Corporate Con: A Cunning Clasp on Creativity
You like my title, don’t you? I know you do, or you wouldn’t be reading this. 🙂
It’s amazing how prevalent this type of fraudulent practice has been throughout history to some extent or another. Even more amazing that it still thrives, feeding on the gullible and desperate.
Disclaimer: The following was not written by me, but I found the post very interesting. This is from a blog I follow. I think it’s important that we all educate ourselves.
**Reblogged from David Gaughran | Let’s Get Digital
How Jessica Mitford Exposed A $48m Scam From America’s Literary Establishment
Posted on December 16, 2014 by davidgaughran
Jessica Mitford took on the American funeral industry, the California Department of Corrections, and the Ku Klux Klan, but it was her 1970 exposé of The Famous Writers School which led to Time calling her “The Queen of the Muckrakers.” And if a courageous editor hadn’t reversed his decision to kill her story, it might never have happened.
Mitford had been aware of The Famous Writers School’s existence for some time. Anyone who was a frequent reader of newspapers, books or magazines would have seen its ever-present advertisements, inviting aspiring writers to cut out and apply for the free aptitude test. While Mitford was suspicious, she didn’t have anything concrete until her lawyer husband took on a new client.
Bob Treuhaft was approached by a 72-year old widow, living on Social Security, who had cleaned out her bank account to make a down-payment to The Famous Writers School. On the same day Mitford heard the widow’s sorry tale from her husband, she received a book in the mail for review: Writing Rackets by Robert Byrne, which also mentioned the school.
Mitford had lunch with Bill Abrahams not long afterwards – then the West Coast editor of The Atlantic. She shared tales from Byrne’s book on literary frauds and the story of the cheated widow, and Abrahams asked her to write a short piece for The Atlantic covering both.
A still of Rod Serling taken from a Famous Writers School television ad (view here).
The following day Abrahams called to say that the editor-in-chief of The Atlantic, Robert Manning, had decided not to run the piece after all. While Manning agreed that the bold claims made in The Famous Writers School’s advertising were “probably unethical,” he pointed out that The Atlantic had made “many thousands of dollars” from those self-same ads and felt it would be equally unethical to run a piece criticizing the school.
Mitford was aghast and asked Abrahams if he would kill a piece on lung cancer on the grounds that The Atlantic took ads from tobacco companies. He accepted her point and said that he would try again with Manning, and that if anything changed he would get in touch.
A week later, Mitford had no further response from The Atlantic but now had the bit between her teeth. She queried the articles editor at McCall’s who was extremely enthusiastic and wanted a full investigation of The Famous Writers School, commissioning a 7,000 word piece. Mitford was delighted and threw herself into exhaustive research.
The Famous Writers
Mitford soon realized that the well-known faces attached to The Famous Writers School’s advertisements played a very different role than suggested. She knew she was going up against some powerful individuals – some of the leading lights of America’s literary establishment.
The Guiding Faculty of The Famous Writers School consisted of people like Paul Engle (long-time director of the Iowa Writers’ Workshop), Rod Serling (of Twilight Zone fame), mystery writer Mignon Eberhart, Pulitzer Prize winner Bruce Catton, and romance author Faith Baldwin. Day-to-day operations were managed by Gordon Carroll (Reader’s Digest editor) and John Lawrence (former president of William Morrow publishers).
The biggest name of all was the man Mitford would later describe as “the ringleader” – Bennett Cerf, founder and president of Random House, and household name in America since his long-running stint on What’s My Line?
Knowing that Cerf could cause her problems, Mitford decided to interview him last.
How The Scam Worked
Part of an advertorial in New York Magazine, June 1969
Mitford investigated how The Famous Writers School attracted students – focusing on those ubiquitous advertisements featuring the Guiding Faculty. Along with Baldwin, Eberhart, Serling, Catton, Engle, and Cerf, there was also John Caples, Bergen Evans, Clifton Fadiman, Rudolf Flesch, Phyllis McGinley, JD Ratcliff, Max Shulman, Red Smith, and Mark Wiseman – all noted writers in their fields.
The ads promised a free aptitude test which would “help you find out whether you can be trained to become a successful writer” and gave the impression that the Guiding Faculty would actually grade your test. The promotional materials also led potential students to believe that Cerf and his famous friends would act as their tutors and mentors throughout the course, and greatly exaggerated the market for freelance authors as well as the likely financial outcomes for students. Nowhere in the ads was the cost of the course mentioned.
After talking to various members of the Guiding Faculty, Mitford confirmed that they had nothing to do with either grading the aptitude tests or tutoring students. When Mitford presented Faith Baldwin with an ad which claimed the opposite, she responded with:
Oh, that’s just one of those things about advertising. Anyone with common sense would know that the fifteen of us are much too busy to read the manuscripts the students send in.
