S9, Ep1 | The Panic

[00:00:00] Chevron Ad: Everyone has a story I can learn from, to be fearless like her, to have the confidence to achieve my dreams. This ad that you're hearing, it starts out with a little girl dressed in an Amelia Earhart outfit. Then it pans to a montage of women playing golf. Professionals, clearly. Nearly 100,000 girls are participating in LPGA USGA Girls Golf.

It's about so much more than golf.

[00:00:34] Amy: Ooh, it sure is, golf lady. Because this ad was paid for by Chevron, who sponsor the program. And it's not just Chevron either. Take a listen to this recent ConocoPhillips ad, which sounds like it's actually advertising an education non profit.

[00:00:52] Conoco Philipps ad: Who's gonna hold you back? I always wanted to be a teacher.

[00:00:57] Chevron Ad: It was just something that came natural to me. I knew I wanted to be a teacher when I was a middle schooler and now I'm PE teacher here at my old middle school.

[00:01:11] Amy: Ads like these and the activities behind them, from sponsoring sports events and teams to funding education initiatives or supporting women in STEM, have become so common that you might be wondering why I'd bother calling attention to them at all. But it's important to talk about why companies, and especially oil companies, spend so much money on stuff that is entirely unrelated to their core business.

And why you almost never see an ad that's about what they actually do. It's not so much about being a good corporate citizen as it is about seeming like a citizen. Period. Someone with ideas and policy positions, morals, ethics, a philosophy, a reputation, and most importantly, a personality. That's mostly due to a guy long time listeners of this podcast might recognize, one of my long running obsessions, Herb Schmertz.

Here's what ol Herb had to say about the idea of companies doing philanthropy for philanthropy's sake.

[00:02:19] Herb Schmertz: It shows a, um, a sophistication and awareness on the part of corporations that they can tie their business interests to other interests, uh, in the cultural and educational and philanthropic area, and yet be able to show to whomever is interested, whether it be shareholders or Uh, whatever, that, um, that there is a bottom line payout for the, for the giver.

[00:02:47] Amy: Herb Schmertz was a fascinating dude. He worked in military intelligence and as a labor lawyer, sorting out disputes mostly on behalf of the government. In the 1960s, he actually helped to end a major longshoreman strike. Here's LBJ and his labor secretary talking about it.

[00:03:06] LBJ Longshoremen: Uh, and what's, uh, what are our longshoremen doing?

That's the serious one, and I, uh, I should, uh, I should sit down and, uh, bring you, or give you a complete memorandum on that. That one is not in good shape. The, the dark one is just not in good shape. Um, what can I do? Before we're through with it, it's very likely to bring it, I had them in this last week, and the trouble is that the, uh…

That the company, uh, the employers want to settle it in Congress and the, uh, the union wants to settle it in the White House about what it comes down to.

[00:03:39] Amy: Schmertz also helped run JFK's presidential campaign. Eventually he ran Bobby Kennedy's campaign too, and Ted's. In between running campaigns for the Kennedys, Herb Schmertz had another job.

VP of Public Affairs for Mobil Oil. Mobil initially hired Schmertz as a labor lawyer, but when he returned to work after taking a leave of absence to work on Bobby Kennedy's campaign, the company thought, hmm, maybe someone so tight with the Democrats would be more helpful in their public affairs office.

Schmertz thought the rough and tumble tactics he'd learned running campaigns in DC could be helpful to mobile too. and so he got a promotion. It helped that the company's CEO at the time, a guy named Raleigh Warner, had a lot in common with Schmertz. They were both Ivy League educated, but good at talking to normal people, and they both thought it was important for Mobil to stand up for itself more often.

In the early 1970s, with an oil crisis brewing and Americans pissed off about waiting in line for hours to get gas, the two hatched a plan to take charge of Mobil's public image.

[00:04:58] Herb Schmertz: You have to find unconventional ways to communicate to the public. It's not a question of convincing the press of anything. Question of convincing the public and, and to do the job properly, you have to really go around the press or beyond the press or against the press to get a story out so that the public focuses on it, not the press.

