Building upon my previous post, I will provide a chapter summary of all the chapters in the book Foundations: Their Power and Influence by Rene A. Wormser. Beginning with the first chapter: The Study of Foundations.
Congressional Investigation Is Not Enough
Since 1950, there have been communist sympathizers and communist infiltrators in the American government and education that have subverted our beloved American traditions, culture, and way of life. As previously mentioned, the Cox Committee was originally appointed to investigate these foundations to find evidence of these subversive activities but was abandoned due in large part to the power these foundations wield. B. Carroll Reece picked up where the Cox Committee left off, and he was aware of the harassment he would be subjected to in an effort to find the truth, namely the use of these foundations' tax-free largesse to promote "un-American and subversive activities; for political purposes; [for] propaganda, or [for] attempts to influence legislation" (3). Studies and investigations of these foundations were necessary because these foundations play a large social role in society and now essentially form the structure of the American society. Despite the limited time, the lack of sufficient funding, the clash of personalities, and an atmosphere of political passion, the Reece Committee accomplished much.
Because the American foundation is a social invention meant to contribute to the improvement of the public welfare, it requires constant reevaluation; what may have been true yesterday of the foundation, may not be true today. Congressional committees can provide a great deal to that appraisal. But most importantly, because these institutions may exert political influence (which may not be in the interest or tradition of the United States) due to their enormous wealth, they "deserve the fullest attention of all who are concerned for the future of our Republic" (4). The Reece Committee in no way projected any kind of prejudice against these foundations, it merely recorded the possible dangers to the public; to ensure that these foundations served the best interest of the people. Being silent would not achieve this objective and Reece simply followed the footsteps of those who had gone before him.
The Walsh Committee
The study of foundations is not new. In fact, it has been under Congressional inquiry before. Under a Congressional Act of August 23, 1912, the Commission on Industrial Relations examined labor conditions by major industrial firms. Its focus was to examine labor conditions and the treatment of workers, "starting with a study of labor exploitation, it went on to investigate concentrations of economic power, interlocking directorates, and the role of the then relatively new large charitable foundations (especially of Carnegie and Rockefeller) as instruments of power concentration" (5). The only difference between then and today is that no one seems to care about the concentration of power that is being used to destroy this country. Consider what Abraham Lincoln said in a letter to Col. William F. Elkins on November 21, 1864:
"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country.....corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working on the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
Now compare and contrast to Louis D. Brandeis, a prominent lawyer and student of social problems who later became a Supreme Court justice, who testified on January 23, 1915:
"But when a great financial power has developed, when there exist these powerful organizations, which can successfully summon forces from all parts of the country, which can afford to use tremendous amounts of money in any conflict to carry what they deem to be their business principle, and can also afford to suffer losses--you have necessarily a conditions of inequality between the two contending forces. The result in the cases of these large corporations, may be to develop a benevolent absolutism, but it is an absolutism all the same; and it is that which makes the great corporation so dangerous. There develops within the State a state so powerful that the ordinary social and industrial forces existing are insufficient to cope with it" (6).
Some may think that these two quotes are about Capitalism, but that is not the intent here. Any concentration of power can exist in another political, economic, and social structure (i.e., Communism, Socialism, Nazism), and it can exist in wealthy foundations too. Today it is true that only a few care about the corruption and concentration of power in corporations, banks, and foundations. This aggregation of power which leads to corruption is accepted by most as a normalization of globalization. The problem with this thinking, however, is that there are "checks and balances" in our Constitution for a reason and the United States is a democracy (well, technically a Republic because there does exist a difference between the two) governed by the people, for the people, and to the people. If only a few are allotted power where does that leave the democratic process?
Brandeis knew there was a strong possibility of an abuse of power; he defined the whole system "inconsistent with our democratic aspirations" (6). If we are to maintain our democratic experiment called the United States with our individual freedoms, then we have to care about the abuses of power and the corruption. And we cannot overlook or make excuses for some of these foundations, banks, and corporations because they offer "wonderful humanitarian aid."
