History | Smith sonian mag

Before Zuckerberg, These Six Corporate Titans Testified Before Congress

As Facebook co-founder and CEO Mark Zuckerberg testifies before the House Committee on Energy and Commerce about a privacy breach that allowed British political consulting firm Cambridge Analytica to collect data from some 87 million of the social network’s users , he becomes part of a long tradition of Congressional oversight of big business.

Zuckerberg is hardly the first Silicon Valley executive to appear before Congress as part of a larger mea culpa . In 2007, Yahoo CEO Jerry Yang faced congressional reproach for his company’s role in the jailing of Chinese journalist Shi Tao. A few years later, Google’s then-chairman, Eric Schmidt, testified before a Senate antitrust panel in response to concerns around the company’s business practices and unprecedented power to control the access and flow of information.

Tales of remorseful industry tycoons testifying under oath are hardly new. Here are six other meetings between famous business leaders and congressional committees.

1. Andrew Carnegie testifies before the Stanley Steel Committee

In January 1912, Andrew Carnegie appeared before Kentucky Senator Augustus Stanley as part of an antitrust investigation into U.S. Steel. The magnate was in the twilight of his life; his position in American industry was long established. A little more than a decade earlier, his Carnegie Steel Company had consolidated with other major businesses to create an industrial behemoth: U.S. Steel, the first billion-dollar corporation in United States history.

But the anti-monopoly fervor would not stand for such an enormous company, and Stanley, considered a champion of the Progressive Era, chaired the proceedings. They began on a whimsical note, with Stanley apologizing to Carnegie for asking him to stand as a witness. His response was a source of much laughter on the floor: “ I was delighted to get that official document to hand down to my heirs. The signature of Chairman Stanley will count for something .”

By the following day, the sweet atmosphere had curdled into sour congressional resentment. Carnegie declared he was “ blissfully ignorant ” of the financial arrangements that prompted U.S. Steel’s merger and went as far as to say he “never saw the inside of a book of the Carnegie Steel Company.” After another day of fruitless hearings, one congressman could not hide his exasperation: “We have been sitting here for two days and have learned nothing.”

Stanley may have won praise for his incisive character–one early report declared he could “pick a man’s pocket with his eyes”– but he could not crack Carnegie. The Supreme Court eventually ruled in favor of U.S. Steel . Even though Carnegie did not live to see the final decision, the ever-artful steel magnate had gotten the last laugh long before.

2. J.P. Morgan defends Wall Street

A political cartoon making light of Morgan's famous line from his hearing. (Wikimedia Commons)

On December 19 and 20, 1912, the famed banker and “Money-King” John Pierpont Morgan appeared before the Pujo Committee in New York’s marbled city hall. Tasked with investigating the scope and power of Wall Street’s wealthiest members, counsel to the committee Samuel Untermyer faced down the famously brusque and laconic businessman with a deliberate and unrelenting line of questions.

While Morgan contended that the “money monopoly” advanced by the Committee was an impossibility, he admitted to quashing competition among railroad lines at the same time he declared liking “ a little competition .” In another famous moment, Morgan argued his banking house assumed no legal responsibility for the value bonds it issued. Instead, “ it assumes something else that is still more important, and that is the moral responsibility which has to be defended as long as you live .” Morgan would go on to wrongly suggest that he had “not the slightest” control over any department or industry in America and did not even have “final authority” on decisions made by the company he directly oversaw .

Despite Morgan’s poor and somewhat arrogant showing, Untermyer and the Pujo Committee, named after the Louisiana congressman who chaired it, could not prove their grand economic conspiracy. Still, they revealed a tangled mess of involvement: 78 major corporations banked with Morgan , controlling billions of dollars in capital and significant positions of power on many boards. In response to the hearings, President Wilson would sign the Federal Reserve Act, freeing the federal government of its reliance on Morgan and his allies. More broadly, Untermyer’s masterful cross-examination led to a rise in public support for the 16th Amendment and the Clayton Antitrust Act. On a more somber note, perhaps, Morgan’s son and other bank executives later claimed that Untermyer’s inquisition led to his father’s death just a few months later in March 1913.

3. John D. Rockefeller Jr. reckons with the Ludlow Massacre

J.D. Rockefeller, Jr. takes the stand before Congress. (Library of Congress)

Between 1913 and 1915, the Senate Commission on Industrial Relations conducted a sweeping examination of labor conditions in the United States, calling forth hundreds of witnesses from the across the nation. Led by Frank Walsh, a former child factory worker and fiery labor attorney, the Commission interrogated many American business tycoons, including oil kingpin John D. Rockefeller, Jr.

Although Walsh’s examinations were far-ranging, he was especially interested in the Ludlow massacre , a confrontation between a group of miners and the Colorado Fuel and Iron Company, a firm owned by the Rockefeller family. The previous April, members of Colorado’s National Guard had set fire to tents where striking miners were living with their family and fired machine guns into the camp. Nineteen people died in the resulting events, including 12 children. Armed warfare erupted and President Woodrow Wilson had to send federal troops to finally restore order .

The violence triggered a national scandal: protests broke out across cities from San Francisco to New York. Before one hearing on the events in Colorado, a witness said Rockefeller had committed treason and should face murder charges . Yet Rockefeller showed nothing but restraint during his testimony, with The New York Times characterizing him as “ wary and bland ” during the long hearings. Despite subsequent examinations, Rockefeller remained poised, even as Walsh accused him of having direct knowledge of the strike and directing its outcomes.