If you're just going to limit yourself to getting the press to focus on it, you're not doing the entire job.

[00:05:22] Amy: At the time, issue advertising, this thing of an oil company doing an ad about diversity or environmental initiatives, it was relatively new. Schmertz eventually called it affinity of purpose marketing.

Not great branding, but he explained why in a speech.

[00:05:42] Herb Schmertz: The term affinity of purpose marketing is a term that I developed because American Express has cause related marketing.

But it basically says the same thing.

[00:05:55] Amy: Affinity of purpose marketing, cause related marketing, today this is basically just marketing. But back then, it was pretty revolutionary, especially in the oil industry. Schmertz thought the company needed to focus on ideas and issues, rather than just selling gas at stations.

And to do that, it needed more than just the ideas themselves. Mobil needed a personality. Here he is, later in life, describing that personality.

[00:06:24] Herb Schmertz: Well, it was multifaceted. Uh, it was a personality where we believe very strongly about the importance of public policy issues. Secondly, we believe fervently that as a sort of a custodial of a large corporation and as custodians of vast resources and employment and everything else, that we were not doing our job if we did not participate in the marketplace of ideas. Third part of our personality was we believed in that a democracy is composed of a group of free institutions. We believed in free markets, freedom of speech, freedom of the press, academic freedom, freedom to organize and participate in union activities. Government intrusion into the marketplace of ideas would limit our freedom of speech and distort the selection of our leaders.

[00:07:16] Amy: Wow, if Mobil was a person, they'd be kind of a dick. Ben Shapiro as a company. Anyway, you'll note too that a lot of these so called personality traits are more like policy positions.

But over time, Schmertz started to do various things to build out a sense of who Mobil was. And he very intentionally did things that no other oil exec had really thought about doing. At one point, he described his approach to this as being like a political campaign for a company. He sponsored a bunch of art exhibitions, for example, and started a literary prize, the Pegasus Prize, in 1977 to honor works from countries whose literature is rarely translated into English.

For Mobil, it also helped to strengthen the company's relationships with various Middle Eastern countries where it was hoping to drill for oil. Schmertz also hired writers to write weekly opinion pieces that he edited, and paid to run them in the New York Times. And of course, he sponsored Masterpiece Theatre.

[00:08:26] MobilMasterpieceIntro.R-1: Masterpiece Theatre is brought to you by Mobile, providing the fuel that helps public television run.

[00:08:35] Amy: Herb Schmertz wrote a whole book about his tactics. It's called Goodbye to the Low Profile. In Spanish, it went by the much better title, El silencio no es rentable. Silence isn't profitable. In it, Schmertz implores his fellow PR guys to stop being nice to the press, to stop being quiet about it when they think that the press is being unfair to them, and to start shouting their ideas from every corner of the public square that they can access.

Schmertz gives a fascinating window into his whole process in this book. At one point, he talks about commissioning a survey to gauge the public's opinion of Mobil before and after the launch of his big issue advertising push, and he remembers fondly how the survey taker said to him, Mobil must be the thinking man's oil company.

Did the survey taker actually say that? We'll never know. The point is that was Herb's goal: classing up Mobil and making it the literary gentlemen of oil companies. But while there is a lot of evidence to suggest that Herb really liked to hobnob with the creative elite, that wasn't the goal. It was just a fun side benefit.

The point was humanizing Mobil, making him seem smart and trustworthy. And yeah, Mobil is definitely a him. Why bother making an oil company seem like a smart, trustworthy dude? So that when he came at you with ideas, like Hey, why don't we do more offshore drilling? You might be more likely to think it's not a terrible idea.

[00:10:16] Archival Mobil Ad: According to the U. S. Geological Survey. There may be 60 billion barrels of oil or more beneath our continental shelves. Some people say we should be drilling for that oil and gas. Others say we shouldn't because of the possible environmental risks. We'd like to know what you think. Write mobile poll room 649 150 East 42nd Street, New York 10017.

We'd like to hear from all of you.

