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1953 Reece Committee Hearings 2 of 4

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pulled into a university . Personally, I regret to see the small
colleges raided in this way by the great universities taking off the
faculties of these small colleges-teachers who are doing so much
good for the American people .
   The CHAIRMAN. But there would be less likelihood of the so-called
raiding both of the faculty and the graduate students in the small
colleges if grants were more general and made available to the out-
standing faculty members and the outstanding students, don't you
think?
   Dr. Cou GROVE . Oh, yes, quite true . Quite true. We have had a
number of universities that have raided small colleges almost to their
destruction . President Harper of the University of Chicago raided
Clark University, took pretty largely all of its talent to the Uni-
versity of Chicago. But that was before the foundations were greatly
operative ; and of course he did it by offering, on the one hand, re-
search facilities, and on the other hand, much higher salaries than
they were getting at Clark University .
   Mr. HAYS . There is just the point of the whole thing . You your-
self say that is before the foundations got into the picture . It hap-
pened . And it is the same thing that is happening to the one-room
school, the little red schoolhouse . Everybody likes to get nostalgic
about it in talking about it, but they are slowly disappearing, and I
do not think that the foundations have anything to do with that,
do they?
   Dr. CoLEGRovE. No, it is the better transportation system and the
better facilities offered to the pupils at the township schools .
   Mr . HAYS . It has only been in the last 1 .0 years that you dared to
run for office if you had not been born in a log cabin and had not
gone to the little red schoolhouse .
   The CHAIRMAN . I have met both requirements .
  Mr . WoRMSER. Professor, I would like your comments on this sub-
ject, if you will . The trustees of these foundations have a distinct
fiduciary responsibility which they recognize, in principle, at least,
as the trustees of public funds . It seems to me the most important
trust function they have is to exercise judgment in connection with
the selection of grants and grantees . Does it not seem to you that to
a very large extent they have abandoned that trust function, that trust
duty, and have delegated the whole thing to other organizations? That
in certain areas they have used these intermediate organizations to ful-
fill their judgment function for them, which they, as trustees, should
exercise? Would you comment on that?
  Dr. COLEGROVE . I think that has very largely occurred . I do not
quite like to put it this way, but the trustees are in many cases just
window dressing to give popular confidence in the institution. In the
United States we think an institution needs a very distinguished board
of trustees ; and, of course, you know, from college experience, a great
many men are made trustees of a university because the university
expects them to make a large donation to the endowment fund or build
a building or something like that . And to offset a group of rich
trustees, you put on some trustees who have large reputations in the
literary world or in other fields than merely finance .
  Many of the trustees, I am afraid, have gotten into a very bad habit .
They are perfectly realistic. They know why they are put on the
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 board of trustees . And they are not as careful as they should be in
taking responsibility for the operation of those organizations .
   I think the Carnegie Endowment for International Peace, which
was set up under Elihu Root and President Nicholas Murray Butler
way back, I think, about 1908, had a board of trustees picked by Presi-
dent Butler, and I think Butler expected to get a great deal of advice
from those trustees .
   But I do recall many years later President Butler told me that he
had to use very extraordinary methods to get his trustees to meet even
for the annual meeting .
   Mr . WORMSER . Then, in practice, they delegate their authority partly
to other organizations . Of course, where they do make their own
grants directly, they delegate enormously to their professional em-
ployees, the executives, who do not have the same trust responsibility
but are merely executives.
   Dr. CoLEGROVE . Yes, they delegate their authority in several direc-
tions . Trustees delegate their authority to the president of the foun-
dation. The president in large measure even delegates his authority
to the heads of departments . A president of one of these large funds
sometimes is a little hazy about what is happening in this division or
in that division . And in these heads of departments-let's say of the
Rockefeller Foundation, where you have the social sciences and
humanities-you will find a delegation of authority in the case of the
social sciences to the operating society, the Social Science Research
Council, and to the American Council of Learned Societies in the
case of the humanities . So you have a delegation of authority in two
directions there.
   Mr. WoRnMSER . So whether a foundation fulfills its obligation to
the public rests primarily on the selection of its employees and the
association with these intermediate groups . Is it your opinion, Pro-
fessor, that these employees-I don't mean in a derogatory sense to
say "employees", the officers of these organizations-are on the same
caliber as a whole, do they compare well with university executives or
those who would administer -rants under university administration?
   Dr. CoLEGRovE . Well, I think those of us in political science feel that
Joe Willits, who was a professor of the University of Pennsylvania
before he took the position that he has at the present time, is an out-
standing scholar, a most competent administrator, a very good judge
of human nature . And yet he cannot give all of his attention to the
expenditure of these' vast sums .
   What applies, of course, to the Rockefeller Foundation applies
even more forcibly to the Ford Foundation, which is much larger .
   Mr. WORMSER. One witness, Professor Briggs, testified that in his
opinion there wasn't one single employee in the Ford Fund for the
Advancement of Education, from the top down to the bottom, who
had had enough experience in the areas in which they were operating
to make proper judgments . That does not sound very good for foun-
dation practices, if they select men as carelessly, let us say, as that . I
am trying to make a comparison with universities, because I am
interested particularly in the possibility that a better medium for
foundation largesse may be through the universities, instead of through
professional agencies .
   Dr. COLEGROVE. Oh, quite true . I think it would require a larger
number of topnotch administrators in the foundations to exercise more
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 critical judgment than can be exercised at the present time . Even
 there, however, you would have to choose between universities ; and if
 you are going to the small colleges, there is a case where you would
 have to have many careful surveys and studies, and an acquaintance
 with the personnel and faculties of those universities. Probably the,
 staffs of high-grade men, let us say men serving under Dr . Willits,
 ought to be a little higher caliber .
   Mr. HAYS . Professor, right there, no matter how a foundation
 handed this money out, you would find somebody to say they did not
give it to the right people .
   Dr. COLEGROVE . Oh, yes.
   Mr. HAYS . And if they gave it all to the small colleges, you could
 undoubtedly set up a committee who would say that was a terrible
 thing and they wasted money and were not getting results, and so on.
 So all of this testimony is a matter of opinion, is it not? I mean, as
 to this particular phase . Dr. Briggs says and you say that it should
not be done through these societies ; that it should be done the other
way .
        COLEGROVE . It is opinion based on our observations .
   Mr. HAYS . Yes .
   Dr . COLEGROVE. My observations would be in a little different field
than Professor Briggs' observations would be . I would say, trying o
be cautious in what I do say, that based on my observation I think
the foundations hate not given as careful a study to some of these
phases as I would like to see .
   Mr. HAYS . Well, now, you talked a little bit ago about the delega-
tion of authority . Do you have any specific ideas about what we could
do to remedy that, if that is bad? I mean how are you going to get
away from it?
   Dr. COLEGROVE. Well, you cannot avoid delegation of authority, but a
good_ administrator has to know how to delegate . He has to choose
to whom he is going to delegate, and choose what powers he is going` to
delegate, and then finally he has to have his system of reviewing the
achievements of persons to whom power to make' decisions has been
delegated .
   Mr. WORMSER . May I interrupt to help Mr . Hays' question?
   Mr. HAYS . You are sure this is going to be helpful ?
   Mr. WORMSER. Yes, Sir.
   Mr. Hays has said that it seemed to him a trustee should not act as
a trustee of a foundation unless he was willing to give the time to it
that was necessary . It seemed to me that that was a very apt remark.
And I wonder if that is not the answer, that these men are so busy
with their own lives that although they are eminent they are not capa-
ble of being trustees of foundations . That is no criticism of them as
persons .
   Dr. COLEGROVE . Yes ; undoubtedly many of the trustees would not
serve if they felt that they would be called upon to do much more
than go to the meetings, hear the reports, and sometimes not say a
single word . You would not have as brilliant, as lofty, as remarkable,
a collection of men as trustees if you required a little more respon-
sibility on their part. I would say, on the whole, the board of trustees
is too hirge . There are too many remarkable mnen, in New York and
elsewhere, who are trustees of more than one foundation . And' just
as we exercise in the American Political Science Association a "self-
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 denying ordinance" where no member of the association speaks
 more than twice in an annual meeting, I would like to see these inter-
 locking trusteeships more or less abolished. You cannot abolish them
 by law, of course. You could abolish them by practice . So you would
 reduce the size of the board of trustees and then expect more consider-
 ation, more consultation, more advice, from the men who had accepted
 this great responsibility.
    Mr. WoEMSEE . Was that not your idea, Mr. Hays, that they should
 be working directly?
   Mr. HAYS. Oh, sure. Exactly.
    Mr. ' KOCH . Here is something that worries me . Suppose I had a
 great big motor company or a steel mill or this and that, and they
 picked me because they wanted, as you say, window dressing . The
 first thing that puzzles me is why they need window dressing in a
 foundation of this kind. If you are running a foundation where you
 go to the people every year, like the Red Cross or the March of Dimes,
 for money, then you want to impress the populace that there are big
 names behind it . But here, where Mr . Ford or Mr . Carnegie or Mr.
 Rockefeller plumps millions of dollars in the laps of the foundation,
 and they do not have to go to the public for 1 cent more, I always
 wonder : why do they need big names in that case? And would it not
 be better, instead of picking me, the head of a big steel mill, pick
 somebody who was a little more familiar with the educational
 field? Because I can see exactly what I would do if I were that for-
 tunate head of a big steel mill. As soon as somebody said, "Let us
 do something about education, or study this," if I were honest, I would
 immediately say, "I do not know anything about it, so what do the
 professors say?" And the professors would immediately tell me what
 they thought the trend of the times was, and I would say, "I will be
 safe if I follow the trend of the times ."
    And it seems to me the dismal part of the testimony so far is that
'there has been so much unanimity among the big foundations in fol-
 lowing the supposed trend of the times . I would rather see one day
 Rockefeller in this corner slugging it out with Ford Foundation in this
 corner to try to argue a particular thing . Here we get into a depres-
 sion, and we find out Professor Beard and Professor Muzzey have said
 things they later veered away from, and yet all of the foundations
 at that time may have put their money in the direction of that project
pushing the pendulum along much farther than it probably should
 have been pushed . And yet there was no foundation that said, "Well,
 change may be necessary, but let us find out what is good about the
 old order so that, when we decide on the change, we have at least heard
 both sides."
   It seems to me there has not been that debate. And it may have
 been because the big names probably said, "We don't really know much
 about it ourselves . ' We will have to see what is the fad, what the ladies
 are wearing in Paris today, or what the trend is in education ." I
 therefore wonder whether it would not be better to suggest that where
 they do not need big names they get lesser names who can spend, more
 time and area little bit more familiar with the subject matter . That,
 unfortunately, was an awfully long speech, but that has been worrying
 me.
   Dr. CoLEoRovE. I think you have given an accurate picture of the
 actual situation . The large number of famous names on the list of
 trustees, is due to the old superstition that our institutions must be
	



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headed bX a famous group of men . And I will say frankly it is to
 impress C,ongress as well as the American people ; to impress public
 opinion as fully as possible . It is an old superstition . It is not neces-
 sary at all . With a group of 7 trustees, using 7 because it is an odd
 number, I imagine most of these trustees if they were trustees of only
 one other organization, maybe trustees of a church, would be able to
 give more attention to their duties as trustees of foundations . They
 could not pass on the responsibility .
   Mr. KOCH . Another element is this. Let us say during the depres-
 sion 70 percent of the people were in favor of a change ; 30 percent
 wanted to try out the old system a little while longer . All of them
paid additional taxes, because many tax-exempt foundations did not
 have to pay taxes . I should think the 30 percent in the minority would
 at least like to feel that . at least 30 percent of the tax-exempt money
 should be used to sell my kind of Americanism or my kind of economic
System . And yet if the foundations all followed the trend, the minor-
ity group does not have the benefit of that terrific money . Because-
I won't say the propaganda-but the education that they can sell is
something terrific . And yet the minority just does not have the benefit
of, any of that money, even though they share the tax bill along with
the majority .
   Mr. HAYS . But you are arguing like the people who do not believe
in smallpox vaccine . Then we should just go along trying to get over
smallpox without it for a while longer .
   Mr. Kocx . No, I say if people pay money they ought to be able to
decide how they spend their money . In your case, nobody pays for
smallpox vaccine except those who get it . But in this case we have all
paid, because the foundations get tax exemption, those who are
entitled to it. And yet I do not get my share of the educational experi-
menting, because it so happens unfortunately that 55 percent of the
people seem to think that something else should be gone into .
   Mr. HAYS . But then you are arguing that you should keep on experi-
menting with something that it has been proved will not work, and I
think that is just a waste of time .
   Mr. KOCH. No, I do not argue that at all . I like to feel that both
sides are fully debated, so that when we decide on legislation we at
least know it has not gone in on default . Because these very leaders
of the early thirties, many of the big leaders themselves, who started
pushing away, have swung back a little . Now, if they had not been
given such a big push by the foundations at the beginning, maybe they
would not have gone so far as to require their coming back again . I
mean, it is just a matter of proportion that puzzles me a little bit,
whether at least some of the foundations should not see to it that both
sides are properly presented, so that we can more intelligently discard
the old system . And that is just one thing that puzzles me a little
bit about their method .
   Mr. HAYS . Perhaps some of their difficulty might come from the
fact that it is difficult to get someone to defend the point of view that
has become generally discredited .
   Mr. KOCH . That may be true . .
   Mr. HAYS . You have had a little difficulty right here in this com-
mittee. It is a little hard to get people to come in and testify in favor
of the case the staff set forth in their initial report . Because appar-
ently, with all due respect to Dr . Colegrove, and I am glad to have
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his testimony, which has been very interesting, apparently a majority
of the opinion in the field is on the other side .
   Mr. K ocii. But you are happy that Professor Colegrove has pre-
sented his case .
   Mr. HAYS . Surely.
   Mr. Kocii . And in a number of cases the minority view has not even
been presented .
   Mr. HAYS . But the thing that I question, Mr . Koch, and I think
you and I both know what we are talking about, is the unusual way
we went at it. I only know of one previous instance where you ever
set forth a verdict and then had the trial, and that was in Alice in
Wonderland, or Through the Looking Glass. It was done that way
there .
   Mr. Kocii. From my point of view, and I am sure the general
counsel agrees, we felt it was obligatory to tell what were the criti-
cisms . I will tell you quite frankly when I was appointed associate
counsel, the first thing I said was, "What is wrong with foundations?"
And then when we started to ask questions we found certain things
professors and others criticized . We felt those things should be put
before the foundations so that they could come in and state whether or
not there was validity to those obi actions . We did not intend, surely,
to render a verdict, but just to say "This has been said about or against
foundation practices . Let us see whether there is any merit to it."
   Mr . HAYS . Doctor, I seem to have been impressed mainly in my
undergraduate days with the theory of the pendulum . And then you
mentioned the second one .
   Dr. COLEGnov] . The cycle theory.
   Mr. HAYS . W e seem to be working on the cycle theory, because we
start out doing a pathological job here . I like that term . I am glad
we got that in here .
   Mr. Kocx . But you said we improved after the lunch hour .
   Mr. HAYS . Then we criticize the pathological approach in the
foundations, but by your own admission that is exactly what we
started out to do here .
   Dr. COLEGROVE . I think on this one aspect we are looking at it from
the pendulum theory . If the foundations have gone too far in dissi-
pating their authority, you might try to swing the pendulum back
by trying to get the foundations to insist on more responsibility on
the part of their trustees. And I mean a responsibility such as Nich-
olas Murray Butler used in the beginning of the Carnegie Endowment
for International Peace, when President Root and later President
Butler would talk over with the trustees, the few that they could
get, a very detailed discussion of what Professor Shotwell was doing,
let us say, and bring Professor Shotwell in and let him explain . You
 can do that with 2 or 3 trustees, just as you could with 20 . They are
 all there in the room . You would get a higher sense of responsibility
 if there were, let us say, just seven trustees . Those men would have
to understand, "Well, here I have a responsibility . I will be at the
 annual meeting, and I will be at each quarterly meeting ." The proj-
 ects could be reviewed, the propositions taken up, by the trustees
 themselves . It would be very curious to have minutes of some of the
 foundation trustees' meetings these days-I have not seen them re-
 cently-to see how little there is of that actual discussion or disagree-
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menu over the content of projects and the selection of personnel for
the projects and the selection of the projects themselves .
   Mr. HAYS. Professor, right there, that sounds very good, and I
think perhaps you have a very good idea. But then we come to the
difficult part of the application .
   With a foundation as large as some of these are, and dispensing
as much money as they have and making as many grants as they do,
it is something like breaking up the New York Yankees . That seems
to be the only alternative . Or, "Let us do away with big corpora-
tions." Because, obviously, the president of the United States Steel
Co . cannot know everything that is going on, and neither can his
board of trustees .
   So I am inclined to go along a hundred percent with your general
idea, but the practical aspect of it is what I find difficult, how you
 are going to do it . If you can give us any light on that, I would be
very receptive to hearing about it .
   Dr. COLEGROVE . Well, it gets back to what you were mentioning
this morning, Mr. Hays, with regard to human nature. We cannot
get rid of human nature, and these human problems all come up when
 you want to push the pendulum back .
   Let us say the Rockefeller Corp . reduced its trustees to 5 or 7 .
Would you be able to find 5 or 7 great outstanding men in New York
or around the country who would be willing to accept that responsi--
bility ?
   Mr. HAYS . That is a question, of course, that is an imponderable,
 and I don't know whether anyone can answer it . We have had con-
flicting testimony . There have been 11 days up to date, and I
cannot remember exactly who said what, or what page it is on, but
there was testimony in here to the effect that these foundations had
too many nonentities in them . Now we hear that they have too many
 names that do not give enough time . So it is almost a case of being
 damned whatever they do, as I see it . And I do not know how they
 are going to escape one criticism or the other . Both of them have a
 certain validity, don't you think?
   Dr. COLEGROVE . I think most of the trustees : of the foundations are .
excellent men, with great reputations, who have made contributions
to industry, to science, to literature, and so on .
   But you have there the practical question that they have dodged
their responsibility .
   I must say whether you can get 5 or 7 men who would be willing
to take all that responsibility themselves is something we could not
answer until it is tried . I would like to see it tried as an experiment .
   The CHAIRMAN . Do you have some more questions, Mr . Wormser?
   Mr. WORMSER. Yes, I do .
   Professor, to your knowledge, have these foundations or their oper-
ating agencies to any extent engaged in direct political activity them-
selves?
   Dr. COLEGROVE . I think, generally speaking, the foundations have
not engaged in any direct political activities . The operating societies
have, and, of course, some of the learned societies have engaged in
political activities .
   I want to talk about only the things I know of myself . I will take
one example, with the American Council of Learned Societies . Last
summer, when the position as Librarian of Congress became vacant,
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there were a few of us who felt that Prof . Reed West, of George Wash-
ington University, was an excellent recommendation for this vacant
position . And we persuaded Senator Taft to look into the possibility
of sponsoring Prof . Reed West . I must say that I was acting only as
a citizen. I have no connection with the American Political Science
Association at the present time, other than being a member . I am not
 an officer of it . Quite a number of persons supported West and ar-
ranged a dossier on Professor West for Senator Taft . Taft became
persuaded that West was just the man for the position of Librarian
of Congress .
   I understand that Senator Taft made up his mind on this while he
was in the hospital, the last time he went to the hospital . The last
telephone call he made, from the hospital to the White House, was
asking the President to support Professor West.
   My understanding is that the President said that if it was all right
with the Hill he would, or someone said it for the President . And
Senator Knowland, Senator Styles Bridges, and, I believe, the Speak-
er, Speaker Martin, all agreed to recommend West . Shortly after
that, Senator Taft died . It was the last political act he took .
   We found, however, those of us who were supporting Professor
West, that some of the operating societies had moved in, like the Amer-
ican Council of Learned Societies, also the American Library Asso=
ciation, and the Social Science Research Council, trying to persuade
Governor Adams and the White House that they should be allowed
to name a group of persons from whom the White House would select
the recommendation for the nomination of Librarian of Congress . It
was a quite interesting little battle, and the few political scientists
who engaged, trying to get West into the post, were defeated, and the
man supported by the American Council of Learned Societies and the
American Library Association and the Social Science Research Coun-
cil finally got the appointment.
   Now, as a member of a professional society, I felt it was not quite
in keeping for the American Council of Learned Societies to engage
in this political activity .
   Mr . HAYS . Well, did they do it as a body, or did they do it as indi-
viduals, as you were doing promoting the other fellow?
   Dr . CoLEGRovE . Well, it was a little more subtle-than that . It was
the officers that did it, the paid officers located here in Washington,
D . C . The American Council of Learned Societies is composed of 23
or 24 societies . The American Political Science Association is one .
At the last meeting of the American Council of Learned Societies,
which was in February--I am a delegate to the American Council of
Learned Societies-I protested what had been done, but I didn't get
very far with the protest, because it had already been accomplished .
   Mr. HAYS . Doctor, if you had been an officer, as you were at one
time, of the American Political Science Association, would you have
felt it incumbent upon you to refrain from pushing the candidacy of
Mr. West because you were an officer of that society?
   Dr . COIXGROVE . I think in that particular case, yes, because the Li-
brarian of Congress is in a rather strategic and important position .
When I advised governmental agencies, it was with reference to ex-
perts for particular tasks to be performed . Now, the Library of
Congress includes the Legislative Reference Service, which does a
great many things for Congress .
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   Mr. HAYS . None of which many Congressmen feel they do very
well. Let me put that in the record.
   Dr . COLEGROVE . Well, there are all sorts of opinions about it .
   Mr. HAYS. That is mine. In fact, not to interrupt you, it might be
said that the Appropriations Committee felt the same way, because
they cut their appropriations the other day, and one of the members
said at lunch the other day that you were never able to get anything
from the Legislative Reference Service if you called them except the
book, which you could have gone over and gotten, and then you would
have to look up the passages anyway.
   Dr. CoLEGxovE . I think it would be much better if the Legislative
Reference Service was a separate organization from the Library, com-
pletely under the control of Congress, and more actively under the
control of Congress . To attach it to the Library of Congress is com-
bining two functions, which more or less get in the way of each other .
   Mr. HAYS . I can sympathize with your point of view on losing this
appointment, but let me just say that rather than the American Coun-
cil of Learned Societies or anyone taking advantage of you, I think
fate played a dirty trick on you.
   Dr. CoLEGROVE. Oh, yes .
    Mr. HAYS . Because with all due respect to Senator Taft, and I hold
 him in the utmost respect, and I collaborated with him, strange as it
 may seem, on many legislative proposals here, there is nothing that
 loses in influence any quicker than a politician who either dies or is
 defeated for office. It ceases just as if it had been cut off right there .
    I might point out to you, and this is interesting in passing, that I
 had a little matter pending in one of the departments that I was very
 much interested in, and sent it to Taft . Someone had gotten to him,
 and it affected somebody in the State of Ohio, not in my district. And
 they had sold him the idea that it should not go through . For 7
 months it stayed dormant, and at 4 o'clock in the afternoon that he
 died, the Department called me up and said, "The thing is going
 through as you want it ." So you see how quickly your influence goes .
 That is what happened to you . And I will say in praise of the Sen-
 ator that had he lived your client would probably have been the
 Librarian today .
    Dr . COLEGROVE. Undoubtedly . And those supporting Professor
 West said as vigorously as they could that this was the dying wish
 of Senator Taft . But, as you say, as soon as a man is dead 	
    Mr. HAYS . Those things all sound good in an eulogy, but they do not
 go much further .
    Dr. COLEGROVE . I do think, however, that you are bound to get a
 little political influence on the part of an operating society which is
  located right in Washington, D . C . Now, where the American Coun-
  cil of Learned Societies, it seemed to me, was at fault, was in not
  getting the permission of the constituent societies before engaging in
 this political activity .
    Mr. HAYS . I have a question right there, Professor .
    Here is a book called English for Turks . I want you to look at it
  and see if you have ever seen anything like it . I am not going to
  cross-examine you on it . I just want you to look at it for a minute
  and look at the flyleaf, and :then I want to ask you . something about
  that kind of a procedure . I have a similar volume here, English for
  Indonesians.
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   Dr. COLEGROVE. I might say that this represents the new process of
printing used by the American Council of Learned Societies, and they
really have made quite a contribution in that direction .
   Mr. HAYS . Yes. That book is put out under the auspices of the
American Council of Learned Societies, as is this one, and we have
another one over here on-I cannot read this language very well .
This is Korean .
   Well, I would not know it unless somebody told me.
   Now, would you consider these to be political acts?
   Dr. COLEGROVE. No . This is purely a literary project . I must say
that you can have a political use made of these textbooks . Let me
say that the American Council of Learned Societies has made a real
contribution with reference to the Arabian studies . And as you know,
our oil companies have sent a large number of American experts out
to Arabia.
  Now, these experts are agents for a private company . It iss
very obvious that if these experts can learn Arabic, they will do a
more efficient piece of work out there . Vice versa, oil companies have
a problem of getting the Turks and Arabians to speak English, trying
to get the experts to speak both Arabic and English and getting the
Arabs to speak English as well as their native language . This is not
r  litical at all . This is a pure expert linguistic undertaking . It may
    motivated in the beginning, as to the money paid for it, by a,
political purpose .
   Mr. HAYS . I understand the Government is paying for it, and that,
is why I am asking ; because this society is working in close coopera-
tion with the Government . It is just conceivable to me that someone
could, off the cuff, say, "Well, they are engaging in politics . They are
even putting out language books for the Government and sending
them all over the world ."
  Dr. COLEGROVE . That statement would not be accurate . Because
Americans going abroad are not so good in languages, you know, we
need to learn foreign languages . And the American Council of
Learned Societies has done a great deal of good there .
  Mr. WORMSER . Could we get closer to the whole problem? Have
you seen in the work of the foundations any evidence of actual political
slantinv ?
   Dr . COLEGROVE . From the foundations themselves?
   Mr. WORMSER . Yes.
  Dr. CoLEGRovE. Decidedly . The Carnegie Corporation, in select-
ino Professor Myrdal, of Sweden, to do the work on The American
Dilemma, was obviously slanting the problem of the South .
   Mr. HAYS . Now, right there, I do not know much about this Myrdal .
I know he wrote a book, and what was the title of it?
   Dr . COLEGROVE . The American Dilemma .
   Mr. HAYS . The American Dilemma . It just happened that at lunch
hour I was reading a newspaper, the morning paper, and I saw in
there some reference that the Supreme Court had cited this book in
arriving at its decision .
   Now, do you mean to tell me that the Supreme Court is citing sub-
versive works here?
   Dr . COLEGROVE . I did not say it was subversive.
   Mr. HAYS. I want to get that straight .
                      TAX-EXEMPT FOUNDATIONS                        593
  Dr. COLEGROVE . I think it was slanted . Just as an illustration, Pro-
fessor Myrdal, who was a left-wing Socialist, a very left-wing Social-
ist in Sweden, was very anticonservative, and he made unwarranted
attacks upon the American legal system, as too conservative, and at-
tacks upon the conservative groups in the United States. He prac-
tically indicated that a conservative is not an intellectual .
   Mr. HAYS . Mr. Justice Burton of Ohio is no leftist, and he appar-
ently went along with this decision, citing this book, and I am just
wondering if it is the unanimous opinion that this book was bad, or if
it is just an opinion that some people have, or if there is anybody be-
sides the Supreme Court that will endorsethe book . Let me ask it that
way .
  Dr. COLEGROvE . I don't think that the Supreme Court in citing this
book endorsed it . They were using the book as evidence . And the
book has a lot of evidence . Its evidence is perfectly all right . There
is no question about it . I am criticizing the book on the ground that
it was held up to be an objective scientific study . And it contains •
really "snide" remarks-I hate to use that remark-against the con-
servatives all over the United States, and especially the conservatives
in the South, remarks that would make Senator Byrd just wince .
  Mr. HAYS . I will take your word for it, Doctor . But-that brings us
to a thing that has happened in this committee, and I would like to
get your opinion on it, just for the record . I think it might have some
value, some weight.
   Do you not think that on any book that there has been controversy
about, you could probably take that book and pick a paragraph or a
sentence out of context here or there to prove either side of the con-
troversy that you wanted to?
  Dr. COLEGROVE . Yes . You can do that even with The Federalist .
But in this Myrdal book, it is the constant slurring of the conserva-
tives, right along the line .
  Mr. HAYS . Let me say I am not criticizing you, because you are
saying the whole tenor of the book you disagree with and do not like .
  But the point I am making is that we have had people who come in
here before this committee and cite a paragraph in the book, and then
you read back another paragraph out of the same book, and they im-
mediately say, "I do not buy the whole book, but just this paragraph
that I agree with ." That could happen very easily, could it not?
  Dr. CoLEGROVE . Of course.
  Mr. HAYS. I compliment you for taking that approach. You say
you do not like the tenor of the whole book, and that certainly is your
right and your privilege, and you have every right to your opinion
on it . As I say, I am not in a position to argue with you on it, because
I have not read the book .
  Dr. CoLEOxovE . The difference between this book and The Federal-
ist, written by Hamilton, Jay, and Madison, was that The Federalist
did not pretend to be unprejudiced . They said, "We are for ratifying
this document as the Constitution of the United States." Hamilton
and Jay and Madison did not pretend to have any unbiased or unpar-
tisan approach .
  Mr. HAYS . And as to this book, you say it was advertised as being
unprejudiced, but in your opinion it was prejudiced?
	


594                   TAX-EXEMPT FOUNDATIONS

  Dr. CoLEGROVE . Very prejudiced . It would be just as convincing to
appoint Professor Hayek to go over to Sweden to, let us say, make an
appraisal of the social-security system in Sweden .              ,
  Mr. HAYS . You will have to enlighten me . Who is he
  Dr. CoLEGRovE . He is one of the strong defenders of laissez faire and
an opponent of economic planning . His book called, The Road to
Serfdom, is an argument that economic planning will inevitably lead to
destruction of civil liberties, creation of a dictatorship, and loss of our
freedoms .
  Mr. HAYS. I am interested in a person whose mind works like that ..
  Now, as I understand it, laissez faire, taken literally, would mean
to let the Government stay out and leave everything alone . What
would you have done in 1933 with 12 million unemployed and people
on the verge of starvation under a laissez faire system?
  The CHAIRMAN. I do not myself put that construction upon laissez
faire, so I do not think we can start out with assumptions that that
is what laissez faire means .
  Mr. HAYS . If you do not put that construction on it, you will have
to have a qualified construction of what laissez faire means, because I
happen to know what it means, and it is one you cannot shade. It
means to let alone.
  Dr. CoLEGROVE. Dr. Hayek does not take the position regarding -
laissez faire that the British liberals took in 1840, 1850, or 1860, which
was complete laissez faire .
  Mr. HAYS. He takes the position, then, that we will have laissez
faire, but we will have it in the modified form that Professor Hayek
thinks is necessary .
  Dr. CoLEGRovE . That would be correct .
   Mr. HAYS . Then, of course, you get back to the same old thing of
who is going to decide about how much laissez faire or how much
planning we are going to have . And then we get back into the same
debate that we have been in for 20 or 30 years .
   Dr. COLEGROVE . How far are you going on one side, or how far are
you going on the other side ; yes.
   The CHAIRMAN. Do you have anything further on the question of
foundations?
   Mr. WoRMSER. I would like to cover just 1 or 2 more questions .
   Mr . HAYS. Mr. Chairman, I would like to interrupt right there and
say if you are implying that I am questioning Dr . Colegrove on some-
thing that is not on foundations I picked this name out	
   The CHAIRMAN . Oh, no. I did not.
   Mr. HAYS . I was just trying to develop the idea and get a little light
on who he is .
   Dr. CoLEGROVE . That is a very good point . I think it is well to keep
in mind that there are really no "liberals" today of the old English
school . They have moved with the trend of the times .
   Mr. HAYS . And no foundations moved them . The times caught up
with them and overran them ; would you not say?
   Dr. COLEGROVE. Of course, it is cause and effect again . Whatever
the foundations have done, of course, has been to promote the trend
this way or that way .
   Mr. HAYS. The whole question of whether the foundations promoted
the trend or the trend pushed the foundations is almost the old "which
came first?" argument, "the chicken or the egg?" is it not? And I
do not see how we can settle it .
	


                      TAX-EXEMPT FOUNDATIONS'                         595
   Dr. CoLEGROVE. The only way to settle it is to get back on the pendu-
lum basis and see whether we have gone too far .
   Mr. WORMSER . I would like a little briefing on what you mean by
slanting. Reading from your notes here, you mention an undue em-
phasis on internationalism and globalism, a submersion of the national
interest, Federal expansion at the expense of States rights, a passion
to build a new social order, and a drive at all levels of education to
make it a tool for social change .
   Without going into too much detail, could you give me an answer
to that?
  Mr. HAYS . What page is that on?
  Mr. WORMSER. Page 5, question 16 .
   Dr. COLEGROVE . In my opinion, a great many of the staffs of the
foundations have gone way beyond Wendell Wilikie with reference to
internationalism and globalism . Of course, Wendell Willkie is part of
this time, too . There is undoubtedly too much money put into studies
which support globalism and internationalism . You might say that
the other side has not been as fully developed as it should be .
   Now, a great many of these other sides have been taken up, partly
in speeches in Congress . The little book that Bob Taft wrote the last
year he was alive with reference to American foreign policy was a very
helpful book . It was based upon considerable research in Mr . Taft's
office and was not supported by a foundation . But the foundations
these days have been supporting too few books like one book which they
supported some years ago by Charles A . Beard, called The National
Interest. That came out in the early thirties, supported, I believe, by
the Rockefeller Foundation . I am not too sure about that, but one
of the foundations supported it . That started a good deal of thinking
on the other side of the fence .
   Mr. WORMSER . Is there not a tendency of Americans to sacrifice the
national interest of our country in dealing with foreign affairs?
   Dr . COLEGROVE. Professor Beard, even that early, felt that we had .
But you can name just a few books or studies on that view which
the foundations have supported .
   Beard's thought was more or less this . I am talking about the
Beard of the last half of his life rather than the first part of his life,
when he was almost a Marxian . Beard thought that Churchill of
Great Britain or Briand of France were always thinking : What is the
best interest of Great Britain? What is the best interest of France ?-
in all of the international conferences . But there is too frequently a
tendency of Americans not to think in international conferences on
foreign policy about the national interest of the United States . We
are thinking always of what is the interest of the whole world .
  And that kind of thinking brings us to the point where we are
too likely to make sacrifices to accomplish this globalism which Eng-
land would not be willing to make under Churchill, or Attlee for that
matter, which Laniel would not be willing to make, or Bidault, or
whoever is Prime Minister of France . That is a very unfortunate
tendency. And I think there is a tendency toward slanting . It seems
to me the foundations should go out of their way at the present time
to promote more studies like Beard's famous book called The National
Interest.
  Mr. WORMSER . Then there has, Professor, been this tendency to
promote what you might call excessive federalism in derogation of
596                  TAX-EXEMPT FOUNDATIONS

States' rights. Do you feel the foundations have promoted that con-
cept?
 . Dr . COLEGRovE. Yes . Very distinctly . And under Professor Mer-
riam particularly. Merriam felt that States were not more than
Provinces or soon would not be much more than Provinces . I know
that Professor Merriam used to annoy my neighbors up in Evanston .
Evanston is a suburb of Chicago, but it has never been incorporated
in Chicago . Merriam always had it in for Evanston, because it would
never go into Chicago . We felt, in Evanston, we had better schools,
we had better parks, we had better police, and we wanted to be an
entity by ourselves . Merriam could never forgive us for that. He
thought we ought to go into Chicago .
   Well, that is probably a little off the subject, but the point I am
trying to make is that the kind of research Professor Merriam se-
lected, the kind of research he developed, was a research that looked
toward the submersion of the States under the National Government .
   Mr. HAYS . Now, Doctor, you do not object to going back to this
international theory . You will agree with me that in the age we live
in today you are going to have to have a certain amount of knowledge
of international affairs. You will agree with me, I think-I heard
you mention Paris a little bit ago-that after these deliberations end
this afternoon, you and I could go up to New York this evening and
get the plane and be in the Cafe de la Paix or Maxine's for lunch
tomorrow .
   Dr. CoLEGROVE . That would be very pleasant .
   Mr. HAYS . Yes . I would rather do that than sit here . I want you
to know, if I seem to be a little nervous today, that the America left
without me yesterday . I am staying here for enlightenment. I feel
I am making a sacrifice . But all of that aside, we are only 12 hours
away from Paris or London .
   Did you say you wish I had not sacrificed?
   Mr. GooDwIN . I am sure you would not have had as good a time .
   Mr. HAYS . Well, that is debatable .
   So the thing that you object to, as I follow you, is not that we have
a great and consuming interest in the world around us, but that we,
you feel, have not had along with that enough enlightened self-in-
terest, as somebody put it . Is that it?
   Dr. CoLEGROVE. Yes . It is probably due to an attitude, which atti-
tude I think has been partly created or simulated by the foundations,
the attitude of accepting globalism, internationalism, without
seeing where the United States fits into the picture other than paying
the bills . Because, of course, European and Asiatic countries expect
us to open the pocketbook and pay the bills for all of these projects,
all of these compromises . If we have a compromise in Indochina, that
is going to cost the United States a lot of money . We can be sure
of that .
   Mr. HAYS . Of course, as I cited here the other day, the French
papers are carrying the story right now that the United States is
willing to fight in Indochina to its last dollar as long as France will
put up its last Frenchman . So there are two viewpoints on that, too .
   Dr. CoLGROVE. They expect us to send our boys over to fight in the
rice paddies of Indochina . They have gone that far now . They used
to just expect us to give money . Now we have to give, besides equip-
                      TAX-EXEMPT FOUNDATIONS                        597
ment, the lives of our American boys to fight the hordes of Asia, which
is a great mistake .
   Mr. HAYS . Well, your friend, Dr. Rowe, who has the same general
viewpoint as you do, said flatly here on Friday that we ought to do
that very thing. He said 2 years ago we should have.
   Dr . CoLEGROVE . I think we ought to give Chiang Kai-shek and the
chinese forces on, Formosa help logistically, transport them to Indo-
china. We should transport some of the South Korean Army to Indo-
china and give them all the equipment, but not use American boys
to fight in Asia.
   Mr. HAYS . Of course, if you are going to give them all that equip-
ment, you had better transport someone who will fight, should you
not?
   Dr. CoLEoRovE. The Koreans showed they could fight, the South
Koreans did .
   Mr. HAYS . They did, too .
   Mr. WoRMSER . I would like to interrupt with one final question of
Professor Colegrove . I think we have kept him an excessive period
of time .
   I gather it is your opinion that the overindulgence in the empirical
method which you believe the foundations have been, let us say, guilty
of, has resulted in something in the way of a decline in morality, that
in the schools particularly, morality has taken a good beating, we
have had substituted for it what I believe is called moral relativity,
and that the foundations, if they fail have failed perhaps primarily
in the direction of not having provided us with more leadership .
   Dr. COLEGROVE . We certainly need more leadership on the ethical
and moral side . There is really no doubt about that in my mind .
And I would like to see the foundations help the American people in
that way . We need to create or develop in the United States more
leadership, not only in science, not only in empirical science, but also
on the moral and ethical side, rationalism, if you want to put it in
that sense.
   Now, with all the money that the foundations have spent, they have
never developed an Abraham Lincoln. They have never developed an
Immanuel Kant . They have never developed a Thomas Jefferson .
They have never developed a James Madison . We need that kind of
leadership at the present time . I suspect that that leadership is going
to come from the small colleges, where a more sane attitude toward
American traditions, American morality and ethics, is taken than in
the large universities.
   Mr. HAYS . Doctor, do you mean to say that Abraham Lincoln is
underdeveloped? That maybe is an unfortunate term, but there are
probably more biographies here than in the case of any other Amer-
ican. I am guessing, but would you not say that is probably true?
   Dr. COLEGROVE . Oh, yes . He is the subject of a lot of good books .
   Mr. HAYS. But you think the foundations ought to make some
grants to write some more books? Or on Thomas Jefferson? I sus-
pect Thomas Jefferson would run a close third . Perhaps George
Washington would be second . And I am a great admirer of Jeffer-
son . I have probably 20-or 30 volumes on him myself .
   Mr. WORMSER. I do not think he meant that .
   Mr. HAYS . I am trying to find out what he meant .
	



    59$                   TAX-EXEMPT FOUNDATIONS

       Mr. WORMSER . I think he meant that there should be a greater
    effort to produce men like that .
       Mr . HAYS . That gets into a very philosophical discussion . I am
    .interested, too . I would like to produce another Abraham Lincoln
    out in my district,, so that when I get done with the job I can have a
    worthy successor .
       Dr . COLEGROVE . Well, you can't say that is a task that foundations
    could accomplish . But they have not developed the climate that pro-
    duced an Abraham Lincoln . And I am thinking now of both sides of
    the fence .
    . Abraham Lincoln is representative, you might say, of the deep
    heritage of the United States . And Jefferson represented the deep
    heritage of the United States .
       Jefferson was a very cultured man, who went to Europe, read French
    books and British books, but he was always thinking, again, in refer-
    ence to the national interest, or in reference to the history of the
    United States and whatever destiny the American people would have .
       There is too little emphasis in our schools at the present time, in
    spite of all these books, to the contributions of Jefferson, Washington,
    and Lincoln to the history of the United States in relation to our
    present situation .
       The question is : Are our public schools, our universities, furnishing
    the climate out of which can appear another Washington or another
    Jefferson?
       I am afraid the climate is not very congenial for that .
       Mr. HAYS . Of course, leaving Jefferson aside, no university fur-
    nished the climate for the other two . They made their own .
       Dr. COLEOROVE . Yes. Maybe it is a task that the foundations can
    never achieve . Maybe they can accomplish very little in that . But
    I would like to see the foundations try .
      Mr. HAYS. The original idea I had when I started this series of
    questions : You talk about the moral climate . Now, there is no argu-
    ment but that we want to create as good a moral climate as we can .
    But I am wondering how the foundations are going about this . If
    they make a grant to some religious order, you can immediately see
    what a hullabaloo that would cause . You would have somebody in-
    fluencing them not only as to politics but dragging religion in and
    trying to influence the religious attitude. And it seems to me that
    they might be treading upon very delicate ground in that situation .
    And again let me say with all deference to you that you have set forth
    a very worthy objective in very general terms, but when we come to
    specifically implementing that objective, I am at a loss as to how I
    would go about it . If I were a foundation trustee, I would not know .
    W  ould you ?
       Dr . COLEOROVE . If you were a foundation trustee, Mr . Hays, you
    would give your attention to it and try to have that problem studied .
      Mr. HAYS . But on this specific problem, I would be a little bit
    afraid to give it to one group or another in the religious field . I
    would be afraido to make a donation or a grant to train ministers, shall
    I say, in the Presbyterian faith, without giving an equal grant to
    every other religious faith, for fear someone would accuse me of
    religious bias. And I just say from a practical standpoint we are
    dealing with something that if there is any solution to it, I would like
    to know about it.
                      TAX-EXEMPT FOUNDATIONS                        599
   Dr. COLEGROVE . I would like to see more studies on the question of
what leadership is and the part that morality and ethics play in lead-
ership . I think the codes of political ethics that are springing up
over the United States are making some contribution in this way .
I do not know any of the foundations that are making a study of
these codes of political ethics .
   Mr. HAYS . One foundation was going to set up a fund to study
Congress I understood, with the idea of suggesting some improve-
ments. And immediately that was met with a barrage of criticism .
Some people questioned: Who are these people that are going to
question the integrity and the sacredness of Congress?
   Personnally, it is to me a little bit like the old newspaper story of
the man biting the dog. I mean, Congressmen are investigating any-
body. I have no objection if somebody wants to investigate Congress.
But it caused a lot of criticism .
   Dr. COLEGROVE. I think probably most of these studies should begin
at the grassroots .
   The CHAIRMAN . My constituents have been investigating Congress
for a long time .
   Mr. HAYS . I, again, because of my great affection for the chairman,
will not comment on that either .
   The CHAIRMAN . Are there any other questions?
   Mr. GOODwIN. No question . I want to make a statement a little
later .
   I want to make a brief statement, Mr . Chairman . After I have
made it, I will ask unanimous consent that it be placed in the record
of today's proceedings at the point in the morning session imme-
diately after reference to the number of institutions of learning in the
several States.
   Mr. HAYS . May I ask unanimous consent that in deference to our
-colleague from Massachusetts we have deleted the remark that came
along in there somewhere that the Harvard College was the second
most left to Columbia . I think we ought to just take that out, so that
there will not be any reflection on Massachusetts at all .
   The CHAIRMAN . Thank you very much, Professor Colegrove, for
_your presentation today .
   The committee is deeply appreciative of your generosity in coming
down here and giving us the benefit of your experience .
   It is now 3 : 35. I question whether we ought to proceed any further .
   Mr. HAYS . I would like to agree with you, and I want to say that
if we are going to take up this monumental piece of empirical research,
I hope you can wait until morning .
   The CHAIRMAN. The committee will adjourn, then, until 10 o'clock
tomorrow morning in this same room .
  (Whereupon, at 3 :35 p . m ., the hearing was adjourned until 10
u. m ., Wednesday, June 9,1954 . )
a
                  TAX-EXEMPT FOUNDATIONS

                    WEDNESDAY, JUNE 9, 1954
                            HotsE or REPRESENTATIVES,
                       SPECIAL COMMITTEE To INVESTIGATE
                                    TAX-EXEMPT FOUNDATIONS,
                                                   Washington, D. C.
  The special committee met at 10 a . m., pursuant to recess, in room
304, House Office Building, Hon . Carroll Reece (chairman of the
special committee) presiding .
  Present : Representatives Reece, Goodwin, Hays, and Pfost
  Also present : Rene A . Wormser, general counsel ; Arnold T. Koch,
associate counsel ; Norman Dodd, research director ; Kathryn Casey,
legal analyst ; John Marshall, chief clerk.
  The CHAIRMAN. The committee will come to order .
  Mr. Koch .
  Mr. KOCH . Mr . McNiece would like to continue .
  The CHAIRMAN . You may proceed. The oath is continuing during
the course of the proceedings .
  Mr. KocH. That is right . May he continue reading his supplement
before we ask him questions, or would you rather ask him questions
with respect to his first installment?
  Mr. HAYS . I have a few more questions I would like to ask . It seems
we have left enough things hanging in midair .
  Mr. KocH . Very well .
TESTIMONY OF THOMAS M. McNIECE, ASSISTANT RESEARCH DIREC-
  TOR, SPECIAL COMMITTEE TO INVESTIGATE TAX-EXEMPT
  FOUNDATIONS-Resumed
  Mr. HAYS. On your first report, Mr . McNiece, on pa e 9, you talk,
near the bottom of the page, about centralized places, w ich seems to
imply that somebody had a motive or desire to plot this thing . Do
you have any specific evidence of that ?
  Mr. McNIECE. I don't at the moment find the item.
  Mr. HAYS . It is in the last paragraph down about the fifth line
"It does, however, seem to confirm"
  Mr. McNIECE . I have it. The excerpts from the final report from
the American Council of Learned Societies, plus the evidence which
continues on through on the influence of the Social. Science Research
Council and the American Council of Learned Societies in preparing
a directory, if I may call it that, of men qualified to advise Govern-
ment in its various fields . I take that as evidence of the flow of what
might be called a central or main stream of influence . I believe it is
in this next and short section of my report that I mention, merely as
                                                                601
602                   TAX-EXEMPT FOUNDATIONS

factual evidence, the number of people from the field of social science ,
who are employed, at least in part, by Government today . That is,,
we have letters in which they advise us of the names of those people
and the fields of work in which they are occupied .
   Mr. HAYS . What do you read into that? The Government has,
need apparently for these people . Where would you more logically
turn than to these societies who would have lists of people?
   Mr . MCNIECE . I am not in any way questioning either the need or
the source, except as it comes from a firm and compact group of what
might be called, and has been referred to here, as the intellectual elite .
They might be defined by another term as the mental aristocrats . I
believe all of the testimony that has been given here, and without
any attempt on the part of any of us to tie in the testimony of the
various professors that have appeared here, seems to indicate the
same thing, that there is, let me call it, a preferred group which
is called upon for advice . It is a highly concentrated corps, I think
I used the term in my previous appearance on the stand .
   Mr. HAYS . If you were doing the calling, you would call upon the
best brains you could get, would you not? You don't mean to put some
term of opprobrium by calling them the intellectual elite?
   Mr. McNrECE . No, but neither would I know how to define best
brains . I would call on people in my judgment that would be fitted
for that . I am not doing the calling . The Government is doing that ..
   Mr. HAYS . I understand that, but if you were doing the calling,
and you had t , find somebody in a certain field, we will say social
science or for that matter any exact scientific field, how would you ga
about finding them
  Mr . McNIECE . The first thing I would do is to look into their back-
ground and training and find the particular types of views held or
expounded before I would do anything else . I take it here that Gov-
ernment does not do that, but relies upon the recommendations of the
very central group to which I have referred previously . That was
the very purpose of the $65,000 grant in total made by the Rockefeller
Foundation . That apparently is accepted as final by the Government .
1 have to assume that . I do not know it. But that was the purpose
of organizing the list .
  Mr . HAYS . What was the purpose again in organizing the list?
  Mr . McNrECE . As I have stated previously, the purpose was to sup-
ply a list of individuals qualified in the judgment, and I don't say
this in a disparaging way, of the intellectual group from which this
list emanated .
  Mr . HAYS . Maybe I am being a little thick at this point, as the Irish
put it, but I don't see anything wrong with the Learned Society or
the Historical Association or the Society of American Chemists, or
anybody else furnishing a list of qualified people .
   The CHAIRMAN. Would you permit an interjection there?
  Mr . HAYS . Yes .
   The CHAIRMAN . We have in the United States the colleges and uni-
versities which, while large in number, are very accessible to be advised
about the requirements of Government . While there is nothing wrong
in asking one of the societies to furnish a list of names, as I see it, do
we not know from practical experience that when a council such as the
Council of Learned Societies is put in the position of furnishing a
list of scholars to advise the Government, that list will be pretty
                           TAX-EXEMPT FOUNDATIONS                           603

much the recommendation of the man who happens to be administra-
tive officer of the council that makes up and supplies the list . Insofar-
as that is the case, that puts in the hands of one man a tremendous
influence. If he happens to be a man that has certain inclinations, he
is in a position to give very wide effect in those inclinations, if he is.
put in a position where he furnishes the list of the experts the Gov--
ernment calls into the service as advisers . That is the angle that I
see that becomes, to my mind, Mr . Hays, very important .
   It is the concentration not only in one organization, but ultimately-
lar ely in the hands of one man .
     r. HAYS . Of course, theoretically that could happen, but if you_
want to carry that theoretical idea out to its ultimate conclusion, it -
could happen in the university in the case of whoever is the executive
officer there . Or if you want an even greater illustration of one man
picking and choosing, how about the President? He has the power
to appoint literally thousands of people. Theoretically he does it
himself. But actually in practice, it is the culmination of a lot of'
recommendations .
   I would guess, without knowing and having any evidence offered
to the contrary, that in these various organizations they operate the
same way .
  Do you have any evidence, Mr . McNiece, that one individual in the
American Council of Learned Societies is in control of this whole .
thing, or is it the thought of a group of men or officers?
  Mr. MCNIECE . It is both. By the time I have finished with my
testimony, I think the answer to your question should be a little more .
obvious, because we can take the end results and draw certain conclu-
sions from them .
  I have said in the sentence immediately prior to the one you quoted
In itself there should be no criticism of this objective .
  In other words, I start out with that premise . It is the end results.
that cause us to raise some questions . We have not touched the end
results as yet as they affect this side of the triangle .
  Mr. HAYS . You are going to bring in some conclusive facts later
on of something bad in the end result? If you are, I will defer any
questioning along that line .
  Mr. McNIECE . All right . I had not expected to do it at this mo-
ment . As a matter of fact, I was not sure I would do it at all . But
here is a quotation which I might insert . It does not appear in any -
of my studies.
  When we see a lot of framed timbers, different proportions of which we :
know have been gotten out at different times and places and by different work-
men, and when we see those timbers joined together and see that they exactly -
make the frame of a house or a mill, all the tennons and mortises exactly fit-
ting, and all the length and proportions of the different pieces exactly adapted
to their respective places, and not a piece too many or too few, in such a case ,
we find it impossible not to believe that all understood one another from the-
beginning and all worked upon a common plan or draft drawn up before the
flrst blow was struck .,
  That is from Abraham Lincoln in a talk made in 1858 . It has been
certified to us by the Legislative Reference Division of the Congres-
sional Library which can give you further details on it if you are.
interested.
  Mr. HAYS . I assume you are saying now that you are comparing
this to the framework of a building, and saying all these people who .
 604                      TAX-EXEMPT FOUNDATIONS

  are furnished the Government by these different societies, their think-
  ing dovetails and fits together perfectly .
     Mr. McNIECE . I hope to show you in the small manuscript portion
  of this talk what we consider to be the predominatin influence to
  cover the listing of suggestions made which we have taken solely out
  of governmental publications .
    Mr. HAYS . Mr . McNiece, don't you think the way to find that out,
 instead of relying-and I am sure you are sincere-or something you
 say is to call in some of these people and examine them and find out
 if their thinking dovetails?
    We have a rather striking example here . You have had four pro-
 fessors that you people have found in your months of research that
 you thought would pretty well, I suppose, exemplify what you wanted
 to bring out . I am finding no fault with that . But even those four-
 I would assume they were pretty carefully selected-have testified
 at variance on various things . Their thinking did not dovetail .
    The CHAIRMAN . You did not intend to say, if I may interject, that
 all the thinking dovetails . What you meant to say, I would assume,
 is a preponderance .
    Mr. McNIECE . That is right .
    The CHAIRMAN . If I may follow through on the observation I made,
 about the concentration in one place of this power or authority or
 however it might be described, to make recommendations for advisers
 to the Government, on a very broad basis, I referred to the fact that
if it happened that the administrative officer of the society that
 made the recommendation happened to be a man of certain inclina-
tions, it might become dangerous . If, for instance, that man hap-
pened to be one of a Fascist inclination, his disposition, of course,
would be to recommend people that represented his line of thinking,
with the result that we would get in the Government, unless they were
very carefully screened by the appointing authority, a preponderance
of people that had a Fascist type of thinking.
   This administrative officer of one of these societies is a man that
has no public responsibility, not like the President or a Cabinet officer,
whom we know and who do have public responsibility. Nor, like the
president of a college, who is identified in the public mind, and to a very
large degree is held responsible not only by the board of trustees, but
particularly by the alumnae of the institution, as well as a very wide
segment of the public . That is quite different from some man that is
ensconced in the office of a learned society that is in a building down-
town here . At least I see a very wide difference . Insofar as there is
a disposition to concentrate into one or a few places-it probably
should not be described as authority to recommend-the privilege of
recommending people for Government consultants, I would have quite
a serious question in my mind about it .
   Mr. HAYS . Let me read to you a quotation I have found here and
see if you agree that it is along the line of some that you have read .
I will read it and then I will hand it to you if you want to look at it .
  But all agree that there can be no question whatever that some remedy must
be found, and quickly found, for the misery and wretchedness which press so
heavily at the moment on a very large majority of the poor .
This was written some years ago, and not as of the present .
  The ancient workmen's guilds were destroyed in the last century and no other
organization took their place . Public institutions and the laws have repudiated
the ancient religion . Hence by degrees it has come to pass that workingmen have
been given over, isolated and defenseless, to the callousness of employers and
                       TAX-EXEMPT FOUNDATIONS                            605

the greed of unrestrained competition. And to this must be added the custom
of working by contract and the concentration of so many branches of trade in
the hands of a few individuals so that a small number of the very rich have
been able to lay upon the masses of the poor a yoke little better than slavery
itself.
   What would you say about that? Do you want to look at it?
   Mr. McNIECE . I would like to see it.
   The CHAIRMAN . All I can say is, while he is looking that over-and
that goes back to describing an individual-there is no Member of
Congress, nobody in this room, and but few people in Washington
who come from a family where they had greater difficulty rearing their
children than I did . What I want to preserve in this country is the
same economic circumstances that enabled my father who started
out with $100, a horse, and a sidesaddle, to rear a family of 13 chil-
dren, all of them graduated from high school, most of them graduated
from college, none of them probably very successful in material goods,
but all able to take their positions in society.
   I am not quite sure what the economic forces and factors are that
enabled my father to do that, but whatever they are, insofar as I am
able to find them, I want to preserve them .
   That is more or less my economic philosophy, and is pretty much
my guide . Whether I am a middle-of-the-roader, a liberal, a free-
wheeler, or a conservative, I think I have exactly the same thinking
that I had when my mother gave me the last $2 she had when I started
off to college, where I was able to make my own way. I do not think
my economic philosophy has changed any at all over all these years .
   Mr. HAYS . Mr . Chairman, I think we can all endorse that as a very
worthy objective, and I think perhaps some of us would even like to
expand so that even more people will be able to do that .
 • The CHAIRMAN . I think that we have had a system where if a great
urge existed people had been able to do that to a degree that does
not prevail in any country on earth . That is why our people have
been carried farther and faster up the road of progress, and attained
the standard of living that has never been attained by any people
anywhere at any time .
   Mr . HAYS . If we are going to debate this a little bit and leave my
quotation alone, I might say to you that I think perhaps statistics
will show, if it not too empirical, that there are a bigger percentage
of boys and girls in America going to college today than ever before.
So perhaps the very thing that some of these witnesses have been con-
demning is the thing that is bringing about the conditions that both
you and I seem to want, Mr . Chairman.
   Now, can we go back to my little quotation .
   Mr . McNIECE . I should be very glad to go back to this . My own
 appraisal is that it is a purely emotional product without one word
or substance of proof . It might have been written-it is not dated-
 100 or 125 years ago . I have no means of knowing that . But there
is a great deal of false emotional propaganda, if I may use the term,
put out from many quarters on such things as this . The National
Bureau of Economic Research in collaboration, I believe, with the
Department of the Census, every once in a while turns out an esti-
mate-I say every once in a while, because it is not annual-of the
total wealth of this country . That is wealth of all forms-stocks,
bonds, farms, buildings, everything . If we divide the estimate of
that total wealth by the population of the country, we find that if the
        49720-54-pt . 1-39
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communistic or socialistic idea were fully realized with respect to the
 disposition of capitalistic assets, that the individual share in that
would be somethng over $3,000 . The family's share of the total wealth
of the country will be something less than a Congressman's salary for
 1 year. That is not going to take anybody very far if the collectivistic
ideals are attained .
    Mr. HAYS . Would you say that would be tending toward that ulti-
mate objective, that little statement there, would it help to push it
along?
    Mr. McNIEcz . This statement [indicating] ?
    Mr. HAYS . Yes .
    Mr. McNIECE . I would certainly assume that is what they are driv-
ing at when they talk about the concentration of wealth . concentra-
tion of many branches of trade in the hands of a few individuals .
That is scarcely in accord with our Government's own record on the
census of distribution and census of manufacturers .
    Mr. HAYS . Let me read your another one .
    The CHAIRMAN. Has that quotation been identified yet?
    Mr. HAYS . I will identify it in a minute .
   Every effort must therefore be made that fathers of families receive a wage
sufficient to meet adequate ordinary domestic needs .
    I would assume that the writer means the Government or somebody
to do that . I will let you look at this .
   If in the present state of society this is not always feasible, social justice
demands that reforms be introduced without delay which will guarantee every
adult workingman just such a wage. In this connection we might utter a word
of praise for various systems devised and attempted in practice by which an
increased wage is paid in view of increased family burdens and a special pro-
vision made for special needs.
   Would you call that socialistic?
   The CHAIRMAN . That sounds like the President .
   Mr. HAYS. It is not . I would not want to quote any of President
Hoover's remarks without identifying them .
   The CHAIRMAN . With one change I would see no serious objection
to that .
   Mr. HAYS. Let Mr . McNiece say what he thinks .
   The CHAIRMAN. If you put the word "opportunity" in front of one
of those adjectives .
   Mr. McNIECE . From my examination over a period of quite a num-
ber of years, I would say the workmen of the country are being paid
for the most part, particularly if it is in accordance with their pro-
ductive ability, in amounts perfectly ample to support their families .
The statistics indicate that . There have been many false statements
made, according to what I have read in the papers, by certain leaders
in the field of labor. The reason I say false statements is because they
have claimed that wages have not kept pace with the cost of living.
Wages have kept pace with the cost of living and more than that .
   Years ago, in a conference at Williamstown, information was
brought out and testimony was introduced that after every depression,
within the period of statistics that were ample to support the con-
clusion, workmen emerged with a net gain in real wages . I do not
believe there is any doubt of that . That was brought out at that time .
I was not present, but I read the proceedings . There was no dissent
taken from the findings of the study of the man who presented it .
                        TAX-EXEMPT FOUNDATIONS                               607
  We need to have a little more information of what is going on, and
factual information, and pay less attention to claims of leaders and
others who get a great deal of publicity, claims that are not supported
by the facts .
  Mr. HAYS. I have just one more, and these are all from the same
volume . I would like to comment specifically on this one
  For the effect of civil change and revolution has been to divide society into
two widely different castes . On the one side there is the party which holds the
power because it holds the wealth, which has in its grasp all labor and all trade,
which manipulates for its own benefit and purposes all the sources of supply
and which is powerfully represented in the councils of the state itself . On the
other side there is the needy and powerless multitude, sore and suffering, always
ready for disturbance . If working people can be encouraged to look forward to
obtaining a share in the land, the result will be that the gulf between vast
wealth and deep poverty will be bridged over, and the two orders will be brought
nearer together .
   Mr. McNIECE . Commenting for a moment, before making a reading
of this, the share of the land reference reminds me very much of one
of the paragraphs quoted from the findings of the Committee on Social
Studies, as supported by the Carnegie Foundation and the American
Historical Association .
   Mr. HAYS . I gather you disapprove of that, is that right?
   Mr. McNrECE . Because I disapprove of communistic and collec-
tivistic tendencies . All of these-I do not know your source-are
closely comparable to Communist literature that I have read . The
objectives cited parallel very closely communistic ideals or socialistic
ideals. . If working people can be encouraged to look forward to obtain-
ing a share in the land-in the smaller areas-I should say rather-
in the areas of less concentrated population, I know from first-hand
information that it is the desire and the attained objective of many
workingmen to own their own properties .
   I distinctly remember reading in the papers-that is my only
authority for it-that at one time some of the labor union leaders were
advising their workmen not to become property owners, because that
tended to stabilize them and make them more dependent on local con-
ditions . I don't know how you would reconcile the divergent points
of view.
   Mr. HAYS . If you are through with those, I would like to have them
back so I can identify them .
   The first and last were from the encyclical of Pope Leo XIII on
labor . The middle was from the encyclical of Pope Plus XI .
   You have given a very practical demonstration, Mr . McNiece, of the
 danger of lifting a sentence or paragraph out of context, because you
 have clearly labeled these as being in conformity with the communistic
 literature that you have read.
   Mr. McNrECE. Yes, and I repeat that. I am not familiar with lit-
 erature of the source you described, but I have been told that other
 encyclicals have completely endorsed and defended, to use the phrase
 which you have used a number of times, laissez faire .
   Mr. HAYS . If you read the whole thing, they condemn very pro-
 nouncedly socialism and communism . But the Popes both condemned
 some of the conditions that were existing at that time . I don't think
 you will disagree with me, and I am not a Catholic-I may say that-
 that the Catholic Church has been one of the bulwarks against com-
 munism in the world, and one of the organizations which has fought
 against it as any organization I know of . So you would not want to
 call the church communistic, would you?
608                   TAX-EXEMPT FOUNDATIONS

   Mr. McNzEcE . I am not calling the church communistic . I am not
taking any part in a discussion of religion and the attributes of the
various groups .
   Mr. HAYS . Do you admit now that there is a danger in doing just
what has been done before this committee over and over again, that
the kind of evidence that has been offered, of lifting a paragraph out
and saying this proves a point does not necessarily prove anything?
   Mr. McNIECE . I tried to make my position very clear in my initial
statement on that particular point . I said the excerpts had been' chosen
very carefully in an effort not to misrepresent context . I suggested
that all references were fully given and if anyone wished to question
the validity of the reference with respect to the points made, he could
consult the original source .
   Mr. HAYS. The only original source that I have had a chance to
consult and read almost in its entirety was the one which Mr . Sargent
quickly repudiated when I began to read some paragraphs he did not
like . One book he quoted.
  Mr. McNIEcE . Which book is that?
  Mr. HAYS . Only Yesterday, in which he picked a paragraph out
and said this proved a point he wanted to make . He later said he
didn't buy the whole book . I think you were perhaps here at the time .
  Mr . McNIECE . I happened to be personally acquainted and a neigh-
bor of Frederick Lewis Allen, the author of that book, and I had a
number of discussions with him . It is not pertinent to this discussion
or this hearing or I would tell you some amusing features and things
that happened to him, from a first-hand discussion with him . That
was one of the first books he had written . He told me that he had
learned something and that was that he would have to be pretty careful
on any future books he wrote, because he made quite a number of
errors.
   Mr. HAYS . I would probably agree from scanning the book myself
that there is considerable error . Again that proves the point I am
trying to make, that you can't lift a paragraph out of context and
say this proves anything .
   Mr. McNIEcE. In connection with that particular paragraph,
though, I happen to be able to offer again first-hand testimony, be-
cause I was stationed in Cleveland at that particular time, and I per-
sonally on orders attended a number of meetings of the type at which
conclusions which he mentioned were reached . I can tell you from
first-hand knowledge that the common discussion of those meetings
of that time was on the culmination of "the day." At that time, and
the time of which Frederick Lewis Allen wrote, it was the common
hope in those circles that very soon the day of revolution, similar to
what had very recently occurred in Russia, would appear .
  Mr. HAYS . Were you sitting in on these plots?
  Mr. McNIECE . Absolutely.
  Mr. HAYS . Were you in favor of revolution at that time?
  Mr. McNIECE. Definitely not. I was there under orders emanating
from the Federal Building in Cleveland . One of the men even dis-
cussed with me the fact that certain leaders in the city of Toledo had
been marked to go down when the day came .
  On the May Day parades, for which they had permission, that group
used to carry their little red banners on bamboo sticks as flag staffs .
One particular year they appeared with their little red banners on
indoor baseball bats, which was rather suggestive .
                        TAX-EXEMPT FOUNDATIONS                                609

   Mr. HAYS . That time came and went without any revolution, didn't
it, Mr. McNiece ?
   Mr. MCNIECE . Of that type .
   Mr. HAYS . But you do think that there was an undesirable social
revolution of some kind or another?
   Mr. McNiECE . In process .
   Mr. HAYS . Still going on?
   Mr. McNIECE . Yes .
    Mr. HAYS . That leads me to a very interesting thing that we started
to pursue the other day . In fact, we touched on it a few times . In
the event of a serious depression in this country, and we all hope we
don't have one, but we have had them in the past, would you recom-
mend that the Government adopt a laissez-faire attitude and take
hands off and let the thing run its course?
   Mr. McNIECE . No . I have covered that point in the last section of
my testimony, that is the economic and the Government interest .
    Mr. HAYS. What would you suggest that the Government do?
    The CHAIRMAN . May I interject that it is going so far afield . We
are not outlining a pattern of conduct during the
    Mr. HAYS. No, but we are criticizing the conduct of the Govern-
ment, and I would like to have some alternatives .
    The CHAIRMAN . I do not understand we are criticizing the Gov-
ernment .
    Mr. HAYS. Have you read this empirical document here?
   The CHAIRMAN. There is no such intention . I don't think it makes
much difference to the Government what this committee or Mr. Mc-
Niece thinks of what should be done in the case of a depression in the
future.
   Mr. HAYS . In the third paragraph-if you don't mind jumping
ahead-he said
   Among these is the increasing participation of the Federal Government
in subsidization of agriculture, scientific research, wage control, mortgage insur-
ance and other activities . Most, if not all, of these were politically conceived
and depression born . They represent new ventures in our Government activ-
ities .
   As I read on, it is critical that the Government goes into that . Did
you mean to be critical?
   Mr. McNIEcE. Prior to that in this section which I have not read,
you will find the origin for the adoption of the suggestions by the Gov-
ernment in those activities, and that is why they are mentioned in this
way from the section of the report you quoted .
   Mr. HAYS . You are saying that somebody sort of talked the Govern-
ment into this, and it would have been better if they had not done it .
Isn't that what you mean to imply?
   Mr. McNIECE . Yes . I told you in the beginning, and it is recorded
in the early part of this investigative work, which is purely factual-
we emphasized the fact that we are drawing no conclusions-the
section of the report from which you are now quoting is getting into
the conclusions which we are arriving at as a result of the evidence,
all of which we have not yet presented .
   The CHAIRMAN . Since we have gotten into this second report, I
have just talked to Mr. Hays, we might as well proceed with the second
phase of your report .
   Mr. McNIECE. I would like to make a short preliminary statement
before getting into the reading from this document . This statement
is as follows
610                  TAX-EXEMPT FOUNDATIONS

  Before beginning a discussion of the relationships between founda-
tions and government, it should be understood by all that we realize
that we are entering the sensitive area of political controversy . One
reason for mentioning this at this time is that we wish it to be under-
stood that we are limiting our analysis of the conditions as we shall
describe them, first to documented statements from the sources quoted
and second, in the economics section of the report to statistical infor-
mation available in the Government's own publications .
  The economic facts seem to substantiate the conclusion that many
of the proposals advanced by the planners and deemed experimental
by some and questionable by others have been put into practice and
are a part of our everyday lives as we are now living them . Congres-
sional appropriations and governmental expenditures indicate this .
While these facts seem to speak for themselves, there are certain inter-
pretations which we shall make especially with reference to future
conditions if we choose to continue these collectivistic ventures .
  In these conclusions we are taking no partisan political position, nor
do we wish to encourage or support any other attitude than this .
  Our interest in these problems as they affect the state of the Nation
and its future far exceeds our interest in any form of political pref-
ferment .
  Now, this section of the manuscript report is headed, "Relationships
Between Foundations and Government ." It is particularly concerned
with the national and social planning .,
  Before proceeding with the submission of evidence bearing upon
the relationships between foundations and government, we wish to
make some comments by way of background as they pertain to na-
tional and social planning by government.
  Three things should be obvious to anyone reasonably familiar with
the interlocking complexities of our production, distribution, service,
and financial problems in our economy
   (1) The successful correlation of all these activities would require
the complete control of all phases of our economic endeavors . Price
control, for example, cannot be effectively maintained without rig-
orous control of material supply and costs, wages, transportation, and
all other elements entering into final costs .
  Mr . HAYS . Mr. Chairman, it seems to me that these reports are very
long, and if Mr. McNiece is going to read all of them today, that is
about all we are going to get done . I have read them . I have some
questions I would like to ask about them . I would like to just have
them put in the record as is, and then go on with the questioning . I
think it would save a lot of time.
  Mr. Kocx . He was just going to read the shorter one .
  Mr. HAYS . Is he going to read the typewritten introduction of this?
  Mr. Kocx . No.
  Mr. McNIEcE . I had expected to take selective manuscript reading .
It would be dull and deadly, and I would say completely impossible
to convey to anyone the message involved in that great series of, I
think, 20 statistical tables . I could not hope to do that by reading .
I had not expected to do that .
  Mr . KocH . You intended to read only the mimeographed statement?
  Mr. McNIEcE . Yes, and certain conclusions and introduction ma-
terial from the Economic Report.
  The CHAIRMAN . This is 19 pages .
                       TAX-EXEMPT FOUNDATIONS                           611
   Mr. McNIECE . That is all .
   Mrs . PFOST. There is a lot of single spacing and tightly written
 pages.
   The CHAIRMAN . The quotations are single spaced . Had you ex-
 pected to read the quotations in full?
   Mr. McNIECE. I had intended to read the quotations in full . It is
 immaterial to me.
   The CHAIRMAN . Why don't you continue with the shorter form?
 The other material is to be inserted in the record .
   Mr. McNIECE . That is right. There are certain things in these
 quotations that I think from my point of view are very important
 from the standpoint of Mr . Hays' questions.
   The CHAIRMAN . Very well .
   Mr. HAYS . I have about 8 or 10 questions to this document, and I
 was wondering if you have any objection in order to prevent the dis-
 organized thing we have had in the past, and going some other day,
 you could read them and answer all of my questions before noon?
 Would you have any objection if I stopped you at the bottom of page
 2 and asked a question right there while it is fresh in mind?
   The CHAIRMAN . What he had in mind, as I understood a while
 ago, in the remainder of this brief form might be the basis for answers.
 1 have not read these quotations. I would rather like to hear them,
 if I might, before the questioning . I think we would have time before
 noon to conclude this and have the questioning also before noon, which
I would like to do .
   Mr. McNIECE . Yes, we could .
   The CHAIRMAN . For my own information, I would rather like to
have it.
   Mr. McNIECE. It is very vital, Mr. Reece, to the questions which
Mr. Hays very properly asked . I would like at least to present those
that bear upon this idea of, let us say, a concentrated corps of influence .
 It is involved here to a certain extent . It is involved in one of the
very first questions Mr . Hays asked me this morning . So I think it
would be better if we could at least go this far with it .
   Mr. HAYS . Read this whole thing
   Mr. McNIECE. Yes, it is not going to take very long .
   The CHAIRMAN . Very well.
   Mr. McNIECE. Otherwise, shortages, surpluses, and bottlenecks
would bob up continuously and everywhere .
   (2) With the complexity due to the literally millions of points or
junctures where difficulties may arise, no man or centralized group of
men possess the knowledge or judgment that will equal the integrated
judgment of thousands of experienced men applied at the points where
and when troubles first develop .
   At the time when increased complexity of national and interna-
tional affairs seem to make more governmental planning and control
necessary, the Government is actually becoming less and less able to
exercise rational and competent control over the multiplicity of details
essential to good planning . To be even superficially effective, it must
be completely autocratic . .
   (3) Even though such centralized planning were physically pos-
sible, the net results would be a smaller and smaller percentage of
goods and services produced that would be available for those who
produce them. This would result from the increasing cost of the
   612                      TAX-EXEMPT FOUNDATIONS

  governmental agencies and bureaus necessary to devise and maintain
  control. Of course this would have to be met by increasing taxation .
  That is the experience in Russia and it has been developing here for
  some years as will be shown in the staff's economic report .
    From the beginning,
J ownership and planningthe Socialist programs have. called for national
                         of productive facilities
    Such references are frequent and clear. Perhaps the following quo-
  tation from Engels, friend and contemporary of Marx, may illustrate
  the point.
     The planless production of capitalist society capitulates before the planned
   production of the invading Socialist society .
     To emphasize the reiteration of this concept by a responsible body
   of men in our own times and country, we may again refer to a para-
   graph from the report of the Commission on Social Studies . After 5
   years of deliberation they say (American Historical Association,
   Committee on Social Studies, p . 16)
     Under the molding influence of socialized processes of living, drives of
   technology and science, pressures of changing thought and policy, and disrupt-
   ing impacts of economic disaster, there is a notable waning of the once wide-
   spread popular faith in economic individualism ; and leaders in public affairs,
   supported by a growing mass of the population, are demanding the introduction
   into economy of ever wider measures of planning and control .
     In what way has this expression of belief found its way into our
   governmental activities?
     In 1933, the National Planning Board was formed . How did it look
   upon its task and what seem to be its final objectives? These may be
   indicated in part by the following extracts from its final report for
   1933-34-National Planning Board, final report 1933-34, page 11 :
      State and interstate planning is a lusty infant but the work is only beginning .
     Advisory economic councils may be regarded as instrumentalities for stimu-
   lating a coordinated view of national life and for developing mental attitudes
   favorable to the principle of national planning .
     Page 60
      Finally, mention should be made of the fact that there are three great national
   councils which contribute to research in the social sciences . The Council of
   Learned Societies, the American Council on Education, and the Social Science
   Research Council are important factors in the development of research and add
   their activities to the body of scientific material available in any program of
   national planning .
      The Council of Learned Societies has promoted historical and general social
   research .
      The American Council on Education has recently sponsored an inquiry into
   the relation of Federal, State, and local governments to the conduct of public
   education . It has served as the organizing center for studies of materials of
   instruction and problems of educational administration. It represents the educa-
   tional organizations of the country and is active in promoting research in its
   special field.
      The Social Science Research Council, a committee of which prepared this
   memorandum, is an organization engaged in planning research . It is true that
   its object has not been to make social plans, but rather to plan research in the
   social field . A decade of thought on planning activities through its committees,
   distributed widely over the social sciences, has given it an experience, a back-
   ground with regard to the idea of planning, that should be of value if it were
   called on to aid in national planning . Furthermore, the members of the Social
   Science Research Council, its staff, and the members of its committees are per-
   haps more familiar than the members of any other organization with the per-
   sonnel in the social sciences, with the research interests of social scientists, and
                         TAX-EXEMPT FOUNDATIONS                                613
with the experience and capabilities of social science research workers in the
United States . The members of the council are familiar with the different bu-
reaus of research. The council has been concerned chiefly with the determina-
tion of the groups and persons with whom special types of research should be
placed . For this purpose it has set up committees, organized commissions, pro-
moted research, and sponsored the development of various research agencies and
interests . With its pivotal position among the social sciences, it could undoubted-
ly render valuable aid if called on to do so, in the formidable task of national
planning .
  Page 66
  It was after the Civil War that American economic life came to be dominated
by the philosophy of laissez faire and by the doctrines of rugged individualism .
But the economic and social evils of the period resulted in the development of
new planning attitudes tending to emphasize especially public control and
regulation.
  Page 67
  Summing up the developments of these 125 years, one may say that insofar as
the subject here considered is concerned, they are important because they left
us a fourfold heritage
  First, to think in terms of an institutional framework which may be fashioned
in accordance with prepared plans ;
  Second, a tendency to achieve results by compromise in which different lines
and policies are more or less reconciled ;
  Third, a tendency to stress in theory the part played in economic life by
individualism, while at the same time having recourse in practice to govern-
mental aid and to collective action when necessary ; and
  Fourth, a continued social control applied to special areas of economic life .
  Page 71 :
  Such was the note already heard in America when during 1928-29 came the
first intimations of the 5-year plan, and the Western World began to be inter-
ested in the work and methods of the Gosplan in Moscow. The Russian expe-
rience was not embodied in any concrete way in American thinking, but it stim-
ulated the idea that we need to develop in an American plan out of our American
background.
  The National Planning Board after furnishing its report in 1934
was discontinued.
  The National Resources Committee was in existence from 1934 to
1939 .
  In 1939, the National Resources Planning Board was constituted, in
part with the same personnel . After a few years of deliberation, it
rendered its final report, from which the following verbatim and
continuous extract is quoted from page 3
   The National Resources Planning Board believes that it should be the declared
policy of the United States Government to promote and maintain a high level
of national production and consumption by all appropriate measures necessary
for this purpose. The Board further believes that it should be the declared
policy of the United States Government.
  To underwrite full employment for the employables ;
  To guarantee a job for every man released from the Armed Forces and the
war industries at the close of the war, with fair pay and working conditions ;
  To guarantee and, when necessary, underwrite
  Equal access to security,
  Equal access to education for all,
  Equal access to health and nutrition for all, and
  Wholesome housing conditions for all .
  This policy grows directly out of the Board's statement concerning which
the President has said
  "All of the free peoples must plan, work, and fight together for the mainte-
nance and development of our freedoms and rights."
614                      TAX-EXEMPT FOUNDATIONS

                                THE FOUR FREEDOMS
  Freedom of speech and expression, freedom to worship, freedom from want,
and freedom from fear : and
                               A NEW BILL OF RIGHTS
   1 . The right to work, usefully and creatively through the productive years ;
   2 . The right to fair pay, adequate to command the necessities and amenities
 of life in exchange for work, ideas, thrift, and other socially valuable service.
    Mr . HAYS . Would you mind identifying where this came from
    Mr. McNIECE . Yes, Sir . This is the final report of the National
 Resources Planning Board .
    Mr. HAYS . All right.
    Mr. MCNIECE. (reading)
   3 . The right to adequate food, clothing, shelter, and medical care ;
   4 . The right to security, with freedom from fear of old age, want, depen-
dency, sickness, unemployment, and accident ;
   5 . The right to live in a system of free enterprise, free from compulsory
labor, irresponsible private power, arbitrary public authority, and unregulated
monopolies ;
   6 . The right to come and go, to speak or to be silent, free from the spyings
 of secret political police ;
   7 . The right to education, for work, for citizenship, and for personal growth
and happiness ; and
   8 . The right to equality before the law, with equal access to justice in fact ;
   9. The right to, rest, recreation, and adventure, the opportunity to enjoy
life and take part in an advancing civilization .
   Plans for this purpose are supported and explained in this report . The pre-
vious publications of the Board, including National Resources Development
Report for 1942, transmitted to the Congress by the President on January 14,
1942, and a series of pamphlets (After Defense-What? After the War-Full
Employment, Postwar Planning, etc .), also provide background for this pro-
posal.
    The plans just mentioned are incorporated in a series of points
under the following captions
   Page 13 : A . Plans for Private Enterprise .
   Page 13 : B . Plans for Finance and Fiscal Policies .
   Page 13 : C . Plans for Improvement of Physical Facilities .
    Page 16 : D . Essential Safeguards of Democracy .
    Under a caption, "Plans for Services and Security" are extensive
recommendations under the descriptive headings which follow
    Pages 16-17 :
A . Plans for Development of Service Activities .
      1 . Equal access to education .
      2. Health, nutrition, and medical care .
B . Plans for Underwriting Employment
C . Plans for Social Security
    Still another basic caption appears as follows
    Pages 60-66 : Equal Access to Health
I . Elimination of All Preventable Diseases and Disabilities .
II. Assurance of Proper Nutrition for All Our People .
III . Assurance of Adequate Health and Medical Care for All .
IV. Economical and Efficient Organization of Health Services.__
	



                                TAX-EXEMPT FOUNDATIONS                          615
  A statement of authorship of the section on Equal Access to Health
says that it was prepared under the direction of Assistant Director
Thomas C. Blaisdell, by Dr. Eveline M . Burns, of the Board's staff .
Dr. Burns is a graduate of the London School of Economics, which
has received grants from the Rockefeller Foundation totaling
$4,105,600 .
   The discussion and detailed recommendations in this final report
of the National Resources Planning Board are far too lengthy to be
incorporated in this study . Certainly, some of them seem reasonable
from the standpoint of our former governmental procedure but others
are sufficiently novel to warrant mention herein in order to clarify
the underlying objectives in the fields mentioned .
                         PLANS FOR IMPROVEMENT OF PHYSICAL FACILITIES 1

  We recommend for consideration : With private enterprise, through the Recon-
struction• Finance Corporation or possibly one or several Federal Development
Corporations and subsidiaries providing for participation of both public and
private investment and representation in management-particularly for urban
redevelopment, housing, transport terminal reorganization, and energy develop-
ment . Government should assist these joint efforts through such measures as
   (1) Government authority to clear obsolescent plant of various kinds, as, for
instance, we have done in the past through condemnation of unsanitary dwell-
ings, to remove the menace to health and competition with other or better
housing .
   (2) Governmental authority to assemble properties for reorganization and
redevelopment-perhaps along the lines of previous grants of the power of
eminent domain to canal and railroad companies for the acquisition of rights-
of way.
                             HEALTH, NUTRITION, AND MEDICAL CARE
  Assurance of adequate medical and health care for all, regardless of place of
residence or income status and on a basis that is consistent with the self respect
of the recipient, through
   (1) Federal appropriations to aid States and localities in developing a system
of regional and local hospitals and health centers covering all parts of the
country-
   (2) Assurance of an adequate and well-distributed supply of physicians,
dentists, nurses, and other medical personnel .
                             PLANS FOR UNDERWRITING EMPLOYMENT
  To guarantee the right to a job, activities in the provision of physical facilities
and service activities should be supplemented by
   (1) Formal acceptance by the Federal Government of responsibility for
insuring jobs at decent pay to all those able to work regardless of whether or
not they can pass a means test ;
   (2) The preparation of plans and programs, in addition to those recommended
under public works (II-B-3), for all kinds of socially useful work other than
construction, arranged according to the variety of abilities and location of
persons seeking employment.'
    1 From final report, NRPB, p . 13 .
    ' Ibid ., p . 17 .
	