There are many who see foundations such as Carnegie, Rockefeller, and Ford as being beneficial to humanity and causing no harm, but they feel that certain stipulations should be put in place. Samuel Untermyer who was counsel to the U.S. Steel Corporation did not share the fear and distrust that many others had with foundations, however, he did have some reservations. Despite his total trust in powerful, wealthy organizations, he argued that Foundations should be "organized under a uniform Federal law instead of under special state charters," and they should be "limited in their size," and they should "not be permitted to accumulate income" (7). Untermyer also felt that the government should be represented when these foundations appoint trustees.
Dr. John Haynes Holmes, a Protestant minister, also testified to his concern about foundation powers stating that an autocratic system of administration was in the midst of a society that is supposed to be democratic, "He contended that a democratic society did not need the services of outside agencies to study a community from its own standpoint and to apply remedies from funds at its disposal" (8). According to Wormser, Holmes would "rather see Democracy die of its own corruption than be favored by the autocratic benefaction or service of any one particular individual."
Even John D. Rockefeller Jr. testified for the Commission stating on June 25, 1915, "These foundations, as is true of all modern corporations, are subject to the reserved power of legislative bodies which created them--to modify or repeal their charters whenever the public interests require" (8). This was Mr. Rockefeller's response to the question of whether "large foundations constituted a possible menace either to the general cause of education or to the industrial welfare of the people" (8). Rockefeller concurred that the public has a right to know and that the legislative body is needed to control foundation activities. Although Rockefeller did contend that "proper selection of directors would sufficiently protect the public interest and that the financial power of large foundations would be felt only in the realm of investment," who is to say that foundations are only interested in investment?
Rockefeller also said this in regard to higher education, "There is a possible danger, if the giver retains any kind of control; I think it unwise" (9). This should raise the alarm in the most astute individuals because even though Rockefeller was a businessman it would be naive to think that a powerful man like Rockefeller was only interested in business and not power and control. Who is to say that businessmen are only interested in investment? Is it not true that some seek investment with the sole purpose of power and control? Perhaps his statements reflect a public relations statement more than anything else and was a smokescreen to hide the real intent.
Either way, Mr. Rockefeller said that it was never contemplated that his father or his associates "could continue to have their influence felt; but at any time in any generation, when the board having the charge of such a foundation is not, in the judgment of the public, a proper board, the legislation can introduce an amendment, limiting, qualifying or modifying the method of electing directors and adding at that time any restriction which it may think desirable" (10). Rockefeller contended that a proper selection of directors would sufficiently protect the public interest, he continued to reiterate investment as the only motive, and he argued for academic freedom and the "complete independence in the use of grants by recipient educational institutions of higher learning" (9). Despite Rockefeller's "good intentions," academic freedom is not the case today. As Chairman Walsh expressed his deep concern that whoever bestowed the granting of funds to higher education, their opinion or views would be unconsciously or consciously taken by the persons being educated.
When these statements and opinions were made in 1915, no one could see the future and how today we see the vast emergence of "intermediate organizations serving foundations in the distribution of grants and their resulting power in the academic world" (9). In 1915, progressive education was in its infancy. Even if Mr. Rockefeller was sincere that if foundations did not serve the public's interest, then they should be reevaluated with each generation, we can see that that is not the case today. Mr. Basil M. Manly, the director of research of the Commission on Industrial Relations who was concerned with the concentration of wealth and influence, concluded in his final report on foundations that "a small number of wealthy and powerful financiers held in their hands the final control of American Industry; that control through actual stock ownership, in spite of the large number of stockholders, rested with a very small number of persons; and that in each great basic industry a single large corporation dominated the market" (10). As Reece states poignantly, "many of the conclusions of the foundation critics of 1915 have lost their cogency because of evolutions in the social structure" (11). Although Manly's statement refers to capitalism and its fear that foundations were being used as instruments of capitalism, due to the "evolution" in the social structure, today we now fear foundations as instruments and promoters of big government: foundations have changed, and they have essentially changed the social structure of the America.
