Tuesday, March 20, 2007

Flashback: The Stans Sell—Sound and Fury Signifying…Well, You Decide.

[More than fifty years of political memories for my kids and grandchildren].

Seated across the conference table in his cavernous office, Maurice Stans produced out of a leather binder, a letter written to him by Richard Nixon following his election and preceding his inauguration. It was typed and signed in his hand. While the secretary sat and waited, I read the three-page single-spaced document. I asked for a copy but was denied; it was a personal message to Stans, written in December, 1968 from the Plaza hotel in New York city where Nixon had had his personal headquarters. It was well-written, well-thought out and showed a great deal of introspection—not just dashed off. Stans had asked the president-elect for his views on the proposal he had unveiled in the form of a television commercial on what Nixon had called “Black Capitalism,” the name minority enterprise was running under in those days.

The letter and Stans’ subsequent reaffirmation made an enormous influence on me. Since I was not allowed to have a copy (because it was in the nature of a personal, confidential letter to Stans), I will have to paraphrase it. But it was a major determining factor in my deciding to leave The Q uaker Oats Company with all its security for my wife, three kids and one yet-to-be-born, for a federal job that could—and did—turn out to be precarious.

Stan had asked Nixon to detail (1) the reason why he—of all the presidential candidates of 1968 (and they included Bobby Kennedy, Gene McCarthy and Hubert Humphrey)—proposed Black Capitalism; and (2) what he saw as its possible repercussions for his administration and the Republican party generally. Here goes my recollection of the document I read 38 years ago (I took enough time to read it that Stans temporarily left the room and came back while I was still studying it):

As to why he came up with the program, Nixon said that he was aware in early 1968 that a number of individuals had toyed with the idea of black ownership since the activist era of civil rights expanded into the concept of economic self-determination—including Dr. Martin Luther King, Roy Innis (the leader of the Congress of Racial Equality [CORE]), Howard Samuels, LBJ’s head of the Small Business Administration to, of all people, LeRoi Jones. One Republican in particular who had done pioneering work on it and whom Nixon cited but misspelled his surname was John McClaughry, an Illinois boy from tiny Paris, Illinois, whom I had long felt was a genius of legislative concept and who was—and still is—a good friend of mine. McClaughry had worked for Chuck Percy and had been a Fellow of the Kennedy Institute of Politics at Harvard and had done pioneering draftsmanship on a piece of legislation Percy introduced called the Community Self-Determination Act. Writing in 1968 language, Nixon cited the legislation and called it a program for winning independence in the “ghetto” by which private capital can be made available for business investment and economic determination.

Nixon made clear that this legislation was the basis for the paid radio commercial Nixon himself delivered entitled “Bridges to Human Dignity,” composed largely by McClaughry and for a TV commercial which concluded with the narrator saying “the black man’s pride is the white man’s hope.” I knew enough about the Community Self-Determination Act from McClaughry and his assistant Bill Geimer (Geimer, a lawyer did major draftsmanship of it) to understand that the program of Black Capitalism was far more than a political sop in Nixon’s mind since he described the legislation very well. The genius of the Act was that it was conservative in framework.

Nixon didn’t describe it but I knew by reading his words that he was innately familiar with it (as Stans was not). The bill combined the growing demand of blacks for control over their own businesses and stores culminating in the creation of a Community Development Corporation, a private profit-making company operating in either poor urban or rural area. Any resident of the area age 16 or over could buy a share in the corporation at par value for about five dollars. No matter how many shares one might own, he could only cast one vote in corporate elections; the shares did not pay dividends.

McClaughry had described it this way: “The corporation would own a family of businesses which might range from a shoeshine stand to a major factory. With the profits from these enterprises, the community corporation would finance community service projects of the people’s own choice such as day-care centers, basic education, legal aid, nonprofit housing, health care and the like.” A companion institution that the Act envisioned was the community development bank wholly owned by the CDC. The bank would finance CDC businesses; the bill also created a U. S. Community Development Bank as a secondary financing instrument serving the local banks. Other major funding for the program would come in the form of benefits with the major beneficiaries business corporations.