616                     TAX-EXEMPT FOUNDATIONS

  Page 17
                         PLANS FOR SOCIAL SECURITY
  Reorganization of the unemployment compensation laws to provide broad-
ened coverage, more nearly adequate payments, incorporating benefits to depend-
ents, payments of benefits for at least 26 weeks, and replacement of present
Federal-State system by a wholly Federal administrative organization and a
single national fund .
  Creation of an adequate general public assistance system through Federal
financial aid for general relief available to the States on an equalizing basis
and accompanied by Federal standards .
  Strengthening of the special public assistance programs to provide more ade-
quately for those in need, and a redistribution of Federal aid to correspond to
differences in needs and financial capacity among the States .
  Page 69
                         EQUAL ACCESS TO EDUCATION
  That equal access to general and specialized education be made available to
all youth of college and university age, according to -their abilities, and the
needs of society.
  Page 70
  That adequate provision be made for the part-time education of adults through
expansion of services such as correspondence and class study, forums, educa-
tional broadcasting, and libraries and museums .
  Page 71 :
  That camp facilities be made available for all youth above the lower ele-
mentary grades, with work experience provided as a part of camp life .
  Page 72
  That the services of the United States Office of Education and State depart-
ments of education be expanded and developed to provide adequate research
facilities and educational leadership to the Nation .
  Page 73
  That inequality of the tax burden for education within and among the States
be reduced through the distribution of State and Federal funds on the basis
of need.
   The quotations from the reports of the National Planning Board
and the National Resources Planning Board should suffice to show
how they have followed the lead of the Commission on Social Studies
and how completely they have embraced virtually all phases of our
economic life including education .
  It will be of interest and significance to trace the progress of one
who was undoubtedly a leader in the evolution of this influence as it has
been set forth. In this case, we refer to Mr . Charles E . Merriam and
in so doing we wish to have it thoroughly understood that we are
casting no aspersions on his name or memory .
   The following statement regarding the origin of the Social Science
Research Council is found in the annual report of that organization
for 1928-29 .
                         TAX-EXEMPT FOUNDATIONS                                617

   From page 39, appendix A :
  In 1921, the American Political Science Association appointed a Committee on
Political Research, with Prof . Charles F. Merriam as chairman . The purpose
of this committee was to scrutinize the scope and method of research in the field
of government in order to obtain a clearer view of the actual situation and to
offer constructive suggestions .
   In a preliminary report in December 1922, the following statement
appeared
  That a sounder empirical method of research had to be achieved in political
science if it were to assist in the development of a scientific political control .
Quoting further the report said :
  As one of its major recommendations, the committee urged "the establish-
ment of a Social Science Research Council consisting of two members each from
economics, sociology, political science, and history, for the purpose of
   "(a) The development of research in the social studies .
   " (b) The establishment of a central clearing house for projects of social inves-
tigation.
   "(c) The encouragement of the establishment of institutes for social-science
study, with funds adequate for the execution of various research projects and
publications, in the various fields of science."
  The Social Science Research Council was formed in 1923 and incor-
porated in 1924 . Charles E. Merriam served as its president from
1924 to 1927 . He was president of the American Political Science
Association during 1924 and 1925, a member of the Hoover Commis-
sion on Social Trends and of the President's Commission on Adminis-
trative Management from 1933 to 1943 .
  In 1926, a Committee of the American Historical Association made
a preliminary study and recommendation on the subject of social
studies in the schools . Mr . Merriam was a member of . this committee
and later of the final commission on social studies whose report of May
1934 we have discussed at length.
   In spite of his retention of membership, he with 3 others out of
the Committee of 14 members failed to sign the final report. Since
no dissenting report or advices are recorded, we can only guess at the
reason. In fairness to Mr . Merriam and from an examination of some
of his later writings on other matters, we are led to believe that he was
sufficiently opposed to the extreme revolutionary plans of Marxism
to disassociate himself from the more radical conclusions in this report .
  Be that as it may, he retained his interest and activity in national
pTanning to the last. Following his connections with the American
Political Science Association, the Social Science Research Council,
and the American Historical Association, he was a member of the
National Planning Board in 1933-34 ; the National Resources Com-
mittee 1934-39 ; the National Resources Planning Board 1939-43 ; the
President's Committee on Administrative Management 1933-43 and
the United States Loyalty Review Board 1947-48 .
  Mr. Merriam is the author of a book published in 1941 by the Har-
vard University Press, entitled "On the Agenda of Democracy ." This
book is composed of a series of lectures delivered by the author .
618                      TAX-EXEMPT FOUNDATIONS

  The opening statement in the introduction follows (p. xiii)
  Foremost on the agenda of democracy Is the reconsideration of the program
in the light of modern conditions . The old world is gone and will not return .
We face a new era, which searches all creeds, all forms, all programs of action,
and spares none . Reason and science have made basic changes that demand
readjustment at many points . * *
  One of the chief tasks confronting democracy is the development of a program
adequate to meet the changes of our time. * * *
  Mr. Merriam defines planning as follows (p . 77)
   Planning is an organized effort to utilize social intelligence in the determina-
tion of national policies .
  The ensuing extracts from the pages indicated throw additional
light on Mr . Merriam's views (pp . 86-87)
  From the organizational point of view the NRPB (National Resources Plan-
ning Board) is part of the Executive Office of the President . This includes the
White House Office, the Bureau of the Budget, the National Resources Planning
Board, the Office of Government Reports, the Liaison Office for Personnel Man-
agement, and the Office for Emergency Management . With the reference to other
Federal agencies outside of overhead management, the Board has endeavored to
encourage planning activities in the various departments of the Government.
There is now a Planning Division, specifically so-called, in the Department of
Agriculture.
  There is one in the making (provided Congress gives an appropriation) in the
Federal Works Agency ; there is a general committee in the Department of the
Interior which is not called a planning committee but which may serve the same
purpose, and there are Planning Divisions in the War Department and in the
Navy Department . There are similar enterprises not labeled "planning" but
doing much the same work in a variety of other agencies, as, for example, in the
Treasury, in Commerce, in the Federal Reserve Board, and in other independent
agencies. The Board has endeavored to make a special connection with Federal
agencies through its various technical committees, dealing with particular topics
assigned by the President . These committees usually have representatives of
several Federal agencies, as, for example, the Committee on Long-Range Work
and Relief Policies .
  The Board (National Resources Planning Board) has also dealt with private
agencies interested in planning . The most notable example is its Science Com-
mittee. Here groups were brought together that never came together before,
namely, the National Academy of Sciences, the Social Science Research Coun-
cil, the American Council of Learned Societies, and the American Council on
Education with its 27 constituent organizations . The members of the sci-
ence committee are designated by these four groups . These scientists have
undertaken with the United States Government some very important studies,
notably the study of population, the study of the social implications of tech-
nology, and the study of research as a national asset-research in the National
Government, in private industry, and ultimately in the various local govern-
ments .
  Pages 110-11 :
  As a student of planning, I see the possibility of adapting our national resources
to our national needs in peace as well as in war, in the development of national
productivity and higher standards of living as a part of the same program .
This is the bill of rights in modern terms .
  Page 113
  It will be important to have a shelf of public work and projects ready for
use, If there is need, available to combat any wide tendency toward general
unemployment.
                         TAX-EXEMPT FOUNDATIONS                                 619
  In another book called the New Democracy and the New Despotism,
Mr . Merriam states (pp . 58-59)
  Out of the field of science and education emerged the body of inquiry, experi-
ment, and reflection known as social sciences . The developing range of knowl-
edge regarding the principles and techniques of social behavior tended to in-
crease human confidence in conscious social control . The tendency was not
merely to accept the environment as given, but to understand it, then to devise
appropriate methods and techniques for the guidance of social forces .
   Page 148
  My own preference is for a national planning board appointed by the Execu-
tive and responsible to him, serving on an indeterminate tenure . Such an organ-
ization might act as a long-time planning agency for the coordination of various
plans among departments or bureaus and for the elaboration of further lines
of long-time national policy in the larger sense of the term .
  All in all, the long record of Mr. Merriam in his participation in
the general field of the social sciences and in the governmental opera-
tions, and the quoted excerpts from his writings should serve to iden-
tify him thoroughly with the policies and practices, the effects of which
are shown in the staff's report on economics and the public interest .
  To emphasize the importance of the parts played by the specialists
from the field of education, it may be said that the staff has lists of
some of these consultants and advisers that total as follows : Depart-
lnent of State, 42 ; Department of Denfense, 169.
  Before taking up the report on economics and the public interest,
it will be well to take a moment or two to close the triangle of relation-
ships among foundations, education and Government by reference to
the United States Office of Education. It is the official center of con-
tact between the Government itself and the outside educational world .
  In table 7 of the Economic Report, it is shown that from 1945 to
1952 inclusive, the Federal Government has expended the total sum
of $14,405,000,000 on education in its various forms. Much, if not all,
of this is under the jurisdiction of the United States Office of Educa-
tion .
  As part of this vast project, the Office itself issues many good book-
lets on various phases of education and collects many valuable statis-
tics on cost, attendance, and other matters of interest in this domain .
Among the booklets issued by this agency are a few which may be
mentioned and identified .
  They are
  The U . N . Declaration of Human Rights : A handbook for teachers, Federal
Security Agency, Bulletin 1951, No . 12, Office of Education.
  How Children Learn About Human Rights : Place of subjects series, Bulletin
1951, No . 9, Federal Security Agency, Office of Education .
  Higher Education in France : A handbook of information concerning curricula
available in each institution, Bulletin 1952, No . 6, Federal Security Agency, Office
of Education .
  Education in Haiti : Bulletin 1948, No . 1, Federal Security Agency, United
States Office of Education .
  This brief reference is purely factual and without appraisal or
comment .
  It is made only as a matter of information for the consideration of
the committee when it considers the problems involved .
620                  TAX-EXEMPT FOUNDATIONS

   This is the conclusion of the report .
   The CHAIRMAN . You are including the other parts in the record?
   Mr. McNIECE . Yes, the economics report is separate and I had
hoped if the time were available we might read certain parts of that,
but include the whole thing for the record, avoiding the complications
and confusion and time involved in reading a lot of statistics which
are of value only for study
   The CHAIRMAN . The Rockefeller Foundation has iven a total in
excess of $4 million to the London School of Economics
   Mr. McNIECE . That is right, according to the record, as we have
com?iled it .
   T-ie CHAIRMAN. That is a lot of money. And the London School
of Economics is generally recognized as being liberal, with liberal in
quotations?
  Mr. McNIECE. Yes.
   The CHAIRMAN . Or by some people referred to as leftist . Having
attended the London School of Economics for a time, that accounts
for my leftist leanings .
   Mr. HAYS . I would say by the process we are going here that makes
you subversive . I don't really think you are, but you could certainly
imply that from some of the things. I am glad you brought that up,
because I had read this before, and I have listened carefully, and you
have put your finger on the only thing in this whole document that
has anything to do with foundations, that reference on page 9 . The
rest is Just airing somebody's political views .
   Mr. McNIECE . No .
   The CHAIRMAN. No . The National Resources Planning Board, the
way it was set up, it did tie into the foundation funds, did it not?
   Mr. McNIECE . Certainly, through the American Historical Asso-
ciation, the Social Science Research Council, the American Council
on Education, the aid of all of which is acknowledged in the official
reports of the National Resources Planning Board . It is stipulated by
them. That is a definite hookup with the foundations .
   Mr. HAYS . You say yourself they suggest that ; is that bad?
   Mr. McNIECE. They have not the power of Congress to authorize
its adoption . They have gone as far as they can .
   Mr. HAYS . Now, you are getting some place : In other words, none
of this has any validity or authority unless Congress decides to imple-
ment it.
   Mr. McNIECE. I have suggested here in the preliminary statement
that the appropriations by Congress and the record of governmental
expenditures follow very closely the line of recommendations which
I just finished reading .
   Mr . HAYS . Are you saying that Congress has a bunch of nitwits
and dupes or just-been subversive, or what?
   Mr. McNIECE . No ; I am not saying any such thing, and it should
not be inferred from any remark I have made .
   The CHAIRMAN . My knowledge is just to the contrary .
   Mr. HAYS . You seem to indicate that Congress was pushed into
this by the statement you just made, that their appropriations par-
alleled this and these people influenced them .
   Mr. McNIECE. Inferences are free to those who make them . I have
only stated the facts . I am making no inference beyond the state-
ment of facts.
                        TAX-EXEMPT FOUNDATIONS                           621

    The CHAIRMAN . But the essential part of these recommendations
 have never been touched by Congress . Take for instance on page 10
    (2) Governmental authority to assemble properties for reorganization and
 redevelopment-perhaps along the lines of previous grants of the power of
 eminent domain to canal and railroad companies for the acquisition of rights-
 of-way .
    If that recommendation were implemented, it would give the Fed-
 eral Government authority to move any industry into any other part
 of the country .
   Mr. McNIECE . That is right .
    The CHAIRMAN . At one time that recommendation was made to
Congress, incidentally. Congress has been, on the contrary, the one
 to resist recommendations of this nature . That is as nationalistic
 a recommendation as could possibly be made to the Federal Govern-
 ment .
   Mr. HAYS . You read the second paragraph . Let us read the first
 one :
   Government authority to clear obsolescent plants of various kinds .
   What about that? You have not heard any squawks from General
Motors, have you, about tax-amortization certificates where they got
 a nice big fat donation from the taxpayers in order to clear out an
obsolescent plant so they could build a better one, and then it did not
cost them anything?
   The CHAIRMAN . The Government has not been given authority to
determine what plants are obsolescent and carry them out .
   Mr. HAYS. That is the only difference . They let them determine
it, and how much profit they will make . That seems to be all right .
   The CHAIRMAN. That is entirely different.
   Mr. HAYS. It is not entirely different .
   The CHAIRMAN. In my way of thinking.
   Mr. HAYS . Going back to pag e 9, and we are going to stick to this
in spite of all the diversions, that to me is the only relation this has .
to foundations in any way, shape or form . You refer to a report pre-
pared by Dr. Eveline M . Burns, and then you hasten to add she is a
graduate of the London School of Economics, which has received
grants from the Rockefeller Foundation totaling $4,105,600 . I want
to ask you specifically, does that mean you do not approve of this
report by Dr . Burns?
   Mr. McNIECE . I am reporting only on facts and not indicating
approval or disapproval of any of the facts which I am offering . My
approval or disapproval would be worthless in any appraisal of the
situation . I am only attempting to bring out the facts as we found
them.
   Mr. HAYS. Why bring in Dr . Burns? What does that have to do
with it, then?
   Mr. McNIECE. I thought it was clearly stated, "A statement of
authorship of the section on `Equal access to health' ." This is in the
report itself-says that it was prepared under the direction of Assist-
ant Director Thomas C . Blaisdell, by Dr . Eveline M . Burns, of the
Board's staff .
   This is the acknowledgment of authorship in the report itself .
   Mr . HAYS. Do you mean to imply that the London School of Eco-
nomics is responsible for anything that any of its graduates ever wrote?'
   Mr. McNIEcF . I don't imply any such thing.
       49720-54-pt . 1-40
622                   TAX-EXEMPT FOUNDATIONS

   Mr. HAYS. Why put that in? I am curious . She must have gone
to some other school .
   Mr. McNIECE. I have no control over other peoples' inferences . The
factual evidence is that Dr . Burns went to the London School of Eco-
nomics, she graduated from there and presumably she went there for
the purpose of absorbing some ideas . That is the purpose of education .
   Mr. HAYS . Do you know from what high school she graduated?
  Mr. McNIECE. No .
   Mr. HAYS. Why not put that in?
  Mr. McNIECE . She is English. That would expend more of the
Government's taxpayers' money . That would take some time.
   Mr. HAYS . Let us not worry about that. We have not up to this
time in this committee . It seems to me it is a valid assumption . The
only reason the London School of Economics was mentioned is because
it got a grant from the Rockefeller Foundation, and she went there,
and you had to tie it into the foundation .
   Mr. McNrECE. Of course it is a tie-in, the same as this flow of men
fostered and supported by foundation grants, without mentioning a
specific one ; such things as some of the prior witnesses have testified
individually . Of course it has an influence .
  Mr. HAYS. That is what I wanted to get in, the fact that was brought
in in order to make a rather tenuous tie to the whole thing.
  On page 2 you say that the methods used in bringing about changes
suggest a form of subversion.
   Mr. MCNIECE. I don't find that on page 2 .
   Mr. HAYS . No, I am sorry . That is in the economic report . Let
us go back . We don't want to get to that one yet .
   At the bottom of page 2, you bring in Engels and Marx . Do you
do that to point out-first let me ask you this . Are you against plan-
ning?
   Mr. McNIECE. That is a very broad question, and I could only make
a purely hypothetical answer .
   Mr. HAYS . I will narrow it down . Are you against Government
planning? That takes away the broadness of the basis .
  Mr. McNIECE . Not sufficiently to permit me to make an answer . I
can make a qualified answer .
  Mr. HAYS . All right .
  Mr. McNIECE . I certainly don't object to, and I would rather criti-
cize any governmental department that did not attempt to plan its own
activities with reasonable care, but for any governmental department
or group of governmental departments to attempt to plan the pro-
cedure of national affairs, including production, distribution, finance,
cedure
not concerned directly with the Government's overriding control of
finance, I certainly disapprove of .
  The CHAIRMAN . That is, you are opposed to a planned economy by
the Government.
  Mr. McNIECE. I disapprove of a planned economy, definitely . But
that has no relations to the planning of an individual department's
activities . They are very poorly managed if they don't do that .
  Mr. HAYS . Now, then, to go to a more narrow base yet and a more
specific example, what about the planning of an agency in the Gov-
ernment-I can't think of the exact title-that loans various political
subdivisions money to draw up plans for improvements, such as hos-
pitals, highways, schools, courthouses, rehabilitation of existing facili-
                     TAX-EXEMPT' FOUNDATIONS                        623
ties and so on, in case there ever comes a time when there needs to be
a program of public works . Do you disapprove of that?
   The CHAIRMAN . May I interject? Really I feel it is outside of
the purview of a member of the staff to give his opinions on such prob-
lems. He is presenting certain facts for the evaluation of the com-
mittee.
   Mr. HAYS . Mr. Chairman, lie is presenting a political document .
If you are going to allow the staff to come in and present political
views purporting to be those of this committee, then I think the
committee has a right to explore them .
   The CHAIRMAN . If he is interested in giving his opinion on govern-
mental problems of all kinds	
   Mr. HAYS . This is an indictment of planning.
   The CHAIRMAN . He is at liberty to do so as far as I am concerned .
   Mr. HAYS . I think the question is very relevant and has direct bear-
ing on this report. I will admit the report does not have much bear-
ing on H. R . 217, but since it has been presented here, we might as
well question about the report . If you want to throw the whole thing
out and say it has no relationship to this investigation and say let us
forget it, I am willing to do that . But if we are going to put it in
the record, I think it ought to be explored a bit .
   The CHAIRMAN . Yes . Anything connected with the report itself,
I think should be, but I referred only to asking him his personal views
on economic and governmental matters .
   Mr. HAYS . Maybe I can get the whole thing over in one question.
   The CHAIRMAN . Good.
   Mr. HAYS . Would you answer this question, Mr. McNiece ? If you
will give me-maybe you won't give the answer I think you are going
to because I think I want it. It is really immaterial to me . It occurs
to me this : You are against planning that disagrees with what you
think is good for the country, and you are for planning that agrees
with what you think is all right. Could you answer that question
"yes"?
   Mr. McNIRCE. I don't know what you comprehend in that part of
your question that suggests my favorable attitude toward planning
that I think is good for the country . The question is rather broad and
general .
   Mr. HAYS . You don't want to say that you are against planning
altogether, do you?
   Mr. McNIECE . It depends on the field in which it operates . If you
can specifically identify the field, then perhaps I can give you a "Yes"
or "No" answer.
 . Mr. HAYS . Let me put it this way. You approve of planning in the
fields that you approve of and disapprove of it in the fields in which
you don't think the Government ought to plan, is that right?
   Mr. MCNIECE. I have no comment . That question again does not
permit of a "Yes" or "No" answer that has any . real significance from
my particular standpoint.
   Mr. HAYS . Then perhaps you could just tell us what fields that you
do approve the Government planning in, and what ones you disap-
prove, because after all, this is more or less your opinion, isn't it?
   Mr. McNIECE . One man's opinion is another man's fact .
   Mr. KocH. May I ask a question here?
   Mr. HAYS . Sure .
624                   TAX-EXEMPT FOUNDATIONS

   Mr. Kocx . Isn't it true that the purpose of this report was not to ,
 state your political view or our political view, but rather to show that
certain matters or certain things have occurred in our political life, .
 and you point out that the foundations urged that that be done? Let
us assume, so that there will be no getting into argument, that what
they recommended was all right. Let us not get into that argument .
But say that they sparkplugged it and that the people in the Govern-
ment who, like everybody else, likes to go to experts to ask what do .
you think about what planning should be done, have gone to those
5 or 6 associations and the question arises, Who are they to call the
signals when neither you nor I elect any of them? There is that ques-
tion. If they advise political activity or political programs, there is a
serious question on the matter of good government . Who is this fourth
power? We have the congressional power, the legislature, the judi-
cial, and the executive . But might there be a fourth power here that
is not responsible to the people and not elected by the people? Is not
that the point that really you wish to mention, and not your political
view?
   Mr. MCNIECE . That is right .
   Mr. HAYS . Yes, but you have just come as close to proving that
po~int as it would be to sit here and say that because I attended Duke
University for one semester that university is responsible for anything
or everything I say in these hearings . That is just how close you have
come in this whole case to proving any connection whatsoever between
the foundations and what has happened in this country in the last
20 years.
   As a matter of fact, some of our own witnesses, one of them yes-
terday very plainly said that he didn't know whether the foundations
had caused it or the foundations had been pushed along by the irre-
sistible force of the times, or words to that effect . I put it in a more
simple analogy and said, "In other words, Doctor, it is a question of
which came first, the chicken or the egg, and you don't know ." And
he said he didn't.
   Mr. MCNIECE. There is one thing to say about that. Effect does not
precede its cause.
   Mr. HAYS . What do you mean to imply by that?
   Mr. MCNIECE. I mean to imply that we have documentation which
shows the gradual development of this movement in this country . I
might say that in no case in even the. slightest detail were we associated
in any way, nor did we know the nature of the documented testimony
that was produced by Mr. Sargent .
   Mr . HAYS . If you are going to bring in Mr. Sargent, let me say as
far as Mr . Sargent is concerned, I will submit his testimony to any
impartial jury, and if you can find one valid thing in it that anywhere
remotely resembles the truth, I would like you to point it out to me .
I will go on to say this to you . I have made an analysis of Mr. Sar-
gent's testimony and over 600 times he mentioned names of people or
organizations which he implied were wrong, and he pretty well cov-
ered the waterfront .
   Mr. MCNIECE. I heard the testimony .
   Mr. HAYS. If you don't want to take my word for it, I suggest you
read the editorial in the San Francisco Chronicle, a very, I might say,
conservative Republican newspaper, which says in effect that if this
committeee had taken the trouble to find out as much about Mr . Sar-
                       TAX-EXEMPT FOUNDATIONS                          625
;gent as Californians already knew, and about how his testimony that
he gave here had been discredited in California, they would not have
wasted 3 days listening to him .
   Mr. McNiECE. That was an editorial comment, wasn't it?
   Mr. HAYS . That is right .
   Mr. MCNIECE. That may answer its own question .
   Mr. HAYS. It answered it good enough for me .
   Mr. McNIECE. I have seen some editorials, one in particular from
California, that was quite the contrary .
   Mr. HAYS . I don't know what paper it is from, but I will put the
=San Francisco Chronicle as being a pretty reputable paper .
   The CHAIRMAN. I don't think this is the time to either characterize
or evaluate Mr. Sargent's testimony .
   Mr. HAYS . I will promise that anything I have said today, Mr .
Chairman, will be mild to the evaluation I will give in the minority
report . That will be a printed document .
   The CHAIRMAN . Do you have any questions?
   Mr. KOCH. No, Mr. Chairman .
   Mr. WoRMsER. No, Mr . Chairman .
   Mr. HAYS. I have a lot more questions, but frankly as far as I am
concerned, I don't think the thing has much relation to what we are
investigating, and I am willing to go ahead on to the next witness .
   The CHAIRMAN . It is almost 12 o'clock. We will stand in recess
until 2 : 30 in this same room .
   (Thereupon at 11 : 45 a. m., a recess was taken until 2 : 30 p. m ., the
same day .)
                                 AFTER RECESS
   Mr. GOODWIN (presiding) . The hour to which the committee stands
recessed has arrived, and the committee will be in order . Mr.
Wormser .
   Mr. WORMSER . I think Mr. McNiece finished reading ~ the supple-
mental report. He has this report, Economics and the Public Inter-
est, parts of which are narrative and parts of which are statistical .
Do you think it necessary to read any part of that, Mr. McNiece?
   Mr. McNIECE . I am perfectly willing to abide by the wishes of the
committee . Certainly it would be in my judgment useless, as well
as boring and time consuming, to attempt to read all the statistics
that are in these 20 tables or so that I have got in here .
   I might state that the objective of the re ort is to follow up the
recommendations, as they were enumerate this morning, of the
National Planning Board, the National Resources Committee, and
the National Resources Planning Board, which lasted through about
a decade of time, from about 1933 to 1943, approximately . That was
all covered this morning. There were specific titles and captions
which I mentioned and followed by reading excerpts under each of
them at some length . The statistics in this economic report, which I
do not believe it is feasible in a hearing of this type to repeat, merely
bear out in caption and in the trend of expenditure-if I may so state
it-over the period of years, they support or agree with to a very, very
great extent the propositions and suggestions that were brought out
in this morning's manuscript which I read .
	


626                   TAX-EXEMPT FOUNDATIONS

   Mr . WoRMSER. What are the sources of those statistics, Mr.
McNiece ?
   Mr. McNIECE. The sources of the statistics, I think I can say con-
clusively are governmental reports of one type or another . Most of
them are summarized in the large statistical annual put out by the
Government Printing Office, in which statistics are assembled from the
various executive departments, such as the Census Bureau, the Depart-
ment . of Labor, Department of Commerce, Treasury Department .
They affect virtually all phases of our operations . I think we have,
if you are interested in seeing it, a copy of the manual in the office
from which these statistics have been taken .
   Mr. GOODWIN . It is your belief that they should be made a part of
the record, is that right?
   Mr . McNIECE. I think they should be made a part of the record .
   Mr. GOODwIN . In the absence of objection 	
   Mr. WORMSER . I think it was stated this morning they would be
made a part of the record .
   Mr . HAYS . I don't know whether they were or not, to tell you the
truth.
   Mr. GOODWIN . In the absence of an objection, the reading of the
statistics will be waived and it will be understood that they will
become a part of the record .
   Mr. WORMSER . This entire document, Mr . Goodwin, please .
   Mr. GOODWIN . That refers to the document .
   Mr. KocH . The only remainin&r question then is this. This morn-
ing Mr . McNiece thought it might be helpful for him to read only a
part of the script in that document, and I think he is now raising the
question whether even that is necessary . I think he would like to
have an expression from you two gentlemen whether you feel that
would be helpful or not.
   Mr. GOODWIN . Let us get an expression of the opinion of the wit-
ness whether he feels it would be helpful to have it read or made a
part of the record without reading .
   Mr. McNIECE . There are some things here which I thought this
morning it might be well to include perhaps in the reading of the rec-
ord, though I don't want to do it at any waste of time on the part of
any of us.
   Mr. HAYS . If this is going to be inserted in the record en bloc, there
is no point as I see it of reading sections into the record twice, unless
you want to emphasize them, and you can do that by just underscoring
them.
  Mr. McNIECE. I have no desire to get it into the record twice . It
is merely a matter of emphasis that might promote better examination
or cross-examination . I have no desire to prolong the reading of this
at all . Part of it, as I have said previously, definitely does not lend
itself to a narrative form .
  Mr. GOODWIN . Then in the absence of objection, the reading of the
material to which the witness is now referring will be waived with the
understanding it is made a part of the record . Is there objection?
  Mr. HAYS . No.
  Mr. GoonwIN. The Chair hears none .
   (The statement referred to follows :)
                         TAX-EXEMPT FOUNDATIONS                                627
                                     PREFACE
   Over the past 50 years sweeping changes have occurred in this country in the
functions and activities of the Federal Government . Some of these changes are
to be expected as a result of increasing population, industrial, and commercial
growth and our greater participation in world affairs.
   By no means have all of the changes resulted from the foregoing causes . On
the contrary other deviations have occurred which are totally unrelated to chang-
ing requirements of Government and which in fact have not been considered as
functions of Government under our Constitution and its enumerated powers .
   Among these is the increasing participation of the Federal Government in edu-
cation, slum clearance, nutrition and health, power generation, subsidization of
agriculture, scientific research, wage control, mortgage insurance, and other activ-
ities . Most if not all of these were politically conceived and depression born .
They represent new ventures in our Federal Government's activities .
   Most, if not all of these newer activities of Government are recommended in
one place or another in publications of socially minded committees of Govern-
ment and of reports by various educational groups, social science and others,
supported by foundation grants .
   They are so foreign to the conception of our Government of enumerated pow-
ers as we have known it under the Constitution, that the departure has been
 referred to as a "revolution" by one of its proponents who will be quoted later .
While the groundwork for these changes has been underway for a long time,
 the real acceleration of progress toward these objectives began about 20 years
 ago. Since then, the movement has grown apace with little or no sign of slow-
ing down .
   The word "revolution" is commonly associated with a physical conflict or
development of some sort accompanied by publicity that marks its progress one
way or another . Not all revolutions are accomplished in this manner .
   The lower the social stratum in which a revolution originates, the noisier
 it is likely to be . On the contrary a revolution planned in higher circles by some
segment of people at policymaking levels may be very far advanced toward
 successful accomplishment before the general public is aware of it .
   A plan may be formulated with some objective in mind, agreement reached,
organization effected, and action begun initially with a minimum of publicity .
 Such a program has been in progress in this country for years . Originally, the
thought of such a revolutionary change was probably confined to very few peo-
ple-the organizers of the movement . With the passage of time and under the
influence of the growing emphasis on the so-called social sciences, the Federal
Government began to push forward into areas of activity formerly occupied by
 State and local government and private enterprise .
   As an indication of this trend, a statement may be quoted from regional
planning, a report issued by the National Resources Committee in June 1938 .
   "More than 70 Federal agencies have found regional organization necessary
and there are over 108 different ways in which the country has been organized
for the efficient administration of Federal services."
   Arrangements of this type facilitate the gradual expansion of governmental
action and control through executive directives as distinguished from specific
legislative authorization .
   Much of this planning was done with the aid of social scientists in Govern-
ment employ and of outside individuals or groups with similar ideas and ob-
jectives . Many of these were directly or indirectly connected with educational
organizations who have and still are receiving very substantial aid from the
large foundations.
   Some of these activities were undertaken under the guise of temporary aid
during depression but they have been continued on an increasing scale as will
be shown in the ensuing report .
   Evidence indicates that a relatively large percentage of foundation giving
was originally in the form of grants to endowment funds of educational insti-
tutions . There has been a sizable shift in later years from grants for endow-
ment to grants for specific purposes or objectives but still through educational
channels.
   As far as the economic influence on Government is concerned, the results
were manifested first through the planning agencies . The recommendations
made by these groups finally evolved into more or less routine matters in which
Congress is now asked to approve each year a series of appropriations to cover
the cost . These various classes of expenditures are listed and discussed in the
628                      TAX-EXEMPT FOUNDATIONS

 ensuing report . Charts are included at the end . In a number of cases, trends
 are shown for the greater part of this century .
   It should be understood that not everyone who has assisted in furthering these
 objectives is guilty of conscious participation in questionable action . Those who
 have studied these developments know that many well-meaning people have
 been drawn into the activities without knowledge of understanding of the final
 objectives . A well-organized central core of administrators with a large num-
ber of uninformed followers is standard practice in such organized effort .
                     ECONOMICS AND THE PUBLIC INTEREST

                                  INTRODUCTION
  This report is made for the purpose of showing the nature and increasing costs
of governmental participation in economic and welfare activities of the Nation .
These were formerly considered as foreign to the responsibilities, particularly
of the Federal Government .
  The nature of these recent activities is briefly described and data shown in
tables 1 to 8 . The results are shown annually in these tables since 1948 in order
to indicate the generally increasing trends in recent years .
  Tables 9 to 16 and charts 1 to 12, together with the accompanying data sheets
from which the charts are constructed, afford some measure, both volumetric
and financial, of the effect these activities have had on national debt, taxes, and
personal income of the people .
  Finally, the conclusion is drawn that the financial integrity of the Nation
will be jeopardized by a continuation of the policies which may be ineffective
in the end as far as their stated objectives are concerned .
                                 INDEX OF TABLES
Table 1 . New permanent housing units started in nonfarm areas .
Table 2 . Federal contracts awards for new construction.
Table 3 . Federal food programs .
Table 4. Federal expenditures for promotion of public health .
Table 5. Federal expenditures for social security and health .
Table 6. Federal expenditures for vocational education .
Table 7. Federal educational expenditures.
Table 8 . Federal funds allotted for education for school year 1951 .
Table 9. Government civilian employees per 1,000 United States population .
Table 10 . Government civilian employees versus other civilian employees .
Table 11. Departments and agencies in the executive branch .
Table 12 . Ordinary Federal receipts and expenditures .
Table 13. Comparative increases in taxes and population-excluding social se-
  curity taxes .
Table 14. National income versus total Federal, State and local taxes .
Table 15 . National income and national debt per family .
Table 16 . Comparative debt and income per family .
Table 17 . Gross national product and national debt .
Table 18. Gross national product, Federal debt and disposable personal income .
Table 19 . Percentage of gross national product-Personal versus governmental
  purchases.
Table 20. Price decline 8 years after war .
                                   REVOLUTION
  In the 20 years between 1933 and 1953, the politicians, college professors, and
lawyers, with little help from business, wrought a revolution in the economic
policies of the United States . They repudiated laissez-faire . They saw the
simple fact that if capitalism were to survive, Government must take some
responsibility for developing the Nation's resources, putting a floor under spend-
ing, achieving a more equitable distribution of income and protecting the weak
against the strong. The price of continuing the free society was to be limited
intervention by Government . [Italics added.]
  The foregoing statement is the opening paragraph in an article by a Harvard
professor (Seymour E . Harris, professor of economics, Harvard University in
the Progressive, December 1953) as printed in a recent issue of a magazine and
as included in the appendix of the Congressional Record of February 15, 1954 .
                         TAX-EXEMPT FOUNDATIONS                                 629
It is a very broad and emphatic statement . Numerically, the "politicans, college
professors, and lawyers" comprise a very minute percentage of the total popula-
tion of the country-a minute percentage of the people who, under the Constitu-
tion are responsible for effecting "revolutionary" changes in governmental prac-
tice . Certainly these changes as enumerated have never been submitted to nor
ratified as such by the people or their duly elected representatives .
   Rvolution accomplished : How then could a departure so drastic as to be
called a "revolution" be accomplished?
   Normally a revolution is not accomplished without a considerable measure of
publicity attained through fuss and fireworks that attend such efforts . In the
absence of such developments, it could only be achieved through carefully coor-
dinated effort by a relatively small group centered at policy making levels .
   In connection with this latter throught, it is interesting to compare the state-
ment quoted in the first paragraph with the five points for Federal action
enumerated shortly hereafter .
   Evidence of such changes in Federal policy, their direction and effect will
be submitted later, but it will be first in order to mention that the Federal Gov-
ernment is a government of enumerated powers . Certainly the powers enum-
erate do not mention the "development of the Nation's resources, putting a floor
under spending, achieving a more equitable distribution of income and pro-
tecting the weak against the strong ." Neither has the Government itself prior
to the period mentioned in the opening paragraph, assumed such rights and
responsibilities .
   These and other changes which have been effected are revolutionary . They
have been accomplished not openly but indirectly and without the full knowl-
edge and understanding of the people most affected .
   Subversion : In fact, the methods used suggest a form of subversion . Sub-
version may be defined as the act of changing or overthrowing such things as
the form or purpose of government, religion, or morality by concealed or insidi-
ous methods that tend to undermine its supports or weaken its foundations .
   Public interest : It may be said by the proponents of such procedure that
It is warranted by the "public interest ." Public interest is difficult to define but
for the purpose of this study, we can probably do no better than to refer to
the preamble of the Constitution of the United States wherein it is stated that
the Constitution is established-
   "in order to form a more perfect union, establish justice, insure domestic
tranquility, provide for the common defense, promote the general welfare, and
secure the blessings of liberty to ourselves and our posterity ."
   The last three words in the foregoing quotation impose a responsibility for
the future upon us of the present . A risk for the future is implicit in some
of the measures advanced for the advantage of the present and such measures
may be said to be subversive, un-American and contrary to the public interest .
To subvert or circumvent the Constitution or to change authorized procedure
under its provisions by other than the methods established by the Constitution
itself may with certainty be called un-American. The Constitution is not a
static or dead document. It has been amended with reasonable frequency and
can always be modified if a real need for change develops .
   Methods of procedure : Mr . A . A. $erle, Jr ., formerly Assistant Secretary
of State and one of the active proponents of increased governmental participa-
tion in economic life made the suggestion that the Federal Government supply
cash or credit for the following purposes after World War II (The New Phi-
losophy of Public Debt by Harold G . Moulton, the Brookings Institution, Wash-
ington, D. C .) .
        (1) An urban reconstruction program .
        (2) A program of public works along conventional lines .
        (3) A program of rehousing on a very large scale .
        (4) A program of nutrition for about 40 percent of our population .
        (5) A program of public health .
   Progress toward objectives : It will be informative to record a few measures
of progress toward the objectives that focus so sharply on paternalism and
socialism in government .
   This Nation has attained a standard of living that is higher and more widely
 distributed than that reached by any other nation in history . It has been
accomplished in a very short span of years as compared with the lives of other
nations and it is still increasing. Impatience and envy unrestrained may con-
ceivably wreck the future for the sake of the present . The possibilities of this
are indicated in factual evidence of today . The public interest will not be
served thereby.
630                          TAX-EXEMPT FOUNDATIONS

   (1) An urban reconstruction program : (e) A program of rehousing on a
very elaborate scale : It is difficult to differentiate clearly between items 1 and
3 and such data as are available will pertain largely to both .
TABLE 1 . New   permanent housing units started in nonfarm areas publicly owned'
                                                                         Number
                              Period
                                                                 Total       Average per
                                                                                year

1935-39	                                                            87,000          17,400
1940-44	                                                           224,800          44,960
1945-49	                                                            67,000          13,400
1950-52	                                                           173,500          57,833
      Total	                                                       532,300          30,000

  Data from Supplement to Economic Indicators .
  Data are not available on the total value involved in this increasing scale of
public construction . Neither do the available data indicate the division of cost
between local, State, and Federal Governments .
  On February 27, 1954, the Housing and Home Finance Agency reported that
there were 154 slum clearance projects underway in January 1954 compared
with 99 at the beginning of 1953 . This is an increase of 56 percent in number
during the year .'
  These tabular statements should be sufficient to indicate planned action in
conformity with the suggestions involved in items 1 and 3. There are no data
available that show any such Federal activities prior to 1935 .
   (2) A program of public works along conventional lines : The following table
shows the value of Federal contracts awarded for new construction . It is not
possible from the information available to determine the real proportion of cost
furnished by the Federal Government . The fact that the work is covered by
Federal contracts suggests that Federal participation is an important percentage
of the total which also includes whatever proportion is furnished by owners,
whoever they may be .
             TABLE 2.-Federal      contract awards for new construction'
1935	$1,478,073,000 1949	$2,174,203,000
1940	2,316,467,000 1950	2, 805, 214, 000
1945	1,092,181,000 1951	4, 201, 939, 000
1948	1, 906, 466, 000 1952	4, 420, 908, 000
  Regardless of the degree of Federal participation in this work, the rising trend,
even in years of high economic output, is obvious .
  A less pronounced trend but a large volume of expenditure is shown in the
following data .
                        Federal expenditures for public works'
1952 (actual)	                                                        $3,116,000,000
1953 (estimate)	                                                       3,419,000,000
  1 Statistical Abstract of the United States, 1953 .
  These data are sufficient to indicate the possibility, if not probability, of spend-
ing for public works on a grandiose scale . The fact that such spending would
be accelerated when economic activity and governmental income are low would
mean drastic increases in public debt which is now at extreme and dangerous
levels. It is significant that the debt has not been reduced but is increasing even
at the continuing high level of tax collections .
  It is also well to remember that the cost of public works does not cease with
the completion of the works . On the contrary, increased and continuing costs
are sustained for operation and maintenance of the additional facilities . This
is not to condemn or disapprove of reasonable and required expenditures to meet
the normally growing needs of our increasing population .
 i New York Times, Feb . 28, 1954 .
                         TAX-EXEMPT FOUNDATIONS                               631
   (4) A program of nutrition : The suggestion for a Federal program of nutri-
tion implied that about 40 percent of our population should be the beneficiaries
of such a plan . It is scarcely conceivable that any such proportion of our people
are or have been undernourished .
   The Federal Government since 1936 has been participating in food distribution
to institutions and welfare cases as well as to school-lunch programs . From
1936 to 1952, inclusive, the cost of these programs has been as follows
                        TABLE 3 .-Federal food program'
Institutional and welfare cases (direct distribution) 	              $306,090,000
School-lunch programs (direct distribution)	                          290, 330, 000
School-lunch programs (indemnity plan) 	                              498,909,000
         Total	                                                  1, 095, 329, 000
  1 Statistical Abstract of the United States, 1953 .
   (5) A program of public health : It was announced by the United States Pub-
lic Health Service that in October 1952, the one-thousandth hospital had been
completed under the Hospital and Construction Act. Since 1946, the Federal
Government has contributed $500 million to this program . The Health Service
announced that it had 800 additional projects underway or planned as of 1952 .
State and local governments have contributed about twice as much toward this
work as the Federal Government.
  The record of Federal budgetary expenditures for promotion of public health
shows the following expenditures for the years indicated .
                                     TABLE 4
1945	 $186,000,000 1950	 242,000,000
1946	 173,000,000 1951	 304,000,000
1947	 146, 000, 000 1952	 328,000,000
1948	 139,000,000
1949	 1.71,000,000                                Total	1, 689, 000,000
  At intervals, agitation is repeatedly renewed on the subject of publicly financed
medical care .
  Benefits under the various forms of social insurance and public assistance pro-
grams are increasing rapidly from year to year . Total payments made by Fed-
eral and State Governments are indicated herewith .
TABLE 5 .Federal expenditures for social security and health' (excluding ex-
      penditures from promotion of public health as previously shown)
1945	$802,000,000 1949	1,672,000,000
1946	821,000,000 1950                                                1,9()0,000,000
1947- .	1,117, 000, 000 1951	1,992, 000, 000
1948	1, 667, 000, 000 1952	2,163,000,000
  1 Statistical Abstract of the United States, 1963 (p . 343) .
  Education : A program of Federal contributions to education was not included
in the five classifications just previously discussed . Such participation has oc-
curred and in some groups in rapidly increasing amounts .
   Federal aid in vocational education includes expenditures in agricultural trade
and industrial pursuits and in home economics and to some extent has been
granted over a period of 30 years or more . The following totals apply to the
years indicated
            TABLE 6. Federal expenditures for vocational education'
1936	 $9, 749, 000 1948	 26,200,000
1940	 20,004,000 1950	 26,623,000
1944	 19,                                        1951	 26,685,000
  1 Statistical Abstract of the United States . 1953 (p . 135) .
  Two other classes of educational expenditures are made by the Federal Govern-
ment, one the large payments for the education of veterans which is now decreas-
ing and the other much small but increasing expenditures for general education
and research. These data are shown herewith
	

632                                  TAX-EXEMPT FOUNDATIONS

                            TABLE 7.Federal educational expenditures'
                                           [In millions]

                                                                      Veterans'      General         Total
                                                                      education      purpose

1945	                                                               --------------                        $158
1946	                                                                        $351           85             436
1947	                                                                       2,122           66           2.188
1948	                                                                       2,506           65           2,571
1949	                                                                       2,703           75           2,778
1950	                                                                       2,596          123           2,719
1951	                                                                       1,943          115           2,058
1952	                                                                       1,326          1'4           1,497
    Total	                                                                 13,547          858   I      14,405.

  J   Statistical Abstract of the United States, 1953 (p . 343) .
   Under the limitations of the law, the cost of veterans' education should con-
tinue to decline rapidly. If another war should ensue and the GI bill of rights
be taken as a precedent, the cost of veterans' education would become a tre-
mendous economic burden on the country . The former bill was passed without
any consideration of the capacity of the educational system to absorb the greatly
increased number of students . Chaotic conditions due to crowding existed in .
many educational institutions .
   Still another form of tabulation of educational funds made available by the
Federal Government is of interest . It pertains to funds allotted for 1951 and
includes those made available to agricultural experiment stations and Coopera-
tive Agricultural Extensions Service .
        TABLE 8.Federal funds allotted for education for school year 1951'
Administered by
    Federal Security Agency	                                                                $171,720,000
    Department of Agriculture 	                                                              161, 658,000
    Veterans' Administration 	                                                            2, 120, 216, 000
    Other	                                                                                    97,049,000
         Total	                                                         2,550,643,000
   1 Statistical Abstract of the United States, 1953 (p . 137) .
    The trend of Federal educational expenditures, aside from those made for
 veterans' education is unquestionably upward . That further increases are urged, .
 especially by those in the educational field, is illustrated by the following extract
 from the discussion by Alvin H . Hansen, Professor of Political Economy, Harvard
 University, before the meeting of the joint committee of the Senate and House
 on the President's economic report . This meeting was held on February 18, 1954 .
The quotation follows
    "There is no recognition of the fact, well known to everyone who has studied
 State and local finance, that the poorer States which contain nearly half of our
children fall far short of decent educational standards ; yet they spend more on
 education in relation to total income of their citizens than do the wealthier
 States . For this situation there is no solution except Federal Aid ."
   General comments : The foregoing evidence and discussion have been pre-
sented in an effort to show why the statement of revolution accomplished seems
 to be supported by the facts . That a continuation of the policies is probable
 seems apparent from the statistical trends as presented .
    Quite regardless of the real propriety of this great and revolutionary departure
from our former constitutional principles of government, a serious question
must be raised about its effect on the future life of the Nation . Most of these
new Federal objectives of expenditure have hitherto been accepted as lying with-
in the province of the State and local governments . It is of course absurd to
assume that aside from the printing press, the Federal Government has access
to any greater supply of funds than exists within the States themselves . And
yet greater funds are necessary when the Federal Government embarks upon
all of these security and welfare activities . Each new or increased channel of
                          TAX-EXEMPT FOUNDATIONS                                                         633
expenditure calls for additional bureaucratic control without any diminution of
similar control by State and local governments. In fact, as will be shown the
very conditions of distribution imposed by the Federal Government are appar-
ently causing some similar increases in State and local governmental costs .
  The tremendously high level of taxes and debt and the pressure for still higher
debt limits and greater expenditures should convince any thoughtful and under-
standing people that danger is in the offing, that the public interest is not being
well served, but on the contrary is being placed in jeopardy . Our obligation to
posterity is apparently submerged in our sea of current self-interest .
   The following discussion, with the aid of data and charts will show in both
physical and financial terms the increasing burdens imposed on the populace by
these governmental policies originating during the past twenty years .
  Civilian employees in Government : The ensuing table shows the drastic
increases in governmental civilian empke„yes that have occurred since 1930 . The
peak was encountered in 1945 from which time there was a gradual reduction
to 1948 . Note the level of stability attained in 1948, 1949, and 1950 at 280 percent
of the 1930 figure .
   TABLE 9.-Government civilian employeeper 1,000 United States population

                                                                               Percentage of 1929
                          Federal     State and        Total
                                         local
                                                                    Federal          State and        Total
                                                                                        local

1930	                          5 .0        21,3            26 .3              102            102              102
1m	                            8.2         24.3            32.5               168            117              127
1945	                         25 .5        22.4            46.8               520            108              182
1948	                         14 .1        25 .8           39 .9              288            124              155
1949-----	                    14 .1        26.5            40 .6              288            127              158
1950	                         13 .8        27.1            40 .9              282            130              159
1951	                         16 .0        26.7            42 .7              327            128              165
1952	                         16 .6        26 .9           43 .5              339            129              169
1953	                         16.2         27.2            43 .4              331            131              169


  Note that Federal civilian employees are now over three times as numerous
in proportion to the total population as they were in 1929 while State and
local employees are about one-third greater . For government as a whole, the
civilian employees per capita of total population have increased nearly 70 per-
cent over those of 1929 .
  These trends are shown graphically on charts 1 and 2 and the supporting
data as they exist for the period from 1900 to 1953 on the accompanying data
sheet 1.
  Because governmental employees have no part in the production of eco-
nomic goods and on the contrary must be supported by those who do, it will
be informative to show the comparison between governmental civilian employees
and the nongovernmental labor force . This comparison is shown in table 10
herewith
  TABLE   10 .-Government civilian employees versus other civilian employees

                                                                                Government civilian em-
                                                                                  ployees per 100 other em-
                                           Total gov-        Other than           ployees
                                            ernment         government
                                                                                    Actual         Percent of
                                                                                                      1929

                                            Millions           Millions
1930	                                              3 .15            46 .1                6 .7                 100
1940	                                              4.19             51 .4                8 .2                 122
1945	                                              5 .97            47 .9               12 .5                 187
1950	                                              5.99             .57 . 1             10.5                  157
1951	                                              6 .37            56 .5               11 .3                 169
1952	                                              6 .63            56 .4               11 .8                 176
1953	                                              6 .67            56 .7               11 .8                 176
634                         TAX-EXEMPT FOUNDATIONS

   These data show that as of 1953 there were virtually 12 Government employees
 for every 100 other workers, excluding all military forces . The increase since
 1930 has been 76 percent . From the economic standpoint a parasitic load of 12
 employees for every 100 others is quite a burden to bear .
   The military forces of the United States have purposely been omitted from
 consideration in the two foregoing tables . It is of interest to note, however,
 that the inclusion of these military forces for the years 1951 and 1952 respectively
 would show 16 .7 and 18.2 total governmental employees that must be supported
 by each 100 other workers in the United States . Indeed a heavy load .
   Trends for all years from 1929 -to 1953 are shown on chart 3 and in the accom-
 panying data sheet 2 .
   It should be noted that the trends for the years 1948-53 shown on charts 1, 2,
 and 3 are continuations of the upward trends which began in the early 1930's
 and show no indication of change . Here in physical rather, than financial terms
 is evidence of the "revolution" mentioned in the beginning of this report . This
 observation will be confirmed by still another instance of expansion measured
'by the increase in the number of departments and agencies in the executive
 branch of the Federal Government . These data apply only to major groups and
 not to their recognized subdivisions or components .
          TABLE 11 .   Departments and agencies in the executive branch
1926	 31 1930	 37 1952	 69
1927	 31 1940	 47 1953	 69
1928	 31 1950	 61
1929	 31 1951	 69
  The data which follow will measure the increased operations in financial terms .
  Federal receipts and expenditures : The ensuing as well as the foregoing
data are shown upon a per capita basis rather than in totals only as it is to be
expected that total expenditures and taxes will normally rise as the population
increases . An increase on a per capita basis calls for analysis and explanation .
  In the following table a comparison is shown on both a total and a per capita
basis between Federal receipts and expenditures . The term "receipts" naturally
includes income from all forms of taxation including income, capital gains,
excises, customs, etc.
              TABLE    12 . Ordinary   Federal receipts and expenditures
                                                    In billions             Revenue      Expenditures
                                                                              per            per
                                               Revenue      Expenditures     capita         capita

1930	                                             $4 .178         $3.440       $33.90          $27.05
1940	                                   `---       5 .265          9 .183       40.00           69.60
1945	                                             44 .762         98.703       320.50          706.80
1948	                                             42 .211         33 .791      288.00          231 .00
1949	                                             38 .246         40.057       256.50          268 .20
1950	                                             37 .045         40 .167      245.00          265.00
1951	                                             48 .143         44.633       311 .80         289.00
1952	                                             62 .129         66.145       396.00          421 .00
1953	                                             65 .218         74.607       410.00          466 .50


  These data in per capital trends since 1900 are shown graphically on chart 4.
As in the prior tables, there is no evidence of a declining trend in the actual
data .
  Federal, State, and local taxes : Further light is thrown on tax trends by com-
paring increases in population and taxes since 1930 . This information is given
in table 13 .
                                 TAX-EXEMPT FOUNDATIONS                                                     635
 Taai.E    13.-Comparative increases in taxes and population excluding social
                                  security taxes'
                                                [In millions]

                                                                                 Percentage of 1929
                    Population       Federal        State and
                                      taxes        local taxes                        Federal          State and
                                                                    Population         taxes          local taxes

1930	                      123.1         $3,517        $6,798             101 .2           105.1           105.7
1940	                      131 .8         4,921         7,997             108.5            147.6           124.4
1945	                      139.6         40,989         9,193             115.0          1,228.0           143.0
1948	                      146.6         37,636        13,342             120.7          1,129.0           207.5
1949	                      149.1         35,590        14,790             122.1          1,066.0           230.0
1950	                      151 .1        34,955        15,914             124.4          1,049.0           247.5
1951	                      154.4         45,984        17,554             127.0          1,378.0           273.0
1952	                      157.0         59,535 --------------            129.1          1,785 .0 --------------
1953	                      159.7         62,656 --------------            131 .3         1,878.0 --------------

 I Except portion used for administrative social security costs .

  Maximum activity in the Korean war occurred in 1952 and in World War II
in 1945 . Despite the relatively smaller operation represented by the Korean
war, Federal taxes in 1952 were 45 percent greater than in 1945 . In the mean-
time the Federal debt has not been decreased but is rising and pressure for
higher debt limit has not been removed . The reasons for some of this great
increase have been indicated in the prior tables .
  Annual data including those shown in table 13 for the period from 1916 to
1951 are given in data sheet 3 and are shown graphically on chart 5 . The strik-
ing comparison between the increases of Federal taxation and of State and
local taxation and of both in comparison with the increase of population justi-
fies some comment on the difference . Obviously State and local taxation by
1951 had increased 173 percent since 1929 while population has increased but
54 percent.
  Federal taxation in the same time has increased 1,278 percent or nearly 13
times with no decrease in Federal debt and strong prospects of further increase.
The postwar trend merely continues that established before World War II,
although it is of course higher than it would have been had the war not occurred.
  On the other hand tables 9 and 10 and charts 1, 2 and 3 indicate conclusively
that civilian employees in Government show an increasing trend, particularly in,
the Federal Government since the early thirties . This measure is quite inde-;
pendent of continuing financial increases due to costs introduced by war .
  It seems natural to assume that real "welfare" needs should be most apparent
in the localities where they exist and that State and local taxes would show
a responsive trend . The fact that such "on-the-spot" trends are but a fraction
of the Federal trends may indicate the correctness of the early statement that
the revolution "could only be achieved through carefully coordinated effort
by a relatively small group centered at policy making levels," a group possibly
composed of "politicians, college professors and lawyers" as quoted in the first
paragraph : The comparison also warrants the inference that , local control
of spending and taxes is more effective than remote control which impairs both
knowledge and understanding.
  Taxes as a percentage of national income : It will be of informative value
to show the trend of taxes as a percentage of national income which provides
the fund out of which taxes must be paid . The following table for the years
shown will indicate such percentage and the trend .
636                               TAX-EXEMPT FOUNDATIONS

     TABLE 14.     National income versus total Federal, State, and local taxes in
                                  billions by calendar years

                                                                National                        Taxes as
                                                                 income         Total taxes    percent of
                                                                                                 income

1929	                                                                 $87.4           $10.30          11.8
1930	                                                                  75.0             9.77          13.0
1940	                                                                  81 .3           16.95          20.9
1945	                                                                 182.7            52.52          28.7
1948	                                                                 223.5            58.10          26.0
1949	                                                                 216.3            54.93          25.4
1950	                                                                 250.6            67.75          28.2
1951	                                                                 278.4            84.56          30.4


  Taxes as a percent of national income increased from 11 .8 in 1929 to 30 .4 in
1951 . In other words, the tax bite took 18 .6 cents or 158 percent more out of
the income dollar in 1951 than it did in 1929, a prosperous though shaky year .
This is another illustration of the effect on private income caused by the -ex-
panding activities of Government.
  Government debt and national income : It might be expected that the increas-
ing percentage of national income that is taken in taxes would result in some
reduction of the national debt . It is now 8 1/2 years since the close of World
War II . Taxes have been increasing but so has the debt which is now push-
ing through its legal ceiling. The difficulty in visualizing the relationships
between debt, income, and population when all are changing makes it advis-
able to express income and debt in terms of the population. This has been done
in the following table wherein both are expressed in terms of the family as
a unit because it has more personal significance than a per capita basis .
                   TABLE 15 .   National income and national debt per family
                                                National      Number            National        Federal
                                                 income        families        income per      debt per
                                                (billions)    (millions)          family        family

1929	                                                 $87.4         29.40           $2,972            $576
1930	                                                  75.0         29.90            2,510             542
1940	                                                  81.3         34.95            2,325           1,230
1945	                                                 182.7         37.50            4,870           6,900
1948	                                                 223.5         40.72            5,490           6,200
1949	                                                 216.3         42.11            5,140           6,000
1950	                                                 240.6         43.47            5,530           5,930
1951	                                                 278.4         44.56            6,250           5,750
1952	                                                 291.6         45.46            6,415           5,700
1953 1	                                               306.0         47.50            6,440           5,600

 1   Estimated .

  National income per family increased 250 percent in current dollars while
the Federal debt per family increased 855 percent .
  The foregoing data in decennial terms from 1900 to 1930 and in annual terms
from 1929 to 1953 are shown on data sheet 6 and income and debt per family
on chart 7 .
  The amount of debt overhanging a nation has a tremendous influence on that
nation's solvency and therefore its stability under impact caused either by eco-
nomic depression or additional forced expenditures to relieve depression or to
prosecute another war . It has been stated many times that we as a Nation were
in a vulnerable debt or credit condition when the collapse began in 1929 . It will
therefore be interesting to compare the conditions of 1929 with those of the
present and of the time intervening .
                                TAX-EXEMPT FOUNDATIONS                                     637
  Again, the comparisons will be upon a per-family basis and will show the
changes in total private debt including corporate debt and total public debt
compared with national income per family . The data follow in the next table
                     TABLE   16.-Comparative debt and income per family
                                                         Private      Total public    National
                                                           debt       and private      income
                                                                          debt       per family

1929	                                                       $5,50           $6,500         $2,972
1930	                                                        5,380           6,400          2,510
1940	                                                        3,70            5,460          2,325
1945	                                                        3,755          10,860          4,870
1948	                                                        4,975          10,690          5,490
1949	                                                        4,985          10,600          5,140
1950	                                                        5,670          11,180          5,530
1951	                                                        6,230          11,650          6,250


   While the total debt per family has nearly doubled, national income has some-
what more than kept pace with it . The disturbing factor from the standpoint
of Federal financial stability is the fact that in the interval from 1929 to 1951,
the Federal proportion of the total debt has increased from 15 to 46.5 percent.
    The foregoing data in annual terms from 1929 to 1951 are given in data sheet
7 while the trends of private debt and total debt are shown on chart 8 .
    Gross national product : It is contended by some that internal Federal debt is
of little importance and that no attempt should be made to place a ceiling upon
it . Rather is it argued that an increase in public debt will be a needed stimulant
to keep national production in step with our expanding population . It has also
been argued as a part of this philosophy that the only safeguarding thing to
watch is the ratio between national debt and gross national product and that
the ratio now existing will provide a safe guide in such control . It will be of
value to examine these factors in the light of these claims .
    Gross national product may be defined as the total value of all goods and
services produced in a period of time and usually valued in terms of current
prices . It does not include allowances for capital consumption such as depletion,
depreciation, and certain other adjustments . Efforts have been made to compute
the value of gross national product at intervals over many years past . Gross
national product has been tabulated for each year since 1929 . The comparative
data on gross national product and national debt are shown in table 17 .
        TABLE      17.-Gross national product and national debt values in billions
                                                         Gross na-                     Gross na-
                                                       tional prod-   Federal debt   tional prod-
                                                        uct at cur-                   uct at 1929
                                                        rent prices                     prices I

1929	                                                       $103.8           $16.9          $103 .8
1930	                                                         90 .9           16.2            93 .4
1940	                                                        101 .4           48.5           124.0
1945	                                                        215.2           259.1           205.0
1948	                                                        259.0           252.4           184.6
1949	                                                        258.2           252.8           186.0
1950	                                                        286.8           257.4           205.2
1951	                                                        329.8           255.3           217.0
1952	                                                        348.0           259.2           223.5
1953	                                                       2366.0           266.1           234.0

 I Consumer's prices.
 2   Estimated .




         49720-54-pt. 1-41
638                      TAX-EXEMPT FOUNDATIONS

  At current prices, gross national product increased 252 percent between 1929
and 1953 but at constant prices the increase was 125 percent . In the same
interval Federal debt increased 1475 percent in current prices . It is this in-
crease in Federal debt which in this recent philosophy is of no practical sig-
nificance. The measure of control under this theory is the ratio between debt
and gross national product .
  Data in the foregoing table are shown from 1900 to date in data sheet 8-
trend values only for 1900 to 1920. This information is shown in chart form
on Chart 9. The dotted line shows what gross national product would have
been at constant prices, in this case at consumers' prices of 1929, a year of high-
level production . The lightly shaded area between the adjusted and unad-
justed values after 1943 shows the inflationary spread due to postwar rising
prices or in other words to the increased cost of living . A still greater area
of inflation must be expected if the dollar is weakened by increasing Federal
eypenditures and debt.
  Ratio of Federal debt to gross national product : Since, as has been previously
mentioned, the ratio between Federal debt and gross national product has been
suggested as an effective measure of control in the prevention of excessive debt,
it will be well to observe the values of this ratio for a period of time embracing
widely varying conditions in our national economy.
  It will also be informative to show the effect of these policies of great Federal
expenditure and high taxes on citizens' personal income after taxes as it relates
to gross national product . This latter division of income is known as dispos-
able personal income and together with its ratio to gross national product is
shown in the following table
TABLE 18.-Gross national product, Federal debt and disposable personal income
                           [Values in billions of current dollars]

                                                                                            Percent
                                                                             Percent      disposable
                                      National      Federal      Disposable  Federal       personal
                                      product        debt         personal debt, gross     income,
                                                                   income   national         gross
                                                                            product        national
                                                                                           product

1929	                                    $103 .8        $16 .9       $82.5        16 .3         79.4
1930	                                      90 .9         16.2         73.7        17.8          81 .0,
1940	                                     101 .4         48 .5        75.7        47 .8         74.7
1945	                                     215 .2        259 .1       151.1       120.5          70.2
1948	                                     259 .0        252 .4       188.4        97.5          72.7
1949	                                     258 .2        252,8        187.2        97 .9         72 .5
1950	                             .       286 .8        257 .4       205.8        89.8          76.7
1951	                                     329 .8        255 .3       225.0        77.5          68 .2
1952	                                     348 .0        259.2        235.0        74.5          67.5
19531	                                    366 .0        266 .1       250.0        72 .7         68 .3

 I Estimated .
   It is apparent from the data that Federal debt increased from 16 percent
of gross national product in 1929 to 73 percent in 1953 . In the same period
the citizens' share of their own income available for their own purposes de-
clined from 79 to 68 percent of gross national product . This declining per-
centage of gross national product left to the consumer himself will be par-
ticularly noticeable when business volume declines to a more nearly normal
level. This sacrifice has been made without any reduction in the total debt
level. This is due largely to the Federal Government's increasing participation
in what might be termed extracurricular activities based upon the conception
of government defined in the Constitution and previously followed during our
unprecedented rise in economic status .
   The data in table 18 are shown in extended form since 1900 in data sheet 9
and on chart 10 . The chart clearly indicates the tremendous change that has
occurred in this ratio between Federal debt and gross national product . From
1900 to 1916 there was a steady decline in the ratio which averaged only 4 .4
percent for the period. This means that the citizen was realizing a larger and
larger percentage of his earnings for his own needs and desires .
   The effect of debt arising in World War I is apparent in the increased ratio,
but following the peak in 1921 there was a gradual decline to 16.3 percent in
1929 when the upward climb began again. Beginning in 1948, 3 years after the
                         TAX-EXEMPT FOUNDATIONS                                    639
end of World War II and 2 years before the Korean war, the Federal debt again
began to climb .
  The decline in ratio since 1948 is caused entirely by the abnormally high output
of economic goods in terms of both volume and price and not by a decline in the
debt level. This distinction is important . Gross national product is the arith-
metical product of price multiplied by physical volume . Physical volume lately
has been abnormally high because extensive military rearmament has been
underway since World War II, not only for ourselves but for other nations .
  Physical volume was also increased by certain relief measures and military
aid for other countries and production to meet domestic demand deferred by
World War II . In addition, prices have risen 49 percent since 1945 . The point
to be emphasized is that the physical volume of output for the period since 1940
has been abnormally high due to production for war and its waste and for demand
deferred from wartime . Without another war we cannot hope to maintain this
physical output regardless of what happens to prices and it should not be con-
sidered a function of Government to try it .
  Disposable personal income : The citizen's reduced share of his own personal
income as a percentage of the goods and services he creates is also portrayed
on chart 10 . The declining trend shown in table 18 is clearly defined on the
chart . The trend was even more sharply downward prior to 1943 when wartime
output increased greatly and to be continued, as previously mentioned, by renewed
abnormal production for military purposes and deferred civilian demand .
  The larger the share of production and its value absorbed by Government,
the less the citizen has for his own choice of expenditures . The following data
are taken from the Economic Report of the President for 1954 .
TABLE 19 . Percentage of gross national product, personal versus governmental
                                     purchases

                                                                Personal  Total Gov-
                            Year                              consumption ernment
                                                              expenditure purchases

                                                                Percent       Percent
1930	                                                                78.0            10.1
1947	                                                                71 .0           12 .3
1948	                                                                68.7            14 .1
1949	                                                                69.9            16 .9
1950	                                                                67.9            14 .6
1951---`	                                                            63 . 1          1911
1952	                                                                62.7           22 .3
1953 1	                                                              62.6            22.7

 I   Estimates .
  Here indeed in the declining share of his own output that is allotted to him
is one result of the revolution at work .
  The extraordinary expenditures of Government beginning in the early thirties
are continuing with increasing volume .
  Changes in post war policies : Changes in governmental policy with respect
to expanding participation in and control of our economic activities has been
repeatedly emphasized in this study . Further light on these policies and their
effect may be shown by reference to the long-term history of prices in this
country . On chart 11, the trend of wholesale commodity prices 2 in terms of
1910-14 as 100 percent are charted . Two outstanding features of this long-term
trend are obvious at once
  1. The great price peaks that occur as a result of war .
  2. Even in annual terms there is no such thing as price stability or normal
prices.
  A glance at the chart and consideration of the continuous change in the
price level should suggest the impossibility of price stabilization by the Gov-
ernment . Complete regulation of all things economic within the country and
complete insulation from all influences from without would be essential .
Manifestly this is impossible . The payment of subsidy, as in agriculture, is to
admit the impossibility of price control and to continue subsidy is to encourage
excess production and high governmental expenditure with its evil results .
  2 Data for 1800-1933 from Gold and Prices by Warren and Pearson . Data for 1934 to
date derived from Statistics by U . S . Department of Labor .
640                      TAX-EXEMPT FOUNDATIONS

  Without war the great price peaks with their resultant periods of chaos would
not occur . With war, they may be temporarily distorted or deferred but the
effects of abnormal war conditions cannot be permanently averted . One of the
unavoidable features of war is that the cost must be paid in full in one way or
another. There is no relief from this .
  The great price recessions following the War of 1812, the Civil War, and World
War I are typical of those which have occurred throughout history in other
countries after major wars. It has now been over 8 years since hostilities
ceased in World War II. Within 8 years following the close of hostilities in
the prior wars mentioned, price declines from the peak values were as follows
                    TABLE 20.Price   declines 8 years after war
                                                                             Percent
War of 1812	                                                                      42
Civil War	                                                                        33
World War I	                                                                      35
World War II	                                                                    3 .7
   The depreciation of the dollar in terms of gold in 1934 would prevent an
ultimate decline of prices to the low levels following earlier wars . The closer
price control in effect during World War II retarded the price increase and the
advent of the Korean war has helped to sustain if not to increase the latest price
peak .
   Present policy seems to be to prevent any such decline as we, have sustained
after past wars. Painful and disturbing as they were, these past declines at
least resulted in paying much of the cost of the war in money of approximately
the same value as that which was borrowed for its prosecution, and that except
for the duration of the price peaks, those who depended upon fixed income for
their living expenses were not permanently deprived of much of their pur-
chasing power.
   The new economic and debt policies seem to be designed in an effort to main-
tain productive activity and prices at or near the present plateau . The deluge
of complaints that flow forth when a small decline from the recent peak occurs
seems to indicate an unwillingness and lack of courage to face the responsibili-
ties for our actions. This tendency is not limited to any one class or group in
our citizenry . This softening of character is probably to be expected as a result
of the protective and paternalistic atitude and activities assumed by Govern-
ment in recent years . This may be due largely to an increased emphasis on
 expediency rather than to a lessening of integrity, or it may be due to both . Be
that as it may, the continuation of the new philosophy will mean the retention
of high-debt levels, high governmental expenses, and a high cost of living . It
is important not only to balance the Federal budget but to balance it at a lower
level of cost. There is no margin of safety in the advent of a serious depression
or of a new war .
   This is a most important point from the standpoint of public interest . In the
event of a depression, Government income will drop far more rapidly than the
volume of business declines . Government expenses will not decline but will
increase greatly if they . "remain a significant sustaining factor in the economy"
as stated in the President's Economic Report . This means additional deficit
financing of large magnitude and therefore increasing public debt to unman-
ageable proportions .
   The possibility of this coming to pass is indicated by the National Resources
Planning Board in a pamphlet of its issue under the title, "Full Employment
Security-Building America," The Board asks
   1 . What policies should determine the proportion of required Government
outlay which should be met by taxation and by borrowing?
   2 . What special methods of financing, such as non-interest-bearing notes, might
be used?
   What are the non-interest-bearing notes to which reference is made? This
is merely a euphonious term for paper money, a product of the printing press .
But this paper money is also a debt of the nation . The various denominations
of paper money are non-interest-bearing demand notes, payable by the Govern-
ment to the holders on demand by them . The phraseology on the notes indicates
this and the Supreme Court has so held
   In the case of Bank v. Supervisors (7 Wall ., .31), Chief Justice Chase says :
   "But on the other hand it is equally clear that these notes are obligations of
the United States . Their name imports obligations . Every one of them expresses
upon its face an engagement of the Nation to pay the bearer a certain sum . The
dollar note is an engagement to pay a dollar, and the dollar intended is the
                          TAX-EXEMPT FOUNDATIONS                                    641
coined dollar of the United States, a certain quantity in weight and fineness of
gold or silver, authenticated as such by the stamp of the Government . No other
dollars had before been recognized by the legislation of the National Govern-
ment as lawful money ."
   And in 12 Wallace, 560, Justice Bradley says
   "No one supposes that these Government certificates are never to be paid ;
that the day of specie payments is never to return . And it matters not in what
form they are issues Through whatever changes they pass, their ultimate
destiny is to be paid ."
   In commenting upon these decisions Senator John Sherman said in the Senate
of the United States
   "Thus then, it is settled that this note is not a dollar but a debt due ."
   Aside from the fact that paper money outstanding is strictly speaking a debt
of the Nation, the importance of the non-interest-bearing note question raised by
the National Resources Planning Board lies in the threat of greatly increased
supply of paper money. The effect of such action if taken will be a renewed
stimulation of drastic inflation with all its evil results .
   Based upon the most reliable data available' our margin of national solvency
is rather small . According to these figures the total debt of all forms, public
and private, in the United States was 86 .5 percent of the total wealth, public
and private, in the country in 1944 . Since 1944, prices have risen due to inflation,
generally from 40 to 50 percent .
   In terms of current prices, this raises the value of national wealth . For this
reason and because the total debt of the country, public and private, increased
only about one-third as much as prices, the ratio of debt to wealth as of 194F't
had dropped to 63 percent. While later data are not available, the comparative
increases in prices and debt by the end of 1951 lead to the conclusion that this
ratio of debt to wealth may be somewhat higher at the present time . In 1929,
the debt-wealth ratio was 51 percent . In the interval from 1929 to 1948 the
ratio of Federal debt to national income (from which debt is paid) increased
from 4 to 32 percent . The influence of public debt on the integrity of money
 values is far greater than the influence of private debt can possibly be .
   If income goes down and debt goes up there will be a double adverse leverage
 on the debt situation as measured by the ability to pay . If increased Federal
 expenditures fail to work in stemming the depression, the situation will be loaded
 with inflationary dynamite to the permanent detriment of all of us . The present
high level of prices is quite a springboard from which to take off .
    Industrial production in the United States : Industrial activity is of over-
whelming importance in the economic life of the Nation . On chart 12 is shown
 in graphic form a measure of this activity year by year since 1900 . The smooth
line marked "calculated normal trend" was computed from two long series of
data and is based on the period from 1898 through 1940 . The rising trend is
based on the increase in population from 1900 through 1953 and the annual rise
 in productivity due to increased efficiency from 1898 to 1941 . With this trend as
 a starting point, the data made available monthly by the Cleveland Trust Co .
 were used to compute the total production as shown . The Cleveland Trust Co .
 is in no way responsible for the index values of total production as shown on the
chart . The dotted line shows the corresponding index as published by the Federal
Reserve Board .
   Except for the war years, the agreement between these two series is close .
 The disagreement during the war period is possibly due to the inclusion by the
 Federal Reserve Board of certain labor-hour data in computing physical output-
a method not followed by the Cleveland Trust Co .
   The long-sustained upward progression in our productivity is a testimonial to
 the industry and technical ability of our people . The increasing output in terms
 of both efficiency and volume is the only source of our high and continued rise
 in standard of living . It shows no abatement . The temporary interruptions we
 call depressions are deviations from trends and are to be expected until we rec-
 ognize their causes and if possible counteract them .
    The significant part of the long-term trend at this time is from 1940 to date .
 Since 1940, industrial output has been accelerated far beyond normal peacetime
 requirements by the wasteful consumption and demand created by war . This
 was followed by a resurgence of civilian demand composed of new and deferred
 replacement needs . Before this was satisfied new military preparations were
 resumed and the Korean war began .
  3 See vol . 14 of Studies in Income and Wealth by National Bureau of Economic Research,
1951 .
642                     TAX-EXEMPT FOUNDATIONS

  Only with the stoppage of hostilities in that area has demand begun to slacken
although it is still fortified by continued production of munitions for war, some
of which we still supply to other countries . This sustained abnormal production
is evident on chart 12 . Some of the more optimistic interpretations of these
characteristics are inclined to consider that we have embarked upon a new and
steeper trend to be traced from the beginning of recovery in the thirties to the
present time .
  Obviously, the assumption that this is a normal trend discounts completely
the abnormally low starting point at the bottom of the depression and the
causes for the sustained bulge previously mentioned . It also assumes an increase
in productive efficiency that is not warranted by the facts . For years, the annual
increase due to improving productivity has been approximately 3 percent .
  An increase to 3 .5 percent would mean an overall improvement of 17 percent
in productivity accomplished almost overnight . During the wartime portion of
this period great numbers of unskilled employees were engaged in productive
work and many overtime hours were also utilized . Both of these factors reduce
output per employee hour . Furthermore, the increasing practice of sharing the
work and of limitations of output by labor unions have tended to offset what
would otherwise mean further gains in productivity .
  The reason for the discussion of this point is the emphasis placed on the con-
clusion that the level of output since 1940 is abnormal unless we assume that
war and preparation for war are normal and that the great deferred demand
for housing, clothing, automobiles, and other articles was nonexistent.
  For the Government to attempt to offset a return to normal peacetime levels
of output is to force a return to deficit financing on such a scale as to endanger
seriously the present value of the dollar. Then would follow further increases
in the cost of living and to the extent that it would occur, a further repudiation
of public debt.
  Conclusions : The 20-year record of expanding Federal expenditures for hous-
ing, slum clearance, public works, nutrition, public health, social security, edu-
cation, and agricultural support clearly outlines the course of Federal procedure .
The great and increasing expenditures for the purposes just listed have been
made not in a period of declining output or depression, but simultaneously with
and in further stimulation of the greatest output in our history . This undue
and unwise stimulation, when output was already high, will make a return to
normal conditions additionally hard to bear or to prevent if Federal expenditure
is used for this purpose . The designation of "welfare state" seems to be well
earned under the developments of recent years . Perhaps the philosophy behind
it might be summarized in a remark made by Justice William O . Douglas in a
speech made in Los Angeles in February 1949 .
  The sound direction of the countermovement to communism in the democ-
racies-is the creation of the human welfare state-the great political inven-
tion of the 20th century ."
  Of course, this is not an invention of the 20th century . It was, for example,
practiced by ancient Greece and Rome to their great disadvantage .
  It would seem to be countering communism by surrendering to it, wherein
the state assumes the ascendancy over the individual and the responsibility for
his personal welfare and security. It would seem more courageous and forth-
right for the Government to cease the cultivation of clamoring minorities, for
those minorities to stop demanding special favor in their behalf and for the
Nation as a whole to maintain its integrity by its willingness to pay the cost
of its deeds and misdeeds . Public interest many times requires the suppression
of self-interest and under our Constitution requires the maintenance of the
Nation intact for posterity .
  Early in this study, there were listed the five channels of increased Federal
expenditure which the proponents of the welfare activities of Government sug-
gested . In tables 1 to 8 are listed the growing expenditures of the Government
under these classifications . The viewpoint that these activities are not in
accordance with our constitutional provisions is supported in principle by the
following opinions of the Supreme Court Justices quoted
   "There can be no lawful tax which is not laid for a public purpose ." (Justice
Miller, 20 Wallace 655 ; 1874) ; and again
   "Tax-as used in the Constitution, signifies an exaction for the support of the
Government . The word has never been thought to connote expropriation of
money from one group for the benefit of another ." (Justice Roberts, United
States v. Butler (297 US ; 1936) .)
   It is the departure from these long-standing principles that in a large measure
is the "revolution" which its proponents are announcing and endorsing.
                          TAX-EXEMPT FOUNDATIONS                                  643
   Power travels with money. It is not feasible for the Federal Government
to assume the responsibility for collecting or printing money and for doling
it out to State and local governments and their citizens without imposing the
conditions upon which it will be spent . Thus by indirection Federal power will
grow and insidiously penetrate the areas reserved by the Constitution to the
States and their citizens .
   Former Supreme Court Justice and Secretary of State James F . Byrnes, now
Governor of South Carolina has said
   We are going down the road to statism . Where we will wind up no one can
tell, but if some of the new programs should be adopted, there is danger that
 the individual-whether farmer, worker, manufacturer, lawyer or doctor-will
 soon be an economic slave pulling an oar in the galley of the state .
   The increasing confiscation of income through the power to tax, confirms the
thought expressed by Mr . Byrnes . We are on the road and it runs downhill.
The evidence is strong .
   Abraham Lincoln once expressed his convictions on this relationship in the
following words
   "The maintenance inviolate of the rights of the states, and especially the right
of each state to order and control its own domestic institutions, according to its
own judgment exclusively, is essential to . the balance of powers on which the
 perfection and endurance of our political fabric depend."
   The conviction persists that the increasing welfare activities in which the
Federal Government has been engaged for 20 years can only come to some such
end as previously suggested if they are continued . It also seems certain that
heavy Federal expenditures to counteract a depression will prove ineffective .
Those important industries whose decline leads us into a depression are the ones
whose expansion should take us out of it .
   An increase in road building will not put idle automobile mechanics back to
work, nor will a rash of public building construction or alleviation of mortgage
 terms send unemployed textile workers back to their spindles and looms . Pro-
posed governmental measures will not be successful because they do not strike at
the causes of the trouble they seek to cure . After all, these same things were
tried in the long depression of the thirties without success . Pump priming did
 not pay.
   There is no thought or conclusion to be derived from this study that Govern-
ment has no responsibility in meeting the extraordinary conditions imposed by
crises due to financial or other causes . In the "arsenal of weapons" as men-
tioned in the Economic Report of the President are certain responsibilities and
procedures available for use as the need may develop . Undoubtedly, the most
important of these, implicit even if not specifically mentioned, is the maintenance
of the integrity and value of our money and of our credit system . The ventures
into "revolutionary" and socialistic fields of expenditure and especially in ex-
panding volume to stem a depression will be hazardous to and in conflict with
this major responsibility .
   These two conceptions are completely antagonistic especially because our tax
and debt levels are so high as to leave little or no margin of financial safety . Our
recurring "crises" have been utilized in accelerating the progress of the "revolu-
tion" which we are undergoing. A further depreciation of our currency value
would provide opportunity for additional acceleration in the same direction .
   In The New Philosophy of Public Debt, Mr . Harold G . Moulton, president
of the Brookings Institution . says
   "The preservation of fiscal stability is indispensable to the maintenance of
monetary stability * * * . It is indispensable to the prevention of inflation with
its distorting effects on the price and wage structure, and thus to the mainte-
nance of social and political stability ."
   As someone has said, "What the government gives away, it takes away," and
this is true even if it comes from the printing presses.
   Perhaps this study can be closed in no better manner than to quote from a
statement' by Mr. Dwight D. Eisenhower while president of Columbia University
   "I firmly believe that the army of persons who urge greater and greater cen-
tralization of authority and greater and greater dependence upon the Federal
Treasury are really more dangerous to our form of government than any external
threat that can possibly be arrayed against us ."
  4 Dwirht D. Eisenhower, in letter to Ralph W. Gwinn, dated Columbia University, New
York, June 7, 1949, in opposition to a general Federal-aid-to-education program . (Con.
gressional Record, 81st Cong .,'1st sess ., vol . 95, p . 14, p . A3690 .)
	




    644                               TAX-EXEMPT FOUNDATIONS

                                     INDEX OF CHARTS
    Chart 1. Government civilian employees per 1,000 United States population .
    Chart 2 . Index of Government civilian employees .
    Chart 3. Total civilian employees of Government-Federal, State, and local .
    Chart 4 . Federal receipts and expenditures per capita .
    Chart 5 . Population compared with Federal, State, and local tax receipts .
    Chart 6. Federal, State, and local taxes-cents per dollar of national income .
    Chart 7. United States Federal debt per family versus national income per
      family .
    Chart 8 . Total debt per family versus private debt per family .
    Chart 9. Gross national product versus gross national debt .
    Chart 10 . Gross national debt and disposable personal income .
    Chart 11 . United States wholesale commodity prices in currency .
    Chart 12. Industrial production in the United States .
                                          DATA SHEET 1, CHART 1
                                      Government civilian employees
                           Federal      State and       Total Gov-
                         employees        local          ernment
                                       employees        employees          Federal         State and
                          per 1,000                                                          ateal             Total
                         population     per 1,000        per 1,000
                                       population       population

     1901	 }   3.3
     1902	
     1903	
     1904	     3.7                    -------------- -------------- -------------- -------------- --------------
     1905	     4.2
     1906	                            -------------- ------------ -------------- ------------ --------------
     1907	
     1908	     4.1                    -------------- -------------- -------------- -------------- --------------
     1909	
     1910	     4.1                    --------------	 --------------	 --------------
     1911	
     1912	     4 .0                   -------------- -------------- -------------- --------------         --------------
     1913	
     1914	     4 .6                   -------------- -------------- -------------- --------------         --------------
     1915	     4 .6                   -------------- -------------- -------------- --------------
     1916	                                                                                                --------------
     1917	     4 .3                   -------------- -------------- -------------- --------------         --------------
     1918	     8 .8
     1919	                            --------------   --------------   --------------   --------------   --------------
     1920	     6 .5                   --------------   --------------   --------------
    1921	      5 .5                                                                      --------------   --------------
     1922	     5 .1                   --------------   --------------   --------------   --------------   --------------
     1923	     4 .9                   -------------    -------------    --------------   -------------    --------------
     1924	     4 .9                   --------------   --------------   --------------   --------------   ------------
     1925	     4 .9                   --------------   -------------    --------------   -------------    --------------
     1926	    4 .8                    -------- ----    -------------    --------------   -------------    --------------
    1927	     4 .7                    -------------    -------------    --------------   --------------   --------------
    1928	     4 .8                    --------------   --------------   --------------   --------------   -------------
    1929	     4 .9                    --------------
                                               20 .8   -------------    --------------   -------------
                                                                25.7             100.0           100.0             100.0 -
    1930	      5.0                             21 .3            26.3            102.0            102.4             102 .3
    1931	     5.0                              21.8             26.8            102.0            104.8             104.2
    1932	     5.0                              21.4             26.4            102.0            102.8             102.7
    1933	     5.0                              20.6             25.6            102.0             99.1              99.4
    1934	     5.7                              20.9             26.6            116.4            100.5             103.5
    1935	     6.4                              21.4             27.8            130.6            102.8             108.1
    1936	     7.0                              23.3             30.0            142.9            112.0             116.6
    1937	     7.0                              22.7             29.7            142.9            109.1             115.5
    1938	     6.9                              23.5             30.4            141 .0           112.9             117.5
    1939	     7.4                              23.6             31 .0           151 .0           113.4             120.6
    1940	     8.2                              24.3             32.5            167.5            116.8             126.5
    1941	    10.8                              24.9             35.7            220.5            119.6             138.9
    1942	    16.6                              24.3             40.9            339.0            116.8             159.1
    1943	    23 .2                             23 .2            46.4            473 .5           111 .5            180.5
    1944	    24 .2                             22.6             46.8            494 .0           108.6             182.0
    1945	    25 .5                             22.4             46.8            520 .0           107.6             182.0
    1946	    19 .1                             23 .7            42.8            390 .0           113 .9            166.5
    1947	    15 .0                             25 .0            40 .0           306 .2           120 .1            155 .6
    1948	    14 .1                             25 .8            39 .9           288 .0           124 .0            155 .2
    1949	    14 .1                             26 .5            40 .6           288.0            127 .4            158 .0
    1950	    13 .8                             27 .1            40.9            281.8            130.2             159 .1
    195116 .0                                  26 .7            42 .7           326.5            128 .3            165 .2
    1952	    16 .6                             26 .9            43 .5           339.0            129.3             169.2
    1953	    16.2                              27.2             43.4            330.8            130.7             168.8

      NOTE .-Indexes, 1929=100 . Not charted.
      Source : Data on governmental employment from Statistical Abstract of the United States, 1953 . Federal
    employment, table 404, p . 379, State and local employment, table 424, p . 393 .
TAX-EXEMPT FOUNDATIONS   6 45
646                             TAX-EXEMPT FOUNDATIONS

                             DATA SHEET 2, CHART 2 AND CHART 3
      Government civilian employees compared with other civilian employees

                                                  In millions
                                                                                Government
                                                                                 employees      Percent of
                                 Total civilfan.ITotal civilian Labor force
                                                 Government     other than
                                                                                per 100 other
                                                                                 employees
                                                                                                   1929
                                   labor force     employees Government

1929	                                     49.2            3.7           46.1             6.7           100.0
1930	                                     49.8            3.1           46.7             6 .7          100.0
1931	                                     50.4            3.3           47.1             6.9           103.0
1932	                                     51 .0           3 .2          47.8             6.3            94.0
1933	                                     51.6            3.2           48.4             6.5            97.0
1934	                                     52.2            3.3           48.9             6.7           100.0
1935	                                     52.9            3.5           49.4             7.0           104.5
1936	                                     53.4            3.7           49.7             7.4           110.4
1937	                                     54 .0           3 .7          50.3             7.5           111 .9
1938	                                     54 .6           3.9           60.7             7 .6          113.4
1939	                                     55.2            4.0           51 .2            7.8           116.4
1940	                                     55 .6           4.2           51 .4            8 .2          122.4
1941	                                     55 .9           4 .6          51 .3            9 .0          134.3
1942	                                     56 .4           5 .4          51 .0           10 .6          158.1
1943	                                     55 .5           6 .0          49.5            12.2           182.0
1944	                                     54 .6           6.0           48.6            12.4           185.0
1945	                                     53 .9           6 .0          47.9            12.5           186.5
1946	                                     57.5            5 .6          51.9            10.8           176.0
1947	                                     60 .2           5 .5          54 .7           10.0           149.2
1948	                                     61 .4           5 .6          55 .8           10.1           150.7
1949	                                     62 .1           5 .8          56.3            10.4           155.2
1950	                                     63 .1           6 .0          57 .1           10.5           156.6
1951	                                     62.9            6 .4          56 .5           11.3           168.6
1952	                                     63 .0           6 .6          56 .4           11 .8          176.0
1953	                                     63 .4           6 .7          56 .7           11.8           176.0

  Source: Total civilian and Government civilian employees from economic report of the President, 1954 .
Total civillanl abor force, table G16, p . 184 . Total Government civilian labor force table G21, p . 189 .
TAX-EXpMPT FOUNDATIONS   6 47
    TAX-EXEMPT FOUNDATIONS   64 9




                             Zoo

                             I00

                             180

                             170

                              60

                             ISO

                              40

                             130
                                   d
                             1&ot
                                   W
                             IIDrl
                                   W
                                a
                             too

                              90

                              80

                              70

                              60

                              To

                              40

                              30

                              20

I                             to
650                            TAX-EXEMPT FOUNDATIONS

                                     DATA SHEET 3, CHART 4
                             Ordinary receipts and expenditures

                                                                         Total Federal Total Federal
            Year                  Population Total Federal Total Federal revenue per expenditures
                                                revenue     expenditures     capita      per capita
                                    Millions        Billions       Billions
1900	                                     76.0          $0.567         $0.521          $7.46      $6 .87
1901	                                     77.4              .588         .525            7.60      6 .79
1902	                                     79.2              .562         .485            7.10      6 .12
1903	                                     80.7              .562         .517            6 .96     6 .45
1904	                                     82.3              .541         .584            6 .57     7 .10
1905	                                     84.0              .544         .567            6.48      6 .75
1906	                                     85.5              .595         .570            6.96      6 .66
1917	                                     87.2              .666         .579            7.54      6 .64
19)8	                                     88.8              .602         .659            6 .78     7 .42
19D9	                                     90.3              .604         .694            6 .70     7 .69
1910	                                     92.0              .676         .694            7 .35     7 .54
1911	                                     93.4              .702         .691            7 .52     7 .40
1912	                                     95.0              .693         .690            7 .30     7 .27
1913	                                     96.5              .724         .725            7 .50     7 .51
1914	                                     98.1              .735         .735            7 .49     7 .50
1915	                                     99.6              .698         .761            7 .01     7 .64
1916	                                    101 .2             .783         .742            7 .74     7 .33
1917	                                    102.8           1 .124         2.086          11.04      19 .&9
1918	                                    104.3           4.180         13.792          40 .00    132 .10
1919	                                    100.8           4.654         18.952          46 .20    179 .20
1920	                                    107.2           6.704          6.142          62 .50     57 .30
1921	                                    108.8           5.584          4.469          51 .35     41 .00
1922	                                    110.4           4.103          3.196          37.20      28 .95
1923	                                    111 .9          3.847          3.245          34 .35     29.OC
1924	                                    113.5           3.884          2.946          34 .20     25 .95
1925	                                    115.0           3.607          2.464          31.35      21 .40
1926	                                    116.6           3.908          3.030          33 .50     25 .84
1927	                                    118.2           4.128          3.002          34.90      25 .39
1928	                                    119.8           4.038          3 .071         33 .70     25 .33
1929	                                    121.6           4 .036         3.322          33 .20     27 .30
1930	                                    123.1           4.178          3.440          33 .90     27 .95
1931	                                    124.0           3.176          3.577          25.60      28 .81
1932	                                    124.8            1 .924        4.659          15.40      37.30
1933	                                    125.6           2 .021         4,623           16 .10    36 .80
1934	                                    126.4           3 .064         6.694          24 .25     52 .90
1935	                                    127.3           3.730          6.521          29 .30     51 .12
1936	                                    128.1           4.068          8.493          31.71      66 .30
1937	                                    128.8           4.979          7.756          38.63      60.20
1938	                                    129.8           5 .762         6 .938         44 .40     53 .40
1939	                                    130.9           5.103          8.966          39 .00     68 .50
1940	                                    131.8           5.265          9.183          40 .00     69.60
1941	                                    133.2            7.227        13.387          54.30     100.40
1042	                                    134.7          12.696         34.187          94.30     253.80
1943	                                    136.5          22 .201        79.622         162.60     583 .50
1944	                                    138.1          43.892         95.315         317.70     690 .00
1945	                                    139.6          44.762         98.703         320.50     706.80
1946	                                    141.2          40.027         60.703         283.50     430.00
1947	                                    143.4          40.043         39.289         279.00     274.00
1948	                                    146.6          42 .211        33.791         288.00     231.00
 1949	                                   149.1          38 .246        40.057         256.50     268 .20
1950	                                    151.1          37.045         40.167         245.00     265.00
1961	                                    154.4          48.143         44.633         311 .80    289.00
1952	                                    157.0          62.129         66.145         396.00     421.00
1953	                                    159.7          65.218         74.607         410.00     466.50


 1930-35Economic Almanac (1953-54) of the N . I . C . B ., p. 517.
 1936-52Statistical Abstract of the United States, 1953, p . 337 .
Expenditure data 1900-29 Statistical Abstract of the United States, 1930, p. 172.
1930-35 Economic Almanac (1953-54) of the N . I . C . B .
1935-52 Statistical Abstract of the United States, 1953, p . 340 .
Source : Revenue data 1900-29 Statistical Abstract of the United States, 1929 p . 172 .
TAX-EXEMPT FOUNDATIONS   651
652                                  TAX-EXEMPT FOUNDATIONS

                                       DATA SHEET 4, CHART 5

                                                                          1929=100
                                       Federal     State and                                    State and
       Year          Population                                                                  local tax
                                        taxes      local taxes    Population     Federal tax      index
                                                                    index           index

                      Millions         Millions     Millions
1916	                       101 .2           $708       $1,935           83 .2           21.2           30.1
1917	                       102.8           1,015         1,923          84 .6           30 .8          29 .9
1918	                       104 .3          3,352         2,309          85 .8          100 .5          35 .9
1919	                       105 .8          4,482         2,923          87 .0         134 .5           45 .5
1920	                       107 .2         5,689          3,476          88 .2         170.6            54 .0
1921	                       108 .8         4,917         3,895           89.5          147.5            60.6
1922	                       110 .4         3,554         4,015           90 .8         106.6            62 .4
1923	                       111 .9         3,052         4,202           92.0            91.4           65 .4
1924	                       113 .5         3,207         4,619           93.4            96.1           71.8
1925	                       115 .0          2,974        4,918           95.0            89.1           76 .5
1923	                       116 .6         3,215         5,398           95.9            96.4           83.9
1927	                      118 .2          3,345         5,722           97.2          100.3            89 .0
1923	                       119 .8         3,201         6,148'          98.5            96.0           95.6
1929	                      121 .6          3,337         6,431          100.0          100.0           100.0
193)	                      123 .1          3,517         6,798          101 .2         105.4           105 .7
1931	                      124 .0          2,739         6,583          102.2            82.0          102.4
193 ;	                     124.8           1,813         6,358          102.7            54.3           98 .8
1933	                      125.6           1,805         5,715          103.4            54.1           88.9
1934	:_                    126.4           2,910         5,881          104.0            87.2           91 .5
1935	                      127 .3          3,557         6,185          104.8          106.6            96.2
1936	                      128.1           3,856         6,659          105.4          115.5           103.5
1937	                      128.8           4,771         7,421          103 .0         143.1           115.5
1938	                      129.8           5,452         7,684          105.9          163.5           119.5
1939	                      130.9           4,813         7,638          107.6          144.4           118.7
1940	                      131 .8          4,921         7,997          108 .5         147.6           124 .4
1941	                      133.2           6,889         8,315          109 .5         206.7           129.3
1942	                      134 .7         12,964         8,527          110 .9         389.0           132 .6
1943	                      136 .5         21,087         8,653          112 .4         632 .0          134 .6
1944	                      138.1          40,339         8,875          113 .6       1,210 .0          138 .0
1945	                      139 .6         40,989         9,193          115 .0       1,228 .0          143 .0
1946	                      141 .2         36,285        10,094          116 .3       1,088.0           157.0
1947	                      143 .4         35,132        11,554          117 .9       1,054 .0          179 .7
1948	                      146 .6         37,636        13,342          120 .7       1,129 .0          207 .5
1949	                      149 .1         35,590        14,790          122 .1       1,036 .0          230 .0
1950	                      151 .1         34,955        15,914          124 .4       1,049 .0          247 .5
1951	                      154 .4         45,984        17,554          127 .0       1,378 .0          273 .0
1952	                      157 .0         59,535 --------------         129.1        1,785 .0 --------------
1953	                      159 .7         62,656 --------------         131.3        1,878 .0 ______________

  Source : Tax revenue data from p . 516, Economic Almanac 1953-54, National Industrial Conference
Board. Excludes social security taxes except that portion used for administration of social security system.
            TAX-EXEMPT FOUNDATIONS   653




49720-54-pt. 1-42
6 54                            TAX-EXEMPT FOUNDATIONS

                                      DATA SHEET 5, CHART 6
                                National income and tax receipts

                    National     Total,    Total per-                     National               Total per-
    Tax receipts,   income,                 cent of       Tax receipts,    income,     Total,     cent of
  calendar years-    billions   billions    income      calendar years-    billions   billions    income

1929	                  $87.4     $10.30         11 .8   1941	               $103.8     $24.36        23 .5
1930	                   75.0       9.77         13.0    1942	                137.1      31 .95       23 .3
1931	                   58.9       8.54         14.5    1943	                169 .7     48 .51       28 .6
1932	                   41.7       8.00         17.0    1944	                183.8      50 .59       27 .5
1933	                   39.6       8.54         21 .6   1945	                182.7      52 .52       28 .7
1934	                   48.6       9 .68        19.9    1946	                180 .3     50 .37       27 .9
1935	                   56.8      10.59         18.7    1947	                198 .7     56 .39       28.4
1936	                   64.7      12.14         18.8    1948	                223 .5     58 .10       26.0
1937	                   73.6      14 .57        19 .8   1949	                216 .3     54 .93       25.4
1938	                   67.4      14.20         21 .1   1950	                240 .6     67 .75       28.2
1939	                   72.5      14.58         20.1    1951	                278 .4     84.56        30.4
1940	                   81 .3     16 .95        20 .9   1952	                291 .6 ---------- ----------

  Source : National income, table G-7, Economic Report of the President, 1954 .
  Tax receipts, Department of Commerce via Facts and Figures on Government Finance, 1952-53, by the
'Tax Foundation . Table 90, p . 116 .
TAX-EXEMPT FOUNDATIONS   655
656                            TAX-EXEMPT FOUNDATIONS

                                    DATA SHEET 6, CHART 7

                                           National      Number of National       Federal   Difference,
                                            income,       families, income per   debt per   income over
                                            billions      millions    family      family       debt

1900	                                           $16 .2       15.96      %1,015        $84           $931
1910	                                            28 .2       20.26       1,392         57         1,335
1920	                                            74 .2       24.35       3,045      1,000         2,045
1929	                                            87.4        29.40       2,972        576         1,396
1930	                                            75 .0       29.90       2,510        542         1,968
1931	                                            58 .9       31 .24      1,885        538         1,347
1932	                                            41 .7       31 .67      1,317        615            702
1933	                                            39 .6       32.16       1,232        702            530
1934	                                            48 .6       32.56       1,493        831            662
1935	                                            56 .8       33 .09      1,718        868            850
1936	                                            64 .7       33 .55      1,928      1,006            922
1937	                                            73 .6       34 .00      2,164      1,072         1,092
1938	                                            67 .4       34.52       1,952      1,076            876
1939	                                            72 .5       35 .60      2,035      1,135            900
1940	;	                                          81 .3       34 .95      2,325      1,230         1,095
1941	                                           103 .8       35 .85      2,895      1,365         1 .530
1942	                                           137 .1       36 .45      3,760      1,990         1,770
1943	                                           169 .7       36.88       4,600      3,710            890
1944	                                           183 .8       37 .10      4,950      5,420         -470
1945	                                           182 .7       37.50       4,870      6,900       -2,030
1946	                                           180 .3       38 .18      3,725      7,006       -3,281
1947	                                           198 .7       39 .14      5,007      6,600       -1,593
1948	                                           223 .5       40 .72      5,490      6,200         -710
1949	                                           216 .3       42.11       5,140      6,000         -860
1950	                                           240 .6       43 .47      5,530      5,930         -400
1951	                                           278 .4       44 .56      6,250      5,750            500
1K2	                                            291 .6       45 .46      6,415      5,700            715
1953	                                         1 306 .0       47 .50      6,440      5,600            840

 I Estimated .
  Source : Income data, 1900, 1910, 1920, estimated based on NBER data in "National Productivity Since
1869 ."
  1929-52, the Economic Report of the President, 1954, table G-7.
  Number of families based on United States census data .
	