[00:10:44] Amy: So, okay, this is interesting history, right? But why are we talking about it today? Well, at a certain point, Schmertz and Warner ran into an obstacle. They wanted to take the advertorial program that they'd been running with the New York Times and do it on TV too.

Schmertz commissioned a few videos and they went to the big three TV broadcasters, ABC, CBS. And NBC. Remember this was before cable was widespread and long before streaming. The three big broadcasters were a major source of information and entertainment for the American public. Two of the three, ABC and CBS, turned the ad buy down flat.

They said it would violate their ethics clauses, and that it might run afoul of the Fairness Doctrine, which required broadcasters to present both sides of controversial issues. They told Schmertz that when it came to covering important political issues, they left that to their journalists. Running these newfangled ads of mobiles felt like broadcasting propaganda and they weren't into it.

Let's all pause for a moment and appreciate an America in which media corporations had a shred of dignity.

For Mobil, though, this was an all hands on deck moment. If the TV guys said this was propaganda, what if the New York Times started to feel weird about running it every single week? What if PBS decided its partnership with Mobil was no longer kosher?

What if all that work on developing a personality and getting their ideas into the public square was just a waste of time in the end? They couldn't have it. And so they developed a strategy that would protect their new human version of Mobil. And that is a problem we are still very much dealing with today.

That's the story we're going to get into in this Drilled miniseries. Welcome to, yeah, why not Herb: a three part miniseries on the oil guy who popularized corporate personhood, and how it's become one of the biggest problems facing climate action today. Part one, "The Panic" after this quick break.

[00:13:46] Ruth Bader Ginsburg: Mr. Olson, are you taking the position that there is no difference in the first amendment rights of an individual? A corporation, after all, is not endowed by its creator with inalienable rights. So, is there any distinction that Congress could draw between corporations and natural human beings?

[00:14:15] Ted Olson: For purposes of campaign finance what the court has said in the First Amendment context, New York Times vs. Sullivan, Grosjean vs. Associated Press, and over and over again is that corporations are persons entitled to protection under the First Amendment.

[00:14:32] Amy: That's the late Ruth Bader Ginsburg talking to Ted Olson, former Solicitor General of the United States, a founding member of the Federalist Society, and a partner in the corporate law firm Gibson Dunn, which represents Chevron, along with several other companies in the fossil fuel business.

To the extent that Americans think about the idea of corporate free speech at all, it tends to hinge on this one Supreme Court case from 2010, Citizens United versus the Federal Election Committee. It was a weird case. Basically a Tea Party Republican group called Citizens United made a movie about Hillary Clinton, and they said it was a documentary, but it was very obviously not.

It was a bit of campaign marketing. It was called Hillary the Movie.

[00:15:22] Hillary: The Movie Archival: She is steeped in controversy, steeped in sleaze. That's why they don't want us to look at her record.

[00:15:30] Amy: Obviously, this was not a movie that was going to get a theatrical release, but Citizens United had arranged to release it as a video on demand offering a few cable channels, right before the Democratic primaries in January 2008. But it was classified as electioneering communication, which had been made illegal by the Federal Election Commission. The producers filed a lawsuit in the U. S. District Court for D. C., trying to get a ruling that would allow them to show the film and various promotional ads for it.

The district court judges ruled that there was, "no reasonable interpretation of the movie other than as an appeal to vote against Senator Clinton." So it clearly qualified as electioneering communication. The producers appealed to the Supreme Court, which took the case up for some reason. It was a weird decision to begin with for them to even hear this case, because by the time they could hear it, the election would have been passed and the whole argument would be a moot point.

When it ruled in 2010, the Supreme Court upheld the District Court on the fact that the film was, in fact, electioneering communication. But… It applied what's called the Strict Scrutiny Test to the First Amendment and concluded that because the money for this film wasn't being paid directly to a candidate for a campaign, it wasn't illegal under the FEC's laws.

Just to make it clear, the justices emphasize in their ruling that corporations and labor unions can spend as much as they want to convince people to vote for or against a candidate, and they don't have to disclose who's paying for what or to what end.

