Chapter 12, Part 2

By Frank Tursi, Susan E. White and Steve McQuilkin
JOURNAL REPORTERS
© Winston-Salem Journal

While it battled the FCC, the tobacco industry had to steel itself for a more involved fight with the Federal Trade Commission. At issue was the Federal Cigarette Labeling and Advertising Act, which was set to expire July 1, 1969. The FTC had led the charge against cigarettes after the first surgeon general's report, but the 1965 labeling act prevented the agency from taking any action on cigarette advertising for four years. If the law expired, the commission would be able to require health warnings on advertising. State and local governments also could pass their own rules on cigarette labeling and advertising.

North Carolina's Sen. Sam Ervin urged farmers everywhere, in their own self-interest, to stick together and support tobacco growers. (Journal File Photo)

The industry supported the status quo. The weakly worded surgeon general's warning hadn't hurt sales and had the potential side benefit of reducing future lawsuits. The tobacco companies also wanted to remain exempt from state and local laws on cigarette advertising and labels.

The FTC, however, contemplated much tougher measures. It recommended, for instance, that the label be changed to: ''Warning: Cigarette Smoking Is Dangerous to Health and May Cause Death From Cancer and Other Diseases.'' The agency also wanted a law to require that cigarette ads carry the same warning and that companies be forced to divulge the tar and nicotine content of their brands. Both measures had been debated and rejected by Congress in 1965.

When passing the labeling act, Congress ordered the FTC to report on its effectiveness. In its 1967 report, the FTC found that the labels weren't stopping anyone from smoking. ''Because cigarette smoking is so strongly habit-forming, it is unlikely that a mildly phrased cautionary statement will have any effect on confirmed cigarette smokers,'' the agency said.

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

Each TV viewer saw about 66 cigarette commercials a month, the FTC reported. For teens the exposure rate was almost 61 a month and for children 44 a month. The FTC noted that manufacturers spent more than $225 million on TV ads in 1967. Throw in radio ads, and the industry spent more than $250 million on broadcast advertising.

In the face of such numbers, the FTC recommended that cigarette advertising on television and radio should be barred entirely. If not banned, then cigarette ads should be limited to certain hours and to programs that didn't appeal to kids.

The FTC's recommendations didn't surprise the tobacco industry; the idea of a TV ban had been supported by Sen. Robert Kennedy before his assassination in 1968 and advanced by Sen. Frank Moss, a powerful Democrat from the anti-tobacco state of Utah. As a result, it was put on the front burner and prompted a slew of bills in Congress. (Kluger footnote; some broadcast ban information.)

Tobacco could still flex considerable muscle on Capitol Hill. More than 50 million adult Americans smoked. The industry employed more than 100,000 people, paying them $500 million in wages. Then throw in the 4,500 wholesalers who handled cigarettes, hundreds of thousands of merchants, truck drivers, printers, and people who made cellophane and aluminum foil. All depended on cigarettes as a source of income.

Sen. Sam Ervin knew that this wide net was also the source of the tobacco industry's political clout. Though important in his native North Carolina, tobacco wasn't a major commodity in the rest of the country. Many more farmers nationally grew wheat, corn or soybeans than tobacco, and only 34 senators represented tobacco-growing states and only 63 of 435 congressmen had tobacco grown in their districts.

Farmers, regardless of what they grew, had to stick together to beat back hostile legislation, Ervin wrote in a letter to farm groups in 1968. Tobacco today; maybe soybeans tomorrow. (Ervin footnote)

''Today, it seems more essential than ever that tobacco's friends unite in support of programs for other commodities,'' he wrote.

Before the cigarette controversy erupted in Congress, Ervin had never been the darling of the cigarette makers. He was staunchly opposed to civil rights, while those who owned the tobacco factories were somewhat more liberal in that regard because they employed thousands of black workers. Ervin also generally opposed legislation that helped cities, which is where most of the factories were. Since the 1965 labeling act, though, Ervin had proved his worth, faithfully doing the companies' bidding.

Ervin and the rest of the state's delegation prepared for battle when the House Committee on Interstate and Foreign Commerce took up the new labeling bill in April 1969. Paul Rand Dixon, the chairman of the FTC, defended the agency's recommendations for tighter regulations. ''A product that is as hazardous and heavily advertised as cigarettes should be subject to more, not less, regulation than now exists,'' Dixon told the committee.