	
	
	
	
	
	
	
	
	
	




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658                           TAX-EXEMPT FOUNDATIONS

                                     DATA SHEET 7, CHART 8

                                 Total
                               debt, pri-   Private     Number of     Private      Total      National
                               vate and      debt,       families,   debt per    debt per    income per
                                public,     billions     millions     family      family       family
                                billions

1929	                             $191 .1     $161.5        29.40       $5,500      $6,500       $2,972
1930	                              191.4       160 .8       29.00        5,380       6,400        2,510
1931	                              182 .6      148.6        31 .24       4,760       5,850        1,885
1932	                              175 .7      137.8        31 .67       4,350       5,550        1,317
1933	                              169.7       128.8        32.16        4,000       5,280        1,232
1931	                              172.6       126.3        32.56        3,880       5,300        1,493
1935	                              175.9       125.4        33.09        3,790       5,320        1,718
1936	                              181 .4      127.5        33 .55       3,800       5,400        1,928
1937	                              183.3       127.9        34.00        3,760       5,390        2,164
1938	                              180.8       121.3        34 .52       3,600       5,240        1,952
1939	                              184.5       125.5        35 .60       3,530       5,180        2,035
19,40	                             190.8       129.6        34 .95       3,700       5,460        2,325
1941	                              212.6       140.4        35 .85       3,915       5,930        2,895
1912	                              260.7       143.2        36 .45       3,930       7,150        3,760,
1943	                              314.3       145.0        36 .88       3,935       8,530        4,600
1914	                              371 .6      145.7        37 .10       3,930      10,020        4,950
1945	                              407.3       140.8        37 .50       3,755      10,860        4,870
1046	                              398.8       155 .5       38 .18       4,070      10,450        3,725
1947	                              419 .5      181 .8       39 .14       4,650      10,720        5,007
1948	                              435.3       202.6        40 .72       4,975      10,690        5,490
1949	                              446.7       210 .0       42 .11       4,985      10,600        5,140
1950	                              485 .8      246.4        43 .47       5,670      11,180        5,530
1951	                              519 .2      277 .2       44 .56       6,230      11,650        6,250

  Source : Data on debt from Economic Almanac, National Industrial Conference Board, 1953-54, p . 122.
  Data on income derived from table 07, President's Economic Report, 1954, and Census Bureau data on
families.
                                 TAX-EXEMPT FOUNDATIONS                   659




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660                              TAX-EXEMPT FOUNDATIONS

                                       DATA SHEET 8, CHART 9


                                               Gross                                                   Gross
                       Gross                 national                         Gross                  national
                     national    Federal     product                                     Federal     product
                                  debt,       at 1929                       national      debt,       at 1929
                     product,    billions   consumer                        product,
                      billions                                               billions    billions    onsumer
                                               price,                                                    rice,
                                              billions                                                billions

19001	                  $16.9      $1 .26   ----------    1927	                  89 .6    $18.51         $98.6
19011	                   18.1       1 .22   ----------    1928	                  91 .3      17 .60        91 .2
 1902 1	                 19.2       1 .18   ----------    1929	                 103 .8      16 .90       108 .8
 19031	                  20.5       1 .16   ----------    1930	                  90 .9      16 .20        91 .4
19041	                   21 .6      1 .14   ----------    1931	                  75 .9      16 .80        85 .6
19051	                   23.0       1 .13   ----------    1932	                  58 .3     19 .50         78 .2
19061	                   24.5       1 .14   ----------    193;;	                 55 .S     22 .50         74.0
19074	                   26 .0      1 .15   ----------    1934	                  64 .9     27.70          8.4.0
19081	                   27 .5      1 .18                 M5	                    72 .2     32.80          90 .2
1909	                    28 .8      1 .15   ----------    1936	                  82 .5     38 .50       102 .0
19101	                   31 .1      1 .15   ----------    1937	                  90 .2     41 .10       107 .8
19111	                   33 .4      1.15    ----------    1938	                  84 .7     42 .00       102 .9
19121	                   35 .7      1.19    ----------    1939	.                 91.3      45.90        112 .5
19131	                   38 .0      1.19         $65.7    1940	                101.4       48.50        124.0
1914	                    40 .1      1.19          68.4    1941	                126.4       55.30        147.3
19151_---	               47.0       1.19          79.4    1942	                161 .6      77.00        169.8
19161	                   53 .9      1.23          84.7    1943	                194.3      140.80        192.5
19171	                   60 .6      2.98          81.0    1944	                213.7      202.60        208.1
19181-_--	               67.5      12.24          76.9    1945	                215.2      259.10        205.0
1919	                    74.2      25.48          73.4    1946	                211 .1     269.90        185.5
1920	                    85.6      24.30          73.1    1947	                233 .3     258.40        179.0
1921	                    67.7      24.00          65.0    1948	                259.0      252.40        184.6
1922	                    68.4      23.00          70.0    1,949	               258.2      252 .80       186.0
1923	                    80.4      22.35          80.7    1950	                286.8      257 .40       205 .2
1924	                    80.9      21.25          81 .2   1951	                329.8      255 .30       217 .0
1925	                    95.0      20.52          83 .1   1952	                348 .0     259 .20       223 .5
1926	                    91 .1     19.64          88.3    1953 2 . .	          366 .0     266 .10       234 .0

  1 Estimated from data shown for 1899, 1904, 1909, 1914, and 1919 as indicated below .
  2 Estimate based in data for 9 months and subsequent production data .

  Source : Gross national product 1900-28, national product since 1869-NBER, pp . 119, 151. Federal debt .
1900-28, Statistical Abstract of United States, 1930, p . 214. Federal debt, 1929-52, Economic Indicators
Supplement 1953 . Personal Disposable Income, 1929-50, National Income, 1951 edition, table 3, p . 151.
TAX-EXEMPT FOUNDATIONS   661
(662                               TAX-EXEMPT FOUNDATIONS

                                        DATA SHEET 9, CHART 10

                      Percent     Dispos-                                      Percent     Dispos-
                      Federal     able per-      Percent                       Federal     able per-   Percent
                         N
                      G. . P        sonal
                                  income,
                                                 D. I. P .
                                                 G. N. P.
                                                                                    t
                                                                                 debtP .     songl
                                                                                           income,
                                                                                                       D. I. P.
                                                                                                       G. N. P.
                                   billions                                    G aN         billions

  1900	                   7 .46   ---------     ---------    1927	                  20 .7 -- ------- ----------
  1901	                   6 .74   ----------    ---------    1928	                  19 .3 --------- -------
  1902	`----              6 .14   ----------      --------   1929	                  16 .3     $82 .5        74 .9
  1903	                   5 .66   ----------    ----------   1930	                  17 .8      73 .7        81 .0
  1904	                   5 .27   ---------      ---------   1931	                  22 .1      63 .0        83 .0
1905	                     4 .92   ---------      ---------   1932	                  33 .5      47 .8        82 .0
1906	                     4 .66   ----------    ----------   1933	                  40 .3      45 .2        80 .8
  1907	                   4 .42   ---------     ----------   1934	                  42 .7      51 .6        79.5
  1908	                   4 .29   ----------    ----------   1935	                  45 .5      58.0         80.4
  1909	                   4 .00    ---------    ----------   1936	                  46 .7      66 .1        80 .2
  1910	                   3 .70    ---------     ---------   1937	                  45 .6      71 .1        78 .8
  1911	                   3 .46   - ---------   ---------    1938	                  49 .6      65 .5        77.3
  1912	                   3 .33   ----------    ----------   1939	                  50 .3      70 .2        76.8
  1913	                   3 .13   ----------    ----------   1940	                  47 .8      75 .7        74 .7
  1914	                   2 .97   ----------    ----------   1941	                  43 .8      92 .0        72 .8
 1915	                    2 .53   ----------    ----------   1942	                  47 .6     116 .7        72 .2
1916	                     2 .28    ---------    ----------   1943	                  72 .4     132 .4        68.2
1917	                     4 .92   ----------    ----------   1944	                  94 .9     147 .0        68 .8
"1918	                   18 .1    ----------    ---------    1945	                 120 .5     151 .1        70 .2
  1919	                  34 .3    ----------    ----------   1946	                 127 .8     158 .9        75 .2
  1920	                  28 .4    ----------    ---------    1947	                 110 .8     169 .5        72 .7
1921	                    35 .4    ----------    ----------   1948	                  97 .5     188 .4        72 .7
  1922	                  33 .6    ----------    ----------   1949	                  97 .9     187 .2        72 .5
1923	                    27 .8    ----------    ----------   1950	                  89 .8     205 .8        76 .7
 1924	                   26.3     ----------    ----------   1951	                  77 .5     225 .0        68.2
- 1925	                  24 .2    ----------    ----------   1952	                  74 .5     235 .0        67 .5
 1926	                   21 .5    -------_-     ----------   1953	                1 72 .7   1 250 .0      1 68 .3

  1 Estimate based on data for 9 months and subsequent production data .
   Source : Gross national product, 1900-28, national product since 1869, NBER, pp . 119,151 . Federal debt
;1933-28, Statistical Abstract of United States, 1930, p. 21 .4 . Federal debt 1929-52, Economic Indicators Sup-
plement, 1953. Personal Disposable Income, 1929-50, National Income, 1951 edition, table 3, p . 151 .
TAX-EXEMPT FOUNDATIONS   663
TAX-EXEMPT FOUNDATIONS   665
665A                                TAX-EXEMPT FOUNDATIONS


                                      DATA SHEET 10, CHART 12

                              Industrial production (physical volume)

             Cleveland Normal      Total        New                       Cleveland Normal               New
                                                series                                        Total
               Trust    trendProduc-          F R 13                         Trust   trend,  Produc- F series .
               index,              35 -39       data,                       index, 1935-39=   tion,I    . R . 13
              percent 1935-39 '- 1935-39 =
                         100                  1935-39 =                     Percent    100
                                                                                                        data,
                                                                                            1935-39 - 1935-39 =
             of normal              100           100                     of normal            100        100

1900	              103      32 .7    33 .7   ----------      1927	             104       87 .2      90 .7      94
1901	              103     34 .2     35 .2   ----------     1928	              106       90 .0      95.4       98
1902	              103     35 .7     36 .8   ----------     1920	              110       92.8      102.0      109
1903	              101     37.2      $7.6    ----------     1930	                87      95.6       83.2       91
1904	               96     38 .8     37.2    ----------     1931	                73      98.3       71 .7      74
1905	              108     40 .4     43.6    ----------     1932	                57    100.5        57.3       57
1905	              110     42.1      46.3    ----------     1933	                68    102.8        70.0       69
1907	             106      43.8      46.5     ---------     1934	               68     105 .1       71 .5      74
1908	               86     45.6      39.2    ----------     1935	                77    107 .6       82 .9      87
1909	             102      47.3      48.3     ---------     1936	               89     110 .0       97.9      104
1910	             101      49.2      49.7     ---------     1937	               93     112 .5      104 .6     113
1911	               94     51 .0     47.9     ---------     1938	               71     115 .4       82 .0      89
1912	             104      52.9      55 .0   ----------     1939	               88     117 .9      103 .7     107
1913	             105      54 .8     57.6    ----------     1910	              102     120 .6      123 .0     124
1914	               95     56.8      54.0    ----------     1941	              127     123 .8      157 .3     161
1915	             100      58 .8     58 .8   ----------     1942	              132     127 .4      168 .2     196
1916	             114      61 .0     69 .5   __   -------   1913	              138     131.0       180.7      235
1917	             112      63 .2     70 .8   ----------     1944	              134     134 .5      180 .2     231
1918	             107      65 .4     70 .0   ----------     1945	              123     138 .5      170 .4     198
1919	             100      67 .5     67 .5           72     1916	              114     141.8       161.7      167
1920	             102      69 .4     70 .8           76     1947	              126     146.0       184.6      185
1921__- .-          76     72 .2     54 .8           57     1918___            131     151 .9      199.0      193
1922	               93     74 .4     69 .2           72     1949___            115     155.6       179.6      180
1923	             112      77 .0     86 .2           8"     1950---            133     161 .0      214.5      207
1924	             100      79 .4     79 .4           82     1951	              139     165.7       230.0      222
1925	             107      82 .0     87.8            91     1952	              130     172.5       225.0      230
1926	             108      84 .4     91 .2           94     1953'•_ ___        138     177.4     2 245.4    2 248


  I Derived from monthly data published by the Cleveland Trust Co . and independently calculated normal
trend .
  2 Estimated .
TAX-EXEMPT FOUNDATIONS   665B'.




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666                   TAX-EXEMPT FOUNDATIONS

   Mr. McNIECE . Then I assume that in answering any question it
would be permissible to clarify it by reading a particular section .
   Mr. HAYS . Surely .
   Mr. KocH . The question now is whether you members would like
to ask any questions with respect to any part of that report, or whether
you would like to study it and ask some at a future time.
   Mr. GOODWIN . Mr. Hays .
   Mr. HAYS . I will surprise you by saying I have no questions .
   Mr. GOODWIN. The Chair concurs.
   Mr. Kocx . Then you are excused for today.
   Mr . GOODWIN . Thank you very much for your presentation.
   Mr. WORMSER . Mr . Chairman, Miss Casey has been sworn, and I
think probaby her oath can be considered to be continued .
   Mr. GOODWIN . I would say so .
   Mr. Kocx . Miss Casey, you have prepared a report . What is the
title of that?
TESTIMONY OF KATHRYN CASEY, LEGAL ANALYST, SPECIAL COM-
    MITTEE TO INVESTIGATE TAX-EXEMPT FOUNDATIONS
   Miss CASEY. It is called Summary of Activities of Carnegie Cor-
poration of New York, Carnegie Foundation for the Advancement
of Teaching, the Rockefeller Foundation, the Rockefeller General
Education Board .
   Mr. Kocx . That is a rather long document, and I understand unless
the gentlemen wish, you have no desire to read that entire document,
but there were certain paragraphs you felt you would like to read .
Is that it?
   Miss CASEY . Yes. I don't have any intention of reading this entire
document . I thought I might highlight some parts of it to give the
members of the committee a background . I would like to say first
of all that the object of this summary was to enable the committee to
have the benefit of the research done and give them the facts taken
from the foundations reports .
   Mr. Kocx . First of all, may that report be considered in the record?
   Mr. GOODWIN . In the absence of objection, the report will be ordered
inserted in the record .
   Mr. HAYS . Reserving the right to object, and I shall not object,
I would just like to point out here that perhaps when some of the
people representing the foundations come before us, they may have
long prepared statements, and I hope there will be no objection to
using the same procedure on them, unless some member of the com-
mittee wants it read . In other words, the thing I am interested in is
that it is rather voluminous, and we have run to quite a few pages . I
hope there will be no inclination to keep something out of the record
when the minority has entered no objection to putting anything in the
record that anyone thought was pertinent.
   Mr . GOODWIN . That certainly would be the idea of the present occu-
pant of the Chair . I assume that it is the opinion of the staff that this
material should be in the record .
   Mr. Kocx . Oh, yes.
                      TAX-EXEMPT FOUNDATIONS                         667
   Mr. WORMSER . Mr. Hays, the only comment I would like to make
on that is that I am asking these various foundations to give us copies
sufficiently in advance so that we can at least know the material that
they are going to bring up . If you have talked to any of them, I
wish you would ask them to please do that. In some cases it is going
to be a rather short job for them . In other cases, they have quite a lot
of time .
   Mr. HAYS . Suppose they want to bring somebody in as the four
professors were brought in, and they wanted to speak as they did,
without any preparation ?
   Mr. Kocii. Then they certainly should have the right to do that .
There is no doubt about it.
   Mr. HAYS . I am concurring with you . Whenever they are going to
have a prepared statement, they should be submitted in advance . I
have no objection to that .
   Mr. GOODWIN . The Chairman assumes there will be no controversy
over any question of this sort.
   (The statement Summary of Activities of Carnegie Corporation of
New York, Carnegie Foundation for Advancement of Teaching, the
Rockefeller Foundation, the Rockefeller General Education Board is
as follows :)




     49720-54-pt.1---48
668                        TAX-EXEMPT FOUNDATIONS

                                    INTRODUCTION

    One of the objectives of the staff, as mentioned in Mr . Dodd's report,
 was to determine whether there was a common denominator, as it were,
 in relation to foundation purposes. A collateral objective was to deter-
 mine, if possible, whether the activities of foundations might fall into
 certain definite classifications .
    Upon examination of the material available in the Cox committee
 files it was apparent that it was insufficient 1 to support a firm conclu-
 sion on this point ; as were the various reference books available on
 foundations and their activities . After further study and discussion
 as to both the quickest and the most efficient method of securing, sufTi-
 cient information, it was decided to examine the activities of the
 first 2 major 3 foundations, to determine whether their, activitie§, could
 be classified, on the theory that such an examination would also serve
 the dual purpose of providing a guide for study of other foundations .
With size of endowment and date organized as criteria, the selection
 of the agencies created by Andrew Carnegie and John D . Rockefeller
 were quite obvious choices, as will be seen by a glance at the following
chronological list
Carnegie Institute (of Pittsburgh), 1896.
Rockefeller Institute for Medical Research, 1901 .
Carnegie Institution of Washington, 1902.
Rockefeller General Education Board, 1903.
Carnegie Hero Fund Commission, 1904 .
Carnegie Foundation for the Advancement of Teaching, 1905 .
Carnegie Endowment for International Peace, 1910 .
Carnegie Corporation of New York, 1911.
The Rockefeller Foundation, 1918 .
The Laura Spelman Rockefeller Memorial, 1918.'
   As a practical matter, the Carnegie Institute of Pittsburgh, the Car-
negie Institution of Washington and the Carnegie Hero Fund Com-
mission were eliminated as objects of study in relation to their fields
of activity, because their purposes were so clearly specified and their
activities confined thereto .
    On the theory that the document itself is the best evidence ., the
logical source of the best information was the records of the fonda-
tions themselves, as contained in their annual reports and similar pub-
lication . When it proved difficult to obtain these reports from the
Library of Congress 5 recourse was had to the foundations themselves .
   In the case of the two Rockefeller agencies-the foundation and the
General Education Board-the president, Mr . Dean Rusk, upon re-
quest responded immediately and loaned to the committee copies of the
annual reports of each of these organizations .
   In the case of the Carnegie Endowment for International Peace
a request was made to permit studies of their records from the date
of organization, to which Dr . Johnson, the president, agreed without
hesitation, and every cooperation was extended in placing the records,
minutes of meetings, and confidential reports at the committee's
disposal . In the time available, it was not possible to cover in detail
all the material available for those years, but extensive notes were made
 'Not only as to details, but also because it covered only the years 1936-51, inclusive .
 2 In point of time.
 s In size of assets .
 * Its activities were merged with those o4 the Rockefeller Foundation, 1928 .
 5 Since only 1 copy was available for circulation, the other being for reference.
                            TAX-EXEMPT FOUNDATIONS                                        669

and verbatim quotations extracted ; Mr. Perkins, of the Carnegie Cor-
poration had equally cooperated but, subsequently on special request,
the Library of Congress permitted the reference copies of the year-
books of the Corporation, the foundation and the endowment to be
'withdrawn from the Library for use at the committee's offices .
   In -addition to these reports, the books and articles, including bio-
graphical material, available on both Mr . Rockefeller and Mr. Carnegie
and their foundations, were consulted and studied . 6
   Based on these studies, and according to the records of the founda-
tions themselves, it was concluded that their activities had been car-
ried on in a handful of major areas, namely :
  1. Education .
 II. International affairs, including international law .
III. Politics (in the sense that politics is the science of civil government .)
 IV . Public affairs.
  V. Propaganda.
 VI. Economics.
  While some of these fields overlapped to a certain degree, that fact
does not affect the validity of the technique of analysis, nor the state-
ment of summation .
                                      I. EDUCATION

                                    GENERAL PURPOSE

   Part I of this summary is devoted to answering three questions
   1. Have these foundations carried on activities in the field of edu-
cation?
        (a) At elementary level?
        (b) At secondary level?
        (c) At college and university level?
   2. What have these activities been (at each of the levels noted) ?
   3. Did such activities have any evident or traceable effects in the
educational field?
   Secondly, once the answers to these questions are determined, what
is their relationship (if any) to education, in the light of the consti-
tutional and historic attitudes with regard - to it in this country?
   The activities relating to questions 1 and 2 will be summarized sep-
arately by foundation, for the entire period of its existence, in section
1. However, since the activities of all these organizations are paral-
lel-at least in part-the effects of all in the educational field, and
their relationship (if any) to the constitutional and historic viewpoint
will be summarized and compared in section 2 .
                                GENERAL INFORMATION
  Of the Carnegie and Rockefeller organizations only one-the Gen-
eral Education Board of Rockefeller ?-from its ,outset has operated
exclusively in the field of education, in the sense of a relationship to
institutions of learning, teaching, and so forth . In the sense that all
   e Bibliography : Life of Andrew Carnegie (2 vols .), V. J . Hendrick :
Giving, R . M. Lester ; 30 Year Catalogue of Grants, R. M . Lester Forty years an Impulse,
                                                                                     of Carnegie
                                                                          ; Fruit of
Howard J . Savage; Philanthropic Foundations and Higher Education, Ernest Victor
Hollis ; The Story of the Rockefeller Foundation, Raymond Fosdick ; History of the Stand-
ard Oil Co ., Tarbell ; American Foundations-Their Fields, 20th Century Fund ; Phi-
lanthrophy and Learning, Frederick P . Keppel ; Public Benefactions of Andrew Carnegie,
Carnegie Corp . ; The Foundation, Frederick P . Keppel .
   1 Terminated operations at end of 1953 .
	




    670                       TAX-EXEMPT FOUNDATIONS

    knowledge developed pertains to education, of course, then the term
    "education" becomes practically all-inclusive of every activity not
    only of foundations, but of industry and government as well . How-
    ever, in the former sense-which is the sense in which it is used here-
    Carnegie Corp., Carnegie Foundation for the Advancement of Teach-
    ing, Carnegie Endowment for International Peace, and the Rocke-
    feller Foundation are dedicated by their charters to purposes directly
    or indirectly related to what might be called the advancement of edu-
    cation.
       In the case of the foundation,2 originally intended as a means of
    providing "retiring allowances" for professors, it is now its primary
    purpose. The corporation 3 and the endowment 4 have it as one of a
    multiplicity of purposes . . Because this is particularly true of the en-
    dowment, and because its activities are so closely interrelated that
    agency's activities will be summarized as a unit when other categories
    of foundation activities are covered .
       One further fact should be noted because it is a matter which time
    did not permit complete resolving . In the case of the corporation,
    and the foundation, there is a considerable overlapping of funds, and
    it is difficult at times to determine the extent to which the funds men-
    tioned in the foundation's financial reports are duplicates of funds
    mentioned in the corporation's report . To a certain extent this is
    true also in regard to the endowment. Thus, while every effort will
    be made in this report to differentiate clearly between the amounts of
    money, it may be that sums reported in the foundation and the endow-
    ment records are duplications of sums reported in the Carnegie record .
       Inasmuch as the Rockefeller Foundation and the General Education
    Board do not seem to have the interlocking relationships found in the
    Carnegie organizations it is not believed that the same possibility of
    duplication exists in regard to those two organizatons.
      However, perhaps in an excess of caution, where doubt arose, the
    item was not included so that whatever error has occurred has been
    on the side of lower totals rather than higher .
                 BACKGROUND s MATERIAL FROM REFERENCE WORKS

      Before proceeding to an analysis of information taken from the an-
    nual reports of each of the foundations to be summarized, a brief
    review of the activities in the field of education by these major con-
    tributors may prove helpful and also serve as a basis for evaluation .
      Dr. Ernest Victor Hollis in his book Philanthropic Foundations
    and Higher Education, published in 1938, covers hot only the back-
    ground and organization of foundations, but also the specific activities
    of foundations in the field of education . While most of his references
    are to higher education, portions of his work involve secondary educa-
    tion indirectly, as will be seen later. Although published in 1938,
    which makes many of the statistics of Dr. Hollis' book somewhat out-
    dated, it is still regarded as an excellent reference .
      x This term will be used throughout to designate the Carnegie Foundation for the
    Advancement of Teaching.
      3 This term will be used throughout to designate the Carnegie Corp .
      • This term will be used throughout to designate the Carnegie Endowment for Interna-
    tional Peace.
      5 See bibliography, p . 669.
	



                           TAX-EXEMPT FOUNDATIONS                              671

   According to Dr . Ernest Victor Hollis ° "unfavorable public esti-
mate of the elder John D. Rockefeller and Andrew Carnegie made it
inexpedient in 1905 for their newly created philanthropic foundations
to attempt any direct reforms in higher education ." The subject was
approached indirectly through general and noncontroversial purposes,
nearly all foundation grants made before 1920 being for such pur-
poses.
   Dr. Hollis writes
  Far-reaching college reform was carefully embedded in many of these non-
controversial grants . It was so skillfully done that few of the grants are directly
chargeable to the ultimate reforms they sought to effect. For instance, there is
little obvious connection between giving a pension to a college professor or giving
a sum to the general endowment of his college, and reforming the entrance re-
quirements, the financial practices, and the scholastic standards of his institu-
tion. This situation makes it necessary to present qualitative influence without
immediately showing the quantitative grant that made the influence possible?
                       REMEDIES FOR EDUCATIONAL CHAOS
   The first efforts of the foundations to influence the development of
higher education, according to Dr. Hollis, were directed toward a
differentiation and coordination of the levels of education, which he
stated "approached chaos" around 1902-5 .
   It is not proposed to discuss whether the conditions existing in the
educational system at that time were chaotic or inefficient ; nor is it
intended to deny that the foundation and the General Education
Board were sincere in their belief that the system should be improved .
It is true, however, that neither of these organizations announced to
-the public their intention to reform the educational system . On the
contrary, the board asserted on many occasions that it was determined
not to interfere with the institutions, nor direct their policies .$ The
president of the foundation, in writing of the early activities of the
foundation, admitted that originally even the founder, Andrew Car-
negie, was not aware of any intention other than the commendable one
of awarding a free pension, and in 1935 Mr . Pritchett accepted the
fully responsibility for inculcating the reform idea in the pension
awards.
   Moreover, it is not intended to evaluate the merits of the objective
and references are cited merely as indications of the intention and
attitude of the two foundations which first entered this educational
field. Additional references taken from the reports of the individual
foundations will be included in later sections of this part, dealing with
the individual foundation activity in education .
   Dr. Hollis takes a very practical view of the manner in which
foundations approached the situation and the logical conclusion to be
drawn, when he writes
  As a condition of awarding a pension to a college professor what could be
more plausible than the necessity for defining a college? Both the logic of the
situation and the desire for the money caused colleges to seek the scrutiny
of the foundation . By this indirection the foundation was being importuned
to do what President Pritchett most wished, and what be probably could . not
 6 Philanthropic    Foundations and Higher Education .
 ' Ibid ., p . 127.
 8 See sections on Foundation and Board .
 672                           TAY-EXEMPT FOUNDATIONS

 have accomplished by any amount of direct grants . With pensions as the induce-
 ment the Carnegie plan for improving the colleges was explicit and avowed ;
 the scholastic, financial, and control standards that were demanded for affili-
 ation guaranteed that the institution would be a real college . Despite its pro-
 testations to the contrary, the General Education Board sought to effect the
 same reforms. I used grants to capital outlay and to general endowment as
 the inducement and its leadership was canny enough not to print or use an
 inflexible set of standards. The college seeking assistance was judged in terms
 of its promise within the local area . The board "made a thorough study" of
 the institutions calling themselves colleges and from this factual survey came
 to a conclusion similar to that of the Carnegie Foundation as to what should
 be done. Each foundation decided to organize and lead a superior system of
 colleges and universities as a demonstration to the rest of the country . Their
 purposes were almost identical, though their methods of work were radically
 different, as were also their attitudes toward church-controlled colleges . The
actions of the Carnegie Foundation were the more open and therefore will enter
more fully into this narrative . But this circumstance should not obscure the
 fact that the General Education Board program sought similar goals and was
just as assiduously conducted!
   Dr . Hollis goes on to say that, using this as a basis [eligibility for
a Carnegie pension], the specific requirements were established as to
what constituted a "college," and these requirements were later agreed
to in principle at a conference, sponsored by the foundations of all
agencies interested in improving college entrance requirements .
   Dr. Hollis, in comparing the policies of the foundation and the
General Education Board, refers to the former's standards as an "all
or none" dictum which "was happily absent in the more flexible, less
explicit plans of the General Education Board for improving
colleges." 10
  Dr . Hollis referred to the setting up of means for improving col-
lege entrance requirements which grew out of the indictment of the
so-called mechanical credits which were congesting the colleges with
inadequately prepared students and again notes the contribution of
the foundation when he states
   At every stage of this complex kaleidoscopic problem, the philanthropic
 foundations interested in higher education have been alined with the progres-
 sive educators who are seeking such changes as those described as taking part
at the University of Chicago . * * * In addition to cash, the above organizations
 and the Carnegie Foundation furnished the highly valuable services of pro-
 fessional staff members .
   Psychological examinations, comprehensive achievement tests, cumulative per-
manent record forms, and related admission devices had to be planned and
perfected before much actual progress could be made in improving the certifi-
 cate plan of admission by units . The best professional and technical abilities of
the universities and nonteaching research agencies were given to the construc-
tion of these instruments . Columbia, Chicago, and Stanford Universities were
the centers in which most of this research was done, but other universities made
notable contributions . The American Council on Education provided the general
administrative and supervisory direction necessary to coordinate such a large
cooperative undertaking. The philanthropic foundations provided $1,212,450 of
the sum necessary for the work .
   The six regional accrediting associations have jointly and severally been
granted $150,000 as a supplement to other resources, for studies looking toward
the formulation and application of qualitative standards for accrediting high
schools and colleges. The north Central Association of Colleges and Secondary
Schools has alone received foundation grants totaling $115 .000 . This sum has
been devoted to developing standards for judging the effectiveness of the 285
institutions of higher education in the upper Mississippi Basin . It is expected
that the research will aid in a determination and statement of the aims, pur-
poses, and general philosophy of secondary and higher education . Aided by a
foundation graht of $25,000, the Committee of Twenty-one, representing the six
       Ibid ., pp. 129-130 .
  10
        See sections on Carnegie Foundation and Rockfeller General Education Board .
	



                        TAX-EXEMPT FOt im'rIONS                             673-
regional' accrediting associations of the United States, is conducting a study of
accrediting that is focused on the secondary school . It has underta*en the
formulation of standards for accrediting high schools, and the outlining of pro-
cedures for their application and adaptation by the regional associations . Sev-
eral of the regional associations are individually undertaking minor studies
aimed at the solution of parts of the general problem. Educational and founda-
tion officials are united in the determination of supplement or supplant quanti-
tative accrediting with qualitative measures for admission to and progress
through high school and college ."
   According to Dr . Hollis, the method of the General Education
Board was preferable in many respects, particularly in that it wits
more tolerant than the foundation of which he states : "The limita-
tion :of . funds, and the conception of the trust itself, as well as the
philosophy of it's first president, tended to maintain a rigid pattern of
action.' 12
   He points out that the board, while it had a regard for high entrance
requirements, did not insist that colleges "conform to preconceived
general standards, regardless of actual local conditions ." 13
   It recognized that the difference in educational, financial, and social
conditions in various parts of the country made it impossible, even in
medical education, to achieve complete uniformity all at once, and that
to force the issue might merely result in changing the terms rather
than in fact raising standards . It was Dr . Hollis' opinion that the
failure to follow such a policy was "The basic cause for the early
bickering, strife, and only partial success of the foundation's college
admission efforts."
   Much dissension has arisen over the use of the so-called unit and in
later years the Carnegie Foundation was to vigorously attempt to
disassociate itself from it . In that connection it should be noted for
the record that the foundation and the board did not invent the unit
as a device for measuring progress through secondary schools but they
did contribute to securing its more effective enforcement. They there-
fore share with the schools the responsibility for introducing it into
secondary education although its retention past its usefulness may be
charged to the schools through their accrediting associations .
   Both the foundation and the board were in agreement that the chief
offenders against standards were the various Protestant religious
denominations," and both agreed that there should be concentration
of effort in a few colleges which would have the effect of eliminating
the weak colleges through lack of finances and other causes . However,
the methods selected by the foundation and the general education
board differed materially .
   The bylaws of the foundation provided that no institution could
share in its pension fund if it remained under the control of a religious
group . The foundation also required that all affiliated institutions
have a 4-year curriculum and at least 6 full professors . (This auto-
matically established the size of the liberal arts colleges, namely, six
departments) ; is and required a minimum endowment or in the case
of State universities, an annual income .
  11 Md ., pp . 144-146 .
  12Ibid ., pp . 133-134 .
  73Ibid ., p . 135 .
  14Ibid., p . 138 .
  11 After 1921 this was increased to S .
674                           TAX-EXEMPT FOUNDATIONS

   The board approaches the problem by "systematic and helpful cor-
roboration with the religious denominations, which took the form of
direct support of the stronger of such colleges . 16
   Both the foundation and the board had concluded that by withhold-
ing funds from "the weak and tottering or superfluous colleges," as
they were referred to, these institutions would die a natural death, con-
solidate or perhaps even coordinate with institutions selected by the
foundations as pivotal institutions. However, he adds, the results
have not borne out that conclusion-the Office of Education Directory
listing some 2,000 institutions of higher education in this country .
   Moreover, according to Dr . Hollis, the waste, duplication and lack
of articulation are still evident, and according to Dr . Hollis were as
bad after the first World War as those facing the foundation at the
turn of the century .
   * * * Accompanying this dissatisfaction with organization was an even
greater disapproval of the traditional content of the courses and their organiza-
tion into curricula . The manner of being admitted to and guided through these
offerings was reopened for further study . In short, after 1918 there was a new
start in efforts to resolve the confusion existing in American higher education,
and the philanthropic foundations influenced most of these undertakings .
  After the war the philanthropic foundations entered into a more satisfying
relation with higher education . They were no longer forced to seek change by
indirection ; rather, they directly concentrated their grants and influence to
remedy some of the more glaring deficiencies that had been revealed by the war .
A more favorable public attitude toward philanthropic trusts made their new
approach possible. They now directly cooperated with the professional forces
of higher education in a new attack on the problems of organization to assure
institutional operation that would be more effective in modern life .
  By 1920 about 90 percent of all college admissions were by the certification of 15
or more variously required units of the type of credit described by Learned .
Under this system inadequately prepared students were congesting the colleges .
At the same time the system hampered the effectiveness of the high school in
serving the much larger group of students who would not enter college . Those
college and foundation officials who subscribed to Learned's indictment of me-
chanical credits began to pool their money and talents to provide means for im-
proving college entrance devices, and this soon led to more fundamental studies
of the relations of secondary to higher education.
  In addition to what may be termed "direct" activities, i . e., funds
granted to institutions themselves, or for projects in the teaching or
educational field all of the Carnegie and Rockefeller Foundations
made direct contributions of funds to the following organizations
        Adult Education i1
        American Council on Education
        Cooperative Test Service
        Educational Records Bureau
        Institute of International Education
        London School of Economics
        National Education Association
        Progressive Education Association .
  Because of the effect of several universities on education, founda-
tions' grants to these institutions have been tabulated . The institu-
tions are
        Columbia University
        Columbia University Teachers College
        University of Chicago
        Lincoln School .
  1, Ibid ., up . 138-140 .
  17Including grants to American Association for Adult Education .
	



                             TAX-EXEMPT FOUNDATIONS                                     675
THE CARNEGIE CORPORATION OF NEW YORK-THE
 CARNEGIE FOUNDATION FOR THE ADVANCEMENT
 OF TEACHING
                     CARNEGIE CORPORATION OF NEW YORK

                         ESTABLISHMENT, PURPOSES, ASSETS

  The Carnegie Corporation of New York was the last of the philan-
thropic agencies created by Andrew Carnegie, and he served as its
president until his death 8 years later in 1919 . It was established "to
promote the advancement and diffusion of knowledge and under-
standing" among the people of the United States and the British
Dominions. Of its $135,336,869 endowment, $12 million is applicable
to enterprises in the British Dominions and Colonies, at the discre-
tion of the trustees. As of 1951 the assets of the corporation were
$175,890,810 .
   The corporation is managed by a board of 15 trustees, 4 of whom
are ex officio, 3 are presidents also of other Carnegie funds, and the
president of the corporation .
                                    GENERAL POLICY

   The corporation makes grants chiefly to universities, colleges, and
other organizations which the trustees believe can contribute to "the
advancement and diffusion of knowledge and understanding," and
devotes its entire annual income (except that necessary for adminis-
trative purposes) to such grants . Its officers do not attempt to keep
in active touch with programs, nor plan nor direct projects, full
res onsibility being assigned to the recipient .
   Question 1 . From 1911 to 1952, inclusive, the last year for which
the annual report is available, the corporation made funds available
to
                                                                               Appropriations
Universities, colleges, and schools in the United States	 $56,838,274
For adult education	                                           3,012,875
American Council on Education 	                                1,012,875
Columbia University	                                           2,687,265
Cooperative Test Service, Educational Records Bureau, Graduate
  Record, College Entrance Examination Board	                     90,924
Institute of International Education	                          2,366,326
National Citizens Commission for the Public Schools	             750,000
National Education Association	                                  261,500
Progressive Education Association 2	                              76,485
Teachers College	                                              3,727,650
University of Chicago	                                         2,419,450
         Total	                                                                    73,243,624
    1 Does not include Columbia University Teachers College or University   of Chicago .
    2 Including grants to the American Association for Adult Education .
    s Now called American Education Fellowship .
  Funds were given to other organizations, such as the National Ad-
visory Council on Radio in Education, whose activities were less
directly related to education, but time did not permit exploring them
in detail . A brief description of the type of activity carried on by the
  1 Basic Facts About Carnegie Corporation of New York and Carnegie Foundation for the
Advancement of Teaching, published by the corporation in August 1952 .
	



        676                       TAX-EXEMPT FOUNDATIONS

        American Council on Education, the National Education Association,'
        and the Progressive Education Association is given in section 2 of
        this summary.
          Prior to 1930 the major grants of the corporation were fof'library
        buildings, laboratories, endowment of liberal arts colleges, develop-
        ment of such colleges through endowment, endowment of medical
        schools at universities, and endowment, buildings, and support of
        Carnegie Institute of Technology.
          Question 2. All quotations are from the annual reports, and in
        order to avoid undue length, a few have been selected from many of a
        similar nature. They appear in the annual reports under the head-
        ing of "General Education," unless otherwise indicated .
        1937 report
          Page 20
          The field of general education, even within the limits of scholarly inquiry is
        too broad for any single foundation to cover, and, fortunately, more' than one
        foundation is now active therein. The present activities of the corporation,
        working in close cooperation with the Carnegie Foundation, are the following
        tests and measurements and records ; comparative education, notably in the
        study of examinations ; professional education, particularly in its relation to
        professional practice and to supply and demand in personnel ; the relation of
        research to professional education, especially in the graduate school ; new de-
        velopments of undergraduate instruction, supported chiefly by direct grants to
        institutions ; and the maintenance of what may be called educational clearing-
        houses, as in Australia and New Zealand . * * *
          Page 21 :
          * * * Meanwhile, the problems of professional standards in general, the rela-
        tions of the professions to one another and to other branches of education, the
        needs of the public and the degree to which these are being met, have all been
        comparatively neglected . The corporation has had opportunity to study these
        questions rather closely in connection with training for librarianship, but its
        interest includes all professions, large and small, as well as what may be called
        emerging professions, that is, callings which are gradually assuming a profes-
        sional status . It is the writer's belief that there is a definite need today to build
        up a body of doctrine which will be based on reality and not on tradition .
          Pages 21, 22 :
          This general situation opens opportunities to foundations for activities of the
        greatest usefulness, but, unless the programs themselves are carefully organized
    •   and rigidly limited in scope, there is a real danger lest they tend to draw the
        foundation itself outside its proper sphere of action . It is essential not only
        that the foundation be insured completeness of relevant data for its study, but
        also that it be freed from any compulsion to press for action as a means of
        justifying its conclusions . While it may advise frankly concerning changes,
        when its advice is sought, it should never agitate for reforms or use its money
        or influence as a means to a political end .
        1938 report
          Pages 31, 32, 33 : According to the report, on the basis of the general
        purpose of each of the grants made in the period since 1933-34 for
        educational studies, they might be divided as follows
        To understand the student	                            $50,300
        To improve teaching	                                   83,100
        To show what is being done	                           129,350
        To inform as to educational policy and organization 	 51,000
        T o find out what the students learn 	               191, 500
        Various other purposes	                                35,600
               Total	 ------------------------------------ 540,850
                         .
                         TAX-EXEMPT FQIIN~B                                    677 ,
                                                                                 .
  The longest unbroken series of grants of this character made by the corpora-
tion has been voted to the Institute of Educational Research of Teachers' College,
Columbia University, and it should be of interest to summarize the results of
cooperation with a small group of workers under distinguished leadership . In
the 16 years from July 1, 1922, the researches in psychology and education at
Teachers College under the direction of Dr . E . L . Thorndike have been supported
by grants from the Carnegie Corp ., totaling approximately $325,000 . The find-
ings are reported in nine books or monographs already published (without cost
to the corporation), and nearly a hundred scientific articles, doctoral-disserta-
tions, and special reports .
  Nor must it be overlooked that, since science advances as a whole, the work
of gathering data which others may use, repeating experiments, adding here
and there to what others have proved, may in the long run be more valuable
than even such striking direct contributions .
1942 report
   Pages 14, 15 : In the 1942 report the corporation lists as its three
major grants those made to the University Center in Atlanta the
Johns Hopkins University in Baltimore, and the New York Vni-
versit in New York.
   Referring to the Atlanta enterprise ($150,000), it is noted that far
greater grants had been given to it by the General Education Board .
Its purpose is stated to be
   * * * a long-planned integration of the work of the several institutions of
college grade in that area under terms which will give Atlanta the advantage of
a modern university without requiring the constituent colleges to sacrifice their
identities . * *
  The grant to New York University ($100,000) was made with the
understanding that the fund would be used for current purposes
rather than for endowment .
  Pages 16, 17-The report then continues
  Two grants totaling $65,000 were made to the Carnegie Foundation for the
Advancement of Teaching for continuation of cooperative work with a selected
list of graduate and undergraduate schools in developing criteria for admission
and in providing -a basis for judgment as to ability of those already admitted
to candidacy for degrees . A more detailed statement on these studies will
appear in the 1942 report of the Carnegie Foundation for the Advancement of
Teaching. Additional grants totaling $21,000 were also made to the foundation
for two programs undertaken in cooperation with the American Council on
Education . Another grant of $10,000 was voted for the formulation of special
tests to be used in selecting the persons to be trained under the defense-training
program of the United States Office of Education .
  As was recorded in last year's report, one of the largest grants voted in 1940`41
made possible the establishment of the Institute of Adult Education at Teachers
College, Columbia University . It is a pleasure to report that the institute
is rapidly defining a useful role for itself, and that the American Association
for Adult Education, now maintained entirely from membership fees, increased
its dues-paying constituency during a year when most voluntary professional
associations were suffering a decline in membership .
                                         •           •           •
  Among the adult education programs initiated w ith corporat ion support in
prewar days, none has proved more timely than that of the Council on Foreign
Relations . The regional committees organized in 12 strategic cities across the
country have met regularly for discussion of international problems and have
joined in producing an interesting summary of these discussions under the title
of Some Regional Views on Our Foreign Policy, 1941 . An appropriation of
$24,000 was voted for the continuation of this program .
  In the United States it need no longer be argued that provision for the educa-
tion of adults is quite as properly a responsibility of the Government as is
education at other age levels . The war, indeed, has offered dramatic evidence
of the social cost of not affording such opportunities, and the numerous training
programs which have been improvised under pressure during the past 2 years
	
	



67W                       Ti4    Rl~MPT I+'OIT      'A'i!Id
may be expected to continue, with suitable changes and improvements, into peace
times. *
   Question 3 . The excerpts from the annual reports given above, as
well as the quotations from Dr. Hollis' book, are pertinent to this ques-
tion also . No attempt will be made to include all the statements in the
year books of the corporation . Moreover, it is believed that 1 or 2
in addition to those already given will suffice .
  According to Dr . Hollis' the foundations are exercising the initia-
tive accorded them to spend most of their money on exploratory work
that seems only remotely connected with improving college education
on the theory that research must first be done in general education in
order to efficiently accomplish college reorganization .
1962 report
   Page 14
  One of the developments which has produced the most lively debate in educa-
tional circles has been the widespread movement to reinvigorate the ideals
embodied in the term "liberal education ." The goal is rather widely accepted,
but there is substantial difference of opiaiion as to how to achieve it . The general
educationists offer a variety of curricular reforms. Advocates of the Great
Books press their claims for the wisdom of the past. Humanists decry the shift
of interest from certain disciplines to certain other disciplines . Our colleges are
literally awash with formulae for salvation ; all of which is healthy and part of
the process of getting things done in a democratic, heterogeneous, and always
vigorously assertive society .

   • * * President Conant and his coworkers at Harvard have provided leader-
ship in this direction with their efforts to develop a new approach to the teaching
of science as a general education course . During the current year the corpora-
tion made a grant to Harvard for the continuation of this work .
   The social sciences also have a significant role to play . Serious men cannot
accept the view of those humanists who rhapsodize over Platonic generalizations
about society but resent the efforts of the modern social scientist to test these
generalizations.
   • * * Developments such as the new American studies program at Barnard
College (see p . 19) and the courses in Asiatic civilization at Columbia University
 (see p . 21) would be impossible without vigorous participation, indeed, vigorous
leadership, on the part of the humanistic fields . But there is nothing in the
humanistic fields which offers a guaranty of salvation . They too have turned out
narrow technicians when they might have been turning out educated men. They
too have often ignored the central concerns of liberal education .

                                    SUMMATION                                            1
   Based on the foregoing, it can be assumed
   Carnegie Corp . contributed large sums of money to projects which
can reasonably be considered "in the educational field" as shown by
their activities during the past 40 years!
1911-20 :                                                             In millions
    For library buildings, laboratories, or endowment in liberal arts
       colleges	                                                            $3 .5
    For development of liberal arts colleges chiefly through endownment_     2 .8
1931-40,:
    For research, study, publication ; grants-in-aid to individuals	           .5
    For development of women's colleges chiefly through endowment____        1 .5
    For development of fine arts and music in academic institutions 	 2 .8
    For adult education projects 	                                           4.0
  2 Ibid ., p . 150.
  a
    Basic Facts About Carnegie Corporation of New York and Carnegie Foundation for the
Advancement of Teaching, p . 11 .
                        TAX-EXEMPT FOUNDATIONS                               679

1941-50 :
    For area studies in universities 	                                        3 .0
    For research by faculty members ; grants-in-aid	                          2.5
    For education in American citizenship and history 	                       2.0
    For improvement of educational testing 	                                  1.2
    For training in social science 	                                          3 .0
    For research in social sciences 	                                         2.0
    For studies to improve education	                                          4.0
    For graduate education in the South 	                                      1 .2
    For education in international affairs 	                                  4 .0

      Total	                                                                 3& 0
        total does not include grants
                                                                      In militons
To Carnegie Institute of Technology	                                       $24.3
For development of schools of medicine	                                     10.0
For support of dental research and education 	                               1.3
For educational projects- and for development of educational institutions
  outside the United States 	                                                4.0
For development of college libraries and librarianships ; library schools
  or library interests	                                                      &0
For free pensions for college and university professors	 21 .5
For others : such as Church Peace Union, Red Cross, etc	 3.0
      Total	                                                                 72 .7
      Grand total	                                                          110.7
  As mentioned previously, the corporation has contributed $1,237,711
to the work of the National Education Association, the Progressive
Education Association, and the American Council on Education, and
their combined activities affect education at all levels .
  In the early years of the activities of each of these organizations,
the amount contributed by the corporation was undoubtedly a siz-
able portion of the funds available to each of them .

      CARNEGIE FOUNDATION FOR THE ADVANCEMENT OF TEACHING
                         ESTABLISHMENT, PURPOSES
  The Carnegie Foundation for the Advancement of Teaching, created
by Andrew Carnegie in 1905, was the third of the philanthropic
agencies he endowed and like the others has its own funds, trustees,
administrative offices, and conducts its own affairs.
  Fifteen years before when he was appointed a trustee of Cornell
University, Mr . Carnegie had been shocked to find that college teachers
were "paid only about as much as office clerks ." In the summer of
1904 while on his annual visit to Scotland, he renewed an association
with Henry S . Pritchett, a member of Theodore Roosevelt's Cabinet
and president of Massachusetts Institute of Technology ; and from
that meeting grew the establishment of a fund to provide pensions
for professors in American universities .
  There have been two distinctily different phases of the foundation's
activities
  1. Activities designed-
to provide retiring pension without regard to race, sex, creed, or color, for the
teachers of universities, colleges, and technical schools-
within those institutions-
who, by reason of long and meritorious service, * * * shall be deemed by the
board of directors to be entitled to the assistance and aid of this corporation
680                       TAX-EXEMPT FOUNDATIONS

or who by reason of old age or disability, may be prevented from continuing
in the active work of their profession ; to provide for the care and maintenance
of the widows and families of the said teachers ; to make benefactions to char-
itable and educational institutions, and generally to promote the cause of
science and education * * *'
  2. Activities designed-
   (b) In general, to do and perform all things necessary to encourage, uphold,
and dignify the profession of the teacher and the cause of higher education
within the United States, the Dominion of Canada, and Newfoundland aforesaid,
and to promote the objects of the foundation, with full power, however, to the
trustees hereinafter appointed and their successors from time to time to modify
the conditions and regulations under which the work shall be carried on, so
as to secure the application of funds in the manner best adapted to the condi-
tions of the time .2
  Until 1913 the foundation confined its activities to the first phase,
partly at least because the attitude of the founder was somewhat
different than that of its president, Henry Pritchett . The difference
is indicated in an exchange of correspondence between the two . Mr .
Pritchett apparently was imbued with the idea of coordinating col-
leges and universities into a more cohesive group . 3 In December 1905,
he suggested as a name, "The Carnegie Foundation for Education,"
and wrote Mr. Carnegie
  While the primary purpose * * * is the formulation of a pension system, our
charter enables us to undertake any sort of educational work for colleges and
universities * * * it may well happen in the future that our activities may
cover a far greater range with respect to education .
  The name did not strike the founder favorably
  The Carnegie Foundation for Education does not strike me favorably .
"Foundation" seems superfluous . "Carnegie Professional Pension Fund" or
"Carnegie Educational Pension Fund" seems to me better . It might be well,
I think, for you to ask suggestions for the name from the (directors) *
I don't think that you should disguise the fact that it is first and foremost a
pension fund . The closer union it may bring about is incidental, though
important .
  Dr . Pritchett, still president in 1916, indirectly confirms this :             4


  The development of a pension system along sound lines is the most direct duty
of the trustees, a responsibility all the more important because the pension prob-
lem, while a living problem in every State and Province of the United States and
Canada, is still involved in confusion .

               AS THE FOUNDATION VIEWED IT 20 YEARS LATER

  The 1923 report includes the following paragraphs on page 20 :
  The relation of the foundation to educational development and the studies
which it has carried on with respect to various current problems in education
have occupied a large part of the activities of the officers and of the staff of
the foundations . These studies, which have been published' in 16 bulletins, have
concerned themselves not only with special problems such as those of medical
education, of legal education, and of engineering education, but also with the
underlying fundamental questions of education .which relate to good teaching,
to the content of the curriculum, and to the cost of public education . The estab-
lishment of the American Law Institute during the present year, by one of the
most distinguished groups of judges, lawyers, and law teachers ever brought
  ' New York State Charter, granted May 8, 1905, surrendered when congressional charter
granted .
  2 Sec . 2 (b) of congressional charter, granted March 10, 1906 . Sec. 2 (a) contains in
slightly different language original provision as to pensions .
  2
    Fruit of an Impulse, p . 56 .
  A 11th Annual Report, 1916, p . 17 .
                              TAX-EXEMPT FOUNDATIONS
                              .                                                  681
together,, is directly related to the studies on legal education which the founda-
tion has carried out through its division of educational inquiry . Experience
seems to indicate that an- agency such 6w the folndation,' standings apart from
the immediate institutional life and having no constituency of its own, can do
its greatest service by enlisting in such studies the most able students in, different
institutions, and that out of the contact brought about in such groups between
teachers, administrators, and school systems, members of the staff of the founda-
tion, and others there is reached a degree of knowledge and of judgment with
regard to these problems which commands a larger respect and attention than
can be had from the isolated statement of any one individual.
   Outside of the direct activities involved in the study and establishment of
pension systems and in the educational inquiries and reports that have been
made, the officers of the foundation have necessarily been involved in a number
of educational relations of a temporary character having to do with the inaugu-
ration and operation of the educational organizations of the country, such as
the College Entrance Examination Board, the Association of American Colleges,
 the Association of American Universities, the American Council on Education,
the American Association of University Professors, and the various other organ-
izations of those involved in the work of teaching or organization of education . .
   It has thus come about that during the 18 years of its history, the foundation,
while pursuing in the main two specific lines of activity-the one having to do with
pensions and pension systems, the other having to do with educational studies,
has nevertheless, by the very fact of these activities, been involved in greater
 or less degree with all those complex relations in education which arise by reason
of the relationships between the schools of a nation; and the various bodies that
have to do with education . The foundation has sought, during these years to
be hospitably minded toward any agency in education that cared for its co-
operation.
  According to Dr . Savage ; Dr. Pritchett's "pet idea" was realized
by Carnegie's grant to the foundation for establishment of a division
of educational inquiry, and credits "Pritchett's patient persistence ."
  Dr. Hollis quotes Dr. Pritchett as saying : 6
  I put forward the suggestion, that while the primary purpose of Mr . Carneg'e's
gift was the establishment of a pension system there would be involved in the
administration of this gift a scrutiny of education which would not only be de-
sirable in the granting of pensions, but would go far to resolve the confusion that
then existed in American higher education . There was no general requirement
               to_
of admissiono college. Many institutions that were colleges in name, were
really high schools, and many universities were scarcely more than modest col-
leges . I suggested the notion that in the administration of this agency, some
criterion would have to be introduced as to what constituted a college .

                                              ASSETS

  The foundation received from its founder and the corporation
$32,700,000.' Its affairs are managed b y a board of 25 trustees and
according to the report for 1951 had assets of $12,874,718 .84.
  In the 1939 report of the foundation appears the following :
  The cooperative arrangement between Carnegie Cooperative of New York and
the Carnegie Foundation for the Advancement of Teaching respecting projects
in the field of higher education has now been in effect for about 15 years . Its
success has been unqualified . A series of 148 grants totaling $1,449,393 have
been made by the corporation for 85 projects, of which 14, involving 34 grants,
have been carried on in the offices of the foundation, and 71 projects involving
$1,087,350 in 114 grants have been carried on under the auspices of 41 other
educational institutions or bodies . To these the foundation has allocated and
transmitted the funds provided by the corporation . On account of 3 projects
which could not be carried out as planned, $25,000 was returned to Carnegie
Corporation of New York through the foundation . The total of projects effective
over the past 15 years 19 therefore 82 .
  a Ibid., p . 109 ; Annual ,Report for 1913, pp . '21-22 .
  6 Annual Report for 1935, p . 129.
  'Basic Facts, p. 13 .
682                        : TAX-EXEMPT       FOUNDATIONS

                                   GENERAL POLICY
  In the distribution of pensions, the foundation set up standards
which must be met by institutions in order to be eligible for pension
awards-designating those who met the, requirements as "accepted"
and others as "not accepted." 8
  While as outlined earlier the foundation's activities began as a
pension award system for college and university professors, this was
shortly used as a springboard into secondary education with the ex-
planation that
  1. It was necessary to define a college in order to grant the pension .
  2. In order to define a college it was necessary to establish Standards
of admission and of college work .
  3. If standards of admission were to be established it was necessary
to prescribe the courses of study in secondary schools which would fit
the student for the college--as defined .
  The purposes of the foundation set out in its charters clearly
place this agency among those whose sole or primary purpose is of
an educational nature, as evidenced by excerpts from its annual
reports.
  From 1905 to 1951, inclusive, the last year for which complete
records are available, the foundation made appropriations to
Universities, colleges, and schools in the United States	$62,763,560
American Council on Education	                                     90.550
Cooperative Test Service, Educational Records Bureau, Graduate
  Record, College Entrance Examination Board 	. .	              2,850,000
National Education Association 	                                  115,000
Progressive Education Association' 1	                              92,000
       Total	                                                  66,011,110
  .The foundation, like the corporation, gave funds to the organiza-
tions mentioned previously whose activities were also of an educa-
tional nature .12
   Question 1 and question 2 . It would be difficult.to draw a line of dis-
tinction between the quotations applicable to each of these questions,
and for that reason both questions will be covered together .
   All quotations are from the foundation's annual reports unless
otherwise indicated, and are only a few of the many similar quotations
which might have been chosen, but which have been ommitted because
to include them would be merely repetitious .
   Even after establishment of the division of educational inquiry in
1913 13 the greater portion of foundation funds were appropriated for
pensions, or matters directly pertaining thereto, as shown by the fol-
lowing summary of grants from 1905-51 : 14
Retiring allowances and widow's pensions 	$59,298,459.42
Support of Teachers Insurance and Annuity Association 	513, 465 .37
Grants to colleges to initiate pension plans 	 775, 678 .79
Pension studies	                                           30,012. 87
      Total	                                           60,617,616.45

  8 Later changed to "associated" and "non associated."
  0 See pp . 26-27.
  10 Although the foundation appropriated funds to NEA (either its own or the corpora-
tion's) Mr . Pritchett himself was strongly opposed to the association's lobbying activities
for a National Department of Education (annual report for 1933) .
  11 See footnote 3, p. 17 .
  '~ See p . 17 .
  13 By grant of $1,250,000 from corporation . Total grants 'of the corporation were
$32 .7 millions .
  14 Basic Facts, ibid ., p . 14 .
                           TAX-EXEMPT FOUNDATIONS                                  683
Studies in education (by the division) 	                                  2,115,265 .68
Merger of testing agencies 	                                                750,000 .00
Publications	                                                                45,632.18
Cooperative educational studies ;and research . administered but
  not,dirocted by foundation 	`	                                          1,161,990 :34
Southern colleges : To stimulate undergraduate teaching 	                   873, 775 .54
       Total	                                                             4,203,963 .74
   However, this does not mean that the foundation's activities affected
only pensions. Even as early as 1907 15 it was becoming more and
more a factor in determining not only what constituted a college, but
what type of organization was best for conducting a college, including
such matters as the size of the board of trustees, whether or not the
president of the college should also be president of the board, and the
extent to. which alumni should have a government of the institution .
The report,' referring to fears expressed that "a great gift like this in
the hands of a limited number of men might prove a centralized power
which would hinder rather than aid the progress of education," dis-
counted such a possibility because the trustees were "in the main college
and university presidents who have come up through the profession of
teacher, and who are not likely to lose touch with needs and aspirations
of teachers ." is
1911 report
   Page 46-The report deplored the fact that
* * * lack of supervision, both on the part of the General Government, and to
a large extent, on the part of the State governments, has resulted not only in an
extraordinarily large number of institutions bearing the name college or uni-
versity, but it has resulted also in the fact that these institutions have become
involved in local rivalries, so they represent in very small measure national
Ideas on national purposes * * *.
  The first "inquiry" of the new division, which expanded rapidly, was
into the training of teachers and the standards of medical and other
professional schools . From the first, emphasis was put on coordina-
tion between colleges and universities, between these units and second-
ary education, and between both and elementary education . The
"individualism," "class feeling," and "competition" of educational
literature was deplored as was the fact that universities were critical of
colleges, that State supported and privately endowed institutions
viewed each other with suspicion ; and relations existing between col-
leges and secondary schools, and between liberal and vocational edu-
cation were referred to as "armed neutrality and open hostility ."
  Before long, there was to come the recommendation that since edu-
cational foundations were conspicuous illustrations of educational
cooperation, educational institutions could do no less . The school
system is referred to as
* * * an elaborate hierarchical device that undertakes through successive
gradations of textbook makers, superintendents, principals, and supervisors
to isolate and prepare each modicum of knowledge and skill so that it may safely
be entrusted to the humble teacher at the bottom, who is drilled for a few weeks
only, if at all, in directions for administering it ultimately to the child . Mean-
while, superintendents and school boards publicly measure their success by
numbers enrolled, by buildings and material equipment added, and by multplied
kinds of schooling introduced ; and the people are taught to accept this as educa-
  152d annual report of the president and treasurer, 1907, pp . 54-55 .
  is Ibid ., p . 63 .
                      1
        49720-51-pt . 1	44
684                      TAX-EXEMPT FOUNDATIONS

; tion. Such perversions are ample comment on the thoughtlessness of our for-
mula . Where is the school system that by enlightened and fearless propaganda
has convinced its public that education consists first of all in the superior quality
and skill of its individual teachers, and is otherwise meaningless 0
   Qualitative education, as contrasted with the present dependence upon esti-
mates by bulk and housing, signifies a complete transformation in the character
 and status of the teaching profession . Such a transformation once properly
accomplished, the other necessary modifications will inevitably take care of
 themselves . America, with its hundred millions of people, needs upward of
three-quarters of a million men and women to represent her with the childhood
 and youth of the Nation in a deliberate and thorough educative process . If wars
 are to cease and democracy is permanently to hold the field, it will be -a democracy
 with sufficient wisdom to confide this, its most responsible task, to its most
competent citizens, and to prepare them thoroughly for its safe discharge. Gen-
uine education, in a sense consistent with any honest vision of its meaning, can
proceed only through immediate contact with keen minds fully informed and
.persuaded of what the rising generation may become, and dedicated to such
achievement. Persons so equipped will in general not be had unless the dis-
tinguished rewards and opportunities of life are attainable through teaching
 careers . Moreover, these careers must not be mere avenues of promotion, as in
notable cases today, but must constitute and be recognized as opportunities for
achievement in themselves . Any other course means simply to exploit the future
 in the interest of the present by abandoning its control to second-rate minds .
Plato's provision that the head of the state be the director of education expresses
 the unavoidable perspective in a completed democracy .
   Marked changes must ensue in our present system of schooling if we undertake
to carry out an honest interpretation of our avowed aim of "universal education"
by making it not only universal but also education . In the first place our ele-
mentary and secondary school systems must be thoroughly integrated into one
homogeneous and indivisible unit-a varied but coherent 12-year career for mind
'and body, whereby, as a youth, each citizen may acquire a certificate of the
 health, intelligence, and character that underlie a successful society * *
  Dr. Hollis 17 comments on the foundation's activities and policies
30 years later
   The foundation had had a real battle to enforce entrance standards in the rela-
tively homogeneous endowed liberal arts colleges concentrated iai the East . With
the decision to admit State universities to the benefits of the Carnegie pension
system it was faced with the problem of applying on a nationwide scale what was
 in fact a regional accrediting standard for a group of superior institutions .
 Educational, financial, and social conditions in this larger territory were so
'uneven that many of the university officials in the South and Middle West urged
a flexibility in Carnegie standards in keeping with the realities the colleges faced .
After considerable study of the problem the foundation from considerations of
 "logical consistency" (and possibly financial expediency), decided to leave the
'rules a Procrustean bed for all affiliated institutions. The foundation was not
 constructively interested in how a college might reach eligibility, but it did advise
-the State universities not to raise their standards faster than the high school
could meet them, even if that meant delay in securing pensions . Apparently
the attitude was that growth could be stimulated by extending the hope of future
affiliation .
                             ELEMENTARY EDUCATION

  Considerable attention was given to the place of both the elementary
and secondary schools in the educational picture . However, there is
indication that after 15 years of effort the foundation itself questioned
some of the results .
1923 report
   Pages 78, 83 : Commenting that after the schools became free from
the hard-and-fixed curriculum and new studies intended to broaden
student opportunities were added, the report adds that the resulting
overexpansion was not entirely advantageous . As an example, it was
  17 Philanthropic Foundations and Higher Education, p . 133 .
	



                            'TAX-EXEMPT FOUNDATIONS                                 685

pointed out that the organization and quantity of subjects had dis-
placed individual contact, relegating to an inferior position the fun-
damental truth that education does not consist in the amount of infor-
mation absorbed but rather in the ability to think clearly and to apply
the information accumulated to one's everyday life .
    It would, therefore, seem to be fundamental that the elementary school should
.accept clearly its own limitations . It should make sure that the teaching which
 is common to all children is done with a sharp discipline of exact requirement,
 but that a very large part of what is meant to be of cultural value shall be through
	exercises not followed by examinations, but having as their spring of influence
  the contact with cultivated and inspiring personalities .
    Under this regime the elementary-school curriculum would be greatly
 :simplified .
    In the second place, while we must in a democracy proceed upon the assumption
 that every child is entitled to the fundamentals of an education in the elementary
  school, we must frankly recognize that a large proportion of the children of
  the Nation have neither the desire nor the intellectual ability to complete the
 work of a secondary school with profit to themselves . In no nation in the
 world is there a task comparable to that of the American teacher in the second-
 ary schools, patiently and devotedly toiling to bring through to graduation
 multitudes of pupils who have' neither the desire nor the ability for intellectual
  work. The high school should no longer be the refuge for mediocrity that we
 'have made it .
    This involves no discrimination against any class or group in the body politic .
 The stupid or indifferent child is just as likely to be the son of the well-to-do
 as the son of the day laborer . Teachers are coerced by parents, by school direc-
  tors, by all the influences that can be brought to bear, to keep in their classes
  numbers of students whose happiness and usefulness are to be found elsewhere .
    Again read without relation to other foundation activities, and
 without linking with other organizations whose work it supported,
this, this too is a reasonable statement of a condition which might
need study in order to advance teaching . However, in view of the
 results attributable to these other organizations in the installation
of "uniform standards and curriculum in the public schools," the
foundation's statements here and elsewhere in its reports cannot be
studied alone .
    One of the present conditions, for example, which is undoubtedly
  attributable to the philosophy reflected in this quotation is the 100-
percent promotion rule which exists in many communities, and to
- which serious objections have been raised .
               EUROPEAN INFLUENCE-PRUSSIAN, FRENCH, ENGLISH
   A` this point it should be noted that throughout the . foundation's
reports the references are too numerous to mention-there are com-
parisons between education in this country and education in Europe,
always to the detriment of the United States ."'
   The foundation began its exchange of secondary school teachers
-with Prussia in 1908 and the report for 1909 expressed the hope that
more secondary schools and those in charge of them would begin to
appreciate the benefits to be had from this exchange .19 This report,
 and those for succeeding years, stressed the advantages of incorporat-
ing into the American secondary school, the same principles found
in Prussian schools with the object of raising the quality of teach-
      is Annual reports for 1910 (pp . 35-39) ; 1911 (pp. 30-38) ; 1913 (pp. 57-59) ; 1924
    (pp . 111, 116), and others .
      '5 Annual report for 1909, pp . 46-48.
686                       TAX-EXEMPT FOUNDATIONS

ing and education in the United States to a level comparable to that.
of Prussia.
                                SECONDARY LEVEL

    In addition to cooperation and financial assistance to the National
 Education Association and the Cooperative Test Service, the founda-
tion itself carried on work in this field . Again, there are numerous
examples which might be cited from the reports, but only one or two
 will be included here .
1924 report
    Page 107 et seq. : Pointing out that the secondary school is the
 determining factor in the educational structure, the report goes on,
to state that through its entrance requirements the college dominates
the educational program of the high school, yet at the same time
there is an unsatisfactory situation as far as the colleges and pro-
fessional schools are concerned, because of
   * * * a growing army of high-school graduates who lack the qualities of
intellectual training which would fit them for fruitful college study . They
have indeed complied with the formal college requirements for admission, but
 they have not learned to use their minds . A large number of the unfit are
eliminated in their freshman year, a process neither wholesome for the college
nor just to those thus summarily dismissed .
The report recommends as a remedy
   The college can take the first great step by a sweeping change in its entrance
requirements. Instead of requiring a dozen subjects and accepting a passing
mark on all of them, it must test on a few fundamental subjects on which it will
demand a very high order of performance and accept the work of the secondary
school in all other subjects. To accept a passing mark of 60 percent has proved
demoralizing alike to high school and college, to teacher, and to pupil. In
fundamental subjects a high order of performance must be secured . This con-
dition complied with, the college can leave the secondary school free to educate
in its own'svay.
   Here again it should be noted that no evaluation is made of this
objective, the particular means taken to achieve it ; nor is it pertinent
whether the results have been good or bad .
   In 1928 the foundation began its study of the relations of secondary
and higher education in Pennsylvania . This study continued for
several years with funds supplied by or through 20 the foundation
 ($365,091 .36), and formed the basis not only for studies of a similar
nature both in this country and abroad, but in the publication of a
number of pamphlets ; and its recommendations have since been put
into effect.'
1929 report
   Page 85 :
   To meet the need for a suitable record a new form was devised and is now
published by the American Council on Education . On this record a student's
ratings in high school and college are presented graphically and comparatively
over a period of years so that his particular mental pattern appears at a glance
together with the tendencies of his intellectual development . Space is given
for standard test and achievement ratings of whatever nature, and provision
is made for appropriate personal data on the same comparative and chrono-
logical basis, thus presenting an integrated history of a student's educational
growth with the pertinent details .
  20 From the corporation .
  21 The most notable example is probably this suggested form which was recommended by
the Progressive Education Association for use in the schools .
	



                             TAX-EX 't'P    FO€ N1 ATIONS                        687
                          COLLEGE AND UNIVERSITY LEVEL
   There can be no doubt that the foundation carried on many activi-
ties at this level, not the least of which were those in connection with
its pension fund . One of the expressed hopes of the founder and
others was that by this method (removal of financial worries) retire-
ment would be accelerated, and new blood brought into this part of
i he educational process.
  Another example is the experimental program of grants-in-aid to
Instructional staffs in colleges and universities of the Southeastern
States which became operative during 1946-47. The organization
of this program was based on 4 strategically located centers, each
composed of 1 university group and at least 5 neighboring under-
graduate colleges . Each center received annually $15,000 from the
foundation, which it matched with $5,000 of its own funds .
194-47
   Page 24 : The purpose of the program as stated in the report, is to
advance graduate instruction-
   * * * to vitalize it ; to improve its quality ; to help focus attention in college
-and university alike on the need of improving the general quality of undergradu-
 ate teaching . That is the general aim . The choice of ways by which one might
 seek to achieve this general aim is wide, but, as far as this experimental program
is concerned, there has been selected and agreed upon as eminently appropriate,
one single way . That particular way is the encouragement of faculty members
to carry on research and creative activities in fields in which they are interested
and competent . The underlying theory is simple : It is that a teacher actively
engaged on a scholarly research or creative project of his own choosing has more
than a fair chance of maintaining an intellectual activity which directly and in-
directly serves to raise his scholarly self-respect and to make him a more effec-
tive teacher . The primary interest of the program, then, is in the teacher and
his research, not in the instutition and its administrative and curricular prob-
1.ems and physical resources .
   The foundation appropriated $700,000 for this program 2z for a
h-year period, 1946-51 .
   Graduate testing program, cooperative test service, merger-national
testing service : A related activity of the foundation has been the
graduate testing program, carried out primarily with funds from the
corporation with small additions from the foundation itself .
19.44-4 .5 report
   Page 13
   * * * In 1929, when the foundation was in the midst of an examination
study of secondary and higher education in the State of Pennsylvania, the Gen-
eral Education Board made a grant of half a million dollars to establish an or-
ganization for experimental service in the construction and use of educational
examinations . This impressive gift, routed through the American Council on
 Education, was intended for the use of its committee on measurement and
 guidance which had long been active in studying personnel problems under the
direction of the late Herbert E . Hawkes, then dean of Columbia College . There
,was thus set up an agency known as the Cooperative Test Service which for
many years under the wise and vigorous leadership of Dr . Ben D . Wood promoted
the construction and use of excellent educational examinations in many fields .
One of its notable achievements, developed shortly before the war, was the insti-
 tution of a common qualifying examination for teachers which has been spon-
sored by the superintendents of a large number of the most important American
cities . This test and the graduate record examination possess many features in
common .
  22 Funds furnished by the corporation .
688                     TAX-EXEMPT- FOUNDATION$

  With the outbreak and early progress of the war the active functioning of this
agency fell into abeyance although its resources continued to accumulate . Its
recent revival under a reorganized committee of control was inevitable in view
of the indispensable part which objective Measurement has played in the educa-
tional plfeparation of the Armed Forces and appears' destined to retain in postwar
institutional activities .
  With the revived Cooperative Test Service the graduate record office has be-
come closely affiliated in the broader matters of policy . Since February 1945,
Dr. Kenneth W. Vaughn, the associate director of the Graduate Record Office,
has also held the corresponding position with the Cooperative Test Service_
This mutual relationship has contributed much to effect a common understand-
ing between the two organizations and to coordinate their efforts in a common
cause.
1946-47 report
  Page 33 : The following year there is further reference to this sub-
ject which culminated in-the merger of the testing agencies in 1947 .23
  * * * In the main, this report directed attention to the compelling advantages
to American education of such a unification and to the principles on which a na-
tional nonprofit agency might be organized . The committee in the final para-
graph of its report indicated that its primary concern, in this phase of its work,
had been with the principles involved, and that no attention was given to the
practical problems of the several organizations whose cooperation was essen-
tial to the plan . It expressed the hope that its preliminary report would stimu-
late the fullest possible discussion of the practical means of arriving at the
objective.
  In the spirit of this statement the committee recommended the establishment
of a new organization to be known as the Cooperative Educational Testing
Commission . It recomended further that the College Entrance Examination
Board, the Educational Records Bureau, the Cooperative Test Service, and Na-
tional Committee on Teachers Examinations of the American Council and the
Graduate Record Office of the Carnegie Foundation, join in the creation of this
commission, and that in addition to assets contributed by these constituent
agencies not less than $750,000 be provided by foundation grants .
  While the report mentions serious objections raised by representa-
tions of the two largest agencies concerned, namely, the American
Council on Education and the College Board, it does not state what
the objections were, but added that there was no disagreement as to the
need for a central agency, or as to its purposes .
                 MERGER OF TESTING SERVICES, 1947 REPORT
  Page 40 :
  On December 19, 1947, the Board of Regents of the University of the State
of New York granted a charter to Educational Testing Service and thus enabled
it to begin operations January 1, 1948 . Besides the final grant of three-quarters
of a million dollars from, Carnegie Corporation of New York, there were added
to the resources of the new Service approximately $450,000 from the College
Entrance Examination Board and the American Council on Education . The
initial capital assets of Educational Testing Service therefore reached about
$1,200,000.
  Three trustees ex officio served in perpetuity : the president of the
American Council on Education, the chairman of the College En-
trance Examination Board, and the president of the Carnegie Founda-
tion. The board consists of from 9 to 25 trustees .
                             THE CARNEGIE UNIT
   From the beginning the reports placed increasing emphasis on the
desirability of "coordinating" all schools throughout the United
  23 1947-48 report, p . 40.                                      ,
	



                           TAX-EXEMPT FOUNDATIONS                                     689

States, and the setting up of so-called -units which became known as
Carnegie units.
   Dr. Savage,24 tracing the-influence of Dr . Pritchett in the expansion
of the foundation's' activities into other than pension fields' refers to
it as a "useful quantitative device" ; and the earliest known reference in
the public records of the foundation is in 1906 . Undoubtedly the
foundation worked assiduously for its acceptance, and was successful .
When attacks began (as far back as 1909), 25 the foundation replied
that it was not standardizing, but merely working for uniformity in
entrance examinations, and later 25 that the use of the unit as originally
conceived and early promulgated did not tend to injure the educational
process, but it was the abuse at a later date by which "the individual
student was broken on the wheel of a mechanical device ." The foun-
dation's attitude was : "What it has done is to make clear the standards
of the colleges themselves, and to throw the light of publicity on the
deviations from the standards they themselves have set up .27
1947-48 report
   Page 29 : This report contains a detailed account of the origin, use,
and merits of the "unit" which Dr. Savage closes with the following
statement
  Such in outline is the history of one aspect of American higher education in
which the Carnegie Foundation for the Advancement of Teaching had an im-
portant part. The foundation did not invent the term "unit," nor its definition .
In a time of educational confusion such as the country was not again to see until
1945 Dr. Pritchett, for the foundation, used it as one instrument in an endeavor
to bring order out of chaos .
  The fact that the Carnegie Foundation appears to have been the first philan-
thropic enterprise professedly to award grants upon carefully considered ap-
praisal of the American college, and, in connection with that appraisal, to use
the unit, as invented and defined by others, is probably what led a considerable
part of the academic world loosely to prefix to the word "unit" the name "Car-
negie ." At any rate, the foundation has long considered the implications of the
phrase to be unmerited .
                                      SUMMATION

  From 1905 to June 30, 1953, 25 the foundation spent $62,763,560 in
retiring allowances and approximately $5 million on studies and re-
search in education .
  Like its sister agency, the corporation, the foundation has con-
tributed to the work of the National Education Association the
Progressive Education Association, and the American Council on
Education, as well as to such programs as the Cooperative Test Serv-
ice, the Graduate Record Service, and the College Entrance Examina-
tion Board . While the amounts contributed to these organizations
were not as substantial as those of the corporation, nevertheless we calf
assume that their activities and the results thereof were acceptable
to the foundation .29
  u Ibid ., p. 102 .
  25 It was asserted that the "unit" was mechanical, tended to work against a true evalua-
tion of the individual, and that in pressing for it the foundation was attempting to impose
standards of its own making on American higher education .
        Annual report for 1947-48, p . 26 .
  8 r : Annual report for 1909, p . 161 .
  28 8t~ ;annual report, 1952-53, p . 44 .
  21 See see.' 2' for a description of the activities of each of these organizations .
690                          TAX-EXEMPT FOUNDATIONS

        THE ROC KEFELLER FOUNDATION-GENERAL
                  EDUCATION BOARD
                                      INTRODUCTION

  The first of four philanthropic agencies created by John D . Rocke-
feller, Sr., was the Rockefeller Institute for Medical Research in 1901 ;
the second was the General Education Board, limited to the promotion
of education within the United States and its Territories, established
in 1903 ; the Rockefeller Foundation, 1913 ; and the Laura Spelman
Rockefeller Memorial established in 1918 in memory of his wife . His
total gifts to each of these were : 30
The Rockefeller Institute for Medical Research 	$60,673,409 .45
General Education Board	                        129,209,167.10
The Rockefeller Foundation 	                    182, 851, 480.90
The Laura Spelman Rockefeller Memorial	73, 985, 313 .77

       Total	                                                           446,719,371 .22
  NOTE -In   1928 the Laura Spelman Rockefeller Memorial was consolidated with the
Rockefeller Foundation, with the exception of 1 or 2 specialized functions, which did not
fit into the foundation's program and which were transferred to a new organization called
the Spelman Fund of New York along with $10 million to carry on its work . This fund
has since been liquidated, as has the General Education Board (on Dec . 31, 1953, when
all its funds were entirely distributed) .
  One other agency in this field-the International Education Board,
to which he gave $20,050,947 .50-was created by John D . Rockefeller,
Jr., in 1923, because of the charter limitations of the General Educa-
tion Board . At this point it should be noted that the total of half a
billion dollars represented by the total of all Mr . Rockefeller's gifts,
is not the grand total of expenditures by his various agencies-it is
merely the principal to which must be added approximately the same
amount in income, which these agencies have also distributed, or yet
have to distribute.
                           REARRANGEMENT OF ACTIVITIES

  The General Education Board carried on activities in the field of
education from 1902 to the end of 1953, but the Rockefeller Foundation
itself did not become active in the field of education for some years
after it was established, except to the extent that its work in the
medical, health, and agricultural fields may be considered educational .
  The Laura Spelman Rockefeller Memorial operated only during the
decade 1918-28, and the International Education Board was in exist-
ence from 1923-38 .
1928-29 report
  Pages 3-6 : In the board's report that year, referring to the various
Rockefeller agencies, is stated that it was becoming evident that the
line between the activities of each was not clearly marked, resulting
in doubts on the part of the public as to the respective fields, and a
duplication of time and expense in the presentation of the same proj-
ects to two or more of the boards . A committee was appointed to study
the situation and to decide how the work might be carried on in closer
and more clearly defined cooperative relations . It recommended that
a new corporation, the Rockefeller Foundation, be created, into which
would be merged the former Rockefeller Foundation and the Laura
  80 Story   of the Rockefeller Foundation, Raymond B . Fosdick, p. Ix.
	



                              TAX-EXEMPT FOUNDATIONS                                   691
    Spelman Rockefeller Memorial . A further recommendation was
    extension of the scope of the new foundation to embrace as a major
    function-
    the advancement of knowledge in-
           (1) the medical sciences,
           (2) the natural science (taking over the program in foreign countries of
        the International Education Board),
           (3) the social sciences (formerly carried on by the Laura Spelman Rocke-
        feller Memorial), and
           (4) the humanities ;
    and the appointment of a director and staff for each of these fields .
      The final recommendation was division of the field of education in
    the United States between the Rockefeller Foundation and the General
    Education Board, along definitely determined lines . The net result
    of this was to create two Rockefeller agencies : The Rockefeller Foun-
    dation, a broad and general operation ; and the General Education
    Board with activities limited to the promotion of education in the
    United States.
      According to this, "education" would fall into the orbit of the
    board and "research" into that of the foundation . In the case of an
    undertaking which embraces both objectives, the deciding factor was
    the principal one, if the motive was education then it was a board
    activity-if research a foundation activity .
      The board from that time dealt chiefly with institutions rather than
    with learned societies or research agencies . Also, it did not sponsor
    individual research projects after that time except in educational
    psychology and the educational processes that fell within its desig-
    nated fields . Thus, the exclusive activities of the board after that
    related chiefly to college education, public education and the processes
    of education, the application of art to industry, and aid in accounting
    methods and administration .
      That year also the board withdraw from the field of medical educa-
    tion because it felt that its part in the endeavor had been completed .
    During the period 1913 to June 20, 1929, the board had contributed a
    total of $87,154,319 .33 to universities and colleges for whites, and
    $18,191,328 .39 to colleges and schools for Negroes, exclusive of any
    projects carried on in such institutions with board funds .
                  THE ROCKEFELLER GENERAL EDUCATION BOARD

                          ESTABLISHMENT, PURPOSES, ASSETS

      Since the board 31 was the first of the Rockefeller philanthropic
    trusts in the field of education, its activities will be summarized first .
      As in the case of the Carnegie agencies no attempt will be made to
    evaluate the merits of this agency or the Rockefeller Foundation
    and this section of the summary like the other sections will be devoted
    to ascertaining whether it is possible to find answers to the questions
    raised in the opening statement .
      However, it should be noted that when Mr . Rockefeller gave the
    $1 million to the board in 1902, he referred to the fact that the imme-
    diate work of the board wouldd be in studying the needs and aiding
    to promote the educational interests of the people of the Southern
      81 The General Education Board will be designated throughout this section as the board.
692                           TAX-EXEMPT FOUNDATIONS

States, and during the early portion of its life, it was in these areas
that the board's activities were concentrated . It should also be noted
that the first permanent endowment, in 1905, amounting to $10 million
was expressly designed to furnish an income-
to be distributed to, or used for the benefit of, such institutions of learning at
such times, in such amounts, for such purposes, and under such conditions or
employed in such ways as the hoard may deem best adapted to promote a com-
prehensive system of higher education in the United States . 82
  This limitation does not appear in the charter of the board 33 and it
was later removed by Mr . Rockefeller in subsequent letters of gift.
  Management of the board's affairs was in the board of trustees, con-
sisting of not less than 9 nor more than 17 in number, elected for a
3-year term . In following out its purpose it gave grants toward
the support of educational institutions, agencies, and projects, as well
as individual fellowships .
  Although the board was created in 1902, the first published report
was in 1914 and it contains the following introductory note : 34
  This volume gives an account of the activities of the General Education Board
from its foundation in 1902 up to June 30, 1914 . The board has made annual
reports to the United States Department of the Interior and these have been
regularly printed in the reports of the Department ; but no further report has
been hitherto issued, because, as the board's work was felt to be experiemental
in character, premature statements respecting the scope and outcome of its
efforts were to be avoided . After something more than a decade, tangible
results have begun to appear and to their description and consideration the
following pages are devoted . Henceforth, statements will be issued annually .
and from time to time, a more critical discussion like the present report will be
published .
  In view of Mr. Rockefeller's deep interest in the South and southern
education, particularly elementary, the board at once set to work to
acquire a thorough knowledge of conditions in the Southern States
and surveys were made, State by State, culminating in a conference of
county superintendents in each State . These studies covered the
organization of the public-school system, its finances, the number and
character of school buildings, the number, training, and pay of public
schoolteachers, private and public secondary schools, institutions for
the higher education of women, schools for the training of teachers,
and schools, both public and private, for the education of Negroes .
1902-14 report
  Page 13 : In a section entitled "Policy of the General Education
Board," the report states
  But the studies just referred to did more than supply facts . For out of them
a conclusion of far-reaching importance soon emerged . They convinced the
board that no fund, however large, could, by direct gifts, contribute a system
of public schools ; that even if it were possible to develop a system of public
schools by private gifts, it would be a positive disservice . The best thing in
connection with public-school education is the doing of it . The public school
must represent community ideals, community initiative, and community support,
even to the point of sacrifice . The General Education Board could be helpful
only by respecting this fundamental truth . It therefore felt its way cautiously,
conscious of the difficulty, complexity, and delicacy of the situation .
  As a statement of policy this language leaves nothing to be desired
and as referred to previously, in this respect the avowed intentions of
  32   Letter of gift, June 30, 1905.
  33   A et of Congress, January 12, 1903 .
  34   P . XV, annual report, 1902-14 .
	


