Friday, March 30, 2007

Flashback: The Meeting With Javits…Setting an Agenda…Hiring a Staff…Across-the-Board Set-Aside Approved by Nixon…and The Chill turns into a Deep Freeze.

[More than 50 years of politics, a memoir for my kids and grandchildren].

Getting in to see Jack Javits was easy, me using the Quaker Oats identification more than my relatively lowly Commerce post. And convincing him was easy. Jack Javits, regarded as the quintessential liberal Senator, albeit Republican, was viewed with high importance by the Nixon people because of his role as ranking Republican on Senate Foreign Relations. As such he had an enormous influence in support of Nixon’s plan to steadily reduce U. S. involvement in Vietnam paired with the tricky rationale for at the same time expanding the fighting beyond the borders of Vietnam—into Laos and Cambodia—to show a steady resolve not to be pushed out of Southeast Asia. Javits did not support the Laos and Cambodia excursions but was a good soldier. Hence the Nixon people were heavily indebted to him.

At the same time, Javits was a strong proponent of the Environmental Quality Policy act which was being pushed in 1969—a Nixon policy initiatve—which set up the EPA. Also he was a powerful figure on the Senate Select Committee on Small Business which heard our proposals. The conversation went along these lines:

Javits: Let me say that after dealing with some of those guys in the White House—Ehrlichman, especially—I’m gratified that somebody in the administration wants to do something about building a minority, particularly black, middle class. It may not come forth with political benefits in our lifetime but (a) it’s the right thing to do and (b) it will bringing dividends in giving hope to minorities along with increasing their option of considering us as a viable second party. Congratulaions.

Me: Thanks but the White House doesn’t know I’m here so the less they know the better. My hope is, Senator, that you will advocate this thing [set-aside] with Ehrlichman without telling him that I have visited here. When he brings up the issue that it is of quotas—which he did with me--you can tell them that right now there is a quota for black businesses getting government contracts—and that quota is next to zero.

Javits: I don’t deal with Ehrlichman; I decided that during the campaign. I deal with the president. And I can tell him straightforwardly that this is the way to go. He’ll say [imitating Nixon almost to a T] “Jack, neither the blacks nor the Democrats will do a damn thing for us even if I do this thing. Take a look at Everett [Dirksen]. He brings in the whole civil rights bill, gets southern conservative support for it, it passes and he damn near gets licked in Illinois due to the black community.’ I’ll play him in reverse English. I’ll say, `Dick, your enemies are betting that you’re too petty and small a man to approve this because blacks haven’t done a damn thing politially for you.’ That’s a kind of goad that will spur his contrarian urge. He’ll say, `well if that’s what those sonuvabitches think I’ll show `em.’ My experience has been that on occasion this is the strategy that works.

Me: Well, thank you, Senator. Just so my name or office doesn’t get dragged into the discussion. Not that Nixon knows me but Ehrlichman does. And I imagine Ehrlichman will be in the room.

Javits: Maybe, but you won’t be mentioned, don’t worry.

The next thing I heard was, several weeks later, when Dave Koch came in my office, practiced a wide-arc golf swing and said, “Congratulations, sir. We faceless civil servants have just discovered that the president is preparing to sign an executive order setting aside a portion of all federal purchasing contracts to firms run by minorities that qualify—this to run for a period of nine years.”

Now how do you know that, David?

“Correspondence Control is very efficient—transmitting letters to and fro. It seems Senator Javits made a powerful impression on the president, pulling his weight as a supporter of foreign policy initiatives. And it seems that Mr. Ehrlichman and Mr. Haldeman didn’t want to push it but at the last minute Mr. Kissinger of all people weighed in and said that he feels Senator Javits’ support on the Vietnam question is so crucial that the administration should give him what he wants. This is a memo from Ehrlichman to Stans which went out to here today—and is due to arrive here tomorrow morning.”

If so, Commerce’s Correspondence Control hasn’t seen the memo yet, right?

“Right, sir.”

Then how does our Correspondence Control know that the White House Correspondence Control is processing the memo?

“A junior assistant in our Correspondence Control—another faceless professional—has a sister over in--.”

I see.


With the first item on the agenda approved (even though we were not to know for several weeks), I turned to other items on our agenda.