For the majority of its conclusions, the Commission on Industrial Relations' report by Manly saw the domination of a few (foundations) in respects to not only American industry but also in education and the social services. The report continued to express concerns that the "policies of these foundations must be inevitably colored, if not controlled, to conform to the policies of the corporations in whose securities their endowment was invested" (12). And if these funds were the result of exploiting American workers or American consumers, then these funds do indeed belong to the American people. The report listed several examples of the alleged use of Rockefeller foundations as instruments for Rockefeller business interests, and it even reviewed the extent of influence of these foundations and private endowments on institutions of education and public service. Evidence in the Commission was supported by complaints that the Bureau of Municipal research of New York adopted a strict policy to meet the demands imposed by Mr. Rockefeller for the foundation's contributions, and that many colleges and universities abandoned their sectarian affiliations and charter clauses relating to religion in exchange for the securement of endowments from the Carnegie Corporation (13). The report commented: "it would seem conclusive that if an institution will willingly abandon its religious affiliations through influence of these foundations, it will even more easily conform to their will any other part of its organization or teaching" (13). Therefore, it was recommended that legislation should be enacted to limit the amount of funds and the amount of power that these foundation managers should have.
The Textron Investigation and Business Abuses
Another committee (subcommittee of the Senate Committee on Interstate and Foreign Commerce) investigated the operations of the Textron Corporation which in several tax-exempt foundations had used the funds in complex business manipulations. This committee expressed concern over the number of "family" foundations, and quoted Fortune magazine, which had described the practices of these organizations as "excessively secretive" (14). The committee chastised this secretiveness as unjustifiable and indefensible because such foundations received their tax-exempt status from society and therefore had an obligation to satisfy their public sanction. These Textron disclosures, however, did lead to a strengthening of the Internal Revenue Code, but Reece was more concerned with the cultural and intellectual aspects of foundation activity because he felt that it is in the "field of ideas that foundations exert the greatest influence of our country" (15). And since the federal government can only withhold the privilege of tax-exempt status, it cannot regulate foundation activity. The Cox and Reece Committees, however, were able to touch on some of the major cultural and intellectual aspects of foundation operation.
The Social Significance of Tax-Exempt Institutions
A number of religious organizations had been challenged in the past by sovereign governments due to the conflicts with the public interests as religion was used as a cloak to hide the real intent. Clement V diminished the potent order of the Knights Templar on May 6, 1312. The Templars had become a significant symbol of culture, charity, and social order. Their influence was known far and wide throughout the western world. By the 12th century, their wealth had grown in excess and like some of our modern-day foundations, the Knights Templar had gone into politics (17). Then, in 1773, Pope Clement XIV dissolved the Jesuit order which had already been removed from Spain, France, and Portugal. Many had grown to resent their concentration of wealth and power due in large part to the political activity of some of the guiding managers of the Order. One historian commented, "Their perpetual meddling in politics and even in speculation and finance, stank in the nostrils of every government in Europe; while their high-handedness and corrupt greed in the matters of ecclesiastical privileges and patronage alienated the clergy" (18). Several other historians have made such comments and a generation of critics had concluded from the study of foundations that they had become the "breeding ground for socialist and related political movements and actions" (22). Some men have written books on the very matter.
Frederick P. Keppel who wrote the book The Foundation, Its Place in American Life made note that foundations must be always on guard against the use of propaganda, even virtuous propaganda. Edward C. Lindeman, who was a socialist and believed in foundation power to contribute to social change, condemned trustees in his book Wealth and Culture, "repugnant arrogance of those who presume to impose cultural norms upon a society on no basis of warrant other than their pecuniary success under the dispensation of a competitive economy...In a decent society creative persons should not be expected to debase themselves as persons in order to gain the economic security which permits them to work. When they do so their true creativeness evaporates with tragic suddenness" (21-22). In the book Prejudice and the Press, Frank Hughes argues that foundations "exhibit the progovernment bias prevalent in university circles" (23). As such, Hughes sees a real danger to the Republic from little incentive towards independent thought and research. Hughes came to these conclusions because many of the foundation trustees were former trustees of universities and many of the professional managers of foundations were former university teachers. This bias threatens American freedoms because this concentration of wealth and power favors certain political ideas and demands a conformity to it.