                         PAX-EXEMPT FOUNDATIONS'                                693
the Rockefeller agencies were at variance with the avowed intentions
of the Carnegie Foundation for the Advancement of Teaching.
  Question 1 and question 2 . It is difficult, if not impossible, without
duplication to completely separate the quotations pertaining to these
two questions. For that reason and because they have equal validity
in providing answers to both questions, no attempt will be made to
distinguish tetween them .
  Unless otherwise indicated, all quotations are from the annual
reports of the board, with the year and page as noted . Because the
activities of the board which relate to these questions, are so varied
:and also because they fall into certain more or less distinct topics
they have been subdivided .
                  ELEMENTARY AND SECONDARY EDUCATION

1902-14 report
  Pages 80, 81, 83 : There is a certain amount of overlapping between
these two levels of education, and for that reason no dogmatic dis-
tinction has been made . Because it saw deficiencies in secondary edu-
cation in the South, the board approached the problem by selecting
a person or persons whose business it was to inform, cultivate, and
guide professional, public, and legislative opinions . Believing there
was need in every State for trained specialists in the field of secondary
education, it felt this individual should also "skillfully and tactfully
marshal all available forces for the purpose of securing concerted
action calculated in time to realize a secondary school system ." Aware
of the lack of funds in the hands of the State departments of educa-
tion, or the State universities themselves, the General Education Board
then entered the picture and stated its willingness-
to make appropriations to the several State universities for the salaried and
traveling expenses of a professor of secondary education whose main and prin-
cipal work shall be to ascertain where the conditions are favorable for the estab-
lishment of public high schools not in existence ; to visit such places and to
endeavor to organize in such places public high schools in accordance with the
laws of the State ; to endeavor to create in such communities a public sentiment
that shall permanently sustain such high schools, and to place the high schools
under such local leadership as shall give them intelligent and wise direction, and
be and the university shall exercise a fostering care over such institutions .
   While stating that the board did not attempt either to indicate or
to dictate the lines along which the individuals should exert them-
selves, it describes their activities in the following terms
  In addition, the professors of secondary education were high-school evangelists
traveling well-nigh incessantly from county to county, returning from time to
time to the State university to do their teaching, or to the State capitol to confer
with the State superintendent . Wherever they went, they addressed the people,
the local school authorities, the county court, teachers, businessmen and business
organizations, county and State conferences, etc . They sought almost any sort
of opportunity in order to score a point . Law or no law, they urged their hearers
to make voluntary efforts toward a county high school, if a start had not yet been
made ; to add a grade or a teacher to a school already started ; to repair the build-
ing or to provide a new one ; to consolidate weak district schools into a larger
,one adequate to town or county needs . Nor did they merely expose defects,
tender advice, and employ exhortations ; they not only urged the policy, but
nursed a situation . By correspondence they kept in touch with places already
visited ; from time to time they returned, to renew pressure or to recognize
achievement. * * *
694                     TAX-EXEMPT FOUNDATIONS

  During the 10-year period the board contributed $24,862 in 12
Southern States .
1915-16 report
  Page 39 : The board held meetings those' years- an the estion of
"needed reforms in elementary and secondary education, one out-
growth of which were the Occasional Papers 2 and 3. However, the
Board was again quick to state that it was interested only in facilita-
ting the trial of "promising educational experiments under proper
conditions ."
1918-19 report
  Page 41 : The board continued to make sums available to the State
universities for a professor of secondary education and also made
funds available for departments of secondary education . These pro-
fessors of secondary education were urged and encouraged to work on
the high-school curriculum and organization as well as the improve-
ment of teachers in actual service and the administration and effect of
State subsidies and Federal grants, and it was around this time that
the subject of "public education" was included as a section of the
annual report.
  Throughout its history the board divided its activities, devoting a
section to white colleges and universities, and a section to Negro
education.
1923-e4 report
  Page 29 : The board states it was becoming increasingly clear that
the professors of secondary education had substantially achieved the
purposes for which they were originally supported .
  That same report, in referring to the improvement in the State
departments of education in the Southern States, announced that it
had decided that the need was for trained men and women in the field
and with that object in mind it had appropriated in 1922, $50,000 to
provide scholarships for persons occupying important posts and
increased the sum to $80,000 during the year just closed .
  The colleges most frequently selected were
      George Peabody College for Teachers
      University of Chicago
      Teachers College, Columbia University
      Columbia University
      Cornell University
      University of Wisconsin
      Harvard University
      University of California
      Hampton University

  GENERAL EDUCATION INCLUDING TESTING AND ACCREDITING PROJECTS
   The board began what it referred to as a general education program
in 1933 and it continued for about 5 or 6 years . It was during this
period that much of the work of the various testing and accrediting
agencies was being done, and for that reason much of the comment in
the reports is on . that subject.
1933-34 annual report
  Page 4 : In this report there is the following statement
  From 1929 to 1932 the board gave its support to several projects for the im
provement of school and college relationships and for the intensive development
                        `TAX-EXEMPT FOUNDATIONS                                695
of quality in college education * * * . Through aid to institutions and to edu-
cational commissions, there were studies made of the accrediting, examining,
and teaching procedures in force at~t number of representative institutions and
within large areas of the country . At a few places controlled experiments were
carried on by the college administrative officers and staff having the respon-
sibility of selecting students and of organizing courses of study for both schools
and colleges * * * .
. :933-34 annual report
   Page 5 : Referring to the critics of educational practice and their
-request for new purposes rather than for further modification in
existing routine, the report states
   It was pointed out that too little has been done to discover a form of education
 universally useful to man in society today ; that by formal or inforxn.al methods
every individual should be made familiar with the forces that he will encounter
 in daily living ; and that apart from special preparation for earning a livelihood,
 he should be made ready for continuous participation in the responsibilities and
:satisfactions of life to the extent of his individual ability .
   The purposes of a general education for individual and social usefulness can
 be stated, they believe, in a way that will have meaning for adults as well as
 for younger students ; the adaptation of methods for its attainment will then
be practicable through the processes of formal and informal studies. From
such considerations the board reached the conclusion that assistance through
 the further definition and development of general education through appropriate
 agencies should be one of the purposes of its new program.
  This is included at this time in view of the grants made later by
the board to other organizations and for types of projects.
                               BUILDING AMERICA
1935-36 annual report
   Page 8 : The report contains the following, under a subheading
"Reorganization of Subject Matter Fields-Society for Curriculum
Study Building America"'
  In the spring of 1935, a new monthly periodical was lautiched by the Society
for Ourriculum . Study with the assistance of funds , provided by the General
Education Board. The magazine represents an= attempt on' the part of the
society to meet a long-felt need in secondary education for visual as well as
factual study of contemporary problems of our social, political, and economic
life. A characteristic feature of the pIblication lies in its emphasis upon pictures
:and graphs as a means of presenting facts and indicating problems . Housing,
Men and Machines, Transportation, Health, Power, Recreation, and Youth Faces
the world are among the issues already published. Throughout the various
types of curriculum, ranging from instruction in subject matter to the newer
types organized around basic functions or major interests of society, Building
America studies are now being used in valuable organized visual aids and as
useful units of study . A further appropriation of $30,000 over a 3-year period
wad made this year by the, board . with a view ,to .developing .the magazine to a
point where it will be self-supporting .
1935-36 annual report
   Pages 11, 12, 13 :
  The various educational accrediting associations of this country are in position
to play a significant role in the reorganization of secondary education . For
some time now, they have recognized that important modifications in standards
and procedures for accrediting are imperative and a cooperative attack on the
problem has been organized by a joint committee of 21 members representing
the several associations * * * .
  $116,000 over a 2-year period has been made by the board to the
American Council on Education .
696                     TAX-EXEMPT FOUNDATIONS

1936-37 report
    Pages 60-67 : Grants were made that year in support of work by
organizations and institutions in the following types of activities
   General planning of educational reorganization : Taking stock of the Situation,
discussion, and agreement upon the purposes of general education, and planning
for such reorganization of general education as is necessary to make it attain
these purposes.
   Experimentation with the curriculum and evaluation of the results of such
experimentations.
   Preparation of new instructional materials and experimentation with new
methods of teaching : This includes experimentation with new instruments of
education such as film and radio .
   Recruiting, selection, and education of teachers : This includes the education
of teachers already in service as well as work with prospective . teachers .
    Study of youth : This includes studies of the special needs of various racial
 and economic groups as well as studies of the needs of all young people for
normal physical, intellectual, and personal developments .
   Again the organizations selected were the Progressive Education
Association, the National Education Association Department of
Secondary School Principals, and the American Council on Education
as well as the National Council of Parent Education, the American
Youth Committee, and Teachers College of Columbia University .
1936-37 annual report
   Pages 63-65 : Dr. Robert J. Havighurst, director for general edu--
cation, made . some interesting comments in this report . After
describing the evolution of the high school from the traditional func-
tion of preparing a small selective group for positions in business and .
industries and another for institutions of higher learning to the educa-
tion of the mass of youth for more effective living . He states
  The kind of reorganization that the secondary schools must . undergo is deter-
mined by social change in two different ways ., As just indicaed, social, change
has brought young people of the most diverse* capacities and interests into the
secondary schools which must develop a program to meet their needs . In ad-
dition, social change is making new demands upon all people for understanding
human nature and society * * * for social change has made it necessary
to discard to a large extent old ways of living, many of which could be managed
by instinct, habit, tradition, and sheer untrained power * * * While we do nott
need to develop new physical organs and adapt old ones to the new life, we do
need to develop new ways of living and to modify old ones . In this process a
reorganized program of general education can play an important part .
  * * * one of the most significant things about the actions of educators and
educational organizations in this connection is their concern for making a re-
organized general education serve to help young people develop a loyalty to demo-
cratic ways of living and a confidence in democratic methods of solving social
problems .
   He goes on to state that both the National Education Association
and the Progressive Education Association feel responsible for saying
in definite terms what they believe the ideals of democracy to be and
how education should be organized to lead to the realization of these
ideals .
   These comments are particularly significant in the light of the ac-
tivities of the National Education Association and the Progressive
Education Association under what they term "democracy ."
1937-38 annual report
   Pages .66-69 : Dr . Havighurst, after pointing out some of the deft •
ciencies of the high school insofar as the mass of young people were
concerned, because the curriculum was geared to the requirements of
                        TAX-EXEMPT FOUNDATIONS                               697
the minority, pointed out that while the board could not commit itself
to any one approach to these problems, it did extend assistance to a
number of responsible and representative organizations with the idea
of :fotmnlating what, in their opinion, are the underlying purposes of
a general education for young people and following that to recommend
a series of changes calculated to make "the systematic care and educa-
tion of youth serve these purposes better ."
   The board gave, as its reasons for selecting the American Council
on Education, the National Education Association, the Progressive
Education Association, and the regents of the University of the State
of New York the fact that "no truly representative canvass of existing
knowledge and points of view on the problems of youth could have
been made without the participation of these groups ."
   While Dr. Havighurst felt that the unanimity of these groups in
recommending a thoroughgoing reorganization of general education
at secondary levels was remarkable such unanimity would actually
appear to be only the logical result of the close cooperation and joint
projects of these groups and others, including Columbia University
and . Teachers College.
   The board went on to give grants to those organizations which it
considered to be factfi.nding and deliberative and these were the same
groups which had done the preliminary studies .
   In his report, Dr . Havighurst made the following comments on the
work of the American Historical Association, after referring to the
various deliberative committee reports which had been effective in
shaping American public education during the years roughly of the
board's; operations
  The present decade has produced several ; committees whose reports may be
ranked with those of previous decades . Four years ago the commission on social
studies of the American Historical Association published an important -series of
books dealing with the teaching of social studies in the schools . The committee
on orientation of secondary education (a committee of the Department of Second-
ary School Principals of the National Education Association) has produced two
reports-one on the Issue of Secondary Education and othe other on the Func-
tions of Secondary. Education. The Federal Government's Advisory Committee
on Education is now issuing a series of statements on its various inquiries . To
these documents may now be added reports coming from several groups which
have reecived aid from the General Education Board .
  He goes on to discuss the reports of the regents' inquiry as to the
character and cost of education in New York and those of the Alneri
can Youth Commission .35
  One of the most important results was the issuance of three major
statements on educational policy by the Educational Policies Commis-
sion of the National Education Association entitled "The Unique
Function of Education in American Democracy," Charles A . Beard ;
the "Structure of Education in American Democracy," by George D .
Strayer ; and "The Purposes of Education in American Democracy,"
by William G. Carr, secretary of the National Education Association .
1938-39 annual report
  Pages 87-93 : Referring to the board's program in the fields of gen-
eral education through the American Youth Commission of the
American Council on Education, the Educational Policies Commission
  as How Fare American Youth? Homer P . Rainey ; Secondary Education for Youth in
America Harl Douglass ; Youth Tell Their Story, Howard M . Bell.
	
	


698                      TAX-EXEMPT FOUNDATIONS

of the National Education Association and the Commission on Sec-
ondary School Curriculum of the Progressive Education Association
and the inquiry staff of the New York State Board of Regents (report-
ing that much of the work had been completed or was nearing com-
pletion) Dr . Havighurst continues : "And is now serving not only as
a basis for changes in the curricula of many secondary schools but as
an incentive to experimentation with a variety of procedures for the
care and education of young people ."
      *           *          *           *           *           *
   Page 93 : Dr. Havighurst, referring to the activities of the board
states :
   Aid to experiments with the curricula of secondary schools and junior colleges
 and evaluation of the results of such experiments has been an important part of
the board's work in general education . Grants for work in this area have included
such undertakings as the Progressive Education Association's 8-year experimental
study of the 30 schools, the American Council on Education's Cooperative College
Study, and the Michigan Secondary School Curriculum Study * * *. The inter-
est was continued by appropriations that year including a continuation of the
National Education Association civic education project, one of the major objec-
tives of which was the improvement of civic education in the United States with
particular stress on the importance of developing in young people an intelligent,
appreciative, and active loyalty to democracy .
1940 annual report
  Page 4 : A total of some $8,500,000 had been appropriated, the effects
of which, the report states, it was too early to judge. But the report
continues
  But it can be said with considerable assurance that the studies and experi-
ments which have been aided by the board under its program in general education
have made significant contribution toward a better understanding of the problems
of youth in an age of rapid social change * * * . Undoubtedly, projects aided by
the board had stimulated a widespread interest in the development of ways for
improving the care and education of young people ; they have built up a new and
much-needed body of organized psychological, physiological, and social knowledge
about youth ; and they have set in motion systematic planning on the part of insti-
tutions and national organizations for a continuing consideration of problems
involved in the preparation of youth for the democratic way of life.
     *           *           *           *           *           *
   Page 76 : Dr. Havighurst once again devoted a special section of
his report to discussing the program in child growth and development
which the board had been supporting since 1933, continuing the inter-
ests evidenced by the Laura Spelman Rockefeller Memorial . From
1933 to the close of 1940, $1,032,888 had been appropriated for studies
of adolescents ; $519,543 for studies of infancy, and $1,73,000 for fel-
lowships, conferences, and special studies . In 1940 the board re-
moved the earmarkings of the various sums which prior to that time
had been segregated for different phases of the board's programs and
that year, 1940, also marked the end of the general education program
which began in 1933 .
1949 report
  Page 34 : Referring to the National Citizens Commission for the
Public Schools, the report states
  Among the most promising projects for rehabilitating the public schools was
that begun during the year by the National Citizsns Commission for the Public
Schools, New York . This laymen's commission : was established upon the advice
of a number of leading educators, and under the chairmanship of Mr . Roy E .
                        TAX-EXEMPT FOUNDATIONS                               699

Larsen and is arousing latent grassroots interests in the improvement of public
education . By means of studies, conferences, printed materials, addresses and
publicity the committee intends to bring about community participation in
behalf of better school administration, better instruction and more generous
support for local educational needs . In publicizing examples of good school and
community practices, the Commission hopes to assist thousands of communities
in their efforts to build stronger schools . This is the first laymen's attempt to
deal with this important educational problem . Toward expenses of its first
year, the board appropriated $50,000.
1950 annual report
   Page 45 : The following year, reporting on this commission the re-
port states : "The Commission has stimulated group action by example
 rather than by direction ." Good practices have been publicized, con-
ferences and study groups have been encouraged, and in response 973
local citizens' committees have been set up across the country to deal
with local school problems . The report goes on to state that regional
offices have been established and subcommittees set up, and the board
appropriated $75,000 for use over the next 2 years .

                         COLLEGES AND UNIVERSITIES
1902-14 report
   Pages 142, 143, 148 :
  The three main features of the policy of the general education board in deal-
ing with higher education may therefore be expressed as follows
   (1) Preference for centers of wealth and population as the pivots of the sys-
tem ;
   (2) Systematic and helpful cooperation with religious denominations ;
   (3) Concentration of gifts in the form of endowments .
   The board tentatively decided that an efficient college should enjoy
an income from endowment covering from 40 to 60 percent of its
annual expenditures and from these and subsequent reports it would
appear that grants from the board were held out as an incentive to
institutions to put themselves in this financial position . This proce-
dure is in no wise unusual and was contingent upon the institution
itself raising matching or greater sums . And again, no criticism is
made of this approach, that such grants were in education fields, and
selected educational fields and somewhat too, selected educational in-
sLitutions, is only pertinent in relation to this question .
   Another item which the board refers to as safeguarding the property
of the institutions was to give special attention to the business meth-
ods of the institutions to whom grants were made and on this point
the report states : "* * * The board was indeed bound to exercise as
much care in the distribution of its income as in making investment of
its principal. For this reason, the business management of colleges
applying for contributions has been carefully scrutinized with a view
to suggesting such improvements as might be advisable ." From this
it is reasonable to assume the board at least to a degree decided upon
what were efficient methods .
   The board itself admits that its grants were in the nature of incen-
tive grants, and of this there can be no doubt, and at this stage in its
operations the board also freely admitted that many years would have
to elapse before the main task in which the board was assisting could
even be approximately completed, but it felt that the board's gift
served an indispensable purpose as leverage .
      49720-54-pt. 1-45
700                           TAX-EXEMPT FOUNDATIONS

  Until 1915 the board's activities were grouped into the following
divisions :
    (1) Appropriations for colleges and universities
    (2) Medical education
    (3) Education in the Southern States, including white rural schools, Negro
          rural schools, and secondary education .
    (4) Farm demonstrations
    (5) Educational research
  In the following years the title selected was somewhat different,
but the fields of activity remained practically the same, with profes-
sional education becoming a section around 1920.
                                LINCOLN SCHOOL
1916 17 report
   Pages 48-49 : This report contains the first mention of the grants
made to Lincoln School, and the board states that this is an example
of the service that can be performed in "support of educational experi-
ments ." It goes on to state that the Teachers College of Columbia
University had requested the board to provide the funds needed to
conduct a school which endeavored "to organize a liberal curriculum
out of so-called modern subjects." The report compared this to its
work in the farm demonstrating program and added : "In addition
to its primary and essential task-that of endeavoring experimentally
to construct another type of education-the Lincoln School will, in
the judgment of its promoters, assist in developing a critical attitude
throughout the field of education ."
1924-25 report
   Page 21 : The board decided that year that the Lincoln School had
a permanent function to perform and it made initial appropriation of
$500,000 to Teachers College toward endowment . Referring to its
activities later,36 the board states : "During recent years the appro-
priations of the board to colleges and universities have been mainly
directed to the development of graduate activities ." And declaring
that a fine line cannot be drawn, it continues : "The board is now look-
ing to the development of graduate instruction and research ."
1925-26 annual report
   Pages 36-37 : In reporting its appropriation of $500,000 toward the
endowment of Lincoln School, at the discretion of Teachers College,
the board quotes from the annual report of Dr . Russell, dean of
Teachers College, as follows
  Eight years ago, with the support of the general education board, we estab-
lished the Lincoln School for the purpose of experimenting with the materials
of instruction and methods of teaching suitable to a modern school . The success
of the undertaking has exceeded all expectations from the standpoint both of a
school and of an experiment station .
                             SUMMATION
  Based on the foregoing
  1 . The board contributed large sums of money to projects in the
educational field .
  2 . In the course of its activities the board has made grants to the
American Council on Education, National Education Association, and
  ~ 1927-28 annual report .
	



                          TAX-EXEMPT FOUNDATIONS                                    701

the Progressive Education Association and others in the following
amounts
Universities, colleges, and schools in the United States 	$257,157, 581
For adult education	                                                              50,000
American Council on Education	                                                4,841,005
     Columbia University 1	                                                  (7,607,525)
Cooperative test service, Education Records Bureau, graduate
   record, college entrance examination board	                                3,483,000
     Lincoln School of Teachers College	 (6,821,104)
National Citizens Commission for the Public Schools 	                            150,000
     National Education Association 	                                           978,312
     Progressive Education Association	                                       4,090, 796
     Teachers College	                                                    . (11,576,012)
     University of Chicago' 	                                              (118, 225,000)
        Total	                                       .	 270,750,694
  1 Grants to these institutions are included in amount shown for universities, colleges,
and schools .
                       THE ROCKEFELLER FOUNDATION

                       ESTABLISHMENT, PURPOSES, ASSETS

  As mentioned in the section dealing with the board, the foundation
was the last agency created by Mr . Rockefeller which is still in exist-
ence . The amounts and dates of his gifts to the foundation S7 were
1913	              $34,430,430 .54
1914	               65, 569, 919 . 46
1917	               25,765,506 .00
1917	                5,500,000.00
1918	          4	 1, 000, 00(k 00
1919	               50, 438, 768. 50
1926	                    37,000 .00
1927	                   109,856 .40
     Subtotal	.	182,851,480.90
1929'	             182,851.480.00
     Total	      0 241, 608, 359. 74
   The foundation's affairs are under the direction of a board of 21
trustees, elected for 3 years, and its charter 40 states as its purpose "To
promote the well-being of mankind throughout the world ." As of
December 31, 1952, its assets were $167,890,851 .75 and its income for
that year was $16,893,519 . Both principal and income may be spent .
   According to the information filed with the Cox committee 41 by
the foundation, its expenditures from May 22, 1913, to December 31,
1952,41 were
For land, buildings, and fixed equipment 	 $48,232,370
For endowment and capital funds	                                     70,003, 956
For current support of institutions, agencies, projects, and fellow-
  ships	                                                                   340,101,279
       Total	                                                               458,337,005
  For 15 years after its creation the foundation placed its major
emphasis on public health and medical education, although a division
  31 This term will be usedd in this section to refer to the Rockefeller Foundation .
 38  Funds from the Laura . Spelman Rockefeller Memorial .
 38  Annual report for 1952 gives $316,220,394 as received from donors .
 40  Incorporated by special act of New York State Legislature, 1913 .
  41 And incorporated in annual report for 1952, latest available .
  42 Does not include expenditures of Laura Spelman Rockefeller Memorial prior to
consolidation .
702                       TAX-EXEMPT FOUNDATIONS

 of studies had assigned to it several miscellaneous interests, including
the training of nurses, aid to dispensaries, human aspects of biology,
and anthropology . In time its programs and those of the other Rocke-
feller agencies began to overlap, and in 1928 after an extended study
a plan was evolved whereby all programs of the four Rockefeller
boards relating to the advance of human knowledge 43 would be
concentrated in the foundation .
   The expenditures of the foundation from 1913 to December 31,
1952, in fields of major interest were
   Appropriations for the social sciences, humanities, medicine and
public health, and natural sciences and agriculture have been
excluded 44
   While the foundation as mentioned has disclaimed any credit for
results, we can assume that their contributions would not have con-
tinued had there not been some measure of approval of the activities
and the results . Here again, since the foundation is an operating
agency only in the field of public health and agriculture, the results of
the agencies selected for contributions are pertinent, and particularly
insofar as there have been traceable and evident effects in the educa-
tional field as the result of the agencies' activities, they are attributable
to the foundation itself.
   The work of the agencies aided by the foundation have already
.been described briefly elsewhere, with the exception of the Institute
of International Education, which is quite evidently in the field of
education, and that description will not be repeated here . It is suffi-
cient to state that the results of their activities are apparent .
Public health and medical sciences 	 $227,981,638
Natural sciences and agriculture	                                  43, 335,198
Social sciences	                                                   63, 775, 805
Humanities	                                                         26,816,321
      Total	.	361,908,962
  The foundation, as well as the board, 46 sought to influence higher
education largely through the universities and the associations of
learned societies, but no attempt will be made to cover the contribu-
tions of . the foundation or the board to the latter group of organiza-
tions . According to Dr . Hollis, 47 the foundation profited by the
experience of the Carnegie Foundation for the Advancement of
Teaching (whose methods in this field have been discussed earlier)
and thus avoided much of the criticism that was directed at that
agency. Perhaps another reason was that the foundation came into
being after a decade of public awareness, but it should be noted that
at its inception the foundation was subjected to severe attack when
it applied for a congressional charter, and (although the board had
been granted one in 1903) so great was the opposition that the matter
was dropped .
  For whatever reason, the annual reports of the foundation are much
less outspoken in their evaluation of their activities and merely state
in narrative and statistical terms the grants made each year . How-
   49 Later expanded to include the dissemination and application of knowledge
                                                                                  .
  94 Any overlapping is very slight and does not affect the validity of these figures .
   45 Does not include $55,339,818 disbursed by Laura Spelman Rockefeller Memorial prior
to consolidation in 1929 .
  4" This term will be used throughout this section to refer to the Rockefeller General
Education Board .
  47 Philanthropic Foundations and Higher Education.
                         TAX-EXEMPT FOUNDATIONS                                703

ever, a glance at these grants over the years will substantiate the state-
ment that the foundation has been active in the field of education
throughout its existence and in some specialized aspects (such as
teacher training and the like) it has been particularly active since the
early thirties.
  Moreover, this is confirmed by the extensive answers of the founda-
tion's tion's Cox committee questionnaire (sec . E) .411 In the preliminary
comment to that section there is a statement of the policy of the
foundation which can be summed up in the last sentence : "We are
ready to state what we have done, but much of the assessment of its
worth must be left to others ."
1948 annual report
  Page 7 : Within recent years there has been a brief statement which
conveys the foundation's own estimates
  The chartered purpose of the foundation with its wide scope and its absence
of preconceived or specialized interests has in a quite informal and undersigned
manner caused the foundation to become one of the crossroads of the scientific,
educational, and scholarly world .

                                  SUMMATION

  In addition to its direct grants to colleges and universities, the
foundation appropriated the following sums from 1929-52 :
Universities, colleges, and schools in the United States' (esti-
  mated)	                                                        $335,000,000!
For adult education 	                                               3,435,500
American Council on Education 	                                     1,235,600
Columbia University (1929-52) 	                                    33,300,000
Institute of International Education	                               1,40G,405
London School of Economics	                                         4,105,592
National Education Association 	                                       31,900
Teachers College	                                                   1,750,893
University of Chicago	                                             60,087,000
        Total	                                                          440,352,890
  I Does not include appropriations made to Chicago University, Columbia University,
Teachers College, or the London School of Economics .
  2 Includes grants of $35 million by John D. Rockefeller, Sr .

  While the greater portion of its expenditures have been in the field
of university and college education, it has also contributed to the work
of the American Council on Education, the National Education Asso-
ciation, and the Progressive Education Association (as shown by the
foregoing table), and also to adult education generally .


   Question 3. It is apparent that each of the Carnegie and Rocke-
feller agencies referred to have carried on' activities at all levels of
education, either as an operating agency or through its choice of
institutions and other organizations .
   Among the organizations selected have been : The American Coun-
cil on Education, the National Education Association, and the Pro-
gressive Education Association, the Institute of International Edu-
cation and the National Citizens Commission for the Public Schools .
  49 P. 79 of Rockefeller Answers to Questionnaires .
	


704                          TAX-EXEMPT FOUNDATIONS

   The American Council on Education is in the nature of a coordi-
nating agency between the Government and educational institutions
and organizations, but also carried on projects which affect education
at all levels .
  The National Education Association and the Progressive Educa-
tion Association concentrate on primary and secondary schools .
  The Cooperative Test Service, the Educational Records Bureau, and
the Graduate Record and College Entrance Examination affect edu-
cation at all levels .
  The Institute of International Education carries on its activities in
secondary schools and at college and university levels.
  There is considerable evidence that the efforts of the first three
of these organizations, to a greater or lesser degree, have resulted in
standardization of methods, both as to teaching (including testing
and training of teachers) and administrative practices in the field
of education .
  Even those not in the educational field recognize that today there is,
in effect, a national set of standards of education, curricula, and meth-
ods of teaching prevailing throughout the United States . As a prac-
tical matter, the net result of this is nothing more nor less than a
system of education which is uniform throughout the country. More-
over, in the case of the National Education Association, one of its
goals for the "united teaching profession in 1951-57," is stated on page
13 of the National Education Association Handbook for 1953-54
to be :
  A strong, adequately staffed State department of education in each State and
a more adequate Federal education agency .

   Equalization and expansion of educational opportunity including needed State
-And national financing.
  The Carnegie and Rockefeller Foundations mentioned have con-
tributed $20,249,947 to these four agencies (or almost 9 percent of the
total of all their grants in this field of activity) ; 4s and since the sup-
port has continued up to now it indicates approval and sponsorship
of the activities of these agencies and their results .
  Among the institutions selected have been : Chicago University,
Columbia University (including Teachers College) and the Institute
of International Education, and the London School of Economics .
  These institutions have received contributions amounting to $194,-
100,589, or approximately 22 percent of the total grants to all uni-
versities, colleges, and schools, including the amount contributed to
pension funds by the Carnegie foundations . If the pension funds
are excluded, then the contributions represent 27 percent of the funds
given universities, colleges, and schools .
  49 Excluding grants to universities, colleges, and schools .
	


                              TAX-EXEMPT FOUNDATIONS                                         705
  In addition, with the exception of the Rockefeller Foundation, all
contributed to the various testing and accrediting agencies which were
finally merged into the Educational Testing Service (aided also by
grants from these foundations) .
  The amount and distribution of the appropriations are summarized
in the tabulation following
                                       [In millions of dollars]

                                                 Carnegie              Rockefeller
                                                                                           Total
                                         Corporation Foundation    Board     Foundation

Universities, colleges, and schools in the
  United States	                           56.838       62 .764    257.158      335.000     711 .760
Adult education	                            3 .013 ------------        .050       3 .436      6 .499
American Council on Education 	             1 .013         .092      4 .841       1 .236      7 .182
Columbia University	                        2.687 ------------       7.608       33 .300     43 .595
Cooperative Test Service, Educational
  Records Bureau, Graduate Record,
  College Entrance Examination Board_-_       .091       2 .850      3 .483 ------------      6 .424
Institute of International Education	       2 .366 ------------ -----------       1 .406      3 .872
National Citizens Commission for the
  Public Schools	                             .750 ------------        .150 ------------      1 .000
National Education Association 	              .262         .115        .979         .032      1 .388
Progressive Education Association___          .076        .092       4 .091 ------------      4 .259
Teachers College	                           3 .728 ------------     11 .576       1 .750     17 .054
University of Chicago	                      2 .420 ------------    118 .225      60.087     180 .732
Lincoln School of Teachers College 	 ------------ 	                  6 .821 ------------      6 .821
London School of Economics 	 ------------	 -----------                              .106      4 106
      Total	 ------------ 	 ----------- 	                                                   994 .492


  The quotations already given from the various reports relate also
to this question regarding the effects of foundation activities in educa-
tion, and therefore only 1 or 2'additional references will be included .
  Probably the most recent self-evaluation by one of this group is that
contained in the 1952 Report of the Carnegie Foundation for the
Advancement of Teaching, at page 14 :
1952 report
   Page 14
   One of the developments which has produced the most lively debate in educa-
tional circles has been the widespread movement to reinvigorate the ideals
embodied in the term "liberal education ." The goal is rather widely accepted,
 but there is substantial difference of opinion as to how to achieve it . The gen-
 eral educationists offer a variety of curricular reforms . Advocates of the great
 books press their claims for the wisdom of the past . Humanists decry the shift
-of interest from certain disciplines to certain other disciplines . Our colleges are
 literally awash with formulae for salvation ; all of which is healthy and part of
the process of getting things done in a democratic, heterogeneous, and always
vigorously assertive society .
     *            *           *            *            *           *           *
   * * * President Conant and his coworkers at Harvard have provided leader-
ship in this direction with their efforts to develop a new approach to the teach-
 ing of science as a general education course . During the current year the corpo-
ration made a grant to Harvard for the continuation of this work .
706                        TAX-EXEMPT FOUNDATIONS

   The social sciences also have a significant role to play . Serious men cannot
accept the view of those humanists who rhapsodize over platonic generalizations
about society but resent the efforts of the modern social scientist to test these
generalizations * *
   * * * Developments such as the new American studies program at Barnard
College (see p . 19) and the courses in Asiatic civilization at Columbia University
 (see p . 21) would be impossible without vigorous participation, indeed, vigorous
leadership, on the part of the humanistic fields . But there is nothing in the
humanistic fields which offers a guaranty of salvation . They, too, have turned
out narrow technicians when they might have been turning out education men .
They, too, have often ignored the central concerns of liberal education .
  A statement on this point made in the early years of its existence is
found on page 87 of the 1902-14 Report of the General Education
Board under the heading "Favorable Legislation"
   It can fairly be said that in framing and putting through this legislation, the
high-school representatives supported by the General Education Board have in
every instance taken a leading part . They would, however, be the first to refuse
any undue credit . The organizations already mentioned-the Peabody Board,
the Southern Education Board, and the Conference for Education in the South-
had greatly stimulated the demand for adequate and orderly educational facil-
ities ; in every State, local bodies and organizations, State and local officials were
working along one line or another to arouse educational interest .
  The section concludes with results in terms of increased schools,
buildings, and so forth, and the amounts appropriated by individual
States for new and improved buildings .
  In a later report of the board (1939-40, p . 22) in a section entitled
"How Have the General Education Board's Activities Been Related
to These Happenings?" there is the following paragraphs
  Board-aided projects have been associated with nearly all the changes de-
scribed above. It is obvious, however, that these changes have been called
forth by the broad social changes of the times, not by the educators, not by
educational foundations . If educational changes are well adapted to the broad
social changes of the times, they find a place and are incorporated in the
continuing social processes .
  However, based on the records of the board itself, no other projects
which might possibly have resulted in "changes" 50 were selected
except those board-aided projects .
  The board, in appraising its contributions to the American Council
on Education's Cooperative Study of Secondary School Standards
(1947-48 report, p. 113), wrote :
  Under an earlier program of the General Education Board appropriations were
made to the American Council on Education for the study of standards for the
secondary schools . The regional accrediting associations for whom the study
was undertaken were interested in developing methods of evaluation that would
take account of significant qualitative factors, so that less reliance would
need to be placed on the purely quantitative criteria in the evaluation of
secondary schools. The study committee worked out and tested new criteria and
procedures and published its conclusions in four volumes : How To Evaluate a
Secondary School, Evaluative Criteria, Educational Temperatures, and a General
Report. The committee anticipated that these materials and procedures would
need review and revision about every 10 years .
  so That is, those such as the Eight-Year Study, the Study of Secondary School Curriculum,
and the Cooperative Study of General Education .
                         TAX-EXEMPT FOUNDATIONS                                707
   Since 1938, almost 25 percent of the secondary schools of the country have
used the new procedures. In the Southern and Middlewestern States, especially,
criteria have been widely used and found helpful in raising the general level of
secondary education . Meanwhile, further educational research, experience
with war-training programs, and changing relations between secondary schools
and colleges have made a general revision of the criteria desirable . The accred-
iting associations have requested such a revision. An appropriation of $24,500
was made to the American Council on Education for use by a joint committee
of the accrediting associations toward the cost of revising the materials and
procedures developed in the earlier investigation .
  While it is quite true that at the present time $1 billion is not par-
ticularly impressive when compared with endowments and Govern-
ment spending in related fields such as research and the like, two
things should be borne in mind . First, at the time the foundations
first began making grants to institutions and agencies, they were, the
biggest and only contributors on that scale in the country . Second,
all have had the same policy of giving grants to inaugurate a particular
type of project or organization, withdrawing financial aid when it
has become self-supporting or aroused the financial interest of other
individuals or groups. Dr. Hollis, 51 writing about this phase of
foundation giving, states (excerpt from chapter 1, introduction, Phil-
anthropic Foundations and Higher Education, by Ernest Victor
Hollis)
  Although foundations are important for the volume of money they distribute
to cultural undertakings, the essential nature of their influence is not in the
aggregate of their contributions . Rather it lies in the fact that the grants may
be large enough to provide the essential supplement necessary for foundations
to hold the balance of power. In the 1924 fund-raising campaign of 68 leading
universities there is an illustration of the powerful influence that foundations
may exert even when the amount they contribute is only a small percentage of
the total . They contributed only 18 .1 percent of the funds raised, but they were
reputed to have exerted a dominant influence on the purposes and plans of the
campaigns through being the largest single donors. The average size of grants
from foundations were $376,322 .76 as compared to an average of $5,902 .75 from
individuals who gave $1,000 or more . About 3 .4 percent of the individual givers
contributed.. 59 .3 percent of the total fund but because the average of their gifts
were not large enough to be considered an essential supplement, they were reputed
to have exerted a negligible influence in the policies and programs of these 68
colleges . If such vital and strategic potential powers are a possibility in
foundation activities, it should be known whether these new social institutions
are committed to a philosophy of social and cultural values in keeping with
the needs of a rapidly changing social order .
  Dr. Hollis discusses the matter of foundation influence in education
at some length, and according to him foundations have influenced
higher education notably and increasingly "toward supporting social
and cultural ideas and institutions that contribute to a rapidly chang-
ing civilization * * * the chief contribution of the foundations
(being) in accelerating the rate of acceptance of the ideas they chose
to promote ."
  S1   Ibid, pp. 3-4 .
708                         TAX-EXEMPT FOUNDATIONS

  In his opinion the foundations had been "exercising the initiative
accorded them to spend most of their money on exploratory work that
seems only remotely connected with improving college education" * *
"on the theory that research must first be done in general education if
valid college reorganization is to be accomplished ."
  He asks the question, "To what extent and in what direction has
higher education in the United States been influenced by the philos-
ophy, the administration, the activities, and the money of philan-
thropic foundations?" 52
  In reply he writes :
  In order to answer one must consider not only the degree of educational control
or dominance that is exercised by the foundations, but also whether their activi-
ties indicate progressive participation in a living culture that looks toward the
future, or whether they indicate a static or even reactionary tendency that
attempts to maintain the existing social order . While categorical answers
cannot be given, enough evidence has been introduced to remove discussion from
the realm of biased assertion or mere conjecture.
  To the question, "To what extent and in what direction has American
higher education been influenced by philanthropic foundations?" 53
  To what extent and in what direction has American higher education been
influenced by philanthropic foundations? An answer to the original question
may now be ventured . This study concludes that the extent is roughly $680
million and the direction increasingly toward supporting social and cultural
ideas and institutions that contribute to a rapidly changing civilization . Foun-
dations at the start were dissatisfied with existing higher education and they
have promoted programs that have, for the most part, been in advance of those
prevailing in the institutions with which they have worked . To a large extent
these ideas were originated by frontier thinkers within the professions ; the
chief contribution of the foundations has been in accelerating the rate of
acceptance of the ideas they chose to promote .
  In contending that these ideas have been closer to the "growing edge" of Ameri-
can culture than were the university practices they proposed to supplant, no claim
is made that wiser choices could not have been made or that there has not been
occasional overemphasis of foundation-supported ideas, resulting in dislocations
and gaps in an ideally conceived pattern of progressive higher education . This
study has often been critical of individual ideas, policies, and persons, and has
illustrated the foundations' frequent lack of social awareness, their failure to
anticipate educational trends, and the presence of unavoidable human fallibility
in their official leadership .
  The question then arises whether or not the activities of these foun-
dations in the field of education are in harmony with the constitutional
provisions with regard to education .
                    VIEWED IN RELATION TO THE CONSTTTUIION

  "Education" is not directly referred to in the Constitution, nor in
any of the amendments . Under the taxing power as well as the pro-
hibition against discrimination, there have been cases in which the
question of educational opportunity or facilities was involved-that
is, in decisions as to the constitutionality of State statutes .
  There is a long line of cases in which the scope and effect of the
10th amendment have been precisely delineated . It is well estab-
 62 Ibid ., p. 282 .
 11 Ibid ., pp. 294-295 .
                     TAX-FY   I LPT FOUNDATIONS --                 7 09

lished that the reservation contained in that amendment can only be
interpreted to mean that, in effect, the rights of sovereignty which
the respective States possessed before the adoption of the Constitution,
and which they did not specifically relinquish by that document, are
expressly reserved to the individual States . It was drafted because
the framers of the Constitution and the Bill of Rights were well aware
that under the pressure of either "emergency" or "general welfare" the
National Government might attempt to assume powers that had not
been granted . They were determined to leave no opening for such
an assumption, and thus, if further powers seemed necessary in the
future, they could only be provided for by amendment in the manner
set out in the Constitution .
   At times it is erroneously stated that the 10th amendment provides
for a distribution of power between the United States and the States-
actually, properly stated, it is a reservation of power of the States .
This is readily understood when one recognizes that each of the States
 (Colonies) was actually an autonomous political entity, prior to the
ratification of the Constitution . As such each has all the sovereign
powers (within its territorial limits) enjoyed by any foreign nation,
including unlimited jurisdiction over all persons and things .
   Within its own borders, education, at every level of instruction, is
the sole province of each of the 48 States . This extends to the cur-
riculum, textbooks, teachers, and methods of instruction, as well as
standards of proficiency for both the student and the graduate .
   The foundations, it is true, have taken the position that any stand-
ards they may have set have been in order to qualify for grants of their
funds-but, in their own words, they have had in view achieving a
uniformity and conformity of education and educational standards
throughout the country.
   Each State has by statute prescribed the methods where changes
affecting its educational system shall be made, and in the case of
drastic changes the usual practice is to present the matter to the elec-
torate for its decision . From the records it is apparent that the foun-
 dations did not follow the statutory provisions of the States relating
to education-and apparently it never occurred to any of them to con-
sult the authorities concerning those of their "educational" activities
which fell within the purview of State regulation . At any rate, at
no time did the individual States themselves (either through an
elected official or the electorate) have an opportunity to approve or
disapprove the changes brought about by foundation funds .
   From a practical standpoint-and again it is emphasized regardless
of their merits-the changes have occurred ; now it is more difficult
to determine what the decision of the individual States would have
been then had they been consulted, particularly because many of them
 (invaded as it were through the back door) have been "conditioned"
to the invasion, and would probably not display the same vigorous
opposition to the intrusion as might have been expected and forth-
coming when this encroachment on State powers first began .
                                               KATHRYN CASEY,
                                                      Legal Analyst.
71 0                   TAX-EXEMPT FOUNDATIONS

     Mr. KocHI . May Miss Casey make such running comments as she
  thinks might be pertinent to help the committee?
     Mr . GOODWIN . The Chair would suggest rather than read verbatim
  something that is in the record, if you might off the cuff make your
  comment.
     Miss CASEY. That is what I plan to do .
     Mr. GOODWIN . Very good. Go ahead .
     Miss CASEY. First, I want to explain how it was decided to do
  this . The decision was actually the result of the situation we found
  ourselves in. In trying to get material on what the foundations had
  done, we first had recourse to the Cox files to see whether or not
. there was any firm pattern which all of them followed as far as their
  activities were concerned .
     That was not a very successful operation, so we went back to the
  annual reports of the foundations themselves . Of course, the four
  in existence longest were the ones we started with, that is, Carnegie
  Corporation of New York itself, the Carnegie Foundation for the
  Advancement of Teaching, the Rockefeller Foundation, and the Rocke-
  feller General Education Board .
    The General Education Board no longer exists, having dispensed
  its funds by the end of 1953. I will give you the total amount of
 money they spent when I come to that particular organization .
    In connection with trying 'to find out if their activities fell into
 an easily classifiable group, it developed that these four foundations
 did. They were education, international affairs, politics, public affairs,
 propaganda, and some economics .
    The other source of information was a bibliography which the
 Library of Congress furnished our office, and from which I selected
 books pertaining to these two organizations .
    Taking the first of these activities, education, the entire report is
 devoted to answering three questions . One, have these foundations
 carried on activities in the field of education at elementary level, at
 secondary level, and college and university level, and what have these
 activities been? The third question was, Did such activities have any
 evident or traceable effects in the educational field?
    Once the answers to those questions were determined, the idea was,
 if possible, to determine if there was any relationship between their
 activities and education in the light of the constitutional and historic
 attitudes with regard to it in this country .
    Mr. HAYS . Are you reading now from the report?
    Miss CASEY. I am paraphrasing it . It is on page 4 . Would you
like me to tell you the pages as I go along?
    Mr. HAYS . It might be a little helpful.
    Miss CASEY. All right. I may skip a few pages .
    Mr. HAYS . You may skip as many as you like, but if you skip from
page 4 to 40-that is not a suggestion-just tell us you are on page
40, or whatever it is .
    Miss CASEY. All right.
    Mr. GOODWIN . The committee won't criticize you no matter how
much you skip .
    Miss CASEY. I will cover this rapidly .
    The other thing I should tell you is the term "education" as used
here means "learning-teaching," not just absorbing knowledge in gen-
                          TAX-EXEMPT FOUNDATIONS                                711
 eral. That would have necessitated a study of every activity of the
 foundations and every activity of Government and industry as well,
 and we did not feel that was going to be productive .
    There are several differences between the foundations which are
 fundamental . In the first place, the Carnegie Foundation for the
 Advancement of Teaching-this is on page 5-was originally intended
 to provide retiring allowances for college professors, while the Car-
 negie Corporation's activity was more general . However, the Foun-
 dation for the Advancement of Teaching, rather shortly after it was
 founded, got into educational activity other than just granting pen-
 sions and providing money for pension funds .
    The Rockefeller Foundation did not get into education, other than
 medical education, until around 1928 or 1929 . I will come to the exact
 date further on, and I can give it to you .
    The General Education Board from the beginning granted funds
 for endowment or other purposes .
    There was also a difference in approach between the Carnegie organ-
 izations and the Rockefeller Foundations, the former being much
 more direct in their approach than the latter .
    In that connection I will read a quotation on page 7, from Dr . Hollis'
 book, Philanthropic Foundations and Higher Education . He refers
 to the fact that the Carnegie Foundation for the Advancement of
 Teaching made their grants in a very direct way, as far as saying
 they wanted to make changes in the educational system is concerned,
 that is . Dr . Hollis writes
    Far-reaching college reform was carefully embedded in many of these non-
 controversial grants. It was so skillfully done that few of the grants are directly
 chargeable to the ultimate reforms they sought to effect . For instance, there
 is little obvious connection between giving a pension to a college professor or
 giving a sum to the general endowment of his college, and reforming the
 entrance requirements, the financial practices, and the scholastic standards of
 his institution . This situation makes it necessary to present qualitative influence
 without immediately showing the quantitative grant that made the influence
 possible.
    The Foundation for the Advancement of Teaching, however, set up
 a definition of what was a college and what curriculum would entitle
 it to be called a college before they would grant pensions to professors
 in that institution .
    Mr. HAYS . Would you criticize that?
    Miss CASEY . Mr. Hays, may I say that I am only reporting on the
 research which I personally did in relation to these four organiza-
 tions . My function as a staff member was not to give opinions, but to
 try to save the time of the committee members by digesting this mate-
 rial for others . Dr. Hollis took a very practical view of the method
-of accomplishing what they did, because he said, "What better method
 is there for doing it?"
    Mr. HAYS . Do you have any idea how many volumes have been
 written about the foundations?
    Miss CASEY . That is an interesting thing ; there are not very many .
    Mr. HAYS. That is what I wanted to know .
    Miss CASEY. A bibliography appears on page 3 . That is not the
 complete bibliography by any manner of means . There are others,
 such as Philanthropic Giving, Philanthropic Giving for Foundations,
 which I did not include because they had no pertinent information
 to the subject of these four in the field of education .
712                   TAX-EXEMPT FOUNDATIONS

   If you like, I can have the complete bibliography included .
   Mr. HAYS. I think it might be interesting. I might later want to
ask you why you picked 1 or 2 volumes and did not seem to quote the
others .
   Miss CASEY . I might say now that many of them said substantially
the same thing or else did not particularly deal with the activities of
these four in relation to education .
   Now I am turning over to page 8 . I am not going to read it, but
in that connection there is one fact I want to mention . At no time
did any one of these four foundations indicate that underlying their
activities in giving endowments to institutions or in granting pensions
to professors or aything of that type was a determination to change
the system. They did not say they were going to change the educa-
tional system. They did not in any manner indicate that . From my
point of view, there is no attempt in this particular summary to evalu-
ate the merits of what they did or the methods which they used .
   On page 10 there is a reference to a quotation of Dr . Hollis com-
paring the two systems, which I will mention now, because I did make
reference to the fact that there were two methods by which they
approached the question . He refers to the General Education Board
approach as much more flexible than that of the foundation, which
he called an all-or-nothing dictum . It was in relation to granting
pensions to the institutions .
   One of the things the reports show is that in all of them there was
considerable discussion of what was referred to as the "Carnegie unit ."
The various reference books also referred to it, and some were quite
critical of the endorsement by the Carnegie system of the unit system .
   Later on the Carnegie Foundation was not entirely happy with
some of the results and explained its reasons for sponsoring it at that
time.
   Mr. HAYS . You mean a unit system of teaching?
   Miss CASEY. A unit system of credits .
   Mr. HAYS . If you left the unit system, you would be getting over
into some of-what do they call it-modernistic?
   Mr. WoRMSER . Progressive.
   Mr. HAYS . That is one of the things they want to get away from .
   Miss CASEY . First, Mr. Hays, the foundations sponsored the unit
system and then later on they argued for its elimination . One of the
requirements of the foundation in connection with granting pensions
was it said that in order to qualify as a college, an educational institu-
tion must have a certain number of professors and teach a certain
number of subjects ; and, being a teacher, Mr . Hays, you know this,
I am sure, at that time there was no requirement as to how many
subjects should be included in a college curriculum, nor how many
professors there should be . That was one thing the foundations put
into effect . So, as a matter of practicality I think originally, the
institution had to have six departments in order to qualify as a college .
Later they raised it to eight.
   Mr. HAYS . That is probably to get away from institutions like Mr .
Reece's College of Lawsonomy .
   Miss CASEY. I don't know how many departments that has .
   Mr. HAYS . It was a standard to go by.
   Miss CASEY. The foundation and the board also concluded that if
they withheld funds from weak and tottering colleges the institutions
                      TAX-EXEMPT FOUNDATIONS                          7 13

 would die a natural death, or would be coordinated into institutions
the foundations selected as "pivotal" institutions.
   I am going over now to page 15 . I shan't quote from that page
but there are listed certain organizations, four institutions, and a
heading "adult education,"' a type of activity they went into particu-
larly. American Council on Education, Cooperative Test Service,
and the Educational Records Bureau and the related activities of that
group, the Institute of International Education, the London School of
Economics, the National Education Association and the Progressive
Education Association .
   Funds from these four foundations flowed into those organizations
more often than into others ; as a matter of fact, my recollection is that
they were the only ones, of this type, that were so generously sup-
ported, with the exception of the National Advisory Council on Radio .
 But these were the ones that the most money went to most frequently .
   The institutions were Columbia University, Teachers College, Uni-
 versity of Chicago, and the Lincoln School of Teachers College.
   I will give later the amount of money available to all of these insti-
tutions so I don't believe I will particularly go into the assets they had
 and the amounts they disposed, except to say that on page 17 there is a
breakdown of who received the total of $73,243,624 given by the Car-
negie Corporation .
   Mr. GOODWIN . That is the corporation by itself without reference
 to the Foundation for the Advancement of Teaching?
   Miss CASEY. Yes, sir ; that is right . The agencies I mentioned
earlier are also described briefly on pages 17 and 18 . Following
through, you will find various quotations from their own reports .
 Practically without exception the quotations are from the annual
reports of the individual institutions and organizations, or from
 the book which I mentioned, of Dr . Hollis, or one of the other books
listed in the bibliography . Those are the only sources I quote .
   In the 1937 report of the corporation, the quotation begins on page
 18, the foundation itself recognized that in this system of setting up
 agencies which would do the testing, and be accredited, there were
 some dangers . They mentioned it particularly in this report and refer
to the fact that "unless the programs are carefully organized and rigidly
 limited in scope, there is a real danger lest they tend to draw the
 foundation outside its proper sphere of action ."
   They worked for an integration of education and a coordination of
 it because they felt that would be the bast method of aiding both the
educational system financially and improving it .
   One of the methods that they selected was to have several colleges
in a certain area integrate themselves . They mention, the General
Education Board does, pivotal institutions which would work with a
 small group.
   Mr. GOODWIN . Have you amplified anywhere what is meant by "un-
 derstanding the student"?
   Miss CASEY . No, sir ; they did not go into that. I was unable to
 find any explanation of exactly how they arrived at their understand-
 ing . You are referring to page 19 at the bottom .
   Mr. GOODWIN . "Studies to understand the student." Go ahead .
 There is a lot here I don't understand .
   Miss CASEY . Incidentally, that particular page shows a total of
 half a million dollars, roughly speaking, in that particular field of
 7 14                  TAX-EXEMPT FOUNDATIONS

  activity-educational studies . By 1951, and even earlier than that,
  the amount of money being spent on that type of thing had increased
  materially and it is a great deal more now . The policy, I would say,
  changed drastically.
     Mr. GooDwnN . I think it might be sometime a proper inquiry to
  delve a little more into the purposes. That next to the last in that
  same classification, "to find out what the students learn ."
     Miss CASEY. I will see if they have any publications of what the
  results of these studies were . This was a special group of studies
  when they were beginning on what they called educational studies .
  and educational reports . There is no point in that report or subse-
 quent reports at which they explain what this covered . I imagine we
 could find out by asking them to send their reports on it .
    Mrs GOODWIN . No, I would not ask for that . I imagine that before
 the hearings are concluded, there may be an opportunity to inquire
 just what was attempted to be found out here .
    All right . You may go ahead .
    Miss CASEY. Throughout these reports there is constant mention
 in the foundation reports themselves, and also in Dr . Hollis' book as
 well as several others, of the fact that they were actually doing explora-
 tory work, in their own words, and that is particularly true of the
 quotation from Dr . Hollis . He refers to it as the remote theory that
 research must be done first in general education in order to sufficiently
 accomplish college reorganization. By that time they were talking
 rather more directly of reorganizing the colleges, and reorganizing
 the curriculum .
    By the time I had finished going through the reports and these other
 volumes, it was apparent that the Carnegie Corporation had been
 engaged in fields which were educational in character . I tried as far
 as their reports would let me to stick strictly to the educational work
 and discarded anything about which there might be any question
because I felt that would give a batter view of what they had done,
and what they had not done in education .
   Practically without exception-I don't think there is one exception
to this in this particular group-they all supported the National Edu-
 cation Association, the American Council on Education, and the Pro-
gressive Education Association. Their sponsorship after that varied ..
Some would choose one and some another . But that, again, I will
give you all at the end .
   The next one I will take up is the Carnegie Foundation for the
Advancement of Teaching. Actually the Carnegie Foundation was
older in point of time than the Carnegie Corporation . It entered into
its educational work almost immediately whereas the corporation did
not. I mentioned earlier that the original purpose was to provide
pensions and in that connection it might be interesting to know that
Mr . Carnegie himself up to a point was not aware of the fact that Mr ..
Pritchett, who was then president of the foundation, actually looked
upon that as a somewhat secondary item, and the educational activities
as its primary purpose.
   Mr. Carnegie also did not particularly care for the name "Carnegie
Foundation for Education," which was suggested, and thought it
should be called a professional pension fund .
   On page 30, I have listed the various activities which were organized
and sponsored by the foundations, and that was the College Entrance
	


                        TAX-EXEMPT FOUNDATIONS                               715
                                                                             0
Examination Board, the Association of American Colleges, the Associ-
ation of American Universities, the American Council on Education,
and the, American Association of University Professors .
   Mr. HAYS . You say that is on page 30?
   Miss CASEY . Yes, sir ; it is at the end of the second quotation . In
the quotation at the bottom of the page the 1913 report states that "by
the very fact of these activities been involved in greater or less degree
with all those complex relations in education which arise by reason of
the relationships between the schools of a nation," and so forth . The
reason for including that is to show that the foundation itself felt it was
engaged in educational activities . When it started its original activity
in pensions, it had a system which it referred to as "accepted institu-
tions" and "nonaccepted institutions ." That particular phraseology
was not particularly "acceptable" to the universities and colleges and
it was changed rather shortly to "associated" and "nonassociated ."
   The foundation itself when it began its work in educational activi-
ties confined it to colleges and universities . However, later it got into
secondary education and even into elementary education, because it
went on the premise-this is covered on page 32, incidentally-that
before it could grant a pension it was necessary to define a college,
and in order to define a college, it was necessary to establish standards
of admission and college work . Then if standards of admission were
to be established, it was necessary to prescribe the courses of study
in secondary schools.
   On page 33, there is a tabulation of the funds expended by the
foundation from 1905 to 1951 . That is roughly $66 million . Of that
amount, $62 million went into pensions or related activities, pension
funds or studies on pension giving .
   All the quotations which I have given so far, and the ones that
follow actually bear on all three questions I raised in the beginning .
It was very difficult to divide it into these pertaining to questions 1, 2,
and 3 . While that has been followed more or less, it is not a firm
rule.
   As to question 3 on page 4, whether there were any trace
  Mr . HAYS . Are you going backwards now?
  Miss CASEY . No, I am merely referring to the questions on page 4
in order to indicate their relationship to these quotations . I thought
it might be easier for you to follow .
   Mr. HAYS . Don't make it too easy . I like to do things the hard way .
   Miss CASEY. As to whether or not these activities had any evident
or traceable effects in the educational field, beginning on page 34, I
would say the answer to that question, as far as its own reports are
concerned, is the emphasis was placed on coordination between col-
leges and other institutions. It was quite critical of the situation
in schools and colleges at that point, and also critical of what was
referred to as the hierarchical device of gradations which the schools
then represented .
   On page 37, of the 1919 report, pages 100 and 101, there is one
quotation which I think should be read, because it sums up their
attitude at that time
  Marked changes must ensue in our present system of schooling if we undertake
to carry out an honest interpretation of our avowed aim of "universal education"
by making it not only universal but also education .
      49720-54-pt . 1-46
716                   TAX-EXEMPT FOUNDATIONS
  i
  Apparently there was a good deal of opposition to the foundation's
activities from the very beginning, and Dr . Hollis refers to it fre-
quently, as do most of the others who cover that phase of its activity .
Dr. Hollis is very outspoken on that point, and since this is a short
quotation I will read it .
  The foundation had had a real battle to enforce entrance standards in the rela-
tively homogeneous endowed liberal arts colleges concentrated in the East . With
the decision to admit State universities to the benefits of the Carnegie pension
:system it was faced with the problems of applying on a nationwide scale what
was in fact a regional accrediting standard for a group of superior institutions .
     The foundation felt there was no need to take into account any
  difference in financial or social conditions in an area . The standards
  were the same. The General Education Board, on the contrary, felt
  that in some areas the regulations in connection with what was a col-
  lege, what should be the curriculum, and so forth, might differ . But
  the foundation did not .
     About 1923, this is covered on pages 38, 39, and 40, the foundation
  began to be a little bit worried about the effects of some of their
  activities and went on to say that the schools should not be set up
 "only for the minority of the students . The difficulties in the schools at
 that time in preparing all students in a huge number of subjects was
 ,quite different from any other country in the world . Throughout the
  foundation's reports and throughout the others, there is constant
  reference to the Prussian system of education which it was felt was
  much more desirable than ours .
     One of the results which has been attributed to this foundation's
  activity is the 100 percent promotion rule which exists in many com-
  munities, and which has resulted from putting into effect the philoso-
  phy that schools should not be for the minority and their standards
  should be based on what the greater number of students can achieve .
 "The foundation also recommended that the college take the first step
  in this reorganization of education by making sweeping changes in
  its entrance requirements .
     This is on page 41, Mr . Hays.
     It also worked with the educational groups, such as the National
  Education Association, the Progressive Education Association, and
 the American Council on Education, in setting up a record form to be
  used in the schools, because a report which gave more information
  about the student's personality and something other than just his at-
  tainment record would be desirable, according to the foundation .
     Mr. HAYS . You don't intend those quotations on page 41 to be
  critical?
     Miss CASEY . They are intended to indicate the type of work done,
"and what the foundation itself thought of it .
     Mr. HAYS . The reason I ask you that question is because I happen
  to concur in the items set forth on page 41, and if you thought there
  was something wrong with them, I thought I would debate it with you .
     Miss CASEY. As I said a little while ago, I don't think it is within
  my province to give an opinion on what was done .
     One other method was used in connection with the college- and
  university-level work, page 43-and this is a followup of a system
they had put into effect earlier-in 1946 and 1947 the foundation set
  up 4 strategically located centers in the South, each composed of 1
- university group, and at least 5 neighboring undergraduate colleges .
                      TAX-EXEMPT FOUNDATIONS                          717

It was just about this time or shortly before that the foundation, be-
 cause of its heavy load of financial liabilities on the pension end,
became a little less active in the educational studies . The foundation
 had received a great deal of money in grants from the Carnegie Cor-
 poration, and it was decided by both organizations that until the
 pension fund released some of the money they had put into teachers'
 annuities and things of that kind, the foundation would lessen its
 activities and the corporation would probably increase them .
    I have already mentioned, and this is referred to again on pages
 43 to 45, the fact that it had been active in a graduate testing program
 and a cooperative test, and also gave the sum of $750,000 received from
 the Carnegie Corporation around 1948 for the merger of all of the
 testing agencies, because, it said, while there was not exactly competi-
 tion there was pulling and hauling between all of them .
    In the 1946 17 period, page 45, there is a quotation which refers
 to this subject which did culminate in the merger of the testing
 agencies in 1948 . The foundation pointed out what was referred to
 as the compelling advantages to American education of unification
 of these organizations .
    Now, on page 47, there is a more detailed discussion of the Carnegie
 unit . I won't read it . It is taken from the 1947-48 report. It is Dr.
 Savage's discussion of the unit . Incidentally, neither the foundation,
 that is the Carnegie Foundation for the Advancement of Teaching,
 nor any of the others actually evolved the unit system . They did
 influence the colleges and universities to accept it, but they did not
 evolve it.
    Mr. HAYS . Then after they accepted it, they pushed to do away
 with it ; is that it?
    Miss CASEY . I would say from the record it would appear that way .
    The major portion of the foundations' funds have always gone into
  pension activities. In 1953, which is the last year we have, the rela-
 tionship is still $62,763,000 to approximately $5,000,000 for research,
 studies, and education .
    Next I will take up the Rockefeller group .
    Mr. GooDwiN . Before you go on to that, for my information, were
-the activities of the Foundation for the Advancement of Teaching
 confined to the problems of pension and annuities?
    Miss CASEY . Most of the money went into that, because it set aside
 a fund each year for the number of prospective annuitants . By the
 1940's I would say that would have become a considerable amount of
 the money they had received from Mr . Carnegie and others who had
 given it funds . So at that point their funds were somewhat limited,
 they received a great deal of money from the Carnegie Corporation
 incidently, and that is one of the difficulties in segregating their
 money, Mr . Goodwin . The corporation and the foundation worked
 very closely together in later years, and it is difficult sometimes to say
 which is corporation money and which is foundation money . In order
 'to try to separate them, I did not include money that came from the
 corporation. I have included it as an activity, but it will not show
 up always in the total you have for the foundation, because it was
  not possible to say without any possibility of error that the money
 was foundation money .
    So actually you have to almost read the two together .
718                   TAX-EXEMPT FOUNDATIONS

   Mr. GOODWIN . All right . Now, do you want to go along with
Rockefeller ?
   Miss CASEY . The"original Rockefeller philanthropic trust was the
Institute for Medical Research and the General Education Board was
also formed before the Rockefeller Foundation was . The other in
what might be called the educational group was the Laura Spelman
Memorial Fund, which operated primarily in social studies, and
was merged in the Rockefeller Foundation in 1948 .
   The reason for that was by that time the Board and the founda-
tion had been carrying on activities which were so similar there was
duplication of requests and both felt it was an inefficient and un-
economic way to have both doing somewhat the same work .
   The total of the Rockefeller grants given either by Mr . Rockefeller
himself or at his or at Mrs. Rockefeller's death, totaled half a billion
dollars in 1929, when the Laura Spelman-Rockefeller Memorial Funds
were consolidated with those of the Rockefeller Foundation .
   I think I told you earlier that the General Education Board began
in 1902, and that the foundation did not get into education other than
medical until around 1928-29 . Primarily the foundation concentrated
in the beginning on medical research, medical education, dental edu-
cation to a degree, and agriculture . When they divided the activities
between the two about 1929, the Board then was to deal primarily with
institutions rather than learned societies and research agencies . Be-
fore that it had had some research carried on by other agencies, and
also it had research and studies carried on by the learned societies .
  As a matter of fact, and this has held true throughout its activities,
the board originally at Mr . Rockefeller's wish was set up to operate
in Negro colleges and southern colleges because he felt that was an
area of the country that needed the most help as far as funds were
concerned. From the very beginning, therefore, they divided their
activities as to whether they were in white colleges or in Negro col-
leges. I am sure that is the only reason that division was made .
  The Rockefeller General Education Board-and the reason for
handling it before the Rockefeller Foundation is because it was in the
fieldbf education first-in setting up its activities in connection with
secondary education in the South, it first made rather extensive studies,
and did not issue an annual report of any kind from 1902, when
established, until 1914. That report, which is a consolidated report,
said the board had approached the problem by selecting a person or
persons whose business it was to inform, cultivate, and guide profes-
sional, public, and legislative opinions. This is on page 56.
  Such individual, this report goes on, should also-
skillfully and tactfully marshal all available forces for the purpose of
securing concerted action calculated in time to realize a secondary school
system .
  Appropriations were made for various purposes, one of which was
to State universities to pay the salary of what they called a pro-
fessor of secondary education . His main and principal work would
be to ascertain where the conditions were favorable for the estab-
lishment of public schools and to visit places and endeavor to organize
in such places a public high school .
                        TAX-EXEMPT FOUNDATIONS                               719
  On page 57 there is a quotation which states the board had no inten-
tion of dictating or indicating the lines along which these individuals
should work. It then describes their activities
   In addition, the professors of secondary education were high-school evange-
 lists, traveling well-nigh incessantly from county to county, returning from
 time to time to the State university to do their teaching, or to the State
 capitol to confer with the State superintendent . Wherever they went, they
addressed the people, the local school authorities, the county court, teachers,
 businessmen and business organizations, county and State conferences, etc .
'They sought almost any sort of opportunity in order to score a point . Law or
 no law, they urged their hearers to make voluntary efforts toward a county
 high school, if a start had not yet been made ; to add a grade or a teacher
to a school already started ; to repair the buildings or to provide a new one ;
to consolidate weak district schools into a larger one adequate to town or
 county needs . Nor did they merely expose defects, tender advice, and employ
,exhortations ; they not only urged the policy, but nursed a situation .
   That is given merely to indicate their activities in the South where
they were primarily directed to establishing high schools . In the
South the work was entirely in high schools . That was not true of
activities elsewhere .
   Incidentally, those activities continued only until 1924 . The re-
port itself is not definite as to when it started, but I gathered it was
shortly after the board was founded in 1902 . They were stopped in
1924 because the board felt that they had achieved the purpose for
which they had been employed .
  About 1933 the board went into what it called a general education
program . This had been called eductional studies, but at that point
the board set out on what was referred to as the general educational
program, which continued for about 5 or 6 years to 1939 . It was
during that period that most of the work was done with the various
testing and accrediting agencies .
  In working with the testing agencies, they carried on studies at
various institutions . Chiefly : Columbia, Chicago, Teachers College,
and the Lincoln School of Teachers College . It was that same year,
1934, that the board began work in connection with what later devel-
oped into the Building America series, according to their 1935-36
report. I am on page 60.
  Under the subheading Reorganization of Subject Matter Fields-
Society for Curriculum Study "Building America," that report refers
to it as follows
The magazine represents an attempt on the part of the society to meet a long-felt
need in secondary education for visual as well as factual study of contemporary
problems of our social, political, and economic life .
  The General Education Board felt these educational testing and
accrediting services were very important, because it said they were in
a position to play a significant role in the reorganization of secondary
education. That was around 1935-36.
  Mr. HAYS. Perhaps instead of reading these paragraphs here and
there into the record again, if you could give us the significant ones
as you see them, and have us underscore them, because what we are
going to do now is to read this and read the record again to see the
important parts of it .
720                   TAX-EXEMPT FOUNDATIONS

   Miss CASEY . That is why I am giving the page numbers, Mr . Hays. .
   Mr. HAYS. Why don't you just give us a memo?
   Miss CASEY . You mean another one?
   Mr. HAYS . I have been following pretty closely now for about 10
minutes, and 95 percent of what you have been doing is reading a sen-
tence or a paragraph here and there through the thing . That is
exactly what we tried' to get away from to save time .
   Miss CASEY. It was those particular paragraphs that I felt were
particularly pertinent to show the trend which each agency had taken .
   Mr. HAYS . I understand that, and I am not criticizing at all . I am
saying it would be easier for the committee in their perusal of this
document if we had a list of the highlights with the page numbers,
and we can relate them with the page . In this way we have to read
not only this document, but the whole transcript again . Do you fol-
low me?
   Miss CASEY . I do . For example, I will tell you right now that on
page 61 there is a quotation which is particularly pertinent as regards
the activities of the General Education Board, and which it pursued
from that point on to the end of its existence in 1953 .
   I will merely read the types of activity they carried on . Is that
agreeable?
   Mr. HAYS . Sure .
   Mr. GooDwIN . That is in line with the suggestion we made earlier, .
if you could give us now an off-the-cuff dissertation of what is in here,,
rather than quotations ; it would save our time.
   Miss CASEY. All right, sir, fine .
   Beginning in 1936-37, the General Education Board concentrated on
what they referred to as general planning of educational reorganiza-
tion, experiments with curriculum, preparation of new instructional
materials, and selection of teachers in the study of youth .
   From then on the major field of activity as far as secondary educa-
tional activities are concerned was development of what the board
terms a reorganization of secondary education . In doing that it worked
closely with the National Education Association and the Progressive
Education Association, and to a degree with the American Council on
Education .
   The stated reason for that was it was felt no study would be com-
plete unless the board had the knowledge of those representative .
groups.
   When its activities in this field of education ended in 1939, this
particular phase of education, it was felt they had made a great contri-
bution ; that a great deal of good had resulted from it, from the work
of the Progressive Education Association and the National Education
Association, particularly in relation to the studies which they issued,,
and from the work of the American Historical Association .
  After 1915 the board began to use agencies other than institutions
of learning. It was very much interested in the Lincoln School,
and the grants to that institution total, I think, something over $6 1/2
million. That continued from about 1918 to the early , 1940's .
The total amount of money the Rockefeller General Education Board
expended in these fields, I will not read them, it is on page 73, was
$270,750,694 .
   There are footnotes on Columbia University, the Lincoln School of
Teachers College, and the University of Chicago, which are not
   an afternoon



                      TAX-EXEMPT FOUNDATIONS                        721

included in the total $270 million, because they are already included
in the amount shown for universities, colleges, and schools in the
United States .
   Mr . HAYS. How long did it take them to spend that money?
   Miss CASEY. You mean the $270 million?
   Mr . HAYS . Yes .
   Miss CASEY . From the time they were formed in 1902 .
   Mr . HAYS . Congress spends more than that lots of times in an after-
noon .
   Miss CASEY . You would know more about that than I would, I am
sure .
   The foundation, as I mentioned earlier, did not get into education
right away . It received from Mr . Rockefeller a total of $241 million .
That includes the Spelman Fund . It had a great influence by giving
money for land and buildings, particularly in the early days, as . well
as to endowments and gave large sums for medical education at
Chicago University and Columbia University .
   It was also interested in having the university medical schools either
become affiliated with a hospital and the foundation even built
hospitals in many instances .
   On page 77 there is a comparison between the types of activities in
which the foundation engaged. You will notice there are $227 mil-
lion for public health and medical sciences which is by far the major
field in which it operated .
   The foundation was much more reticent in taking credit for what
it accomplished than the General Education Board of any one of the
Carnegie groups . It is mentioned particularly in the Cox committee
questionnaire in which it is stated the foundation is perfectly willing
to state what it had done, but they felt any assessment of it should be
left to others.
   Practically the only quotation I think might be merit as its own.
view of the work appears on page 78 in their 1948 annual report_
   From the reports it is apparent that both the Carnegie philan-
thropic trusts and the Rockefeller philanthropic trusts had carried on .
activities in the field of education . They had done it in two ways. .
Either through their own activities as an operating agency, or through
choosing other related agencies .
   On page 79 there is a total of the amount of money in millions which.
all four of these organizations spent . It is $994 million .
   Mr . HAYS . That is nothing . We have spent as high as $45 billion.
in                . You want to get into big money if you want to
impress anybody around here . If we passed an Armed Forces appro-
priation of less than $30 billion, somebody feels they are deprived .
   Miss CASEY . I agree, Mr . Hays, that sum is not particularly impres-
sive compared to funds available through Government sources today.
But at the time it was going into this field, these four funds were the
largest organizations making funds available and contributed the
greatest amount of money . They were the only contributors on that
scale . All four of the foundations had a common practice, that is,
they all felt they should contribute funds to an organization, either to
inaugurate it or to get it through its first years of operation and then
cease contributions . There are frequent references to the fact that
once an organization is self-supporting or getting funds from other-
 722                   TAX-EXEMPT FOUNDATIONS

 soures, that these four foundations did not feel they should put the
 money into it.
    I will not read Dr. Hollis' comments in connection with the founda-
 tions, but you might be interested in reading pages 80 and 81 . He
 refers particularly to a fund-raising campaign of 68 leading univer-
 sities. He said that while they only contribute 18 .1 percent of the
 funds, they were reputed to have exerted a very predominant in-
 fluence on the purposes and plans .
    He also raises the question to what extent and in what direction has
 higher education in the United States been influenced by the philoso-
 phy of the foundations, and he said that would have to be viewed in
 the light of all other activities. You will find that quotation on
 page 42 .
    Beginning on page 83, there is a two-and-a-quarter-page reference
 to the question raised in the beginning of the summary as to the rela-
 tionship of their activities in the educational field in the light of the
 Constitution and its attitude toward education .
    The subject of education is not discussed in the Constitution and is
 not raised in any one of the amendments to the Constitution, but there
 is a very long line of cases as to the power and the jurisdiction of the
 individual States in the light of the 10th amendment to the Constitu-
 tion. These cases bear out the idea that any power not expressly
 given to the Federal Government is expressly reserved to the States .
 Since education is not mentioned, it can be assumed that the question
 of education is entirely a State province .
   The foundations have by their activities and the amount of money
 they have put into the field of education certainly influenced the
 matter . I won't read it, but on page 26 of this summary, I refer to
the fact that the organizations which I mentioned earlier, National
 Education Association, Progressive Education Association, and
 American Council on Education, have to a degree caused a standardiza-
tion of methods, both as to teaching and as to the testing and training
 of teachers, and also as always to the curriculum in various schools .
 There is to a degree, and I would say to a very large degree, uniform-
 ity throughout the country as far as educational curricular and meth-
ods of teaching are concerned . Of course, that does not cover every
 institution of learning, but by and large the National Education Asso-
ciation has worked very hard
   Mr. HAYS . Miss Casey, you are discouraging me . I thought we
had you up to page 83 . Now you are back to 26 .
   Miss CASEY . You need not be discouraged, Mr. Hays, I only
wanted to give you the page number where I mentioned this pre-
viously. As I started to say, the National Education Association
made that a major activity . We are back now to page 83 .
   Mr. HAYS . That is the direction I like to travel .
   Mr. GooDWIN . This is a temporary retrogression .
   Miss CASEY. Each State has prescribed methods whereby change
affecting its educational system can be made, and in most instances if
there is anything drastic about it, it is provided that it shall be done
either by consulting with the proper official or by taking the matter
to voters at election time . For that reason, many of these changes
would probably not have gone into effect had the foundations at that
time had to get the approval of the individual States in order to do it .
                      TAX-EXEMPT FOUNDATIONS                         723
To that extent they have encroached on the powers of the individual
States. .
   That is the end ; that is page 85.
   Mr. GOODWIN. That completes your comments?
   Miss CASEY . Yes, Sir .
   Mr. GOODWIN . Have you anything?
   Mr. Kocx . Just for the record, Miss Casey, what other reports are
in the works, so to speak, of the staff ?
   Miss CASEY . As far as I am concerned?
   Mr. KOCH . Yes .
   Miss CASEY . The others are mentioned on page 3, and the ones cov-
ering international affairs, politics, propaganda, and political activi-
ties . The reason for making this report as the first is because the same
methods are followed in their other activities when these foundations
substantially follow the setup that they put into effect in connection
with education generally .
   Mr. KOCH . Those additional reports are not ready yet ; is that right?
They may be ready next week or the week after?
   Miss CASEY . That is right.
   Mr. KOCH . So this is all you have to present today?
   Miss CASEY . Yes .
   Mr. KOCH. That is all we have to present today .
   Mr. GOODWIN . Any questions, Mr . Hays?
   Mr. HAYS . No questions.
   Mr. GOODWIN . If not, thank you very much for this survey. It
shows ample research certainly, and the committee will endeavor to
match your industry by our careful reading of the survey .
   Mr. HAYS . One question, and not on the report . I think to keep the
record in some sort of focus, I don't believe, and I am sure it was
inadvertent, that Miss Casey was originally sworn just briefly to
testify about some other matter that came out at the time . Could you
give us something about your background, Miss Casey?
   Miss CASEY. Yes ; I will be glad to . I went to public-
   Mr. GOODWIN . That doesn't require any information about the date
of birth .
  Miss CASEY . I was wondering about that . Although I would not
mind saying it, I will date myself by my activities .
   I am a lawyer . I graduated from law school right here in Wash-
in on, Columbus University, a small law school that recently became
a liated with Catholic University .
   I have taken various other legal subjects at Catholic University and
George Washington University . I did my undergraduate work at
the University of California in 'Berkeley .
   My earlier education was in public and parochial schools in the
District of Columbia. I have been aa lawyer for the last 16 years.
   (Discussion off the record .)
  Miss CASEY . I started to say I have practiced law since 1940 as a
trade association executive and general counsel, and I have practiced
before the various Government agencies . I am a registered lobbyist,
and have appeared before congressional committees .
   Mr. HAYS . You are a registered lobbyist at this point?
   Miss CASEY. You never lose it, do you?
"7 24                 TAX-EXEMPT FOUNDATIONS

     Mr. HAYS. I don't know . I have never been one . I just thought it
   might not make very good headlines if somebody would write that the
  committee had a registered lobbyist on its staff .
     Miss CASEY. Perhaps I should say I was a registered lobbyist .
     Mr. HAYS. I think that would be more preferable .
     Miss CASEY . Does that cover the extent to which you wish to go,
   or do you want me to go further?
     Mr. HAYS . That is sufficient .
     Mr. Kocx . Did you ever write a book?
     Miss CASEY. Yes, called Bituminous Coal Code, Annotated, I have
  also written articles for the magazines on various subjects, including
  several in connection with the Interstate Commerce Commission,
  before which I had a fairly extensive practice .
     Mr. GOODWIN . I listened in vain for any reference to any activities
  east of the Hudson River .
     Miss CASEY. That is where all have been . My practice has all been
  in Washington, D . C ., Mr . Goodwin . I am admitted to the bar in the
  District .
     Mr. GOODWIN . I referred to the Hudson . Let me say specifically
  New England .
     Miss CASEY . The organization which I represented for some years
  had a good many members in New England, Mr . Goodwin. It was
  an agricultural group .
     The CHAIRMAN (presiding) . In your work with the trade associa-
  tion, I assume it was necessary that you write those articles?
    Miss CASEY. At times, but frequently I was requested to write on a
  particular subject not necessarily cQnnected with my work . I have
 been admitted to the Bar of the District of Columbia, I am a member
  of the Bar of the Supreme Court, and have been admitted in the
  States of Maryland, Pennsylvania, and New York by motion .
     Mr. HAYS . That is all .
     The CHAIRMAN . Thank you. It is now approximately 4 o'clock
  so I presume there would hardly be time to take up anything else .
  As I understood from your conversation just now, it was anticipated
  that Miss Casey would probably run until tomorow, and you had no
 ,one else scheduled.
    Mr. WORMSER . That is right.
    The CHAIRMAN . Anticipating closing at noon tomorrow .
    Mr. Kocx. Somebody put a long plea for a long weekend a couple
. of weeks ago so can we start on Tuesday morning?
    The CHAIRMAN . That would be my inclination .
    Mr. HAYS . That suits me . Of course, I don't have the dynamic pro-
gram for next week from the leadership yet .
    The CHAIRMAN . This farm program is coming up and that ought to
 be dynamic enough .
    Mr. HAYS . Could we get some information?
    The CHAIRMAN . Mr. Counsel, what is the outlook for next week?
 I am familiar with one aspect, but you go ahead and state it .
    Mr . WORMSER . Mr. Reece wishes some evidence to be brought in on
the League for Industrial Democracy, and the American Labor Edu-
cation Service, and the Twentieth Century Fund. Beyond that, ex-
cept for occasional interludes for reports which I presume will be
introduced shortly, we want then to bring on the major foundations
who should have an opportunity to appear .
                      TAX-EXEMPT FOUNDATIONS                         725
   I would like to discuss with Mr . Hays and Mr . Reece also possibly
  n what order to put them . I want to suit their convenience as much
.as I can . I would like to get in touch with them individually and
 perhaps clear with you two first how it should be done.
   Mr. HAYS . I don't know anything about this League for Industrial
 Democracy, except what I heard here, but are you going to subpena
 somebody from that organization? I don't want to be obnoxious
 about it, but I want to know a little bit specifically what we are going
 to do .
   The CHAIRMAN . We anticipated having, someone to make a sum-
 mary of their publications and activities from propaganda and
 political viewpoints, more or less, and then have some official from
 the league.
   Mr. HAYS . You mean you are going to have someone outside of the
.organization?
   The CHAIRMAN . Yes .
   Mr. HAYS . Can you tell me who that is going to be?
   The CHAIRMAN . I have in mind Mr . Ken Earle, who was formerly
 with the Senate Internal Security Committee, who is familiar with
the subject, and has done a good deal of research . Mr. Wormser, with
 my understanding, had requested that he prepare a written statement
 which we hope will be available Monday for the members of the
'Committee.
   Mr. WORMSER . I would like to have as much guidance as I can get
 on organizing the program.
   Mr . HAYS . By the way, right now, what progress have you made in
gettin the additional material on Facts Forum that I asked you
 about
   Mr. Kocx . We wrote in for it last Friday .
    (Discussion off the record .)
   Mr. Kocx . That is in the works now .
   Mr. HAYS . Can you follow it up with a wire and get that in, because
I am at a sort of standstill.
   Mr. Kocx . Mr . Hays, Miss Casey said she telephoned so it will
Speed it up .
   The CHAIRMAN. So far as I know, the committee will meet in this
room. If there is any change, there will be an announcement made
of it. So the committee will stand adjourned until 10 o'clock Tuesday
morning.
    (Thereupon at 3 : 55 p. m ., a recess was taken until Tuesday, June
15, 1954, at 10 a . In .)
                   TAX-EXEMPT FOUNDATIONS

                       TUESDAY, JUNE 15, 1954
                           HousE OF REPRESENTATIVES,
                       SPECIAL COMMITTEE To INVESTIGATE
                                   TAx-EXEMPT FOUNDATIONS,
                                                    Washington, D . C.
  The special committee met at 10 a . m ., pursuant to recess, in room
304, House Office Building, Hon . Carroll Reece (chairman of the
special committee) presiding.
   Present : Representatives Reece (presiding), Goodwin, and Hays .
  Also present : Rene A . Wormser, general counsel ; Arnold T . Koch,
:associate counsel ; Norman Dodd, research director ; Kathryn Casey,
legal analyst ; John Marshall, chief clerk.
   The CHAIRMAN. The committee will come to order.
   Mr. Wormser, who is the next witness?
  Mr. WORMSER. Mr. Earl is the next witness .
  The CHAIRMAN . Mr . Earl will take the stand . Will you qualify?
That is our custom . Do you solemnly swear the testimony you are
about to give in this proceeding shall be the truth, the whole truth
and nothing but the truth, so help you God?
  Mr. EARL. I do .
  Mr. HAYS . Mr . Chairman, before we proceed, I would like to put
this in in the form of a request, and I hope the committee will see fit
to grant it. I received a copy of Mr . Earl's testimony late yesterday
afternoon at my office sometime, and I don't know exactly how long,
apparently not as long as I had first thought, after the press gallery
had received their copies. I had only time to read it over .
   And I want to make it clear that I don't know anything about the
League for Industrial Democracy . As a matter of fact, I don't know
as I have heard of the organization prior to these hearings .
  I am not, and I don't want to be, in a position of defending it or
condemning it, either one at this time . But since Mr. Earl's testi-
mony is full of prominent names, it is full of paragraphs taken out
of context, which I thought I had demonstrated was a dangerous
proceeding, I would like to have an adjournment of 24 hours for the
purpose of evaluating this testimony so that I can intelligently com-
ment or question Mr. Earl about it .
  It may be that everything in his testimony is true. On the other
hand, there may be quite a number of things that I would like to look
over. And I think before we go ahead and name all of these promi-
nent names, and I want it made clear that I don't intend to name any
myself this morning, I believe, Mr. Chairman, under any kind of rules
of procedure whatever that it would be only fair that we do have a
chance to try to evaluate this so that we can intelligently talk about it .
                                                                 727
 728                   TAX-EXEMPT FOUNDATIONS

     The CHAIRMAN . Due to circumstances in my family, it was neces-
  sary for me to be out of the city over the weekend . So the gentleman
  from Ohio is 24 hours ahead of me so far as the statement is con-
  cerned because I have not had an opportunity to read it .
     But without reference to this statement, if I may, Wayne, I would
  like to make one statement with reference to lifting things out of
  context.
     I think when Mr . Dodd appeared before the committee, and the
  other witnesses, they had made a studious effort in every instance when
  a quotation was given, to give the source, the authorship, and enough
 of the context, a sufficient summation of the context so as not to get
  in a position of talking quotations out of context .
     Now, I don't think, or I am not sure that that same thing can be
  said about what the gentleman from Ohio did when he read a couple
 of statements to the committee at a recent session. But so far as the
 committee members and so far as the committee staff is concerned,
 they have made a special effort not to get into a position of lifting out
 of context .
    Having heard of the question that you raised with reference to Mr .
 Earl's statement being released to the press in advance of your receiv-
 ing a copy, I made inquiry, and I understand that they were sent to
 the members and sent to the press all in a simultaneous operation .
 And as to who received the very first copy, I have no information . I
 did not get mine until this morning . On the other hand, I was not
 expecting it until this morning since I was out of the city .
    The chairman has no disposition so far as he is concerned to rush
 a hearing. In fact, he has a very important, or there is a very impor-
 tant meeting of the Rules Committee this morning at which my pres-
 ence is urgently requested, if not needed . And the gentleman from
 Massachusetts, whose active participation in the committee is highly
 appreciated and has been most helpful, has an executive session of
 the Ways and Means Committee this morning . So I think that it
 would suit our convenience entirely .
    But I would suggest that we meet in the afternoon, Wayne, if that
 is agreeable, so as not to delay too much .
    Mr. HAYS . Mr . Chairman, I appreciate the courtesy in partially
 agreeing with my suggestion, and I would be happy to compromise
 any way I could, but I just simply won't have time by afternoon to
evaluate this .
   Now, I will be glad to tailor my convenience to suit the committee
in working an extra day, or I would be glad to hear Mr . Dodd whom
we have postponed in cross-examination, or anything, to defer it ;
but I would like to have time to have my office staff evaluate this and
look up some of the pamphlets that are quoted from and let me get on
my desk the material so that I cannot only read the paragraphs that
Mr . Earl has quoted but read some of the preceding and some of the
following paragraphs in order to get a grip on the material . Because,
frankly, Mr . Chairman, as I said before, this League of Industrial
Democracy is obsolutely a new field to me, and it is a thing that I know
nothing about . And I just feel that I would like to be a little bit
prepared on the subject.
   The CHAIRMAN . I am not in a position to evaluate the League for
Industrial Democracy upon the basis of the evidence because the evi-
dence has not been presented . But I am not sufficiently naive to say
                     TAX-EXEMPT FOUNDATIONS                        729
that I have been around Congress as long as I have and do not know
anything about the League for Industrial Democracy . I think its .
impact has been in evidence in too many areas for me not to have made
some observations concerning it .
   Mr. HAYS . Mr. Chairman, I will say to you this : that I am just a
country boy from Ohio and I am very naive, as anyone who has at-
 tended these hearings can see, and so I will plead guilty to it right .
now.
   Mr. GOODWIN . My only interest is that we should get along, Mr .
Chairman . I think that we should proceed with these hearings . I
would like the forenoon off and the afternoon off, and as the chairman
suggested I would like to be over in Ways and Means now as they are
in executive session on a very important matter, the Philippine trade
bill . I think, however, that this proceeding here is of great im-
portance .
   I have been considerably irked as we have gone along with the
tremendous amount of time we have wasted here . I am already getting -
communications from people who are interested, expressing a fear that
we will get along to the point where there won't be any time for some
of them to be heard.
   My only interest is that we should go forward as rapidly as we
can .
   The CHAIRMAN . The committee will stand in recess until 2 : 30, for
various reasons, all of which have been discussed .
   (Thereupon at 10 : 15 a . m., a recess was taken until 2 : 30 of the
same day .)
                          AFTERNOON SESSION
  The hearing was resumed at 2 p . m .
  The CHAIRMAN . The committee will come to order.
  I might first say that when the committee meets tomorrow morning,,
which I presume will be at 10 o'clock, we will meet in the Banking and
Currency Committee room, 1301 New House Office Building .
  Mr. KocH . I was going to ask Mr . Earl : Before you read your-
statement, will you give the committee a brief outline of your history
or background? Then the committee might want to ask additional
questions.
TESTIMONY OF KEN EARL, ATTORNEY, LEWIS, STRONG & EARL, .
                  MOSES LAKE, WASH.
  Mr. EARL. Yes, I will be glad to . My name, of course, is Ken Earl .
I am an attorney out in the State of Washington now, although for 4
years prior to going out there to practice I was an employee on the
staff of the Internal Security Subcommittee and the Immigration Sub-
committee over in the Senate . I mean just that, too . I wasn't the
counsel or the assistant counsel, or anything of the kind . I was a
person who helped out in many of the projects and tasks which they
undertook, and, of course, am not at liberty to divulge just what those
were .
  My home originally was in Nevada . As far as background other
than that is concerned, I am a graduate of the Georgetown University -
Law School and took . m y undergraduate work in Brigham Young
73 0                   TAX-EXEMPT FOUNDATIONS