By the time the Commission prepared its final report in 1916 , disagreement abounded; its eight members published three different sets of conclusions and recommendations. Still, some historians say the events proved an inspiration for the New Deal programs advanced by Franklin Roosevelt a few decades later and describe Ludlow as a pivotal event in American labor history .

4. Joseph Bruce Ismay faces the Senate following the sinking of the Titanic

Senate Investigating Committee questions Joseph Bruce Ismay, a figure at the center of the sinking of the RMS Titanic . (Library of Congress)

Less than a week after the sinking of the RMS Titanic , both houses of Congress launched sweeping investigations into the tragedy. On April 19, the first day of hearings, Joseph Bruce Ismay, the Managing Director of White Star Line, the company that built the ship, came before a committee led by Senator William Smith.

In his opening remarks, Ismay announced that “ We court the fullest inquiry. We have nothing to conceal; nothing to hide .” But across multiple days of hearings, Ismay consistently abnegated himself of responsibility for the ship’s sinking, dodged questions on the specifics of building schematics, and boldly claimed that the Titanic had enough lifeboats for every passenger (it didn’t). Subsequent depositions challenged his remarks and the American popular press castigated him as spineless and rapacious for putting his life ahead of women and children (Back in Britain, his critics were kinder; one weekly newspaper called him a “tragic figure.”) The towns of Ismay in Texas and Montana even debated changing their name to avoid any potential connection to the man.

One Boston historian summed up the popular sentiment with this bit of invective : “Ismay is responsible for the lack of lifeboats, he is responsible for the captain who was so reckless, for the lack of discipline of the crew … In the face of all this he saves himself, leaving fifteen hundred men and women to perish. I know nothing at once so cowardly and so brutal in recent history.”

Although Senator Smith could not prove the negligence of the large companies he so reviled, Ismay would face the consequences of the Titanic ’s sinking for the rest of his life; his trial in the court of the public opinion left an infamous and indelible mark.

5. Tobacco’s biggest names before the Waxman Committee

In an unprecedented 1994 hearing, the seven CEOs behind America’s largest tobacco companies appeared before the House Subcommittee on Health and the Environment. Recent public outcry, led by prominent campaigns in California and Florida spurred the business leaders to fear that the government might try to ban cigarettes outright . The executives faced more than six hours of grueling questioning from an altogether unsympathetic committee. During these examinations, they admitted that cigarettes could lead to health problems, but denied claims that they were addictive.

"As a matter of fact, it is too hard to smoke, and doesn't taste very good," said William Campbell, the president and chief executive of Phillip Morris, the company that manufacturers Virginia Slims.

While the transparency was surprising, few found the arguments convincing. “They are unbelievably smug,” wrote Diane Steinle, in an editorial for the Tampa Bay Times. “They don't blush, though they must know that their denials are without credence. They just continue to act as if smoking cigarettes were equivalent to sucking on a pacifier.”

In response, the Justice Department launched an investigation hoping to prove that the executives had made illegal misrepresentations about nicotine’s addictive properties . Over the following months, the Justice Department would allude to perjury, but executives tended to couch their statements in a way that made it difficult to prove such charges.

Still, the government issued subpoenas to company executives and convened a grand jury to interview witnesses. By 1996, all seven of the tobacco industrialists had left the business in response to the probe . Two years later, four of these tobacco companies agreed to pay $246 billion over a period of 25 years, still the largest civil-litigation suit in history. In addition to the massive payment, the agreement made significant changes to advertising and marketing restrictions , including banning cartoon characters and promotions on billboards.

6. Kenneth Lay’s audible silence during Enron’s plunge

It should come as little surprise that some congressional hearings result in no disclosures of significance. In 2001, Enron, one of America’s 10 largest companies, collapsed in what the New York Times editorial board declared “ the most spectacular corporate demise ever .” In the following months, multiple senior members of Enron invoked the Fifth Amendment, including former CEO and Chairman, Kenneth Lay.

On February 12, 2002, he appeared before the Senate Commerce Committee to face more than an hour of furious remarks from senators. “The anger here is palpable,” said Senator John Kerry of Massachusetts. “We are all reduced to a sense of futility.”

Lay sat through the proceedings unmoved, only speaking to deliver his prepared statement. “I come here today with a profound sadness about what has happened to Enron, its current and former employees, retirees, shareholders, and other stakeholders. I've also wanted to respond, to the best of my knowledge and recollection, to the questions you and your colleagues have about the collapse of Enron. I have, however, been instructed by my counsel not to testify.” He continued by asking for individuals “not to draw any negative inference because I am asserting my Fifth Amendment.”

His plea didn’t stop the public from making their discontent known. “These men apparently have lied, cheated and stolen, and they have done so with an air of entitlement that should freeze the blood of every hardworking American,” wrote one woman from Tampa, Florida, to The Washington Post .

“Until proven otherwise, Mr. Lay is legally innocent -- but without a doubt he's guilty of a host of outrages against our collective sense of decency. Let him squirm,” added Gary Parker in a letter to the editor, also to the Post. Despite the outrage, Lay would not spend a day in prison: He died in June 2006 while on vacation, about a month after he his conviction for 10 counts of fraud, conspiracy and lying to banks.