SMITH:... We have two proposals which I guess most people in this room are interested in. These were put forth by a group of seven stockholders calling themselves the Project on Corporate Responsibility. This group purchased 12 shares of GM common stock in January of 1970. The group has implied that the efforts by General Motors have not been adequate in fulfilling its responsibility to the community as a whole.

These proposals would create a committee to represent special interest groups and increase the size of the board of directors to include three representatives-not on the basis of their interest in General Motors-but rather on the basis of their sympathy with members of the Project.

The members of the committee will be chosen by majority vote of a group composed of one representative of the Project, one representative chosen by the United Auto Workers, and one representative of the Board of Directors.

Now General Motors believes that the purpose of this proposed committee is to harass the corporation and its management and to promote the particular economic and social views of the Project.

We really believe this committee will restrict management's ability to meet its responsibility to the stockholders and to the public.

We believe that if General Motors is to fulfill its responsibilities in the future that it must continue to prosper and grow.

Indeed, the corporation can only discharge its obligations to society if it continues to be a profitable investment to its stockholders along with meeting its public responsibilities.

We believe that General Motors could not have achieved this record of success and leadership in our growth and progress unless it well served the interest of the public and its stockholders.

We are proud of our record. We believe we have done an excellent job of meeting our responsibilities. That is why along with our proxy statement this year we will mail a booklet. This booklet is a compilation of GM's record of progress.

It outlines the corporation's accomplishments in the areas of automotive safety, air pollution control, mass transit, plant safety and social welfare. The problem of vehicle emission pollution from manufacturing plants, and the safety of persons using our product.

These are many of the areas which affect the general public welfare and areas in which we think we've got a good record to demonstrate.

These are not new problems to General Motors. We have been responding to them because they're part of our job.

As far as criticism of General Motors, the project has implied that General Motors is against automotive safety, that we are against effective low cost mass transit, and that we are against effective emission control, and that we are against social welfare. Nothing, of course, could be further from the truth. General Motors is working diligently in all of these areas. And, more, we believe that we have an excellent record.

How well General Motors has fulfilled its responsibilities to the customers, the dealers, our employees, our stockholders and our public, we believe, should not be measured against an arbitrary criterion supplied by the Project, but rather against our own achievements which we can document.

One of the major areas that probably has not been as well documented publicly because it is more recent is the area of exhaust emission control. I would like now to ask Dr. Bowditch to take over and do some explaining about this very important area.

(Bowditch's speech appears on page 9.)

Questions and Answers:

Q. It strikes me that the real issue here is whether General Motors and its shareholders might be better served by a board of directors which is more broadly representative of the various segments of our society representing GM's interests. As I look at the list of directors, it is almost exclusively an industrial and financial organization.

No attention has been paid in the pronouncements of GM or today with respect to the proposed nominees and the concept of a somewhat broader board to reflect a more diversified list of representatives. Can you comment on this suggestion as a way of measuring up the board with the long term interests of society and the corporation's public?

Smith

SMITH: We believe that the corporation in this society is not working against the interests of the public. We believe that General Motors has met the public interest.

We believe that it has sold a product at a price people can afford and committed ourselves very well in an area where we have laid out a record of responsibility to our general public.

You are talking in a matter of degree. How much do you want the shareholders to be represented by representatives of the public? I would say this to you: these men who are on our board now-while their principal occupation in many cases is an industrial one-if you look at each one carefully and individually, you will see that all of them have been engaged in many public endeavors. Connors has been secretary of commerce... an other director was president of Duke University and he has done an outstanding job there as an educator. I think he brings a good background to the board. Geographically, we have a gentleman from Canada and a gentleman from Chicago.

As I said, I think it becomes more and more a question of degree and I feel that, on our board, you can find men who bring this broad background to General Motors and who do so in the interests of General Motors and its stockholders equally. And I think those are the people who can best serve our stockholders and the company. The fact that they have done so is demonstrated by where we are today.

Q. What guarantee are we going to have that someone is going to be sitting on the Board of Directors making top-level policy decisions saying that we're going to have to invest 10 per cent of our capital in, say, pollution control?

SMITH: I'd like you to judge us on the basis of our past performance. You can carry words in a bucket but its the deeds that will come to account.

All you have to do is look at the cars that are out on the road right now and see that the energy-absorbing steering column was developed by General Motors prior to the government's conception of any such standards. We developed this; submitted this to the government; they took a look at it, liked it and felt it was a very good attempt. It has been credited as being one of the finest things for saving lives on the highway today, and that was adopted by the government as a standard.