University, Provo, Utah . Perhaps there are other areas someone
would like to ask me about .
    Mr. KOCH . How long have you been a member of the bar?
   Mr . EARL. Since about 1951 .
    Mr. KOCH . Are you an expert on foundations?
    Mr . EARL . No, Sir, I am not an expert on foundations .
    Mr . HAYS . I might say that, as I said this morning, I do not know
much about this League for Industrial Democracy . In fact, if I were
to call myself an expert, I am a 4-hour expert on it, since from 10 : 30
this morning until now is all the time I have had to do any research on
it . Would you say you are an expert on this LID organization?
    Mr. EARL . I would say this, Mr . Hays, that as far as the LID is con-
cerned, the LID's publications pretty well speak for themselves, and
so a person's main qualification in taking the material which I have
to see what the LID has stood for and what it now stands for would
be the ability to read and think .
   Mr . HAYS . Would you mind telling us how old you are, Mr . Earl?
   Mr . EARL. I am 34 years old .
   Mr . HAYS . You are 34 .
   Mr . EARL . Right.
    Mr . HAYS . In what year were you born?
   Mr. EARL. 1919 .
   Mr . HAYS. In other words, in 1932, you were about 13 years old?
   Mr . EARL . That is approximately right.
   Mr . HAYS . Well, we may have occasion to refer to that .
   How did you happen to be called to testify before this committee?
   Mr . EARL . I was called by the chairman of your committee, because
he learned, apparently from someone here in Washington, that I had
occasion in the past to at least be interested in the LID and its activ-
ities.
   The CHAIRMAN . If I may interrupt, I had intended to make a pre-
liminary statement along that line . I became interested, along with
the subject of the foundations in general, in the League for Industrial
Democracy, and while it may not be a foundation within the accepted
impression of foundations, it is a tax-free organization and is a foun-
dation or a comparable organization . Over a period of time, a very
considerable amount of literature was acquired by me on the League for
Industrial Democracy, as well as some other comparable organizations .
And in order to get it in form to be presented, I felt it was best for it to
be given to someone who had some background and interest in this sub-
ject, and I knew about Mr . Earl and his work with the Internal Secu-
rity Subcommittee of the Senate, and I called Mr . Earl and asked if he
would take what he had and might have access to or get access to, and
take the information which I had, and reduce it to a summary which
could be presented to the committee . He at first had some uncertainty
whether he could take the time to do it, but finally decided that he
could do so, and I feel that we are very fortunate to have a young man
with his experience, although young, and with his training and overall
familiarity with the subject-matter, particularly the phases with which
he is dealing, here to present the result of his research to the commit-
tee for its evaluation .
   Mr . HAYS . In other words, did I understand you to say, Mr . Chair-
man, that it is really not a foundation? It really has no bearing on
this investigation, then, does it?
                       TAX-EXEMPT FOUNDATIONS                              73 1

  The CHAIRMAN . I had a telegram from the League for Industrial
Democracy today, raising the question whether the League for In-
dustrial Democracy is a foundation . And I presume an accurate defi-
nition of foundation may have been formulated with the view of deter-
mining the scope of what foundations as embraced in the resolution .
But in any event, the resolution under which we are working not only
empowers us to investigate foundations but comparable organizations,
and the language is written so that I think the committee has au-
thority, for that matter, to investigate any tax-exempt organization,
call it whatever you might . But, of course, I think actually the League
for Industrial Democracy, receiving tax-free funds, is a foundation
in the accepted sense of the word . And it is embraced in the group of
some 7,000 foundations to which we have referred .
  Mr. HAYS. Let me read a little of a telegram that I have here, a
copy of a telegram. It says
  Recent trends indicate critical decisions during 1954 will materially affect
Nation's future . * * * Radio tremendous force influencing public particularly
grassroots America. *
  Two labor unions spending over 2 millions annually on radio-television .
Surely business should join spending fraction that sum .
  I am just reading a few sentences to give you a general idea .
  I have no objection to putting the whole thing in the record .
  America's future reached successful climax signing 5-year contract Mutual
Broadcasting System .
  They go on to say they are going to have John T . Flynn. It says
  Make check (tax deductible) payable America's Future, Inc . and send to :
Francis A . Smith, first vice president, Marine Trust Co ., of western New York,
Maine at Seneca, Buffalo, N . Y .
   And it is signed by various people and was sent out to the presidents
of practically all the large corporations in the country .
   Would that come under your purview? If we are going to in-
vestigate this LID maybe we ought to investigate this group, too .
   The CHAIRMAN . Without having the details, I could not say unques-
tionably it would come under the purview of this committee .
   Mr. HAYS . Then we could just investigate anything that you take
tax deductions for, including the Red Cross, according to your defini-
tion, is that right? Or your church?
   I mean, you are allowed to deduct for that, if you contribute to the
church ; aren't you?
   The CHAIRMAN . Certainly, in the general concept 	
   Mr. HAYS . I am trying to circumscribe the thing and get some
kind of a definition as to how far afield we are going to go .
   The CHAIRMAN . Then do you feel that the League for Industrial
Democracy is outside the purview of this committee?
   Mr. HAYS . Mr. Chairman, that is not the point at issue . The point
at issue is who is deciding who the committee will investigate . You
decided in your own mind apparently that that is a fertile field, and if
you want my opinion you felt you had fallen down so badly with
the foundations you had better get something to salvage the situation
with, and maybe this would be a good thing . Understand, I am not
defending the LID, because I don't know enough about it . But I
am just trying to bring out the facts and let the . chips fall where they
may.
      49720-54-pt . 2-47
732                  TAX-EXEMPT FOUNDATIONS

   The CHAIRMAN . It was originally the chairman's thought that
the LID would have been presented very early in the hearings, very
early. And then, as a matter of policy, it was my idea that it was
best to outline the broad criticisms first, and then bring in the indi-
vidual' foundations and organizations in accordance with the proce-
dure which was adopted.
  Mr. HAYS . I have some more questions . I would like to get this
thing in perspective, if there is any way to do it .
   You did answer the question about being an expert on this, Mr .
Earl .
   Now, let me ask you this : Do you have any idea of the membership
of the LID in numbers?
  Mr. EARL. No, I do not.
  Mr. HAYS . Would you know anything about its annual budget?
  Mr. EARL. No, I don't. I don't think it is really pertinent .
  Mr. HAYS . Well, of course, I didn't ask you that, but since you
brought it up, I would be glad to discuss it with you .
  Would you think its budget would be similar to that of the Ford
Foundation? Do you think it spends $10 million a year? I think it
is pertinent to find out what its budget is, so that we will know what
its influence is.
   Mr. EARL. No, of course it doesn't have a budget like the Ford Foun-
dation. I would think in comparison to Ford it would have a rather
modest budget .
  Mr. HAYS. A kind of miniscule budget, wouldn't it?
  Mr. EARL. A which?
  Mr. HAYS. Very minute. That is a good word, isn't it? I hope I
am using it the right way . I like the word.
  Mr. EARL. In comparison with the Ford Foundation, certainly .
  Mr. HAYS. But you don't have any idea of what its budget might be?
  Mr. EARL. No, I do not.
  Mr. HAYS . Would you be surprised if I told you its annual budget
was less than $50,000?
  Mr. EARL. No, Washington doesn't surprise me a bit any more .
  Mr. HAYS . Well, I can see it is not going to be possible to surprise
you very easily . Having been on the McCarthy committee, nothing
will probably surprise you .
  Mr . EARL. I am very proud of having worked on the McCarthy
committee .
  Mr. HAYS . If you feel you have to defend it, I would be glad for
you to take time to do it .
  Mr. EARL. Go right ahead.
  Mr. HAYS . Do you have any idea how this organization derives its
income, its tax-free money?
  Mr. EARL. It is my understanding that it derives the greatest part
from contributions from people like you and I .
  Mr. HAYS . You mean people of very limited income . I don't know
anything about your income, but if you are talking about mine, it is
in the limited class .
  Mr. Kocx . Minuscule?
  Mr. HAYS . Well, there is some debate about this. I am inclined to
belong to the school thinking it is minuscule, yes .
  Mr. Kocx . Me, too .
                       TAX-EXEMPT FOUNDATIONS                          733
    Mr. EARL . But I understand that most if not all comes from con-
 tributions .
    Mr. HAYS . In order that this discussion can proceed with some sort
 of continuity, you have no objection if, when you are quoting a para-
 graph, I stop and ask you where it was taken from or ask you a ques-
 tion or two about it, do you?
    Mr. EARL. Not at all.
    The CHAIRMAN . Mr. Earl has a prepared manuscript .
    Mr. HAYS . I understand that, Mr . Chairman, but we have had so
 many prepared manuscripts and we have deferred the cross-examina-
 tion, most of which is still pending, and since he came from such a
 great distance
    The CHAIRMAN . He is going to remain until the cross-examination
 is com ~l~eted-if we follow the regular procedure.
    Mr. HAYS. I think if we go along we can get it in today . I don't
 think it will take too long .
    The CHAIRMAN. I very much hope so .
    Mr. GOODWIN . I have been waiting for some time, Mr . Chairman, to
 get started.
    Mr. HAYS . I may say I hope I don't inconvenience you, Mr . Good-
 win, but you seem to be able to start off with less background than I
 have, and that is just a little difference we have, and I hope that doesn't
 annoy you too much .
    Mr. EARL . Mr. Chairman, let me preface my statement by referring
 to something which gave Mr . Hays concern this morning . That is
 that a great many prominent Americans are mentioned in my prepared
statement. I assure the committee that I am not engaged in character
 assassination nor anything akin to it . The various persons mentioned
in my statement believe wholeheartedly in the things which they have
said and done, and they are not about to repudiate any connection with
or support given the LID and its activities.
    Nor is this an attempt to "get" the LID or paint it as a Communist
front. Far from it . The LID stands very proudly upon its record,'
as do the men and women who are associated with it . The LID and
those around it have espoused a cause, and much for which they fight
has been accomplished ; not entirely, of course, due to the efforts of
the LID, but they do lay claim to have exerted some influence and
have helped bring about the goals for which they stand . This I do
not quarrel with.
    However, I do dispute their right to be feeding a team of players
with tax-exempt dollars, when the medium through which most of us
engage in political activity has no corresponding tax-exempt privi-
leges .
    May I also say a word regarding the problem involved in quoting
excerpts from any prepared material? One obviously cannot, in at-
e empting to characterize certain works, read the entire contents of a
publication . And so in excerpting one becomes chargeable by another
with an opposite view with quoting too little material, quoting out of
context, or quoting too much material.
    The LID has been a producer of very prolific pamphlets, and it is my
belief that all have been written for the purpose of spreading, explain-
ing, and making more palatable the Socialist program for America .
734                     TAX-EXEMPT FOUNDATIONS

That is the conclusion which I have reached after reading great
amounts of their literature . In excerpting from these publications, I
really face the problem of deciding which of a great number of quotes
to use, rather than the problem of finding something spicy enough
to use .
  With that foreword, I would like to turn to the prepared statement
that the committee has .
   As I mentioned earlier, I have had occasion to be interested in the
course of the LID and your chairman has asked me to come here
and chart that course .
   In the Treasury Department publication, Cumulative List of Organ-
izations that are Eligible for Tax-Exempt Contributions, the LID
is listed on page 174 as such an organization, and I believe that it
has had tax-exempt status for a great many years .
  Mr. HAYS . Do you happen to know, Mr . Earl, whether that was ever
questioned or not?
   Mr. EARL . It was questioned some years ago . It was questioned, I
believe, in the case of Weyl, W-e-y-l.
   Mr. HAYS. Weyl v. The Commission?
   Mr. Kocx. And may I say, if it is helpful to the committee, that that
decision was in 1932, and it wasn't until 1934 that the prohibition
against propaganda was placed into the statute .
   Mr . HAYS . Of course, a good deal of the things that Mr . Earl is
going to quote occurred in 1932, so I thought the court decision might
have some bearing .
   Mr. EARL . That decision was in 1932 .
   Now, of course, in charting the course of any organization, I presume
you have to have a starting place, and with this one I started back
at the time it received a new name, back in the twenties, and I men-
tioned its activities and doings in the thirties, and then more recently
in the forties and fifties .
   Under the law, certain organizations are granted tax-exempt status
providing no substantial part of their activities are devoted to propa-
ganda, political purposes, or attempts to influence legislation . As has
been pointed out by prior witnesses before this body, notably Mr .
Andrews and Mr . Sugarman' the task of checking on tax-exempt
organizations is difficult, because of legal provisions that are too gen-
eral, and in which the terms mentioned, "substantial," "political," and
"propaganda" are not defined.
   Mr. HAYS . Right there, I would like to stop you and tell you that
if you don't mind my saying so, I think you are misquoting Mr . Sugar-
man and Mr . Andrews, and I would like to read, if you will permit me,
from the record, page 979 of the transcript.
   Mr. EARL. Go ahead.
   Mr. HAYS (reading)
  Mr . SUGARMAN . As I indicated at the earlier stages, the Revenue Service at
one time attempted to draw a line between propaganda and education by indi-
cating that organizations engaged in disseminating knowledge or their views
on controversial subjects may be engaged in propaganda and not entitled to
exemption. The courts felt we should not draw that line into the statute . For
that reason, organizations of that sort may now be granted exemptions under
the existing judicial precedents .
  I think that propaganda problem is one that we pretty well leave alone in
the sense that in this area, like many others, we find that attempts to define terms
do not help us particularly when we get to actual cases .
                        TAX-EXEMPT FOUNDATIONS                                735

    And then I would like to refer you also to a question that Mr .
Goodwin put to Mr. Sugarman on page 992 of the transcript .
   Mr . GOODWIN . Now my final question : I want to put that to the Commissioner .
    I am sorry. He put it to Mr . Andrews .
   Would it be a fair statement to say that this is an indication that the Congress
is pretty well satisfied with the way the Bureau and the Department are inter-
preting the original terminology, and the way in which the courts are placing
their decisions?
   Commissioner ANDREWS . I think that is a fair conclpsion, yes.
   Mr. EARL. I did not have access to the record .
    My information came from an article by Robert K . Walsh, of the
Washington Star. I quote
   He and Mr . Andrews-
speaking of Mr . Sugarman-
added that the task of checking on tax-exempt organizations is difficult because
of legal provisions that are too general and the agency's lack of funds and
facilities .
    I agree, of course, with the statement made by Mr . Sugarman or
Mr. Andrews, whichever it was, that the spelling out in the statute
defining very meticulously what is and what isn't political propa-
ganda, et cetera, wouldn't be very much help in actual cases .
    The CHAIRMAN . I might interject that those of us around here who
have read the observations of Mr . Walsh have very great confidence
in his conclusions and analyses .
    Mr. HAYS. I would say Mr . Walsh, who is present here today, is
limited probably by the number of words he can put on the wire, and
while he got across a general impression of what they did say, I think
it might well be said that somewhere in here, and I don't have the
exact page, they made another flat statement that they didn't want
in any case to become censored down there .
    Mr. EARL. It is a problem. I know that .
    The CHAIRMAN. I don't think you should quote one sentence there.
We have had a great deal about lifting things out of context .
    Mr. EARL. I was only lifting one to quote one that had been lifted,
you see . I thought it was permissible in that case .
    The CHAIRMAN . There is no question but that the statute, as I under-
stand the statute, does place responsibility upon the Bureau of Internal
Revenue, in connection with activities and organizations, of deter-
mining to what extent these organizations do engage in political work
and work of a propaganda nature . They are circumscribed by prece-
dent and by decisions . We all recognize that. But, nevertheless, I
think it is generally accepted that the Internal Revenue Service does
have a responsibility there.
    But I hope we won't take too much time discussing this angle.
    Mr . HAYS . I don't intend to take any more .
    I was a little flattered . I hope I interpreted your remarks accu-
rately, to signify that my expression about lifting things out of con-
text made some impression the other day .
    The CHAIRMAN. I was very much impressed that that was true in
the two instances in which you were involved .
    Mr. HAYS . Well, that was the demonstration I was talking about .
    The CHAIRMAN. You may proceed .
736                      TAX-EXEMPT FOUNDATIONS

    Mr. EARL . In an attempt to obviate certain apparent difficulties of
this nature, I shall refer to two definitions which Mr . Norman Dodd,
 director of research for this committee, used in his recent report .
    I received a copy of this report shortly after I came to Washington .
    He defined "political" as "Any action favoring either a candidacy
for public office, or legislation or attitudes normally expected to lead
 to legislative action ." And he defined "propaganda" as "Action hav-
ing as its purpose the spread of a particular doctrine or a specifically
 identifiable system of principles . (In use, this word has come to
 infer half-truths, incomplete truths, as well as techniques of a covert
nature.)
    However, when one tries to ascertain whether or not a "substantial"
 part of an organization's activity is "political," "propaganda," or
"designed to influence legislation," a problem of immense proportions
is encountered . An organization's activities, ordinarily, will be
neither white or black, but a shade of gray, and the problem becomes
one of ascertaining whether black or white predominates in the gray .
   In this prepared statement I have assembled excerpts from publica-
tions of the League for Industrial Democracy which I think appropri-
ately illustrate and demonstrate its activities, both in years past and as
of now . My own comments serve to tie the excerpts together and
identify them, and, of course, represent my own views . However, I
think that these excerpts will speak for themselves in demonstrating
LID propaganda themes, political action, and attempts to influence
legislation.
   Let us first find out what the LID is
   The League for Industrial Democracy is a membership society engaged in
education for a new social order based on production for use and not for profit .
That is taken from an LID ad on an inside back cover of 1940
pamphlet entitled "New Zealand's Labor Government at Work, by
W. B . Sutch ."
    Some time after 1940, this statement was changed, and a recent
publication entitled, "The LID and Its Activities," reads
   The League for Industrial Democracy is a nonprofit educational organization
committed to a program of "education in behalf of increasing democracy in our
economic, political and cultural life ."
   Now, as a short aside : In both, the word "democracy" pops up and
I presume presents the problem of trying to find out what they mean by
the word .
   This last pamphlet or publication that I referred to says this
  The league seeks to encourage every movement in the fields of labor, of coop-
eratives, of democratic public control and ownership, of social legislation, of
civic rights, of education, and of international relations, which aims at the
preservation, strengthening, and fulfillment of the democratic way of life.
   Mr. HAYS . Well, do you question their right to promote those ideas
at all?
   Mr. EARL. No, I do not.
   Mr. HAYS . Then what is the basis of your argument? The fact
that they are doing it with tax-free money?
   Mr. EARL . That they shouldn't be in the political arena with tax-
free dollars .
   Mr. HAYS . What about the Committee for Constitutional Govern-
ment?
                      TAX-EXEMPT FOUNDATIONS                        737

  Mr. EARL . I am not going to talk about any other organi-
zation, Mr . Hays, because you are going to get into organizations
about which I know nothing. If I speak of any other political parties,
it will be the Democrats or the Republicans . Because I think the
LID is an adjunct of the Socialist Party . Now, the Socialist Party
itself, when you make a contribution-I don't infer that you do, but
when anyone makes a contribution to the Socialist Party, it is my
understanding that that contribution is not tax exempt, that you can't
list it on your income-tax return .
  Mr. HAYS . You are talking pretty much about a cadaver, aren't you,
Mr. Earl?
  Mr. EARL. What is that?
  Mr. HAYS . You are pretty much concerned with a cadaver, aren't
you, Mr. Earl? The Socialist Party is a corpse. It isn't even running
a candidate any more . As a matter of fact, I think you will find, if
you want to go back to when you started this, in 1932, and read the
platform of the Socialist Party, and then read the Republican Party
platform in 1952, you will find that their aims are very similar . I
don't know what you are getting at. Or the Democratic Party plat-
form for that matter .
  The CHAIRMAN . The word "cadaver"-I would question its appro-
priateness . The group which is generally embraced in the term
"socialist," as represented in parties of that stripe, has been control-
ling a great many elections and had a vital influence, in my opin-
ion, on our national life . And I think some of the quotations I have
read in his statement will indicate that it is not the numbers that
have the greatest influence, but it is the course of action of certain
people.
  Mr. EARL. Allow me, with regard to what you have said, Mr . Hays,
to say this : You mentioned that the Democratic program as of today,
the Republican programs as of today, embrace a great many of the
things that the LID embraces and that the Socialist Party embraces .
And I am the first to agree with you . I agree that they do . But I
disagree when it comes down to this . The Republicans and the Demo-
crats are putting forward that program with tax dollars . Now, you
will have to agree with that .
   Mr. HAYS . No, I don't agree with you at all, and I will tell you why
I don't .
  Mr. EARL. Go ahead.
  Mr. HAYS . The Republican National Committee has widely adver-
tised that its congressional budget this year will be in excess of $3
million . And it would be very interesting from my point of view to
learn how much of that in excess of $3 million is going to be depletion
allowance money from Texas. And that is certainly not tax dollars .
  Mr. EARL. Well, I will tell you . When you or I contribute to the
war party fund of either the Democrats or the Republicans, we don't
list it on our income tax . And that is what I am talking about .
  Mr. HAYS . We don't list it on our income tax?
  The CHAIRMAN . As a deduction?
  Mr. EARL . As a deduction .
  Mr. HAYS . That is right.
  Mr. EARL . If you made . a contribution to the LID you could .
  Mr. HAYS . I suppose that people who give $5 could . But do you
know how many do?
738                    TAX-EXEMPT FOUNDATIONS

   Mr. EARL . Enough do to keep them going . Put it that way.
   Mr. HAYS . To get up to that $45,000 a year they spend .
   Mr. EARL . I don't know whether they spend 45 or how much they
spend .
   Mr. HAYS. Well, I am telling you . I can read the exact figures as
to how much they spend if you want, in promulgating these ideas of
theirs .
   The whole point I am making, Mr . Earl, is that it seems to me you
have crossed the continent on a rather unimportant mission about a
very unimportant organization, as I see it .
   Mr. EARL. Perhaps that is the way you feel about it .
   Mr. HAYS . Which has no relation to this investigation, that I can
see .
   The CHAIRMAN . If Mr. Earl will be permitted to give his statement,
we will be in a position to evaluate it .
   Mr. HAYS . I am going to evaluate, Mr . Chairman, as we go along,
if you don't mind . I think we can get a better evaluation .
   Mr. GOODWIN. Mr. Chairman, I wonder if that is the way to do this
in the most expeditious way? My desire is to make progress . It seems
to me I don't want to make a motion at this stage, but I am very:
definitely of the idea that we should go ahead with the statement, and
such speeches as are to be made from the committee rostrum should
come at the conclusion of the testimony of the witness .
   Mr. HAYS . That is a good idea, Mr . Goodwin, except that, to use
your own terminology, we never get to make the speeches, because then
we have another witness the next day, and they are put off indefinitely .
So that these people get to peddle all of this tripe, if you will permit
me to use the word, and it gets out to the press, and they release it to the
press before the committee gets it .
   Mr. GOODWIN . The gentleman from Ohio has thus far in the pro-
ceedings been able to get in what speeches he wanted to apparently .
   Mr. HAYS. And he wants to keep it up, too, if you don't object .
   The CHAIRMAN. The chairman was just about tq apologize for his
failure to give the gentleman from Ohio any opportunity to project
himself into these hearings, and I certainly don't want to be guilty of
such lathes in the future . And I particularly have in mind the case
of one witness where a rough calculation indicated that he had only
been interrupted 246 times .
   Mr. HAYS . Now I know where Fulton Lewis got that statement .
And are you the one who told him I was put on this committee to
wreck it?
  The CHAIRMAN . I didn't know Fulton Lewis got the statement in
the first place .
  Mr. HAYS. I wouldn't want to question your veracity .
  The CHAIRMAN . I know by inference that you do question it . That
doesn't make a particle of difference . I am not expecting you to
accept my veracity in public . In private, of course, I know you would .
   Mr. HAYS . I would accept it even in public, Mr . Chairman . But
once or twice you have tested my credulity pretty far . But I accept
your veracity right down the line ; and if I don't, I won't tell you by
inference or innuendo . If the time ever comes, I will tell you, period .
So until then don't you read anything into my remarks .
  The CHAIRMAN. Well, I know that the gentleman is very frank and
he isn't very credulous .
                     TAX-EXEMPT` FOUNDATIONS                        739

   Mr. HAYS . When somebody tells me he doesn't know how television
got here, I have to be credulous to accept that . But I did.
   The CHAIRMAN . There is no misunderstanding as to how television
got here . The organization which I presume these gentlemen repre-
sent called me before the hearings started about television and stated
they wished to take a TV newscast . I told them it would be satis-
factory with me, and I discussed it, I am sure, with the gentleman from
Ohio and some of the other members of the committee and no objection
was advanced.
   Mr. HAYS . Oh, no objection at all .
   The CHAIRMAN . And insofar as the hearings this morning were
concerned, they came in . on the basis of their prior authorization . So
there is no misunderstanding about that .
   Mr. HAYS . Oh, no, no .
   The CHAIRMAN. And the hearings would be so much better if the
gentleman from Ohio would confine his attention to the matter before
the committee and not get involved in these other matters .
   Mr . HAYS . If you want to debate this, we can . Did you or anyone
speaking for you advise anyone that you had a witness coming in
today who would blow the lid off?
   The CHAIRMAN . I certainly did not .
   Mr. HAYS . All right . I accept your veracity. I just heard that.
   Mr. GOODWIN . I would like the record to show, Mr . Chairman, that
I am suggesting that the witness be permitted to go ahead and submit
his evidence without interruption . At the end of that, of course,
there will be an opportunity for any members of the committee to ask
questions, and I assume to make speeches from the rostrum .
   Mr. HAYS . Would you have any objection to just having him insert
it in the record? We do not have to be read to, or do we?
   Mr. GOODWIN . I think we should hear his testimony. My only
concern, Mr . Chairman, is that we go ahead and make as much speed
as we can and get along. I am told that the program for this session
of Congress is to adjourn on the 31st of July at the latest. I can see
that, unless my suggestion is adopted, we are likely to come up to
the end of this afternoon's session with probably not more than 2 pages
 out of 40 gone over . I think this is a waste of time .
   The CHAIRMAN . The Chair hopes that the suggestion of the gentle-
man from Massachusetts might prevail, which is in accordance with
the motion that was made and was carried earlier in the proceedings,
since a script of the testimony is available to the committee, and we
 adjourned over -until this afternoon in order to give all the members
opportunity to read it or at least such members as might have had time .
   Mr. HAYS . Yes, but when the gentleman finishes reading his script,
 which is going to be some time later this afternoon, I can list hear
the chairman now saying, "It is 4 :30, and it is time we adjourned,
 and then tomorrow we have someone else coming in as a witness
 and you will have to defer cross-examination ." And I am just not
                  to that kind of procedure, Mr Chairman .
going to submitto go along and be as agreeable. as possible, but this
   I would like
 business of letting these people release these stories to the press and
 letting it go out unchallenged-I can't sit idly by and do it, especially
 when they go back to 1932 and talk about things that were preva-
lent then.
7 40                    TAX-EXEMPT FOUNDATIONS
   And a lot of people made a lot of statements in 1932, and, of course,
when they were living through the depression they felt very strongly
about it, and they perhaps wouldn't make them in 1952 or 1954 .
   I will try to not interrupt the witness any more than I can help,
but there are some things, such as the statement about Mr . Andrews,
that I felt had to be straightened out before we go any further .
   The CHAIRMAN. With that discussion, then, the gentleman will
          .
please ~r,oceed .
   Mr. EARL. We were talking about the definition of the word
"democracy" and what the LID means by that word . Reference is
made in a publication entitled, "Revolt"-this is a long time ago, 22
years ago, as a matter of fact, October 1932 .
   Mr. HAYS . Who published that? May I ask that?
   Mr. EARL. The LID published it .
   Mr. HAYS. Was that an LID publication, or of some affiliated body?
   Mr. EARL. By the Intercollegiate Student Council of the League
for Industrial Democracy .
   Mr. HAYS . Then it was not the LID itself, but an affiliate ; right?
   Mr. EARL. Right . We have read now where it is from, published
by Intercollegiate Student Council of the League for Industrial
Democracy.
   Mr . HAYS . That is all I wanted in the record .
   Mr. EARL. And under an article entitled, "What the LID Stands
For," the concluding paragraph throws some light, I think, on what
they mean by democracy .
   Mr. HAYS . Are you reading now from your statement? I am trying
to follow you here.
   Mr . EARL (reading)
  The LID therefore works to bring a new social order ; not by thinking alone,
though a high order of thought is required ; not by outraged indignation, find-
ing an outlet in a futile banging of fists against the citadel of capitalism ; but
by the combination of thought and action and an understanding of what is
the weakness of capitalism in order to bring about socialism in our own lifetime .
   Now, of course, that is a long time ago ; but my thesis is that they
haven't disavowed that. They still have the same aims . I think
it is very well put there .
   We are told by Harold Lewack in Campus Rebels, a Brief History
of the Student League for Industrial Democracy, published in 1953,
that the Intercollegiate Socialist Society, forerunner of the LID,
was founded in 1905 following a call by Upton Sinclair and George
H. Strobell for the organization of an association-
for the purpose of promoting an intelligent interest in socialism among college
men and women .
   Now, another aside from the prepared statement is that they still
have their own student organizations on the campuses, and it is pre-
sumed they still have the same goal in mind .
   In 1921, for various reasons cited on page 8 of Lewack's Campus
Rebels, the society's name was changed to the League for Industrial
Democracy .
   Let us observe that Socialist forms of government are in power in
various countries of the world, but I presume it is admitted that
ours is a Republican form of government ; though not long ago it
would have been permissible to refer to it as a Democratic form of
government .
                         TAX-EXEMPT FOUNDATIONS                                741
   You have referred to it as a cadaver . That is fine, but the LID is
still strong and healthy . Of course, that is the problem involved
here. Whether or not the LID has abused its tax-exempt status .
   Let us now examine some of the agitation and propaganda themes
of the LID .
   This next, preceding the excerpt, is my thought as to what that
attempts to do .
   Mr. HAYS . You are editorializing now .
   Mr. EARL . That is right.
   Special pleading and incitement to direct action on the picket line
and elsewhere would appear to be outside the scope of the normal
educational process. In Revolt, the publication to which I referred
earlier, for October 1932, published by-I said LID, and now I
should change that to Intercollegiate Student Council for the LID-
are found practical suggestions for political agitation . Under the
heading "Blueprints of Action-a Handbook for Student Revolu-
tionists," students are urged to do several things . Among them
   Teach labor courses, form workers' educational groups, boycott businesses
unfair to labor ; parade with antiwar banners and floats from the campus to the
business center of town on Armistice Day ; distribute "No More War" leaflets ;
sell Disarm-
which was a publication .
   Where ROTC is compulsory, a student strike is advocated as the most effective
weapon .
    And picket homes and offices of the guilty capitalists . And earlier
they had referred to Tom Mooney and his troubles .
    Mr. HAYS . Right there, you have a star, and it says, "Not a direct
quotation inside brackets." That is your own summation?
    Mr. EARL . Where I have, "Who have imprisoned Tom Mooney and
other innocents," it refers to the fact that earlier in the article they
were speaking about Tom Mooney and his troubles .
   Mr. HAYS . What are those dots in there? That indicates you have
left out sentences?
   Mr. EARL . That indicates material is left out .
    Mr. HAYS . I don't suppose you would want to comment, after what
happened the other day, but I would just like to read you one short
paragraph and see if you think it would be dangerous .
    Mr. EARL . I heard what happened the other day . I read about it .
And I will say right now that I probably, though you may read it,
won't comment on it.
    Mr. HAYS. All right. You have that privilege .
   Our forefathers of a hundred or even 50 years ago likely called our present
social organization socialistic . Socialism has certainly infiltrated into our social
and economic structure . Our own liberal political and social philosophers have
affected it, and many of the measures of President Roosevelt's New Deal were
labeled socialistic . Perhaps some were .
This part I want to emphasize-
but I feel that many conservatists were alarmed at the expression "social
justice" and believed that anything connected with it was tainted with socialism .
At any rate, socialism has been a strong propelling force in the last hundred
years to make men's minds more alert to the necessity of social justice .
    You wouldn't want to comment on that, would you?
    Mr. EARL . No. May I go ahead now?
742                   TAX-EXEMPT FOUNDATIONS

    Mr. HAYS . Would that ring faintly familiar at all to you, Mr .
 Wormser ?
    Mr. WORMSER . I think it does.
    Mr. HAYS . That is from one of your books, isn't it?
    Mr. WORMSER . That is right .
    The CHAIRMAN. Since you have reacT that, I want to interject that
 that is one of the purposes of opposition, to have some effect upon the
 majority party.
    Mr. KocH. Mr. Chairman, on behalf of my partner, may I say Mr .
 Wormser is not tax-exempt .
    Mr. HAYS . I just point out that there are people who have ideas
 and express them, and I am wondering if you are trying to stifle ideas,
 the free market place of ideas . Someone used that expression once .
 In fact, I think a president of a university used it .
    Mr. EARL . No ; I would be the last to try to stifle it.
   The CHAIRMAN . The only thing, as I understand it, that you are
 trying to show by the quotation is that organizations promoting what
amounts to a destruction of the institutions under which we have
grown and prospered these one-hundred-sixty-odd years ought not to
be financed b y tax-exempt funds?
    Mr. HAYS . Are they advocating the destruction or the change of
 them? That is the thing I want to know . And if they are advocat-
ing the change, the gentleman has already testified that he was-
what?-13 years old in 1932?
   Mr. EARL . I am now 34.
   Mr. HAYS. But in 1932, do you remember anything about the
depression at all? Who was feeding you then? Somebody must
have been . You weren't earning a living .
   Mr . EARL . I will tell you . I have never had a hungry day in my
life.
   Mr. HAYS . You don't know how you would feel if you did, do you?
   Mr. EARL. No. I trust I never will .
   Mr. HAYS . And I trust that some of these social revolution changes
that have taken place, such as social security and unemployment com-
pensation and Federal deposit insurance will keep you from that very
thing.
   Mr. EARL. Let me say this : I won't argue with you about social
security or the Federal Deposit Insurance Corporation or any of them,
or the merits of them, either way . Because both parties have espoused
them . That isn't the problem here, as I see it . The problem is
You get into the arena with tax-exempt dollars, or don't you?
   Mr. HAYS . But you take a pretty limited view of this, Mr . Earl .
That is my only quarrel with you . I think you have a legitimate
point .
   Maybe you would answer this question, without naming anyone .
Do you think it is just as bad to get into the conservative side with
tax-exempt dollars as you do the other side?
   Mr. EARL . It would be a legitimate place of inquiry ; sure.
   Mr. HAYS . Well, that makes it a little better .
   The CHAIRMAN . The question involved here is an organization using
tax-exempt money, promoting "Parade With Antiwar Banners," at
a time when the security of the Nation is involved .
                         TAX-EXEMPT FOUNDATIONS                              743
  Mr. HAYS. In 1932? The security was involved all right, but your
party didn't do anything about it ; when the Japs went into Manchuria
and Hitler went into the Rhineland and so on .
  The CHAIRMAN (reading)
  Where ROTO is compulsory, a student strike is advocated as the most effective
weapon .
  LID is a militant educational movement which challenges those who would
think and act for a new social order based on (production for use and not for
profit) that is a revolutionary slogan. It means that members of the LID think
and work for the elimination of capitalism . * *
  And so forth and so on .
  Those are the things that we are making inquiry about, as to whether
tax-exempt money should be used to promote them.
  Mr. HAY. Let me read you a revolutionary slogan and see if you
think we ought to investigate it .
  Whenever any form of government becomes destructive of those ends, it is the
right of the people to alter or to abolish it, and to institute new government,
laying its foundation on such principles and organizing its powers in such form as
to them shall seem most likely to effect their safety and happiness .
   Now, that is real revolutionary . That is out of the Declaration
of Independence . You can't get much more revolutionary than that.
  The CHAIRMAN. Of course, the Declaration of Independence refers
to the right of the people to set up a government .
  Mr. HAYS . And to abolish it and to change it and to do whatever
they think is necessary for their happiness . I don't know anything
about this LID or how bad an organization is .
  Mr. GOODWIN . We are trying to learn something about it .
  Mr. HAYS . I don't think you are going to learn much except from
one side.
  The CHAIRMAN . We will be very glad to have the representative
from whom we received the telegram come down and give us the other
side . Now, we have been here 1 full hour .
  Mr. HAYS . And we have had some very profound documents read
from, such as the Declaration of Independence .
  Mr . Wormser, I meant no offense by quoting your book. You
should be glad to have it read with such high-class literature as this .
I am trying to prove that people have ideas and have a right to
promote them and sell them if they can .
  Mr. WORMSFR. I think it is only fair to say that it was read out of
context.
  Mr. HAYS . Oh, yes . I have done a lot of reading from your books .
I want to know what goes on in the staff's mind . And I did find that
some of the things that go on in your mind click in mine . So I feel we
are closer together than we have ever been .
  Mr. GOODWIN . That is a hopeful note to go on with .
  Mr. HAYS. But I keep saying, "Don't be too optimistic ."
  Mr. EARL. Any notion that the LID was to confine itself to the
cloistered atmosphere of academic pursuits, as distinguished from
"work" and "action" is dispelled by the editors of Revolt, who write
on page 6 of this issue, under the heading "What the LID Stands
for"--
  Mr . HAYS . Is that still 1932?
  Mr . EARL . Yes .
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   The CHAIRMAN . If I may interject, he is going back to the beginning
of  the LID, when it was organized under the name of League for
Industrial Democracy as the successor to the Student Communist
League or whatever it was, and he is going to come on up to date, so
that his quotations are not from any one period, but over a long period
of years.
   Mr . HAYS . We could prevent a lot of interruption, which un-
doubtedly must interrupt your cerebral continuity somewhat, if you
would just, as you read these quotations, say, "This is 13, and this
is 35" if you happen to know .
   Mr . EARL . I ordinarily prefer them with that . If you can stand it,
we will be to 1950 on page 11 .
   Mr . HAYS . I will try to wait with bated breath.
   Mr. EARL. From the publication in 1932, Revolt, on page 6, under
the heading of "What the LID Stands for"-
   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 and not for profit . That is a revolutionary slogan . It means
that members of the LID think and work for the elimination of capitalism, and
the substitution for it of a new order, in whose building the purposeful and pas-
sionate thinking of student and worker today will play an important part .
   Other quotations from page 6 of this same article suggest that LID
spokesmen were interested in a rather strenuous program of education
   Men and women who would change a world must blast their way through the
impenetrable rock. No stewing over drinks of tea or gin, no lofty down-from-
my-favorite cloud, thinking more radical thoughts than thou attitude makes a
student movement or a radical movement. LID students talk and write about
conditions . LID students act about them .
   * * * a staff of 6 or 8 leave the Chicago or New York offices to help co-
ordinate activities . They get into classrooms, they talk to classes . * * * In addi-
tion these speakers furnish a valuable link between students and their activities
later on . After graduation the work continues unabated . In city chapters, in
New York, Chicago, Philadelphia, Detroit, Baltimore, the work of education and
action goes on .
   The LID emergency publication, the Unemployed and Disarm, have reached a
circulation of one-half million . * * * Students organized squads of salesmen to
 sell these magazines, containing slashing attacks on capitalism and the war sys-
tem, at the same time it enable the unemployed to keep alive .
   In November of this year a training school for recent graduates will be opened
 in New York * * * to equip students by field work to perform their tasks in
 the labor movement. * * *
 This language about recruiting and training, I think, would be more
 appropriate in an Army field manual than in the journal of an educa-
 tional association .
    In the same issue, Paul R. Porter, a field secretary of the LID, who
 has more recently been a director of the ECA in Europe, and as an
 aside, a recipient of an LID distinguished award, expressed his fears
 that American business leaders might turn to fascism as a means of
 saving their dying world . In an article entitled, "Fascist Goat Glands
 for Capitalism," Mr . Porter writes, and this, of course, is from the
 same publication published in October 1932
   Social systems do not commit suicide . Societies grow senile and shaky but
 their ruling classes hold to the last their power and privileges against the class
 ultimately destined to displace them . It is this fact which makes so grave the
 prospects of fascism, in America as well as in Europe .
   Because political democracy, for all its weaknesses and delusions, is a power
 instrument in the hands of the workers, the ruling class will attempt to divest
 them of it (p . 7) .
	


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  Talk of "ruling classes," the "delusions" of democracy, the in-
evitability of class displacement, is language borrowed from Stalin
and Lenin .
  Mr. HAYS . Let me read you a paragraph right here very similar
to this
  President Hoover and his associates had announced there would be a short
period-
this is 1932 they were talking about-
of unhappiness, after which the law of supply and demand, if not interfered with,
would restore normal conditions . This might have been true, but the country
felt very sick when Franklin D . Roosevelt took office and was in no mood for
waiting . Those who were without jobs, who could not pay their rent, who could
not sell their merchandise, who could not get their money out of banks which
had failed, were not hopeful that the old capitalistic system would correct
its own maladjustments . F. D . R.'s overwhelming victory at the polls was
deemed a mandate to overhaul the old machinery thoroughly .
  Do you think that is revolutionary?
  Mr. EARL. I am not quarreling with it.
  Mr. HAYS . Do you think it is revolutionary, Mr. Wormser?
  Mr . WORMSER . I think you ought to put my whole book in evidence .
  Mr. HAYS . We ought to get the title in anyway . It might create a
demand for it among the New Dealers .
  Mr. KocH . And the price.
  The CHAIRMAN . You may proceed .
  Mr. EARL . Explaining that a "Socialist revolution means a redis-
tribution" of wealth "on an equalitarian basis," Mr . Porter advises
workers and farmers that--
   * * * their recourse now is to form a political party which they themselves
control, and through which they might conceivably obtain state mastery over the
owning class (p. 7) .
    Mr. Porter visualizes the onset of fascism in these words
  When Community Chests are more barren than Mother Hubbard's cupboard
and workers begin to help themselves to necessities in stores and warehouses,
when bankrupt municipalities stringently curtail normal services, then vigilante
committees of businessmen, abetted by selected gangsters, might quickly and
efficiently assume command of governmental functions .
  The assumption of power by vigilantes in a few key cities would quickly
spread . The President (Hoover or Roosevelt) would declare a national emer-
gency and dispatch trops to zones where vigilante rule was endangered . Prob-
ably he would create a coalition super-Cabinet composed of dominant men in
finance, transportation, industry, radio, and the press, a considerable number
of whom would be Reserve of eers .
  Mr. HAYS . May I ask you about the "Hoover or Roosevelt" in
parentheses? Does that mean that was written before the election?
   Mr. EARL. This was written in October of 1932, and I think the
election was in November .
   The CHAIRMAN . Are you correct in this phrase here, that Mr .
Porter-Paul R . Porter, we should say, to distinguish him from
another distinguished man-spoke of "vigilante committees of busi-
nessmen, abetted by selected gangsters"?
   Mr . EARL. Where are you reading from, sir? Oh, that is from
the quote at the bottom.
   The CHAIRMAN . That is pretty strong language .
   Mr. HAYS . That is the bottom of page 4, the second paragraph from
the bottom, the next to the last line .
   Mr. EARL . I will read from the magazine .
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  Mr. Kocx . Is that a direct quotation?
  Mr. EARL . Yes, it is .
  Mr. HAYS . I understood Mr . Porter as saying that could happen .
Right?
  Mr. EARL. Yes . His thesis here seems to be that that very well
could happen.
  Mr. HAYS. That was written in 1932?
  Mr. EARL . October 1932 .
  Mr. HAYS. You could get a lot of funny statements written back
there, when people really were hungry, with 12 million unemployed .
Of course, that makes them pretty poor prophets today .
  Mr . EARL (reading) :
   The bulldozing methods of the wartime Council of Defense would be em-
ployed against protesting labor groups and some individuals might be imprisoned
or shot, though several "cooperative" A . F . of L . officials might be given posts of
minor responsibility .
  And then my own comment on that
  Mr. Porter's objectivity and ability to see the picture of life as a
whole-valuable assets to a scholar engaged in education-are further
demonstrated by this passage taken from the same publication, the
same page
   The American working and middle classes are, politically and economically,
among the most illiterate in the world * * * . Insofar as they (the middle class)
comprehend the class structure of capitalist society their impulse is not to
welcome union in struggle with the working class into whose ranks they are
being pushed, but on the contrary to vent their humiliation in resentment against
militant labor.
   Many workers, for their part, are disgusted by the impotence of most A. F. of L.
unions and would quickly respond to demagogic Fascist agitation, even as many
once flocked into the Ku Klux Klan. Unemployment to them is not an inevitable
consequence of maldistributed income * * * (p . 7) .
  Having analyzed the danger, Mr . Porter then outlines the action
program that can ward it off
   Watch now those little flames of mass unrest * * * Great energy will be gen-
erated by those flames of mass revolt . But revolt is not revolution, and even
though new blankets of cruel repression fail to smother the fire and in the end
only add to its intensity, that energy may be lost unless it can be translated into
purposive action . Boilers in which steam can be generated-if we may work our
metaphor-need be erected over the fire, and that steam forced into engines of
reconstruction .
   Trotsky, in describing the role of the Bolsheviks in the Russian Revolution,
has hit upon a happy figure of speech which we may borrow in this instance . No
man, no group of men, created the revolution ; Lenin and his associates were but
the pistons driven by the steam power of the masses . The Marxist Bolshevik
party saved that steam from aimless dissipation, directed it into the proper
channels .
   To catch and to be driven by that steam is the function of the radical parties in
America today (p . 8) .
  Mr. Porter was a trifle unhappy because the Socialist Party was
"not yet a consistently revolutionary party," and he apparently re-
gretted the tendency towards moderation in the Socialist parties of
both Great Britain and Germany .
  This is from the same article
  There are members who would pattern it (the Socialist Party of America)
after the German Social Democracy and the British Labor Party, despite the dis-
astrous experiences of two great parties of the Second International . There are
members who have lost to age and comfort their one-time fervor, and members
who would shrink from struggle in time of crisis (p . 8) .
	


                        TAX-EXEMPT FOUNDATIONS                              747
  Yet, voicing hope for the Socialist revolution in America, Mr .,
Porter closed on a note of optimism and advice .
  They (the Socialists) must overcome the quiescent influence of those whose'
socialism has been dulled by intimacy with the bourgeois world, and they must
speak boldly and convincingly to the American working people in the workers'
language.
  If their party can rise to these tasks then perhaps capitalism can be decently,
buried before it has found temporary rejuvenation in a Fascist dictatorship
(p. 8) .
  While it would not be fair to attribute these views to the entire mem-
bership of the LID, they are of special significance for the reason'
that Mr. Porter, as organizer and lecturer for the LID, was the mis-
sionary who contacted thousands of students in his travels about the
country . They are not the opinions, therefore, of a casual contributor
to a party organ, but the fixed beliefs of one of the most active of the
permanent cadre of our Socialists .
  In another article, Journal of the LID Chautauqua, this wasr
taken from Revolt, page 10, printed in October 1932-Carrie Glasser
describes an LID summer school. She writes as follows in the same
issue of Revolt
  We can tell . also of heartening accomplishment, of the seeds of new thought
we have planted, of clubs organized for working men and women (in the West
Virginia coalfields), of labor plays written and acted, of songs composed by
the workers themselves, and herein we see the hope of a fruition of social dis-
content which will lead to a social change (p. 10) .
   Mr. HAYS . I am going to have to comment right there : do you know
about conditions in the east Ohio oilfields, adjacent to where I grew
up and still live, in 1932? Do you know anything about those con-
ditions?
   Mr. EARL. I have read about them, but I am sure you are much more
familiar with them than I . I realize they were very bad .
   Mr. HAYS . Do you realize men worked 14 hours, sometimes going
to work in the dark and coming home after dark, and that instead of
a, pay check, they frequently got a slip telling them how much they
owed the company for groceries? Have you heard of such conditions
that existed in Ohio in 1932?
   Mr. EARL. I have heard that they did .
   Mr. HAYS . I did not "hear that they did ." I saw it and lived
through it. And I saw my father extending credit to those coal
miners' families for food, knowing full well he was never going to
get the money, because he could not stand to see their kids go hungry .
Then you talk about a little revolutionary dogma. I am amazed they
did not say worse things than that.
  The CHAIRMAN . Whatever the conditions were, and they were bad,
that does not justify an organization, for the purpose of sponsoring
a revolt against our form of government, going in and trying to
capitalize on the misery and discontent of the people .
  Mr . HAYS. They wanted change and they got the change .
  The CHAIRMAN . The whole tenor of what he is saying here is that
they are revolting against our system of free enterprise and free labor ..
  Mr. HAYS . Mr. Reece, you are not proud of that free enterprise
that was paying those men no wages at all in 1932?
  The CHAIRMAN . I am proud of our system of free enterprise, free
enterprise and free labor, which has given us the highest standard
of living that any people on earth ever enjoyed . While we have our
     49720-54-pt. 1-48
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ups and downs, the continuous course of history has been upward,
and I am proud of it . And for one, I do not want to see the taxpayers'
dollars used to try to break down that s stem .
  Mr. HAYS. Well now, I do not thin you * are as disturbed about
that as you are perhaps about some other political matters, but be
that as it may, let me say to you, as to the great free enterprise system,
that I believe in it . I am a capitalist. And as I said to you the other
day, I do not want anybody running my business .
   But you know, when the capitalistic system-and as I say, I am
one of them-gets in trouble, as your coal miners and operators did
in 1932, they were very happy for the Government to bail them out .
  The CHAIRMAN . I voted for the Bituminous Coal Act because I
thought it was a good thing .
  Mr. HAYS . Because you thought that the Government could help
out free enterprise. It is all right if it is free enterprise and they are
getting a little help, but when the fellow who is doing the work gets
help, that is revolution .
  The CHAIRMAN . If we are through-
   Mr. HAYS. I do not know if we are through or not . I do not get
many answers, except that I get some speeches about wrapping your-
self in Old Glory and how wonderful the Fourth of July is . But
these are pretty fundamental things . They were to those people
then . And I have heard it said to this committee, "Just muddle along
through these depressions ." Of course, if 10 or 12 million people
starve to death, I expect they would not want to "muddle ." But if
they want to do something about it, that is revolution . Is that what
we are saying?
   Mr. GoovwIN . There must be a better forum, Mr . Chairman, for
colloquies of this sort . I do not know quite where it would be, but
I am sure it is not in this committee .
   Mr. HAYS . Well, I won a debate on this subject over on the floor
of the House from a fellow statesman, geographically, that is, from
Ohio, and I will debate it any place anyhow, because I lived through
it. When you start talking about the coal miners of West Virginia
and Ohio, you are talking my language . I know something about it.
   The CHAIRMAN . Proceed .
   Mr. EARL . Felix S. Cohen, under the heading "Politics and Eco-
nomics," has this to say in the same issue of Revolt
  The crucial issue of industrial civilization today is not between laissez-faire
individualism on the one hand and collectivism on the other . History is deciding
that question . The question for us is what sort of collectivism we want (p . 20) .
  Modern technology makes collectivism inevitable . But whether our collec-
tivism is to be Fascist, feudal, or Socialist will depend * * * upon the effective-
ness with which we translate those political ideals into action (p. 20) .
   Mr. Cohen reminds his colleagues that political warfare to achieve
a new social order is total, not limited, conflict
  You cannot fight on the economic front and stay neutral on the legal or
political front . Politics and economics are not two different things, and the
failures of the labor movement in this country largely arise from the assumption
that they are . Capitalism is as much a legal system as it is an economic system,
and the attack on capitalism must be framed in legal or political terms as well
as in economic terms (p. 21) .
  * * * a Socialist attack on the problem of government cannot be restricted
to presidential and congressional elections or even to general programs of legis-
lation. We have to widen our battlefront to include all institutions of govern-
ment, corporations, trade unions, professional bodies, and even religious bodies,
                        TAX-EXEMPT FOUNDATIONS                               749
as well as legislatures and courts. We have to frame the issues of socialism
and democracy and fight the battles of socialism and democracy in the stock-
holders' meetings of industrial corporations, in our medical associations, and
our bar associations, and our teachers' associations, in labor unions, in student
-councils, in consumers' and producers' cooperatives-in every social institution
in which we can find a foothold * * * (pp . 22-23) .
  This is scarcely the outline of an educational project . Rather it is
the battle plan of strategic sociology, through which an entire civili-
zation cane shifted from its cultural, economic, political, and moral
foundations . Mr . Cohen's language is the jargon of the professional
revolutionary, not the scholar. Consider the following
  I don't think that we can capture the New York Telephone Co . or the BMT
in a day or a year . But then I don't think we can capture the Federal Govern-
ment in that time, and if we did gain control of the Federal Government without
.having any experience * * * in other institutions which govern the country,
our control of the Federal machinery might not do us much good (p . 23) .
  Mr . Cohen explains the advantage of infiltration over the simple use
of the ballot in advancing the cause
  Even a single stockholder in a public utility may have a nuisance value that
modifies the activity of that corporation in the interest of its employees or its
consumers, and may have a voice that reaches the public outside of the corpora-
tion in impressive terms . Paul Blanshard has done more for socialism with
his two shares of stock in the BMT and the New York Telephone Co . than a
hundred men and women who vote the straight socialist ticket on election day
and forget about socialism the rest of the year (p . 23) .
Finally, Mr . Cohn reminds his colleagues that these tactics of pene-
tration are useful however the revolution is finally accomplished-by
legal or unconstitutional means
  But the need of fighting politically within corporations and trade associations
and professional bodies, as well 'as labor unions, is just as pressing if we think
that fundamental social change can be secured in this country only by uncon-
stitutional measures.
  In a revolution, when the ordinary political machinery of government breaks
down, it is absolutely essential that the revolutionary force control the remain-
ing centers of social power. In Russia the success of the Bolshevik revolution
rested with the guilds or soviets, which weer not created by the Communist
Party and which antedated the revolution . A socialist revolution in this country
will succeed only if our guilds, chief among them our engineering societies, have
within them a coherent socialist voice (p. 23) .
  The author reveals his respect for the democratic process in these
words
  We may not need a majority. We do need at least a few Blanshards in every
important corporation and association who have made themselves familiar with
the concrete evils which that corporation or association contributes to the putrid
mass of capitalism, and who will be able to carry essential industrial activities
through a time of crisis (p. 23) .
  In the December 1932 issue of the same publication, Revolt, appears
an article by Amicus Most entitled "Students in the Class Struggle ."
Its announced purpose is to give serious though to the part that stu-
dents can play in the class struggle and their place within a workers'
movement. Excerpt follows
   Karl Marx in the Communist Manifesto wrote : "In times when the class
 struggle nears the decisive hour-a small section of the ruling class cuts itself
 adrift and joins the revolutionary class," and "A portion of the bourgeois ideolo-
 gists, who have raised themselves to the level of comprehending theoretically
 the historical movements as a whole," goes over to the proletariat . Students
 will, therefore, fall into this classification. They are really idealists who are
 acting against the economic interests of their own class, for the middle class is
 actually opposed to changing the capitalist system (p. 11) .
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   It, therefore, becomes essential, if the student who has accepted the Socialist
philosophy is to become an active factor in making socialism a reality, to com-
pletely forget his class interests (p . 11) .
  The student must be active in strikes, in unemployment organizations, in
demonstrations, etc ., not as a leader, or by making an occasional speech, but by
participation as a rank and file worker . He must be a picket, he must do the
clerical work, distribute the leaflets, face the police and thugs, the dangers and
the public condemnation just as any other worker does (p . 11) .
  In the same issue of Revolt, Paul Porter, field secretary, whom
we referred to earlier, reports on activities of individual LID chapters
  * * * the true measure of student Socialist strength will be found in the
League for Industrial Democracy chapters and Socialist clubs that remain per-
manently on the campus . Their manifold activities will comprise the main stem
of the radical student movement (p . 12) .
  Mr. Porter announced the convocation of a mass really against war
in New York.
  Planned as an outgrowth of the conference will be a student delegation to
Washington soon after Congress convenes, to serve notice that hundreds of stu-
dents will reject the role of cannon fodder in another war, to request that the
State Department furnish a list of investments for which American youth may
some day be called upon to fight, and to demand that money now spent in main-
taining the ROTC and the CMTC be used providing relief for the unemployed
(p . 12) .
  Surely a march on Washington constitutes an attempt to influence
legislation .
  And, to quote from page 12
  Delegates are already making preparations to attend the traditional Christ-
mas holiday conferences of the LID, which will be held for the 18th successive
year in New York and for the 5th in Chicago . This year's New York theme will
be "Socialism in Our Time" and has been divided into three main categories,
to with : "How May Power Be Won," "Building a Power Winning Organization,"
and "The Morning After the Revolution ." The Chicago conference will be along
similar lines.
  Mr. HAYS . Can you tell me what year those two paragraphs were
written?
  Mr. EARL. They are still from 1932, sir .
  It is conceivable that the subjects discussed under those headings
were all theoretical, though the titles suggest "action."
   Other projects of LID chapters, described by Porter, include riots
and visits to soup kitchens .
   Taken from page 13 of the same publication
  On Armistice Day military-minded former Senator Wadsworth * * * spoke
in Ithaca on behalf of a bigger Army and Navy . Members of the Cornell Liberal
Club, the Socialist Party, and student peace groups held a rival meeting after
which they marched with banners past the high school in which Wadsworth
was speaking. Leonard Lurie, Cornell LID representative, describes their gentle
reception : "Several of the Army officers rushed at us and tore down a few
posters . The police joined the destruction which was over very shortly . They
prodded us along the street with their stick, and Fred Berkowitz remarked,
"I wonder how much the police get for hitting people * * * ."
  Growing in frequency are those trips of economies and sociology classes to
case illustrations, such as breadlines and strikes, of this magnificent chaos
called capitalism . Recently students from Amherst and Mount Holyoke, under
the leadership of Prof. Colston Warne, made the rounds of New York's choicest
soup kitchens, and visited Brookwood Labor College and the officers of various
radical organizations (p. 13) .
  And in parentheses, I refer to the Report of Proceedings of the
48th Annual Convention of the A . F . of L., November 19-25, 1928,
pages 315-318, on Brookwood Labor College . Also see New York
                         TAX-EXEMPT FOUNDATIONS                             751
Times, November 29, 1928, page 12, for report of action at the same
AFL session . (See also Appendix IX Investigation of Un-American
Activities, Select Committee on Un-American Activities, House of
Representatives, in the 78th Congress, for citations for Prof . Colston
Warne.)
  Under "Blueprints for Action," on page 14 of this issue of Revolt,
students are urged to
   Transform your Thomas-for-President Club into a permanent LID chapter,
which we hope can be known as a Socialist Club, if you have not already done
so . Have each member joint the LID. Many may also wish to join the Socialist
Party, which should be encouraged. For an elaborate program of action in
the months ahead consult the detailed Blueprints in October's Revolt, or write
to Paul Porter at the LID .
  Mr. HAYS. That is still 1932?
  Mr. EARL . Yes, Sir .
  Mr. HAYS. That dangerous movement of 22 years ago folded up
pretty completely, did it not?
  Mr. EARL . A message from the national chairman of the Intercol-
legiate Student Council reads
  The presidential campaign is over, but ours has just started .
  It is hardly necessary to make suggestions as to what is to be done . Workers'
forums, college forums, miners' relief work, LID Lecture Series, renewed and
vigorous efforts to sell Revolt-all these projects will aid in the educational
work that is so necessary at this time .
  We must look ahead 4 years . Local elections are in a sense more important
than national elections . To measure the success of the LID, is to measure the
growth of socialism in the community you are in (p. 14) . [Emphasis added.]'
   If encouraging students to join the Socialist Party and working to
win local elections for Socialist candidates is "educational" activity,
it is difficult for me to see why the Republican and Democratic Parties
do not qualify for tax-exemption under the same provisions of the
statute.
   In February 1933, the title of "Revolt" was changed to the "Student
Outlook." The editorial states
  With this issue Revolt becomes the Student Outlook . Students felt it was
more important to sell our magazines and convince by its contents than to shout
"revolution" and have no one listen . Persons who give us more than a glance
will not mistake our colors .
  Another editorial on page 1 of this issue calls for "student guts"
  * * * it is questionable whether the student who hasn't guts enough to get
out on his college campus and hawk the Student Outlook will overcome his
delicate scruples if the time comes to face tear gas and machine guns *
Only those who steeled themselves to decide with firmness during school hours
will do so at those moments that historians pick out for special mention .
  Under the title "Socialism in Our Time," in the same issue of the
magazine, Helen Fisher reports on the 17th New York conference of
the LID. She writes (on p. 8)
   The speeches and questions were those of participants in the building of a
power-winning organization, not spectators .
  It was a conference of practical revolutionists.
   Both Reinhold Niebuhr and Franz Daniel ruled out the possibility of our ever
attaining a Socialist commonwealth by purely parliamentary action * *' * Both
felt that the change would come through the general strike or some weapon
similar to it.
  In the discussion of the Day After the Revolution, Paul Blanshard stressed
the necessity of presenting at least a sketch of the proposed society to those we
are trying to get to fight for it. Sociolopia, according to Mr . Blanshard, would
752                     TAX-EXEMPT FOUNDATIONS

have an international government, some international battleships and airplanes,
complete control of munitions, an international language and socialized owner-
ship of industry with control by workers, technicians, and consumers . Lewis
Mumford then spoke about the need for disciplining ourselves morally and intel-
lectually the day before the revolution .
   Mr. HAYS. Mr. Earl, would you care to comment there on whether
 or not, as to all of these quotes you have read-and some of them sound
pretty radical, I would be the first to admit-you perhaps think,
 though, sort of prove the case for the value of free expression ; that
 even though people talked like that in the 1930's, when we had a de-
pression, we solved those problems by peaceful legislation, and that
 the capitalistic system has become even stronger because of remedial
 legislation, certainly, then it was in the thirties?
   Mr. EARL . I will agree with you, Congressman Hays. But, I think
I will have to revert again to the theme that this is what I would term
 "political action," and I doubt that they should have been in it .
   Mr. HAYS . In other words, are you advocating now, Mr . Earl, that
 the Congress take some kind of action to dry up the $45,000 a year
 that this organization has, so that they cannot express these views?
   The CHAIRMAN . You are not recommending anything, as I under-
stand it.
   Mr . EARL . I think that what I believe in and advocate is pretty well
 set forth here, and of course it will be up to the committee to decide.
However, I have said before, I have said earlier here, that I think
that their tax exempt status was certainly being violated.
   The CHAIRMAN . Wayne, it is not correct, that while we won out,
so to speak, there was great difficulty encountered? Take the sit-
down strikes, particularly in Detroit, but which spread to other parts
of the country. Take the Allis-Chalmers strike. And now it has
been definitely established, I think, on a factual basis, that both of
those disturbances that gave the country genuine alarm were in-
spired, prompted, by these and similar, comparable influences for the
purpose not of helping the United States and our system here but
for the purpose of destroying it insofar as they had the power to.,
destroy it .
   There were many other instances, over the country, delaying pro-
duction of essential military equipment, as well as equipment to pro-
duce the supplies needed by the military, to the point that we were-
very greatly handicapped for a period of time, as a result of which we
had great losses.
   Mr. HAYS . Mr. Chairman, I would not want to get into any debate
with anybody about relative merits of the various strikes that have
occurred in this country.
   I come from an area where strikes are not an unknown thing .
   I have, as I grew up, witnessed the militia coming in and breaking
up strikes, and I have even seen a few strikers shot and seen them
hauled away, and all of that . And I want to say to you as objectively
as I can that it has always seemed to me that in any strike that I have
personally observed, there were probably two sides to the thing .
There probably was more merit on one side than there was on the
other . This is as I viewed the situation, when the coal miners struck
in 1927, and again when they have had strikes since then . And I
might tell you now, and you probably know as much about it as I do
or more, that the big coal companies do not have strikes much any
more, because they have finally adopted the idea that labor unions are
                      TAX-EXEMPT FOUNDATIONS                         7 53
here to stay and we are going to do business with them . But there
was always some merit there . The men were either getting not enough
to live on-and I suppose from the viewpoint of the operators, they
had merit, too, because they had to show a profit, and they had to try
to pay some dividends to their stockholders .
   It seems to me that the whole thing that has come out of it-neither
this committee nor any other committee can edit the thinking that
goes on in people's minds. I think the crux of this is not whether this
little minute organization that has only $50,000 a year approximately
to spend has espoused some, to me, rather radical ideas, if these quota-
tions are accurate, and I assume they are . That is not the issue, as I
see it, whether they have done it on tax-free dollars'or whether they
have not . It seems to me there is a bigger and more basic issue here .
Who is going to edit the thinking of people? Who is going to say
that you cannot demand social change? Who is going to say that you
cannot advocate the changing of the social order? I think it is here
that we have something basic.
   The CHAIRMAN . In a much shorter speech, I will answer that
Nobody .
   Mr. HAYS . I am glad to have that concession .
   Mr. EARL . I might say this, before I continue, that it is my thinking
that these quotes that we have listened to, Mr . Hays, although they
concern very difficult problems of the times back in 1932 and 1933, that
have since been solved to a great extent, all in the political arena . And
they do more than that, as far as these people were concerned . You
will notice all through here that their theme was the pushing of
socialism . And a great many things that have happened are things
that you and I agree with today . And just because a Socialist is
supposed to love his mother and his wife, I should not turn around
and say because they believe that I certainly will not love my wife
or love my mother.
   The things that they advocated were that all of these be done not
garticularly to help America and help the system that was then in,
but to overthrow that system and supplant it with a system of
socialism.
   The CHAIRMAN . And your quotations later will indicate the doings
right up to the present time.
   Mr. HAYS . Mr. Earl, in a very friendly way, I am going to ask you
to try to answer this question . Do you not suppose that if someone
had spent as much time as you obviously have in studying the writings
of people on the other side, we could come up here, somebody could
come up here, with a pretty long document of pretty horrible quota-
tions about people who were advocating the use of troops to put down
the workers and to move in police and to surround the workers' homes
and all that?
   Do you not think we could dig up that kind of stuff?
  Mr. EARL . You probably could, sir, but probably not with tax ex-
empt money .
   Mr. HAYS . Then let me say this, before you go any further . The
thing that I am trying to point out is that despite all of the extreme
argument on either side, I consider it kind of a tribute to the good
commonsense of the American people that we rectified what were some
obvious mistakes by peaceful means and did not listen to the extrem-
ists on either side . And I am just wondering about what the value
:754                  TAX-EXEMPT FOUNDATIONS

 is of rehashing this 20 years later . And at the moment we are only
 rehashing one side of it .
   As far as I am concerned, I do not even want to rehash the other side,
 which would be just as extreme, I am sure .
   Mr. Kocx . Mr . Hays, if there were another side that was financed
by tax-exempt foundations, I think the staff would like to have it .
   Mr. HAYS . Well, now, right there, are you saying that this organi-
zation was financed by tax-exempt foundations?
   Mr. Kocx. No ; it is a tax-exempt foundation .
   Mr . HAYS . No ; it is not a tax-exempt foundation . It is a tax-exempt
organization. I will grant you that . But it is not a foundation, by
any stretch of the imagination .
   Mr. Kocli. I think we can agree on this . It is one of those founda-
tions that are created under section 101, subparagraph 6. And that
section, Mr. Hays, has a provision against propaganda . And, as I
understand it, it is our job to check whether that definition is clear
enough, or whether we should throw the thing out and let all the
foundations, whether they have an income of $33 million a year or
$50,000 a year, get into the act. The thing is that we have to go into
this question of propaganda, as I see it, under 101, subdivision (6),
and I do say that LID is one of those creatures.
   Mr. HAYS . Of course, there are a lot of other creatures, too . There
is the Committee for Constitutional Government . But you do not
want to go into that . I will promise you that you do not .
   Mr. Kocx . Wait a minute. Did not the witness who mentioned the
outfit-did we not find out that that was 101, subparagraph (8),
which has not got that propaganda clause? And the contributions to
that other are not tax-exempt .
   Mr. HAYS . You mean to say that the contributions to the Committee
for Constitutional Government are not tax-exempt?
   Mr. Kocx . I understand that their own income is not tax-exempt .
   Mr. WoRMSER . There is that distinction between 101 (6) and the
other .
   Mr. HAYS . Which one are they under? I will agree with this in
principle to save further argument . And though I may disagree with
some of the people who represent the Committee for Constitutional
Government, I firmly agree that they have the right to espouse what-
ever belief they want to . But the only thing I will get into any argu-
ment on is that I think these people and the people from the Com-
mittee for Constitutional Government ought to be treated alike . If
one is tax-exempt, the other should be, and if the one is not, the other
should not be.
   Mr. GOODWIN . And you will agree that if we can conclude these
public hearings seasonably, we ought to leave plenty of time in
executive session to go into all of those matters?
   Mr. HAYS . Oh, yes . I have no optimism that we will ever be able
to come to any agreement, but I am willing to devote as much time as
necessary trying.
   Mr . GOODWIN. I am going to be much more optimistic than you are,
Mr. Hays.
   The CHAIRMAN . Knowing the agreeableness of the gentleman from
Ohio and his great capacity to study and resolve the facts and work
amicably with people when he gets behind closed doors, I have con-
                         TAX-EXEMPT FOUNDATIONS                               755

 fidence that we will be able to get out a report which will be signed by
 all the members of the committee .
    Mr. HAYS . Mr. Chairman, if I were as thin-skinned as you are, I
 would take offense at that obvious sarcasm, but I am going to accept
 it just as though you meant it, and when the record comes out there
 will not even be your inflection in there, and people will think you did
 mean it.
    The CHAIRMAN. We do not have any trouble when we are together
 behind closed doors . We never have .
    Mr. HAYS . I will just say : Do not be too optimistic .
    The CHAIRMAN . You may proceed .
    Mr. EARL. Alvin Coons made a similar report on the conference in
Chicago, where the LID considered everything "from technocracy
 to technique ." This is from page 9, and this is still back in 1933, in
 February :
   Clarence Senior, national secretary of the Socialist Party, expressed the belief
 that reforms would only further encumber the capitalistic system and that every
 concession would only hasten its end .
   Affirming his faith in democracy as an instrument of social change, he
advocated its use as long as possible, not however, excluding the use of other
methods should it fail.
    "Radical students," he declared, "can spend their time more profit-
 ably getting acquainted with the problems of the workers, than they
can in studying chemistry to learn how to make bombs, or in going into
the ROTC to learn how to shoot . You can hardly expect to teach the
workers to shoot straight for bread if you cannot teach them to vote
for it" (p. 9) .
    Under Blueprints for Action, in the February issue of The Student
Outlook, these techniques are advocated (p . 16)
   Boring from within .-Never will it be emphasized too strongly that college
 radicals must shunt their freshmen, particularly, onto the college paper. Espe-
 cially journalism students, those that write well, and will succeed . Send so many
for tryout that one, at least, will make the grade. Keep their marks up to avoid
disqualification or suspension.
   Make interlocking directorates, by having your men in all school activities, to
promote radical activity of otherwise quiescent groups, and to make the news of
these groups redly tinged . Cosponsored action, possible with interlocking direc-
torates, makes good news.
   Then, if I may, I will turn to that article . They entitle this, "This
Is One Way to Sell Radicalism ." And down under a subheading
called, Newspaper Style, paragraph E :
   Propagandize only in quotations or in adroit wording . Examples : "Capitalism
is bankrupt. At least this is what 100 youths contended at a meeting ."
   It is now time to turn from an analysis of LID ideology and
revolutionary techniques in the early thirties to an examination of
contemporary activities and beliefs . A study of LID personnel and
pamphlets suggests that, even today, the league is expending more
energy in political action than in education . Certainly there is much
evidence to support the view of LID "research" is designed to in-
fluence legislation .
   On April 15, 1950, for example, the league sponsored a symposium
entitled "Freedom and the Welfare State" to celebrate its 45th anni-
versary. Some of the speeches made at the conference will indicate
the bias of the educators present. All of the quotations which follow
	


756                      TAX-EXEMPT FOUNDATIONS
 are taken from Freedom and the Welfare State, a published account
 of the conference.
    Dr. Harry Laidler, executive director of the LID, called upon
 his associates to meet the need of college students for guidance from
 those who do "honest, independent thinking" and thus offset "reac-
 tionary" propaganda in the colleges and the "totalitarian" propaganda
 from abroad .
    This is taken from pages 5 and 6 of that publication, which I have
here.
   We in the league are happy to record the social progress that has been made
 during the first half of the century . We are, however, conscious of the fact that
 the goals of full democracy and economic security have not as yet been
 reached * * * Economic injustices in the distribution of the fruits of industry
 are widespread . An inner circle of owners and executives of mammoth corpo-
rate groups still possess vast power over the lives of our people .
   Mr. HAYS . Mr. Earl, right there, on that very last sentence that
you read, starting with "An inner circle," would you disagree with
that statement?
   Mr. EARL. I would not necessarily disagree with it, no .
   You mean, as regards my own thinking?
   Mr. HAYS . Yes . It is more or less a true statement, is it not?
   The CHAIRMAN . I personally disagree with it, myself, but you have
a perfect right to express your opinion if you care to do so .
   Mr. HAYS . This committee has apparently been trying to make out
the thesis that an inner circle of executives of foundations possess
vast power over the lives of our people, and I am wondering if it is
not true that an inner circle of owners and executives of great corpo-
rations possess vast power over the lives of our people .
   Mr. Reece has a right to his own opinion, but I think he is pretty
far out on a limb there .
   To go back to my more or less famous quotation of last week,
exactly the same words almost
   The CHAIRMAN . All of our corporations now are controlled by the
Government, under the law which has been set up to provide free
competition in the enterprise system, so that today an inner circle
of owners and executives of corporations can control the lives of the
people.
   Mr. HAYS . Of course, the law says that they shall not do that, but
again any law is only as good as its enforcement agencies, and of
course you will never forget, I do not suppose, and probably never
will be able to live down the statement that "what is good for General
Motors is good for the country ."
   The CHAIRMAN . Even the inner circle of the great New York Cen-
tral Railroad was not able to control the lives of its own stockholders,
much less the people .
   Mr. HAYS . And that is the case right there, because I did not know
how to get my friend, Mr . Young, into this . He went out and fought
for the stockholders and the little people in the New York Central,
and he had a tough time getting his battle won . It was not easy, and
he will tell you that himself.
   The CHAIRMAN . Of course, we had better not get into that discus-
sion. All of his associates were not particularly little people .
   Mr. HAYS . No . That is true . They certainly were not . But he
has put forth a program and a platform for the little stockholders,
	



                        TAX-EXEMPT FOUNDATIONS                             757
 and he has done an unusual thing in his very first meeting, saying
that his board of directors are not even going to take expenses . So
 I kind of feel like the little stockholders are going to get a break .
   The CHAIRMAN . I have a very high regard and very warm affection
 for Mr . Young. And I suffered no great pangs of disappointment
-when he gained control in his fight .
   You may go ahead .
   Mr. EARL. (reading)
   The league, with its program of total democracy in industry, government,
and human relations, has surely a great educational task before it.
   We are seeking to meet the social challenge in many ways. We are con-
tinuing to send distinguished lecturers from here and abroad to our colleges
and cities. We have published more pamphlets on educational and social prob-
lems this year than in many years past . We are conducting a campaign for
the organization of city chapters which is meeting with remarkable success .
    And I mention again that this is in 1950.
   Our dinners and conferences during the last year or so, with Senator Hum-
phrey, President David Dubinsky, John Dewey, Senator Lehman, and Walter
 Reuther, among others, as honored guests, have been of historic significance .
Such college conferences as the recent regional conference at Harvard have been
of a high order.
   Our greatest educational task, is, however, before us . In the college world,
the 2% million young people on the campuses are today groping for light . on
problems of democratic social change . They are being propagandized by nu-
merous reactionary organizations which have large sums of money at their
disposal. They are being propagandized by totalitarian forces that receive
their line not from hard, honest, independent thinking, but from a dictatorial
government abroad . They are bewildered . Students are looking to democratic
organizations like the league for enlightenment and guidance (p . 6) .
  Recruiting, training, organizing, public relations-these are still
the chief activities of the LID by the testimony of its own com-
manding officers.
  Both Mr. Ewing and Mr. Reuther-Mr . Ewing, as an aside, is Mr.
Oscar Ewing, who went to represent President Truman at this par-
ticular meeting-seemed to feel that the real threat to America was
from reactionaries .
  The conservatives may yell "socialism" at any suggestion for improvement .
They may feel the hot breath of revolution with every proposal for change.
But most dangerous enemies we have to our American way of life are those very
people whose emblem is not the eagle but the ostrich * * * (p. 13) .
  Those blind forces of reaction in America who would lead us back down the
road to so-called normalcy and commit the American economy to the economics
of scarcity and special privilege, are the Cominform's most valuable allies .
These same blind forces, if permitted to grow unchecked in America, will drive
us again to depression and disaster as they did in 1929, and provide the Comin-
form with a weapon more devastating than a stockpile of H-bombs .
   Mr. HAYS . Just one question there, Mr . Earl. Do you not agree
that if we did have another depression, it would be a good weapon
for the Cominform ?
  Mr. EARL. Would be what, sir?
  Mr. HAYS . A very good weapon for the Cominform .
  Mr. EARL,. Sure, I agree.
  The CHAIRMAN . It is now 4 : 30. It would appear evident that Mr .
Earl is going to be unable to complete his testimony this afternoon,
and I thought we ought to discuss what the program is .
	