[00:17:12] Robert Kerr: It basically says that from now on, corporations can spend directly from their treasuries. And that opens up this I mean, incalculable pool of money.

[00:17:25] Amy: This is Robert Kerr, a professor at the Journalism School at the University of Oklahoma. I went looking for Professor Kerr because he wrote two very detailed academic books about what he calls the Corporate Free Speech Movement, and one of them focuses entirely on Mobil oil's role in it, which we're going to get to in a minute.

But first, more on the impact of Citizens United.

[00:17:51] Robert Kerr: All the business corporations in the world can now spend freely from their stockholders money, really. Over the years, because I wrote so much about it, people often ask me to participate in different kinds of discussions. And a lot of people first will say, um, Well, I think corporations should have a right to speak. And that's a broadly held view. Corporations… should have a right to speak. And then, when I'll say okay, but do you think they should have a right, if you've invested in a corporation, should they have a right to spend your investment for political purposes? And they almost always say no. Almost everybody, whether they call themselves liberal or conservative, they almost always agree, well no, I invested that because I wanted to make a profit.

I don't want the corporation deciding which political side, because when people think about it, they realize Um, you know, wherever their personal political views lie, if a corporation can spend the stockholder's money, they might spend it for someone you support, but they could very well spend it for someone you don't.

[00:18:59] Amy: What a lot of people don't know is that there was a key case that came a few decades before Citizens United that was really the first domino to fall on corporate free speech.

[00:19:12] Bob Brulle: There was a pretty big effort to get a Supreme Court ruling that basically supported corporate speech and the right of corporations to do advertising of their, not just product, product advertising, but of their, you know, positions.

[00:19:30] Amy: That's Brown University environmental sociologist Dr. Robert Bruhl. The ruling he's referring to was a case called First National Bank of Boston v. Bellotti. It was brought by a bank that wanted to be able to advertise in favor of a ballot referendum that it had also backed financially.

It violated a state law in Massachusetts that prohibited corporations from this sort of political funding. But the bank decided to challenge that law in a case that went all the way to the Supreme Court and won. It was the first time the court had stepped in to define corporate First Amendment rights.

[00:20:11] Bob Brulle: I don't think people really appreciate how big of a deal that was in shifting the rules of speech in the public space that now suddenly corporations could use their budgets, which are enormously, you know, larger than individuals to, to advocate their position in the public space. And as a, as a sociologist, I would say that what this did was it allowed for a systematic distortion of the public space in that it gives corporations basically a loudspeaker to amplify their voice above everybody else's and in a media environment where there's many, many competing voices, the ability to get your message out And that's what we're Repeatedly, over and over and over again, in opposition to other voices, is, is enormously influential in getting your viewpoint to be part of the public discussion and eventually become part of the taken-for-granted world view.

[00:21:24] Amy: And here's where we bring it back to Mobil Oil and our old pal Herb Schmertz.

[00:21:29] Bob Brulle: And Mobil was one of the leading corporations to fight for that legal right.

[00:21:36] Amy: That's why Robert Kerr wound up writing a whole book about Mobil's role in shaping free speech. A book he actually interviewed Herb Schmertz for.

[00:21:43] Robert Kerr: He was very pleasant, you know, a little bit argumentative, but not much. He said that, looking back, he thought the Mobil op eds demonstrated that corporations can participate in the dialogue, and that Mobil had achieved leadership, and that's basically true, they did. Nobody, no one else utilized the New York Times op ed page the way Mobil did.

[00:22:07] Amy: I don't think he meant it this way, but whoo, sick burn on the New York Times. Embarrassing. Anyway, Mobil didn't just shape public discourse by using the media as a tool. It also got involved in shaping the legal structures that would allow them to have more influence, to be the loudest voice in the room.

[00:22:30] Robert Kerr: He, um, got into Bellotti some. I don't think in his mind, at least many years later, he wasn't looking back like, yeah, we won that and that changed history. He was on the side that won, and it did change history, and of course, that's the thing I can talk about endlessly, but, um, Um, he, he said the reason they got into it at first was that, um, they saw the energy crisis of the 1970s coming, and it, and it was a big deal.

