> Chapter 4
"THE
TAX-EXEMPT FOUNDATIONS"
(By William H. Mcllhany, II. Pub. 1980 by
(Subsidiary reference: "The Dodd Report to the Reece Committee on
Foundations," by Norman Dodd. Pub. 1954 by Long House,
We take up this book next to flesh out the brief exposition concerning
the tax-exempt foundations that appeared in The
Naked Capitalist. Mcllhany's book, appearing ten years later, and devoted
to its one single topic, gives startling illumination to the scope of
"unAmerican" activities undertaken by the major American tax-exempt
foundations and the satellite organizations which they financially support.
Mcllhany's incentive for writing this book stemmed from the abortive
1954 hearings of the House of Representatives' Special Committee to Investigate
Tax Exempt Foundations, chaired by Rep. Carroll Reece. Both Carroll Quigley and
Cleon Skousen have discussed the Reece hearings in their respective books, as
we have reviewed above. Mcllhany's approach was to obtain an extensive
interview with Norman Dodd, the Research Director of the Reece Committee, to
get his account of the history of that investigation, and follow it up with his
own investigations and interviews with officials in the primary foundations and
"accessory agencies" (as Dodd labels them) that were under
investigation. We will go immediately to the major new revelations transmitted
to Mellhany by Mr. Dodd.
Following his appointment and prior to the hearings, Dodd prepared a
list of questions and sent them to the major foundations. One reply he received
was a call from the Carnegie Endowment for International Peace, which resulted
in an appointment with Dr. Joseph Johnson, its recently appointed president
(replacing the former president, Alger Hiss). Johnson said he couldn't take the
time to research and answer Dodd's questions about the organization, but would
make the minute books of the foundation available to one of Dodd's staffers in
their library. Dodd swiftly agreed, believing that Johnson probably did not
know what might be in those records.
He sent Kathryn Casey, the legal analyst for the Reece Committee, to
examine those records, asking her to concentrate on the first years of the
Endowment after 1910, and the years from 1917 to 1920. She came back shocked
and upset, but having transcribed enough material for Dodd to reconstruct what
she had found. In his words (pp. 60-6 1):
"[In the minutes, about 1911] the trustees raised a question. And
they discussed the question and the question was specific, 'Is there any means known to man more effective than war, assuming you wish to alter the life of an entire people?' And they discussed this and at
the end of a year they came to the conclusion that there was no more effective
means to that end known to man. So, they raised question number two, and the
question was, 'How do we involve the
"And then they raised the question, 'How do we control the
diplomatic machinery of the
"Finally, we were in a war. These trustees in a meeting about 1917
had the brashness to congratulate themselves on the wisdom of their original decision because already the impact of war had
indicated that it would alter life and can alter life in this country. This
was the date of our entry in the war; we were involved. They even had the brashness
to dispatch a telegram to [President]
"The war was over. Then the concern became, as expressed by the
trustees, seeing to it that there was no reversion to life in this country as
it existed prior to 1914. And they came to the conclusion that, to prevent a reversion, they must control education. And then they approached the Rockefeller Foundation and they said, 'Will you take on the acquisition of control
of education as it involves subjects that are domestic in significance? We'll
take it on the basis of subjects that have an international significance.' And
it was agreed.
"Then, together, they decided the key to it is the teaching of American history and they must change that. So, they then approached the most prominent of
what we might call American historians at that time with the idea of getting
them to alter the manner in which they presented the subject."
The minutes further showed, says Dodd (pp. 61-62), that the Carnegie
trustees, upon encountering resistance from established historians, set about
"to build their own stable of kept historians, and they even got a working
agreement with the Guggenheim Foundation to grant scholarships to their selected
candidates who were seeking graduate degrees.... The extent to which the
Carnegie trustees were able to build their stable of submissive historians is
significant.... Though encountering resistance at first, this group succeeded
gradually in capturing more influence in the American Historical Association
and affiliated circles."
