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January 28, 1970 - Image 4

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The Michigan Daily, 1970-01-28

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Seventy-nine years of editorial freedom
Edited and managed by students of the University of Michigan

NA:

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Maynard St., Ann Arbor, Mich.

News Phone: 764-0552

Editorials printed in The Michigan Daily express the individual opinions of staff writers
or the editors. This must be noted in all reprints.
DNESDAY!, JANUARY 28, 1970 NIGHT EDITOR: MARTIN A. HIRSCHMAN

Nixon vetoes
national priorities

PRESIDENT NIXON'S veto of the $19.7
billion dollar HEW appropriation
bill, which he called the "wrong amount
for the wrong purpose .. . at the wrong
time," poses a crucial test today for a
Congress supposedly committed to solv-
ing the nation's problems.f
For while the President indulges in
heavy rhetoric when lie talks about im-
proving the "quality of our lives," he
seems uninterested in spending any great
sums of money to achieve these 1o f t y
goals.
Nixon based his objection to the HEW
appropriation - which is $1.3 billion more
than he requested - on the grounds that
the increase would be inflationary. He
claims that his veto will serve the best
interests of our economy.
Just how inflationary that $l.3 billion
wold have been must be taken with a
grain of salt when one realises that the
President is willing to commit $11 billion
on an ABM system and $30 billion a year
on the Vietnam War without questioning
their effects on the economy.
AT A TIME when many people in the
country are asking for a re-ordering
of national priorities, Nixon's, objections
to the H2W appropriation seem even more
absurd. And his attempt to explain the
reasons for his objections to Americans
Monday night was a clear exercise in mis-
leading doublespeak.
He warned that putting $19.7 into the
economy -which would be spent by
Jupe 30, the en~d of the fiscal year for
which the money was appropriated -t
wbuld add more fuel to an already over-
heated economy.
What he did not tell the people is this:
Federal programs dependent on the
money in the bill have been operating in

a void since last July, "spending" the
money they assumed they would receive
but which hadn't yet been appropriated.
THUS, A LARGE portion of the money
in the bill has already been "spent",
and will not be fed into the economy
in the next five months. What the Presi-
dent has actually done is to choose not to
spend an extra $1.3 billion for the edu-
cation of American children.
The strange thing is, Nixon may be
able to get away with that sort of action,
because the economic pinch is indeed
real. The inflation he is worried about
does exist, and is putting the average
American wage earner in a financial
bind.
Nixon can never stop this inflation
without cutting military spending dras-
tically and ending tax credits for the oil
and manufacturing industries. However,
he can create the impression that the
government is doing something about it.
by lashing out at the HEW bill.
Which way Congress will go this after-
noon is not clear: votes might still be
swayed before the final action is taken.
For this reason, a telegram this morning
to Rep. Marvin Esch or Sens. Philip Hart
and Robert Griffin asking them to vote
to override the veto might not be com-
pletely fruitless.
IF THE VETO is not overridden today,
Nixon stands to come out ahead, by
creating an image of an administration
trying to do something about inflation
which will justify, in the minds of his
constituents, the faint memory of $1.3
billion in health, education and welfare
aid they did not get.
-JAMES T. NEUBACHER