Mitford asked Mark Wiseman about why the ads claimed the market for freelance writers was in rude health when the opposite was true. He said:
That’s just a fault of our civilization. You have to over-persuade people, make it all look optimistic, not mention obstacles and hurdles.
Paul Engle was even more forthcoming about the actual role of the Guiding Faculty:
I only go there once in a great while. There’s a distinction between the Guiding Faculty, which doesn’t do very much, and the teaching faculty, which actually works with the students.
What the Guiding Faculty did do was provide some of the teaching materials used in the course. But it’s clear their main role was to make the course sound more attractive to potential students. In return, the faculty members received substantial stock holdings and a 1.6% cut of the school’s annual gross revenue.
Both these forms of compensation turned out to be extremely lucrative for the Guiding Faculty. Revenues for the school (together with its parent organization the Famous Artists School) rose from $7m in 1960 to $48m in 1969, while the stock improved from 5 to 40 over the same period.
The school was able to generate such staggering revenue (approximately $310m in today’s money) because of the huge enrollment numbers and the absurd price of the courses. 65,000 students were enrolled in 1970, including nearly 2,000 veterans via the GI Bill. The cost of the course – only revealed when a salesman came to your home to close the deal – was $785. That was a considerable sum in those days so most students went for the payment plan, pushing the cost up to $900 (approximately $5,800 in 2014 dollars). Mitford estimated this as roughly twenty times the cost of similar correspondence courses offered by universities at the time.
Mitford also established that the school was taking on students which had no place being on a professional writer’s training course: non-native English speakers with a poor command of their adopted tongue, those with no flair for language or composition, the barely literate, the penniless. The pass rate for those taking the free aptitude test – 90% – was so high because the bar was set ridiculously low.
Robert Byrne, the author of Writing Rackets, submitted an aptitude test under an invented name with deliberately mangled prose; the applicant was accepted in glowing terms. And when Mitford’s husband asked his widow client to write out an account of her experiences with the school, it was “garbled” and “semiliterate” – very far away from the level of someone suitable for such a course. Nevertheless, the widow was also deemed to have passed the aptitude test “with flying colors” by The Famous Writers School.
After being presented with complaints about the high-pressure sales tactics, The Famous Writers School said that its salesmen were carefully screened, that they received rigorous training in ethical salesmanship, and that every effort was made to ensure that their presentation of the course was both accurate and truthful.
But Mitford was never one to take such claims at face value and secretly arranged to witness one such salesman closing the deal in her neighbor’s living room. The salesman told a series of outrageous lies regarding the school. He said the Guiding Faculty spent a lot of time at the school grading assignments and mentoring the other teaching staff, that one of the faculty would personally review her assignments, and that the staff-pupil ratio was uniquely favorable – 300 instructors for 3,000 students – when in fact there were 55 instructors for 65,000 students (and 800 salesmen). He then disingenuously dangled the possibility of a publishing contract and made false claims about the success of graduating students.
The dropout rate for these courses was extremely high. Through looking at the company’s books and running the numbers, Mitford estimated that only a tenth of students completed the course. However, not all of this was down to unethical salesmen targeting the unsuitable.
Mitford spoke with a whole range of competent students who had enrolled and dropped out, with many citing the poor quality of both the course materials and the feedback given on assignments – particularly that a different person graded each piece of coursework. Those who attempted to get out of their contract without paying the remaining installments were threatened with legal action, but otherwise The Famous Writers School seemed unconcerned at the high dropout rate.
Indeed, Phyllis McGinley, a famous poet who was one of the Guiding Faculty, admitted to Mitford:
We couldn’t make any money if all the students finished.
Bennett Cerf’s “Appeal to the Gullible”
Now that Mitford had established exactly how the scam operated, it was time for the final interview. She met Bennett Cerf in his “wonderfully posh” office at Random House, where he remained president of the company he started despite selling his stake to RCA. Cerf explained how he helped found the school and put together the Guiding Faculty.
We approached representative writers, the best we could get in each field… The idea was to give the school some prestige.
He admitted that he did no teaching, wasn’t involved in recruiting the teaching staff or establishing standards, and didn’t supervise the school’s operations.
I know nothing about the business and selling end and I care less.
Cerf refused to disclose what compensation he received from the school, but described it as “quite generous.” When confronted with the inaccurate claims made in the advertisements bearing his name, Cerf said:
I think mail-order selling has several built-in deficiencies. The crux of it is a very hard sales pitch, an appeal to the gullible.