We have many more of these things where General Motors has not waited for the standards to come....

Q. Development is one thing, but actually putting it into the car is another. I don't think the collapsible steering column went into the car before the government made it a standard.

SMITH: Oh yes it did. It went in well before.

Non-White Dealerships

Q. In response to your statements that by your deeds you should be judged, I would like to ask whether it is true that there are only seven non-white dealerships out of 13,000 General Motors franchises? If that is true, what do you intend to do about it?

SMITH: Well, I don't know whether the figure seven is what the accurate figure is, but this gets down to seeking qualified candidates for a qualified job. There are no restrictions as to who may become a General Motors dealer. Anybody can become a GM dealer that can meet the qualifications-and these qualifications are not based on race, religion, creed, or anything else like that.

It's who can enter in and do a business and have a chance of serving our customers. We have an obligation: we cannot take somebody into a dealership who cannot serve our customers, who would not have thefacilities, who would not be able to service our products. So the determination of a number of dealers by any racial criterion is not a numerical consideration.

Q. Well then I take it that it is not a matter of either corporate responsibility or corporate management to develop programs that would enhance the ability of non-white groups to meet those qualifications?

SMITH: No, as I said, I think we have a deep responsibility and I think we can demonstrate it with the fact that we have worked it with a number of non-whites in all sorts of areas in developing supplier relationships, in our employment we have done something that will go a long way toward this.

General Motors has organized the MESBIC if you are familiar with it. It's a Minority Employment and Small Business Investment Company and we have invested a million dollars just to go toward helping people.

Now a million dollars is a lot of money, but more importantly we are trying to help people by working with them. Just to give somebody some money doesn't do anything for him if we don't supply the technical help, the engineering help; and we hope to organize the businesses in our plant cities so that our plant personnel and engineers can go out and actually help these people. This is a policy to come out of our board, they're the ones who authorized the million dollar investment.

Q. How long has this plan been going?

SMITH: The Secretary of Commerce approved our plan today to organize this in plant cities across the country.

Q. You viewed the prospective shareholders' committee as a potential special interests group and likely a harassment to the Board and management of General Motors. Do you feel the same way about the proposed three public interest board members or could they perhaps provide some worthwhile input?

SMITH: Any time anybody is elected to any office by a group that put them in there, I think it would be reasonable to assume that these people are going to be responsive to the demands of the group that put them there. To me that seems a fundamental axiom.

Q. If GM's record is so good then why does GM oppose any of these recommendations from the Project on Corporate Responsibility and if so which of the recommendations do they oppose?

SMITH: Specifically, we're opposing a group who has been elected to represent special interest and not the interest of the stockholders.

Transit Lobby

Q. The Project on Corporate Responsibility has made the statement: "The least General Motors can do is not to lobby against the use of government funds for public transportation." Is there any truth in this statement that GM hasn't supported public transportation?

SMITH: The best way to get at this is to look at what we consider the facts. I'd like to read one thing that goes back to 1963-and this is our position on mass transit.

Mr. John F. Schwartz, then president of General Motors, said "Certainly, it is important that in our planning for the future we seek improved mass transit. Every large city needs it; but it is a serious mistake to assume that planning for better urban transportation is a matter of choosing rail over road, public carrier over private car. Sound planning involves a proper balance, the right mix; for no one mode of travel can serve all the needs for mobility in a modern city."

Now speaking directly to the point, on March 11, 1970, Oscar A. Lundine, a vice-president of GM, testified before the subcommittee on housing, from the house committee on banking and currency, on mass transit.

At that time, he said "We are convinced that there is expanding need for public transportation including both bus and rail systems. We are anxious to cooperate in all possible ways with federal state and local officials in their efforts to meet this need. We encourage the enactment of the urban mass transportation assistance legislation."

Q. I asked about the use of funds for public transportation.

SMITH: As I say here we just urged the passage of the urban mass transportation assistance legislation.

Q. But has General Motors ever lobbied in Washington against funds for mass transit?

SMITH: I believe we have supported mass transit in the most effective way I know-of appearing before the Congress down there and urging the enactment of the mass transit bill.

Referring back to Mr. Lundine's testimony at that time he also told them of our transportation research section in the GM laboratories, which has been very active in taking an overall systems approach to the solution of transit travel. We are at this time undertaking for the United States Department of Housing and Urban Development a study on urban and mass transportation.