By FRANK BROWNING
R EMEMBER the National Student As-
sociation? That's the one that used to
work for the CIA in a conspiracy with
Gary Powers, Walt Rostow, and Richard
J. Daley to s n u f f out the Idealism of
Young America.
Everybody thought it was curtains when
President Johnson finally ordered the CIA
to cut it out, settle accounts, and let the
damned students pay their own bills. Even
then NSA President Gene Groves dropped
his jaw and confided that the revelation
would "make the work of NSA difficult if
not impossible."
NSA has had a hard time. First student
governments at big campuses like this one,
Chicago, a n d Wisconsin cleansed them-
selves of membership post haste. T h e n
with the rise of more militant confronta-
tion-style student politics, the liberal gov-
ernment agencies and the foundations de-
cided to step out.
By April 1 last year, things had gotten
so bad at the old townhouse b e t w e e n
Georgetown and the Washington ghetto
that bankruptcy seemed imminent. "On
April 1, NSA's bank account was $7500
overdrawn, we had not paid payroll tax
for the first quarter of the year (which
was $20,000). our $10,000 phone bill was 60
days overdue, and our total debt equaled
$318,000," one of last year's administra-
tive staff members recalls.
Add to that a 60-man staff drawing $11,-
000 every two weeks and some evidence to
suggest t h a t one employe was playing
checkers with the ledgers in a minor em-
bezzlement scheme.
Bankruptcy for a struggling student or-
ganization means far more than it does
for private corporations which, like Ram-
parts, can disappear and re-emerge al-
most in the same day. For NSA it would
have meant certain extinction.
THE END OF NSA, as simple as it may
seem, has always been a question fraught
with a magnificent complex of unexpected
consequences. At first glance the death of
NSA might appear only as the end to
standard student representation programs:
student rights and anti-draft suits, con-
gressional lobbying, seminars and confer-
ences on education innovation, tutorial as-
sistance projects, and the annual grand
catharsis: the National Congress.
Critics on the other hand have 1 o n g
claimed that the main thing that keeps
NSA going is the platform it offers stu-
dent politicos f o r entering graduate
schools, the government, and academic as-
sociations like the American Council on
Education. Not the least of those charges

keting company - perhaps most recently
remembered on this campus for a Red and
White Envelope labeled NSA PAK distrib-
uted in late October. An explanatory note
on the outside of the envelope reads, "The
U.S. National Student Association, in co-
operation with student governments across
the country, including your own, have em-
barked on a new and exciting program.
Student designed, it is intended to provide
you with high quality products and ser-
vices in tune with your interest and
needs . "
NATIONAL ACADEMIC Services Corp.
is nowhere mentioned, and since Student
Government Council does not cooperate
with NSA, its placement on campus" was
handled by NAS field representative
Charles Kao. Inside the PAK are adsfor
"Official Strike S h i r t (as pictured in
LIFE. Giant RED FISTS with B L A C K
LETTERS," "Music Scene" (a TV show),
NSA Record Club, NSA Publications, Re-
. Con Computerized Job Placement - and
many, many more.
Up until last summer most of NAS' ser-
vices - book clubs, record c 1 u b s, job
placement, and a few others =- were han-

Security for whom ?

NSA has had a hard time. First student governments at
big campuses like this one, Chicago, and Wisconsin cleansed
themselves of membership post haste. Then with the rise of
more militant confrontation-style student politics, the liberal
government agencies and the foundations decided to step
out.

The insurance program works like this.
Local student governments do some of the
selling along with materials provided by
the national office. In addition Academic
Underwriters uses NSA mailing lists. As
Clark says, "Its easier for us because stu-
dents trust their own organization." From
each $20 premium, NSA gets about two
dollars in dividends - which last year
amounted to some $51,000.
Should you call up - the NSA (really
Academic Underwriters) Insurance office
in Baltimore, the receptionist will however
deny that any money goes to the Associa-
tion in the deal, that the only connection
with the National Student Association
is "just sort of an endorsement."
Students' checks are deposited in a
trust fund at the Boatmen's National Bank
of St. Louis. (Dividends can't go directly
to NSA since as a non-profit or-
ganization NSA c a n n o t operate a
profitable business; thus the trust fund,
makes "donations" to NSA). Carriers for
the policy are American Health and Life
Insurance Co., which, except for small
policies with the Army, Navy, and Air
Forc academies has no other subscrib-
ers.
SO, WHEN IT SEEMED that the death
of NSA - and consequently its insurance
program - was imminent, Clark opened
his heart. "It became apparent that they
were having trouble with their effort to
fund activities from other sources and
they were struggling valiantly to keep
their organization alive," he recalled re-
cently. "When it became apparent they
couldn't do it alone, we set about to raise
the capital for a new corporation."
Until its registration is approved by
the Securities Exchange Commission,dNAS
remains a private corporation. Stockhold-
ers' lists are carefully guarded. However,
Sutton (who until two weeks ago was pri-
marily concerned with NSA finances) says
Clark and Ben King each hold 80,000
shares in the company. And among those
businessmen present at the April 1 meet-
ing to finalize the contract were repre-
sentatives of Commercial Credit Caor -
poration, itself a recently acquired sub-
sidiary of Control Data and the parent
organization of American Health and Life
Insurance Co.
Other investors were Arnold Frumin,
president of Re-Con Corp (with whom
NSA had the job placement contract now
taken over by NAS), and a representative
of the Raymond C. Tung Foundation,
another Maryland insurance company.
Originally negotiations were to have
been completed by late November I'1968
for initial investment in the new corpora-
tion, but by April 1 meeting with NSA of-
ficers there was still nothing firm. Clark
and his potential investors asked for more
time; Powell claimed to have other bid-
ders for NSA Services (although one of his
closest staff members maintains there
were no other offers). He told them that
it would cost $150,000 - the first third