Mcllhany continues (p. 62), "It is important to remember that the
[Carnegie] endowment supported
The foundation minutes of around 1911 expressing the need to control the
State Department, as noted above, were apparently written during the tenure of
the first president of the endowment, Elihu Root. Mr. Root had himself just
finished a term as Teddy Roosevelt's Secretary of State from 1905 to 1908, so
he was in a position to know what control of the State Department could
accomplish. Later, says Mcllhany (p. 61), "as a U.S. Senator and Nobel
Peace Prize recipient, Root was probably the most influential trustee at this
time." On August 16, 1918, he wrote to Colonel Edward Mandell House,
President Wilson's advisor and alter ego, discussing the need for "an
international community system" to enforce World War 1 settlement terms
which were soon to be negotiated. In response, "Colonel House wrote back
on August 23, telling Root that he had discussed his letter with Wilson, and
that he did 'not believe there would be much difficulty in bringing our minds
in harmony upon some plan' for a 'Community of Nations."'
This interest in the control of international relations is especially
interesting in light of the second major revelation which Dodd related to
Mcllhany. Dodd said that in response to his request for information prior to
the Reece hearings, he sought and was extended an invitation to visit Rowan
Gaither, the president of the Ford Foundation. The visit took place in December
1953. Dodd said that Gaither opened the conversation with an unforgettable
admission (p. 63):
"'Of course, [Mr. Dodd,] you know that we at the executive level
here were, at one time or another, active in either the
"And I said, 'Yes, Mr. Gaither, I'd like to know.'
"'The substance was to the effect that we should make every effort to so alter
life in the United States as to make possible a comfortable merger with the
Soviet Union. "'
Shocked by this confession, Dodd recalls responding that, in the light
of those directives, he was no longer surprised at the record of left-wing
grants made by the Ford Foundation. He suggested that Mr. Gaither make those
directives public, a suggestion which Gaither brushed aside, indicating that,
for public consumption, his foundation was guided by the Ten Commandments, The
Sermon on the Mount, the Declaration of Independence, and the U.S.
Constitution.
Thus, the thrust of the major foundations to alter life in the United
States toward internationalism, expressed first in 1911 in the minutes of the
Carnegie Foundation, is found substantially unchanged 42 years later as a
guiding principle of the relatively new (but much wealthier) Ford Foundation.
Dodd also related to Mcllhany that about a month earlier, in November
1953, after having given a speech at the Mayflower Hotel in
"Edelsberg said the men had some very serious problems. They had
amassed so much power that it would destroy them. They should dissolve their
associations, but he was sure they would not be willing to do so. Dodd well
recollects what [Edelsberg] said, continuing: 'We will exercise our power and
it will destroy us, but it will destroy everything else in the process.... As
we exercise our power from here on out, we're going to get closer and closer to
the surface, and somebody's going to get very curious and pick up the end of
the string and follow the string and he's going to find himself at our
door."
"It was obvious that Edelsberg was claiming to represent an elite
far more powerful than anyone active in the ADL. He told Dodd that the strength
of the group was their secrecy and their understanding of the nature of a free
society. And their Achilles heel was the possibility that their efforts to
cloud public understanding in these areas might fail."
Dodd related that, following the first day of the hearings, he was again
contacted by Mr. Edelsberg, who said that he had been ordered to deliver a
threat against Dodd's life. No such attempt was apparently made, however,
though Dodd says that his phone was subsequently tapped, he was crudely
followed, and he was subjected to a verbal attack in the October 1954 A.D.L. Bulletin.
Before going to a discussion of the hearings themselves, let us detour
to pick up a valuable supposition spotted by Mr. Mcllhany regarding the
motivations of the Rhodes-Milner group. Mcllhany notes (p. 19) that Cecil
Rhodes attached to his will a "Confession of Faith" which contained
the following:
"The idea gliding and dancing before our eyes like a willow - a
wish at last frames itself into a plan. Why should we not join [or 'form' as other
writers have interpreted Rhodes' handwriting] a secret society with but one
object: the furtherance of the British Empire, for the bringing of the whole
uncivilized world under British rule, for the recovery of the United States,
for the making the Anglo-Saxon race but one Empire."