758                   TAX-EXEMPT FOUNDATIONS

   We had anticipated completing with Mr . Earl today, but not finding
it convenient to proceed this morning, and being delayed somewhat in
the afternoon, it is now certain that we cannot complete today .
   Some of us have some obligations in our offices that must be fulfilled.
   What are your suggestions, Mr . Wormser ?
   Mr. WORMSER . I think we had better continue first thing in the
morning with Mr. Earl . We have the Social Science Research Coun-
cil scheduled for tomorrow, but I suggest that we put them on after
Mr . Earl.
   The CHAIRMAN . If that is agreeable, then, we will go ahead with
Mr. Earl .
   Mr. HAYS . Is there any objection to inserting the rest of his state-
ment into the record? We can have time to read it tonight and ques-
tion him in the morning.
   The CHAIRMAN . There may be some parts of it that he might sug-
gest be put in the record, and some read . I have not, myself, had
opportunity to read it yet, and I have had no one to assist me in digest-
ing it, so that I am not in a position, as one member of the committee,
really to say .
   Mr . HAYS. My only point is this, Mr . Chairman . He is going to
read it into the record, and I certainly am not going to object to his
reading it. I would think that we could expedite the thing, since
it has already been released to the press, and they have had a chance
to cull over any parts of it they want, and the committee may have
an opportunity to go over it tonight, and we could just consider it
read and go on in the morning .
  .The CHAIRMAN. I am sure there are certain parts he would like to
read.
   Mr. EARL. If I may suggest this : I will go through this tonight and
digest the rest of it.
   Mr. HAYS . Why not insert it in the record, and then if you have any
comments on various pages, you could go through it and note your
comments . Do you think that would work out?
   The CHAIRMANv. Let us determine that tomorrow . This is valuable
testimony, in all probability, that he is now getting ready to present,
and the chairman would not like to see the committee restrict him too
much in the presentation of it .
   Mr. HAYS . I had no idea of restricting him . I would be willing
for him to comment at any length he wanted . But it seems to me the
mere reading of it, since it has been released
  The CHAIRMAN. At the gentleman's insistence, we have suggested to
the witnesses to prepare written statements of their evidence, and I
am sure the gentleman does not intend to reflect on the importance of
the testimony by reason of the fact that it has been prepared in writing
and therefore is presented by the way of reading it .
  Mr. HAYS . No ; the gentleman from Ohio has no such intention and
my only idea in this in the beginning was to do the very thing we have
done now . We go up to quitting time, and if the witness is not
through, in order to prevent a break in his presentation, we could
allow him, as we did for the staff, to put it -in the record and continue
his comments at another time .
                      TAX-EXEMPT FOUNDATIONS                           759

  The CHAIRMAN . I am sure of that . But we canceled the session this
morning, and in the first hour of the session this afternoon, practically
the full hour was consumed in colloquy between the members of the
committee, which the chairman does not remove himself from as a
participant, but the result has been that the witness has only occupied
1 hour this afternoon .
  Mr. HAYs. I have no objection, Mr. Chairman, to the witness read-
ing the rest of it in the morning if he wants to. I was only trying to
expedite the thing and give some continuity to his presentation .
  The CHAIRMAN. That can be done.
  The committee will stand adjourned until 10 o'clock tomorrow
morning.
   (Whereupon, at 4 : 35 p. m ., the hearing was adjourned until 10 a . m.,
Wednesday, June 16, 1954.)
                  TAX-EXEMPT FOUNDATIONS

                    WEDNESDAY, JUNE 16, 1984
                           HOUSE OF REPRESENTATIVES,
                       ,SPECIAL COMMITTEE To INVESTIGATE
                                   TAX-EXEMPT FOUNDATIONS,
                                                    Washington, D . C.,
   The special committee met at 10 a . m ., pursuant to adjournment, in
room 1301, New House Office Building, Hon . B . Carroll Reece, chair-
man of the s~ecial committee, presiding .
   Present : Representatives Reece (presiding), 'Goodwin, Hays, and
Pfost .
   Also present : Rene A . Wormser, general counsel ; Arnold T . Koch,
associate counsel ; Norman Dodd, research director ; Kathryn Casey,
legal analyst ; John Marshall, chief clerk .
   The CHAIRMAN . The committee will come to order .
   You may proceed, Mr . Earl .
   Mr. GOODWIN . I wonder, before Mr . Earl starts, Mr . Chairman, if
we could not get some sort of a stipulation from the committee that we
will be as easy as possible on the questioning . I notice that we are run-
ning behind schedule all the time . We learned yesterday that there
was a possibility that the House may go into a 3-day recess period
beginning with the first of next month . I know that those of us who
like to get home occasionally would dislike very much to be held in
Washington for the continuation of the public hearings . If . the mem-
bers of the committee could perhaps forego the temptation of cross-
examining, it might be possible to expedite .
   The CHAIRMAN . If Mr . Earl could . be permitted to conclude his
prepared statement, I think that would be well .
   Mr. HAYS . I would like to have him put his statement in the record .
   The CHAIRMAN. I haven't had the opportunity to study his state-
ment, myself . As one Member of Congress, I would like to hear it .
There might be some questions at the end that I would like to ask him .
   Mr. HAYS. I would just like to say that I will try to refrain . I am
just as anxious to get home as anybody else . But since I have sat pa-
tiently through a lot of testimony, some relevant and some not so rel-
evant, about foundations, I am not going to show any inclination to
shut this questioning off . I think the thing is very fundamental, and
ample time should be given to this .
   Mr. GOODWIN . My Nought is that we could get down to the funda-
mentals the gentleman from Ohio refers to much more quickly if we
use a little more discretion .
   Mr. HAYS . I appreciate the gentleman's position, and I will try to
cooperate, but I think the discretion will have to be left up to each
                                                                 761
 762                      TAX-EXEMPT FOUNDATIONS

 member of the committee. I don't believe anybody can decide but me
 what I think it is best to ask about and what is not .
   Mr. GOODWIN. The last thing I would attempt to do is to tell you
 how you should conduct your questioning .
   The CHAIRMAN . We will do the best we can to expedite the presenta-
 tion, I am sure .
   You may proceed, then, Mr . Earl .
 TESTIMONY OF KEN EARL, ATTORNEY, LEWIS, STRONG & EARL,
               MOSES LAKE, WASH .-Resumed
  Mr. EARL . Might I ask first whether or not the sound system is
working? Is my voice heard up there now?
  Mr. HAys . If you will pull the microphone as close to you as you
can, Mr. Earl, that will help . These are not as sentitive as some
microphones .
  Mr. EARL . We had gotten to the middle of page 12 of my prepared
statement. We were speaking about a conference which the LID
held in 1950 . They reported that conference in a pamphlet entitled,
"Freedom and the Welfare State ." And beginning with the middle
of page 12
  Mr. Israel Feinberg, vice president of the ILGWU and a member
of the Board of the LID, had this to say
  Labor, in effect, must become the vanguard of the welfare state . But welfare
measures alone don't go to the heart of the problem . Labor must lead an
attack on the private monopoly power of the giant corporations . It must seek
a redistribution of income so that the working people have sufficient purchasing
power to halt the drift to depression . All this would require further Govern-
ment interventions into our economic life . To see to it that the necessary pro-
grams are carried out democratically, labor should insist on a voice in formu-
lating and administering them . Labor should be represented on management
councils, whether the ownership be private or public-that would be real indus-
trial democracy.
  Another LID board member, Mr . Norman Thomas, Socialist leader
and chairman of the Post War World Council attacked anticom-
munism in these words . This is also taken from the same publication .
This is obviously a summary written by one of the editorial writers of
the LID
  "Within the trade unions, in the growth of which he rejoiced, there was grave
danger that, under cover of a fight against communism-which, properly con-
ducted, is legitimate and necessary in our unions-certain leaders may attempt
to fasten a kind of Fascist dictatorship of their own on the unions ."
  At Washington and in some of the State capitals, we suffer from a rash of
stupid and reactionary proposals-
such as the Mundt-Ferguson-Nixon bill, which would, if enacted-
jeopardize all of our liberty while doing nothing important to stop communism .
  The setbacks in civil liberties Mr . Thomas blamed on "the whole Communist
technique of conspiratorial deceit," on the reactionaries who exploit the situ-
ation caused by Communists, "partly to cover their own bad records by a
boisterous partiotism," and on the Republican Party, which is trying to find itself
an issue in "socialism versus liberty" (p . 31) .
  I injected both of those excerpts, because I think that they are
strictly in the political arena.
  On April 11, 1953, just a year ago, the LID held its 48th annual
luncheon in the Hotel Commodore . The subject was "The Crisis in
American and World Resources ." Speakers included Mrs . Eleanor
                      TAX-EXEMPT FOUNDATIONS                           763

Roosevelt ; Oscar L. Chapman, former Secretary of the Interior ;
Thomas C . Douglas, Premier of Saskatchewan, Canada ; Adolph Held,
chairman of the Jewish Labor Committee ; Paul R. Porter, former
United States Deputy for Economic Affairs in Europe . Dr. Ralph
J. Bunche, Senator Paul H . Douglas, Congressman Jacob K. Javits
and Dr. Harry A . Overstreet sent messages of congratulation and
admiration to the league .
  Mr . HAYS . Mr . Earl, could you tell me just why you put these names
in right there, and what significance it has?
  Mr. EARL . I put the names in partly because a little later I refer
to some of their messages, and also to indicate the political character
of the persons who attended the conference . And also, although this
came up yesterday, I would like to refer to it You mentioned yester-
day that you figured I had come a long way to testify concerning a
very unimportant organization . I rather suspect that persons of
Mrs. Roosevelt's stature and Mr. Chapman's stature, and various other
people who have been honored by the league and who pay it homage,
would be rather at odds with you about that, because they obviously
consider it an important organization .
  Mr . HAYS . Well, I suppose, Mr . Earl, that they would be able to
testify about that better than you would . I don't think you need to
put any words in their mouths, and if they want to take issue with
you, they can . But if you put their names in here for the purpose of
trying to indicate that they are mixed up with any leftwing organiza-
tion, I happen to know a couple of these people, namely, Congressman
Javits and Senator Douglas, and I want to say to you that there are
no more outstanding Americans in Washington today than those two
men, and both of them have a long record of anticommunism .
  Mr . EARL . Mr . Hays, I did not say that these people were left-
wingers, that they were Communists, or anything of the sort . I would
like to point out that these people are proud of their association with
the LID, and what the LID has done . They have said so . And
they are going to be the last persons in the world to disavow anything
that they have said concerning it.
   Now, I put their names in here to indicate the type of people who
are associated with the LID and who nurture the things that the
LID stands for. That is the reason I put their names in there .
   They have been associated at their affairs, and some of these people
have been honored by the LID and have gone there to receive their
plaudits and banquests, et cetera . And I don't think any of them are
going to disavow what the LID has said .
   Mrs . PFOST . Mr . Earl, do you think that is bad, for them to be
mixed up, as you say, with the LTD?
  Mr . EARL . No, Mrs. Pfost, I don't think that it is "bad ." I say that it
demonstrates the political nature of the LID, and the fact that it is con-
stantly in the political arena . I am not here to judge the merits or
the demerits of the program that the LID has espoused, except to say
that the LID has espoused socialism, and that they are for certain
things, and that, being for a certain political program, for certain
legislation, I think they should be plumping for it with dollars that
remain after their income has been taxed .
   Mrs. PFOST . By your dropping these names in or referring to
these people as being associated with or mixed up with the L . I . D .,
      49720-54-pt . 1-49
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does that mean that you feel that these people are trying to further
socialism? Is that the implication, by bringing the names in?
   Mr. EARL. I think that the implication stands for itself. The
LID stands for . certain principles . It has made no bones about
what those principles are . I think the record of the various confer-
ences indicates what those are . You and I know that a great many of
those principles have been espoused by both the Republican and the
Democratic parties . So I will just drop it there .
   Mr. HAYS . Well, let's not drop it there, for just a minute . You
use a technique that is not one that you have developed yourself . It
has been around here before ; in which you start off with the premise
that these people are not Communists, and thereby plant the seed ;
just as though I would say to you, "Now, Mr . Earl, don't for a minute
think that I think you are stupid," and if I hadn't brought that up,
nobody would have thought about it, would they? I am just using
that as an illustration, not that I mean you are . But that is the kind
of technique you are using on these names .
   Mr. EARL. I disagree with you, but that is all right .
   The CHAIRMAN . It is pretty difficult to discuss an organization
without discussing some of the names that are associated with it, it
seems to me. But, as I understand, the whole purpose here, or the
primary purpose here, is to indicate the political characteristics of
the activities of the organization, which is supported by tax-exempt
funds .
   Mr . HAYS. Well, I will just give you a little example . We get over
here, and he says Senator Douglas received, an award, and he says he
sent a speech up which would make interesting reading, implying
there is something bad about it . When we come to that I am going
to read it.
   Mr. EARL. I was going to read it .
   Mr. HAYS. I would life to read it, and you may comment on it .
   The CHAIRMAN . Proceed .
   Mr. EARL. The LID, according to the luncheon program, "serves
as a liaison between many liberal forces of this country and abroad."
It is questionable if liaison work with political activists is "educa-
tional" within the limits of our statutes relating to tax exemption .
It is even more doubtful that giving public relations support to the
political leader of a Canadian Socialist Party is pure research.
   The CHAIRMAN . It was my impression that the State Department
served as liaison between this country and the forces abroad . Maybe
I was in error in that .
   Proceed .
   Mr. HAYS . From some of the comments I have read about the State
Department, I would say that almost anything you might say about
them could be in error .
   Mr. EARL. Here is the league's citation to Thomas C . Douglas,
Premier and Minister of Cooperatives, Saskatchewan, Canada
  In 1944, following a brilliant career as ethical leader and member of the
Canadian Parliament, you were elected, against the powerful opposition of the
forces of special privilege, the C .C.F. Premier of Saskatchewan .
  Four and eight years later, you and your able and dedicated coworkers were
returned to power with overwhelming majorities . Under your dynamic, crea-
tive and socially visioned leadership, the Cooperative Commonwealth Federation
Government assured to the people a clean and honest administration ; enacted
the most advanced legislation on the American continent in the fields of natural
                         TAX-EXEMPT FOUNDATIONS                               765
resources, human rights, health and social insurance worked out a harmonious
relationship between the strong cooperative movement and expanding public
enterprise ; steadily improved the cultural and recreational services, and gave
to the world an example of social and economic planning with freedom that has
placed every democratic country in its debt .
   In recognition of these historic achievements, the League for Industrial Dem-
ocracy, at its 48th Annual Conference, takes pleasure in presenting to you its
10.53 Award to a Distinguished Leader from Abroad, and looks forward to your
 continued pioneering services to your Province, your country and the demo-
cratic world .
  Mr. Norman Thomas, in presenting citations to Paul Porter and
Clarence Senior, said
  Today we wish to show our appreciation to two active student officers of the
late twenties who have since been of great service to our country and the world.
* * * nowhere in their career is it mentioned they were active Socialists . Paul
Porter used to give me kind of a headache too about the kind of Socialist he was
at times, but it's not mentioned now ; he perfectly safe as far as I am concerned .
And as for Clarence Senior, I read that "* * * following his graduation, after
a decade of service in the fields of adult education * * * public housing and
labor and Socialist political action, * * * he entered the field of inter-Ameri-
can * * * relations ." Now the truth about this man must be .told ; he was
once the national secretary of the Socialist Party and he did a very good job .
  I am awfully proud to have known these men so long, and awfully proud of
what they have done . They have done the kind of work that might have saved
us if more people had done it. For instance, imagine if by their work in the
days of their less reputable calling they could have . made Texas or Louisiana
Socialist?
  Do you think we would have had to worry about who would own the oil? I
don't . I am quite sure that there would have been an extraordinary change in
our theory of States rights, Mr. Ex-Secretary Chapman, at this point . They
did a grand job and they are doing it now . (From the luncheon program . )
  The LID News Bulletin, January 1953, in announcing this forth-
coming conference (referred to above) used this language
At a time when the country is using up many of its natural resources at an
unprecedented rate ; * * * when powerful lobbies are seeking to take our off-
shore oil resources out of the control of the Federal Government, to return the
TVA to private monopoly and to prevent the further public development of the
Nation's vast hydroelectric resources, and when adequate aid in the development
of resources of other lands is vital to the maintenance of world democracy, it
is most fitting that the LID should give its attention this year to this important
problem of conservation (p . 1) .
If there is any doubt that the bulletin is anything other than a rally-
ing cry for a militant lobby-rather than an educational journal-
such doubt can be dispelled by turning to page 6 of this same issue .
There the LID's program for "democracy in action for 1953" is
set forth by Dr . Harry Laidler, executive director . It should be noted
that the academic recommendations endorsed by the league just hap-
pen to deal with the issues then before Congress. Moreover, instead
of presenting both sides, they urge action in behalf of a particular
piece of legislation . Excerpts from this democratic program follows
  In presenting this program, Dr . Laidler declared that advocates of a
strengthened democracy would be confronted in 1953 with powerful opponents,
well supplied with funds, and that, for the first time in 20 years, the main body
of the Nation's press would be alined on the side of the party in control of our
national government * * * (p . 6) .
  1 . Conservation of natural resources : It urged the increase of forestland
public ownership and control ; the' retention of offshore oil by the Federal Gov-
ernment and the use of revenues from oil resources for educational purposes ;
extension of the TVA principle to other river basin developments
  2. Social security : The program recommended that the Nation consider the
enactment of a democratically operated national health insurance system * * *
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 and the strengthening of the old-age pension and unemployment insurance
system
   3 . Labor legislation : * * * (reorganize child labor laws)
   4. Economic stability : It favored the formulation of plans for the maintenance
of economic stability when defense tapers off, by means of credit controls,
progressive taxation, useful public works, social-security programs, and other
measures .
   5. Housing : It proposed * * * Federal aid for the construction annually by
municipal housing authorities of a minimum of 135,000 apartments for low
income and middle income groups 	
    Mr. HAYS . That is the Eisenhower and Taft program .
    Mr . EARL (reading)
   6 . Education : * * * (Federal aid, better salaries for teachers, "freedom of
inquiry," etc . )
   7. Civil rights and antidiscrimination legislation : (stressed need for Federal
and State FEPC laws, liberalization of our immigration laws, fair hearing to all
public employees charged with un-American activities .)
   8. Corruption : (Favored purge of dishonest officials .)
  9. Foreign policy : The program favored, in addition to military aid, increased
economic, social, and educational assistance to developed and underdeveloped
countries * * •*
  10. Labor and cooperative movements : It urged * * * labor unity, the
strengthening of collective bargaining * * * in white collar trades . * * * It like-
wise urged the strengthening of the consumers' and producers' cooperative move-
ment
  * * * the league report viewed as antidemocratic trends the increased influence
of such public figures as Senator McCarthy on important Senate committees
* * * the increased confusion among Americans regarding what should con-
stitute a realistic democratic foreign policy ; the bitter propaganda against the
United Nations which had been witnessed on all sides during the year and the
continued threats of men like Governor Byrnes to destroy their State's public
school system rather than abolish segregation in the public schools (p . 6) .
Whatever the merits of these proposals, they suggest the platform of
a political party or the legislative guide of an organized lobby-not
the reflection of an educational institution .
  An examination of some of the pamphlets recently published by the
LID reveals that the league is still marketing a product suspiciously
close to "propaganda ."
   From-Needed : A Moral Awakening in America, a symposium ;
report on LID luncheon, April 25, 26, 1952-this is a summary by the
editor.
  August Claessens, national chairman of the Social Democratic Federation,
took a dimmer view of trends in business morality than did Mr . Rennie, and
declared that, in his opinion, "capitalism, now so inoffensively called `private
enterprise,' is essentially immoral . It is a source of corruption in business and
politics . Private enterprise corrupts Government enterprise and the only ef-
fective steps toward the elimination of these immoral influences are the rapid
extension of collectivism and the advance of the cooperative movement" (p . 28)
  At the same luncheon, Walter Reuther presented a citation to Philip
Murray on behalf of the LID. The citation was received by James
B. Carey for Mr . Murray, who was unable to be present . Mr . Reuther
referred to the Government seizure of steel as -an example of the
need for morality in American industry
  The steel industry cries aloud in protest against Government seizure, yet the
steel industry fails to realize that in a free society there is no substitute for the
voluntary acceptance and discharge of moral and social responsibility . It was
the failure of the steel industry voluntarily to discharge its social responsibility
by bargaining in good faith that created the crisis that compelled the Government,
as the agency of the people and the guardian of the public good, to intervene .
Never in the history of industrial relations has there been a greater need for,
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and such a tragic lack of, the moral leadership on the part of American in-
dustry (p. 7) .
  James B . Carey, secretary-treasurer, CIO, made the following re-
marks in accepting the citation on behalf of Mr . Murray
  It is fitting, therefore, that a League for Industrial Democracy should honor
a Congress for Industrial Organization . The aspirations and goals of our two
organizations are more than similar-they are complementary .
  The steel barons of our day are determined to victimize not only their own
employees, but all American consumers and wage earners . In their complete
abandonment of moral and ethical sensibility, they would undermine the living
standards of millions of Americans and even jeopardize the national defense
program itself. * *
   Our country needs, and our world needs, collective indignation that takes on
strength and crusading power only by the cohesion of brotherhood inspired by
the common economic, political, and social goals that all working men and women
share * * * (p .11) .
  Mr . Abraham Lefkowitz, principal of Samuel J . Tilden High
School, made the case for progressive education as a means of fighting
corruption . This is taken from pages 24 and 25 .
  Mr. GOODWIN . Where is the Samuel J . Tilden High School?
  Mr. EARL. The Samuel J . Tilden High School is in New York .
  Democratic education creates social individuals, not individualists . The indi-
vidualist works for a self and subtracts from others ; but the social individual
is most to be desired because of what he bestows upon others, through no loss
to himself.
  Having attracted first-class minds free to develop the highest spiritual ideals,
how can our schools help pupils to be receptive to these values? We know
exhortation is no more effective than mere possession of knowledge . Children
must face vital social problems and participate in their solution, based on recog-
nized social values that evolve from group planning, discussion, study, and
action. Hence, our schools, now dominated by the competitive ideal of each for
himself and the devil take the hindmost, must subordinate the competitive ideal
with its marks and rivalry for individual gain to the social service ideal of
cooperation for the common good or for group objectives or the development
of talent (pp. 24, 25) .
  Perhaps there is no more succinct explanation of the interrelation-
ship of progressive "education" and socialism .
  Mrs . PFOST . What connection does Mr . Lefkowitz have with LID?
  Mr. EARL. I am not sure what his current affiliation is . I would
have to check . H appeared as a speaker at this particular program,
  Mrs . PFOST. I beg pardon?
  Mr. EARL. I say he appeared as a speaker at this particular
luncheon .
  Mr. Lefkowitz continues
  A critical study of social problems ; emphasis on sports where the indivdual,
despite his desire to shine, is taught to subordinate self to the team chosen with-
out discrimination ; or stress on creative arts or school group activity based on
democratic planning, etc.-all these develop a social outlook and should make
for spiritual values (p . 25) .
  Toward Nationalization of Industry, by Harry W . Laidler, exec-
utive director of the LID, was published in 1949 and represents a fairly
recent explanation of LID views on this subject . Excerpts from this
pamphlet follow
  One of the outstanding questions before the American people today is whether
they should work for the increase or the decrease of the powers of the Federal
Government over the economic and social life of the country (p. 3) .
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  Among our public utilities, one corporation controls a practical monopoly of
the telephone business and another of the telegraph business of the country .
Great holding and investment corporations control much of our electrical indus-
try, while a major part of the mileage on the Nation's railways is directed by a
handful of large railroad systems and banking groups . One, two, three, and
four overlords of industry control more than half of the business in many of our
manufacturing industries, while a few large banks, centering in New York,
possess an enormous influence over the industrial structure of the country (p . 4) .
   Mr. Kocx. Mr. Earl, a pamphlet such as this, Toward Nationaliza-
tion of Industry, is that for sale, or sold, by the LID, or is that dis-
tributed free of charge? Do you know ?
   Mr. EARL. On the front it reads, "Price 25 cents," so they must
have been for sale .
   Mr. Kocx. And, of course, we don't know whether they make money
or lose money on some of their publications, but they do publish books,
don't they, or pamphlets?
   Mr. EARL. Yes, they have quite a list of pamphlets that they list on
the back of each of their publications .
   The selection of facts, the emphasis and the choice of vocabulary
here combine to distort the picture of America in much the same fash-
ion that it is distorted by the propaganda mills of the U . S . S . R . Dr .
Laidler continues
  Under a system where the basic industries of the country are privately owned
and run primarily for profit, therefore, much of the income of its wealthiest cit-
izens bears little or no relation to their industry, ability, or productivity (p . 6) .
   Here is the familiar theme, common to all Marxists, that capital-
ists are drones and parasites . Moreover, it will be seen from what fol-
lows, that they are actual or potential fascists . Then we go on, on
pages 8 and 9
  The development of our system of private industry, furthermore, has been
accompanied by attempts at autocratic controls of economic, political, and social
relationships by owners and managers of our giant industries .
  Many of our great leaders of industry who have constantly and bitterly opposed
the extension of Federal power and nationalization on the ground of "regimenta-
tion," for years spent much of their time in an attempt to regiment their own
labor forces and, through the use of the spy system, armed guard, police, con-
stabulary, militia, injunction, and blacklists, to prevent the workers under them
from exercising their American right to organize and to bargain collectively .
Laws passed during the thirties have made illegal many of these practices, but
ruthless and undemocratic procedures in labor relations are still resorted to in
industry after industry by the possessors of economic power . These same leaders
have sought to control and regiment political organizations, the press, the
platform, the pulpit, the school, and university in the city, the State, and the
Nation .
  The industrialists of the Nation have frequently kept prices high and rigid,
have kept wages down, have constantly chiseled on quality, and have run their
businesses not for the service of the many but for the profit of the few . In many
instances they have sought to involve the country in international conflict with
a view of safeguarding their investments abroad (pp . 8, 9) .
  Dr . Laidler calls for nationalization of our forests, coal mines, oil
reserves, railroads, electrical power, communications, et cetera
  Our forests should be brought far more completely than at present under
Federal administration * * * (p . 9) .
  The forests of the country, under private ownership, are, furthermore, cut
down faster than they are restored .* * * Public ownership and operation, on
the other hand, would guarantee scientific forest management (p . 11) .
  Bituminous coal mines should be brought under the control of the Federal
Government . * ** The condition of the industry under private control has long
been chaotic (pp . 11, 12) .
                         TAX-EXEMPT FOUNDATIONS                               769
  Anthracite coal is another resource which, in the interest of the Nation,
should be owned and controlled by the Federal Government (p . 13) .
  The waste in the exploitation of our oil resources likewise necessitates further
Federal control (p. 13) .
  The Federal Government should likewise increase its control over the Nation's
power resources * * * Dr. Isador Lubin some years ago suggested the creation
of a Federal Power Corporation, which should have ownership not only of water-
power, but of coal, oil, and natural gas, with the view of coordinating the efforts
on a national scale of all of those industries which generate power (p . 15) .
   (Dr. Lubin, Commissioner of the Bureau of Labor Statistics from
1933 until 1946, was the United States representative to the U. N .
Economic and Social Council from 1946 until March of 1953 .)
  The case for the nationalization of the railroads is a powerful one . Such
ownership, in the first place, would make possible the scientific planning of the
transportation industry for the entire country (p . 16) .
  Only under Government ownership can a sensible plan be worked out . Only
under such ownership can a foundation be laid for cooperation between the
railroad system and busses, water transportation, airlines, trucks, and other
forms of transportation, a cooperation absolutely essential to the health and
welfare of the Nation's transportation system (p . 17) .
If this means anything at all, it means rigid Government control over
all forms of transportation, not just railroads. Note also the wholly
unreal assumption of bureaucratic infallibility which underlies the
case for continental coordination of transportation .
  And to quote from page 18
  Only under Government ownership will it be possible to secure enough cheap
capital adequately to modernize the railroad system .
  Finally, Government ownership would serve the interests of democracy by
taking this vitally necessary industry out of the grip of a mass of holding com-
panies and financial interests intent on profits and placing it in the hands of
representatives of the 150 million people in the United States . Surely an indus-
try on which the health of the whole continent system is so dependent should
not be the plaything of small groups of railroad magnates and financiers .
  Statements to the effect that American railroads are the "plaything"
of financiers do not belong to the realm of responsible scholarship .
  Mr. HAYS. Mr. Earl, I would like to interrupt you right there and
just ask you a question or two about that last editorial statement of
yours .
  Are you familiar with such characters as "Bet a Million" Gates,
Diamond Jim Brady, Commodore Vanderbilt, and a fellow by the
name of Grew, and so on, who played around with the railroads for a
great many years? .
  Mr. EARL . I have heard some of their names . yes .
  Mr. HAYS . Did you ever hear about the time one of them bundled
up $5 million in securities and crossed the river in New Jersey so that
the opposition crowd couldn't get hold of the money it was felt be-
longed to the new board of directors? Did you know that the Erie
Railroad only within the last 10 years or so paid off the indebtedness
caused by water that was put into its stock by some of these same
people? I mean, if you are going to editorialize, I think you ought to
perhaps be a little more familiar with your subject.
  Mr. EARL . Well, I point out here that I still contend that these are
things that these people in a tax-exempt organization shouldn't be
indulging in .
  Mr. HAYS . Which people? You mean the manipulators shouldn't
have indulged?
  Mr. EARL . No, I am talking about Mr . Laidler .
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  Mr. HAYS . All right. That is all. Go ahead .
  Mr. EARL. Quoting from page 19 :
  Similar arguments may be advanced for the public ownership of our elec-
trical power . The experiments by the Federal Government in hydroelectric
power in the TVA in Boulder (now Hoover) Dam and Columbia Basin, as I
declared before, should be extended and the city, State, and Federal Govern-
ments should secure all control over the electrical resources of the Nation .
  Public ownership of our electrical industry, as of our railroad industry, would
make possible a unified control of the industry throughout the country . It would
lay the foundation for a coordination of the power industry in general (p . 19) .
Communications, manufacturing, banking and credit are not ignored
by Dr . Laidler's proposals for nationalization. (See p . 20) And on
page 22 Dr . Laidler calls for a housing bill which stirs the imagination.
Dr. Laidler would not nationalize the composition of symphonies or
the writing of novels, but his language suggests that "thought control"
would follow "industrial control ." (See p. 23 .)
  Dr . Laidler goes on to say
  If public ownership is to be truly democratic, furthermore, each socially
owned industry should be administered democratically . That does not mean
that the workers in each industry should completely control that industry .
The final control of a publicly owned industry should be in the hands of society
as a whole (p . 24) .
  Dr . Laidler goes on to admit that
  Of course the exact type of democratic control which should be adopted would
have to be worked out on an experimental basis over a long series of years
(p . 25) .
Answering the charge that socialism will eliminate and frustrate the
range of consumer choice, Dr . Laidler replies :
  Of course under public ownership consumer choice should be made
as free as possible. In ordinary commodities and during ordinary
times, the Government should merely try to chart the past trends in
the field of consumer demand, and, on the basis of past demands,
decide how much of various types of commodities should be produced
in the immediate future . In the nature of the case, Government
agencies and voluntary groups and individuals should do their part
to educate the public regarding the value of certain commodities ; to
encourage the purchase of socially desirable goods and discourage
the purchase of "illth" * * * instead of wealth . But all regimenta-
tion in this field of activity should be avoided (p . 26 .) [Italics added]
  It is difficult to reconcile the pious declaration against "regimenta-
tion" with the suggestion that Government agencies should "educate"
the public to accept "socially desirable" goods . Incidentally, who
writes the definitions? Who decides that the times are "ordinary"?
For notice that it is only during "ordinary" times that the choice
will be as "free as possible ." Finally, where is the guaranty that
linking future production to "past trends" will benefit the consumer?
  In analyzing the propaganda themes of the League for Industrial
Democracy, it is instructive to see what prominent members of the
league have had to say about communism . And I would like to say
first here that I have included these references concerning this subject
as a demonstration of socialism's constant search, at least what I think
is its constant search, for the silver lining in the Communist cause .
Since Marx's manifesto is the foundation of both socialism and com-
munism, socialists feel very badly about seeing their first cousin go
astray . And further I have included them because communism is
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one of the powerful political issues of our time ; that most people
are now agreed that communism is an international conspiracy .
  Hence, it is interesting to read what certain people have had to
say about it . And if you want me to, I shall go through it . It is
contained on page 20 through the middle of page 24 of my statement,
and contains first the statement of Mr . Alfred Baker Lewis, who was
chairman of the LID board in 1943 and 1944. This pamphlet, en-
titled, "Liberalism and Sovietism," was published in 1946 .
  This essay represents an attempt by socialist intellectuals to dis-
associate themselves from the terror and cruelty of Russian com-
munism . An uncautious reader is left with the feeling that, while
Russian foreign policy is evil, the economic program of the Soviets
is really quite acceptable.
  Excerpts from the above pamphlet follow . Mr. Lewis explains to
his fellow liberals just how the Bolsheviks came to be unfriendly
  The governments of every capitalist nation, i. e ., of every nation in the world
but Russia, immediately upon the Bolshevik's seizure of power in that land,
turned against the Bolsheviks, or the Union of Socialist Soviet Republics, to
use the official title . They did this partly from determination to preserve the
right of capitalist ownership of industry, banks, and natural resources .
   Since every government was against them * * * the Russians naturally were
against every government. They therefore sought to set up out-and-out revolu-
tionary parties in all other countries (pp. 3-4) .
   Such was the call to revolution . It was not unnatural ; in fact, it was largely
a defense measure, since all the Russian Government was doing was building
backfires against the governments which were conducting either directly or
through agents military invasions against it (p . 4) . [Italics added .}
  Now, let me digress for a moment and say that Mr . Lewis was very
rough on the Communists in here for their terror and all of the other
things that we know that Russia is doing . But I think this first thing
demonstrates in a small way the fact that he was trying somewhere to
find a silver lining.
   Substantially the same argument was used by Communists to ex-
plain the Soviet war against tiny Finland, and the knife thrust into
Poland's back . All Russia was doing was protecting herself against
Fascist invasion by seizing another broad band of territory across
which Nazi armies would have to march . Similarly, subversion to-
day is merely the Kremlin's method of combating the aggressive war
plans of American imperialism .
  Throughout the booklet, Mr . Lewis shifts the emphasis from the
international Communist conspiracy as a threat to world peace and
stresses the danger of Russian imperialism . In effect, this kind of
argument produces the kind of psychology in, say, America, that might
unify the Russian people behind their Communist overlords, in much
the same way that the dogma of "unconditional surrender" unified the
German people behind the Nazis . Russian "imperialism" is lightly
thastized as a modern form of British imperialism . Slave labor, gen-
ocide, brain-washing, espionage, kidnaping, political assassination-
all the instruments of total and unlimited terror are, by implication,
equated with the rule of the English sahib, sipping gin in the Indian
sun.
  And then to go on, from pages 16, 18, and 19
  Russian imperialism is also evident in Bulgaria (p . 16) .
   In another part of the world, in Manchuria, the Russians are pursuing the
policy of Hitler * * * In addition, directly reversing the policy of the Soviet
Government under Lenin when the Russians ceded their imperialist rights in the
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Chinese Eastern Railway to the Chinese Government, the Russians got from the
Chinese Government an agreement giving them a half interest in the Manchurian
port of Dairen * * * (p. 18) .
  The British Labor Government and the American Government have usually
opposed to some extent the extreme demands of Russia * * * On numerous
other minor issues the British and Americans have differed with the Russians .
Consequently, the Russians have done all they could to embarrass the British
and American Governments, especially the British . For that is simply the psy-
chology of you oppose me and I'll oppose you (p . 19) . [Italic added.]
The "master plan" for world conquest, it would seem to Mr . Lewis, is
nothing more than simple retaliation for British and American rude-
,less .
   Mr. Lewis concludes his study with suggestions as to what "real
progressives" should do in the fight against communism . He urges
them to oppose Communist penetration of liberal groups and, at the
same time, to "loyally defend the civil rights of Communists ."
  Liberals should not be afraid of being called redbaiters . Strictly speaking, no
one is a redbaiter except a person who tries to deny to Communists their civil
and political rights. Liberals should and most of them do loyally defend the
civil rights of Communists as well as others * * * (p. 25) .
  You are not a redbaiter because you oppose Communist penetration in the
guise of liberals into other organizations or oppose the Communist Party's in-
fluence in its "innocents clubs" or transmission belts or because you oppose Rus-
sian imperialism . You will be called such, but do not let that worry you . You
would only be a redbaiter if you tried to prevent by law the Communists from
establishing their own organizations (p . 25) .
A fter arguing that the, way to stop Russian imperialism is by strength-
ening the United Nations, Mr . Lewis ends on a note of hope . After
all, he says, the Communists are not as bad as the Nazis ; there is,
therefore, "a real possibility of peace ."
* * * there is one important and vital difference between the Russian totalita-
rian dictatorship and the Nazi one . The Communists never were racialists, even
though the Soviet Government refused to admit Jewish refugees from Nazi
persecution * * * Far from being racialists the Communists both in Russia and
elsewhere are sturdy opponents of racial discrimiation, and active propagandists
against race prejudice (p. 28) .
Mr. Lewis then advances an ingenious argument to demonstrate that
aggression and war are not necessarily part of the Communist plan .
(See pp . 28, 29 .) The statements of Soviet leaders that the destruc-
tion of either the Communist or the capitalist world is inevitable are,
apparently, as irrelevant as their acts .
   We may reasonably have some hope, therefore, that Russian Communist lead-
ers can be persuaded * * * that the American and Western European democ-
racies want peace and the end of imperialism and of power politics, and oppose
Russia only when she is imperialist, not simply because she is Communist
We might at the worst have two worlds * * * yet all competition between them
could be kept on a civilized basis of raising higher their respective standards of-
living, and that would not necessarily lead to war * * * (p. 29) .
  The Soviet's original attacks on the governments of the democratic nations
through the Communist Parties which it set up and controlled, were defensive
measures against attacks actual or expected from those capitalist nations . Rus-
sian imperialism today is the result of an act of will an the part of the Russian
dictator, Stalin, and not because it is the nature of a Communist dictatorship to
practice aggression upon its neighbors (p . 29) .
The invasion of Korea, the seizure of Tibet, the use of Chinese Com-
munist arms and cadres in Malaya and Indo-china seem to sing a
contrary song .
  (NoTr.-Alfred Baker Lawis, author of above statements, is listed
as chairman of the board of the LID for the year 1943-44 .)
	


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  There seems to be some inner compulsion which prompts even
tough-minded liberals, who understand and despise the Soviet police
state, to search desperately for the silver lining Here is Norman
Thomas, another chairman of the board of the LID, writing in Democ-
racy Versus Dictatorship, published in 1937 .
  This pamphlet, entitled "Freedom and the Welfare, State," which
was published in 1950, still carries "Democracy Versus Dictatorship"
as one of their current pamphlets .
  This is a quote from page 11 :
  * * * it is still true that between the Fascist and Communist types of dictator-
ship there are important differences . Both accept in practice the doctrine of
the totalitarian state, under the dictatorship of one party which form of govern-
ment, and communism as an instrument for achieving the final Communist society
in which the coercive state will have become unnecessary . The Fascist dictator-
ship is bent upon preserving in a large measure the profit system and the class
divisions of society . The Communist dictatorship has already practically
abolished the profit system and the older class divisions of society . Neither
Italian fascism or German nazism has any such record of social achievement in
the education and industrialization of a backward people as the U. S . S . R . since
1917. If there is danger in Russia of a new type of class-driven society at least
communism, like Christianity, carries along in its own sacred books the dyna-
mite for the overthrow of the hierarchies it may develop .
  Mr. Thomas leaves no doubt in the reader's mind that socialism is
to be achieved at the polls
  It will be the business of the workers with hand and brain, the lovers of true
peace and true democracy, to make the wars and confusions of a bankrupt
society, the society of a federation of cooperative commonwealths .
  That cannot be done simply by the ballot in a world gone mad . Indeed, under
no circumstances can the working class put its trust simply in the political
democracy of which the ballot is the symbol .
In another booklet, Russia-Democracy or Dictatorship? published
b~' the LID in 1939, and I think still on their current list, Norman
'Thomas documents the case against the Soviet slave empire . The
piece is a detailed indictment of most, if not all, of the horrors of the
Stalinist regime. Nevertheless, the concluding paragraph ends on
this somewhat curious note
  One can hope that the Russian revolution, stolen from the masses by a Stalinist
bureaucracy, will some day be rewon by them . One can hope that democracy
can be achieved within the Communist Party, and that other parties will win
the right to function . One can hope that the material benefits of state owner-
ship will be more equitably shared by the masses, and supplemented with the
liberty that Socialists believe to be equally important . One can still hold
communism superior to fascism, while rejecting the continuing totalitarian
terror that is a common feature of both, and that tends to reduce life under it
to a common denominator of serfdom to the state . Above all, one can hope that
the western democracies, including the United States, will some day enjoy the
blessings of socialism without having first to endure the agony of the transition
period, through which Russia has been passing for more than 20 years.
  Mrs . PFOST. Mr. Earl, if you put in this quote here, why did you
not put in the quote that gave the detailed indictment of most, if
not all, the horrors of the Stalinist regime? We will all agree that
certainly we would not want to live under his regime, and if you
are going to quote the one section, why did you not quote the other,
to give us both sides of the picture?
  Mr. EARL. I am going to submit for the committee's use all of
the pamphlets to which I have referred, so that you will have that
material. I mentioned that he had done that, but I put this con-
cluding paragraph in to demonstrate once again this great hunt
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for the silver lining that they find in communism ; and that they hope
that socialism can be achieved here without our having to go through
that terrible period that Russia is passing through . Does that answer
your question?
   Mrs. PFOST . Yes. I just couldn't understand, if you were going to
give the true picture, why you would put one quote in and leave the
other out .
   Mr. EARL . I think we all understand what Russia is .
   Mrs. PFOST . Yes.
   Mr. EARL . And that it is a dictatorship, and that there are a great
many terrors there, and he does - a beautiful job of documenting those.
   In the preface to this work, the editors state they have tried to
publish a work which would contain two viewpoints, one "more
sympathetic to the present Soviet Government" than the one offered
by Mr. Thomas .
  Among those who have been invited to present the other side of this con-
troversial subject are Maxwell Stewart, Corliss Lamont, Robert Dunn, Mary
Van Kleeck, Jessica Smith, and Earl Browder (p. 3) .
   When there were no takers, the LID, after delaying for nearly a
year, finally decided to publish the Thomas essay, which is highly
critical of the Russian experiment . Apparently, however, the editors
could not resist at least one word of explanation in the preface which
might soothe the outraged feelings of the pro-Soviets .
  The authors will be the first to insist that ideal democracy exists nowhere,
and certainly not in the United States, with its unemployment and labor injunc-
tions, its treatment of Negroes and sharecroppers, and its many other problems .
They will be the first to admit, likewise, that the U . S . S . R . should be examined
and judged, not by American standards, but in the light of Russian history
and conditions . It must also be admitted that democracy everywhere is more
limited during war than in times of peace, and that the Soviet leaders, living
for many years in almost constant fear of attack, had a war psychology long
before hostilities began (p . 4) .
   Mr. HAYS . In order to know what that paragraph means, Mr . Earl,
could you give us the year when it was published or written?
   Mr. EARL . I believe I referred to the year of 1939 . Just a second .
   Yes, December 1939 .
   A Conference of the League for Industrial Democracy, held at the
Hotel McAlpin, New York City, on May 8, 1943, brought together
a number of labor leaders, Socialist professors and foreign politicians .
They met to emphasize the need for postwar planning if the free
world was to be spared mass unemployment and depression . The,
presence of so many Socialist leaders from abroad emphasized the
reality of the world movement against capitalist society, a movement
in which allies join hands across national frontiers to combat their
own countrymen.
   The proceedings of the conference were published in an LID
pamphlet entitled "The Third Freedom : Freedom From Want ."
A list of outstanding participants, together with significant excerpts
from their speeches, follows
   1. The Right Honorable Arthur Greenwood, leader of the British
Labor Party in the House of Commons, broadcast a message from
England which was rebroadcast during the LID luncheon . (Mr.
Greenwood was elected treasurer of the British Labor Party in the
summer of 1943 ; as a Minister in the War Cabinet of 1941, he ap-
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pointed Sir William H. Beveridge chairman of the committee which
used the Beveridge report on social insurance .) Greeting his friends
in the LID, Mr. Greenwood remarked
  The significance and importance of your work will not be limited to the
United States . We over here are greatly interested in it, too . The subject you
are dealing with vitally concerns people everywhere because it expresses one
of the deepest aspirations of the masses of all peoples (p. 3) .
It is our duty, according to the British Labor Leader, to make free-
dom from want-
inalienable through the law of nations . To provide freedom from want is one
of our chief tasks . It is an urgent problem that concerns the society of nations
and national communities, and is not merely one of individual responsibility
(p. 4) .
It is very clear that Mr. Greenwood, like many of his colleagues, sees
the necessity of pressing for socialism at the strategic level (i . e. world
cooperation as well as socialism within nations) .
  A new inspiration and impetus was given to social planning by the declara-
tions of the Atlantic Charter . But important as these individual national
preparations and plans may be, it is of the first importance that we should keep
constantly in our minds that the indispensable basis of a universal forward
movement toward social security and social justice for the peoples is to be found
only in the concerted action of the nations working in the closest and most
effective cooperation (p . 4) .
   Mrs . PFOST . Mr. Chairman, we have been here now a little over an
hour, and we have covered 12 pages, and there have been very little
in the way of interruptions . We have 131/2 pages yet to go . Do
you think it is necessary for us to sit and listen to the material read
to us? Couldn't Mr . Earl submit this for the record?
   The CHAIRMAN . Mr. Earl would have preferred to have spoken
offhand, but in order to give the committee members the testimony in
advance, it was necessary for him to make a written statement, so as not
to fall into the position for which some of the previous witnesses have
been criticized . And the mere fact that at the instance of the com-
mittee as well as its insistence it became necessary for him to prepare
a transcript, I hardly think it is fair to the witness to suggest that
there is anything odious about reading a statement.
   Now, so far as I am concerned, I have not had opportunity to read
this, myself, and it takes no more time for me to listen to it than it
would for me to read it myself .
  Mrs . PFOST . The reason I brought it up was in view of the fact that
we did have the material in advance, and I have gone over it, and I was
hoping that he might be able to expedite the hearing just that much ;
because we do have the context of what Mr . Earl is trying to convey
to the committee, and in view of the fact that the House is in session,
I thought perhaps it would speed us up considerably if we would be
able to offer the statement for the record, and that we might question
him a little .
  The CHAIRMAN . Well, he has certain passages marked, I think, to
have included in the record, and has included some of tem, and is
only going to read what he thinks would be of more particular intere t .
  Mr. EARL . How would it be if we compromise, and I will go through
and just refer to some of them . Of course, whatever the committee
decides is agreeable withh me .
  Mrs . PFOST . It was my understanding last night that he expected
to sort of hop through the testimony, and I for one am apple iative
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 that we do have this transcript before us and that we have had an
 opportunity,to have a few hours . We didn't get very many hours
before your testimony started .
   Mr . EARL. I got it to the committee as quickly as I could.
   The CHAIRMAN . You may proceed .
   Mr . EARL. Two . Dr. Carter Goodrich, chairman of the governing
body of the International Labor Office and professor of economics at .
Columbia University, reinforced Mr . Greenwood's thesis
  I wish to argue, first, that attaining freedom from want for our own people,
as well as for others, requires international cooperation as well as national ac-
tion ; and, second, that in this cooperation we should make large use of an
agency, the International Labor Organization, which is itself, in its structure
and way of working, a notable example of industrial democracy (p. 6) .
   3 . Mr . Robert J . Watt, international representative of the American
Federation of Labor, produced a typical propaganda assault on capi-
talist society
   I reedom from want is the No. 1 of the goals toward which civilized man has
worked through the centuries . The present paradox of want amid plenty is
evidence of negligence, of laziness and leadership, of stupid, unthinking accep-
tance of an economic fetish from the laissez-faire cult .
  Democracy cannot survive if it bends its economic life to the taboo of an
ancient medicine man (p. 10) .
   He also poses an economic and political solution to the problem of
want
  For freedom from want, workers must be paid such wages as represent their
true productivity in order that their purchasing power can sustain the circula-
tion of goods . Wages of capital should go down to the measure of its actual
social value (p . 11) .
  Yes, for freedom of our people from want, the Nation cannot pay too high
a price . What we cannot afford is to ignore or be overly timid in preventing
such want (p. 12) .
   Of course, in skipping around. here, I don't want any inferences that
I am just trying to pick out some juicy parts . I think it is all im-
portant, or I wouldn't have written it .
   Mr.. R. J . Thomas, chairman of the United Automobile Workers,
CIO, sent an address, and I am just going to quote the last quote in
pages 14 and 15 . He tells, first, that after the war he figures that
there will be a lot of trouble and depression, et cetera, and then he
has this to say
  There is another alternative : That alternative is to insist that our great pro-
ductive machinery shall be used-as it has never been used before-for the sole
purpose of providing abundance for our people . This second alternative must
be based on the principle that industry should serve the people, and not merely
the chosen few who own industry and operate industry for private profit
(pp. 14-15) .
  While it is perfectly proper in the political arena to assert dog-
matically that, unless the opposition is overthrown, there will be chaos
and dictatorship, it is quite another matter for a tax-exempt organi-
zation to publish this quackery in an educational pamphlet . The
postulating of the socialism-or-dictatorship dilemma is, of course, a
standard theme in the propaganda schools of the left.
  Let's go to the next page, page 27 .
  Mr. HAYS . Let's not go to the next page too soon, because I have
a question .
  Mr. EARL. Go right ahead .
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   Mr. HAYS . You mention this Dr . Eveline M . Burns in here, and I
don't know whether you are skipping her for any reason . . You have
put her name in. Who is she?
   Mr. EARL . All I know about Dr . Burns is that she is the Director
of Research, Security, Work, and Relief Policies of the National
Resources Planning Board, and I mentioned her because of what
she said .
   Mr. HAYS . Do you know anything else about her?
   Mr. EARL . No ; I do not .
   Mr. HAYS . Would you be surprised to know that Mrs . Hobby
picked her as one of the members of her Board to make recommenda-
tions for the new social-security law which just passed the House?
   Mr. EARL. I wouldn't be a bit surprised ; no, sir.
   Mr. HAYS . Well, I know you are hard to surprise . For the record,
it might be interesting also to put in that she is the wife of Dr . Arthur
F . Burns, Chairman of the President's Council of Economic Advisers .
I don't mean any leftwing president, either . That doesn't surprise
you, does it?
   Mr. EARL . I was not aware of it.
   Mr. HAYS . And you are not questioning my veracity?
   Mr. EARL . No ; I am not .
   The CHAIRMAN . There is nothing in here characterizing Mrs . Burns
in any way, as I see it . It is merely quoting from her speech .
   Mr. HAYS . You editorialize about it as you please, Mr . Chairman,
but I will tell you if my name were mentioned in this document any
place, I would resent it. I would think it was an attempt to show
I was a leftwinger.
   Mr. EARL. Do you want me to skip around? I don't want to be
accused of skipping something.
   Mr. HAYS . I just didn't want you to skip Dr. Burns . Now you can
skip from here on if you want .
   Mr . Kocx. The quotation on page 24 that you mentioned . What
does that come from? Fou quote from the lady and give it as page
24. And I just wanted to find out whether that is page 24 of some
LID document .
   Mr. EARL . That is page 24 of the document from which we are
reading right now, The Third Freedom, Freedom From Want .
   Mr. Kocx . And that is an LID publication?
   Mr. EARL . That is an LID publication .
   Mr. HAYS . When you say she admonishes her colleagues, who are
you talking about, her colleagues down from Mrs. Hobby's office,
or who?
   Mr. EARL . She is speaking here at an LID conference, so I am talk-
ing about those people .
   On page 27, item 6 : Dr . I. S . Falk, Director of Research and Statis-
tics of the Social Security Board, argued that :
  A strong system of social insurance is necessary to prevent want in the post-
war period, even if full employment is achieved .
   Now, again, I am not arguing with social security right now . I am
just indicating here that social security is a political subject, and it is
one that has current legislation before Congress, and did at that time .
   Next I point out some of the subjects that were discussed .
   Henrietta C . Epstein, vice president of the American Association
for Social Security
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   Mr. HAYS. Mr . Earl, I might ask you a question right there? In
view of Congress's penchant for investigating practically anything
 and everything, do you think there is any subject we could discuss
that woudd't have some kind of overtone or implication? If we are
going to be that broad, there is no way to get away from it .
   Mr. EARL . I think it is much narrower than that, because the law
under which these organizations received their tax-exempt status
indicated that they received that status provided that no substantial
part of their activities were devoted to poliical purposes, et cetera .
It is my thesis that more than a substantial part of the LID's , activ-
ities have been devoted to attempts to influence legislation and polit-
ical purposes .
   Mr. GooDWIN (presiding) . The second bell has now sounded for
a quorum call .
   The commitee will stand in recess subject to the call of the Chair,
probably for about 15 minutes .
   (Short recess .)
   The CHAIRMAN . The committee will come to order, please .
   You may resume, Mr . Earl.
   Mr . EARL. We were speaking about the symposium held in 1943
by the league.
   As to the subjects discussed : Henrietta C. Epstein, vice president of
the American Association for Social Security, spoke on the subject,
Health Insurance Our Next Forward Step ; Dr . Arne Skaug, Direc-
tor, Norwegian Government Disability Services, explained The
Norwegian Crusade for Social Security ; and Dr . J. Raymond Walsh,
director of research and education, CIO, urged that labor "find the
media, and words to articulate and implement" its aim . (Dr. Walsh's
address, published in the Freedom from Want pamphlet, . was made be-
fore the Washington chapter of the LID on March 5, 1953 .)
   Then Alfred Baker Lewis, chairman of the board of the League
for Industrial Democracy, continued his bit :
  To get freedom from want in the postwar world we must be clear that we
cannot do so by reestablishing complete freedom of enterprise, the fifth freedom
which ex-President Hoover and the National Association of manufacturers want
to add to the four freedoms (p. 53) .
   Mr. Lewis explained why private enterprise could no longer avert
terrible depressions . He indicated that they had gotten us jammed up
before, and that they just didn't have the capacity to pull us out of
the hole .
  Thus the free land in the West acted as a safety valve for unemployment and
depression . But by 1930 that free land was no longer available except for moun-
tain tops and deserts . The automatic safety valve upon which we relied com-
fortably before World War I and which gave rise to the belief in the efficiency of
rugged individualism as a cure-all for our economic ills, has gotten jammed and
needs to be regulated by careful Government planning and vigorous Government
action if we are to avoid an explosion of suffering and unemployment again
(p . 54) .
   George Baldanzi, executive vice president of the Textile Workers
Union of America, seemed to feel that Hitler and his Nazi henchmen
had little to do with bringing on the war . Nor, presumably, were the
Japanese responsible .
  Business and industry are looking for a solution to the problem of full employ-
ment within the framework of what they call free enterprise . What they mean,
of course, is their old freedoms to exploit . But free enterprise is drawing its .
                         TAX-EXEMPT FOUNDATIONS                                 779
last gasp . This very war we are fighting, and the causes of the war, are indica-
tions of the breakdown of the economy of free enterprise (p . 57) .
   Labor believes that special privilege will have to accept a planned economy,
that the days of laissez-faire are gone with the winds of war . We believe that
production will have to be geared to social need rather than to private profit
(p. 57) .
   History has shown us that full employment is not possible under a system of
free enterprise . . * * * The free enterprisers are interested in profits, not people
 (p. 57) .
   Whether it is established on the basis of democracy or on the basis of monarchy
or on the basis of fascism, the system of free enterprise inevitably leads to war .
When they dry up at home, entrenched privilege must look for them abroad.
War inevitably follows, and another war will follow this war unless the leaders
of the United Nations begin to think in terms of changing the economic pattern
as well as the political pattern of liberated and conquered nations (p . 58) .
  Participants in a roundtable discussion on social insurance and full
employment included Dr . Oscar Lange, associate professor of eco-
nomics of the University of Chicago ; Donald S . Howard, of the
research staff of the Russell Sage Foundation ; Dr. Herman A . Gray,.
chairman of the New York State Unemployment Insurance Advisory
Committee ; E. J . Coil, director of the National Planning Association ;
Charles Abrams, a director of the National Public Housing Confer-
ence ; Ellis Cowling, educational director of the Consumers' Cooper-
ative Services of New York ; and Charles C . Berkley, executive direc-
tor of the New York Committee on Discrimination in Employment .
  The subject, I think, is the important thing here, social insurance
and full employment .
  The conference also discussed another program under the heading
"Mobilizing Our Forces in Behalf of the Third Freedom."
  Nathaniel Minkoff of the ILGWU, who is this year's president of
the LID, called for a new party
  So much for the present . The real test will come immediately after the war,,
when, what with sudden deflation, demobilization and shrinkage of production,
as well as with the inevitable worldwide confusion, our Nation will face the
grave danger of economic collapse. Only a courageous, farsighted economic
policy, based on long-range social planning, can save us from disaster . It is not,
my purpose now to discuss what this postwar planning should consist of nor
how it should be undertaken . I merely want to stress that it is not merely an
economic and social question, least of all a more question of technical expertness .
It is primarily a political question, for even the best program in the world must
remain a mere scrap of paper unless it is implemented with political power
(p . 71) .
  We must organize independently of old, now meaningless party affiliations into
a compact and mobile force able to exert its influence where and how it will do
the most good * * * (p . 72) .
  Above all we must be clear as to our social basis . What we want, I think,
is a democratic coalition of all functional groups in the community with organized
labor as its backbone and basis . I am not holding out to you any perfect models
but, with all its faults, I think the American Labor Party of New York State
is something of the sort we have in mind (p . 72) .
   He, of course, was calling for the formation of a new political party
in America, and I question the legitimacy of that for an educational
association.
   Mr. Samuel Wolchok, president of the Retail, Wholesale, and
Department Store Employees of America, CIO, also demanded
political action. His address, printed in this same booklet, was made
to the Washington Chapter of the LID in March 1943 . The tone is
scarcely academic .
  There is the sharp line of cleavage as to the future of the postwar world,
between the idealistic forces of the liberals on the one hand, and the blind, cruel
forces of the reactionaries on the other.
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  The reactionaries are well organized . They have power, the press, the radio,
money and ruthlessness on their side . They are well-girded for battle . They
are far more interested in controlling the peace than in winning the war and
their energies are solely directed to that end (p. 73) .
  The reactionaries in this country have no program to solve this country's ills
and the ills of mankind * * * Their program can only culminate in fascism
and dictatorship here, followed by revolution (p . 77) .
Mr. Wolchok then adds his voice to the swelling chorus demanding
political action
  The solution then lies in a third party * * * a party supported by trade
unions and true farmers' unions, by welfare organizations, by civic bodies, and
by other social-minded groups and committees * * * ( p . 74) .
   He mentions further that there is already a great nucleus here for
the formation of a third party . He refers to the CIO, the A. F . of L.,
the National Farmers unions, and then suggests that to this could be
added the liberal, civic, and welfare organizations spread throughout
the country.
   Prof. Frank H . Underhill, professor of history, University of
Toronto, Canada, pictured the advantage of having a political party
to implement liberal and Socialist goals. Then he described the suc-
cess of the CCF in Canada, and suggested that they have a program
there but it works much better when they have a political party with
which to, carry out that program. He lectured his audience on the
advantages of having that political party and the things that they
should try to accomplish .
   On page 31 of my prepared statement, following the quotation, I
mentioned that Mr. Leroy E . Bowman, supervisor, Bureau of Adult
Education, New York State, spoke on the subject "Educating for the
Abolition of Want," and I would just summarize by saying that his
speech, in his speech, he visualized a vast interlocking directorate of
labor, consumer, and Government interests in control of the mighty
apparatus of adult education . His theme throughout was that we
must eduacte the adults in America to accept this social planning over
all of our economic extremes in the country .
   Next, Mr . Mark Starr, educational director of the ILGWU, and Dr .
John L. Childs, professor of philosophy of education at Teachers
College, and a member of the postwar planning commission of the
A . F . of L ., presided over a roundtable with the title "Mobilizing Our
Forces, Economic, Political, Cultural, In Behalf of the New
Freedom."
   He suggested that all organized groups must be mobilized and used .
And to quote 95 and 96, "I wish we had the outlook for a CCF in
America . There is no such adequate approach available here ."
   Another pamphlet published by the LID is entitled "Toward a
Farmer-Labor Party," and the author is Harry W . Laidler. It was
printed in 1938 . However, it is still on the current list of LID
publications and I presume has not been repudiated by the league .
   To summarize what this pamphlet calls for, I think that it would be
rights to say that it calls for the formation of a political party with the
labor groups and the farmers as the basis, and that only through such
a coalition could they reach the goals that Mr. Laidler would have
them reach .
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   He indicates, as I have said on the bottom of my statement, on page
32, and he is quoting here from another magazine
   To delay the building of a new party of the masses because of the possibility
or probability of the selection of a "liberal" candidate by the Democratic Party,
these students of politics contend, "is to repeat the error of past years ."
"Similar arguments," Oswald Garrison Villard maintains, "have postponed
the organization of that third party ever since 1924 * * * . Now once more,
progressives are called upon to stay in the party fold . Frankly, it seems to me
shortsighted reasoning ."
   And then he goes on to say that he would much rather they formed
this new party rather than try to stay within the framework of any
of the parties then in existence .
    To me agitation for the formation of a new party scarcely qualifies
as legitimate project of a tax-exempt organization .
    Now, if we can go down to the middle of page 34, just below the
middle, speaking of the Forward March of American Labor that was
published by the league in a revised printing as recently as 1953 .
It is supposed to be a history of the American labor movement . The
text, however, is embellished by a remarkable series of cartoons which,
in the year 1953, strike an impartial reader as a crude effort to dis-
credit today's business with faults that have long since been corrected .
    Mr. HAYS. When were those cartoons originally published, approxi-
mately?
    Mr. EARL . I mention that the pamphlet was originally published a
long time ago.
    Mr. HAYS. I mean the cartoons.
    Mr . EARL. I don't know, sir . I would have to check that and see .
    Mr . HAYS . They did just what you are doing . They went back
several years and lifted up some cartoons that give a kind of a wrong
impression in 1953, much as your quotations of 1932 might give .
    Mr. EARL . The point is, though, that they haven't disavowed many
of the things that I pointed out in yesterday's testimony concerning
their aims and goals stated in the 1930's.
    This pamphlet struck me as not particularly setting forth the true
picture of the situation as it is now .
    On April 25 and April 26, 1951, the LID held another of its annual
 conferences in New York . The proceedings were published in a
pamphlet entitled "World Cooperation and Social Progress." The
 league presented the citation to Dr. Ralph J. .Bunche, Director of the
 Trusteeship Department of the United Nations, and awarded another
 citation to President William Green of the A . F . of L . And it gave
 a John Dewey award for distinguished LID alumni to Senator Paul
 H . Douglas of Illinois, who "in his graduate days," according to the
 pamphlet, had been-
leader of the league's chapter at Columbia University, and, since his university
 days, has done distinguished work in the fields of economics, civic reform, social
 legislation, and international peace .
    Senator Douglas was not present and he accepted the award in
absentia, and an address extolling the LID, sent by Senator Douglas,
 was read at the conference .
    Now, I believe that both the gentleman from Ohio and myself would
 like to refer to that.
 782                      TAX-EXEMPT FOUNDATIONS

   Mr. HAYS . Yes . I have some photostatic copies here that Senator
 Douglas made available to me from his files of the letter that he sent
 up. I think that we ought to just read that, and then have you tell
 me what is wrong with it . We will give these to the press . He says
     I want to express my heartfelt appreciation to my friends in the LID that
  they should have honored me with a John Dewey award for contributions to social
  progress. When I see the slow rate at which we advance toward the social
  goals of democracy, I sometimes wonder if the making of such awards should
  be held in abeyance until we have greater achievements to celebrate . The
  understandable and essential efforts to meet the military and strategic threats
  to free nations, in World War II, and, now again, as we face an aggressive
  Communist totalitarianism, have absorbed our attention rather completely . We
  must turn back the Communist threat of a police state and in the process social
  progress has, therefore, been accorded a subordinate place, and has been possible
  ordinarily only when it can be related to defense needs . In some areas, it has
  suffered serious setbacks .
     Where we have made gains, however, as in housing, social security, reduction
 of racial discrimination in the Armed Forces, resistance to monopoly grabs,
 sounder fiscal plans that do not destroy essential welfare programs, and foreign
 economic assistance, they have come as the result of the thinking and planning
 and working of many persons and many groups. Your award to me, therefore, is
 fitting, only if today you treat me as merely one representative of that great
 company of persons, in public office and out, who have tried, however imper-
 fectly, for a better society in a better world .
    I want also to pay a brief tribute to the LID for the nearly half century of
 educational work it has done . It has undertaken research in, and analysis of, .
 many of the basic economic problems of our times . It has stimulated students
 and statesmen, members and leaders of many groups, to a more thoughtful con-
 sideration of democratic objectives. It has brought a much-needed emphasis on
 extending democratic principles and practices into the economic and industrial
 phases of American life, lest the power of monopoly or of unrestrained man-
 agerial domination, challenge our political democracy and threaten freedom it-
 self. Even when we have not agreed with all of its conclusions or recommen-
dations, we have found the LID a valuable goad, a stimulating source of infor-
 mation, and a place for frank discussion of basic problems . For his writing, his
 research, his speaking, his editing, and countless other services, I'm sure we
 would all agree that our good friend Harry Laidler deserves the major credit
for this record of LID achievement .
    Yet to list the contributions of the past is to remind us of the great tasks that
still lie ahead . I'm glad your conference has put these into the international
 setting in which all issues must now be resolved, for peace, as well as economic
 and social progress, must be won for the world if we are to enjoy them in our
own country . We must recognize that freedom is about the most precious pos-
 session mankind can have and that we should determine that the State is made
for man and not man for the State .
    These jobs ahead are gigantic ones . To halt the pell-mell rush of inflation ; to
achieve a greater equality of sacrifice and of participation in our defense effort ;
to advance the elimination of racial and religious discrimination ; to check the
thrust of special interest for special privilege and power ; to keep . the public in-
terest central in Government operations ; to weed out graft and special privilege ;
to guard the civil liberties of individuals while maintaining the security of the
Nation ; to make what increases we are able, in low standards of living here
and abroad-these aims must also be kept in view, even as we strive to keep the
free world' united in effective resistance to Communist aggression . It requires,
as you all recognize, the fresh thinking, geared to the needs and conditions of this
day, which we associate with John Dewey's approach to issues .
   If this occasion can serve to evoke a rededication on the part of us all to
these great aims of democracy, I shall feel well compensated for the role in
which you have so kindly cast me today .
  Is that an accurate reading of the letter?
  Mr. EARL . That is an accurate reading .
  Now, I presume that you will want to know what I find interesting
in that .
                      . TAX-EXEMPT FOUNDATIONS                           783
    Mr. HAYS . I would be interested to know what you mean by the
 word "interesting"?
    Mr. EARL. First, I mean this : that it sounds more like a speech at
 the Democratic convention, or perhaps even the Republican conven-
 tion, than at an educational luncheon and seminar .
    Next, at the bottom of the first page, in the center, where he has
 this to say, speaking of the LID
 It has undertaken research in, and analysis of, many of the basic economic
 problems of our times . It has stimulated students and statesmen, members,
 and leaders of many groups, to a more thoughtful consideration of democratic
 objectives .
    Right there, I was just wonderin to myself whether or not when
 lie speaks of "democratic objectives' he is speaking of them in the
 sense that the LID understands democratic objectives .
    You will recall from yesterday's testimony that democratic objec-
 tives, as understood by the LID included some things we men-
tioned today, the nationalization of a great many of our basic indus-
tries, and
   Mr. HAYS . Senator Douglas points out that he has not agreed about
 all of its conclusions or recommendations.
   Mr. EARL. Yes ; he does that at the top of the next page, and he says
Even when we have not agreed with all of its conclusions or recommendations-
However, I think it is probably common knowledge that he espouses
a great many of their common objectives mentioned in both his second
paragraph and in his next to the last one .
   That is fine, and I don't quarrel with Senator Douglas' privilege
or right, or anything else to espouse those .
   Mr. GooDwrN . I did, however, Mr. Chairman, if I listened cor-
rectly, understand that the Senator was looking forward to that
depression even then .
   Mr. HAYS . What are you trying to say? Is it that he was a pretty
fair prophet, or what?
   We have 20,000 unemployed in my district. And I don't know what
you want to call it. You can call it a depression or recession, or what-
ever it is . But the people are out of work . And they have a lot of
names for it, and none of them very complimentary to this
.administration .
   Mr . GOODWIN . The reports are that this year of 1954 is the most
prosperous in the history of the Republic, with one exception, and
that one exception was 1953 .
   The CHAIRMAN . I don't want you to lose your role as defender of
this administration .
   Mr. HAYS . Don't worry about that because I have been just about
as critical of the administration as I have been in its defense . I only
come to its defense when I think it needs defending from its own
party . And then I feel free to criticize it any time I think it is
wrong. It casts me in an independent role, one which I find seems
to suit me better . Perhaps it is better than endorsing everything in
either party .
   The CHAIRMAN . You may proceed .
   Mr. EARL. Luncheon speakers included M . J . Coldwell, member of
Parliament and president of the CCF of Canada ; H . L . Keenley-
side, Director-General, Technical Assistance Administration, United
784                      TAX-EXEMPT FOUNDATIONS             .

Nations ; Paul R . Porter ; and Ralph Wright, Assistant Secretary of
Labor .
   I think rather than read what they say, it is just more of the politi-
cal platform and a demonstration of political action .
   On the next page, page 36, Stanley H. Ruttenberg, director of the
Department of Education and Research of the CIO, observed
   It is not certain that this mobilization program will develop into an all-out un-
democratic force,- but it presents certain dangers . One of these dangers is the
dominance of representatives of big business in key positions
   Mildred Perlman, secretary of the Student LID ., called upon labor
to finance the socialistic apparatus . According to the editor
  Mrs. Perlman concluded with an appeal to labor which has been closely
allied over the years with the struggle for democratic education, to build a
war chest in behalf of democratic education on the campus and in the com-
munity . In so doing it will * * * help train a democratic leadership for the
future.
   If this is a legitimate undertaking, under the tax-exempt banners of
the LID, there seems to be no valid reason why Young Republican
Clubs or Young Democrat Clubs should not also solicit contributions
which can be deductible from income tax returns . Tax law, in a
capitalist and free enterprise society, should not show undue partiality
towards those who are trying to abolish that form of economic
organization .
   The final session of the conference was given over to a "considera-
tion of labor political action ." In this case they were concerned with
the problem of how they could give increased emphasis to their poli-
cies and their program, and how they could implement it through
other parties than those that were in effect and in existence at the
time.
   The president of the CCF of Canada, Mr . Coldwell, gave his .' nieri--
can Fabian friends some advice about how they could organize this .
He mentioned, at the end of this statement that I have chosen from
page 36, that during the last 4 or 5 years the Canadian Congress of
Labor had designated the CCF as the political arm of that labor
organization and that the CCF had a growing support .
   Mr. Robert Bendiner, former managing editor of The Nation,
argued that, on page 38-
labor should aim at political action that would not be confined to a narrow pro-
gram of wages and hours, but would be directed to the achievement of public
welfare in the broadest sense . Labor should show more and more independence
than has been hitherto the case.
   Now, the LTD's latest annual conference, held April 9, 10, and 11, in
New York-since I wrote this I have received a copy of the LID news
bulletin covering this conference . The news bulletin was published
in June of 1954 and reports this conference .
   It indicates that George Meany, president of the A . F . of L., and
Senator Wayne Morse, of Oregon, were honored by the LID, and that
this 49th annual conference discussed domestic and foreign policy and
made certain awards .
   In going through this, they had a great number of people there, of
course, and a lot of important people . I think that if anyone were to
take this and take a look at it, then go back to 1952, to the Democratic
National Convention, or the Republican National Conventions in Chi-
cago, and get a report of some of the things that happened there, that
                      TAX-EXEMPT FOUNDATIONS                           785

this would turn out to be a minor political convention, so to speak,
because of the themes that they discussed .
   Now, the theme of the conference's main panel was entitled "How
Free Is Free Enterprise ." And various speakers took the capitalist
system to task and indicated that they wanted more Government in-
tervention in a great many fields .
   I am going to submit this to the committee along with the other
items that I have already submitted .
   Incidentally, the reference I make here to Mr . Mark Starr's press
release is included in here, of course, after it had happened, and there
would be no need to refer to that .
   They indicate that the pamphlet covering this session will not be
available until fall .
   Mr. GooDwnc . What is that?
   Mr . EARL . Will not be available in print until fall, that is the report
of the various speeches .
   In conclusion, Mr. Chairman and members of the committee, let me
say that in this presentation I do not quarrel with the right of these
many people in the LID, and all of those who have been its recipients
of awards or have spoken to it, and I don't quarrel with their people,
to say and write the things which we have discussed, though I disagree
with many of the things which they advocate .
  My thesis is this : If the LID is to continue to fill the air with
propaganda concerning socialism ; if it is to continue stumping for
certain legislative programs ; and if it is to continue to malign the
free enterprise system under which we operate-then I believe that it
should be made to do so with taxed dollars, just as the Democrats and
the Republicans are made to campaign with taxed dollars .
   Now, rather than burden the text of my statement with further ex-
cerpts from a great many other LID pamphlets, I have taken the
liberty of preparing a list of those pamphlets in which fruitful read-
ing might be had.
   I have listed them on the last page of my statement . I have them
here and I would be glad to offer them to the committee for whatever
help they may be to the committee .
   That concludes my testimony .
  The CHAIRMAN . Without objection, the pamphlets will be accepted
but not all are to be printed with the record . Mr . Earl's statement
will be included in full .
  Mr . EARL. That is right .
  Mr . HAYS . Mr . Chairman, before we go any further, I want to cor-
rect the record on one statement that I made today . I do so because I
don't like to let anything stand that I have said that is wrong when I .
find out it is wrong and also because I don't want to be put in the posi-
tion of having our record make anyone seem an adulteress or bigamist .
  Going back to Dr . Eveline Burns, I find that in checking her biog-,
raphy in Who's Who that she is the wife of an economist . He is not
Dr . Arthur F . Burns . He is Dr . Arthur R . Burns . And in checking
the biography of Dr . Arthur R . Burns in Who's Who there are three
Dr . Arthur R. Burns. And my staff got the wrong Dr . Burns . I
checked his biography and so I had a lady married to someone she is
not married to . She is not the wife of the President's economist but
the wife of another economist whose middle initial is the only differ-
ence in their names . And in saying that let me say that I have checked
'7 86                   TAX-EXEMPT FOUNDATIONS

further and she was on Mrs . Hobby's committee . But she is not the
wife of the President's economist .
   Mr. EARL. I wasn't sure of that myself. I had here that she wasn't
the wife, but I wasn't certain, and so I didn't know .
   The CHAIRMAN . Are there any further questions? Do you have any
questions?
   Mr. WORMSER . I have none.
   The CHAIRMAN . Are there any questions by members of the com-
mittee?
   Mr. HAYS . I have a statement. And if Mr . Earl cares to comment
on it, I am sure it would be all right with me . I might say, Mr . Earl,
I have more or less patiently listened to you and I have just heard you
deliver a valedictorian in which you attempted to summarize what you
allege to have proved by your testimony : To say that your thesis is
that the LID is to continue to fill the air with propaganda concern-
ing socialism ; and continues its stumping for certain legislative pro-
grams ; and if it is to continue to malign the free enterprise system
under which we operate, then you believe that it should be made to do
so with taxed dollars .
   I would like to analyze now what you have testified about . In the
first place, I read yesterday excerpts to you from the testimony of
Commissioner Coleman Andrews of the Bureau of Internal Revenue
and Mr. Sugarman, his principal assistant, who is charged with the
responsibility of these tax-free foundations . And by the way I might
just put in there that we have more or less agreed this isn't a founda-
tion . But we are investigating it anyway . It is clear from that testi-
mony the following : First, if one of these foundations receiving tax
exemption is found to be subversive, then upon that finding the tax
exemption can be removed.
   Now we know that this organization, the League for Industrial
Democracy was challenged in 1931 in the courts, and I am just trying
to bring out the facts, and not to defend this organization, because
many of the things, that it apparently espouses, I don't favor . It was
challenged in the courts as to its tax-exempt status . And in that case,
although the law has been changed, that case still stands and it hasn't
been challenged again, and so that that still is part of the law 	-
   Mr. EARL. I would like to see it challenged today . But go ahead .
   Mr. HAYS . Which is reported in the Federal Reports of the Circuit
'Court of Appeals, 2d Circuit of New York, following the argument
that you made here, found that the contrary as follows-and I am
quoting from page 812 of the 48 Federal Second
  The fact that its aims-
meaning the LID-
the fact that its aims may or may not resemble that of a political party does not
of itself remove it from the category of an association engaged in educational
work .
   Now understand, I am not a lawyer ; nevertheless, I recall from the
testimony of the people from the Bureau of Internal Revenue that this
law was changed in 1934 . And as I said, but it in no way affected the
validity of the ruling of the court that I have just read .
   So it is perfectly clear that so far as the Bureau of Internal Revenue
is concerned this organization, the League for Industrial Democracy, is
_not subversive. Otherwise, we have a right to assume that, with the
                      TAX-EXEMPT FOUNDATIONS                          787
vigilance of the Internal Revenue, the tax-exempt status of this or-
ganization would have long since been denied .
   It is further clear that its program in no way has been found to be
one affecting legislation in the Congress or else, under the terms of the
decision I have read you, the tax-exempt status would have been
removed .
   Now the third point that we get from the testimony of the people
of the Internal Revenue is that, if such organizations are neither sub-
versive nor have they invaded the field of legislation so as to deny
their status as educational foundations, then if their . advocacy is either
to the left or to the right their status is left untouched as it properly
should be under any constitutional concept of freedom of speech, free-
dom of assembly, and propagation of ideas .
   Let me summarize what I have told you . Under the law establish-
ing the tax exemption of LID, the regulations of the Bureau of
Internal Revenue and the decisions of the court concerning this spe-
cific association, it has in no way violated the provisions of either the
law nor the regulations and is in all respects entitled to the tax exemp-
tion which it now receives . And I will remind you, further, that the
people from the Internal Revenue we questioned about this stated
unequivocally that they did not want to see the law changed, and
stated that in answer to a question by Mr . Goodwin, so as to put them
in the position of being censors of the authority or actions of the
foundations in this category.
   The only thing they were interested in was to prevent tax dollars
from going for the purposes of subversion and evasion schemes to
be set up under the guise of foundations .
   Now, Mr . Earl, I would like to challenge you on one point, and
this has been a summary so far. You have taken quite a bit of time
to pick out those quotations from the literature of this organization
and people who have spoken or written under its auspices to lead this
committee to believe that either, one, this association is subversive,
which it is not, or that it has gone into the field of legislation under
the field of organizing a political party .
   I have not had the opportunity of reading all of the literature that
has come out of this organization. But I feel that, if it were put
into the record, it might well log water down and might miss some
of the things you have read . But I am only taking the record you
have made.
   And now I ask you to show me one iota of proof that the LID at :
any time has taken legislative action, created a political party, or done
 anything more than to express its belief in the economic and social
aims which they think can be best achieved by the political route.
   I admit they have done that . If you cannot establish these facts,
I think that your whole summary argument falls . Because it is clear
 from the law and the regulations of the Internal Revenue and the
 decisions that the tax-exempt status of this organization in no way
 can be taken from it simply because it advocates that its ideas have
 been made through persuasion to become the law of the land .
   I hope to God the day will never come when anyone challenges the
 right freely of organizations and people to do that . Let me recall
 to you that just prior to our entry into World War II an organization
 known as America First was established under the sponsorship ofd
 Colonel McCormick, General Wood, and many others, which organi-
 788                      TAX-EXEMPT FOUNDATIONS

 zation violently opposed our entry into the war against Germany . You
may recall that one of the chief spokesmen of that organization was
then Col . Charles E . Lindbergh, and I am sure that there must be
many Americans today who look back with shame upon the derision
they heaped upon that great man's head because his ideas did not
happen to conform to theirs .
   Thank goodness the Government today has taken steps to remove
the onus which was placed upon him during the war, simply because
he disagreed with the majority .
   Now my recollection is that the America Firsters started as a tax-
exempt organization . I want you to understand from me clearly that
I am perfectly consistent in my belief that such organizations as that,
and I understand the organization is being revived, should receive
the same tax-free status as the League for Industrial Democracy .
   I only make this statement because I believe in openhandedness and
I don't think the Government should favor or take favors away,
through its tax-exemption laws, from any organization on either side
of the political spectrum so long as that organization is not subversive
and does not advocate the violent overthrow of our Government .
   The CHAIRMAN . Are there any further questions?
   We appreciate very greatly the efforts which you have made to pre-
sent this presentation . The committee will evaluate in due course
your presentation, together with the pamphlets which have been sub-
mitted.
   In order that the record may be complete, the last pages which you
(lid not read will be inserted here in the record .
   (The material referred to follows :)
   To people who use one tax-exempt organization for politics and propaganda,
 there is apparently nothing incongruous in suggesting that "welfare organiza-
 tions" support a new party .
   "There already exists in this country a powerful nucleus for such a third party .
 One does not need too vivid an imagination to visualize the strength behind a
 third party backed up by the might of the Congress of Industrial Organizations,
 the American Federation of Labor, the Railroad Brotherhoods, and the National
 Farmers Union . Add to this the many liberal, civic, and welfare organizations
that are spread throughout the land and we have a force powerful and strong
enough to decide elections in every county, State, and even in the Nation" (p . 75) .
   In defining the third party, Mr . Wolchok again emphasizes the necessity of
 international collaboration with fellow Socialists
   "The third party's program must be international as well as national in scope .
Its program must provide for collaboration with the liberals of other nations
 * * * Its program must strive for the liberation of those countries now subject
to imperialism, as well as of those conquered countries now under the Nazi, the
Fascist, and the Japanese yoke . Its program must provide for assistance to the
downtrodden of all nations . It must promise succor to the forgotten man of
every land" (p. 76) .
   Prof. Frank H. Underhill, professor of history, University of Toronto, pictured
the advantage of having a political party to implement liberal and Socialist
goals . He described the success of the Cooperative Commonwealth Federation
 (Canada's Fabian party)
   "In Canada we have gone further toward building up an effective political
party of the left . In 1942 the CCF (Cooperative Commonwealth Federation)
celebrated its 10th birthday . In its early years it seemed a rather sickly child,
but during the past few years it has been growing rapidly . There are several
points about the structure of the CCF which are worth nothing . In the first
place it is a definitely Socialist Party, speaking the language of Fabian rather
than of Marxian socialism, with a program based on the Canadian situation pre-
sented in terms which the Canadian public can understand" (p . 80) .
Professor Underhill then explained the facts of political life of his American
hosts
                          TAX-EXEMPT FOUNDATIONS                                 789
   "The value of having an organized Labor Party is shown again today in the
different receptions given in Britain and the United States to new schemes
for complete social security. The Beveridge report in Britain has aroused wide-
spread discussion among all political groups ; the report of the National Re-
sources Planning Board has been received in a conspiracy of silence in this
country * * *" ( p . 79) .
   "If there is a general reaction toward the right in the United States in the
next few years, the forces of the left have no reserve with which to organize a
counterattack . In fact, the left has no army of its own at all, though it seems
to have a good supply of willing generals . In Canada the army is in existence
and has learnt by 10 years experience how to overcome its own internal dif-
ferences and to make an effective fighting force out of itself * * *" ( p . 80) .
   Mr . Leroy E . Bowman, supervisor, Bureau of Adult Education, New York
State, spoke on the subject, "Educating for the Abolition of Want ." So far,
according to Mr . Bowman, this "idea has not been taught in the schools," partly
because "economically successful persons" have accepted the fact that poverty
 (for others) is "an ineradicable part of existence ."
   "* * * the necessities of business operations under present circumstances
and the understandable reluctance to see change occur have led to the con-
elusion by them that want is inevitable . So those who suffer want have been
wholly engaged in coping with it, not in eliminating it . And those not suffering
from 'want have had resistance to the idea that it could be done away with"
 (p. 87) .
  From Mr . Bowman's point of view, it would seem that control over consump-
tion, the planning of production, and the use of government to achieve economic
welfare for the masses are not "ideological" notions, but part of the external
structure of the universe . (See pp . 88 and 89.) Mr. Bowman visualized a vast
interlocking directorate of labor, consumer, and government interests in control
of a mighty apparatus of adult education (p. 89) .
  Mr . Mark Starr, educational director of the ILGWU, and Dr . John L. Childs,
professor of philosophy of education, Teachers College, Columbia University,
and a member of the postwar planning commission of the A . F . of L., presided
over a round-table discussion on Mobilizing Our Forces-Economic, Political,
Cultural-in Behalf of the New Freedom . Said Dr . Childs
  "1 . Freedom from want is related to other objectives . We cannot progress far
on that front unless we progress also on other fronts of our domestic econ-
omy . * *
  "3 . We cannot make progress unless we can create a political situation which
will stop attacking liberals in Government, and the baiting of labor . * * * All
organized groups must be mobilized and used . I wish we had the outlook for
a CCF in America . There is no such adequate approach available here . * * *"
(pp. 95-96) .
   One of the most extraordinary documents published by the LID is Toward
a Farmer-Labor Party by Harry W . Laidler . Although the booklet was first
 distributed in 1938, it is on the current list of the LID pamphlets and cannot,
 therefore be repudiated by the league . Excerpts which demonstrate the politi-
cal and propaganda nature of this work follow
   "The reasons for these developments toward a party of workers of hand and
brain on the farms, in the factories, mines, shops, and offices are not hard to find .
 * * * They have witnessed the two-party judiciary handing down decisions
which well-nigh paralyzed labor's efforts to organize . They have observed the
officers of the law breaking up their meetings and their picket lines and deny-
ing them their elementary constitutional rights . * * * And they have witnessed
America, under the political control of the parties of the propertied interests,
subjecting the masses of its people to widespread insecurity, poverty, and the
 threat of war, at a time when the natural resources, machinery, and trained
labor of the land could, if fully utilized for the common . good, insure a life of
abundance and security to all" (p. 5) .
   Dr . Laidler equates genuine labor and Socialist movements with the dictator-
ship of the criminal elite in the Kremlin who, by the testimony of a U . N . Com-
 mission on Slave Labor, are the most savage exploiters of labor since the .Pha-
raohs of ancient Egypt . It is fair to inquire why such a scholarly institution as
the LID if is no longer entertains its pro-Russian view, has not withdrawn this
pamphlet and prepared another .
   "American labor and farming groups in this country are on the move politi-
cally as well as industrially. * * * Representatives of labor -are today the pre-
miers in the three Scandinavian countries. * * * Labor and Socialist Parties
790                        TAX-EXEMPT FOUNDATIONS

  now constitute the largest single parties in France, Belgium, Switzerland, and
  Finland . In Great Britain, the British Labor Party is `His Majesty's chief
  opposition .' * * * In far-off New Zealand, labor in 1935 captured 53 percent of
  the 80 seats in the New Zealand House of Representatives. * * * In Russia, the
 Communists Party dominates. * * *" (p . 3) .
    The reforms of the New Deal were not radical enough to suit Dr . Laidler,
 or those for whom he acts as spokesman
    "There are others who contend that millions of workers in the city and on the
 farm are rapidly coming to the conclusion that New Deal democracy offers no
 solution for unemployment or for any of the other grave evils of our economic
 life but, on the other hand, that it is heading this country toward another war
  (p .6) .
    Dr. Laidler quotes an article from the Nation which urges no delay in build-
 ing a "new party of the masses ."
    "To delay the building of a new party of the masses because of the possibility
 or probability of the selection of a `liberal' candidate by the Democratic Party,
 these students of politics contend, `is to repeat the error of past years .' `Similar
 arguments,' Oswald Garrison Villard maintains, `have postponed the organiza-
 tion of that third party ever since 1924 . * * * Now once more progressives are
 called upon to stay in the party fold. Frankly, it seems to me shortsighted
 reasoning . * * * No one can foretell where Franklin Roosevelt will stand in the
 next 3 years . * * * For one thing the President is steadily undermining democ-
 racy by encouraging the growth of militarism in the United States . Wherever
 you find large armies and navies, there you find enemies of democracy . * * *
  (p. 6) .
    Agitation for the formation of a new party scarcely qualifies as a legitimate .
 project of a tax-exempt foundation . And one may also wonder if the Communist
 conspiracy should be described as a "working class political movement," as in this
 paragraph :
    "Other working class political movements organized during the present century
 were the Communist Party, formed in 1919, following a split with the Socialist
 Party, and a small and temporary Farmer Labor Party, in 1920 . * * * Socialists
 and Communists are still actively at work on the national field, although the
 combined votes of the Presidential candidates of minority parties in 1936 consti--
 tuted only from 2 percent to 3 percent of the total.
    "The next farmer-labor alinement on the political field of the future, it is hoped, .
 will not only wrest concessions from the old parties in power but will supplant
 the parties of business with the party of the masses" (pp . 7, 8) .
    Dr. Laidler offers practical suggestions for political action
    "Everyone interested in the development of a Labor, Farmer-Labor, Socialist, .
 or other political party representing the interest of the masses in his State, .
 should make a survey of present laws and immediately begin educational and
 agitational work for improvement" (p . 9) .
    "A second problem confronting the organizers of a new political party is how -
 to insure that the party and its elected officials shall be democratically controlled
by those economic groups that obtain their living through their labor of hand
 or brain and not through ownership of the means of production and distribution
 (p . 9) .
    "Whatever the form chosen for representing the will of the masses in these
organizations, the particular organizational structure adopted has usually been
developed with the view of keeping control in the hands of the working class
and farmer membership or leadership and of preventing the party from becoming
a neublous `liberal or 'progressive' organization with no class basis or from being
employed as an instrument to keep in power a few political leaders" (p . 11) .
   Dr. Laidler discusses tactical procedures which he recommends to Socialist
politicians
"* * * frequently, after helping to elevate an old party candidate, through
labor's endorsement, to a high political position, the Farmer-Labor Party finds
that it has `built up' a political figure who, as a representative of a capitalist
party in subsequent elections, might be in a position greatly to retard the devel-
opment of a party of the masses . The Farmer-Labor Party, by such political
trading, thus tends to perpetuate the 'good-man' concept in politics .
   "Moreover, when a Farmer-Labor Party throws its support to a capitalist
party candidate, it is difficult for it in the same campaign to put forward with
vigor the main arguments for the existence of, and the imperative need for, a
party of labor of hand and brain" (pp. 13, 14) .
                         TAX-EXEMPT FOUNDATIONS                                 791
   "An even more important problem facing the new political alinement is that
of bringing about a genuine understanding between city and agricultural pro-
ducers of hand and brain . * * * Both are exploited by those who live primarily
by owning and not by working" (p . 14) .
   The executive director of the LID warns Socialists of the dangers of forming
.a coalition with the petit bourgeois
   "A problem facing most Farmer-Labor parties, likewise, is the place of the
small-business man within its ranks . Some businessmen join with labor polit-
ical groups because they are convinced that there is no security under a com-
 petitive system, and that they must unite with the masses to inaugurate a planned
.society . * * * Others, on the other hand, ally themselves with labor for the
purpose of inducing labor to join with them in a general `trust-busting' campaign,
 a campaign against big business, in behalf of the restoration of small industry .
 Intelligent labor, however, realizes that all such efforts in the past have led to-
futility . * * * Not in trust busting, but in community ownership lies labor's
salvation . Control of labor party policy by the small-merchant class anxious
 to turn back the weels of industry leads to nothing but confusion . Merchant
 groups animated with this purpose constitute a danger to any healthy growth
of labor or farmer-labor partyisrn" (p . 15) .
   In conclusion, Dr . Laidler says
   "At the present moment, the divisions in the ranks of labor and the belief
that labor should support the Rooseveltian New Deal against big-business at-
 tacks have somewhat retarded developments on a national scale * * * .
   "* * * only a fundamental change in property relations will bring security,
 economic justice, and a high living standard to the working masses" (pp . 53, 54) .
   All in all, Toward a Farmer-Labor Party is a field manual for applied Socialist
 political action .
   The Forward March of American Labor was published by the LID in a revised
 printing as recently as 1053 . It is supposed to be a history of the American
 labor movement . The text, however, is embellished by a remarkable series
 of cartoons which, in the year 1953 strike an impartial reader as a crude effort
 to discredit today's business with faults long since corrected . I refer the com-
 mittee to the pamphlet for both its text and the cartoons mentioned .
   On April 25-26, 1951, the LID held another of its annual conferences at the
 Hotel Commodore. The proceedings were published in a pamphlet entitled
 "World Cooperation and Social Progress ." In addition to discussion of inter-
 national cooperation and how to curb "antidemocratic forces at home," there
 was the usual technical consideration of how to produce more effective political
 action .
   The league presented a citation to Dr . Ralph J . Bunche, Director of the Trustee-
 ship Department of the United Nations . It awarded another citation to Presi-
 dent William Green, of the American Federation of Labor . It gave a John
 Dewey award for distinguished LID alumni to Senator Paul H . Douglas, of
 Illinois, who "in his graduate days," had been "leader of the league's chapter at
 Columbia University, and, since his university days, has done distinguished
 work in the fields of economics, civic reform, social legislation, and interna-
 tional peace" (pp. 3, 4) . Senator Douglas accepted in absentia, and an address
 extolling the LID, sent by Senator Douglas, was read at the conference. I
 refer the committee to that address, found on pages 12 and 13, for some interest-
 ing reading.
   Luncheon speakers included M . J . Coldwell, M . P ., president of the CCF of
 Canada ; H. L. Keenleyside, Director General, Technical Assistance Administra-
 tion, United Nations ; Paul R . Porter, Assistant Director, Economic Cooperation
 Administration ; and Ralph Wright, Assistant Secretary of Labor . Follow-
 ing are excerpts :
   From Dr. Bunche : "Unfortunately, there are those who attempt to take
 advantage of the public anxiety caused by the East-West conflict and the world-
 wide ideological struggle between democracy and communism, to stifle pro-
 gressive thought and honest criticism, to circumscribe our traditional freedom,
 and to restrict the enjoyment of our civil rights . We must be ever vigilant
 against internal as well as external threats to our traditional liberties" (p . 7) .
    Clarence Senior presided over a panel discussion on Counteracting Antidem-
 ocratic Forces in America . President A . J . Hayes, of the International Associa-
 tion of Machinists, lectured his associates on the need for a more aggressive
 psychological warfare program on the domestic front
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   "Radio and television are today unduly controlled by big business . The voice
of liberals must be heard and strengthened . When one considers the 15 million
trade unionists and their families, labor can be far more influential in the field
of public opinion than it now is . One way of increasing that effectiveness is
through the publication of a labor daily, especially `for the group of active leaders
who make all not=oval trade union organizations tick .' There are thousands of
articulate men and women in this group . Its great need is for rapid, up-to-date
information to help them understand the quickly shifting scene . A labor news-
paper would not be a substitute for a regular daily press, but a supplement to
it" (p . 30) .
   President Hayes argued that the mobilization defense program was a "glaring
example of the undemocratic process"
   "I think that you can find some of the antidemocratic forces in America in the
atmosphere which set up that program . The security measures . which, in some
rational form, are necessary in this peculiar situation, have given the enemies of
all progressive measures an ideal opportunity to block and hamstring all prog-
ress, and so to smear and attack all progressives that decent people are tending
to withdraw from the central liberal cause . As they do so, the victory of the
evil forces becomes more sure" (p . 30) .
   Stanley H. Ruttenberg, director of the department of education and research
of the CIO agreed with Hayes . He observed
   "It is not certain that this mobilization program will develop into an all-out
undemocratic force, but it presents certain dangers . One of these dangers is the
dominance of representatives of big business in key positions * * *" (p . 31) .
   Mildred Perlman, secretary of the student LID, frankly called upon labor
to finance the socialistic apparatus on the campuses . According to the editor,
"Mrs . Perlman concluded with an appeal to labor which has been closely
allied over the years with the struggle for democratic education, to build a
war chest in behalf of democratic education on the campus and in the com-
munity . In so doing it will * * * help train a democratic leadership for the
future" (p . 33) .
   If this is a legitimate undertaking, under the tax-exempt banners of the
militant LID, there seems to be no valid reason why Young Republican Clubs
or Young Democrat Clubs should not also solicit contributions which can be
deductible from income tax returns . Tax law, in a capitalist and free enter-
prise society, should not show undue partiality toward those who are trying
to abolish that form of economic organization .
   The final session of the conference was given over to a "consideration of
labor political action," with Murray Baron in the chairman's seat . The first
speaker was Tilford E. Dudley, assistant director of the political action com-
mittee of the CIO, who "urged more effective labor political education and
increased labor activity in politics" including consideration of a new party
 (p. 33) .
   Gus Tyler, director of the political department, ILGWU, A . F. of L ., declared
that labor should "give increased emphasis to educating the rank and file on
political issues, to more effective fund raising, to the registration of voters and to
the directing of votes along proper channels . This series of steps, he believed,
might lay the foundation for statewide `third parties', and `accelerate party re-
alinement and party responsibility.'"
   The president of the Cooperative Commonwealth Federation of Canada ("a
farmer-labor party with a democratic socialist program"), Mr . M . J. Coldwell,
gave his American Fabian friends some practical advice . The editor sum-
marized
   "Mr . Coldwell declared that the remarks of the previous speakers reminded
 him of political discussions he used to hear in Great Britain in 1906 .
   "No matter how good the men we elected in Britain in 1906 on the ticket of the
Conservative and Liberal Parties, we found that their programs were inevitably
controlled by those who appointed the machines . Consequently, in Great Britain
and Canada, and, indeed, in most of the countries where we have the same kind
of parliamentary institutions, labor and progressive elements were forced to
organize their own political movements . He declared that, in Canada, the
Canadian Congress of Labor, a counterpart of the CIO, had, during the last 4
or 5 years, designated the CCF as the political arm of that labor organization
 and that the CCF had a growing support" (p . 36) .
   Mr . Coldwell then revealed the international linkage of the Socialist movement .
    "This afternoon I want to go outside of my own country and outside of the
 United States, and to say to this group of American Progressives that we are
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associated together in a group of Socialist parties which have been meeting
continually ever since the war ended . The representatives of these parties are
now preparing a modern manifesto of Socialist principles with a view of estab-
lishing a common basis of thought and of assisting the backward people of the
world in organizing for similar objectives" (p . 37) .
  Robert Bendiner, former managing editor of the Nation, argued that "labor
should aim at political action that would not be confined to a narrow program
of wages and hours,, but would be directed to the achievement of public welfare
in the broadest sense . Labor should show more and more independence than
has been hitherto the case" (p . 38) .
  The LID held its latest annual conference April 10, 11, 1954, at the Hotel
Commodore in New York, according to a press release, dated April 9, 1934, one
of the sessions at the conference was to deal with the subject How Free Is Free
Enterprise? Mr . Mark Starr, educational director of the ILGWU, and a member
of the LTD, was to lead the discussion . According to the release, Mr . Starr had
this to say
   "On the other hand, those believing in more collectivism must work out ways
and means of attaining planning plus the Bill of Rights * * *"
  In conclusion, let me say that in this presentation I do not quarrel with the
right of these many people in the LID to say and write the things which we have
discussed, though I disagree with many of the things which they advocate . My
thesis is this : If the LID is to continue to fill the- air with propaganda concerning
socialism ; if it is to continue stumping for certain legislative programs ; and if
it is to continue to malign the free-enterprise system under which we operate-
then I believe that it should be made to do so with taxed dollars, just as the
Democrats and the Republicans are made to campaign with taxed dollars .
  Rather than burden the text of my statement with further excerpts from a
great many other similar LID pamphlets, Mr . Chairman, I have taken the liberty
of preparing a list of those other pamphlets in which fruitful reading might be
had .
                              Other LID publications
Socialism in the United States, by Harry W . Laidler, 1952
A Program for Labor and Progressives, symposium . edited by Harry W . Laidler,
  1946
The Atomic Age, by Aaron Levenstein
Canadian Progressives on the March, by M . J . Coldwell, 1945
Recent Trends in British Trade Unionism, by Noel Baron, 1945
40 Years of Education, symposium edited by Harry W . Laidler, 1945
What Price Telephones, by Norman Perelamn, 1941
Labor Parties of Latin America, by Robert Alexander, 1942
British Labor, by Harry W . Laidler
The Road Ahead, a Primer of Capitalism and Socialism, by Harry W . Laidler,
  1950
America's Struggle for Electric Power, by John Bauer, 1935
Toward Independent Labor Politics in Britain, by Edward M . Cohen, 1948
Democratic Socialism, by Norman Thomas, 1953
National Health Insurance, by Seymour E . Harris, 1953
World Labor Today, by Robert J . Alexander, 1952
British Labor on Reconstruction in War and Peace
Public Debt and Taxation in the Postwar World, by William Withers, 1945
Labor Government at Work, by Harry W. Laidler, 1948
Canadians Find Security With Freedom, Thomas C . Douglas, 1949
A Housing Program for America, by Charles Abrams
Our Changing Industrial Incentives, by Harry W . Laidler, 1949
  The CHAIRMAN . Thank you very kindly indeed.
   Mr. EARL . May I now be excused from the subpena, sir?
   The CHAIRMAN . Oh, yes ; you are excused .
  The committee will meet at 2 o'clock this afternoon in this same
room .
   (Thereupon, at 12 noon, the special committee recessed, to recon-
vene at 2 p . m ., this day .)
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                          AI IERNOON SESSION