the "official strike shirts" as products
they didn't approve. Theoretically NSA's
own supervisory board retains ultimate
control over all decisions made by NAS.
Were it not for certain contractural
technicalities in the insurance program,
Sutton believes NSA might never have had
to sell its services to NAS. The more he
learned of the insurance set-up, the more
suspicious he became until he finally hired
a private insurance investigator to check
the whole arrangement out.
"Finally I went to the bank (Boatmen's
National in St. Louis) where the insur-
ance trust is held, and when I showed up
and asked to see the records, the shock
waves went all the way back to New
York. They claimd I was irpertinent,"
Sutton says.
HIRING ITS COMMODITY SERVICES
out has hardly been able to solve all or
even most of NSA's major problem. Even
the association's friends frequently re-
marked last Spring that officers seemed
to be continually immobilized and t hat
entering the office resembled stepping
into a hung-over T-group.
-When a new director came in to run
the Ford Foundation-funded Center for
Educational Change he discovered almost
$40,000 had been spent but explained only
by terms like "consulting" or "travel."
Sutton had known NSA's general con-
ditions before he became vice president at
it's August Congress, where he issued a
caustic critique of existing operations in
which he argued "Existing NSA services,
being largely exploitive, ought to be phas-
ed out in behalf of similar services whih
are locally managed and controlled."
.By autumn, at any rate, the NSA had
secured a $200,000 loan to meet operating
expenses from one of NAS' investors-
Commercial Credit Corp. Stipulated in the
loan agreement was a requirement that it
be used only for back bills and operating
expenses-not for payment of the $50,000
in reparations demanded by black stu-
dents at the El Paso Congress. Should
NSA fail on the loan, NAS was to be held
responsible for repayment.
However, even as late as Dec. 29 the
association was still far from secure. A
letter from an NSA lawyer stated that
$170,000 in bills then remained to be
paid although available organizational
resources came to only $90,000.
If NSA survives, it will almost certain-
ly be because NAS is too heavily committed
to cease providing financial support.
Without the association and its more than
500 member schools, National Academic
Services Corp. would lose the key to its
marketing strategy. And besides the loan
Commercial Credit made to NSA, Its sub-
sidiary, American Health and Life, loaned
NAS $700,000, holding warrants f o r
200,000 shares of NAS stock as collatoral.
Overall the investments were not bad
deals for Clark and King or for the grand-
daddy conglomerate C o n t r o 1 Data. At
present, their only major competitor,
National Student Marketing Service, has
also been fantastically successful in re-
cent years.
Last 'year's NSA President Bob Powell
(who is now an NAS board director) says
that "right now the college market for
goods and services - about $40 - 60 mi-
ion a year - is enormous and largely un-
tapped. If TIWA wants to sell youth cards
to students r Time magazine wants to sell
subscriptions, there are not too many
places for them to go. Many people have
been exploiting students. We hope to do
business a little bit differently. What you
need is a different image, a different ap-
proach, a different sensitivity. And that's
something which NAS can, provide."
Powell says the experiment with NAS
is "a new kind of idea in the field of
student economic independence." He en-
visions NAS providing management and
financial help as ,well as purchasing op-
portunitieshin an effort to get student-
run cooperative off the ground and com-
peting with well established local com-
panies. Local representative Charles Kao
has had preliminary talks with D e n n i s
Webster, manager of the University Dis-
count Store, for handling the store's re-

cord line.
Al Handell, whose first goal, old NSA
friends say, is to be a- millionaire before
he's 45, looks into the future and sees the
campus filled with commerce:
"There'll be a big domestic services card
eventually for check cashing, credit, and
discounts. One card would entitle you to
a whole range of things-youth fare, trav-
el abroad, records . . . It's like 'taking

