Foreign Relations of the United States, 1969–1976, Volume XXVIII, Southern Africa

45. Memorandum From the Assistant Secretary of State for African Affairs (Newsom) and the Department of State Legal Adviser (Stevenson) to Secretary of State Rogers¹

Washington, February 17, 1971.

SUBJECT

• Efforts to Induce American Companies Operating in South Africa to Improve Conditions of Employment of Non-Whites—Information Memorandum

American firms doing business in South Africa are coming under increasing criticism from U.S. domestic and black African opinion, inter alia on the grounds that their presence in the Republic gives moral support to the unpalatable racial policies of the South African Government. We believe that by bettering the conditions of employment of non-whites in their South African plants, American businesses can quietly demonstrate to the contrary that in one important way they are helping to improve social conditions in the Republic in line with the non-discriminatory objectives they support at home.

Over the past year we have developed a number of suggestions that American firms might consider in examining ways to improve their employment, wage and benefit arrangements for non-white South African employees and more generally to support improvements in the situation of all non-white South Africans. We have considered personnel policies followed in the US, the practices of South African, American and other firms in South Africa, and the pertinent South African legislation. We have also discussed the problem with a few selected private individuals, such as William Beatty, a Vice President of Chase Manhattan, George Lindsay of the Lawyers’ Committee for Civil Rights under Law, Tom Wyman of Polaroid, and Professor John Dugard of the University of the Witwatersrand.

We have found that as a general rule American companies are not in the forefront as regards personnel practices, some falling below common standards, and that there is considerable room for improvements which are legally acceptable and, at least in many cases, economically supportable. Our soundings have indicated that the home offices of many of the more than 300 US firms involved in South Africa are ignorant of the realities of the situation there, and we have good evidence that they would welcome additional information and ideas.

It is clear that ordinarily any changes in the employment and other personnel practices of American firms in South Africa must be initiated by their headquarters in the U.S. With rare exceptions managers of American affiliates in South Africa, whether of American, South African or other nationality, are not prepared to act on such matters without explicit guidance from their home offices.

Although a moral issue of worldwide concern is involved, we believe we can best approach American companies on this problem quietly, and from the viewpoint of the firm’s self-interest, as seen within South Africa, in the rest of Africa, and in the United States. In light of the increasing importance to U.S. business interests of significant labor, civil rights, and consumer groups in the U.S., enlightened self-interest necessarily includes what management, consumers, and stockholders of American business accept as consistent with the principle of racial equality. At the present time, any action we or the companies take should avoid the impression of a concerted attack on the racial system as such, for that could stimulate strong South African reaction and damage U.S. business interests.

While some of the business representatives with whom we have talked would like the State Department to take the lead in this matter, we consider it essential for American companies to be out in front. Some, particularly Polaroid, are already there. Others, such as Morgan Guaranty, which has quietly stopped lending to any South African entities (Chase International never has) and will consider loans only to American firms for trade purposes, are limiting their ties to South Africa. Still others, as exemplified by inquiries we have had from Dupont and AMAX, and by the interest a number of firms have shown in the Polaroid program, are worried about the South African situation and looking for an appropriate course of action.

Attached is a paper outlining some of the constructive personnel policies which can be adopted within the present South African legal framework.²

We propose to continue our soundings and to work quietly with a few key individuals in businesses, banks and the legal profession, raising the kinds of questions discussed in the attached paper and seeking to encourage further inquiry and trial efforts in the area.

We do not at this time plan or propose any formal US Government action in this area. Should this seem desirable after our soundings, we will seek your formal approval.

1. Source: National Archives, RG 59, Central Files 1970–73, LAB 10 S AFR. Limited Official Use. Drafted by Keiter on February 13 and cleared in AF/S, L/AF, and AF.
2. The attachment, “Apartheid and U.S. Firms in South Africa,” provides an overview of the problems faced by American companies and their subsidiaries operating in South Africa, and offers suggestions for improving the lives and working conditions of non-whites without drawing undue attention from the South African Government.