   (The hearing was resumed at 2 p . m .)
   The CHAIRMAN . The committee will come to order .
   Who is your first witness, Mr . Koch ?
   Mr. KOCH . Mr . Pendleton Herring, the president of the Social
Science Research Council ; and the gentleman on his right is Mr . Paul
Webbink, the vice president ; and the gentleman on his left is Mr .
"Timothy Pfeiffer, counsel for the association .
   The CHAIRMAN . We have had the policy of swearing all witnesses .
   Do you solemnly swear that the testimony you give in this matter
.shall be the truth, the whole truth, and nothing but the truth, so help
you God?
   Mr. HERRING . I do.
   Mr. KOCH . I believe Mr . Herring would like to read a statement
 which he has prepared, and which has been distributed among the
 committee .
   Is that right, Mr . Herring?
`TESTIMONY OF PENDLETON HERRING, PRESIDENT, SOCIAL SCIENCE
  RESEARCH COUNCIL, ACCOMPANIED BY PAUL WEBBINK, VICE
  PRESIDENT, SOCIAL SCIENCE RESEARCH COUNCIL, AND TIMOTHY
  PFEIFFER, ATTORNEY, NEW YORK CITY
  Mr. HERRING. Yes.
  The CHAIRMAN . You may proceed in your own way, and unless
someone is moved to do otherwise we will permit you to make your
presentation and then be questioned .
  Mr. HERRING. Thank you, Mr. Chairman .
  Mr. HAYS . I think it might be well, in conformity with the pro-
cedure we have had, if Dr . Herring might, unless counsel wants to
ask him some questions, just give us his general background, and so
on, which would keep the thing in conformity with the testimony of
the previous witnesses .
  Mr. HERRING . Mr . Chairman, I would like first to express my
appreciation of the opportunity of being here today . A good deal
has been placed before the committee that I find some difficulty with .
  Mr . WORMSER . I think Mr . Hays made a good suggestion . You
might just first qualify yourself with biographical data .
  Mr. HERRING . I will go to that immediately, then .
  My name is Pendleton Herring . I am the president of the Social
Science Research Council, with an office in New York City .
  As I started to say, I feel that it might be helpful to the committee
if I placed before you a few facts about my previous experience, since
I want to be as helpful to you as I possibly can and try to speak
directly against the background of my own experience and observation
in these fields .
   I was born in Baltimore, attended the public schools there, attended
Johns Hopkins University, got my A . B . in 1925 and my Ph . D . in
1928 .
   It might possibly be of interest to the committee if I said that
during my college years I went off as a merchant seaman and worked
my way to various parts of the world . And I mention that here,
because at that rather early stage I got the impression that the world
                     TAX-EXEMPT FOUNDATIONS                         795
 was a pretty big place and there were a good many different kinds of
people in it. I also did some newspaper work for the Baltimore Sun
paper . And then I went off to Harvard in 1928 and taught there until
 1946, when I went with the Carnegie Corp ., from 1946 to 1948, when
I took over my present responsibilities with the council .
   During those years I wrote a number of books, not quite as many
 as Mr. Wormser, but a number ; and I also served as a consultant for
various governmental agencies, the Air Force, the Army
   The CHAIRMAN . What were the titles of some of your books?
   Mr. HERRING. Well, my doctoral dissertation, Mr . Chairman, was on
group representation before Congress, and I wrote a book a little later
on entitled "Public Administration and the Public Interest ." That
was a book that took me to the other end of town, and I visited a
good many administrative agencies . A little later on, I wrote a book
entitled "Presidential Leadership," on the relations of the Chief
Executive and Congress . I found that rather a complex and fascinat-
ing subject . And I wrote a book in this instance considerably, shall I
say, in the empirical vein, on our Federal commissioners . I just
 wanted to know who they were and where they got their education
and what their previous experience had been, and I wrote that up in a
little book.
   And I also wrote a book on the impact of war, that developed the
idea that a democratic government, as of this country, has proved its
capacity in the past to fight for its principles, and that our system,
with its faults, that are as dear to us as other aspects, is yet able to
face up to danger when the challenge comes . That book was written
on the eve of the last war.
   Well, don't let me go on this way . It is a subject I like to talk
about .
   Mr. WORMSER . Mr . Herring, weren't you too modest about your
teaching career? Will you tell us something more about that?
   Mr. HERRING . I was in the department of government . In Harvard
we call it political science-government . I was in the department of
govenment there . And in 1936, M . Littauer, whom some of the mem-
bers of the committee may recall, a prominent Member of the Con-
gress for many years, established the Littauer Center of Public
Administration . I was the secretary of that school during its first
10 years, and during those 10 years we faced right up to the problem,
How do you train them for the public . service? We found that was
a very complicated problem. There were no easy pat answers . But
that school was started by Mr . Littauer and has turned out a number
of people who are serving their country in various governmental
posts.
  Is that adequate on that?
  Mr. WORMSER . I thought you had professorial status .
  Mr. HERRING . That is right . I was a member of the faculty .
  The CHAIRMAN . That is very good . Thank you very much .
  Mr. HERRING . Now, what I would like to do, Mr . Chairman, if you
will permit me, is read this introductory statement to the committee,
and then I will say a word or two about other documents, and so forth .
  The CHAIRMAN . We would be very happy to have you do so .
  Mr. HERRING . In this introductory statement to the committee, I
hope that I may have the opportunity to present my views concerning
the general thesis that the staff of the committee and other supporting
     49720-54-pt . 1	 51
796                   TAX-EXEMPT FOUNDATIONS

witnesses have developed . In the light of my own experience, I would
also like to comment briefly on social scientists and their ways of work-
ing . But first, may I explore with the committee what common
ground we all share in the problems under investigation .
   In the investigation, thus far, most of the basic questions raised
are within the traditional discourse and debate on public policy .
Time and again, in the past, attacks have been leveled at wealth and
bigness ; debates on such matters are almost traditional . In this
present instance, there is, to be sure, a modern twist to suit the times
Big foundations are the target rather than big business . We meet
again the recurrent problem of how far to extend Federal regulation .
In view of the references to collectivism, I am sure that we share a feel-
ing of caution concerning governmental intervention and control over
education and research . However, it is certainly in the public interest
to give thoughtful consideration to such matters and also to whatever
attitudes may affect the course of foreign policy . All would agree
these are proper topics for public discussion, particularly if these
broad matters can be reduced to specific terms .
  Hence, I hope you will not feel me unduly critical if, at the very
outset, I call attention to one disturbing aspect of this investigation
that is rather vaguely sketched in Mr . Dodd's opening statement and
referred to by other witnesses in indirect and somewhat baffling lan-
guage. In effect, the committee has been presented with an effort
on the part of their staff and supporting witnesses to rewrite Ameri-
can history and to explain what has happened in the United States
since the turn of the century in terms of a conspiracy .
  To assert that a revolution has occurred without violence and with
the full consent of an overwhelming majority of the electorate, and
to imply that peaceful change overwhelmingly supported by the voters
of the country is the result of a conspiracy, would strike us as a more
outrageous error if it were not such a fantastic misreading of what we
have all witnessed and experienced .
  To imply that an interlock of individuals unknown to the American
public is responsible for basic changes in our national life over the last
50 years, is to belie the responsible statesmanship of the Republic, the
lawmaking authority of the Congress, and the good sense of the Amer-
ican people . The whole tenor of the ambiguous charges set forth by
the staff strike at the very integrity of our system of self-government.
These allegations suggest that the American people are dupes and
that our elected officials are puppets. To underrate the valiant and
thoughtful response of the American people and their Government
to two world wars and a great depression, and to imply that the legis-
lative enactments and governmental policies worked out through the
process of democratic self-government is the result of a conspiracy
operating through American education, is not only a travesty of his-
tory but a travesty of the very principles by which we live as a free
Nation . This line of innuendo I am confident must be uncongenial to
the fundamental principles of all the members of this committee . As
experienced lawmakers, you know how public policy emerges through
established constitutional forms, and the interplay of politics, and I
know that no committee of the Congress will countenance unmaking
the facts of history to suit some special purpose .
  Hence, the question is promoted as to why such a travesty of Ameri-
can principles and politics is presented at this time . I think the thesis
	



                       TAX-EXEMPT FOUNDATIONS,                        797
 being developed by the staff is better understood as symptomatic of a
 troubled state of mind on the part of a few persons than as a logical
 statement to be refuted literally .
    The committee has been reviewing developments in education and
 the intellectual life of the country, since the turn of the century, and
 I think we can all agree that during these decades changes of great
 moment to this Nation have taken place . None of us, of course, can be
 opposed to change as such. Life is constantly changing . But there
 are important questions concerning the direction of change, of the
 forces that may affect change, and what can be done by way of public
 policy to direct change in the public interest . This latter responsi-
 bility is essentially the responsibility of Government, particularly
 of the Congress, and I would not presume to comment on these mat-
 ters. It seems to me, however, that some of the disquietude and wor-
 ries of previous witnesses may be taken as symptoms that may direct
 constructive thought to underlying problems of general common con-
 cern . I can identify two .
    The first is the spectacular advance in science and aa great increase
 in educational opportunities throughout the country . The full impact
 of a great increase in new knowledge, and its dissemination throughout
 all our society, creates a dynamic force that none of us can fully under-
 stand . No nation that I know of has advanced, disseminated, and ap-
 plied so much knowledge so widely and so rapidly as has the United
 States since the turn of the century. This has inescapably affected
 traditional attitudes and ways of doing things . It raises questions of
 interest to the Congress, to industry, labor unions, churches, and otherr
organizations, as well as to educational institutions . How can prog-
 ress in knowledge both of natural and human affairs be absorbed,
 digested, and utilized so as best to advance the general welfare?
   There are many, many particular questions that can be brought
under this broad one . I gather that this committee is particularly
concerned with whether or not certain particular viewpoints have had
an undue importance upon our intellectual life . Have we become the
victim of special pleaders, advancing their special "isms" ? For exam-
ple, have internationalism, collectivism, or socialism, as bodies of
thought, exercised undue weight? I know of no way, in entirely ob-
jective terms, of weighing or measuring such influences . I know of
no reliable method of analysis for establishing cause and effect rela-
tionships between such ideas and what has happened in our recent
history . For my part, I find the best safeguard in the maintenance
of a free market place of ideas so that truth can prevail in the result-
ant competition of ideas . If there has been interference with this
free interplay, it is well that the country hear about it . The first
problem, then, in which we all share a concern is our great national
harvest of the tree of knowledge and how the fruits of knowledge
may best be used to strengthen and nurture our society .
   The second great factor of our generation is the evil force made
manifest by international communism and Soviet imperialism . How
can we reckon with tyranny of this order of strength and complexity
and, at the same time, keep our own institutions free and strong?
Here, again, the answer comes not from 1 school of thought or 1 po-
litical party, but rather from our united endeavors as responsible cit-
izens of this Republic. Moreover, the essential part that knowledge
and reason can play in increasing our national strength and overcom-
798                   TAX-EXEMPT FOUNDATIONS

ing the communistic menace needs wider public support . Finally, we
need perhaps to appreciate more fully the fact that the free study and
inquiry carried on in our great educational institutions constitutes in
itself one of the essential American values that we must protect from
the evil forces at large in the world .
   I think we can all agree that thoughtful attention should be given
to the problems of relating scientific advance to education and that
great attention should be given to safeguards against communism . We
all want to maintain freedom and pursue truth . We are all concerned
with justice and the good life. We are all concerned as citizens with
national security .
   The problems before this committee are much more specific in char-
acter . This investigation is concerned with ways in which foundation
officers and trustees and educators and social scientists have discharged
their responsibilities .
  When I turn from this broad statement of common objectives and
basic purposes to much of the testimony that has been offered, and to
the statements that have been made with respect to the social sciences,
I must confess to a sense of bafflement . The staff has tried to call into
question the efforts of the very individuals and institutions who are
devoting their resources and energies to the increase and dissemina-
tion of knowledge and the protection of the American way of life.
The picture that has been presented to the committee does not accord
with my own observation and experience . The most charitable ex-
planation that comes to mind is that they speak from ignorance rather
than malice. Perhaps I could be most helpful to the committee by
sketching very briefly my own sense of reality about the kinds of
problems dealt with by the staff and other witnesses . The committee
has been presented with statements about an alleged interlock, financed
by the foundations and controlled from the top in such a way as to
foster educational theories along certain definite lines. We are told,
in effect, that a few organizations constitute an efficient integrated
whole, tending to work against the public interest . I shall limit my
observations to the kinds of individuals, fields, and organizations that
I know something about at first hand, and I must say flatly that my
experience here contradicts the views that have been suggested by the
staff .
   My contacts are largely with the social scientists over the country
and with the limited number of foundations interested in social sci-
ences and closely related fields . Most of the social scientists with
whom I work are on the faculties of our universities and colleges . I
come into contact, also, with a smaller number employed in industry
and governmental agencies . These individuals are men and women
of independent judgment and integrity . They have dedicated their
lives to research or teaching, or both. They have an extraordinarily
high sense of civic duty and respect for truth . Their primary objec-
tive is to attain a greater understanding of human behavior and social
relationships and to share this knowledge. They are sensitive to any
impairment of freedom of inquiry . They bring sharp critical judg-
ments to bear on the work of their fellow-professionals in various
fields . No other country has such professional groups, so highly de-
veloped, and so widely concerned with an analytical approach to
human problems. While our debt to European scholarship, particu-
larly of the 19th century, is very great, the 20th century development
                      TAX-EXEMPT FOUNDATIONS                          799
of the social sciences is widely recognized abroad as a distinctively
American contribution . This growth has been large since the turn of
the century . While many traditionally minded European scholars
remain somewhat skeptical of much that has happened here, there is
an increasing interest among the younger university men in other
countries about American developments . Just as in the natural sci-
ences, the tide has turned from Europe and scholars from all over the
world come to the United States for advanced work in the social
sciences .
   This development was possible in the United States because of our
greater willingness to experiment . Our expanding universities could
give opportunity to research men who wished to explore new leads .
They were not forced into the conformity set by a ministry of educa-
tion ; they were not trammeled by faculties firmly set in old ways . It
was the very absence of control under national educational systems,
that provided the conditions favorable to growth and exploration.
Hence, the big fact that impresses me is not a system of interlocking
cartels, but rather, an extraordinary degree of individual initiative .
   The individual social scientists over the last 50 years or so, have
organized professional associations for the purpose of sponsoring pro-
fessional journals and holding annual national conventions . But, here
again, the interests of individuals could not be contained in a single
professional organization. Many members of these associations also
belong to many other associations that have little or nothing to do
with their professional concerns . Even within the area of profes-
sional interest, regional associations have been formed, and wholly
separate societies have been established within each field . The prob-
lem has not been that of authoritative control, but rather, of maintain-
ing enough unity of purpose and focus of attention to keep the associa-
tions reasonably harmonious .
   The social scientists in the United States, in recent decades, have had
a wide range of opportunities for their skills . Their work is so much
in demand that their problem is essentially one of choice . The demand
for the services of outstanding economists, psychologists, demog-
raphers, and the rest has been for years far in excess of the supply .
For those interested in applied research, there is a wide range of
opportunities in government, business, labor unions, and a great va-
riety of organizations concerned with social problems. Students turn
with lively interest to those fields that attempt to advance our under-
standing of human affairs and student interest in these subjects has
been so great that our universities and colleges must compete in re-
cruiting able social scientists to their faculties .
  Our economyy of abundance seems to operate in intellectual matters
as it does in other fields . Teaching, applied research, and consulta-
tion in various practical fields tend to absorb the energies of social
scientists. For the limited number who are carrying on original and
costly research, foundation aid is very welcome . Such social scien-
tists need foundation support unless they are to be largely dependent
on industry or government. They are not dependent on foundations
to provide opportunities for their skills and abilities ; they have many
alternatives . Even if they desired to, foundations could not possibly
control the interests and attention of the social-science professions .
However, I know of only 10, or so, foundations with a real interest
in social-science research .
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   I have emphasized the independent of social scientists and I have
called attention to their diversity of interest and the broad range of
o portunities open to them and their development in the United
  tates, in order to get before the committee a better sense of per-
spective and proportion about the problems under investigation . In
conclusion, I would like to emphasize that it is the men and the women
in these fields of learning who are our strongest national resource for
advancing the ranges of knowledge that will make us better able to
understand our common problems . They command the analytical
methods for most effectively getting at such questions in basic and
tangible terms . Eternal vigilance is the price of liberty and social-
science research is an essential tool for the vigilant .
   The social scientists have an essential contribution to make . They
don't know all the answers, but they can explore many of the signifi-
cant problems and offer highly relevant facts on a variety of impor-
tant questions . But since the committee's staff and other witnesses
have brought into question the methods of the social scientists, par-
ticularly their use of empirical methods, I would like to clarify what
is meant by the empirical approach .
   To approach a problem empirically is to say : "Let's have a look at
the record ." To employ the empirical method is to try to get at the
facts . Where feasible, counting and measuring and testing is under-
taken . There is nothing necessarily technical about empirical meth-
ods and there is no simple distinctive empirical method as such .
   Congressional investigating committees normally follow an empiri-
cal approach . To imply something immoral about using an empirical
method of inquiry is like implying that it is evil to use syntax .
   One thought occurs to me . It came to my attention the other day .
   Our system of self-government is based on the necessity of the
apportionment of congressional seats, and you . might say at the outset
it was necessary to count noses ; and our census is built into our con-
gressional structure . You have there a quantitative approach, if you
will, that is simply integral to popular self government . You have
to know how many people there are, in order to go forward . I just
mention that as a thought that might have some pertinence here .
   There is another entirely separate question, namely ; is fact-finding
enough in itself ? Obviously not . Logically and necessarily, a posi-
tion must be taken on a priori grounds as to whether a problem is
worth investigating . In strictly research terms, this involves the
investigator's assumptions as to what is significant or worth while to
study . In terms of applied research, it involves a determination by
the responsible decisionmaker, to tell the research man what body of
fact he wants investigated and what questions he would like answered,
if possible .
   Neither the Social Science Research Council nor anv responsible
research organization that I ever heard of has ever made fact-finding
an end in itself . Here fact-finding is obviously open to the charge of
aimlessness . On the other hand, the scientific investigator does not
work to establish predetermined conclusions . He may follow his
hunches. He may go from one experiment to another . His intuitive
or rational knowledge of his field helps direct his curiosity toward
those avenues of inquiry that seem promising . He guards against
wishful thinking . He will not let his hopes of what should be get
                      TAX-EXEMPT FOUNDATIONS                         801
in the way of his concern with what actually exists and what can be
observed . From his background of work in his particular field, he
follows leads concerning what may be most significant to investigate .
IIe seeks to array the facts, and he remains sensitive to the hypotheses
that seem to be suggested by the facts and that way point to certain
tentative generalizations. Once having gained some sense of direc-
tion or relationship from this initial inquiry, he may formulate other
hypotheses that suggest meaningful relationships among a wider
range of factual data . Out of all this, there may or may not emerge
a theoretical formulation . It frequently happens in science that
theories are established that can be tested experimentally and where
other workers in the same field from their independent work arrive
at the same conclusions . When this takes place, theories can be built
into larger conceptual schemes, behavior can be predicted, and prac-
tical ways of putting the theories to work can be stated.
   This method of analysis for many years has been applied to the
study of human beings and social interrelationships with varying de-
grees of success. No responsible witness would predict that all human
problems can be scientifically studied, and no responsible-minded
social scientist would argue that all human problems can be solved
by science . All would agree, however, that knowledge is better than
ignorance, and the attempt to analyze in more orderly and systematic
fashion the problems that confront man and society is well worth the
effort . Some people working in the social sciences are more optimistic
than others concerning our present stage of advance and our prospects
for the future.
   To deny that the social sciences have a contribution to make, or to
cast doubt on the capacity of man to guide his destiny by applying
thought to human problems, in secular terms at least is to embrace
either an obscurantist or anti-intellectual position, or to adhere to a
determinist position . The current and most menacing school of
thought that denies the fundamental premises of the social sciences
is the Marxian philosophy of history . The obvious unreality of their
dogma seems to have no effect upon the adherents of communism,
despite the fact that it has led to the triumph of statism and the
worst tyranny of modern times. The point here is that it denies the
validity of empiricism as a relevant method of inquiry because it
asserts that the course of history is inevitable and individuals can
do nothing to basically affect the outcome .
  Mr . HAYS . Dr. Herring, would you mind if I interrupted you right
there for a question along that line? Do you have any knowledge
of whether the Communists-I am speaking now of the Russian Gov-
ernment-object to empirical research?
  Mr. HERRING. Mr. Hays, I have with me some rather interesting
data on this point, and if it would meet with the pleasure of the com-
mittee, I would like to submit it to you a little later . I can sum-
marize on the point now .
  Mr. HAYS . Just very briefly, if you could answer the question .
  Mr . HERRING . The gist of it is that they do object to it most vio-
lently ; that the one thing that anyone believing in this predetermined
course of affairs or any one committed to a politically dictated course
of policy cannot tolerate is an objective analysis of the facts . And the
Russians certainly have a way, in their publications, of coming up
with some interesting fulminations .
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   Mr. HAYS . I do not want to disrupt you too long, but would you
care to just briefly comment on why you think they object to empirical
research? Is it because they are afraid that the findings will not
coincide with what they say is right, with their dogma?
  Mr. HERRING . Here you have an authoritative line of policy that is
enunciated by the Kremlin, and whatever is called for by that pre-
determined line is produced, or else . That is one aspect of it, in sort
of practical terms.
   The other side is that here is a system of belief, of view, that fits in
with the philosophy of history that makes this kind of free inquiry as
to what is going on something that cannot be entertained by people
who have that cast in mind . But this sort of point can be documented
over and over again by people who have a first hand familiarity
with what has spewed out of Russia .
  The Marxian dialectic confuses the issue by asserting a scientific
validity to their doctrine. And it may be just as well to emphasize
this point, because it does confuse matters . This is wholly false and
misleading . It is based on the argument of Marx that his theory of
class struggle was arrived at by reviewing the efforts of the laboring
man through revolution and other means to achieve a relatively
stronger degree of political and economic power .
   The social sciences stand four-square in a great tradition of freedom
of inquiry which is integral to American life, to the Anglo Saxon tra-
dition of self-government, and to the concern with the individual
fundamental to both Western civilization and its ancient heritage
stemming back through the Renaissance to the Classic World and
to Judaic-Christian concern with human dignity .
  To spell out the full course of historical events that would pro-
vide the empirical evidence for this assertion, would unduly tax the
time of this committee and it is obviously not necessary to argue this
case before a committee of the Congress of the United States .
  This is the sort of thing that could be pursued perhaps in a seminar
room .
  However, since the issue of empiricism has been raised by other
witnesses, a brief explanation may be helpful. I have been discussing
the empirical method as a tool of analysis and I have indicated that
our American tendency to get at the facts, to have a look at the
record, to separate mere speculation from factfinding, is so embedded
in our habitual ways of doing that that it really needs no defense .
  It has been suggested, however, that there has been an overemphasis
on this method and that it may somehow, in a manner unspecified,
lead to undue control, the corruption of moral principle, the confusion
of the public, the domination of education, and the corruption of
ethical principles and spiritual values . It is somewhat difficult to
come to grips with this broad allegation, since it is presented in terms
of inference and innuendo . The charge is not made flatly, but rather
in terms of overemphasis or posible deleterious effects in the future
if an empirical approach is carried too far .
   I would agree, as a logical proposition, that extremism in any
subject is, by definition, bad . Hence, the problem, I suggest, is one
of balance and degree . Witnesses have asserted that overemphasis
has been placed upon an empirical approach . This remains a matter
of opinion and I know of no way in which such a charge can be
definitely established one way or the other . In my opinion, there is not
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an overemphasis upon empirical research . In my opinion and ex-
perience and observation, quite the reverse is true . I observe a strong
human tendency on the part of a great many of us, as individuals, to
see what we choose to see and to believe what we want to believe . I
observe a readiness to speculate, to guess, to haphazard opinions, and
to come to judgments on the basis of very inadequate evidence . It is
my observation that this is a very human tendency, if not indeed a
common human weakness . This tendency is found in all walks of
life . It becomes a matter of high moment in policy decisions and in
the formation of public opinion .
   Social scientists working as economists, historians, statisticians,
sociologists, or what not, are prone to this weakness as individuals, just
like anyone else. In their professional capacity, it is their duty to
guard as best they can against letting wishful thinking get in the way
of objective analysis . Sometimes they fail, but in my opinion more
often than not they succeed . In their work as scientific investigators,
they operate within an appropriate system of values, to wit : They
cannot be unmindful of the ethical principle of seeking the truth and
of honestly analyzing their evidence . They cannot be oblivious of
spiritual values of freedom, because their work as investigators is de-
pendent upon a full sense of truth and freedom and justice . They are
the first to suffer if their fellow-citizens relinquish a common loyalty
to truth, to freedom, and to justice. The evidence of this is obvious
when we recall that after dictatorships arose in Russia, in Italy, and
in Germany, the freedom of scholars and research men to pursue the
truth as they saw it on matters of public policy, of economics, of his-
tory, and of the nature of man and society, was immediately curtailed
and ultimately destroyed . It was imposible for them to carry on
empirical work . The facts could not be arrayed in terms designed to
bring out their true meaning . The ends were dictated by the State and
either incompetents or prostitutes in the social science fields were
ordered to produce the results demands by the dictators and to array
evidence in accordance with the principles predetermined by the single
party in power . The social sciences were destroyed before the dicta-
tors began their perversion of the natural sciences, particularly biol-
ogy and genetics, and their erosion of the church and religious beliefs .
   I repeat that eternal vigilance is the safeguard of liberty, and recent
history proves that particular vigilance must be exercised if the free-
dom to study human problems is to be maintained . The dangers here
are not simply the obvious threats of totalitarian rule, but likewise
(and more insidious for us in the United States) the dangers of preju-
dice, malice, and wishful thinking. Authoritarianism that denies the
freedom of the individual to study, to question, to inquire, to form his
own opinions on controversial matters, is not always expressed through
conspiratorial parties, concentration camps, and secret police . Author-
itarianism is found in many less obvious ways in the United States
today . It is expressed in Mr. Dodd's statement in an indirect and
subtle fashion, and is all the more dangerous for that reason . It is in-
sinuated rather than asserted, when he states (on p . 26) "that it may
not have occurred to (foundation) trustees that the power to produce
data in volume might stimulate others to use it in an undisciplined
fashion without first checking it against principles discovered in the
deductive process ." This assertion is so elliptical in character that,
here again, it is hard to bring the charge out into the open . There
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 is an inference, however, that principles exist which can only be ar-
rived at through the so-called deductive process, and that must serve
as an authoritative basis of truth against which truths arrived at
through the inductive process should be subordinated . This is not
flatly stated but, in my opinion, it is clearly to be inferred .
   In philosophic terms, if this statement means anything (and this,
of course, is debatable) Mr . Dodd is asserting that one theory con-
cerning the philosophy of knowledge is superior to another theory
concerning the philosophy of knowledge . He seems to be saying that
deductive thought is somehow superior to inductive thought. He
seems to identify inductive thought with the social sciences and thereby
suggest that their findings cannot be valid unless substantiated by the
principles discovered through the deductive process .
   Now, I am not choosing of sides between these two . I am just trying
to get the issue before you .
   In the first place, this line of reasoning discloses his ignorance of
the methods employed by the social scientists. Social scientists do not
limit themselves to either inductive or deductive reasoning, as such .
They employ deductive principles, for example, when they decide upon
the importance of subject matter for study . They tend to follow the
inductive method when they analyze their data . They are not, how-
ever, victims of any single school of thought, nor are they limited to
any single line of reasoning . They use whatever methods of logic
they, in their competence as scholars and research men, feel may help
with the job in hand. By and large, they tend to limit their inquiries
to topics that they regard as researchable : that is to say, they seek ques-
tions that they think are susceptible of systematic analysis and of sub-
ject matter that preferably can be observed . This leads them to study
the behavior of men and of institutions and of the activities of business
firms, labor unions, governmental agencies, and individuals, singly or
in groups. Some devote their attention to analyzing the beliefs that
people hold and the attitudes they take on various issues. Some social
scientists are more interested in the theories that men express than
in the activities in which they engage . But their general inclination
is to try to find out what is going on rather than what should take
place . Many students of social phenomena offer their interpretations
about desirable alternative courses of action, and some offer their in-
formed individual judgments on the basis of their studies .
   By and large, this work in the social sciences tends to go from a
consideration of particular facts to the larger interrelationships
among these facts and the generalizations that might be offered con-
cerning them . In this sense, it is empirical and comes within a com-
mon American habit of mind . At the risk of oversimplification, I
would say that the views of Mr. Dodd might be characterized as ration-
alistic because of his alleged faith in principles deductively arrived
at, and the views perhaps of most social scientists tend to be arrived
at empirically . I repeat that it is difficult to restate with precision
just what Mr. Dodd's position is and that it is also difficult to general-
ize with any precision about fields of knowledge so varied, so dynamic,
and so fluid as the social sciences . The point I wish to make is that,
to the extent that the line can be drawn between empiricism and
rationalism, empiricism tends to be more in the American tradition
than rationalism . To sustain this view, it is necessary to recall that
the father of empiricism, as a distinctive field, is John Locke . Its
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antecedents, of course, go back to Francis Bacon and can be clearly
traced to Aristotle . It was John Locke, however, who stated this
school of thought most clearly, and it was John Locke who also set
forth the philosophy most widely accepted by the Founding Fathers
of this country . Locke found himself in conflict with the philosophers
of rationalism in Europe. From the standpoint of the history of
thought, Locke's views were in conflict with those of Leibnitz and
Spinoza . Were Locke here today, he would probably repeat a com-
ment he made to a friend apropos of some rationalistic speculation of
Leibnitz, when he said : "You and I have had enough of this kind of
fiddling."
  I respect the great contribution to Western thought made by Euro-
pean philosophers, but I know that they likewise would be critical of
much of the research that has been carried on in this country over
the last hundred years, or so . Descartes, Spinoza, and Leibnitz,
among others, championed the ability of the mind to know reality by
means of its faculty of reasoning which, for them, was independent of
experience . It was John Locke, the philosopher of the glorious revo-
lution of 1688 in Great Britain, who developed the political philoso-
phy so meaningful to the Founding Fathers of the United States who
also developed the doctrine that knowledge is derived from experience .
  This faith that the future is not foreordained, and that man can
learn by doing, is the viewpoint that has motivated so much of our
history . It was in the Age of the Enlightenment at the end of the
18th century, that men began to nourish the hope that human institu-
tions might be brought within the scope of science . And it is not
surprising that this search for a science of society should have been
taken up and carried further in the United States than anywhere
else in the world . If we had time, it would be very interesting to
develop this further . Because if you think back to the attitudes of
the Founding Fathers, it was empiricists such as Benjamin Franklin,
who went out and flew a kite in order to find out what was going on
in the thunderstorm, and it was that kind of "let's get at the facts" atti-
tude that was in the minds of men like Washington and Adams and
Jefferson . They were people, in that period, who were enlightened
and informed by that attitude . And, as I say, if we had time to go
into the history of thought, it is a fascinating story, this contrast be-
tween the rationalists on the continent of Europe, the encyclopedists,
who found themselves at odds with the government at the time .
   Contrast the problem that they faced there with what went on here,
where we had a meeting of minds and an understanding on the part
of scholars and scientists in this country, and our Statesmen . There
was no conflict of mind between the schools of thought . They were in
the same tradition . And the interest that George Washington ex-
pressed in a national university, for example, and the interest that
Alexander Hamilton expressed in subsidies to inventors and to the
encouragement of science at that time, the interests of Adams, all go
back into this same thing .
   One could go on at a great rate about the very interesting historical
antecedents . But the point is that here was a new land, untrammeled
by old conflicts and ancient grudges, where man was offered an oppor-
tunity to realize his destiny . Nature conspired with human intelli-
gence and imagination to realize the potentialities before us as a
Nation . Life, liberty and the pursuit of happiness were to be achieved
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if the individual but used his good sense and worked with his fellow-
citizens to maintain democracy .
  The social sciences, as they have developed in recent decades have
contributed, within the limits of their capacity to the high purposes
set forth in the preamble to the Constitution ; namely-
* * * to form a more perfect Union, establish justice, insure domestic tran-
quillity, provide for the common defense, promote the general welfare, and
secure the blessings of liberty to ourselves and our posterity . *
  Political science, by enabling us to understand the nature of our
Government and laws more clearly, has contributed greatly to good
government and the preservation of representative institutions .
Economics, by adding to our knowledge of the business cycle and
storing up great bodies of statistical and other data, has enabled
industry and government to find ways of achieving a more stable
economy . Industrial relations research has helped find methods for
reducing the conflict between management and labor . Sociology has
provided facts about family life, juvenile delinquency, and race rela-
tions that have time and again substituted reason and knowledge for
bias and prejudice . Demography has provided knowledge of popu-
lation trends of enormous practical importance . Penology has helped
us to deal more reasonably with the control of crime . This list could
be elaborated at great length. The main point is to emphasize the
American habit of saying, "Let's have a look at the record . Let's see,
in a given instance, what is practical and feasible . Let's see what
we can accomplish by taking thought together . Let's have done with
fiddling, with mere speculation, and see what can be done through
commonsense, fortified by whatever orderly array of facts can be
introduced, to find a reasonable solution ."
  In this endeavor, the principles of truth, freedom, and justice serve
as a guide . In these terms, I can ask no more of this committee than
an empirical approach to this inquiry into the activities of the founda-
tions and related agencies .
  Since various references have been made to the social sciences and
specific allegations have been directed at the Social Science Research
Council, I respectfully request an opportunity to present to the com-
mittee statements on these matters, either orally or in writing, and
preferably in both forms . The council is not, in any sense, the formal
spokesman for either the seven associations that designate members
to our board of directors or for the 10,000 individuals engaged in the
social sciences over the country . Our focus is on the advancement of
research . If the committee wishes to pursue its inquiry about the
social sciences in this country, this might best be done by calling upon
leading social scientists to present their views .
   I have before me brief statements from annual reports of the council
that describe our aims, organization, and general attitude, and data on
this has been distributed in advance to the committee, as a general
statement from our annual report about the organization . And I
would be glad further to supply whatever specific facts I can concern-
ing council activities that may be of interest to the committee . We
have also prepared a more extensive statement, dealing with certain
allegations that have been made .
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   This statement to which I refer is entitled supplementary statement
A. It was distributed in advance to the committee and takes up and
offers specific replies to specific points .
   I know you want to conserve your time, and I would not undertake
to read this document to you, since you have it.
   The CHAIRMAN . It may be presented as part of your statement.
   Mr . HERRING. If I may offer, then, for the record, supplementary
statement A and supplementary statement B, I think it would be
helpful to the committee .
   (The statements referred to are as follows :)
   SUPPLEMENTARY STATEMENT A ON BEHALF OF THE SOCIAL SCIENCE RESEARCH
                   COUNCIL-REPLIES TO SPECIFIC POINTS
   There are a number of particular criticisms of the social sciences in the report
 of the research director for the committee on which we offer comments . He
 states :
   "The broad study which called our attention to the activities of these organi-
 zations 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 con-
 firming this . Likewise ; it is difficult to avoid the feeling that their common in-
 terest has led them to cooperate closely with one another and that this common
 interest lies in the planning and control of certain aspects of American life
 through a combination of the Federal Government and education" (stenographic
 transcript, ibid, p . 47) .
   If this statement intends to say that the organizations listed in the report are
 able to exert such power as to bring about a combination of the Federal Govern-
 ment and education so as to permit the organizations to plan and control some
 aspect of American life, then the statement is absurd . Education is controlled
 by local school boards and by departments of education in the 48 States, and the
 Federal Government is controlled by a large number of competing interests among
which the influence of the organizations mentioned is certainly not great . With
 respect to the specific objectives or effects attributed to the interlock the council
 has had no part, or inclination, in bringing about such alleged changes through
education.
   The council is concerned primarily with improving the quality of research in
the social sciences-that is, with the reliability, rigor, objectivity, and honesty
of social-science research . Necessarily related to this objective is a concern
with improving the quality of the research workers in these fields, with study-
ing the conditions under which research is carried on, and with intelligent dis-
cussion and understanding of what research can and cannot do . The council
is not engaged in developing or in advocating public policies or political programs,
or in directing or shaping educational objectives and policies .
   The Social Science Research Council has not cooperated with similar agencies
in other fields of research for the purpose of planning or controlling certain
aspects of American life . It has not sought, nor does it seek, control over any
aspect of American life, including research in the social sciences . The council
has participated in encouraging various types of planning in research, particu-
larly with the intention of making research more productive . This has been done
through the preparation of publications which help to summarize the existing
accomplishments of research in a given field, and through efforts to help research
men find the most promising lines of future research on which they might con-
centrate their attention .
   The Social Science Research Council accepts grants from several foundations
for the administration of fellowships and for other forms of financial support
for research in the social sciences . However, foundations make grants for simi-
lar purposes to other organizations concerned with research in the social sciences,
such as universities and research institutes of many kinds, and foundations also
administer fellowship programs of their own . In addition, individual research
men in universities are frequently financed by university committees from en-
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  dowment funds, and research institutes also are financed by funds from private
  sources, such as business firms concerned with market research problems, and
  also by the Federal and State gc+vernment . (See, for example, the Directory of
  Social Sciences Research Organizations in Universities and Colleges, published
  by the Social Science Research Council in 1950 .)
     There is the allegation in the report that the staff's study of the foundations
  and the organizations mentioned "seems to warrant the inference that they con-
  stitute a highly efficient, functioning whole . Its development and production
  seems to have been largely the work of these organizations engaged in research,
  such as the Social Science Research Council and the National Research Council"
   (ibid ., p . 47) . This charge as worded here is a vague one . The inference that
  such a "highly efficient, functioning whole" exists is not warranted . We admit
  that in our operations we do seek to be efficient . The nature of this "whole"
 and the extent of the "interlock," however, need some rigorous examination
 if the committee is to have a fair and accurate view of just what does and what
  does not exist.
     There is first of all the statement in the staff report that the council "acts as
 spokesman for seven constitutent member associations," The fact is that the
 council has never been designated as a spokesman by the seven associations which
 elect part of the council's board of directors, that the council has never sought to
 arrogate to itself the role of spokesman for these associations or for social science
 as a whole, or for anyone except itself, and that actually save for an occasional
 individual member of one or another of the associations no one has ever seriously
 proposed that we or anyone else act as spkesman for them .
     The suggestion that the council is such a spokesman rests upon a very funda-
 mental misunderstanding of the way in which learned associations function as
 well as of the entire academic population . It is only on very limited matters that
 the associations try to act as spokesmen for their members as a whole . The pro-
 grams of their annual meetings, the contents of their journals, or the nature and
 substance of any other activities which they carry on are not cleared with the
 council or conducted in accordance with policies discussed with the council or
 influenced by the council as such in any other single way . Consultation does
 occur occasionally in matters of mutual research interest but these occasions
 have arisen with any particular association not more than about once in 3 or 4
 years .
    The one continuing relationship between the seven associations and the council
 consists of the designation by each of them each year of a member of the council's
 board of directors for the subsequent 3 years . The origins of this relationship are
 very simple if one understands the situation in the social sciences at the begin-
 ning of the twenties. There were then seven well-established associations some
 of whose members wanted to see the establishment of an agency more actively
 engaged in fostering better research . The associations themselves could not well
 undertake this because they were not organized to carry on from month to month
 and from year to year the tasks to be undertaken by the council, because of a
 view that a single agency concerned with all seven fields was desirable, and be-
 cause actually research always has been and must be only one of the concerns of
 the associations many of whose members are interested primarily or solely in
 teaching or in other vocations .
    Leaving then the "spokesman" angle of this allegation as the committee may
 reasonably be concerned with the extent to which the council and the other organ-
izations called to its attention cooperate . Ten years ago the conviction arose that
the councils (the American Council on Education, the American Council of
Learned Societies, the National Research Council, and the Social Science Re-
search Council) ought not to work in total isolation from each other and that
they ought occasionally to talk over ideas and activities which might be of
interest simultaneously to two or more of them . This led to the creation of the
Conference Board of Associated Research Councils, a body to which some prior
reference has I think been made in these hearings . Over its entire life it has
held an average of three meetings-sometimes a day in length, sometimes half a
day-a year. The conference board has no staff beyond the volunteer services
provided by the councils themselves . It is therefore certainly far short of a tight
"interlock ." Some measure of criticism may well be justified and might better
be directed against the limited communication and cooperation which has oc-
curred between the councils . Close and more frequent consultation might assist
in making contributions of national benefit . go far, however, we have not found
a highly efficient way of achieving this close working together, and certainly no
funds for providing the conference board with even minimal staff resources .
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   The four councils do cooperate under a contract with the Department of
 State in the preliminary selection of postdoctoral lecturers and research scholars
 to receive awards under the Fulbright Act . This process of selection is made
 from among persons who apply in an open competition, publicly announced
 throughout the United States . The committee of selection consists of 12 mem-
 bers, usually university professors, appointed by the board, and 4 members of
 the staffs of the councils, all of whom serve without compensation other than
 expenses . The final selection of Fulbright grantees, however, is made by the
 Board of Foreign Scholarships, the members of which are appointed by the
 President of the United States .
   The conference board has sponsored the Commission on Human Resources
 and Advanced Training which has for the past 5 years been studying problems
 of the supply of and demand for American professional persons over a wide range
 of fields of learning . There are also other ways in which the four councils work
 together. There have been over the past 15 years a number of joint committees
 between 2 or more of the councils as such, and some 5 or 6 conferences sponsored
 by 2 or more of them . For example, we and the National Research Council some
 years ago set up a joint committee to try to foster more accurate ways of measur-
 ing attitudes and consumer wants . A few months ago the Social Science Re-
 search Council and the National Research Council jointly sponsored a small
 conference to discuss whether significant studies of twins could perhaps be
 worked out . Other examples are the formation by the National Research Coun-
 cil and the Social Science Research Council of a temporary committee to make
 arrangements for a conference on research in contemporary Africa, held in
 October 1953, to which were invited some 50 specialists in biology, geography,
 anthropology, sociology, economies, and political science .
   With the American Council of Learned Societies we have had joint commit-
 tees which tried to improve communication between scholars engaged on studies
 of Latin America to ascertain whether something could be done to increase the
number of Americans with competent knowledge of India and its neighboring
countries, and to aid American scholars in critically analyzing such materials
 as can be drawn out from behind the Iron Curtain . These joint committees
 represented a recognition that there are problems on which humanists and social
 scientists, or social scientists and natural scientists ought to have something
to contribute to each other . At the same time, however, the joint committees
 have always been very minor elements in the current work of any one of the
councils concerned .
   With the other organizations mentioned in the report, aside from the other
 three councils, and the American Historical Association, which is one of its
 affiliated societies, the Social Science Research Council has had almost no
formal contact, and little informal contact .
   Another allegation in the report of the research director is given in these
terms
   "In what appears from our studies to have been zeal for a radically new social
order in the United States, many of these social science specialists apparently
gave little thought to either the opinions or the warnings of those who were
convinced that a wholesale acceptance of knowledge acquired almost entirely
by empirical methods would result in a deterioration of moral standards and a
disrespect for principles . Even past experience which indicated that such an
approach to the problems of society could lead to tyranny appears to have been
disregarded" (ibid . p . 48) .
   This statement contains a number of suggestions and charges which involve
questions of extended scope . What is the "radically new social order" sug-
gested? Has there been a wholesale acceptance of empirical knowledge which
has resulted in a deterioration of moral standards and a disrespect for prin-
ciples? In the experience of which countries has an empirical approach to
social problems led to tyranny? These questions raise broad and vague issues,
and the present report of the research staff provides an insufficient basis for
their analysis. However, there is a tone of accusatory implication in these state-
ments which may be noted at this time. It might be inferred by a casual or
predisposed reader of the paragraph quoted above that radical social scientists,
undeterred by criticism of their use of empirical methods, were responsible for
an alleged deterioration of moral standards, and disrespect for principles, and
might become responsible for a tyrannical regime in the United States .
   Implications of this kind can only be met by positive statements, in order
to present the issues in their clearest light . For example, it may well be
noted that certainly very few social scientists have shown zeal for a radically
 810                      TAX-EXEMPT FOUNDATIONS

  new social order in the United States . A second statement which may be
  made to move the discussion to a plane more productive of a sharp definition
  of real questions, is that, if there has been a reterioration of moral standards
  and a disrespect for principles, and this statement should by no means be con-
  ceded, social scientists have no greater share in such a development than have
  the members of many other groups in society . Furthermore many persons with
 deteriorated moral standards and a disrespect for principles have been totally
 oblivious of knowledge acquired by empirical methods or by any other methods .
 Finally, social scientists wish neither to be controlled by governmental restric-
 tions on their freedom of inquiry, nor to exercise control over other human
 beings. They wish, rather, to widen the area of free choice open to human
 beings, by the discovery of knowledge. It is no accident that it is in the United
 States that the social sciences have flourished more than in any other country
 in the world ; it is in the freest of societies that the study of man can be most
 freely made . Only where knowledge may be sought for its own sake, spurred
 by curiosity and enthusiams of individuals, can research most fully contribute
 to the widening of human horizons and the realization of man's best self .
    It has been alleged that the foundations and the "accessory agencies" have
 "directed education' toward a new international frame of reference ." I have
 been unable to find in the hearings just what this new international frame of
reference is supposed to be . The council has not sought to direct education,
 since this is not within its scope of operations, and its effectiveness in doing so
 would certainly be limited if it mistakenly undertook such a mission . The
 council has several times tried to find ways of encouraging more systematic
 and more searching inquiry into problems relating to the economic and political
 position of the United States and better knowledge of other areas of the world .
 We shall undoubtedly make new attempts in this direction if and as construc-
 tive ideas arise . The council's attempts to study the research which has gone
 on and to figure out ways of doing better research have, however, had no rela-
tion which I can discern to any particular "international frame of reference"-
new or old . The choice of this country's international frame of reference has
been made and will we are sure continue to be made by its legislative and execu-
tive policymakers and by its citizens through established constitutional proce-
dures . Of course, the council will continue its interest in working out better
and more significant research plans relating to problems of international rela-
tions-not to any particular international frame of reference-in view of the
obviously increasing importance of these relations to the security and welfare
of the United States .
    Here, for example, is a current council undertaking . Foundation officers be-
came concerned with problems of foreign students at American universities . As
a means of learning more about these problems, and how improved methods of
dealing with them might be found, three foundations have made grants to the
Social Science Research Council. A grant of this type is made to the council
for several reasons . The council has experience in the administration of funds ;
it has knowledge of individual scholars engaged in various fields of research ; it
has their confidence, and is therefore able to enlist their collaboration in the
carrying out of research projects . The result of the council's development of
this research project will be several publications useful, we hope, to foreign
student advisers in universities, to Government officials planning exchange of
persons programs, and to teachers and others who have contacts with foreign
students . These publications will be primarily descriptive in nature ; they will
summarize the results of observation, of interviews and of different types of
psychological and other tests . They will also include some comments of a
summary character, which it is hoped may assist those responsible for policy
in choosing among alternate courses of action . The use of these findings will
of course depend on the judgment of those who have responsibility for policies
and activities directly connected with foreign students .
   Nowhere in the report is the statement made flatly that social scientists, by
themselves or with others, are engaged in a concerted political movement to
modify the American way of life . Nevertheless, there are suggestions, some of
which have been quoted above, which when taken as a whole give the impres-
sion that Mr . Dodd feels that social scientists as a group exert a sinister in-
fluence on American social life and institutions. An additional hint of this
order is found in the following paragraph
   "We wish to stress the importance of questioning change only when it might
involve developments detrimental to the interests of the American people, or
when it is promoted by a relatively small and tightly knit group backed by a
                         TAX-EXEMPT FOUNDATIONS                                     81T
disproportionately large amount of money which could threaten the American
ideal of competition" (ibid., p . 47) .
  In this and other parts of the staff report, a case is sought to be made against
the social sciences, and against organizations in other fields, in terms of innu-
endos, or suspicions that social scientists may be desirous of exercising control
over some aspects of American life . Social scientists reject such an attack on
their work and on their motives .
  The paragraphs which follow are offered in order to indicate to the committee
the nature of the fellowship program of the Social Science Research Council,
in view of the comments made by Dr . A . H . Hobbs, assistant professor of
sociology at the University of Pennsylvania, in his testimony at the hearings
on May 20-21, 1954 .
  Before answering these allegations, which reflect Mr . Hobbs' personal opinion
and not detailed knowledge of the purposes and operation of the council's fellow-
ship program, it may be well to state that the council is only one of a great
number of organizations, many supported by foundations, which offer fellowships
for training and research in social science . Therefore, the trends in types of
training and methods of research, if any, that may appear in the projects of
council fellows do not necessarily attest to the general character of training and
research in the social sciences .
  Throughout its career the council has been concerned with developing more
rigorous methods, among which statistical procedures can be numbered . Few
scholars would deny that the social sciences have benefited greatly by the use
of quantitative methods . The council has been and will continue to be interested
in their development, as it would in the fostering of any productive approach .
Whether the council has overemphasized the quantitative approach is, and must
remain, a matter of opinion . To some reputable social scientists any use of
numbers is abhorrent ; to others, of an opposite persuasion, work without a
quantitative basis seems of little value . It must be strongly emphasized, how-
ever, in spite of misconceptions prevalent in some places, that the council has
never been concerned exclusively with the development and promotion of only
one methodology' statistical or otherwise.
  Even a casual reading of the appointments made in the council's programs
of faculty research fellowships and research training fellowships during the
past 2 years would reveal that projects of many kinds have been supported,
entailing a wide variety of research techniques . They range from problems
utilizing refined statistical analysis to inquiries of a theoretical or descriptive
nature in which quantification would be inappropriate . It is, in fact, exceed-
ingly difficult to determine the extent to which statistical methods will be
involved in any particular research . As one tool among many, the statistical .
approach is used by scientists when they feel it will yield significant information
about the question under consideration . It is, on the other hand, scrupulously
avoided by scholars when the area of interest calls for other research methods .
Ordinarily, even the most devoted exponent of quantitative techniques finds
that certain aspects of his problem call for other strategy, for library research,
or interviewing or observation . Particularly in new areas of research interest
scientists often find that less rigorous methods are essential to describe the-
problem and explore its implications, perhaps using statistics at a later stage
of the research to pin down the more important features of the situation .
  Although the research projects supported by the council embrace a wide
range of interests and methods, one can distinguish varying degrees of adherence
to a quantitative approach . The following classification represents the distribu-
tion of projects in the faculty research fellowship program since 1950, and in
the research training fellowship program for 1953 and 1954, according to their
use of statistical techniques

                                                            Faculty           Research
                                                            research           trainin g
                                                           fellowship        fellowship
Primarily quantitative	                                                  5                 13
Mixed	                                                                  14                 27
Primarily nonquantitative 	                                                                27

  Mr. Hobbs' principal allegation is that the council, in its fellowship program,
but especially in its announcement of awards for 1953 from which he quoted, has
      49720-54-pt. 1	 52
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overemphasized empiricism, specifically statistical computation (transcript, ibid .,
pp . 169-170) . He further states that a social scientist reading the announce-
ment "would interpret it to mean that probably, almost certainly, what they
 (SSRC) are interested in is only statistical computations ."
   The statement that "fellows will be selected on the basis of their actual and
prospective accomplishments in formulating and testing hypotheses concerning
social behavior by empirical and, if possible, quantitative methods" applied in the
1953 announcement, from which Mr . Hobbs quoted, to only one type of fellow-
ship, the faculty research fellowships . From Mr . Hobbs' statement one might
easily gain the impression that all of the five programs of the council described in
the 1953 circular are qualified by this emphasis on a quantitative approach . Not-
withstanding this stated preference for projects utilizing quantitative methods, a
number of appointments to faculty research fellowships, as already noted were
made for work of a nonstatistical nature . In selecting the recipients of fellow-
ships and grants primary importance has never been attached to the methods
to be employed, but rather to the intellectual promise or achievements of the
applicant .
   The audience of professional social scientists and advanced students to whom
the announcement quoted is addressed certainly does not construe the term
"research" to mean "only statistical computation ." This is demonstrated by the
variety of applications received and by the diversity of projects and methods for
which fellowships have been awarded . It should also be noted that Mr . Hobbs
himself was the recipient in 1946 of a council fellowship, a demobilization
award for the purpose of making a study of the "trend of emphasis in sociological
teaching : 1932-41." Presumably he would approve the subject of his own study
for which he sought and gained support from the council as well as the methods he
employed .
   In one place in his testimony (transcript, ibid ., p. 168) Mr . Hobbs states
that graduate students "are encouraged through the situation (the giving of
large foundation grants) to embark upon study projects which are extremely
narrow . * * *, He also states (p. 169), "furthermore, these projects aid these
students to a disproportionate degree . Other students who, through differing
interests, through a broader viewpoint of society and behavior, who do their
work and who don't have such assistance, are handicapped in comparison with
the ones who receive the aid through foundation grants ."
   The council's research trainingg fellowships, to quote the 1953 announcement
from which Mr . Hobbs also quoted, are intended precisely to afford persons an
opportunity "to obtain more advanced research training than that which is
provided in the usual Ph . D . program ." We have been mindful of a tendency
at times to use graduate students essentially as clerical assistants on large
research projects . We have made our concern explicit in letters which accom-
panied many thousands of announcements mailed to social science colleagues in
recent years.
   The following quotation is from one of these letters written by Elbridge Sibley
and dated November 1, 1951
   "We often fail to get in touch at the right time with extremely able graduate
students and young Ph . R's who might profit greatly by a year's fellowship .
With distressing frequency we hear from academic friends that the best students
in their departments are not among the applicants for fellowships because they
are already employed in doing things which someone else wants to have done.
It is ironic that the ablest individuals seem to run the greatest risk of being
prematurely diverted from training for research by offers of employment which,
although attractively remunerative, do not foster the optimum development of
their research talents . A timely suggestion from you might well lead such a
person to take advantage of an opportunity for further training which would
in the long run greatly enhance his preparation for a more effective career ."
   The same point was made in a similar letter circulated the following year
   "To repeat what has been said in similar letters in past years, it is too often
true that the very persons whom we are seeking tend, precisely because they
are unusually able and hard working, to be diverted from achieving their own
maximum development or productivity as research scientists . If you can en-
courage one or more of these to become candidates for fellowships or grants,
you may be doing a significant service both to the individuals concerned and to
social science ."
   In brief, the research training fellowships are designed to give students a
broader type of training in methodology . Furthermore, the stipends are paid
directly to the fellow who is responsible himself for the conduct of his research
or study program.
                          TAX-EXEMPT FOUNDATIONS                                 8,13
SUPPLEMENTARY STATEMENT B-NATURE AND PURPOSE OF THE SOCIAL SCIENCE
                         RESEARCH COUNCIL
   In the first printed report of the Social Science Research Council, we find this
excellent statement about how the council came into being
   "For those unfamiliar with the Social Science Research Council, the following
statement of its genesis, aims, and organization is set down :
   "As man's study of his physical and institutional surroundings has become
more intensive, the comfortable wholeness of his earlier world has disintegrated.
We no longer have `natural philosophers' who `take all human knowledge as their
province.' They have given place to troops of `specialists,' whose achievements
are unquestioned, but who are painfully aware of how small a fraction any indi-
 vidual knows of what mankind has learned . Men `who know more and more
about less and less' are pushing forward the refined researches of today at every
point along the deploying line of scientific advance . But even as a device for
gaining more knowledge, specialization is acknowledged to have its drawbacks .
 We are in danger of distorting our vision when we wrench a section of the world
loose from its context to facilitate its intensive scrutiny . We risk waste effort
 when we use our narrowly limited individual resources in attacking problems
which might yield to joint endeavors. The mathematical, physical, and biologi-
cal sciences were first in this country to organize in an effort to see their problems
whole and to facilitate cooperation among specialists concerned with clusters of
problems . But shortly after the National Research Council was formed, several
 representatives of political science, economics, sociology, and statistics came
together for a similar purpose . Out of this informal beginning the Social Science
Research Council developed in 1923 . It was presently strengthened and
 broadened by the accession of psychologists, anthropologists, and historians ."
                                                  WESLEY C. MITCHFT.T ., Chairman.
    (Social Science Research Council, Third Annual Report, 1926-27 . New York,
November 1927. Pp . 14-15 .)
   The following statement is reproduced from the 1952-53 annual report of the
Social Science Research Council :
   "The council is organized as a private corporation, and governed by a board
of directors . The board meets twice a year to review all operations of the coun-
cil and. related matters . The members of the board are drawn from, among out-
standing representatives of the various social sciences and closely related fields .
The content of the program of the council reflects their informed and responsible
judgment . The actual process of selecting topics and determining procedures is
carried on with the aid of a small professional staff, cooperating with committees
and consulting directly with many research workers ., The suggestions and rec-
ommendations from council committees or from less formalized sources of advice
are examined and discussed by the council's committee on problems and policy .
This committee meets about six times in the course of the year to consider the
current work of the council and to develop further, with the aid of the staff,
proposed new projects, programs, and preliminary explorations,
   "Most members of the council are active on 1 or more of the 30 or so committees
described in subsequent pages of this report . As the committee lists demonstrate,
the membership is drawn from a wide variety of institutions and disciplines and
 in recent years has involved services annually by some 200 members of 50 or
more university and college faculties and of the staffs of scientific, business, and
governmental organizations . Committees concerned with the planning and
appraisal of research in different fields are appointed by the committee on
problems and policy, while administrative committees are elected by the board
of directors . Participation is based upon competence of individuals in their
fields, known interest in the subject at hand, and willingness to give time and
attention to cooperating with fellow scientists . Committees serve without com-
pensation, except for actual expenses in attending meetings . The appointments
are on an annual basis, and are usually reviewed and revised each autumn .
   "The initial leads from which the council's research planning activities evolve
arise from the ideas and research goals of the research workers who identify
themselves with the objectives of the council, irrespective of whether they are
at the moment members of it, or of its committees . Research planning would
be artificial and sterile if it were not directly related to the motivation of re-
search workers to carry their own inquiries forward . The council endeavors to
fulfill its basic purpose through the process of selecting ideas and individuals
 and providing opportunities for the development of whatever cooperative rela-
 tionship will advance research in specific areas . In a sense, this process has an
814                      TAX-EXEMPT FOUNDATIONS

architectural quality in that the council seeks to relate the skills and objectives
of the individual specialist to building a structure of ideas and knowledge of more
general significance.
   "The foundations supporting the council over the years have recognized the
value and utility of an organization that can bring together the initiative and
judgment of social scientists on problems of research development directly related
to their own concerns . Fruitful leads for scholarly inquiry and constructive
suggestions for strengthening research personnel and improving their training
most appropriately come from the responsible academic leaders who are de-
voting their lives to these problems in the universities and colleges . The council
provides a means of ready communication among scholars in different institu-
tions who, because of the very fact of their specialized research interests, often
work in relative isolation among their immediate colleagues and hence welcome
an opportunity to discuss their problems with persons developing similar inter-
ests at other institutions . Education in the United States is not organized under
a unified national ministry of education ; rather, there are a considerable number
of national organizations, each dealing with distinctive facets of education and
research. The Social Science Research Council is one of perhaps a dozen or so
such organizations . Its distinctive contribution rests in its concern with the
advancement of research in the social sciences .
  "The grants made directly to the council by foundations are usually for specified
purposes . Hence, the council is n*t in a position to consider many requests for
financial assistance that a foundation might find appropriate . The council's con-
cern is with ideas for research and with preliminary aspects of research which
may or may not lead to well-planned projects worthy of support. Many of the
council's appraisal and planning efforts are focused not on the development of
specific research projects but on calling attention to needed work . The publica-
tions of the council resulting from these efforts are fertile sources of suggestions
for research. In other cases, relatively precise plans for research may be out-
lined . If specific research projects are developed and funds are needed, the in-
dividual or group prepared and qualified to execute the plan may seek funds
directly from a foundation, and the funds, if made available, go directly to the
applicant or his own institution .
  "Only in exceptional instances does the council accept funds for the direct
support or supervision of research . It sees its functions as those of planning,
stimulating, and initiating research rather than conducting projects than can
be done more appropriately by other organizations.
  "At the September 1953 meeting of the board of directors, particular considera-
tion was given to the present status of the social sciences in the light of the
current demands upon them and prevailing methods of support . There was no
disposition on the part of the board to attempt to modify the objectives for which
the council was founded ; it reaffirmed its continued concern with basic research
and development of the social sciences .
  "The trend of the times is toward increasing recognition that the social sciences
afford means for better understanding and analysis of many complex social,
political, and economic problems . The economists, the psychologists, the statis-
ticians, and members of all the other social disciplines are the specialists whose
aid is sought, because theirs is the relevant training . Many organizations offer
opportunities for social scientists to work on pressing current problems that
call for study by trained personnel. In attacking such problems, at the behest
of philanthropic, business, or other organizations, specialists from many fields
apply their knowledge and the techniques and theories of analysis that are now
available in social science . But all will agree that valuable though such in-
quiries are-and indeed essential for bringing available thought and information
to bear-the complexity of the problems involved does not permit anything more
than a partial analysis .
  "It is the council's primary function to provide for the development of better
methods of research, more effective means of gathering necessary data, and
more adequate theoretical formulations . Unless research men are encouraged
and stimulated to give some portion of their time and energies to these purposes,
the agencies that seek quick `answers,' facile solutions, or practical judgments
may tend to crowd more fundamental problems from the forefront of con-
sideration .
  "The council has long been concerned with improving the training of social
science research personnel ; but not enough attention is given to their opportuni-
ties for lifetime careers and to the frequent lack of research continuity in such
careers. As research institutes attain more financial stability they can offer
                          TAX-EXEMPT FOUNDATIONS                                  815
-competent staff employees continuous careers in research, but most social science
research organizations in universities today lead a hand-to-mouth existence .
 Moreover, well-qualified social scientists often follow a seemingly erratic career
line as they are attracted from one brief research opportunity to another at
different institutions .
   "As the September discussion revealed, the increase in contract funds for re-
 search has led to undue emphasis on developing special projects as distinct from
continued basic work . Basic research can he encouraged only by providing an
 environment for research scholars conducive to continuity in their work . There
should be clearer recognition by the universities that research is just as much a
 part of the professor's career as is teaching, and that provision of opportunities
 and funds for research is just as important as for teaching. In order to obtain
university funds for research at the present time, there is too much emphasis
 on shaping a project that has `appeal .'
    "The best working conditions for social scientists generally are to be found
 in a university setting, and maintaining that setting with its original advantages
 is of first importance . University personnel should not be dependent on funds
from contracts with outside agencies to sustain their research interests . Short-
 term support for particular or limited research jobs results in the abuses that
have been described as 'projectitis .'
    "The council's concern with basic scientific research and with matters of
paramount interest to research workers, in accordance with the purpose for
 which the council was incorporated, means that questions of public policy must
 be left to other organizations . Of course, social scientists in their teaching and
 writing pursue a variety of interests and concern themselves with a wide range
 of problems. But within the council our common purpose is the advancement of
 research in the social sciences .
    "The decision taken 20 years ago with respect to current public problems still
 holds : `The council determined not to avoid current issues by reason of their
 generally controversial character, but rather to give weight to the promise of
 particular research to contribute to an understanding of contemporary ques-
 tions . This decision involved no intention of abandoning more remote and
 fundamental research in favor of that applied wholly to immediate ends . It
 simply recognized that in research, as in so much human activity, a measure of
 value is benefit to mankind .'
    "In these terms, perhaps no greater benefit to mankind can be envisaged than
 advance in our capacity to understand ourselves, our society, and the other cul-
 tures and nations of the world . Such a capacity, we believe, rests significantly
 in better methods of analysis . Recognizing the difficulties created by power con-
 flicts and irreconcilable goals of human societies, still the challenge of improving
 the means and methods of social science analysis offers wide and constructive
 scope for continued research effort . Facts are to be preferred to guesses, and
 knowledge to ignorance . More systematic ways of ordering knowledge about
 human affairs are better than speculation or special pleading . It is upon such
 obvious common assumptions that the structure of the social sciences is erected .
 Technicalities and refinements sometimes make these fields appear confusing to
 the layman . Misunderstandings now and then occur . But the social sciences,
 as fields of knowledge, point to no particular form of society as ultimate, or
 any prior set of public policies . These sciences are premised on the faith that
 logical thought, established facts, and various forms of analysis can contribute
 to a clearer understanding of human problems . The social sciences provide no
 complete anwers to any practical problem, but they offer relevant facts and
 ideas to all who would prefer to see human affairs worked out through reason,
 through faith in their fellow men, and through methods of persuasion .
    "There are various schools of thought within different social science disciplines .
 There is disagreement and competition in these fields, just as in other walks
 of life . There are no authoritative groups to say with complete finality : This
 is economically sound or that is socially valid . But there are more, and less,
 rigorous methods of analysis and better-and less well-qualified analysts . Some
 research workers are more objective than others . By keeping the competition
 keen and free, some win the hard-earned recognition of having achieved a
 scientific approach to the study of human behavior and social relations .
    "The problems of the individual research worker remain of constant concern
 to the council . No research team is better than its individual members, and no
 research plan has much meaning beyond the capacity of individuals to carry it
 through .
    "The council has not produced a generalized blueprint for the overall develop-
 ment of the social sciences, nor does it think that it would be desirable to do so .
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Rather, it seeks to stimulate inquiries into new fields of knowledge ; to discover
and encourage social scientists who wish to try to apply new methods to tradi-
 tional studies ; to grasp and further opportunities provided when competent
people in widely separated places have similar research interests and the effec-
tiveness of their work may be enhanced through pooling of ideas and experiences .
The strategic employment of small funds in such circumstances may be productive
of research that otherwise might emerge only at a much later time, or not at
all . The council thus serves mainly as a cooperative agency through which
individual social scientists voluntarily collaborate to advance the progress of
research . The council does not seek to impose upon them a program of its own
but seeks to bring into focus and develop their interests and judgments . If the
council is defined in terms of its work, its effort is concentrated not in its offices
in New York and Washington but in the colleges and universities where a new
generation of social scientists is being trained and where persons associated
with council committees and other activities of the council engage in research ."
    Mr. HERRING . I think if it suits your pleasure, the must helpful
thing I could do perhaps would be to say something about the council
and try to get some factual material before you that would give a clear
understanding of what it is we are doing.
  The CHAIRMAN . Mr. Koch, did you have some questions?
  Mr. KOCH . You just continue making whatever oral statements you
wish .
  Mr. HERRING . Mr. Chairman, I will go right ahead, but let me say
that I would be very happy indeed if any member of the committee or
of counsel would like to ask any questions . Because what I have here
are just rough notes . So I will go ahead, and if there is any point you
would like elaborated, or any question you would like to ask, I hope
you will do so .
  Well, I assume that you have read or browsed through this state-
ment about the nature and purposes of the Social Science Research
Council . I don't want to repeat material. But I have identified a few
points that I would like to bring to your attention .
  In preparing for this hearing, I read somewhat more of our past rec-
ords that I had, and I came across a very interesting statement by
Wesley Mitchell in the first council printed report . It is just a para-
graph, and I would like to read it, because I think it is illuminating.
  In this first printed report, the following statement is made
   For those unfamiliar with the Social Science Research Council the following
statement of its genesis, aims, and organization is set down .
  As man's study of his physical and institutional surroundings has become
more intensive, the confortable wholeness of his earlier world has distintegrated .
We no longer have natural philosophers who take all human knowledge as their
province . They have given place to troops of specialists, whose achievements
are unquestioned, but who are painfully aware of how small a fraction any indi-
vidual knows of what mankind has learned . Men who know more and more
about less and less are pushing forward to refined researches of today at every
point along the deploying line of scientific advance . But even as a device for
gaining more knowledge, specialization is acknowledged to have its drawbacks .
We are in danger of distorting our vision, when we wrench a section of the
world loose from its context to facilitate its intensive scrutiny . We risk waste
effort when we use our narrowly limited individual resources in attacking prob-
lems that might yield to joint endeavors . The mathematical, physical, and bio-
logical sciences were first in this country to organize in an effort to see their
problems whole and to facilitate an organization among specialists concerned
with clusters of problems . But shortly after the National Research Council was
formed-that is, for the natural sciences, several representatives of political
science, economics, sociology, and statistics came together for a similar purpose .
  Out of this informal beginning, the Social Science Research Council developed
in 1923 . It was presently strengthened and broadened by the accession of
psychologists, anthropologists, and historians .
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   The interesting thing that I want to emphasize here is that this ob-
jective that I have just read, this statement of objective, reflects the
initiative of a group of leading social scientists . They had a sense of
need, this high specialization developing . There are things that we
share. We need some way of getting away and talking shop . How
can we get a better grasp of these problems? Here is a man working
as a specialist on a university faculty . The specialist who would
know most about his field might be 100 miles or 500 miles across the
continent. Isn't there some way in which we can get together and
talk about the common problems we share as specialists in these fields?
Well, it was that sense of need that brought this organization into
existence .
   The first point, then, that I want to emphasize, is that that is where
the initiative came from .
   The second point I want to emphasize is the consistent attention
that the council has maintained to its objective .
   Now, a little documentary quote on that is found in our decennial
report. In 1933, we published a somewhat smaller report on the com-
pletion of the first 10 years . And the director, in that report, repeats
  The council is confident of the validity of its objectives of better and more
broadly trained personnel, the improvement of research materials, of the devel-
opment of research methods over the social field as an integrated whole .
   This consistent interest in better training, helping able people to
develop, better data, a lot of technical problems there of how to get
at the facts, better methods, what to do with the facts after you get
them-it is that kind of thing ; and I can certainly sympathize with
perhaps the difficulty in the great array of organizations over the
country, of knowing, "Well, now, just what is this organization con-
cerned with?"
   It has a unique interest in the advancement of research in these
particular fields . And there are a great many technical problems
there, of how to get at this subject matter more adequately .
   Well, that is one point . Another point I would like to emphasize
about the organization is that in an organization of this character you
need to try to maintain, be aware of the importance of, continuity,
stability, on the one hand, and rotation of membership on the other .
How can you be sure that the organization is pursuing its ends?
Well, you can only be sensitive to the problem.
   But some of the questions that were raised as a result of this in-
vestigation prompted me to look at the record a bit here and see
just what the story is so far as the membership of our board of
directors is concerned .
  Over the last 30 years, we have had about 160 members or 159
members on the board of directors, and at the present time only 4
members of the board have served more than 6 years and only 11
more than 3 years. But if you work out a little chart-1 term, 2
terms, 3 terms or more of this membership-you will find that about
half of them served for 1 term and about 40 out of the 160 served
for 2 terms, and about 20 served for 3 terms . I just mention that
to indicate the problem of rotation and the problem of continuity of
attention .
  Well, now, I can go on with further exposition about the organiza-
tion . If you would like to have me present to you information about
the selection of this board, I can do so .
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     Mr. Kocx . Why don't you do that? And also name the constit-
uent members, will you please?
     Mr. HERRING. Well, the board of the council is composed of 30
individuals. We have seven associations that designate, from panels
that we submit to them, their selection for membership on our board,
and those associations are the American Anthropological Association,
the American Economic Association, the American Historical Asso-
ciation, the American Political Science Association, the American
Psychological Association, the American Sociological Society, the
American Statistical Association . And then we have 8 members at
large, and I am a member of the board, so that brings it up to 30 indi-
viduals. These members from the associations are appointed or
designated for terms of 3 years, so that we have a new designation
or reappointment each year .
     Mr. Kocx . When you said a panel-how many names are on the
panel?
     Mr. HERRING . There have to be three names, under our bylaws, and
our practice is always to discuss this matter, and frequently there is
quite a roster of names .
     The important thing to keep in mind here is that here is an or-
ganization that is meaningful if you have people serving on the board
who are interested in what we are doing, and who are interested in
the advancement of research and who are working on research rather
than other things . And therefore we have on these panels the names
of people any one of whom would have an interest in the sort of
thing we are trying to do . It is pretty obvious that you would not
 ,N- ant to put on the panel the names of people who were interested in
something else . And this system has been in effect now since 1935,
and until some questions were raised here about it we never gave it
a second thought. It is a system that has proved quite workable and
satisfactory to all concerned.
     Mr. WoRMSER . Why don't you permit the societies, the constituent
societies, to determine their own representatives? Aren't they aware
of what the special purposes of your organization are?
     Mr. HERRING . Well, that is a perfectly reasonable question, Mr .
Wormser. There are all sorts of ways in which this thing could be
done . I gather from some of the men who were around at the time
that it was suggested a good many years ago that this organization
ought to handle its members on some other basis .
     Mr. WORMSER . It was suggested that a panel would be named from
which you could get the particular type of representative wanted .
     Mr . HERRING. We want the type who can give some time and thought
to the sort of work we are doing, and who has research interests rather
than interests of some other kind . And every now and then somebody
may serve on the board who is more interested in other things .
     Mr. WORMSER. Well, the suggestion has been made specifically that
you are interested particularly in not getting professors, let us say, who
might be more of the rational school than the empirical .
     Mr. HERRING . Well, you present that as a problem . It has not
been a problem, in my experience . I have not been aware of that
as a problem. And there is the freest interchange of opinion and
discussion about these matters .
     Well, I think one way of getting before the committee fairly graphi-
cally, perhaps, the sort of thing we do would be to say to you first
                      TAX-EXEMPT FOUNDATIONS                         819
that this board of directors meets twice a year . They review the pro-
gram. We have discussion on research problems . And our day-to-day
work is conducted through committees . We have about 30 com-
mittees that are quite active, and these committees are set up to con-
Sider problems where we think there is some research significance .
   Mr. HAYS . What sort of questions do these committees consider?
   Mr. HERRING . I have here before me types of questions considered
by my committees, because I thought that would be the most down-to-
earth way of getting at it . I will just sample this and offer for the
record a fuller statement, so that you can get the thing in that fashion .
   Let us take, for example, agricultural economics . We have a com-
mittee on agricultural economics. And the membership of this com-
mittee is made up of agricultural economists in this instance over the
country, who are interested in doing a better job in that particular
field. The common practice in the organization is that whatever
member of our board is interested in whatever committee would de-
termine whether or not he would serve on it .
   Agricultural economics, then, was in response to the opinion ex-
pressed over the country, particularly in our land-grant colleges and
other institutions where good work in agricultural economics is going
forward, that there be an opportunity provided for reexaminin
some of the assumptions underlying research in the agricultural fiel
and for critically restudying the research methods used 1 y agricul-
tural economists. So we brought together 20 of the younger outstand-
ing men in the field for a 2-day conference last January . They
talked shop for 2 days, and on the basis of their recommendations we
set up a committee which is currently concerned with two jobs : a
critical, fresh look at past research on low-income farms and farming
areas-its report is still in preparation-and an attempt was made
also to bring together the thinking of a larger number of experts on
the usefulness of various types of research, with particular emphasis
on finding the advantages of relatively simple methods over more
intricate ones for the analysis of agricultural problems .
   What I am trying to emphasize here is that these men were ap-
proaching the problem essentially as technicians, and they wanted to
see how they could improve the methods of analysis . I do not know
whether I need to emphasize that greatly, but we are not interested
in talking about : what should agricultural policy be? This group is
talking about how to use better methods for doig further research,
knowing what has already been done .
   Mr . HAYS . In other words, they would not be very helpful to Mr .
Benson in his present dilemma .
   Mr. HERRING . That is right.
   Mr. GooDwIN . What do you mean, "dilemma"?
   Mr. HAYS. Mr . Goodwin, the only thing I think I could say chari-
tably is that if you had some farmers in your district you would know
what his dilemma is . I am very keenly aware of it . His dilemma
is either finding a reasonable solution to the farm problem, or finding
a new job .
   Mr. GOODWIN . I am sorry I started it.
   Mr. HERRING . I will offer you one or two other illustrations . Here
is a committee . I sat in on a few of its meetings . It is a committee
on economic growth. This committee brings together several econ-
omists, sociologists, and anthropologists to find how and under what
820                       TAX-EXEMPT FOUNDATIONS

conditions economic systems grow . These include not only what are
thought of as purely economic factors, but also the customs and tradi-
tions and attitudes of people . We know that some parts of the world
have grown more rapidly economically than others, and this group is
interested in the questions : Why? Why is that? What is economic
growth? Can you measure it?           Can you identify it, even? What
are we talking about?
   One of the first problems is really to figure out how you can talk
about some of these matters .
   Now, in the case of economic growth, there are not only the eco-
nomic factors of capital and so on, and credit, and whatnot, but there
are problems that involve motivation . Some peoples in some parts
of the world just seem to like to work harder than other peoples in
other parts of the world . Is there any way of better understanding
these motivational factors? In some parts of the world people put
their money in a hole in the ground . In others, they put it in the stock
market . What can you find out about the readiness of people to
invest? What do they do with their savings? That may suggest, in
a very crude way, the kind of concerns this group is interested in .
And I will say this, that where they can find any statistical data on
this, they have a hard look at it, a very hard look . Because the
statisticians on that committee want to know whether these statistics
are any good or not . And if you want criticism of statistics, I can
refer you to some statisticians who are the most critical minded people
when it comes to the quantitative approach .
   Mr. HAYS . I might ask you, right at that Point : Is the council
interested in the individual, the so-called lone-wolf type of research,
that we have heard referred to here?
  Mr. HERRING . Well, we are very much interested in that . And if
I have given you an adequate enough indication of the kinds of ques-
tions, I will just offer you this memo of illustrative questions .
  Mr . GOODWIN (presiding) . In the absence of objection, it will be
admitted .
  The Chair hears no objection .
   (Tile material referred to is as follows : -)
             TYPES OF QUESTIONS CONSIDERED BY SSRC COMMITTEES
  Agricultural economics .-For 2 or 3 years various agricultural economists at
 State colleges and elsewhere urged that the council provide an opportunity for
reexamining some of the assumptions underlying research in the agricultural field
and for critically restudying the research methods commonly used by agricul-
tural economists . We brought together about 20 of the younger outstanding men
in the field for a 2-day conference a year ago last January . On the basis of their
recommendations we set up a committee which is currently concerned with
two jobs
   (a) A critical fresh look at past research on low-income farms and farming
areas . Its report is still in preparation but it will, we understand, for instance,
question whether a failure to study closely enough the existing statistics of agri-
culture and of income has not exaggerated the extent to which low-income farms
really exist .
   (b) An attempt to draw together the thinking of a large number of experts
on the usefulness of this or that type of research of a variety of research methods,
with a particular interest in pointing out wherever possible the advantages of
relatively simple methods over more intricate ones .
   Business enterprise research .-Because psychologists and sociologists as well
as economists are turning to what they view as a more realistic view of the busi-
ness enterprise as an integral and essential part of the American system, it
seemed useful just a year ago to bring together a number of those most interested
                         TAX-EXEMPT FOUNDATIONS                                821
for a preliminary conference . On the basis of that conference's discussion, we
set up a committee which is now in process of a critical stocktaking of the work
heretofore done by economists and others on the business enterprise, in the hope
that more significant and constructive directions for future work can be suggested .
 (It should be unnecessary to point this out, but the committee's discussions have
involved neither Marxism nor economic determinism, and instead are concerned
with promoting a better general understanding of the nature of and contributions
of American business enterprises .)
                                 ECONOMIC GROWTH
   This committee brings together several economists, a sociologist, and an anthro-
pologist in an effort to devise ways of better understanding how, and under what
conditions. economic systems grow . These conditions include not only what are
usually thought of as purely economic factors such as capital, raw materials,
and the like, but also the customs, traditions, and attitudes of the people . The
American tradition of free enterprise developed and flourished under conditions
of rapid economic growth . If it is to continue to flourish, or if economic progress
is to be fostered in so-called underdeveloped places, there is need for more ade-
quate knowledge of the complex factors which produce growth in some situations
and stagnation or decline in others, and for understanding of the reasons why
industrialization has taken root readily in some environments and failed to do so
in others. There is even need for an acceptable method of measuring economic
growth, whereby meaningful comparisons can be made between different econ-
omies. The committee, needless to say, does not presume that it will finally solve
these problems ; it serves to focus the interests and pool the experience of scholars
in many places who are working on these problems .
   His toriographii.This is a committee of historians who believe that their
profession may be able to sharpen its insights and to make more significant in-
terpretations of historical events by drawing upon the skills and knowledge de-
veloped by other social disciplines . It is engaged in, preparing. a book, for his-
torians, describing possible applications of the methods and data of such
disciplines as economics, political science, and sociology .
  Identification of talent .-In view of the large sums devoted to scholarships
and fellowships for the education of youths who may become leaders of future
generations, it would be obviously desirable to be able to identify more confidently
than is now possible those boys and girls who possess in undeveloped form the
talents requisite for high-grade leadership . Already much progress has been
made in developing tests of intelligence which indicate with considerable relia-
bility a pupil's capacity for higher academic study, but it is a matter of common
knowledge that leadership in business, government, and civic affairs calls for
traits of personality other than the ability to make high grades in school . The
committee on identification of talent is sponsoring several research projects
on particular aspects of the broader problem of identifying at, say, high-school
age, boys or girls who may be capable, with suitable education, of becoming
business leaders or statesmen . It is characteristic of the scientific approach
to such a problem that the problem must first be analyzed into smaller under-
lying problems which can be effectively studied by scientific methods . A head-
long attack on the problem as a whole would he premature at this stage . Thus,
for example, one investigator sponsored by the committee is making intensive
studies of high-school boys of equal scholastic standing but from different
social backgrounds, in an effort to discern why some of them aspire to higher
goals than others ; another investigator is attempting, by observing the behavior
of participants in a community organization, to define more precisely a trait
of leadership which he calls social sensitivity-the ability of a leader, so to
speak, to sense the unspoken feelings of members of his group . Out of the
results of such limited but carefully controlled observations it is to be hoped
that gradually a more adequate solution of the complex practical question of
identifying undeveloped talent can be achieved .
  Mathematical training of social scientists .-The field of interest of this com-
mittee is clearly indicated by its name . Its major projects thus far have been a
seminar in which a group of mathematicians and social scientists devoted the
summer of 1952 to preparation of teaching materials adapted to use in courses
for social-science students, and a summer institute in 1953, at which about 40
social-science teachers and graduate students received intensive instruction in
certain mathematical subjects . Not all branches of social science make use of
mathematical principles and methods, but their use is steadily growing, and there
is consequently an increasing need for mathematical instruction by which social
822                      TAX-EXEMPT FOUNDATIONS

scientists can gain useful competence in specific areas of mathematics without
devoting years to curricula which are traditionally prescribed for professional
mathematicians .
   Measurement of opinion, attitudes, and consumer wants .-This committee
exemplifies the council's role as a meeting place for research workers who have
common interests and problems but are separated geographically or by their dif-
ferent vocations and educational backgrounds . The committee, when it was
organized in 1945, brought together for the first time leaders in the use of
opinion and attitude surveys (polls, as they are popularly known) in govern-
mental, commercial, and academic organizations . While interested in different
kinds of subject matter, the members of the committee recognized many common
problems of method . All were interested in methods whereby the opinions and
attitudes of groups of people can be efficiently and economically ascertained,
and how to avoid the pitfalls which beset early ventures in public opinion polling .
Three major research projects were sponsored, touching on such matters as the
reliability of data obtained by questioning small samples of individuals, and the
kinds of bias which may be introduced by the interviewer who asks the questions .
When the final reports of all of these studies are completed and reviewed, it is
expected that the committee will be discharged in accordance with the council'ss
usual policy of maintaining each research planning committee only so long as it
appears to provide the most effective means of advancing research . The fron-
tiers of research are continually shifting, and each new forward thrust calls for
some special combination of skills, interests, and experience . When the Com-
mittee on Measurement of Opinion was established, it was almost alone in the
field ; subsequently, two major professional associations have cone into being,
which can be expected to serve on a wider scale many of the purposes for which
the council's group was set up .
   Migration differentials . About 15 years ago, the council issued a bulletin on
research on the migration of population . The present committee was estab-
lished in 1950 to review again the status of research on this subject, which is
of great timely importance in view of the tremendous volume of migration dur-
ing and following World War II. The committee, following a typical pattern
of council activity, is preparing a volume which will not only review and assess
the significance of previous studies of migration but also point to gaps in existing
knowledge of the subject which need to be filled if the causes and effects of
movement of people from place to place are to be understood . The committee is
interesting itself not merely in how many people have moved whence and
whither, but also in the factors which prompt people to move, the kinds of per-
sons who move as compared with those who reside permanently in one place,
and the social and economic consequences of this continual reassortment of people
in different communities . Do people, for instance, move from, their homes be-
cause business is poor where they are, or simply because they hope to achieve
greater satisfactions elsewhere? Is the average migrant a restlessly energetic
person, or a ne'er-do-well who drifts about in the vain hope of finding easy
success somewhere?
   Labor market research.-This committee in the past 2 or 3 years has conducted
a highly significant research experiment in carrying through a major study of
labor mobility in 6 cities through the entirely voluntary cooperation of research
men and institutes in 7 different universities . It has, at the same time, sponsored
an entirely independent and critical study of the research which its members
and others have done on labor mobility, to ascertain what has and what has not
been proven, to raise questions about the research methods used, and to suggest
recommendations about future more efficient work in this field . The results of
this appraisal are being published this summer as a typical number in the coun-
cil's series of research bulletins, and the results of the first project are also cur-
rently being made available.
   Scaling theory and methods .-This committee addresses itself to the highly
technical problem of devising methods by which the statements which people
make in everyday language about their opinions and attitudes can be translated
in quantitative terms. For example, if a number of persons are asked to state
their opinions on some public issue, their responses may range all the way from
strong approval, through indifference, to strong disapproval . In an election, the
voters may be required simply to vote "yes" or "no," but a social scientist seek-
ing to understand their attitudes needs some means of comparing the infinitely
variable degrees or shades of opinion which lie between these extremes . "Scal-
ing" is the term applied to what might loosely be called "measuring" such differ-
ences . It involves the use of various methods which are still in an experimental
	