First was hiring a staff. I had some ideas who should occupy the key positions. There should be a private sector director in charge of mobilizing businesses to get involved in voluntarism on the side of minority enterprise and I had in mind Walter Sorg of Glencoe, Illinois, the scion of a wealthy financial publishing house in New York and Chicago. There should be a public sector director in charge of designating which of the 116 federal programs we could target—and I had decided on Gary Baden, a Democrat, a Commerce veteran who had gone to work for John Lindsay in New York and was very unhappy. The head of our Community Outreach department which would build relationships between us and the minority communities should be given to James Sexton, a black civil rights lawyer and ally of Venable. Under him, I wanted to put a bright young Chicago attorney who was pressing to come to Washington, Bill Geimer.

I had plans for Geimer whom I knew when he was structuring the ill-fated Community Self-Determination Act that didn’t pass Congress but I felt—and still do—was indispensable to promoting a thriving black economy. A final thing-to-do before I was to get fired would be to turn over a formal strategy paper on minority enterprise to the secretary and directly to the president. My view was that a public-private for-profit corporation—no government funds—should be created and that the office I was holding should be abolished, making sure that for the first time in modern history a federal office in the bureaucracy would be dissolved to be replaced by the public-private.

Geimer was the only one I knew who could legally design such a corporate structure. A gifted conservative with a sophisticated social conscience as well as a superb writer—all tied together with marvelous legal acumen—he was the understated star of the office’s economic development unit. He went on to several roles in the federal government—an assistant in the White House who helped put on an exemplary White House Conference on Youth at a time when many youth of the time were spaced out, long-haired and tipping over buses on the streets of Washington…a top aide to Don Rumsfeld when he managed the difficult price control agency…a private lawyer who helped us at Quaker structure an innovative self-regulation unit for advertising…a lawyer who helped us at Quaker design legislation that was introduced in Congress to ward off a hostile takeover…and ultimately the founder of the Jamestown Foundation which was a key private sector resource during the Cold War and which is now performing a great mission informing Americans on the war on terror. Unfortunately, like David Koch, Bill Geimer died at an early age. It was a great misfortune that something came between us in the post-Commerce years that interrupted our friendship which he disdained to join with me to repair—for which I grieve in retrospect.

There also was opposition among blacks to have a strong Hispanic unit created—and I was determined to create one by hiring Arthur Ortiz, an Hispanic who had just left Quaker Oats to head that unit. Another man I wanted to hire was a Chippewa Indian who knew the problems of the Indian community and in particular the reservations (I had had some experience with unutterable Indian poverty at reservations in Minnesota) and who was the ideal man for that. I wanted a good statistician, an expert on economics and wanted Barbara Flower of the Conference Board in New York to join us to head up that operation. I needed a computer specialist (even in those early days computers were necessary) and I wanted to move a guy from another division of Commerce to take over that role, Bill Rock.

I needed a banker to work under Sorg in the Private Sector—and that would be Bill Kneisle of the First National Bank of Chicago, an active civil righter with an extraordinarily good sense of banking and a South Dakota white lawyer with an infectious personality and marvelous dedication, Richard Hopewell. For Community Relations I even hired an ex-priest who was indubitably the least religious man I ever met. In all the categories there were a roughly even number of minorities and minorities—which, believe it, got me into disfavor with the secretary’s people. A very senior official under the secretary said this to me: “we think the point ought to be white people hired to help minorities—not so many minorities as you have hired. How can they help minorities?” Believe it or not this was put into memo form with only slight wording change—which, when David Koch read it via Correspondence Control, caused him to come into my office, close the door firmly and burst out in laughter: Welcome to the Commerce Department that I have always known!”

I then knew I was a dead duck. I could only shake my head.

But I continued to staff-up. I needed a liaison between our office and the Hill—and that would be a Democrat, Terrence Scanlon, the nephew of Senate Majority Leader Mike Mansfield, who had begun, actually as a Senate page, worked in the JFK White House and was in close touch with his uncle (he later became a Republican, was named chairman of the Consumer Product Safety Commission by Ronald Reagan and heads the conservative Capitol Research Foundation in Washington). For other contacts, including a fairly wide swath of Republicans and Democrats, I’d do the rest. For Communications, I’d do it. Also each Monday morning at 8 a.m. I’d like a staff meeting of all the professionals with guest speakers from the private sector—including Louis Kelso, author of the “Two Factor Theory.” I would want to get business economists coming in her gratis to be on hand for bull-sessions.