Health reports by the U.S. Department of Health, Education and Welfare showed that young men who smoked heavily could expect to live eight fewer years. Yet, advertisements showed smoking only as a pleasurable activity enjoyed by healthy people. ''Advertisements that foster indifference in the face of so grave a danger are in need of ballast,'' Dixon argued.

One major area of contention was the stronger warning that the agency wanted. Many of the committee members seemed hostile to Dixon and the FTC. How could the FTC require tar and nicotine numbers when no one knew what were safe levels? Why wasn't Dixon's FTC going after alcoholic-beverage makers?

Joseph P. Cullman III, the chairman and CEO of Philip Morris and chairman of the executive committee of the Tobacco Institute, represented the industry. Cullman took the place of Bowman Gray Jr., the RJR chairman who had recently died and had been the industry's spokesman during the first debate on warning labels. Cullman lacked Gray's disarming style and Southern wit, and he didn't relish stepping into the spotlight. Though faced with a few hostile questions, Cullman was treated respectfully and handled himself well.

The House hearings were a pro-industry whitewash that produced a bill that extended the labeling requirement for six years with marginally tougher wording: ''Warning: The Surgeon General has determined that cigarette smoking is dangerous to your health and may cause lung cancer and other diseases.''

Even that wording was too forceful for Charlie Wade, RJR's legislative-affairs chief, who said in a speech June 4, 1969, that no warning was needed. ''But if we have to have a hazard label,'' Wade reasoned, ''isn't it better to have the surgeon general blamed for this statement rather than have the people who read it think that the manufacturer, or Congress, or some medical authority believe it so?''

Tobacco's normally united front was beginning to crack, however. Robert Wald, Lorillard's young Washington lawyer, said publicly a month after the House hearings, ''It is inevitable that television advertising is going to end, one way or the other.'' (New York Times Magazine footnote)

The broadcasters, who had been tobacco's allies since the first label fight, broke and ran. The Senate, with Moss threatening to filibuster the House bill, wasn't going to be a pushover, and the broadcasters feared the fallout of a bruising battle with powerful senators. They announced in April that they would gradually end all cigarette advertising by 1973.

Feeling betrayed, the tobacco barons, who had not been consulted by the broadcasters, began to see the political handwriting on the Capitol wall. Earle Clements, the former senator from Kentucky and the retiring president of the Tobacco Institute, advised that the industry had better seek favorable terms or risk a humiliating rout in the Senate.

A ban did have a few things going for it. The companies would have a pile of money to use to diversify or simply to boost the bottom line. It would also effectively eliminate any chance that a new competitor would ever enter the cigarette business because launching brands was prohibitively expensive without television.

For RJR officials, it seemed like a sweet deal. They ran the largest company and thought -- naively in hindsight -- that a ban would lock them in at the top. A timely retreat could also stave off more destructive prohibitions, such as warning labels on ads as well as packs. Most important, though, a TV ban would end the free air time that stations that carried cigarette ads were required to give to anti-smoking groups under the FTC's fairness doctrine.

So it was that Cullman announced at the Senate Commerce Committee on July 22 that all cigarette commercials would end Sept. 30, 1970, when contracts with TV stations expired. As part of the bargain, a specific reference to cancer or any other disease was removed from the proposed new warning, but the FTC was empowered to consider warnings on all forms of advertising.

''The alleged altruistic purpose of the offer . . . was to remove cigarette ads from media which had an especial exposure to youth,'' said an internal memo prepared by lawyers for Reynolds in the 1980s.

As a final reward to the industry for accepting the inevitable, the bill that President Nixon signed on April 1, 1970, pushed back the effective date of the ban to midnight, Jan. 1, 1971, to allow the companies one final fling during the college bowl games.

After the ban, the industry had a pile of money that could no longer be spent on TV or radio ads. And its ad men and marketers faced a challenge: How to transfer the imagery of their brands from TV to other forms of advertising. It was a task that would reshape the cigarette industry. It would also build another business, this one based on fast cars, guts and marketing.