Though sounding remarkably like the sentiments voiced by Andrew
Carnegie, it seems a contradiction that
"This goal [of merging
Mcllhany supplies copious references to the works of these other
researchers. He is clearly suggesting that the Pan-British oratory is little
more than a cover for the real (and really secret) objective, which is to reorganize the world by socializing its
governments and then merging them
into one, by, for example, "altering life in the United States such as to make possible a comfortable merger with the Soviet Union," as
revealed above by Rowan Gaither. This secret objective is exactly that
described by Mr. Skousen in our previous review, which he summarized as
follows:
"[The] world hierarchy of the dynastic super-rich is out to take
over the entire planet, doing it with socialistic legislation where possible,
but having no reluctance to use Communist revolution where necessary."
Mcllhany then proceeds to describe the two attempts of Congress to
investigate the foundations - first by the special committee of the House run
by Democrat Congressman Eugene Cox of
The Cox committee was formed April 4, 1952, and was required to complete
its work by January 1, 1953, i.e., at the start of the next congressional
session. It's motivation centered on the concern raised by the immediately
preceding work of the Senate Internal Security Subcommittee which found, as
Mcllhany puts it (p. 35) "that much of the Roosevelt-Truman foreign policy
that led to the fall of mainland
China to the Communists was deliberately calculated to produce that
result. The private organization which influenced or supplied so many of
the State Department personnel responsible for shaping Far East policy was the
American Council of the
The Senate report then identified the main sources of IPR funding, the
American IPR receiving, in the 26 years from 1925 through 1950, 50 percent of
its total income from foundations (chiefly Rockefeller and Carnegie groups),
and the International IPR receiving in the same period 77 percent of its total
income from the Rockefeller and Carnegie groups and the American IPR. These
funds included grants as late as 1950 of $50,000 and $60,000 from the
Rockefeller Foundation to the American and the International IPR, respectively.
Further, the temporary chairman of the Carnegie Foundation, John Foster Dulles,
recommended in 1946 that the foundation's presidency be given to the upcoming
State Department figure Alger Hiss.
The board so acted in December 1946. Though evidence concerning Hiss's role as
a Soviet spy was made available to
Dulles a few weeks later, and though Hiss was publicly identified as a spy by
Whittaker Chambers in December 1948, Hiss was not removed as the foundation
president until 1950.
These several revelations provided the momentum for forming the Cox
committee to investigate the foundations and their apparent promotion of
Communist objectives. Mcllhany quotes from the House Resolution authorizing the
committee study (p. 37): "The committee is authorized and directed to
conduct a full and complete investigation and study of educational and
philanthropic foundations and other comparable organizations which are exempt
from federal income taxation ... to determine which such foundations and organizations are using their resources for un-American and subversive activities or
for purposes not in the interest or tradition of the United States."
The hearings then proceeded apace, with selected testimony described by
Mcllhany in some detail. The time was short, however, and compilation of a
report was interrupted by the unexpected death of Chairman Cox. The job was
given to another, and the final report which emerged consisted of just 15
pages, lacking any significant, supported conclusions or generalizations
concerning the thrust of foundation activities and grants. As Mcllhany puts it
(p. 49):
"The issues discussed in the hearings were summarized for the
report in the form of twelve questions. Several of these focused generally on
the grants made to subversive organizations and individuals with Communist
affiliations, but the report, perhaps due to the impossibility of in-depth
analysis, concluded that the foundations had overwhelmingly lived up to their
respective reputations as public trusts." However, he continues,
"there was one angry member of the Cox committee who was disappointed by
the outcome of the hearings and the very limited nature of the report. Representative B. Carroll Reece of
Carroll Reece got the continuing investigation he wanted by a House
resolution passed in July 1953. The best single thing that he did in
furtherance of his goal was to hire Norman
Dodd as research director. Dodd's background and mentality matched the task
at hand, as Mcllhany makes clear in his thumb-nail biography of Dodd. Mcllhany
relates the following exchange in January 1954, shortly after Dodd's hiring:
"'Norm, would you accept the
premise that this country is the victim of a conspiracy?' Dodd remembers
thinking for a moment and saying, 'Yes, Carroll, I'll accept that.' Then
[Reece] said, 'Can you conduct this investigation in a manner which will expose
it with proof?' .... Dodd agreed to conduct the research on the suggested basis
of proving what they both knew was true - what had been demonstrated in the Cox
Committee hearings but not stated in its report - that some of the foundations
were part of a totalitarian conspiracy."