We needed a presidential advisory commission on minority business composed of major CEOs from around the country as well as minority businesses—not unlike the Chicago United task force that mobilized the city’s resources in the early 1960s. I wanted Bob Stuart on the Commission and Javits had suggested a Rockefeller, maybe David, to head it up. (That was vetoed quick; Nelson Rockefeller and Nixon were still at odds).

Then with the staff lineup falling in place, I sketched out the various things I thought the office should accomplish. Stan had an idea of setting up Minority Enterprise Small Business Investment Corporations to provide capital formation to qualifying minority businesses. It was a good idea. The SBA Investment Act of 1958 had authorized SBA to license and support Small Business Investment Companies to finance small business which had difficulties raising capital. An SBIC was capitalized by private investors at a minimum of $150,000. The granting of a license to run an SBIC required the investors agreed on certain restrictions on their investment activities in return for which the SBA would agree to lend twice the capitalization to the SBIC by purchasing SBIC debentures.

SBICs were largely vehicles to create white small business. Stans had the idea of a MESBIC which did not require the Nixon administration to spend any political capital getting authorization from Congress; it was also cheap. I came up with the idea that MESBICs should be sold to the blue-chip companies whose CEOs would be on our national advisory commission. There was some unease about that because the CEOs were delicate creatures in Stans’ view, because, of course, he had in mind that he would have to work with them raising money in 1972 for the reelection. But, aw, I said: this is 1969—a full three years away. He said o.k. grudgingly.

Then we came to grips with his native reluctance to ask Nixon to do anything for us. Naming the advisory committee, I thought, would be a good opportunity for the President to call the CEOs on the phone and invite them to serve—underscoring the importance he placed on the mission. But as I talked with Stans, it was clear that the Chill was still continuing. The president was definitely cool on using his influence in any way to help minority business—and, for that matter, Stans himself was not enthusiastic about doing it. So we did it by letter.

I asked the Oracle (David Koch) why the Chill.

“Umm. Let me find out.”

A few days later when I came back from lunch he was in my office practicing golf swings with an imaginary club.

“The secretary still thinks he has a shot at Treasury because David Kennedy is a disappointment and he doesn’t want to rile up the waters because of this program which could screw up his chances of getting it. Ehrlichman is decidedly against it because of the friction in could cause in the South. Haldeman is very cold. Moynihan sees it as a possible attention-getter from his welfare reform and he’s been scotching it. Finch loves it but he’s at HEW and being gunned down behind his back in the White House and doesn’t know it. You’re going to have to improvise without the president and largely without the secretary. You’re lucky.”


“All those good recommendations about you in your file—everybody from the former Republican governor of Minnesota to private citizen Hubert Humphrey—say you do better when unsupervised. The president and secretary are going to leave your program alone, baby!”

What happened to the faceless professional who called me sir all the time?

“You corrupted me with your ad hoc ways.”


There were more elements to the program, many worked out between Abe Venable and me. I required the newly hired office to work as a task force (there were about 25 professionals) to draw up plans for private sector involvement including franchising…promoting minority ownership by asking established franchisers to commit a minimum of 25 franchises to minorities in a two-year period in return for SBA assistance…automobile dealerships...with only seven out of 28,000 in the hands of minorities, how do we go about convincing the big automobile companies to set a goal of 25 each for a total of 100 dealerships for minorities for, let us say, an unspecified time span?...

Service station dealerships…increasing the number…business opportunities retailing…getting trade associations and retail groups to launch businesses in their trade, modeled after a successful once by the Menswear Retailers Association…turn-key…we’d need specific economic advise on this to work with large corporations to “spin” off a subsidiary to minorities once the subsidiary was started (I was dubious this would ever work; and it didn’t).

Voluntary contract preference…getting businesses to patronage minority firms through advertising via the Ad Council (I was enthusiastic here)…

Abe and I tussled over other aspects of the program like Business Opportunity Centers where offshoot agencies of our office would be set up across the country to provide sources of information on business opportunities for minority people…which I thought was just the old federal government’s yen to expand to branch offices. I also ditched Abe’s two choice ideas the Foundation for Equity Capital, a charitable foundation that would receive contributions form individuals and institutions to invest in minority enterprise (which I couldn’t reconcile with its non-profit status) and a Credit Guarantee program which was nothing more than a federal grant to the black National Bankers Association which I thought would be money ill-spent.