As Nixon explained McClaughry’s ideas, I knew that the president had spent some valuable time figuring out the program. For example, McClaughry emphasized the importance of maintaining a widespread ownership of private property—even through government subsidy if necessary, citing conservatives Daniel Webster, John Adams and James Madison as espousing the doctrine that concentration of economic power in the hands of a few must inescapably lead to despotism. Having discussed this earlier with McClaughry and Geimer, that’s where I (and Geimer) fell off the McClaughry boat, believing the brilliant author had tortured some of the views of the founders to make a point—but in essence, the entire Act was one of genius.

The essence of Nixon’s memo to Stans was his wholehearted endorsement of the concept. The Republicans had missed the boat on civil rights, nhe said and were unlikely ever to catch up to the Democrats on that front. But Nixon, like McClaughry, saw the societal and major political importance to Republicans by providing the poor with a political home by helping them obtain property rights which was bound to make them more conservative. Nixon summarized it by saying that Republican officeholders and leaders of large corporations could—and should—be persuaded to help propertyless minority groups to acquire ownership and control of their economic fortunes which would be a desirable means of advancing conservative goals while at the same time strengthening Republican ranks.

Nixon thought it vitally important to base a center for this help in Commerce, not SBA. The reason there was personal for Stans. The SBA had independent funding but was not under Stans. For Stans’ benefit, Nixon would create a center by executive order—not causing legislation to be introduced which would prompt a lengthy legislative fight with a Democratic congress that would be suspicious of an attempt to build Republican support with blacks and other minorities.

When I finished reading the document and handed it back to Stans, the secretary recruited me with this argument. Logically, the head of such an agency should be a black economist: maybe a Darwin Bolden, a black economic development expert from Harlem who headed the Interracial Council for Business Opportunity (ICBO) contributed to by the Rockefellers, maybe a Ted Cross, an attractive black economic writer whose book “Black Capitalism” was creating quite a stir, maybe even a Reverend Leon Sullivan of Philadelphia. The disadvantage of this course was clear. Any black leader worth his salt would be ridiculed and called a Republican Uncle Tom by the militant black civil rights community working in tandem with Democrats in Congress. If there was any stalling on the part of the administration, a fiery Leon Sullivan would quit; a Darwin Bolden would quit and get huge headlines. The alternative was to give direction of the agency to a nondescript white semi-unknown…me. I had to agree with his logic.

Here I pointed out that it would be insuperably difficult for Stans or Nixon to fire a black for whatever reason without triggering a firestorm…recognizing as I drew my hand on my own throat as if cutting it that it would be easy to fire a white like me with no trouble whatsoever. He agreed. So we both shared the view that it would be prudent for a white to initiate the effort.

But what kind of white? To my way of thinking, McClaughry himself was superlative but for some reason—I never knew why—he was not available, having presumably turned it down…which gave me some pause. That’s why I was sitting there this day. But my skills were different from McClaughry’s anyhow, Stans said. McClaughry was a legislative draftsman and expert on the Community Self-Determination Act. I was not but the CSD Act was going nowhere anyhow. (He was right there). He called me (1) a skilled corporate lobbyist who was familiar with the Democrats and Republicans in Congress. Moreover (2) I had a track record—modest though it was—in inner-city work for Quaker. And (3) I was a Republican, interested in building a strong Republican party with an infusion of minorities. Beyond that, (4) I had pretty good credentials for a Republican with some Democratic leaders in Congress. In addition—ta-ta!—(5) as an ex-corporate executive I might be expected to be able to draw support from other corporate people and finally (6) I was a publicist, savvy enough to give the program thrust in the media.

At this point I sought to disabuse him of a number of fallacious points. No matter who headed the agency—and I agreed it should be a white—the going would be very rough from the standpoint of the Democrats and some Republican conservatives who would not be enchanted with the prospect of helping black businessmen. Second, the liberal media would be a roadblock no matter what public relations skills would be possessed by him who headed the agency. Third…and this would be foremost…only the president himself and Stans, as secretary of commerce, would in the last analysis be able to carry a lot of the load because if the media recognized that this was first of all a major domestic priority with Nixon, a lot could be done.

I added—as it turned out presciently—the need to get corporate CEOs involved at an early point. They would not get involved if they were to be called by an agency director but would be animated if recruited by the White House acting in the president’s name…with his appearance heavily involved…and by Stans as Commerce secretary at strategic points. He wholeheartedly agreed and at that point launched into an energetic sales pitch on how the president would get involved…citing the memo which I had to agree was excellent…and his own determination to get involved.