William H. Whyte, Jr. who died in 1999 and who was a former editor of Fortune magazine wrote several articles on the Ford Foundation, so he was well informed on foundation practices. Whyte wrote a book in 1956 titled The Organization Man and in it he outlines the disastrous impact of organization techniques on the life of America. He attributes them to a "growing force for conformism, threatening in the end to destroy all vestiges of genius, individual responsibility and initiative, and with them the concepts of individual independence and liberty so dear to earlier generations" (24). Because foundations are controlled by organizational bureaucrats, the flow of great ideas and scientific achievement is being hindered rather than advanced by the behemoth corporation-or foundation -supported research projects. Instead of independent research, preference for group performance is pushed and accepted. In scientific study, we see an increasing number of peer-reviewed articles being published by two or more authors rather than one demonstrating that scientists now depend on others in the early stage in determining what problems to investigate. This is because grant funding by these foundations generally only supports group projects. Whyte believes that the lure of these funds for organization-favored projects impedes the creative potential of our scientists (25). This increasing dependence on grant money for research forces scientists into a vicious circle, and what once only needed one or two sentences to apply for grant money, now needs six to eight single-spaced pages. And even that is subjected to numerous members of committees to be approved.
Reece comments on this to which I agree, "The control imposed on a scientist by the requirement that his research designs be approved by the members of numerous giant committees will bring his ideas down to the lowest intellectual common denominator. It will impose on him the most powerful pressure to conform to a pattern of mediocrity" (26). Whyte also ridicules the idea of scientific teamwork by stating, "the group, even in the realm of thought, is superior to the individual." I agree with Whyte because this sounds like Marxism in which the individual is anathema. Marx was all about the collective. In terms of foundations revisiting and supporting individual research, Whyte states, "Instead of countering the bureaucratization of research they are intensifying it" (26). It is not surprising then that many creative individuals have been conditioned to leave individual projects because the foundation culture is not favorable to individual projects; they simply are not funded. There is only generous foundation subsidy for large projects with multiple team members. As a result, this leaves any new scientific discovery locked in a chest hidden under the ground as the barren and sterile fields of conformity remain. New scientific discovery will remain a desolate wasteland with buried treasures just below the surface.
Ultimately, foundation giving has a significant impact on education, political action, and social thinking, "this influence reaches the public through the schools and academies, through publicity, and through educational and other associations dedicated to public and international affairs" (28). Only a reform of the law can ensure the proper use of tax-free funds, and only a moral account of the foundation managers who make the decisions on the use of funds will enable intellectual freedom and protect the public from abuses of power.
Foundation Responsibility
According to the Association of Fund-Raising Counsel, Inc., it is estimated that out of 40,000 organizations listed by the IRS as tax-exempt, only about 6,000 actually engage in giving (1954 when this book was written). Foundations must give an account via public reports specifically because of their public sanction. They owe it to the public. Even more so, if they are promoting political ideologies or social change, since some of these foundations have promoted seductive ideas that have promised a better society or a utopia on earth as Karl Marx would. When the managers of these funds promote particular brands of social philosophy their influence determines how much they tamper with the public welfare. For example, the Carnegie Endowment for International Peace. This is a large foundation but is dwarfed by the likes of Rockefeller, Ford, and the Carnegie Corporation, yet the Carnegie Endowment for International Peace has its ubiquitous tentacles in the Department of State, many law schools where international law is taught, foreign offices of other nations, and even the United Nations. As Reece says, "it is no longer a mere clearing house for ideas; it has become a proponent of the particular ideas of its trustees, its staff, and an entourage sympathetic to certain special concepts of international relations promoted by the foundation itself" (31). If these foundations are promoting a particular political philosophy, they need to be held accountable and they need to be responsible in a fiduciary manner to the public.
What is "Propaganda" and What is "Education"
As mentioned earlier, the only thing the IRS can do is withdraw its tax-exempt status when a foundation engages in political activity. It cannot regulate what these foundations do. Because the tax laws have been weak and ambiguous and because the term propaganda was not clearly defined in 1954, so much propaganda was coming out of these foundations all the while they were enjoying tax-free status, "numerous foundations pursue their political ways free of interference by the Internal Revenue Service because of the ambiguity and weakness of the statue referred to" (33). It is interesting to note that the IRS has taken the word propaganda out of its 501c (3). In the IRS code 501c (3) of 1954, the word propaganda is mentioned:
"No substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (including the publishing or distribution of statements), any political campaign on behalf of any candidate for public office."