Anyone who was alive then as I was, I mean, it, it dominated, um, not just media discussions, but, Popular discussions and, you know, man on the street, everybody was, uh, for years and years was talking about the price of gasoline going up and the long lines at the gas stations. And, you know, sometimes the gas stations closed because they had no gasoline.

And, uh, he said that Mobil felt that media in general were getting it wrong. And that they had to come in and, and correct things. That's why Mobil got into what they called issue advertising, or affinity of purpose marketing. But they started to look for ways the law could protect that type of marketing because of one big threat to it in the early 1970s.

[00:23:47] Amy: Here's Schmertz talking about that threat in a promotional video he made for the National Association of Manufacturers to circulate to executives at other big corporations.

[00:23:58] Herb Schmertz: Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof. Or abridging the freedom of speech or of the press or the right of the people peaceably to assemble and to petition the government for a redress of grievances.

That was the First Amendment. And you may not be aware of it, but there are two constraints imposed by television networks that we contend are not consistent with these First Amendment rights. And I'd like to discuss these constraints with you.

[00:24:30] Amy: Yep, it was the TV thing I mentioned before. In the early 1970s, high on the success of his weekly New York Times advertorials, Schmertz tried to take a video version to the three big networks, ABC, CBS, and NBC.

ABC and CBS turned them down flat. NBC accepted a couple of the ads but asked for major edits. It was a huge threat to this plan that he and Mobil CEO Rawleigh Warner had cooked up to try to mitigate the impact of the energy crisis on Mobil's reputation and profits. But Schmertz sold it as a huge threat to all businesses and to the American way of life.

[00:25:13] Herb Schmertz: First constraint, which you may not be aware of, is that the television networks take the position that controversial issues of public importance should only be presented in formats determined by broadcast journalists. They contend that the public's interest will best be served by this limitation. The second constraint involves the ability to purchase time to present what we contend is issue or opinion advertising.

The networks take the position that they will not sell commercial time to advertisers to present what They define as controversial issues of public importance. Now, some of the things that they have considered controversial are offshore drilling, oil company profits. Uh, the energy crisis itself has been considered a controversial issue by one station.

Now, when you put these two constraints together, the result is that the American people are not getting adequate information to make up their minds on a very crucial issue, namely the energy crisis and the development of adequate energy for the United States.

[00:26:20] Amy: Schmertz and Warner immediately started talking to business groups like the National Association of Manufacturers, the Chamber of Commerce, and various economics clubs about this looming threat against American business.

And with it, democracy itself. They wrote op eds, they went on the radio, they highlighted the problem in their weekly New York Times spot. They argued that TV was doing a superficial job at best of covering the energy crisis and that by rejecting Mobil's ads, they were robbing the American public of crucial information.

[00:26:54] Herb Schmertz: And the result is that you get really, uh, superficial coverage, a visually attractive story, not one that really relates to what caused the shortage, what caused the crisis, and where do we go from here. Now, that would be alright, if we were allowed to run the commercials that we think the American people are entitled to receive and the information that we would like to impart to the American people, and indeed if others were allowed to present their views so that the American people received a very wide spectrum of views and could get all the information and then make up their mind on these important issues.

But we're not allowed to do that. As I said, television networks say that they will not accept commercials that deal with controversial issues. So that means, as I said, that the issues that we want to present only can be presented in formats determined by broadcast journalists. We can't say it the way we'd like to say it.

And you, the American people, really, are not getting an adequate opportunity to get satisfactory information.

[00:27:58] Amy: We still hear arguments like this today, so let me just emphasize here that the First Amendment protects speech. It does not guarantee reach. Nowhere in the Constitution is every American promised a primetime TV slot.

[00:28:15] Herb Schmertz: Here's an example of one of the ads that Mobil wanted to run.

