureau's crackdown on convention expenses; a major oil company president is miffed because he now has to pay $500-a-year personal income tax for the use of his company Cadillac.

sbGOVERNMENT SPENDING. "The fears businessmen had before the election have been confirmed in the much higher level of federal spending," says Borg-Warner President Robert S. Ingersoll. Though businessmen hailed the defense-spending raises that helped fire recovery, they complain that the Administration's welfare programs will not only distend the budget and feed inflation but also expand federal controls.

sbREGULATORY AGENCIES. A major source of the business community's sense of harassment is the new aggressiveness of the watchdog agencies. Some railroadmen see nationalization coming on the heels of the Interstate Commerce Commission's recommendation for federal subsidies for passenger lines. New Chairman Joseph C. Swidler of the Federal Power Com mission, describing himself as "consumer-minded," says that he will cut natural-gas rates even if customers do not petition for reduction. Groans one Western corporation chief about the choice of Careerist Paul Dixon to head the Federal Trade Commission: "Kennedy appointed a career prosecutor to the job of judging the cases."

sbANTITRUST. Though the Eisenhower Administration was equally vigorous in trustbusting, the Kennedys do it with more fanfare. Minnesota Liberal Lee Loevinger, chief of the Antitrust Division, has repeatedly raised business hackles--and depressed A. T. & T. stock--by incautious statements implying, unintentionally, he insists, that his lawyers are out after the giant communications company. In a series of electronic and banking mergers, the trustbusters have waited until the last moment to raise objections, and have refused to be deterred by court reversals; last week after a federal district court turned down their eleventh-hour effort to halt the merger of Manhattan's Manufacturers Trust Co. and Hanover Bank, the trustbusters said that they would persist in the courts--which means that the case may drag on for months after all the banks' change has been put in one pocket. And when Ford announced that it planned to absorb noncompetitive Philco (see Corporations), the snap reaction among many businessmen was: "What will Bobby Kennedy do?"

* The B.A.C.--a band of top executives who advised the Government on economic policy and got secret briefings from top officials--finally broke its longtime links with the Commerce Department last July after Hodges demanded that all its meetings be public.

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