The roadblocks that were erected to first prevent, and then sidetrack,
and finally to stop the Reece Committee hearings make as good a story as ever
came out of
Then when Reece called the committee members and staff to his office to
discuss when the hearings should start, Rene Wormser, the committee counsel,
proposed (p. 57), "Gentlemen, I recommend that the committee hold no
hearings, but that you permit me to write a report and we'll let the
foundations do anything they want." Reece said no, but Wormser's
suggestion was consistent with the prior expressed concern felt by both Dodd
and Reece that Wormser did not share their premise of a foundation conspiracy.
Dodd then offered to write, and did write, a report to the committee setting
out the basis upon which the committee would proceed with its work. We'll
discuss that report more fully in a moment.
On May 10, just after the first public hearing, Dodd received a death
threat via Mr. Edelsberg, as previously related. Then, during the one month or
so of actual hearings, Dodd and his witnesses were continuously interrupted for
harangues by Wayne Hays, delaying the hearings and preventing adequate time for
development of coherent causal relationships. Hays exploded on June 17 into a
tirade of obscenities directed at Reece and the committee staff, immediately
following which the hearings were postponed and then finally called off
entirely.
Hays subsequently apologized to Reece, but Reece did not reinstate the
hearings. Dodd related to Mcllhany that he was later informed that Reece did
not do so because of blackmail pressure brought against Reece relating to a
prior recorded charge by Washington police of his homosexual behavior in a
public washroom. Dodd believed the charges to be a frame-up, but whether true
or false, the hearings were discontinued, and Dodd was prevented from bringing
up the content of the Carnegie Foundation minutes which Kathryn Casey had
transcribed, or the conversation he had had with Rowan Gaither of the Ford
Foundation, both of which would have gotten damning evidence on the record in
support of his thesis.
Mcllhany devotes about two pages (pp. 66-68) to a discussion of the Dodd
Report to the Reece Committee, which we referred to above, and which we also
identified as a "subsidiary reference" at the beginning of this
chapter. For our purposes, the Dodd Report provides us with a highly important
insight into the scope and power of the forces seeking to socialize our
society. As the report points out, the implementation of socialization actions
by government, and the aggrandizement of Executive branch power, went through a
revolutionary increase during FDR's first term, but with the wide acceptance of
the electorate. This led to additional studies by the Reece Committee staff
which indicated that such a revolution could not have been publicly accepted
"unless education in the
++ Indent "
"Its ensuing studies disclosed such a relationship, and that it had
existed continuously since the beginning of this 50-year period. In addition,
these studies seem to give evidence of a response to our involvement in
international affairs. Likewise, they seemed to reveal that grants had been
made by Foundations (chiefly by Carnegie and Rockefeller) which were used to
further this purpose by:
"Directing education in the
"Training individuals and servicing agencies to render advice to
the Executive branch of the federal government.
"Decreasing the dependency of education upon the resources of the
local community and freeing it from many of the natural safeguards inherent in
this American tradition.
"Changing both school and college curricula to the point where they
sometimes denied the principles underlying the American way of life.
"Financing experiments designed to determine the most effective
means by which education could be pressed into service of a political nature.
"At this point the staff became concerned with ... identifying all
the elements comprising the operational relationship between Foundations,
education, and government, and determining the objective to which this
relationship had been dedicated and the functions performed by each of its
parts.... To insure these determinations being made on the basis of impersonal
facts, I directed the staff to make a study of the development of American
education since the turn of the century and of the trends in techniques of
teaching and of development of curricula since that time. As a result, it
became quite evident that this study would have to be enlarged to include the
accessory agencies to which these developments and trends had been traced.
"The work of the staff was then expanded to include an investigation
of such agencies as:
"The American Council of Learned Societies, the National Research
Council, the Social Science Research Council, the American Council on
Education, the National Education Association, the League for Industrial
Democracy, the Progressive Education Association, the American Historical
Association, the John Dewey Society, and the Anti-Defamation League."
Dodd then proceeds to provide a sketch of each of these organizations
(excepting only the ADL). The scope of their activities is awesome. Here,
somewhat abbreviated, is how he describes them:
"The American Council of
Learned Societies was founded in 1919 to encourage humanistic studies,
including some which today are regarded as social sciences. It is comprised of
24 constituent member associations. In its entirety, it appears to dominate
this division of scholarship in the
"The National Research
Council was established in 1916, originally as a preparedness measure in
connection with World War 1.... [Since 1919] on behalf of its 8 member
associations, it has been devoted to the promotion of research within the most
essential areas ordinarily referred to as the exact and applied sciences.