[00:28:19] Archival Mobil Ad: Well, I thought I'd never see this, uh, this country is big and huge and can do just about anything and let something like this happen. It's unbelievable. I find it very disillusioning to find that government seems to be as naive as all of us.

I don't know. It could be the oil. The company's not being prepared for all the gas that, you know, that we need. The people themselves, everybody, it's just, we went crazy. The past 20 years have been, uh, nuts, you know, with cars and, uh… I don't know what we could do about it, uh, about the shortage. I think people are trying to use less gas themselves.

I feel we can be very much, uh, self sufficient if we just tap our own resources. I don't feel that our own resources have been tapped. All I can say, it was beautiful before. This is ridiculous to stand in line to get gas. We agree. And we're looking for oil everywhere we can. As fast as we can.

[00:29:19] Herb Schmertz: This commercial was made during the period of long gas lines, and this version was rejected by all three networks because they contended it dealt with a controversial issue.

[00:29:29] Amy: Keep in mind this was pre Bellotti. At the time, the networks relied in part on the Fairness Doctrine to justify rejecting ads from Mobil. It didn't necessarily prohibit the networks from taking these kinds of commercials, but it did give them cover to reject things they just thought were not appropriate.

[00:29:51] Herb Schmertz: And we've been running ads on the Editorial –opposite the editorial page of the New York Times for about three and a half years. These in effect have been paid editorials where we have had an opportunity to present our views, views different indeed frequently from the editorial policy of the New York Times. That hasn't caused the Times any problem.

They've been delighted to receive these ads, and indeed they've been delighted to increase the spectrum of views. The networks, on the other hand, have have gone just the opposite direction. They have said that they will not develop a structure to accommodate a wide spectrum of views and have relied on the Fairness Doctrine and have said only broadcast journalists will present views.

[00:30:35] Amy: That difference, of course, was mostly to do with the Fairness Doctrine, which applied to broadcast networks like ABC, NBC, and CBS. But not to newspapers like the New York Times, which Schmertz knew, of course, but acknowledging that fact would not have served his argument that the TV networks were being uniquely unfair to Mobil.

[00:30:57] Robert Kerr: I asked him, did he sell Mobil on this? And he insisted, no, it was the other way around, that management came to him. Rawleigh Warner, who was the CEO back then. I had a pretty good interview with him. A lot of things he said were consistent with what Schmertz said. And he did say that, yes, I was angry about the way the media were getting everything wrong.

And I wanted us to be a bigger voice.

[00:31:20] Amy: Would it, um, did Warner confirm what Schmertz said about Bellotti that, you know, that he sort of, um, put that on, on Schmertz's radar?

[00:31:30] Robert Kerr: Yes, I, I think they saw it as just sort of a… Organic piece of what they were doing with trying to speak out more in general, because they really got active about 72 with their op eds.

And then Bellotti probably came on the radar when it was first kicking around the lower court. So they would have picked up on it, even though it didn't involve the petroleum industry in any way. They just saw it as a chance to expand First Amendment rights for corporations.

[00:32:02] Amy: And they didn't stop there.

Next time, how Mobil turned the tide on corporate personhood, why Exxon kept that work going once the two merged, and how it all played out in Nike's sweatshops in the 90s.

[00:32:20] Credits: Drilled is an original critical frequency production. This season is produced and sound designed by Martin Zaltz Austwick. Our sound engineer is Peter Doff.

Additional reporting by Julia Manapela. Fact checking by Wudan Yan. Our first amendment attorney is James Wheaton. Marketing is handled by Maggie Taylor. Our artwork is by Matt Fleming. The show is written and reported by me, Amy Westervelt. Primary documents and additional information related to this series are available on our website at drilled.media. You can also sign up for our weekly newsletter there. If you'd like to support our work, you can upgrade to a paid subscription to the newsletter, or subscribe on Patreon or Apple for early and ad free episodes plus bonus content. There are lots of ways to support us for free too! You can share the show, and you can leave us a rating or a review, that really helps us find new listeners. Linking to the show on social media is great too. Thanks for listening and supporting us and we'll see you next time!