Today in 2022, the word propaganda is not mentioned. But back in 1954, because the term was not clearly defined many foundations promoted propaganda while enjoying tax-free status. An example of this is the Robert Schalkenbach Foundation of New York who was in 1954 and still is dedicated to the promotion of Henry George's single tax idea. More than likely, it has indoctrinated thousands of unsuspecting citizens, yet the "foundation would undoubtedly claim its efforts to be "educational" ' (34). Another example of a foundation promoting propaganda under the guise of "education" is The League of Industrial Democracy, formerly The Intercollegiate Socialist Society. Some of its promotions include a booklet called "Revolt," and it states the following:
"The League for Industrial Democracy is a militant educational movement which challenges those who would think and act for a "new social order based on production for use not for profit." That is a revolutionary slogan. It means that members of the LID thank and work for the elimination of capitalism, and the substitution for it or a new order, in whose building the purposeful and passionate thinking of the student and worker today will play an important role"
This sounds just like Marxism with the raised fist, and it is revolutionary with seditious undercurrents. Because of the IRS code in 1954, this foundation went about promoting socialism without any harassment from the IRS. The worst part is that some of these pamphlets and books published by the LID were used in some college courses. Dr. Laidler of the LID submitted a letter to the Reece Committee stating that their books and pamphlets were indeed used in college courses. He used this as a major premise and because colleges are educational, he used this as a minor premise resulting in a syllogism with the conclusion that their work was "educational" (36). Semantic difficulties have always been a problem in the courts, and today they have a problem distinguishing between education in a legitimate sense and "education" which is used primarily for political propaganda that is intended to influence legislation. As Reece points out, "An interpretation of the venture capital theory permitting the use of tax-exempt funds for partisan purposes would be a palpable absurdity...The managers of tax-exempt endowments act as trustees not only for the donors to such foundations but also for the public. They have as little right to use their trust funds for partisan ends as they have to put them into their own pockets" (37). Fortunately, there have been some foundations that have lost their tax-exempt status through the years for promoting partisan literature, but many foundations still enjoy tax-free largesse while promoting partisan ideology.
Foundation Responsibility in Supporting Social Change
In statements to the Reece Committee, some foundation managers maintained their innocence. They claimed they were not responsible for the amount of grants being used for the destruction of capitalism through social change. This has led to a bias and discrimination against conservative programs, "If foundations have favored quasi-socialist "liberal" causes and discriminated against "conservative" programs it may well be due to some extent, to the fact that the preference had already existed in the academic world...[and] there may have been a penetration of foundation boards and administrative ranks by anticonservative professionals (academicians, scholars, and administrators)" (39). This inclination was quickened by the use of intermediary agencies and individual "expert" consultants who were merely advisors that were chosen because of their standing in the academic world. Consider this astute quote by Reece:
"The politically minded manipulator often is rewarded with eminent status, whether he is a true scholar or not. The symbol of academic prestige is not necessarily evidence of learning or of sound social judgment. Once an academician is selected to act as an "expert," he becomes one in the public eye because he has been chosen. He may have succeeded in coming into office chiefly because he had developed good "public relations." If that was the case, he is likely to support whatever fads and foibles enabled him to succeed, rather than the thought of truly creative minds. These "experts" have almost invariably followed the current fashion which grew up among teachers and political scientists under a barrage of communist and socialist propaganda and under the impact made by the depression of 1930. This fashion is one of confidence in the power of man to create heaven on earth by manipulating the structure of government."
Reece goes on to express his deep concern, particularly of the cumulative effect, in these foundations and their impact on the minds of Americans. This promotion of propaganda and the push for social change warrants a questioning as to "whether these foundations are truly performing their trust duty to the public" (40). He believes, to which I agree, that many of these foundation managers have given preference to the "political ideas held by cliques of academicians and to the proponents of the ideas who are generally identifiable as leftist" (40). Because of this one-sided preference, political bias, and change just for social change, the normal checks and balances in our Constitution have been rendered null and void. Why should the public pay the bulk of the taxes when these foundations enjoy tax-exempt status so they can promote their propaganda and political bias? Where is the foundations' responsibility to the public trust?
In chapter 2, Reece discusses the power of the individual foundation. As mentioned previously, I will write a post on each chapter because there are far too many important points that cannot be left unsaid!