Despite a renewed national emphasis on the virtues of free enterprise, a band of youthful entrepreneurs has been squelched here, practically in President Reagan's backyard.
It seems they were making too much money.
The situation began two years ago, when officials at Orange County's juvenile hall agreed, with some misgivings, to start a Junior Achievement program at Fischer School, a maximum-security facility for juvenile offenders. Junior Achievement, a national program organized in 1919 to promote the free enterprise system among American youth, had rarely been tried with young runaways and car thieves.
The program had an additional problem right off the bat--Junior Achievement products usually are sold door-to-door, and the California teen-agers were confined to the detention center. The resourceful youngsters solved that one by offering the wares of their new company, "Universal Enterprises," by mail order.
Within 18 months, a rotating group of 100 delinquents, without ever leaving the detention center, had sold more than $50,000 worth of pillows, T-shirts and baseball caps, about 25 times what Junior Achievement officials had expected. They had won the award for best company in Southern California, perhaps set a national record and by and large astounded themselves and their counselors.
They were paying thousands of dollars in taxes from an enterprise that met Tuesday nights in the tax-funded detention center. Dozens of probation and youth correction officers were calling and writing from all over the country for more information about a program that appeared to offer a solution for many American cities plagued by untrained, unemployed, troubled youths.
It was, in short, an all-American success story--until Orange County probation department officials put a stop to it.
The county's chief probation officer, Michael Schumacher, said the program "became too successful." At first some officials were concerned that with so much money involved, inmates might be tempted to steal company funds, or use their salaries to bribe officials. Schumacher said strict accounting eliminated that worry but still "they got so many orders and got them so fast that the place began to operate more like a factory than a correctional institution."
Schumacher said some inmates and staff were working overtime and weekends on the business, which interfered with counseling and other activities designed to ease the inmates' behavioral problems.
But to Charles Bundschuh, a one-time accountant who turned to full-time teaching nine years ago to help such young people, the program's collapse at juvenile hall is a triumph of bureaucracy and ignorance over youthful enthusiasm and self-discovery.
"I think these people really dropped the ball here," he said. Bundschuh said the participants worked with equipment that fixed logos to the T-shirts and caps, but denied that the work disrupted life at the school.
Teen-agers assigned to the Fischer School, housed in a long, low building in Orange, Calif., have usually failed at other county programs for troubled youths. Bundschuh, a former accountant with Arthur Young & Co., thought the after-school Junior Achievement program would enliven the young inmates' interest in reading and mathematics and also teach them a few business skills.
Although probation department officers working at the juvenile hall initially had strongly supported the program, Bundschuh said, "the bureaucrats who ran the probation department . . . actually avoided any of our invitations to meet with Junior Achievement kids, to go to some of our seminars."
In the spring of 1980, the first Universal Enterprises company sold more than $3,000 worth of decorative pillows without the help of a corporate sponsor. When Santa Fe International, based in Alhambra, Calif., agreed to send advisers to the program in 1980, sales took off.
The 30 or 40 inmates wrote to companies all over the world, including some Santa Fe International operations, asking for orders and admitting they were teen-agers who had gotten into trouble and were looking for a way out.
"They worked at developing the market, getting service to customers and it just growed and growed," said Dick Bone, director of management services for Santa Fe Drilling Co. and one of the program's former advisers.
At the end of each semester, according to Junior Achievement practice, the students liquidated their holdings, paid themselves salaries and commissions, paid off shareholders among family and friends and paid their taxes. Soon, Bundschuh said, almost all of the 60 young people assigned to the Fischer School were taking part. A 17-year-old girl, committed to the institution for repeated drug abuse, collected $750 in commissions. Four other students made more than $100, but all the money was deposited in accounts for them at the Bank of America.
Despite the probation department's concern about the money, Bundschuh said, "the kids didn't handle more than $25 in cash at any one time, and always in front of a counselor." Not only were there no thefts or any other criminal acts, Frank Plaskon, an executive of Junior Achievement in Southern California, said, "but for the first time in their lives they were saving money they had earned."
Most of the approximately 100 bank accounts opened for the students are still active, Bundschuh said, even though most of the inmates have since been released.
Probation officers have persuaded Junior Achievement executives to forbid mail-order businesses in any future programs at the Fischer School. That means that friends and relatives of the students would have to do the selling in the future.
The probation department says it wants to revive the program on a limited basis, but can't find a new corporate sponsor. Santa Fe International has dropped out, saying its executives are tired and overworked but also openly disagreeing with the probation department's restrictions on the program.
"It was a disaster, telling a kid he cannot make as much money as he can," Bundschuh said. Santa Fe's Bone acknowledged that "we did feel that it was not in the best interest of Santa Fe or Junior Achievement to put a cap on gross revenues and sales. That would not be entrepreneurial."
Meanwhile, interest in the success-story-that-was continues to grow. Los Angeles is considering a Junior Achievement project at one of its juvenile centers. Junior Achievement officials said they were pleasantly surprised when the little Orange County company broke all records.
And Orange County education department officials said they were similarly impressed to hear a young participant from the juvenile hall tell them, "Hey, you guys, society says we're failures . . . but our success here in Junior Achievement proves that we're not all failures."