"The Social Science Research
Council was established in 1923 to advance research in the social sciences.
It acts as spokesman for 7 constituent member associations representing all of
the subdivisions of this new field of knowledge, i.e., history, economics,
sociology, psychology, political science, statistics, and anthropology.
"The American Council on
Education was founded in 1918 'to coordinate the services which educational
institutions and organizations could contribute to the Government in the
national crisis brought about by
++ Indent further 3 # paragraphs
79 constituent members
(national and regional educational associations),
64 associate members (national organizations in fields related to
education), and
954 institutional
members (universities, colleges, selected private school systems, educational
departments of industrial concerns, voluntary associations of colleges and
universities within the states, large public libraries, etc.)
"The National Education
Association was established in 1857 to
elevate character, advance the interests of the teaching profession, and to
promote the cause of popular education in the
"The League for Industrial
Democracy came into being in 1905, when
it was known as the Intercollegiate
Socialist Society, for the purpose of awakening the intellectuals of this
country to the ideas and benefits of socialism. This organization might be
compared to the Fabian Society of England, which was established in 1884 to spread socialism by peaceful
means.
"The Progressive Education
Association was established around 1880.
Since then it has been active in introducing radical ideas to education
which are now being questioned by many. They include the idea that the individual must be adjusted to the group
as a result of his or her educational experience, and that democracy is little more than a system for cooperative living.
"The American Historical
Association was established in 1889 to
promote historical studies. It is interesting to note that after giving careful
consideration, in 1926, to the social
sciences, a report was published under its auspices in 1934 which concluded that the day
of the individual in the United States had come to an end and that the
future would be characterized, inevitably, by some form of collectivism and an increase in the authority of the State.
"The John Dewey Society was
formed in February 1936, apparently for the two-fold purpose of conducting
research in the field of education and promoting the educational philosophy of John Dewey.... He held that ideas were
instruments, and that their truth or falsity depended upon whether or not they
worked successfully."
++ End of All indents
Dodd concludes: "The broad study which called our attention to the
activities of these [accessory] organizations has revealed not only their
support by Foundations, but has disclosed a degree of cooperation between them
which they have referred to as 'an
interlock,' thus indicating a concentration of influence and power. By this
phrase they indicate they are bound by a
common interest rather than a dependency upon a single source for capital
funds. It is difficult to study their relationship without confirming this.
Likewise, it is difficult to avoid the feeling that their common interest ...
lies in the planning and control of certain aspects of American life through a
combination of the federal government and education.... In summary, our study
of these entities and their relationship to each other seems to warrant the
inference that they constitute a highly efficient, functioning whole. Its
product is apparently an educational curriculum designed to indoctrinate the
American student from matriculation to the consummation of his education. It
contrasts sharply with the freedom of the individual as the cornerstone of our
social structure. For this freedom, it seems to substitute the group, the will
of the majority, and a centralized power
to enforce this will - presumably in the interest of all."
Dodd finishes off his report with observations, first, about the
potentially pernicious effects of new government-sponsored foundations, such as
the National Science Foundation, moneys to which "are so large that they
dwarf Foundation contributions," and second, about the unprecedented
funding and activities of the relatively new Ford Foundation, in the light of
which he suggests "that the Committee give special consideration to the
Ford Foundation."
Given the insights that Dodd displayed in his report, and his intention
to make them public and dig for documentary evidence backing them up, is it any
wonder that those directing this targeted monolith of educational brainwashing
would find ways, fair or foul, to subvert and quash the Reece Committee
hearings?
