The Elephant and the Chickens

The powder mill that Eleuthere Irenee du Pont de Nemours built in 1802 on the banks of Delaware's Brandywine River has exploded into a vast corporation that did $3.6 billion worth of business last year, and now ranks 18th on FORTUNE'S roster of the largest U.S. industrial companies. Du Font's base remains in tiny Delaware, 47th in population among the states. That disparity in size intrigued Economist Lewis Anthony Dexter, who studied the situation in 1963 and concluded: "The elephant takes care not to dance among the chickens." It also intrigued Ralph Nader, who feels otherwise. In a report released last week, a group of his Raiders argued that the elephant not only dances with the chickens; it tramples them into the ground.

In the 845-page report, titled The Company State, Nader writes: "Du Pont dominates Delaware as does no single company elsewhere in any other state. Virtually every major aspect of Delaware life is pervasively and decisively affected by the Du Pont company, the Du Pont family, or their designees." Irenee du Pont Jr., 51, a company vice president and de facto family spokesman, told TIME Correspondent Hays Gorey that the charges are nonsense. Du Pont approves a description of the report by Dr. Julian Hill, a retired Du Pont chemist, as "intellectual vandalism." He adds: "I don't believe there is Du Pont family control of Delaware."

Uses of Power. Many of the facts of Du Font's size and reach are beyond dispute. The company employs 13% of the Delaware work force; its $288 million payroll in Delaware is bigger than the state budget. The family controls two of the state's four largest banks. Irenee Jr., for example, is president of the family-controlled Christiana Securities holding company, a director of the Wilmington Trust Co., the News-Journal Co., Delmarva Power & Light and chairman of the Greater Wilmington Development Council. The state's sole U.S. Representative is Pierre S. du Pont IV, a freshman Republican. Governor Russell Peterson is a former Du Pont executive. Together, Du Pont family, employees and associates make up 25% of the state legislature.

The Nader report pries at every chink in the uses of the Du Fonts' corporate and family power. Among the Raiders' charges--and Du Font's rebuttals:

TAXES. Former Senator John Williams, denouncer of Bobby Baker for influence peddling, sponsored a tax-bill amendment that allowed a $2.1 million writeoff for Xanadu, a family estate in Cuba that was confiscated by Castro. Further, say the Raiders, the company and family properties in Delaware are undervalued for tax purposes. Irenee Jr. says that he knows nothing about any contacts made with Senator Williams in the family's behalf. To the other point, Vice President Irving Shapiro, the company's first Jewish director, replies: "If the accusation is that Du Pont is chiseling on existing tax laws, that's absurd. If the criticism is that tax laws should be changed, that may be needed."

THE PRESS. Through Christiana Securities, the family owns 100% of the stock in the company that publishes the state's two largest and most influential newspapers, the Wilmington Morning News and Evening Journal. Creed Black, editor from 1960 to 1964, quit when a Du Pont public relations man was put in above him; the owners, said Black, obviously wanted "house organs instead of newspapers." But now, insists Irenee Jr., the editors "call the shots the way they see them." He says that if the papers were sold to two separate owners, as the report recommends, they would probably not survive financially.

PATERNALISM. Du Pont pensions may be revoked even after retirement for "any activity which is harmful to the interest of the company." Governor Peterson got a written exemption, the report says, in case he had to act in office against Du Pont. What is more, adds the report, the company has fired employees who sought to bring in a national union. Shapiro says that in 30 years the pension revocation clause has been used in three cases, all involving salesmen who took customer lists to competitors. The company contends that it treats its employees so well that they have felt no need for a national union; Du Pont has only local, independent unions.

BLACKS. Though blacks are 15% of Delaware's population, according to Equal Employment Opportunity Commission reports as of two years ago, the state's chemical industry had only 1.5% blacks in office and clerical jobs, .4% as chemists and engineers and none as salesmen. Irenee du Pont responds: "We'd love to have 15% blacks at all levels of employment, but the prime consideration is doing the job properly." He says that few blacks yet have the technical training required.

Good Works. The Nader report was prepared over a period of nearly 18 months by a seven-man task force led by James Phelan, 26, a Yale Law School senior who was once interviewed for a Raidership by Edward Finch Cox, now married to Tricia Nixon. Unhappily, the Raiders' work is marred by contradictions and errors. The Du Pont-owned Chambers Works in Deepwater, N.J., which makes a variety of chemical products, does not discharge 100 billion gallons of effluent daily into the Delaware; the figure is 100 million gallons of dilute effluent--still no small amount. The report complains that the Du Pont company contributes only $5,000,000 to charity annually, when in 1969, for example, it could have taken a deduction for $35 million; at the same time, it criticizes the Du Fonts for playing too great a part in the administration of good works in Delaware.

More gravely, the Nader report garbles its account of the bankruptcy of Lammot du Pont Copeland Jr. (TIME, May 3), son of the recent Du Pont board chairman. Inexplicably, also, the report accuses the family-controlled newspapers of downplaying news that National Guard troops were stationed in Wilmington in 1968 at a time of racial disturbance and stayed for nine months. On the contrary, both papers played the story on the front page for weeks, crusaded to get the troops out and even nominated themselves for a Pulitzer Prize for their efforts.

So Small. Representative Pierre du Pont agrees that his family has had an important impact on Delaware, but he argues that "by and large" that influence has been good. He adds: "Many of the problems discussed in the report are problems of the corporate system in general. Perhaps they are exaggerated in our case because Delaware is so small." Wryly, he concurs with the Nader recommendation that the Wilmington newspapers should be sold. Says Du Pont: "I would get more coverage if they were."

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