When Mitford asked him how many books by Famous Writers School students that Random House had published, Cerf replied:
Oh, come on, you must be pulling my leg – no person of any sophistication, whose book we’d publish, would have to take a mail-order course to learn how to write.
With Cerf interviewed, Mitford’s research was complete and she submitted the final piece to the articles editor at McCall’s. But the tale didn’t end there.
Killing The Story
Bennett Cerf on the cover of Time Magazine, 16 Dec 1966
On reading the contents and seeing the famous names mentioned therein, the editor-in-chief ofMcCall’s balked and refused to run the story, wary of angering Random House and Bennett Cerf, and conscious of their advertising relationship with both the prestigious publisher and The Famous Writers School itself.
Later on, Mitford discovered that Bennett Cerf exerted direct pressure on McCall’s to kill the story, despite his explicit promises to the contrary when interviewed. But Mitford knew none of this at the time, all the editor-in-chief of McCall’s told her was, “I don’t think it’s very good.”
Despite her ostensible opinion of the piece, she paid Mitford’s research expenses and the full agreed-upon fee for publication, instead of the kill fee that was standard in such situations.
Two years later, that McCall’s editor admitted the truth to More magazine.
I did not want to offend Bennett Cerf at a time when McCall’s was trying to improve the caliber of its fiction.
Mitford was undeterred by McCall’s rejection (and pay-off). In fact, she was furious, more determined than ever to get her exposé published. She queried Life Magazine – who were extremely keen and promised that it would be a major story, with photographers deployed to take pictures of the school. But the piece was killed when Life’s advertising manager revealed that he had just agreed a $500,000 ad campaign with The Famous Writers School to cover the next six months.
It seemed like Mitford’s investigation would never see the light of day, until Bill Abrahams at The Atlantic said that Robert Manning had a change of heart: he had cancelled The Atlantic’s advertising contract with The Famous Writers School and wanted to run the story. True to his word, Manning published it as the cover story in the July 1970 edition, under the title Let Us Now Appraise Famous Writers.
The article is a classic piece of investigative journalism, a complete dissection of how the scam worked as well as a delicate filleting of the famous faces profiting from this misery.
But even the most optimistic reporter couldn’t have predicted what happened next.
The Aftermath
In her wonderful book Poison Penmanship: The Gentle Art of Muckraking, Mitford explains that she had written articles on controversial topics for The Atlantic before, but even a piece like her coverage of The Dr. Spock Trial or the secret medical tests being conducted on Californian prisoners only generated “six to ten letters a piece” from readers.
Even before the July 1970 issue hit newsstands, The Atlantic had received an unprecedented fifty letters from subscribers who were privy to early copies of the magazine. After the issue went on sale, a further three hundred readers wrote in to share their experiences with The Famous Writers School.
Congressman Laurence J. Burton
Mitford had touched a nerve. Robert Manning told her that this issue had the largest newsstand sale of any in the The Atlantic’s history. Her article was subsequently picked up by the Des Moines Register and the Washington Post, and Mitford herself was invited onto The Dick Cavett Show to talk about the famous names involved with this scam.
As law suits from Attorneys General in several states were being prepared against The Famous Writers School, Congressman Laurence J. Burton of Utah read a copy of Mitford’s piece into the Congressional Record.
In his introductory remarks on the floor of the House of Representatives, Burton said the following:
I have written to both the Federal Trade Commission’s Bureau of Deceptive Practices, and the Veterans’ Administration, registering my concern, and requesting that they provide reports on the activities of the Famous Writers School. […]
High-pressure tactics and misleading information should not be used to gain enrollments for a course which would not attract enrollees on its merits. I believe the people of this country are entitled to protection from such unfair practices.
All this negative publicity had a profound effect on the fortunes of The Famous Writers School. Its stock plummeted from 35 to 5 before trading was suspended in May 1971, and the operation formally went bankrupt at the start of 1972 – a few months after the death of Bennett Cerf.
A Temporary Success
“You may not be able to change the world, but at least you can embarrass the guilty.” – Jessica Mitford
Mitford later called it “one of the clear-cut successes however temporary in my muckraking career. She felt the qualification “temporary” necessary because The Famous Writers School reappeared a few years later. In fact, it’s still in existence, although it has never quite operated on the same staggering, and lucrative, scale.
The spiritual successor to The Famous Writers School is another matter. Author Solutions is undergoing a massive international expansion under its owners – Penguin Random House. And there appears to be no one in today’s media with the courage of Jessica Mitford, and her editors at The Atlantic, willing to investigate its operations.
However, Penguin Random House’s uncanny ability to avoid press attention on this matter can only last so long. Author Solutions will face a class action for deceptive practices next year.