.4'

i

ALMSOT EXACTLY 90 per cent of the
contracts let by the Department of
Defense are non-bid, negotiated c o n-
tracts which guarantee the contractor
a profit over and above costs. The var-
ious contractors follow various methods
of calculating their costs and, since there
is no uniform accounting procedure, there
is no effective governmental audit of
these contracts.
igt on, Lenore
HE NEW YORK TIMES announced
Monday that "There is. no starring
role for Mrs. Nixon," but the same things
cannot be said about the engaging wife
of Michigan's former governor George
Romney.
Lenore Romney has long been rumored
to be the brains behind her brainwashed
husband and it came as no surprise when
Republicans began circulating reports
late last year that she might be called
back to the home front to do battle with
incumbent Sen. Phil Hart.
For several years Mrs. Romney gained
fame throughout this state while giving
speeches to citizens concerned about what
her husband was doing in Lanlsing. That
she could answer with a straight face
gained her notoriety and a reputation for
being able to tell good stories.
One recalls a little-know speech deliv-
ered at the National Music Camp in Inter-
loched when Mrs. Romney proclaimed,
"Culture is being in a covered wagon and
having the courage to go on."
UJNFORTUNATELY FOR Mrs. Romney
covered wagons are at a premium,
but belted into a shiny new Rambler, she
may have the courage to go on with the
senate race.
Good luck Lenore and don't forget to
have the oil checked every 1,000 miles.
-MAYNARD
Editorial Staff

Some contractors have been detected
padding expenses in order to further in-
crease their profits. Is it any wonder that
defense costs have risen all out of pro-
portion to the nation's security require-
ments-from only $13 billion before the
Korean War, to $50 billion before the
Vietnam war and to $80 billion today?
THE RECOMMENDATION of the Gen-
eral Accounting Office that all de-
fense contractors follow uniform ac-
counting procedures should be translated
into law. To bring some reason into an
irrational, runaway defense budget, Con-
gress will .have to arm itself with the
expert knowledge required to weigh, to
question and to challenge the proposals
of the military-industrial complex f o r
launching new weapons systems. As it is,
Congress is almost wholly defenseless
against the assertions by interested part-
ies that any new weapon is essential to
American survival.
The relationship between the weapons
manufacturer and the military establish-
ment has been, as some critics h a v e
charged, an unhealthily cozy one. T h e
military may dream up the need for a
weapon and then the manufacturer tools
up to supply the need-at a profit. Or the
manufacturer may dream up the idea
for a weapon, suggest the need to the
military and then tool up to supply it-
at a profit. This mutually beneficial, back-
scratching arrangement excludes any ef-
fective check on the arms race.
SEVERAL POSSIBLE checks have been
suggested: expansion of the House
Appropriations Committee to include
staff experts on military matters; setting
up a separate research think-tank opera-
tion, along the lines of the legislative re-
ference service, which would be available
to any member of Congress; establishing
a new wing of the General Accounting
Office to conduct effectiveness studies of
weapons systems and make expert an-
alyses of military proposals.
The subcommittee of the Joint Econ-
omic Committee now looking into defense
spending, with Senator Proxmire serving
ably as chairman, can be counted on to
come up with its own recommendation.