Then we looked at the proposed executive order—Number 11458—which was due to be issued by the president. It prescribed the institution of a separate entity of government for directing what was called Minority Business Enterprise. I nit-picked it as hard as I could item by item.

The first section gave Commerce and the agency they wanted me to head the job of (a) coordinating “plans, programs and operations of the federal government as to what may contribute to the establishment, preservation and strengthening of minority business enterprise.” I pointed out that it is folly for one agency that is on an equal footing…and in fact is lesser…than others to successfully coordinate. EDA for example, an agency of Commerce, had about $400 million in funds, some of which were already devoted to economic development. The agency was due to be headed by my friend Bob Podesta, a Chicago investment banker. Why shouldn’t his agency undertake this? Stans was not greatly convincing as to why a separate agency should be created, not Podesta’s used. I assumed it was because Stans wanted to have a more personal hand over an agency that would be especially created under his aegis—but it still didn’t ring true…yet I passed on to other things.

Next the agency was required to “promote the mobilization of activities and resources of state and local governments, businesses, associations, universities, foundations” etc. to cooperate with the program. I guess I could do that—although since it had never been done before, who knew?

The new agency would “establish a center for development, collection, summarization and dissemination of information on minority enterprise” which I guessed would involve that new instrument, the computer. Hiring the right person could get it done.

Then a whole raft of duties: develop a strategy for the entire national government on minority enterprise including the coordination of the 116 already existing programs that fund, subsidize or support business. One hundred sixteen?

I gasped as I stared at the number: 116! There must be billions of dollars that went to white business, a portion of which could be directed to minority business if we could exert the clout over the other departments. How to get the clout? It would have to come from the president foremost and the secretary of commerce next with me doing the spade-work. But first we would have to deduce a national strategy into which a portion of the programs could be diverted. That would involve a monumental fight within the administration, if I knew anything about the jealousy of individual agencies and their opposition to being raided by another program. Again—all depended on the will of the president.

Moreover…collect information from other departments—not difficult…convene the heads of various departments—not difficult….confer with officials of state and local governments—not difficult…recommend appropriate legislative or executive actions—not difficult…establish an Advisory Council for Minority Enterprise—not difficult.

I gave the draft of the Executive Order back to Stans and said, Everything depends on the will of the president. You and I can break our backs on it and not get anything done but p. r. if he is not involved personally. And at the same time, we can make it work if he is involved—along with you…but most of all him.

He said, “You used the words you and me. I hope that means you’ll take it.”

I said: My big question is—will the president see us on a regular basis? Will we have his support? Will we have his—I’ll use a Chicago word—clout?

He said, “you take the job and you’ll see him and you ask him yourself. I already have and his memo you read is the answer.”

I had to agree it was a great memo.

I said I have one big hurdle—and that’s Mrs. Roeser who’s expecting. We have three kids and we lost one. Beyond that, I hate like hell to leave Quaker because I enjoy working there and there is no provision in law for leaves of absence to serve in the federal government so I doubt if I can go back. I’m 41 years old which isn’t all that old but not all that young either, with three kids and another on the way. I’ve got to get back to you…

He said, “by the end of the week. Remember…” and I hated to hear those words because I knew full well they didn’t apply to him in the slightest…

“None of us want to be here but we are here to serve the country.”

As I walked out I thought: You’re a multi-millionaire, Maury. I’m a working stiff. Besides you’re here because you want to be on the cover of “Time.” Not me. I don’t want to be on the cover of “Time.” And it wouldn’t matter if I did. If I took the job and did it right, Nixon and then you would be on the cover of “Time.”

Then I paused going down in the elevator. I even forgot to ask him what the job pays.

1 comment:

  1. The Community Development Corporation concept was debated for at least a decade before Percy and Nixon caught on to it. For me the debate was what the Bickerdyke Redevelopment Corporation should become.

    In the mid-70s I started another CDC, known as CHEC - Community Housing Education Corporation. It was bitterly opposed by the Campaign for Human Development, Msgr Eagan and HUD Sec Msgr Geno Baroni, and by local Legal Aide attorneys and the entire left.

    It was the threat of successful private efforts that drove the Alinsky movement I was in away from the Tom Gaudette model and toward the ACORN-Arkansas-Rodham model.