But the more I thought about it the more I thought we ought to put our maximum resources on selling the idea of a profit-making public-private corporation. I tried the idea on Javits who had a sharp businessman’s acumen and he loved it. Because Geimer was not being used effectively where he was lodged in my new agency, I promoted him out from under, made him my special assistant, sat him down and asked him to immediately draw up a corporation based largely on the Community Self-Determination program which would be my coup de grace as I left—either under my own power or kicked out the door by the secretary.

“Huh?” he said. “You are so defeatist as to be planning your swan song after you just arrived?”

Before I could answer, Dave Koch who was practicing imaginary golf swings in my office said, “exactly.”

Midway through the year, my new agency started to exhibit internecine jealousies…blacks didn’t like the Hispanics…whites wanted to work more with Hispanics than blacks…Hispanics felt they were being pushed aside by blacks…blacks felt white women were rising to the fore more quickly than black men. The only happy one seemed to be the Indian, a super-minority of one who flowed freely between the offices, some of which were black-dominated, some white-dominated, some-women dominated. So I decided to throw one hell of a party and get everybody drunk, `fessing up to their faults. How to do it on federal money?

I didn’t do it on federal money. I arranged through Bob Thurston, my old boss at Quaker to have Quaker rent a private dining room at the Madison hotel, with a bar and bartender, the menu of choice steaks and prime rib. Pat Racey, my old assistant, attended as a kind of chaperone. On a Friday night after everyone was stressed out after fought like animals about meaningless things like jurisdictions and turf, we loaded them into a bus and took them to the posh Madison Hotel where in a private room I told them how much they all meant to me…and invited them to rehash their grievances as we drank the night away—but I would not let them out to go home until they made what in my church is called “a firm purpose of amendment”—i.e. promising to share grievances early and get along from that evening forward.

This they did after a five-hour bacchanalia which began with anger and denunciation and wound up with remorse, tears and lachrymose speeches, which crested when an American Indian lawyer I had just hired made the politically horrendous announcement that as an Indian who had consumed firewater he was going to scalp the entire party. A black stood up and gathered the few women in the group and shouted in memory of the old two-reel cowboy movies, “stop! You know what they do to white women!” Whereupon white women yelled “yippeeee!” and black and Hispanic women shouted irreverently, “we are discriminated against!” while the Indian ran around the table whooping and twirling his napkin in frenzied ritual. Pat Racey, an abstemious Puritan, was scandalized to the bone, looked like a minister who stumbled in to a bawdy house (he told me repeatedly until my 1991 retirement from Quaker that Gary Baden blew his nose into the restaurant’s linen napkin; I responded that if that’s all he could object to, I was not worried).

The party was a superb catharsis and ended any discontent for the balance of my tenure, during my final weeks of unmitigated tension where Stans tried to build a grassroots mutiny in my office; everyone was coolly unreceptive to such inducements for mutiny coming from him—our only betrayer being the ex-priest …but when he went over the side it was too late to matter. But that it was the ex-priest rather figures, doesn’t it?

My remarks at the bacchanalia dealt with the number of car dealerships in minorities’ hands: 7 out of 28,000…and I said that we would immediately launch an effort where, it would be hoped, the president or the secretary would call the CEOs of the then big automobile companies—Henry Ford II, CEO of Ford; James Roche, chairman of GM; Roy Chapin, CEO of American Motors; and Lynn Townsend, CEO of Chrysler—and invite them to meet with us to volunteer to make available twenty-five dealership opportunities to qualified minorities whom we, in liaison with the Urban League, would find and the League would train. That was my hope. But even then we were all pariahs. The president had turned down the temperature from a chill to a deep freeze on minority enterprise and the secretary of commerce, lock-step, was obeying him.

But we did meet with all the Big Four as result of telephone calls made from the White House. How we got that to happen—next time.

1 comment:

  1. Tom-

    I can hardly tell you how much I enjoy these ACTUAL facts about these times. I am printing down every one, in case you don't do the obvious, and publish this great work of history (political, cultural, moral AND humor)!

    If you chose to swim with the sharks, you were sure to get bit--