comes from Jim Sutton, just resigned Ex-
ecutive Vice President: Not only does he
think NSA fails to do much for students,
but he believes it ought to fold so that
smaller legitimate associations might grow
up in its place, adding that "when I start-
ed (in September) I wanted NSA to fold
so we could start new things out in the
field."
Sutton says he was brought to NSA as
a "foundation man" i.e., someone to trans-
late program ideas into proposals for foun-
dation funding and to develop connec-
tions between foundation and association
officers. But, he says, he never got around
to doing that because he had to spend all
his time figuring out and clearing up the
Association's sloppy business operations.
It is from that maze of business ties
that the less obvious reasons emerge for
keeping NSA alive. There are of course the
old bills which creditors would never col-
lect should the organization die. There are
the political hopes of people like Al Lowen-
stein and the Robert Kennedy Fellowship
directors -who look to NSA as the future of
a Potent Acceptable Youth Movement.
And, now, most important are a number
of businessmen who have long been NSA
friends who standto grow wealthy if it
can only pull through the current trials.
ON FEB. 1 those businessmen, the origi-
nators of the NSA Life Insurance Program,
will register a year old corporation with
the Securities Exchange Commission with
hopes that stock w ill be available for
trading in July. The corporation, called
National Academic Services Corp. (don't
confuse NAB with NSA) came to life as a
private company early in 1969sand it con-
ducted its first business venture late on
the night of April 1 with a $50,000 check
to the National Student Association. Had
that check not come then, the organiza-
tion would very likely have died the next
day.
National Academic Services Cdrp. is in
effect the new answer to the CIA and the
Ford Foundation, or as President Charlie
Palmer (ex-of the Berkeley student gov-
ernment and Peoples Park) puts it, the
way by which NSA can maintain finan-
cial solvency without becoming beholden
to its donor.

dled by the Services Division of NSA. The
Services Division had a staff of six - plus
its director Al Handell who is now a vice
president of the new corporation. Although
the Services Division had been envisioned
as the future financial base for NSA, it
hadn't been fulfilling expectations.
In their Congress report presented last
August, NSA officers said: "We knew the
market was there to greatly expand our
Services Division and generate income for
local student governments, as well as the
national office, and we also knew that we
were not tapping that market because of
our relatively small investment in the area.
"During 1967-68, NSA's Services Division
had netted less than $25,000 in income.
and the projections for 68-69 showed a net
of only about $50,000. What was missing
was the professional approach and the in-
vestment money needed to transform a
sluggish Division into NSA's most impor-
tant source of operating income."
Although nearly all of the delicate ne-
gotiations for transferring NSA services to
the prospective corporation were handled
by former president Bob Powell, Handell
argued hardest for the new arrangement.
As far as former vice president Sutton is
concerned Handell has also gained more
than anyone else at NSA from setting up
the new venture - a vice presidency and
an alleged 40,000 shares of t h e private
company.
WHAT NSA NEEDED of course was in-
vestment capital. Internal finances were
too far gone to gain private bank loans
and neither .the government nor philan-
thropic foundations normally invest in
marketing companies. So the association
turned to two old friends from Annapolis,
Garnett Clark and Ben King, owners and
operators of Academic Underwriters of
America, Inc., agents for the NSA Life In-
surance program.
Clark and King were naturals and it re-
mains unclear who first approached whom.
They had negotiated the life insurance
contract with NSA back in 1964 and in
1965 had offered what Powell t e r m s a
three-year $25,000 grant to initiate the
Services Division. That grant ran out in
Spring 1968.
Clark reflects- fondly on the 7-y e a r s

I

I

...... ......5..S.. ....%A'WV..S5... ..
"The problem is that you can't figure out who's running
who. In the long run there's never going to be an effective
student association until students are willing to pay for it. If
you take money from the CIA, then the CIA controls you; if
you take it from commercial firms, then they control yoru."
..r" v::." 3.3"i: s. ss "44 ;'+y7 r, ; :. . .v.7

payable the next day - to keep NSA from
going elsewhere. If the remainder were
paid by June 1, then the new company
could have exclusive rights to all NSA
services except the insurance program
which was already tied up in an old
contract.
As the final contract was written NSA
is guaranteed $200,000 a year plus 35
per cet of NAS' net profits. NAS presi-
dent Steve Corker (who was made direct-
or of NSA's National Student Travel As-
sociation in an unsuccessful effort to keep
it from going bankrupt last summer) pre-

money away from corporations and giving
it to students. Concert promotions and
entertainment, speakers bureaus. A stu-
dent's shopping place: a book of unusual
offers, send in all 21 post ca'rds and get
a free year's supply of shaving cream . .
We'll set up dealers all over the country.
It'll be almost like a Master Charge Card
or a student ID card."
Before he became the second NSA vice
president to resign last semester, Jim Sut-
ton envisioned the NSA campus filled
with commerce too:
"For about the last three weeks at NSA

'1

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