The remaining portion of Mcllhany's book, comprising about two-thirds of
the total book, is devoted to updating information on the activities of,
primarily, the three major foundations that the Cox and Reece Committees had
sought to investigate, namely those of Carnegie, Rockefeller, and Ford. He
starts off his chapter on Carnegie by referring back to Dodd's most critical
finding:
"The reader will recall the minutes of the trustees of the
endowment during its first decade and the reason they so shocked an
unsuspecting staff member of the Reece Committee. Here were very powerful men,
the likes of Secretary of State Elihu Root and Professor James T. Shotwell,
planning in secret to push the
Mcllhany then updates the Carnegie Foundation's history and major
involvements through the early 70's. He finishes the Carnegie chapter with an
interview he recorded in June of 1976 with David Robinson, "the Carnegie
Corporation's congenial vice-president." The conversation is fascinating,
replete with key-words such as Look-Say, New Math, Day Care Council, OSHA,
Teacher Tenure, Chelation, Laetrile, FDA, NAACP, Howard Roark, Gunnar Myrdal,
Corp. for Public Broadcasting, Education Vouchers, Bussing, Ralph Nader,
National Lawyers Guild, ACLU, CFR, and more. It's like a questioning expedition
through the multitudinous shoals and tribulations which ever more tightly
surround and press upon our body politic as the months and years roll by.
Next is the Rockefeller group. A large part of McIlhany's treatment
consists of a 1976 interview with John M. Knowles, MD, the then current
president of the Rockefeller Foundation. Subjects covered included medicine, nutrition,
child welfare, public health services, public education, planned parenthood,
Austrian economics, and many other matters. His responses were rather more
evasive than Mr. Robinson's, and Mcllhany noted: "The overriding
impression Knowles left with me was a tremendous lack of credibility." He
backs this up by analyzing at some length the panegyric entitled China Diary which Knowles authored and
had printed in 1976 as a Rockefeller Foundation Working Paper, following his
1975 visit to Red China in the company of a huge phalanx of CFR members and
other insider elites (whom Mcllhany lists), led by Cyrus Vance, at that time a
Rockefeller Foundation trustee and vice chairman of the Council on Foreign
Relations, and soon to be Secretary of State.
Mcllhany's last major target is the Ford Foundation. His interviewee
there turned out to be Mr. Richard Magat, the director of the Office of
Reports, and a 20-year employee of the foundation. Magat started off by
effectively implicating a couple of the high ranking "accessory
agencies" identified by Norman Dodd:
"One of [our ways of supporting researchers] is the general support
of a discipline or field.... For example ... we have, as you probably know,
given a very, very large amount of money to the Woodrow Wilson Fellowship
Foundation.... We do not select the individuals. So that immediately eliminates
any skewing in one direction or another. Now that's true of a lot of the
research we support. In fact, in terms of the numbers of individuals, that
probably accounts for the great majority. So that, for example, we give funds
to the Social Science Research Council and the American Council of Learned
Societies, who support a very large amount of research in the social sciences.
They make the selection and they are, you know, beyond question, reputable,
even-handed...."
The interview goes on at length, the basic matter under discussion being
the paucity of grants to study free enterprise-based solutions to social
problems. The fields of psychology, economics, public broadcasting, education,
political advocacy, property rights, and law enforcement are among those which
came under the microscope. Mr. Magat weaseled his way expertly through the bulk
of these matters, admitting little that would cast a significant shadow on his
employer.
Mcllhany finishes his examination of the Ford Foundation by listing and
describing the immense range of causes and studies it has supported up through
the mid-70's (pp. 175-187). If there is one common thread running through this
massive outpouring of money and energy, it is that the federal government is
therewith encouraged or enabled to expand its involvement with every problem
that is brought up about which something should be done. This guiding principle
is demonstrated in each of Mcllhany's many listed examples, including lastly
the emphasis on governmental control over environmental and energy use issues.
Mcllhany's concluding summation (p. 217) is:
"That portion of the record which we have reviewed is only a small
fraction of the total evidence that could be presented. Further study will
surely establish not only the degree of consistency with which the foundations
we have examined have promoted the growth of big government and the objective
of world government, but also the fact that there are no foundations
successfully promoting to any similar degree an individualist goal of limited
government."
Though written in 1980, that statement undoubtedly remains true today
(1996). Though a few such Constitutionalist foundations do now indeed exist, it
can hardly be said that their influence yet is anywhere near comparable to
those which have been in existence for the last 80 years or so. Truth, however,
is on our side. The question is, do we have enough time to get enough of it out
to enable a return to a Constitutionalist society without the major train wreck
which, as Mr. Edelsberg told Norman Dodd, "will destroy everything else in
the process."