                        TAX-EXEMPT FOUNDATIONS                             823
stage . The committee, like many other council committees in other fields, is
critically reviewing the results thus far obtained, and endeavoring to encourage
research workers to make needed improvements in the "tools" which they use .
   Mr. HERRING . I am delighted to turn to some discussion of our con-
cern with the individual and what we have done to encourage in-
dividual research . It is - a topic that I find particularly congenial .
   Mr. Kocx . Mr. Herring, unless you were coming to it later, maybe
it is more curiosity on my part, but could you tell us from whom you
get your money, and roughly how much that is? Could you show
what other organizations support you? In other words, you get
moneys not only presumably from the seven constituent members, but
also from some of the foundations . If you were going into that' later,
that is all right .
   Mr. HERRING . I will come to that. I would like to answer the Con-
gressman's question first .
   I think it would be most informing perhaps if I could give you a
picture of what our activities were and then talk about the logistics .
   Mr. Kocx . All right.
   Mr. HERRING. Well, the aid to the individual through the fellow-
ship program, I suppose, is the most direct thing, the one that first
comes to mind . For many years, we have had grants from founda-
tions to administer in order to appoint people to fellowships .
   Mrs . PFOST . Right there, Dr . Herring : What procedure do you fol-
low in granting fellowships?
   Mr. HERRING . Well, in the first place, these programs are national
competitions, and therefore it is exceedingly important to get the
word around that there are fellowships available .
   So over the years we have developed ways of bringing the announce-
ment to the attention of possible candidates over the country . We have
bulletins that we send out and put on the bulletin boards of the uni-
versities and colleges, and we send leaflets by mail . In 1953 about
4,600 copies were distributed in the initial mailing and many hun-
dreds more were later sent in response to inquiries . The initial mail-
ing list includes the heads of all accredited universities and 4-year
colleges in the United States and leading institutions in colleges,
graduate school deans, heads of social science research organizations,
some fifteen hundred or more indivdual scholars believed to be in-
terested . That is a mail distribution of announcements . Then we
send a covering letter that urges: the recipients of the letter to call the
offerings to the attention of their colleagues and students . An an-
nouncement is published in the council's quarterly publication, that has
a circulation of 5,100 copies among our 'educational institutions . Arid
an advance release of the announcement is sent to the interested pro-
fessional societies, suggesting that it be published in their journals .
So that is a way of bringing it to the attention of at least 40,000 people
with especial interest in this field .
   The persons apparently eligible to file applications are furnished
appropriate forms . The applicants give the names of references .
We carry on extensive correspondence with professors and others who
know these people . And then members of our staff travel over the
country and interview as many of the applicants as they possibly can
  So we go into this very systematically, very carefully, and for each
fellowship program that we have-and the ones that we have vary over
the years we have special committees set up . These committees are
824                   TAX-EXEMPT FOUNDATIONS

 composed of people from the universities and colleges, and we try
 to get in the committee the array of knowledge that would enable the
 members of the committee to pass on the qualifications of the scores of
 applicants that they have to consider .
    Mr. HAYS . So you do, then, pay considerable attention to the indi-
 vidual or lone-wolf type?
    Mr. HERRING . As for our interest, we have at the present time, I
 am happy to say, a fellowship program that enables us to give some
 attention to some men in their undergraduate work, and then we have
 predoctoral, postdoctoral, and we have our faculty award fellowship
 pro am. That is designed for a few people further along .
     ow, I think it is important to get before you again some sense of
 proportion about all this . This is a big country, and there are hun-
 dreds and hundreds of educational institutions . We appoint some-
 thing under 150 people, counting all of our fellowship programs at the
 present time, and we have more annually, and we have about five fel-
 lowship programs at the present time . In other words, under 1 of
 these programs we would appoint 30 people . You can imagine, then,
 that the competition is keen .
   Mr. Kocx. On that point, Mr . Herring, do they have a uniform
 examination, or does each one present a thesis, or something? Just
 what does the committee have before it in making their selection?
 Just how hard is it to weed them down to those 30? That is what
I want to know .
   Mr. HERRING. If the committee would be interested, I can file with
you the forms that we use . We have them here, and you can look at
them . But essentially what we are getting at is the man's academic
record. We give particular attention to his plan for study . We want
to know what he would like to do under this program . We get a very
good line on his ability and his record from the people with whom he
has been working. I would say that the question would be what the
stage of the man is, what training would be most helpful . If it is pre-
doctoral, then he has completed the preliminary requirements for the
doctorate. What additional training would be helpful there? The
criteria are broad and flexible . We are trying to find people of prom-
ise and ability, men who have some imagination and have an idea that
they want to pursue . We were interested essentially in finding able
people who have a dedicated interest in carrying forward their
research.
   Mr. Kocx . What I am getting at is : Do they submit any essay from
which you determine that they have imagination, or is it more from
their background record?
   Mr. HERRING. No, whatever their publication record may be, or
some manuscript they might want to offer .
   Mr. Kocx . There is no uniform material that you distribute among
all of the applicants, is there?
   Mr. HERRING. It is a very uniform picture . We get all the tangible
evidence we can and the committees read the writings and so on .
   Mr. HAYS . Dr . Herring, there has been frequent complaint from
previous witnesses, and apparently it is a complaint that a good deal
of cognizance has been taken of by those reporting on these hearings,
that these previous witnesses have made this complaint over and over
                         TAX-EXEMPT FOUNDATIONS                                825
again . In fact, there was even an editorial in the June 11 edition of
the Chicago Daily News, in which they say, and I quote
  Frequent complaint against the foundations is that they have been more
generous to the liberal viewpoint than to the conservative .
   If you have followed these hearings or have read any of the trans-
scripts, you will know that that has been made here . Would you care
to comment on that at all?
   Mr. HERRING . Well, my comment would be that what we are inter-
ested in is the man's ability, his growth potential, his training in his
field ; and what his personal political views are or whether he is to
the left or the right is just something that isn't relevant to this sort of
consideration .
   Mr. HAYs . Well, the editorial goes on and gives their solution,
which I wish were original with me . I love this phrase, but I have
to give credit where credit is due . I wish I thought it up. They say
"Perhaps the only way the foundations could overcome conservative
objections to this would be to label such studies as research into
'psychoceramics' ; in simpler English, the study of crackpots ." They
feel there are specimens in both camps .
   You don't have to comment on that . I really don't think it needs
any . It sums up my feeling . In other words, as I see it, the kind of
people you are looking for are people who are going forward into new
fields, not reworking fields that have already been plowed .
  Mr. HERRING. And in the fields of their professional competence
and development . It is within the context of their professional
growth and development that we approach these things .
   I don't want to forget Mrs . Pfost's question, and if I may, I will
offer for the record a 21/2 -page description of the procedure followed
in the administration of these fellowships, which might be useful .
   (The material referred to is as follows :)
  The following procedures are involved in the administration of fellowships and
grants-in-aid of research by the Social Science Research Council .
  1. In the early autumn of each year offerings of awards for the ensuing year
are publicly announced through several channels . The published announcement
briefly describes each type of award and the eligibility requirements for candi-
dates, and sets a closing date (early in January) for acceptance of applications .
It is explained that later applications will be considered only if time permits
after prior attention is given to those filed on time .
   (a) Leaflets are widely distributed by mail . In 1953 about 4,600 copies were
distributed in the initial mailing, and many hundreds more were later sent in
response to inquiries. The initial mailing list includes the heads of all accredited
universities and 4-year colleges in the United States and leading institutions in
Canada ; chairmen of social science departments in the larger institutions ; grad-
uate school deans ; heads of social science research organizations and institutes ;
and some 1,500 or more individual scholars believed to be interested .
  A covering letter urges recipients to call the offerings to the attention of their
colleagues and students .
   (b) An announcement is published in the council's quarterly publication,
Social Science Research Council Items, which has a circulation at present of
about 5,100 copies.
   (c) An advance release of the announcement is sent to the interested profes-
sional societies suggesting that it be published in their journals .
  2 . Persons apparently eligible to file applications under the announced terms
of the fellowship and grant programs are furnished appropriate application
blanks at their request . The council staff routinely declines to furnish blanks to
persons who clearly do not meet the announced objective requirements with
respect to age, previous education, permanent residence in the United States or
Canada, and the nature of the project or study for which aid is sought ; but the
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 staff does not refuse to accept applications from candidates who are technically
 eligible, even though they appear to be unlikely to receive awards .
   3 . Applicants are invited to name sponsors from whom letters of recommenda-
 tion can be had (three in the case of most types of awards) . In addition, the
 council staff frequently solicits written reports from other scholars whom it
 believes to be qualified to offer informed and honest judgment . The form used
for references on fellowship applicants includes questions concerning both the
 applicant's character and his qualifications as a social scientist .
   4 . Between the closing date for filing applications and the time of meetings of
 the selection committees in March, an effort is made to arrange an interview with
 a member of the council staff with each candidate for a research training or
faculty research fellowship who is not so obviously unqualified that favorable
committee action is out of the question, or so far away that the time and expense
required would be prohibitive.
   In 1954 about 90 percent of all applicants for these 2 types of , uwards were
interviewed . Applicants for undergraduate research stipends or for grants-in-aid
of research (both of which involve much smaller sums than the fellowships) are
not routinely interviewed by the staff, but the procedures are similar in other
respects . When traveling throughout the country to interview candidates, staff
members endeavor also to secure from teachers and associates of the applicants
such additional insight as can be gained into their qualifications and personal
characteristics. It is our experience that more incisive appraisals are often
made in these conversations than in written communications . Long-distance
telephone calls to mutually acquainted scholars of known insight and judgment
often add significantly to our information about candidates .
   5. In the case of applicants who have not completed their formal education,
official transcripts of college and university records are required . Under the
faculty fellowship and grant-in-aid programs, candidates are routinely asked
to submit specimens of their publications or writings for scrutiny by the com-
mittees ; the same is done under the other programs in individual cases in which
such further evidence seems desirable .
   6 . About 2 weeks before the meeting of each fellowship or grant committee
copies of applications and letters of reference are sent to each committee member
for study . When large numbers of applications must be acted upon by a single
committee, it has been our practice to distribute in advance copies of clearly
inferior applications to 1 or 2 committee members rather than to all . This is
done in such a way, however, that the member or members receiving such appli-
cations are not aware that they are the only readers and are therefore not
prejudiced by the staff's action. Unless the committee member or members
reading these applications immediately recommend their rejection, copies are
made available for review by the whole committee .
   7 . Each committee meets for 1 or 2 days, depending on the volume of work
to be done . Each application is taken up and voted upon after as much discus-
sion as appears necessary . Usually a substantial proportion of applications are
quickly rejected by unanimous consent on a first reading of the names in alpha-
betical order .
   Members of the council staff who have interviewed candidates attend the com-
mittee meetings and are called upon to supplement by their comments the docu-
mentary materials. (In a minority of cases someone other than a member of the
Washington office staff of the council interviews candidates in remote parts of the
country but cannot attend the committee meetings . Ills comments are sub-
mitted in written form .) It can be said that committee members have, almost
without exception, conscientiously studied the documents before coming to meet-
ings ; and that proceedings of the committees are in no sense a perfunctory rati-
fication of selections made by the staff . In fact, it is a well established and fre-
quently reiterated policy that the staff shall not attempt to prejudge the com-
mittee's decisions .
   8. As quickly as possible after each committee meeting each candidate is
notified by mail of the action taken . If an award has been recommended, the
conditions governing tenure are enclosed, and must be agreed to in writing before
the award may become effective.
   9 . Shortly after each meeting minutes are circulated to all committee members
and to the president of the council .
    Mr. WoRMSER . You do, then, consider the project offered by the
applicant without regard to the man himself . In other words, you
	


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might find an exceptionally able candidate and yet turn him down
because of the project which he suggests .
   Mr. HERRING. I wouldn't say that at all, no .
  ,*r. WORMSER . No, I am asking you that.
   Mr. HERRING . Well, we are interested in the man and his promise
and the way he goes about his planning of his own research, and I
would say that his plan for study is a very important indication of
his competence as a potential research man, as to what is researchable
and what further training he needs . But I would not use the term
"projects" in this context, because this is not the financing of projects .
It is the financing of men and women, individuals .
   Mr . WORMSER. Mr. Herring, I don't mean to be obscure in any of
my'questions, and my reason for asking that is again the criticism
that has been made, that has various facets, that an organization of
your kind does to a certain extent exercise control over the direction of
research . Now, if you had an exceptionally able man, would you turn
him down merely because you did not like the nature of the project
which he suggested? Or would you perhaps try to turn him to an-
other type of program
   Mr. HERRING. As I say, the judgment is on the man and his develop-
ment. And if you want a pointblank answer to the question, "Would
we turn a man down because we don't like his project?" I would say
"No." The answer isn't a particular project . The only way I can
answer your question responsively, Mr . Wormser, is ' to say we are
interested in the individual and his growth and his training and how
he can become a better worker in his professional field .
   Mr. WoRMSER . He suggests the subject for research . And you may
think that is an entirely inadequate or impossible or useless piece of in-
vestigation . What do you do in a case like that, where he is an awfully
good man?
   Mr . HERRING . Well, in a case of that sort, you see, there is really an
internal contradiction there . If he is an awfully good man and has
an awfully bad subject, I don't see how he could be an awfully good
man .
   Mr. WoRMSER . You may think it is awfully bad .
   Mr. HAYS. Well, Mr . Wormser, we are gettinback to thought con-
trol there, are we not? You cannot sit here and -   pick out any witness's
thoughts as to good or bad . There has to be some standard .
   The CHAIRMAN . As I understand it, Mr . Wormser, if you will per-
mit me to clarify the question, from the brief time that I have had an
opportunity to assimilate it, we have a very good man, recognized as
capable. He comes up with a project . There might be a difference
of opinion about the project . He thinks it is good . Another good
man, Mr . Herring, would not think it a good project . There is a
difference of opinion . Does Mr. Herring's view with reference to the
desirability of the research project prevail, or that of the man who
initiated it?
   Mr. WORMSER . Merely to pinpoint what I meant : Is the emphasis
upon the man or upon the subject?
   Mr . HAYS . Of course . But you are getting into a field where I don't
think anyone can give you a specific answer to a general question .
Suppose someone came up with a project to do research into the fer-
tility of ostrich eggs.
     49720-54-pt. 1-53
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    Mr. Kocii . But you may exercise thought control by refusing to let
 him go ahead with it .
    Mr. HAYS . You can tell him to go ahead with it if he can find some-
 body to finance it, but you do not happen to feel you should . I think
 you have to have some responsibility as to how you hand out this
 money . Or else if you want us to pass a law saying you have to give
 the money to the first 150 applicants who come in, that is about the
 only other way you could do it.
    Mr. Woa srR. I want to explain my question . I am just interested
 in the methods you used . I am not trying to attach any significance to
 them.
    Mr . HERRING . I would like to spend all the time on this that you
 will permit, because I think it is important to clarify it . We are talk-
 ing now about fellowships . And in the administration of fellowships,
 we have committees of men drawn from universities who are com-
 petent to deal with the fields under consideration . So it is a committee
 judgment . That is one thing .
    Secondly, we are thinking of young men and women in their pro-
 fessional training . We are not thinking of projects . So we want to
know what the previous academic record has been, what further train-
 ing is needed, and what research interests the man has . So that we are
not pasisng judgment on whether this project or another is good in
the abstract. We are looking at the man's interest, and we want to
see what will help him most .
    Now, I will tell you one proposal of a candidate that rather attracted
my attention. As I say, I don't sit on these committees, but I was
rather interested in this, as a human interest facet . We heard of a
young chap at the University of Texas who had thumbed his way
to the eastern seaboard because he wanted to look at some of the records
that Charles Beard had looked at when he wrote his Economic Inter-
pretation of the Constitution . And we were interested in this young
man as a research man . He got a fellowship . But what impressed
me there was the eagerness and the zest and the energy of this chap,
who was thumbing his way to archives . I have heard of people thumb-
ing their way to various people, but the picture of a young fellow
thumbing his way to the archives in order to have a look at the record,
I thought was a rather interesting picture .
   Well, now, may I go back to this interest in the individual? Because
fellowship is one thing, and it is along story . We have directory of
fellowships that we can offer as an exhibit, giving you the record of
the over 1,200 people over the years who have had these fellowships,
But mark you, that is a 30-year period . So that keeping the sense of
proportion again, this organization is dealing with a very small num-
ber. I could not give you the total number of graduate students in the
United States in these fields . I tried to get it, but we are not suffi-
ciently organized here from the national standpoint even to have fig-
ures of that sort.
   But there are other ways of helping the individual . For many
years we have had a very modest grant-in-aid program, $25,000 ;
up to date, that has been the size of that sum, and we have a little bit
more for next year.
   Grants-in-aid to help people complete some work engaged in are
allocated by a committee, again, of competent scholars, and they do
the best they can in dividing up $25,000 in $500 or $1,000 grants .
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So you can see how far that money goes . We really need more money
for that sort of thing ; and we have a bit more money for next year,
and I hope I can scratch around, and I hope we can find some more
foundations for this grant-in-aid, because it is very helpful indeed to
get that few hundred dollars to do the final typing or consult the docu-
ments or get the manuscript ready for publication .
   Now, within the last few years we have had summer seminars . The
idea there is to find out whether there are a number of people, younger
men again, who have some common research interests . They want to
improve some method, or they want to discuss some theory in their
field . What normally happens?
   Well, the summer recess, as the traditional period when the scholar
could do further study and catch up on his reading, and so on, is fad-
ing . Economic necessity, balancing the family budget, comes into it,
so that more and more you find professors teaching in summer school .
Well, now, we have a little grant that enables us to offer to research
men who participate in these seminars the equivalent of what they
might otherwise get if they taught summer school, a few hundred
dollars, and that enables them to work together through the summer
and talk through some problem .
   Mrs. PFOST. Dr. Herring, why don't the foundations just divide up
their money among the universities and colleges of the country and let
them spend it, instead of setting about it in this way?
   Mr. HERRING . I guess the quick answer to that would be that there
isn't enough money . If you took all the colleges and universities, you
would have about 1,700 institutions, and it is awfully hard to say with
precision just how much foundation money goes into the social
sciences, but the best finure I can arrive at by consulting annual re-
ports, and so on, would be : somewhere in the neighborhood of $12
million.
   Mr. Koeii. Annually?
   Mr . HERRING . Annually, yes . And you would divide $12 million,
 let us say, by 1,700 institutions, and you would come out at about
$7,000 per institution . In other words, you could divide and dissi-
pate. You could escape responsibility . You could say, "Well, we will
 just leave it to the other fellow and spread it thin ." Or you can face
 up to the difficult decision of saying, "Well, this institution is doing
 better work, in our judgment, than the other institution ."
   The CHAIRMAN . But, Doctor, if the idea of working through the
established universities, as raised in the question by Mrs . Pfost, should
be favorably considered by the foundations, do you think it is logical.
to conclude that they should adopt purely an empirical attitude and
divide it evenly among the 1,700 colleges of the United States? That
would not be the method by which they would go about it ; would they?
   Mr. HAYS . Would you permit me to interject there? If they did
not, that would be about the only way in the world they could keep
 from being investigated at some time in the future by somebody who
 said they were not dividing it up the way it ought to be . The people
 who did not get it would be the people complaining ; would they not?
   The CHAIRMAN . They have made substantial grants for buildings
 and for the general funds of educational institutions .
   Mr. HAYS . But $7,000 a year would not build a Chic Sale for them
 at today's prices.
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   The CHAIRMAN . But, in the first place, when they make a grant to
a college or university, that institution has to meet certain require-
ments, as I understand it, that show that it is in a position to utilize
the money advantageously.
   Mr. HERRING . Mr. Chairman, that is where the money goes . It
goes to universities and colleges. But some foundations have to make
responsible decisions as to which ones.
  The CHAIRMAN . But do you not think the suggestion is not quite
fair, that they would be put in a position where they would have to
divide the money between the 1,700 colleges of the United States?
  Mr. HERRING . I confess I just offered that by way of emphasis . I
concede you would not want to see them do that .
  Mr. WCRMSER . Do you think your organization is more capable of
selecting these desirable fellows than their own universities ?
  Mr. HERRING . I think the first point to emphasize there, Mr .
Wormser, is that, as I recall my days at Harvard, there were more
fellowships at one institution there-you know . They had scores of
fellowships. I wish we had it here with us . There are so many
scholarships and fellowships available through so many organizations
and so many requests and endowments over the years that it is a book
about that thick. In other words, we have to get this thing in
perspective again . There are just scores and scores of ways for able
young men to get fellowship and scholarship support ; and most of it
is through our colleges and universities .
  Mr . HAYS . Dr . Herring, right there : The point is that you do not
handle all of the fellowships or any major part of them in the social
science field ; is that not true?
  Mr. HERRING . That is right.
  Mr. HAYS . You handle a very minute number, and various colleges
and universities have some of their own, and the foundations perhaps
make some directly . I don't know.
  Mr. HERRING . That is right . The foundations would make a grant
to an institution, perhaps four fellowships. The institutions have an
array of scholarships and fellowships. The point. I would like to
emphasize, that I think might be helpful here, is that our programs in
fellowships offer opportunities perhaps to people who are not at some
of the institutions that may have larger funds . It is a national com-
petition, whereas the fact is that most young people get their fellow-
ship support from the colleges and universities . And we have a total
of around 150 appointees a year for the whole United States .
  Now, just put that little corporal's guard in the perspective of the
phalanxes of American students, and you can see that it is a very
limited thing . I wish we had substantially more . I think it is very
important that we do have greater fellowship resources . I think it
is rather wasteful when we have twice as many qualified people ap-
plying as we can take care of.
  The CHAIRMAN . Do you have any other questions?
  Mr. KocHI. You were going to continue, Mr . Herring .
  Mr. HERRING . I am still hammering away at helping the individual
through fellowships .
  Mr. GOODWIN . Do you ever have to meet the criticism, that favori-
tism is shown? If some bright young fellow gets an award, and
somebody discovers that he is a nephew of Dr . Black at Ivy College,
                     TAX-EXEMPT FOUNDATIONS                        831
who holds down the Chair of Sociology, and somebody says, "Uncle
William may have put in a word for him"?
   Mr. HERRING. No, sir, I can't think of any such cases .
   Mr. GOODWIN . You keep very clear of that, do you?
   Mr. HERRING . You see, it is kind of competitive. In this spirit of
competition, you have these self-correcting things, you see . You
have people on the different committees from these different institu-
tions, and there is a good deal of competition among our various
colleges and universities . So you can imaginee that Professor Y from
Siwash keeps an eye on the situation, and there is a certain competi-
tive element there that is a protection against the kind of dangers
you refer to .
  Well, there is still another one of these summer programs we are
getting under way. That is to present to groups of people who share
some interest an opportunity to get a little better research training .
We had an experience that was encouraging along that line, in the
field of mathematical training, not statistical training but mathemati-
cal training. And we had a seminar, a training institute, if you will,
that brought together 40 or more people . And the summer was spent
in getting a very intensive training in mathematics, so that men could
apply that in their work as they saw fit later on .
  Now, there may be some other training methods that we can work
cut, and offer this opportunity for men to spend the summer recess
at that sort of thing .
   Mrs . PFOST . Dr . Herring, do you concentrate on the so-called
empirical research, or the quantitative, to the exclusion of the other
kinds?
   Mr. HERRING. I could perhaps indicate the range of topics . The
answer is "No ." We do not. But I would like to develop that
thought a bit by giving you some illustrations of the varieties of
topics.
   And I will say, Mr. Wormser, that here we are talking not about
fellowships and the training of the young man as he goes forward,
but we are talking about this grant-in-aid program, where people are
further along. And it might be of interest to the committee if I just
gave you some illustrations of the sorts of things .
  Mr. WORMSER. Does your answer "no" apply only to the grants-in-
aid, or all these fellowship grants ? You said "no," that you do not
specialize in empiricism .
  Mr . HERRING . That is right . I want to come to this facility re-
search fellowship that has been mentioned . I think you might be
interested in some further light on that .
   Here is a man at Mount Holyoke : Study of the Influences in Roman
Life and Law . Here is a professor at the University of Toledo
Study of the Latin American Philosophy of Law . A man at North-
western : Preparation of a Revised Edition of a Guide to the Study
of Medieval History . Here is a man at Louisiana State University
History of Political Ideas .
  Here is a professor of sociology at the University of Notre Dame
Theoretical Study of Ethnic Groups . Another man, at Wells Col-
lege, Research on the Organiation of Medieval Trade . A man at
Oglethorpe : Study of the Conditions of Political Freedom . And
so on .
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   Now, in our annual report each year, we have a list of the topics
and names of individuals. It is all spread in the record here, and
if I may offer as an exhibit, Mr . Chairman, copies of our annual
report, you would find this spelled out in the variety of institutions
and so on indicated .
   The CHAIRMAN . It will be accepted .
   (The Social Science Research Council Annual Report, 1952-53,
was filed for the information of the committee .)
   Mr. HERRING. Another way the individual is helped is through the
conferences that we sponsor from time to time . We had quite an
interesting conference at Princeton, a meeting place for some 60 or
more people over the country who had some kind of special interest
in Africa as an area . And that brought together people who could
sit around a big table and say "All right . This is what I am inter-
ested in." And they could exchange views that, it seems to me, would
fall in this same category of encouragement of the interests of indi-
viduals . We have a study Mr . Sibley did of Aid to Individuals . We
made a study of the problems there, of getting financial support, and
if you would like to have that as an exhibit, that also could be offered
for the record .
  I have just a seven-line statement that I rather like as expressing
the spirit of this thing . It was written back in 1926, but I think it
reflects the spirit we try to adhere to .
  Nothing is more certain that that individual insight, flash of genius, brilliant
statement of a problem, a patient pursuit of an obscure trail to a great truth,
will be an indispensable part of the development of the social sciences if they
are to attain the goal toward which we all look . The whole purpose of the
council will be lost if we cannot aid those creative spirits, if we cannot provide
for them better facilities, if we cannot help them in the discovery and solution
of problems .
   I just offer that, going back many years, as a statement of the faith
that we have that if you can help the individual develop, you have
come a long, long way .
  Mrs . PFosT . Dr. Herring, right there : How many social scientists
would you say there are today? And could you tell us where they are
employed?
   Mr. HERRING . Well, I could offer you an estimate . If you take the
membership of the associations in these fields, it adds up to around
40,000 . Now, that figure may err on the large side, because there are
some duplications . Some people belong to more than one association .
Our chairman belongs to two of the associations, for example, so he
would be counted twice in this figure of 40,000 . And there are some
that belong to the associations but are not actively engaged in the work,
though well disposed toward the field, you see, and holding member-
ship .
   So with those qualifications, I would say roughly there are probably
about 40,000 . There are some people, of course, that are active in these
fields but don't belong to the association ; however, I think that would
probably be the exception.
   Mr. GOODWIN . At this point, what does social science embrace? I
assume it is sociology, philosophy
   Mr. HERRING. Some aspects .
   Mr. GOODWIN . Economics
  Mr. HERRING. Economics, yes .
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  Mr . GOODwIN . Political economy .
  Mr. HERRING . That is right . Anthropology, statistics .       We feel
that the seven associations that I mentioned before are those that are
most directly concerned, and then there are others, so that would be
economics and political science and anthropology and statistics and
psychology and history .
  Mr. GOODWIN . I would think history would be more of an exact
science . History is a statement of facts, things that happen . On the
16th day of June, the gentleman from Tennessee presided over a hear-
ing of the Banking and Currency Committee . Certain things hap-
pened on a certain day . I am curious to know why that comes to
sociologists.
  Mr. HAYS. It comes in this way, if you will permit me to interject .
  Mr . GooDWIN . I would just as soon have your opinion as the doctor's .
  Mr . HAYS . I am not trying to be facetious, either .
  Mr. GOODWIN . Neither am I .
  Mr. HAYS. Ten people witnessed a hearing of the House of Repre-
sentatives, and all 10-of them write down to the best of their ability
what they saw . You might get considerable variation in the historical
account of it. And that is why history, although apparently it would
be in some phases-I am speaking as one who has done research in it-
is not an exact science . You cannot tie down specific dates, every-
thing about it, because some of the individuals who observed or wrote
about it saw it one way, and others another way, so there are certain
areas that you have to evaluate .
   Mr. GOODWIN . I am a little at a loss, here . My few associates have
had experience in the teaching field . And if Mrs. Pfost has not, she
should have had.
  Mr..BAYS . I did not mean to take the answer away from you, Doctor .
I would just be interested to see whether you agree generally .
   Mr . HERRING . That indicates that it is a subject that not only here
but elsewhere one can discuss . As far as we are concerned in the
Council, we include history as one of the social sciences, but it also is
included as one of the humanities, and I do not think you can draw
any . precise line . ' There are historians and historians . Some would
be concerned more with the chronicle of dates, and some would be con-
cerned more with efforts of interpretation . But we feel that the time
factor is terribly important and the sense of perspective that you get
through approaching matters historically . And over the years there
have 'always been historians who have found it congenial to work
with their colleagues in other fields. So that we do not treat it as a
matter that you settle in either/or fashion . The historian may take
up economic history as a special field . Some historians go at matters
more in terms of a literary approach, an artistic approach .
   Mr. GOODWIN . That brings up one question I had, another one per-
haps to expose my ignorance or the fact that I may not have followed
closely the prior hearings. But you mentioned in your statement the
empirical approach and the rational . Now, you say that the empiricist
says, "Look at the record." Now, I can grasp that . I know what that
means . Can you put into easy English and into a phrase equally
succinct a definition of the rationalist?
   Mr. HERRING . Well, Mr . Goodwin, I will try, but I didn't bring the
rationalistic approach into this, so I don't think I can qualify too well .
834                   TAX-EXEMPT FOUNDATIONS

   But what I think we are talking about : If you are going back to the
rationalistic school of philosphy, and that is how this got in, that was
a school of thought that emphasized the capacity of the human reason
to grasp reality directly, through ratiocination rather than through
sensation. It is a little bit mystical, perhaps, but there was an im-
portant school of thought . So most of us sort of compromise on say-
ing, "Experience has been quite a teacher, and we will be as rational
as we can, but we won't worry ourselves about a philosophy of knowl-
edge that gets into these intricacies."
   Now, that is really something for the seminar room rather than for
this hearing room, I suppose .
   Mr. WORMSER . Could I interject something there? Because this
may help Mr. Goodwin. In the sense that empiricism has been used
here, we have been using it in relation to research .
   Is it not essentially and plainly the inductive method as against the
deductive method ? And before you answer, I want to make one state-
ment in regard to your statement, in which I think you rather gave
the impression that the staff or Mr . Dodd or someone connected with
the committee meant to derogate empiricism as a method of inquiry .
I want to assure you that the staff is fully aware that empiricism is
not only desirable but a necessary component of scientific research .
We quite realize that . Our only concern in that area is whether there
has been an excess, in the sense that empirical studies which did not
take into account what you might speak of as some of the premises in
a sound syllogism . But to illuminate Mr. Goodwin further, aren't
we talking about primarily research methods? And there, isn't it in-
duction against deduction?
   Mr. HERRING . I tried to develop that in my statement . I don't
think I would agree with that. I tried to spell it out in the statement .
I think that would be an oversimplification .
   Mr. WORMSER. An oversimplification?
   Mr. HERRING . Well, I don't see quite, Mr . Chairman-pardon my
saying so, but there is a question that Mrs . Pfost raised some time
ago, and I haven's gotten through with it . We are getting over to
philosophy of knowledge, and she was saying, "Where are these
people living?"
   You remember, she said, "Where are these social scientists, and
where are they employed?"
   So, if I may go back to that original question, I would like to do so .
   Well, they are employed in our universities and colleges in teaching,
and we may think of that first. But I want to emphasize that while
you cannot say with precision just what percentage are employed
outside of our universities, I think it would be reasonably accurate to
say about 40 percent of these people are engaged in activities where
they apply their training as social scientists not in the classroom but
in the market place . They are employed by business, in market analy-
sis. They are employed by Government, and a whole host of agencies
where economic analysis and other forms of analyses are necessary .
So I do hot want you to think of this group as strictly a professional
group . They are engaged in many businesses and public agencies .
   The CHAIRMAN . If I might interject, with reference to procedure,
it is now 4 o'clock, and some members of the committee have some
engagements, and some work has to be done in the offices .
                       TAX-EXEMPT FOUNDATIONS                           835

   Mr. KocH . I think Mr. Herring is willing to be here tomorrow. As
 far as we are concerned, we recognize that we have a real expert as
 a witness today, and also he is a very agreeable witness to deal with,
 and we feel that if we go into these various criticisms with him
thoroughly, maybe the examination of succeeding foundations may
 not be so long . And we would like very much to get the benefit of all
of the education that he can give us on this . All of which adds up to
 this : that I would like to examine him for a couple of hours tomorrow
at least. That is why we can't finish with him tonight .
    The CHAIRMAN . It is convenient for you to be here tomorrow?
   Mr . HERRING. Quite convenient . And if it is as pleasant an expe-
rience as today, I would be delighted .
   Mr . HAYS . Then you have 2 hours of questioning?
   Mr . KocH . Yes.
   Mr. HAYS . We had better plan on being here all day, then.
   The CHAIRMAN . I think you have made a very splendid presenta-
tion . I know you are a man of very great ability, with a splendid
background and training .
   There was just one sentence in your statement that I thought was
out of cast, Doctor .
   Mr . HERRING . I would appreciate knowing what it is .
   The CHAIRMAN . You have made an analytical study of the state-
ment that was presented by a member of the staff . One is impressed
by it . But what appeared to me to be out of cast in your statement was
your characterization of the individual .
   For example, beginning with the last sentence on page 5
   The most charitable explanation that comes to mind is that they speak from
ignorance rather than malice.
   That is not like you .
   And the other is on page 3, referring to the work of the staff as-
symptomatic of a troubled state of mind on the part of a few persons * *
   I do not think that is characteristic of a man of your position and
great capacity . Because you are interested in analyzing what was
presented, and not analyzing the individuals who presented it . And
I rather regret that you permitted those two sentences to creep into
your statement.
   As you grow older you become more understanding of people who
differ, and I seldom take exception to people differing with me .
   The committee will meet in this same room tomorrow morning at
10 o'clock.
   Mr. HAYS. May I make a minute statement about Dr . Herring's
statement?
   I would just like to compliment you on your statement, Doctor, and
say that I was especially pleased to see that you took a positive ap-
proach to this problem rather than a negative approach ; that you
did not spend a lot of time quoting a lot of paragraphs in answer to
a lot of allegations that have been made about the foundations . And
I do not really refer so much to the staff's reports as I do to some of
the witnesses who have made, some fantastic charges, which have
failed to stand on their own feet, because of the absence of any fact .
I am very happy that you did not waste any time refuting those
things, which had already fallen flat on their face, but that you did
take a positive approach.
836                   TAX-EXEMPT FOUNDATIONS

   Now, I am sure that from what little I know about you and have
been able to find out, you did not mean to hurt anybody's feelings
by any statement that you made, and as far as saying something about
someone's troubled state of mind, I do not feel there is any implica-
tion involved there . As a matter of fact, I was rather amazed to
notice that one of the great dailies picked up a phrase that I had
more or less pulled out of thin air . I called some of this testimony
"a plot psychosis," in which some people apparently could see a great
plot on the part of some of these foundations to reorient the whole
social-science field. And I certainly meant no implication by that .
It was just an effort on my part to try to describe the situation as
I saw it. And I am certainly not trying to put words in your mouth .
And I feel, for the benefit of the staff, Mr . Reece, Mr . Goodwin, or
anyone else, that the words "troubled state of mind" were simply
an attempt on your part to describe the picture as you saw it, and
that you certainly did not mean any implication or bad connotation
or unfavorable impression to be left.
  The CHAIRMAN . I would not take exception to being said to have
"a troubled state of mind ." A man who does not have a troubled
state of mind in these days is abnormal, I think .
  The committee stands adjourned until tomorrow morning at 10 a. m.
   (Whereupon, at 4 : 10 p. m ., the hearing was adjourned until 10 a . m.,
Thursday, June 17, 1954 .)
                    TAX-EXEMPT FOUNDATIONS

                       THURSDAY, JUNE 17, 1954
                             HOUSE OF REPRESENTATIVES,
                        SPECIAL COMMITTEE To INVESTIGATE
                                     TAX-EXEMPT FOUNDATIONS,
                                                        Washington, D . C.
  The special committee met at 10 a . m., pursuant to adjournment, in
room 1301, New House Office Building, Hon . B . Carroll Reece, chair-
man of the special committee, presiding .
  Present : Representatives Reece, Goodwin, Hays, and Pfost .
  Also present : Rene A . Wormser, general counsel ; Arnold T . Koch,
associate counsel ; Norman Dodd, research director ; Kathryn Casey,
legal analyst ; John Marshall, chief clerk .
  The CHAIRMAN . The committee will come to order, please .
  You may proceed, Mr. Herring.
TESTIMONY OF PENDLETON HERRING, PRESIDENT, SOCIAL SCIENCE
  RESEARCH COUNCIL, ACCOMPANIED BY PAUL WEBBINK, VICE
  PRESIDENT, SOCIAL SCIENCE RESEARCH COUNCIL, AND TIMOTHY
  PFEIFFER, ATTORNEY, NEW YORK, N . Y .-Resumed
   Mr . HERRING . I am very happy indeed that I can go forward, call-
ing to the committee's attention the facts and principles that seem to
me relevant and that I hope will be helpful in this inquiry .
   There were one or two points raised by members of the committee
yesterday that I would like to go back to, because there was insufficient
time to develop the interesting points that were mentioned .
   The first point relates to Congressman Hays' inquiry about the
Soviets and their attitudes toward the social sciences and the founda-
tions, and the second point relates to the interesting line of comment
opened by Congressman Goodwin in his references to history . So
if it is your pleasure, I would like to take up those two points and
proceed .
   I have before me, and I have copies that I would like to place in
the hands of the committee, a brief memo that was prepared by a
Russian specialist, a man who spends his time reading all that we can
get out from behind the Iron Curtain about what the Russians are
doing . He wrote this memo, and there are a few paragraphs that I
think are interesting and relevant, and you have the whole thing
before you . So I will just read 2 or 3 paragraphs.
  This memorandum is meant to implement any suggestion to you that the
Reece committee might be interested in learning something of how the general
problem it has under investigation is treated and viewed behind the Iron Curtain .
                                                                       837
838                       TAX-EXEMPT FOUNDATIONS

In drawing up this memorandum I have not undertaken a systematic survey, but
have merely drawn on my notes and on items which were easily recalled by me
or my colleagues . A systematic survey of Soviet sources would yield an enormous
number of violent attacks on the foundations and the accessory agencies in
Communist sources.
        FOUNDATIONS AND ACCESSORY AGENCIES BEHIND THE IRON CURTAIN
  By way of background the committee may be interested to know that in Com-
munist-controlled countries the existence of organizations like the great Ameri-
can foundations and the accessory agencies is unthinkable . Where they existed
at the time of the Communist seizure of power they were always among the
first institutions to be broken up and to have their funds confiscated by the Com-
munist dictatorship . This is because the Communists recognize that such funds
and agencies are sources for centers of free thought and opinion which is always
inimical to Communist rule . In the Soviet Union, for example, professors,
scientists, and other scholars are not permitted to organize associations like the
American Historical Association . They may belong only to trade unions and to
officially sponsored grovernmentally organized institutions such as the Academy
of Pedagogical Sciences.
  Not only does the Communist world look askance at the existence of founda-
tions and agencies of the accessory type in its own domain, but it also takes a
very hostile view to those which exist in the free world and particularly those
which operate in the United States .
  Then I skip to the next paragraph, on page 2 .
  The rule of the foundations on the American scene is not too well understood
by Communist propagandists, however, and they concentrate most of their fire on
what the Reece committee has defined as the "accessory agencies ." Our great
educational associations, for example, are constantly attacked in Soviet educa-
tional journals as instruments of capitalism, spreading its ideology, teaching hos-
tility toward the Soviet Union and toward communism, and misleading our youth
by "reactionary" teaching methods . To cite another example, from odd notes
at hand which could be matched many times over through a careful survey, we
might consider the American Economic Association .
  In a book entitled "Ideologists of the Imperialist Bourgeoisie," published by
the Academy of Sciences of the U . S . S . R . in 100,000 copies, the American Eco-
nomic Association is attacked for allegedly fomenting propaganda designed to
incite a new world war against the Soviet Union . The members of the asso-
ciation are described therein as "bourgeois economists (who are) in the service
of monopolistic capital" and whose theories are designed solely for the purpose
of defending the American business interests of their "capitalist masters ."
  Then there is further data in the following paragraph, but perhaps
we could skip to the middle of page 3.
                       SOCIAL SCIENCE IN THE SOVIET UNION
  Since the Reece committee appears to be particularly interested in the support
given by the foundations to social science in the United States, they may wish
to know that in the eyes of Communist leaders social science is regarded as one
of the worst and most dangerous enemies of Communist ideology and Com-
munist expansion. Indeed, so strong is the feeling against sociology that it is
not permitted to teach it as a subject in the Soviet Union . Sociology is defined
there as a strictly "bourgeoise" and "capitalist" science of society and is re-
garded by the Soviets as directly opposed to and contradicting Marxism . Con-
sequently they forbid the teaching of sociology in Soviet Russia and have substi-
tuted Marxism-Leninism instead as the only "true" science of society . Com-
munist hostility to sociology is reflected in the fact that the Soviet press has in
recent years been full of attacks on American sociology, and in addition at least
two special books on the subject have been put out by official Soviet publishing
houses . One of these, issued in 1951 by the State Political Publishing House
of the U . S . S . R. in 100,000 copies, bears the title "American Bourgois Philosophy
and Sociology in the Service of Imperialism" ; the other, was issued in 1952 by
the Academy of Sciences of the U . S. S . R . in 10,000 copies under the title "Con-
temporary American Bourgeois Sociology in the Service of Expansionism ."
  Tfiis latter is apparently a revised edition of a book by the same author pub-
lished under a slightly different title in 1949, and at the time severely criticized
	



                        TAX-EXEMPT FOUNDATIONS                              839
In a review in Culture and Life (Kultura i Zhizm), the official publication of
the Department of Propaganda of the Soviet Communist Party . The criticism
held that the author was "too easy" on American sociologists and failed to expose
the full degree to which American sociologists play "the odious role of servants
and lackeys to the imperialist * * * capitalists of the United States ." You may
rest assured that on the second time around this author did not fail to drive
home the point.
  The individual American social scientists brought under attack in these polemi-
cal Soviet writings read like a Who's Who of American sociology and social
science in general. Among them are many men who were prominent in the
councils of the foundations and the accessory agencies or who have ,received
support from them.
  But I think we can skip the names of individuals, however, since one
name has already been brought into the discussion, and we might turn
to page 5, where at the beginning of the second paragraph, I read
   Since the name of Stuart Chase has or will probably come before the commit-
tee his name might serve for one last illustration. In one of the Soviet books
cited above Chase is violently attacked as a long time spreader of "reactionary"
ideas, even in the time when he was regarded as a liberal in the thirties. It is
charged by the Communist press that after the recent World War he openly
joined the "shrill chorus of American atom-bombists" in their `openly Fascist"
attacks on world peace. Specifically, he is accused of "fulfilling the orders of
monopolistic bosses" by preaching the saving of capitalism through resort if
necessary to war and atomic destruction .
   Since the report by the staff to the Reece committee seems concerned about
the possibility that the foundations and the accessory agencies have fostered
changes in the basic American way of life, it might be appropriate to conclude
that this is hardly the Soviet view. On the contrary, they see American social
scientists as "propagandizing the antiscientific idea of America's uniqueness"
and of spreading the "false" idea that under American capitalism there are
such things as "enduring prosperity" and "a harmony of interests between labor
and capital."
   Mr. WORMSER . May I interrupt you just to say that in this memo-
randum, it is stated that the Soviet Union has a hostile attitude toward
United States foundations . I suppose you are aware of the fact
that in the Cox committee hearings it was brought out rather con-
clusively that the Communists had by direct order from the Kremlin
determined to infiltrate American foundations for their own purposes,
and there is evidence that to some extent they had been successful .
That doesn't look like a hostile attitude in that sense, does it? They
are very ready to use the American foundations when they can for
their purposes.
   Mr. HAYS . Well, I would say that doesn't indicate any friendly atti-
tude . They don't have a friendly attitude toward a lot of American
institutions that they would like to infiltrate .
  Mr. HERRING. It has been charged that they have been trying to
infiltrate the American Government . I wouldn't interpret the Ameri-
can Government as friendly .
  Mr. HAYS . If you wanted to use that type of logic, you could prob-
ably arrive at the conclusion that because at the same day the staff
attacked the Kinsey report, the Soviets attacked it, and the same day
the Communists attacked empirical research, the staff attacked empiri-
cal research, that the Communists and the staff are against empirical
research, and if you wanted to arrive at some kind of an analogy you
could say there was some sort of a liaison between the staff and the
Communists.
  The CHAIRMAN . I think the gentleman is in error when he says the
staff attacked the Kinsey report . As one member of the committee,
840                    TAX-EXEMPT FOUNDATIONS

 I don't have much interest in the Kinsey report . Any interest that
 the committee might have in the Kinsey report arises out of whether
 that was a desirable undertaking for a foundation, which is quite a
 different matter . In my observation, if I may make one, with refernce
 to the attitude of Soviet Russia toward foundations, I am not in any-
 wise surprised, myself, because Soviet Russia is against private
 enterprise of all types . Everything is centered in the government
 there, both major industrial activities, and, of course, as we have
 learned, to our great regret, practically all research and ideological
 forces are directed by the government . So it is quite understandable
 that thegovernment of Soviet Russia would not permit the establish-
 ment of great foundations which would be free of government
 influence .
   Would you mind identifying for the record Alex Inkeles?
   Mr . HERRING. Alex Inkeles is on the staff of the Russian Research
 Center at Harvard University . He has published studies of Russian
problems, and he is recognized as a leading specialist in the field of
Russian studies .
   The CHAIRMAN . But with reference to the question raised by Mr .
Wormser, the mere fact that Soviet Russia is against private founda-
tions, as it is against all other types of private enterprise does not
mean that Soviet Russia might not be desirous of utilizing any forces
in America or elsewhere which might exist, to their advantage, if it
was possible to do so-without indicating that they are able to do so,
that would be an illogical conclusion .
   Mr. HAYS . That raises an interesting question in view of what Mr .
Wormser said . Does the staff have any evidence that they have in-
filtrated in these foundations?
   The CHAIRMAN. His question was based altogether on the findings
:and report of the committee with which Mr . Goodwin and I worked .
   Mr. HAYS . But there have been charges made again and again in the
presence and otherwise and even in the Congressional Record that
there are Communists in these foundations . But I haven't yet seen the
staff bring out any evidence of it . I think it is time that the staff either
said they are there and are going to bring them out, or else they say
they are not there. We have these insinuations and allegations with-
out any proof.
   Mr. WoRMSEn . I am not insinuating or alleging anything . I am
referring only to the Cox committee report which showed conclusively
that there had been Communist penetration in the foundations . In
fact, two substantial foundations have lost their tax exemption, be-
cause they had been sufficiently penetrated.
   Mr. HAYS . Then they are not foundations anymore . But the ones
I am talking about are the ones still in existence . Charges were made
as to the Ford Foundation . Have yon any evidence that there are
Communists
   The CHAIRMAN . I assume you are referring to my speech . I made
no such allegations myself . I made allegations that undesirable in-
fluences were to be found in the foundations, but not that there were
Communists there ; or that at least is as I recall my speech .
   But that doesn't help us get along with the hearings .
   Mr. HERRING . Mr . Chairman, I think I could be most helpful by
commenting on some of the things I know something about, and I
                         TAX-EXEMPT FOUNDATIONS                                 841

have just brought this in to sharpen our sense of contrast between our
great free institutions here and the way they go about things .
  The CHAIRMAN . I think that is a very fine expression you are mak-
ing. There are no free institutions in Russia of any type, character,
or description, whether educational, whether philanthropic, or whether
industrial, financial, or any other way . There all power is vested in
the Government when it desires to exercise it .
  Mr. HERRING. I just wanted to nail that point down .
  The CHAIRMAN . So there is nothing unusual, as I see it, in Russia
taking the attitude it does toward foundations within the borders of
Russia.
  Mr : 'HERRING. Now, may I follow up with just one additional point?
And then I would like to come back to the good old United States of
America, if I may . But just one other point on this Russian side .
  I have here an article that appeared in Culture and Life, this same
Soviet Russian publication, the 21st of June 1949, by M . Rubenstein .
The article is entitled "Science in the U . S . A . in the Service of Monop-
olies and Militarists ." And there are just a few sentences from this
article that I think are of particular interest . This is a Russian speak-
ing now, and I am quoting
  The American press has currently been giving a great deal of lip service to the
"independence" and "impartiality" of science in the United States, which allegedly
is outside the realm of politics . But one needs only to become familiar with the
incontrovertible facts of reality to dispel this myth of the impartiality and inde
pendence of American science and to make it more than apparent that science in ,
the United States serves as an obedient instrument of the forces of reaction and
the capitalist monopolies that are militarizing it-putting it at the service of its
aggressive aims .
Then he goes on to say
  A considerable role in the American, scientific-research network is played by
universities and colleges which prepare cadres for all scientific institutions and
which at the same time are centers of theoretical research .
  Due either to a profound fallacy or by conscious design, a widespread concep-
tion is being circulated in America that science in the universities as distinct
from research work done in the laboratories of the industrial corporation is
"independent" of the policies of the monopolies .
  It will suffice to mention that 200 of the largest United States corporations
control the governing board literally : academic councils of almost all the Ameri-
can universities, which, in consequence, are controlled directly by Wall Street .
And this Soviet author continues
  The monopolies' influence on the social science is displayed with cynical candor . :
Not,only do the monopolies not object to the professors' dealing with current
problems ; on the contrary, they demand that this be done-but on the condition
that their studies and all written and oral statements must clearly be aimed at
defending .the interests and policies of the monopolies . Anyone disagreeing with
this policy is ruthlessly driven out and, in effect, blackballed .
  And , just one final sentence.          I can't stand much more of this
myself,
  Long ago Lenin has shown that there can be no "impartial" social science
in a society torn by class struggle, that in one way or another, bourgeois science
always defends wage slavery .
  And, quoting Lenin's work-and mark you, I suppose a reputable
Russian author has to work in a quote from Lenin . So he has one,
to Make it legal..
  To expect science to be impartial in a wage-slave society is as silly and naive
as to : expect impartiality from manufacturers on the question of whether work-
ers' wages should be increased by decreasing the profits of capital :
	




    842                       TAX-EXEMPT FOUNDATIONS

       That is from Lenin's Works, volume 19, page 3 .
      At present, when the United States has become the primary force in the
    imperialist camp, the social sciences in America have been placed completely in
    the service of imperialist expansion .
       If anyone wants to have this, they are welcome to it .
       The CHAIRMAN . Would you like to put it in the record as a part .
    of your remarks?
       Mr. HERRING . We would like to do so .
       The CHAIRMAN . Without objection .
       (The document referred to is as follows :)
          SCIENCE IN THE U . S.   A. IN   THE SERVICE OF MONOPOLIES AND MILITARISTS

      (By Mr. Rubinshtein in Kul'tura i zhizn', Culture and Life, June 21, 1949, p . .4)
        The American press has currently been giving a great deal of lip service to
     the "independence" and "impartiality" of science in the United States, which
     allegedly is outside the realm of politics . But one needs only to become familiar
     with the incontrovertible facts of reality to dispel this myth of the impartiality
     and independence of American science and to make it more than apparent that
     science in the United States serves as an obedient instrument of the forces of
     reaction and the capitalist monopolies that are militarizing it, putting it at the
     service of its aggressive aims .
       Despite the extreme diversity and chaotic state of the scientific-research net-
    work in the United States, one can delineate three basic and definitive groups
     Scientific-research laboratories operated by industrial corporations, the univer-
    sities, and scientific institutions run by the government . Each of these groups
     of scientific-research institutions is completely dependent on the capitalist
    monopolies, and on the policies of finance capital prevailing in the United States .
          •            +         s          s                    •    a       s
       Clearly, it would be laughable to expect scientists who are directly subservient
    to the monopolies to be impartial toward and independent of the policies of
    these monopolies . It should be noted that even in the most specialized areas
    of research these scientists do not have the right to publish their own works
    unless permitted and censored by the appropriate corporation .
       A considerable role in the American scientific-research network is played
    by universities and colleges which prepare cadres for all scientific institutions
    and which at the same time are centers of theoretical research .
       Due either to a profound fallacy or by conscious design, a widespread concep-
    tion is being circulated in America that science in the universities as distinct
    from research work done in the laboratories of the industrial corporations is
    independent of the policies of the monopolies .
       It will suffice to mention that 200 of the largest United States corporations
    control the governing boards literally : academic councils of almost all the
    American universities, which, in consequence, are controlled directly by Wall
    Street .
       The monopolies' influence on the social sciences is displayed with cynical
    candor . Not only do the monopolies not object to the professors' dealing with
    current problems ; on the contrary, they demand that this be done-but on the
    condition that their studies, and all written and oral statements must clearly
    be aimed at defending the interests and policies of the monopolies . Anyone
    disagreeing with this policy is ruthlessly driven out and in effect, blackballed .
       In carrying out the instructions of their masters, university presidents make
    reactionary speeches on burning political and economic issues-and then these
    speeches are widely circulated by the press and radio, which are in the hands
    of these same monopolies .
       Long ago Lenin has shown that there can be no "impartial" social science in a
    society torn by class struggle, that in one way or another, bourgeois science
    always defends wage slavery . "To expect science to be impartial in a wage-
    slave society is as silly and naive as to expect impartiality from manufacturers
    on the question of whether workers' wages should be increased by decreasing
    the profits of capital" (V. I . Lenin, Soch ., vol. 19, p . 3) .
       At present, when the United States has become the primary force in the im-
    perialist camp, the social sciences in America have been placed completely in
    the service of imperialist expansion .
	
	
	




                        TAX-EXEMPT FOUNDATIONS                                   843
   In many American universities special centers for "research" have been
formed which have become veritable hornets' nests of scholarly instigators of
a new war . Such, for example, is the Institute of International Studies at
Yale University, which has become one of the centers for American geopoliticians
who propagate the idea that the whole world must become a Lebensraum for
American monopolies, and who glorify the "absolute weapon" of atomic and
bacteriological warfare .
   American economists, who, for the most part, are in the immediate service
of the capitalist trusts, are coming out more and more frequently with odious
and mendacious "theories" concerning the inevitability and even the desirability
of a new world war as the sole means of saving American capitalism from crises
and unemployment . These economists are striving to convince the American
people . In response to the demand of the monopolies, that the growth in ex-
penditures for armaments is "stimulating a rise in business activity" and that
the Marshall plan expenditures enable "unemployment to be exported" beyond
the borders of the United States of America . America's bourgeois historians
brazenly distort the history of the United States as well as the history of inter-
nabional relations in an attempt to portray American imperialists as "bene-
factors" of humanity .
   American scholars-ethnographers and sociolgists-are outdoing themselves in
their efforts to repaint the Hitlerite racial theory in American colors, to poison
 the consciousness of the masses with this odious form of the Fascist ideology .
They propogate the demented ideas of a "chosen" Anglo-Saxon race elected to
rule the world, call for intensified racial discrimination, and factually justify
 the lynching of Negroes, annihilation of Indians, and the ruthless exploitation
 of colonial peoples . This dissemination of the poison of nationality differences,
beneficial to the monopolies, is aided in every way by many American biologists
who base themselves on the unscientific theses of the Weismann-Morgan school
 of genetics.
                 4           t           a           *           s           +
    Mr. HAYS . Dr. Herring, do you have any knowledge of Prof. Ray-
mond Bauer at Harvard? He is also in the Russian field .
    Mr. HERRING. I have met him ; yes .
   Mr. HAYS . He has a book called, The New Man in Soviet Psychology.
    Mr. HERRING . I have browsed through that book.
    Mr. HAYS . I would just like to read a couple of paragraphs which
he has written, which continue to prove the thesis we are on here of
the antagonism of the Soviets toward American-type independent
research. He says
   It is particularly striking that certain criticisms made before this committee-
this is a letter from Dr . Bauer-
exhibit the same fear of findings of empirical social research that prompted the
Bolsheviks to repress so much of the work of Soviet psychologists . You will
find ann account of this in chapter 7 .
    That is of his book, which I have read, and which is outlined in
great detail .
   Here you will see that the findings of psychologists were criticized and the
work ultimately stopped, because their conclusions did not please the Bolshevik
politicians.
    He said
   I would recommend to you also chapter 8, which deals with one of the most
drastic instances of Soviet political interference in education and psychology .
    And I have also read that .
    It is ironic that progressive education in this country should have been labeled
 "communistic" by its critics, when, as this chapter and other sections of the book
 show, all traces of progressive education were violently rejected by the Com-
 munists in the period between 1931 and 1936 . Finally, if you have the time and
 patience certain portions of the last chapter may prove rewarding, particularly
 pages 186 and 189-
       49T20-54-pt . 1	54
 844                     TAX-EXEMPT FOUNDATIONS

 and I am citing these in case anyone who reads this record would be
 interested-
 and pages 191 and 196. Here-
 says the author-
 I have tried as objectively as possible to draw the distinctions between our own
 and the Soviet political systems as regards the role the social sciences play in
 the two societies .
    And this whole book of his is an indictment of the Soviet system,
 because they have repressed all free and independent research of
 any kind .
    The CHAIRMAN . Will the gentleman yield?
    Mr . HAYS . Yes .
    The CHAIRMAN . Any interest, as I see it, which has been expressed
 here since the study began has been toward maintaining free and inde-
 pendent research, independent both from government and any other
 great sources of power . And one of the things, as - I understand, that
 the staff is desirous of the committee studying is whether there is too
 great concentration of power that directs research, so as to keep it
 from being free and independent, just as the learned doctor states
 from whom the gentleman from Ohio quotes . If there is great con-
 centration of power, it doesn't make a great deal of difference whether
 it is in the government or whether it is in some outside agency . So
 that is one of the very questions that the committee desires to explore .
 And in exploring, there is not an indication of any unfriendliness
 whatever, but simply a disposition to learn and develop the facts .
   Mr. HAYS . Mr. Chairman, I think that calls for a statement . I
 might say that your statement is a very heartening and encouraging,
thing to me .
   The CHAIRMAN. That has been the very key, as I understand it, of
practically all the questions that have been raised by the staff, Mr .
 Hays . And I am not unaware of the fact, as Mr . Herring has observed
in the press, that various implications have been put on the work of
the committee . But that is the very key or one of the principal keys to
the purpose of the work that has gone on so far .
   Mr. HAYS . Mr . Chairman, as I said, that is a very heartening thing,
to hear you say that, and I am glad to hear you say it . But putting
your statement up against the very bare words of the reports of the
staff, the two just don't correspond . Anyone who can read Mr . Mc-
Niece's report or Mr . Dodd's report and say they are in any way
friendly toward the foundations, or who can say their reports are not
a very damning indictment didn't understand English the way I do .
Maybe there is something wrong with the way I do understand it .
   The CHAIRMAN . I regret very much that we should have to monop-
olize the time of the committee, including Mrs . Pfost and the very able
gentleman from Massachusetts, who is a member of the Ways and
Means Committee, which may ultimately have responsibility concern-
ing legislation as to the tax-exempt status of foundations, but I don't
want the wrong impression to go in the record with reference to any
statement the staff of the committee has made. The whole purpose of
the chart that Mr . McNiece displayed to the committee was to raise
the question with reference to the concentration of power in a few
places, which had over-all supervision over research .
                       TAX-EXEMPT FOUNDATIONS                            845
    Now, he was not stating that as a fact but simply raising the ques-
 tion for the exploration of the committee. And, as chairman, I would
  like to leave Russia and get back to the United States and proceed
 with our hearing.
    Mr. GOODWIN . I think that is most desirable, Mr . Chairman . We
 have a very eminent gentleman here who is a witness . It may be
- that lie is very much interested in discussions from the rostrum here,
  which I think might very well be confined to executive session . If
  lie should be, and desires to take from his valuable time some portion
  of it to listen to discussions here, very well, but it seems to me that
  we should go on with the hearing and listen to the witness here .
    Mr. HAYS. Well, Mr . Goodwin, I am in general agreement with
 you, but I don't think you can let any blanket statement go unchal-
  lenged, from my point of view, and I don't intend to . I am not going
  to let these rather peculiar statements of the staff go into the record,
  and then, as to any criticisms I have to make of them, make them
  in executive session, where nobody knows I made them .
    Now, the chairman desires to end this colloquy, but he always keeps
  bringing in new material . Now, he brought in this chart. And I
  am impelled to say something about that chart, because I think that
  chart came about as near being nothing as anything that anybody
  could have spent much time on, and I am going to tell you why . It
  is a lot of nice, little pretty boxes with a lot of nice black lines running
  here and there, and according to its author it was supposed to show
  some sort of an interlock . Now, suppose I went over to the blackboard
  and made a chart -and said, "That is the White House," or "the State
  Department ." I will put in the White House, and then I will put
  the State Department underneath it and run a line down .
     Then I will make another box, and it says, "The Kremlin," and I
  run a - line from the State Department to the Kremlin . We have an
  Ambassador there . And another one says, "The Ambassador to
  Poland ." And we run a line there, where there is a Communist gov-
  ernment. And another to the Government of Czechoslovakia . And
  then I could say, "Look, we have lines running out to all these places,
  so there must be some kind of an interlock between our Government
  and these Communist governments ." It is just about that factual .
     The CHAIRMAN . Do you have any other statements you wish to
  make before we proceed?
     Mr. HAYS . None right now.
     The CHAIRMAN . Were you proceeding with your questioning?
     Mr. Kocx . Well, Mr . Herring had a few more remarks . Or I won't
  even restrict him to aa few . He wanted to complete his oral presenta-
  tion before we started questioning .
    Mr. HERRING . I thought Congressman Goodwin made an interest-
  ing point yesterday that we didn't have time to develop, and if I may
  pick up there, I think it may add something to the problems we have
  under consideration .
     He pointed, I thought with real discernment, to the importance of
  historical fact, what is historically so. And it brought to mind a
  little piece of American history that I think is quite relevant .
    Let's go back to the Franklin Institute in Philadelphia in 1832 . In
  those early years, with steamboats getting under way, unfortunately
  a good many boilers burst . Bursting steam boilers were a problem .
  And the Franklin Institute, in its empirical, pragmatic, down-to-
846                     TAX-EXEMPT FOUNDATIONS

earth way, said, "What can we do about bursting steam boilers?" So
they turned to a professor at the University of Pennsylvania, a pro-
 fessor of chemistry and moral philosophy, old Professor Bates . He
 was the grandson of Benjamin Franklin . And they said, "Will you
try to find out why steam boilers burst?"
   So he got a grant from the Government . The Secretary of the
 Treasury got hold of $1,500-probably the first money used for
scientific inquiry . And in American fashion : "If steam boilers burst,
 let's get some explanation ." So they set up a little group to investi-
gate, and they went into all the scientific aspects . And when they got
through, I must confess to you that this group of scientists did come
up with a recommendation for action. They did say that "maybe if
we had some way of inspecting steam boilers, we might protect the
public from bursting steam boilers ."
   So the Steamboat Inspection Service, as a result of this empirical
investigation, was established in 1836, and it was the first Government
regulatory agency . And I submit to you that the reason for the
Government getting into regulation was not socialism . It wasn't any
bursting Socialist with his ideas . It was the down-to-earth fact that
sometimes steam boilers burst, and we want to know why .
   So the grandson of old Ben Franklin went in there, and he found
out the reason, and he said, "One of the reasons, that goes beyond the
sheer chemical side, is that maybe there is a little carelessnes in stoking
the fire ." In other words, you have got to get the human factor in
there. You have to keep an eye on the people who are running the
steamboats. And we have the Steamboat Inspection Service as the
first regulatory agency .
   And I think, Mr . Goodwin, there is an illustration where if you go
back to the .record, if you look at American history, if you say, "What
causes these things?"-now, suppose that group had gone at ,it in- this
rationalistic fashion . The first thing you do is get an armchair, and
you sit down and say, "Let's speculate about this . Why do these
boilers burst?" And you go about it through doing a lot of abstract
reasoning.
   The steam boilers, I submit, will still be bursting . But when you
look at them and you say, "How can we stop this?" and if it takes a
little Federal regulation to protect the public from bursting steam
boilers, the American way to do it is to get at the actual situation .
And I don't want to overemphasize this thing, but I must speak with
a bit of emphasis, because I think, as you say, sir, if you look at the
historical development of things, you often find the reasons .
   The CHAIRMAN . You intended for this memorandum from Mr .
Inkeles to go in the record as part of your statement, although you
only read portions of it?
   Mr. HERRING . Yes, please .
   (The document referred to is as follows :)
From : Alex Inkeles .
To : Pendleton Herring.
  This memorandum is meant to implement my suggestion to you that the Reece
committee might be interested in learning something of how the general problem
it has under investigation is treated and viewed behind the Iron Curtain . In
drawing up this memorandum I have not undertaken a systematic survey, but
have merely drawn on my notes and on items which were easily recalled by me
or my colleagues . A systematic survey of Soviet sources would yield an enormous
number of violent attacks on the foundations and the accessory agencies in
Communist sources .
                         TAX-EXEMPT FOUNDATIONS                               847
        FOUNDATIONS AND ACCESSORY AGENCIES BEHIND THE IRON CURTAIN
  By way of background the committee may be interested to know that in
Communist-controlled countries the existence of organizations like the great
American foundations and the accessory agencies is unthinkable . Where they
existed at the time of the Communist seizure of power they were always among
the first . institutions to be broken up and to have their funds confiscated by the
Communist dictatorship . This is because the Communists recognize that such
funds and agencies are sources for centers of free thought and opinion, which
is always inimical to Communist rule . In the Soviet Union, for example, pro-
fessors, scientists, and other scholars are not permitted to organize associations
like the American Historical Association . They may belong only to trade unions
and to officially sponsored governmentally organized institutions such as the
Academy of Pedagogical Sciences.
   Not only does the Communist world look askance at the existence of founda-
tions and agencies of the accessory type in its own domain, but it also takes a
very hostile view to these which exist in the free world and particularly those
which operate in the United States . Unfortunately I have not maintained a
file of the attacks on the foundations as such, but I recall from time to time
having seen violent attacks on them in the press of the Iron Curtain countries.
The general line has been that the American foundations are simply thinly dis-
guised devices whereby the "monopoly capitalists" of the United States hide
behind the disguise of charity and the pretense of advancing the public interest,
whereas in fact they are pursuing the goals of spreading the ideology of capi-
talism, continuing to oppress the workers, and "buying out" the services of
American scholars, scientists, teachers, etc .
   The role of the foundations on the American scene is not too Well understood
by Communist propagandists, however, and they concentrate most of their fire
on what the Reece committee has defined as the "accessory agencies ." Our
great educational associations, for example, are constantly attacked in Soviet
educational journals as instruments of capitalism, spreading its ideology, teach-
ing, hostility toward the Soviet Union and toward communism, and misleading
our youth by "reactionary" teaching methods . To cite another example, from
add notes at hand which could he matched many times over through a careful
survey, we might consider the American Economic Association . In a book en-
titled "Ideologists of the Imperialist Bourgeoisie," published by the Academy
of Sciences of the U . S . S . R. in 100,000 copies, the American Economic Asso-
ciation is attacked for allegedly fomenting propaganda designed to incite a new
world war against the Soviet Union . The members of the association are de-
scribed therein as "bourgeois economists [who are] in the service of monopolistic
capital" and whose theories are designed solely for the purpose of defending the
American business interests of their "capitalist masters ."
   The American Philosophical Association is repeatedly attacked in much the
 salve terms. An example that is typical comes from the June 1949 issue of
 the official Soviet journal, Problems of Philosophy (Vopresi Filosofii) . The
 American Psychological Association has also often been treated in much the
 same way . I find in my notes, for example, that the American journals Psycho-
 logical Abstracts, the Journal of Social Psychology, and the Journal of Genetic
 Psychology are described in the 1951 official Soviet Literary Gazette (issue 106)
 as being merely "screens behind which lies hidden a reactionary antiscientific
 and antipopular propaganda . These journals, one of which is published by the
 Psychological Association, are further charged by the Communist propagandists
 with containing not science but only pseudoscience which seeks to justify "the
 merciless exploitation of the workers, the advent of Fascist regimes, colonial
 brigandage, and aggressive wars" for which the Communists hold capitalist
 society responsible .
                      SOCIAL SCIENCE IN THE SOVIET UNION
   Since the Reece committee appears to be particularly interested in the
support given by the foundations to social science in the United States, they
may wish to know that in the eyes of Communist leaders social science is
regarded as one of the worst and most dangerous enemies of Communist ideology
and Communist expansion . Indeed, so strong is the feeling against sociology
that it is not permitted to teach it as a subject in the Soviet Union . Sociology
is defined there as a strictly bourgeois and capitalist science of society and
                                                          .
is regarded by the Soviets as directly opposed to and contradicting-Marxism
Consequently they forbid the teaching of sociology in Soviet Russia and have
substituted Marxism-Leninism instead as the only true science of society .
848                       TAX-EXEMPT FOUNDATIONS

 Communist hostility to sociology is reflected in the fact that the Soviet press
 has in recent years been full of attacks on American sociology, and in addition
 at least two special books on the subject have been put out by official Soviet
 publishing houses . One of these, issued in 1951 by the State Political Publishing
 House of the U . S . S . R ., in 100,00 .0 copies, bears the title "American Bourgeois
 Philosophy and Sociology in the Service of Imperialism" ; the other was issued
 in 1952 by the Academy of Sciences of the U . S . S . R ., in 10,000 copies, under
 the title "Contemporary American Bourgeois Sociology in the Service of Expan-
 sionism ." This latter is apparently a revised edition of a book by the same
 author published under a slightly different title in 1 .949, and at the time severely
 criticized in a review in Culture and Life (Kultura i Zhizm), the official
publication of the Department of Propaganda of the Soviet Communist Party .
 The criticism held that the author was too easy on American sociologists and
failed to expose the full degree to which American sociologists play "the odious
 role of servants and lackeys to the imperialist * * *" capitalists of the United
 States. You may rest assured that on the second time around this author
did not fail to drive home the point .
   The individual American social scientists brought under attack in these
polemical Soviet writings read like a Who's Who of American sociology and
social science in general . Among them are many men who were prominent
in the councils of the foundations and the accessory agencies or who have
received support from them . Amongst those of an earlier or older generation .
Ross, Bernard, and Bogardus and Ogburn are prominently named by the Soviet
hatchetmen as "tools of monopoly capital Bernard is violently attacked for
                                                 ."
allegedly having held up Henry Ford and John D . Rockefeller as being true
representatives of progress . Ogburn is repeatedly castigated as the "sociologist
of the atom bomb," and despite minor differences, all are held to be "apologists
for imperialism" ; Blumer, Reuter, Becker are a few among many others on a
list of names which could be spelled out almost indefinitely . Pravda (July 17,
1952), for example, held Otto Klineberg, Talcott Parsons, David Reisman, and
others to be agents of the American military engaged in psychological warfare
against the Soviet Union and acting as learned servants of American imperialists,
capitalists, and monopolists . In the same issue Harold Lasswell is described
as having been "a hardened intelligence agent since the times of World War I .
   In the journal October directed to Soviet intellectuals, F . Lundberg and
Weininger have been charged with an attempt "to carry out the order of their
masters, the Wall Street magnates, by shamelessly slandering the women's
democratic movement * * *" Lewis Mumford is also numbered among the evil
sociologists of the United States, as, indeed, is former Senator Bilbo, of Missis-
sippi, the former being accused of being a "mercenary servant of the warmongers .
   Since the name of Stuart Chase has or will probably come before the com-
mittee, his name might serve for one last illustration . In one of the Soviet
books cited above Chase is violently attacked as a longtime spreader of reaction-
ary ideas, even in the time when he was regarded as a liberal in the thirties .
It is charged by the Communist press that after the recent World War he openly
joined the "shrill chorus of American atom bombists" in their openly Fascist
attacks on world peace . Specifically, he is accused of "fulfilling the orders of
monopolistic bosses" by preaching the saving of capitalism through resort, if
necessary, to war and atomic destruction .
   Since the report by the staff to the Reece committee seems concerned about
the possibility that the foundations and the accessory agencies have fostered
changes in the basic American way of life, it might be appropriate to conclude
that this is hardly the Soviet view . On the contrary, they see American social
scientists as "propagandizing the antiscientific idea of America's uniqueness"
and of spreading the false idea that under American capitalism there are such
things as enduring the prosperity and a harmony of interests between labor and
capital .
   Mr. HERRING . I would like to come down to the present time, because
Congressman Goodwin's point as to this phraseology, "new and inexact
sciences," came back to mind. And I would just like to comment on
that one . And I could comment at some length on it, but I will try
to restrain myself to one rather symmetrical little illustration here .
   I have before me a statement that Wesley Mitchell made 35 years
ago . Wesley Mitchell was one of the founders of the Social Science
Research Council, and lie was the man who developed the National
                               TAX-EXEMPT FOUNDATIONS                                            849

Bureau of Economic Research . And his successor in the National
Bureau of Economic Research is now the author, Burns, that was
referred to yesterday, who is the President's adviser on the Economic
Council.
                                  Thirty-five years ago, Wesley Mitchell said
                            While I think that the development of the social sciences offers more hope
for solving our social problems than any other line of endeavor, I do not claim
that these sciences in their present state are very serviceable . They are im-
mature, speculative, filled with controversies . Nor have we any certain assurance
that they will ever grow into robust manhood, no matter what care we lavish
upon them . Those of us who are concerned with the social sciences are engaged
in an uncertain enterprise . Perhaps we shall win no great treasures from
mankid,butcertainlyit sourtasktowrkout hisleadwithal theinteli-e
gence and energy we posses until its richness or sterility is demonstrated .
                                  That was 35 years ago .
                                  Let's turn from that to a current editorial in the New York Times
dated June 7, 1954.
                                  And I will just read two brief paragraphs from it . It is entitled
"Economic Geiger Counters," and the editorial says
                            In the field of economics, the Geiger counters
we all know what Geiger counters are-
are the, statistics of production, income, inventories, and the like, on which
economists, businessmen, and public officials depend for signals on the health
of the economy. If our economic data are sound we can gage whether we are
going uphill or downhill, whether the business prognosis is good or bad . If our
economic data are bad we can be lulled into complacency when action is needed
or be stampeded into needless Government intervention which may do more
harm than good .
                            Against this background it is disturbing to learn that top officials of our
Government feel that many of our key economic indexes have better reputa-
tions than they deserve . Even worse studies have shown that some data in
the inventories and profits field have been so far wrong at times in the postwar
period that they have shown movements contrary to the actual change . Only
a few months ago the wide discrepancy between two Government efforts to,
measure unemployment excited wide attention .
                            A joint congressional committee is apparently planning to look into this
situation in an effort to learn what improvements are needed . On the basis
of information already available, it is likely that the committee will find that
much of the fault can be laid at the door of a false economy which has prevented
adequate resources from being devoted to keeping our statistical Geiger counters
in good shape . Economic statistics are not the dull, lifeless, unimportant
ciphers too many laymen believe them to be . They are the indispensable tools
for understanding the operation of our complex economy. Any congressional
action to improve these tools would repay our people a hundredfold .
                               And I think it is interesting to note that one member of this com-
mittee is very directly concerned with the Joint Committee on the
Economic Report, and maybe he is so busy working on it today that
he is not here with us . But here the point I want to make is that we
have developed within a generation from a time when a leading au-
thority in the field can say, "These are premature ; we don't know
whether it is going to work out or not," to 35 years later, when we sit
here today and see that by directing attention to an empirical study
of the business cycle and going at it statistically and getting out of
armchairs and getting the facts together, it has become an integral
part of our Government . So that we have the Council of Economic
Advisers continuing from one administration to another as a function,
as a way of using this Geiger counter in determining the economic
health of the Nation .
850                      TAX-EXEMPT FOUNDATIONS

  Well, if I may continue, I would like to go right ahead, then .
  Keeping in mind Mr . Goodwin's point and the historical approach
to this thing, it has been suggested that this stuff is new and inexact .
Well, as I say, it is a big subject . It seems to me that as we look at
science, science should be new, and often must be inexact . The point
is that you try to go from the inexact toward the exact. It is the
process that is important. And the newness is important . We don't
want old sciences . We want science to ever renew itself . If you turn
to cancer research, that is new, and that is inexact, and it is no less
important because it is . It is the newness, it is the growth, it is the
ever-changing character of science that preserves its vitality and
strength.
  Well, you can get scientists in different fields to hold forth on this
one, but I would like to come back to the historical record again .
  I have before me a foreword by the President of the United States
prepared for Recent Social Trends in the United States-the report of
the President's Research Committee on Social Trends . And the
President to whom I refer is Herbert Hoover . I would like to read
his brief letter for the record.
  Hoover writes
  In the autumn of 1929 I asked a group of eminent scientists to examine into
the feasibility of a national survey of social trends in the United States, and in
December of that year I named the present committee under the chairmanship
of Dr . Wesley C . Mitchell to undertake the researches and make a report . The
survey is entirely the work of the committee and its experts, as it was my desire
to have a complete, impartial examination of the facts. The committee's own
report, which is the first section of the published work and is signed by members,
reflects their collective judgment of the material and sets forth matters of opin-
ion as well as of strict scientific determination .
  Since the task assigned to the committee was to inquire into changing trends,
the result is emphasis on elements of instability rather than stability in our
social structure.
  This study is the latest and most comprehensive of a series, some of them
governmental and others privately sponsored, beginning in 1921 with the report
on waste in industry under my chairmanship . It should serve to help all of
us to see where social stresses are occurring and where major efforts should be
undertaken to deal with them constructively .
Signed "Herbert Hoover, The White House, Washington, D . C.,
October 11, 1932."
  It is rather interesting, from a historical standpoint, and to give
some sense of proportion about our present problems at midcentury,
to go back, as I did the other day, to these volumes and browse through
them a bit . And you will find there, in these volumes, some references
to the fact that there were problems back there in the thirties, too .
And many of those problems are still with us .
  I don't want to take your time to read a whole list of the problems
of the 1930's, because we have got our hands full at the present time .
But they had their problems . And-
even a casual glance-
we read, in this foreword to the social trend study-
at some of these points of tension in our national life reveals a wide range of
puzzling questions . Imperialism, peace or war, international relations, urbanism,
trusts and mergers, crime and its prevention, taxation, social security, the plight
of agriculture, foreign and domestic commerce, governmental regulations of
industry, shifting moral standards, new leadership in Government and business,
and the stanch status of womankind, labor, child training, mental hygiene, the
future of democracy and capitalism, et cetera .
	



                        TAX-EXEMPT FOUNDATIONS                             85 1
  But one last sentence here
  Democrats, statesmen, and servants and propagandists have attacked these
problems, but usually from the point of view of some limited interest . Records
and information have been and still are incomplete and often inconclusive .
  But Herbert Hoover, that great social engineer, was a man who
said, "Let's have a look at the record ." And these volumes were pre-
pared under his sponsorship . And Congressman Goodwin, I sub-
mit to you, that having a little historical sense about the past and
about the continuity in these things is a way of-well, it helps one's
blood pressure a bit perhaps .
  Mr. GooDWIN . That is very, very interesting, and I think very il-
lustrative, too, sir .
  Mr. HERRING . Well, now, Mr . Chairman, there are a variety of
things I could turn to . I want to keep constantly in mind, if I may
say so, the fundamental point that the chairman raised a few minutes
ago . I would leave this room satisfied indeed if I could help to
clarify that problem, because if it is a serious problem in your minds,
let's have a look at the facts and see if we can develop it . Maybe
a few minutes on that would be helpful testimony .
  Let's start with the fact that in this great country of ours we have
1,700 colleges and universities spread across the breadth of the Na-
tion. We know how they came into being . Some of them are great
State institutions . I needn't rehearse the story there . The, churches
started' great private benefactions . But you see the story, all over
the country, of these institutions. They weren't developed from a
Paris or a Berlin in accordance with a ministry of education in a na-
tional system. They grew up like the wheat on the prairies . They
grew up out of our native soil . They grew up because-well, you
could start with Harvard, if you like . I keep William and Mary
in mind, too . There was the importance of training the clergy in the
old days, getting an enlightened clergy . There was a practical need.
And our great land-grant colleges were started . This is a subject
I fear I get a little eloquent on, because it is such a dramatic and
beautiful piece of American history, I feel.
  The CHAIRMAN . Would you permit a little interruption there? I
want to associate myself in my very . feeble way with your eloquence
and deep feeling about these colleges and universities . And there is
no apprehension on anyone's part so long as the colleges and univer-
sities are used as the medium for the research . There will be no
dangerous concentration then . It is when the generating force is
centered-in other agencies, which haven't risen up in the same way
that the colleges and the universities have, and use intermediary agen-
cies as the channel that gives rise to apprehension ; if you will just
permit that, in order to keep the direction clear .
  Mr. HERRING . I just wanted to start with the grassroots and take a
historical direction in this, so that we could see the broad sweep of
American life .
  Mr. HAYS . Right there, Doctor, isn't it true that the colleges and
universities are always the generating force in any research, or always
at least the propelling force, and that the most that any foundation
has done has been to simply provide the fuel, the gasoline, for the en-
gine, you might say, the money, which in this case is the fuel, to see
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 that these fellowships could be granted and that the colleges and uni-
versities could have the funds available to have people to do research?
 Isn't that the way it has been handled?
    Mr. HERRING. That is right . We start with this magnificent de-
 velopment in our country .
    Now, within those institutions, you have the professors . And let
me mention a point that we sometimes forget .
    We have a system in American education, of tenure . When a man
has proved his capacity, he is given an appointment with tenure . That
 means you can't fire him. He has a job that is a secure job. It is at
 a modest salary, but he has independence . And I don't know any
group of citizens that have the same degree of independence, because
 they have this economic support. They are secure in their jobs, and
 they are expected to express their opinions and to develop their
thoughts and to teach their students to the best of their ability . And
our great tradition is : Leave them alone to do that job .
    So the tenure on the economic side is shored up with the great princi-
ple of academic freedom .
    So here again, in our practical way, we have both the practice of
tenure and the principle of academic freedom . So that means you
 have, then, men who have, in a sense, these privileges to exercise their
 thoughts and to contribute to the education of the youth of the country
 and to the furtherance of knowledge .
    Now, these men have their own interests . The chemists get together
 with the chemists and the sociologists with the sociologists .
    As I indicated in my opening statement, they often get together re-
gionally . We are a great people for getting together . And they get
together on their professional matters, just as in all other walks of life,
 in chambers of commerce and Rotary clubs and so on, congenial people
.get together.
    All right. Let's build up from that . In the fields with which I
 am familiar you have these associations of historians and economists .
 They get together in the sense that once a year they . meet here in
 Washington or somewhere else where there are appropriate hotel
 accommodations, and they read papers and talk, and some of the
 younger men look for jobs, and they renew old friendships, and they
 have their annual conventions. And the other thing they do together
 is to sponsor and publish a learned journal, where the articles can be
 published and the books in the field reviewed .
    Now, this is a part of the great associational activity of the United
 States . D'Toqueville, when he carne here in the middle of the 19th
 century, looked around, and lie saw this rich associational life-no
 monolithic state . The problem was to give the Government enough
 leeway at times to do some of the minimal jobs . The problem here
 of the associational life of the country was of the essence of freedom .
    Well, the same pattern holds for industry and labor, and so on, this
 freedom to associate and to share common interests .
    Well, now, without going into a long history of the foundations,
 we know that as wealth accumulated, around the turn of the century,
 a great industrialist such as Andrew Carnegie faced the problem of
 what to do with his wealth, whether to follow the European pattern of
 just willing it all to his descendants . That, obviously, is in the feudal
 tradition . But over here this, peculiar, unique American plienome-
                      TAX-EXEMPT FOUNDATIONS                        853
non, the foundation, started off most dramatically, most importantly,
with . Carnegie, and a few years later with the Rockefeller Foundation .
   The point that is so important here is to see that you have a large
 and diverse group of people, with great independence of mind, and
 with their own interests ; and the foundations want to advance some
 aspect of social welfare.
    Now, in our great foundations, the terms under which they operate
 are very broad . The advancement and dissemination of knowledge,
 or the welfare of mankind . The problem is : How do you move from
 that broad mandate into something tangible, something particular?
 Who is going to do what? And the problem of the foundation officer
 and the problem of the foundation trustees is to go from these broad
 objectives of human welfare down to something particular, specific,
 defensible, understandable, something that will advance the broader
purposes .
   Now, the foundations have a problem, in exercising judgment, and
 in deciding, with their limited resources, which of the various oppor-
tunities for investing some of this money in good ideas and social pur-
 pose can be selected. So that you have on the one hand people who
have various things they want to do in their own research and their
-teaching, and on the other hand you have quite limited foundation
resources .
   As I was saying, I think one of the important points brought out
 in the inquiry thus far is that there are a great many foundations in
 the United States, some six or seven thousand, I believe . I was
 scarcely aware there were that many . But here again, I want to talk
.out of my own experience . And over the years of the council's life,
we have received support, grants, from about a dozen or so founda-
 tions . In other words, the number of foundations with an interest
 in the social sciences is a very limited number of foundations .
    So let's get that sense of perspective into the picture .
   Mr. Koca . Could you at this time name the principal ones? I was
 going to that later, but why don't we get it now? The principal con-
 tributors to your organization .
   Mr. HERRING . Well, I filed that with you, and you have a list of
 all the money we have gotten from all the sources .
   Mr. Kocx . I do not have a list here .
   Mr. HERRING . Yes . Well, I have it before me . I have before me
 "Summary of disbursements under appropriation, by donors, from
June 1924 through April 30, 1954," and that goes back to the beginning
,of the organization. I have 24 items on this list. If I pick out the
principal ones, which are the ones you wanted	
   Mr . Kocx . And would you mind then offering the list as part of
the record? Mine doesn't go up beyond 1951 .
   Mr. HAYS . I suggest, Mr. Chairman, that the witness offer the list
and make it part of the record, and if there are any specific questions,
they can be asked, but I don't think we want to take the time to read
all these statistics.
   Mr. Kocx . No ; we don't. I agree with you . I just thought he could
mention a few of the important foundations, and not go into dollars
and cents.
   Mr. HAYS . I think it would be well to have the entire list incorpo-
rated into the record at this point, and then the witness can make any
comments he desires.
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  Mr. KOCH . All right. You offer the entire list, and then just men-
tion the top five that you can think of that have contributed .
  Mr. HERRING . In looking over this list, I see the Laura Spelman
Rockefeller Memorial, the Rockefeller Foundation, the Carnegie Cor-
poration, the Julius Rosenwald Fund, the General Education Board,
the Ford Foundation . Does that Suffice?
  Mr. KOCH . That is all right .
  Mr. HERRING. So we herewith offer the list for the record .
  Mr. GOODWIN (presiding) . It may be admitted .
   (The list referred to is as follows :)
Summary of disbursements under appropriation, by donors, through Apr . .10, 1954
                                                                   Disbursed
Laura Spelman Rockefeller Memorial 	 $2,340,512 .22
Rockefeller Foundation	                                 6,120,935 .0.5
Mr . John D. Rockefeller, Jr 	                             15, 559 .06
Russell Sage Foundation 	                                 113, 551 .66
Carnegie Corporation of New York 	                      2,111,575 .58
Commonwealth Fund 	                                          5, 000.00
Mr. Julius Rosenwald	.	50, 000 .00
Mr . Revell McCallum	                                        1,489.55
Julius Rosenwald Fund	                                     68, 407 .88
Carnegie Foundation for the Advancement of Teaching 	10, 000.00
Maurice and Laura Falk Foundation 	                         3,000 .00
General Education Board	                                  242,182 .37
Spelman Fund	                                              67,500 .00
W . E . Upjohn Unemployment Trustee Corporation	23, 745 . 65
Committee of Trustees on Experimental Programs 	76, 326 . 19
Scripps Foundation for Research in Population Problems 	3, 3=32 . 21
The Grant Foundation	                                      11,583 .63
American Philosophical Society	                             7,500 .00
The John and Mary R . Markle Foundation 	181, 137 .47
U. S . Bureau of the Census	                              128,219 .86
Ford Foundation	                                          396,392 .19
Twentieth Century Fund	                                   150,000.00
Rockefeller Brothers	                                       8,042.86
      Total	                                                     12,135,993 .43
   Mr. HERRING . The picture I am trying to get before you then in
terms of my own experience is the fact that there are a limited number
of these foundations with an interest in these social-science fields .
And let me survey briefly for you this problem of the relations between
an organization such as the council and the foundations .
  In the first place, the foundations make substantial grants directly
to universities.
  A point that I want to emphasize, in order again to get some sense
of proportion into this thing is this : Our best estimate is that probably
about $12 million from foundation sources goes annually to social-
science research, broadly construed . The Council has funds that
amount to about one-tenth of that . Now, I wish Mr . Reece were here,
because I think this relates to a problem on his mind . We are one of
many organizations . We are a part of this great associational life
of the United States . And we have a special focus on the advancement
of research. There are many other organizations dealing with many
other problems . We have our problem, our interest, our focus, and
we have these resources .
  Now, I would like to offer this as an exhibit . I wouldn't want to
burden the record with this, but we could pass it up to you . Here is
                     TAX-EXEMPT FOUNDATIONS                          855
A Directory of Social Science Research Organizations in Universities
and Colleges, prepared by the committee on organization for research,
Social Science Research Council, June 1950 ; and in this publication
you will find listed the names and addresses of 281 organizations con-
ducting or financing research in the social sciences in 104 universities
and colleges . And here are their names and addresses . And I think
this a fairly concrete illustration of the fact that we are dealing with
a great many organizations, and here are the ones in the universities
that are concerned with this field .
   Mr. GooDwIN . You are not offering these for the record, but just by
reference?
  Mr. HERRING . Yes ; just as an exhibit, Mr . Chairman .
   (The document referred to was filed for the information of the
committee .)
  Mr. HERRING. The Social Science Research Council has demon-
strated its capacity over a 30-year period as a highly responsible group
to consider the leads, the ideas that individuals have, and their re-
search ability, their possible significance for the advancement of the
field. The council provides an opportunity for specialists, working
at the growing edges of knowledge, to identify new leads, to appraise
existing state of knowledge, to work out concrete next steps, to evaluate
research holding out the most promise . That is where we focus our
attention .
  Maybe one way to get the matter before you more vividly would be
to offer an illustration. Let's take the history of an idea and how it
goes through our procedures .
   A few years ago, one member of the council, a member of our board
of directors, who was trained both in psychiatry and in anthropology,
came to me, and he said, "I am very much interested in"
  Mr. GoonwIN . We will recess at this point and will resume, sub-
ject to the call of the Chair, I should say in about 8 or 10 minutes .
   (Short recess .)
   The CHAIRMAN. The committee will resume .
  If you will permit a diversion before you proceed with your testi-
mony, Mr. Adams, who had expected to be called in this morning, has
prepared a statement, which has been given to the press . If there
is no objection, that statement will be admitted into the record to
appear at the conclusion of the statement and questioning of Mr . Her-
ring ; and then Mr. Adams will appear and take up from there .
   Mr. KOCH . Could we ask Dr. Adams whether that is agreeable to
him?
   The CHAIRMAN . I had so understood. That is agreeable with Dr .
Adams .
   Mr. ADAMS . Mr. Chairman, I am at your disposal, sir .
   The CHAIRMAN. Without objection, it is so ordered.
   Mr. HERRING . Mr. Chairman, when we broke for the recess, I was
about to embark on a description by way of illustration of how an
idea that is brought up by an individual research ban is discussed and
developed, and so forth . But I think rather than pursuing that, I
would just like to say that with reference to this general point we
were discussing, namely, the problem of whether there is control of
research, the problem is rather one of recognizing a good idea when
you see it, deciding whether to encourage a man with one idea or not .
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It is not a matter of control . It is a matter of recognizing and
assisting .
   So that I think, since the time goes by so rapidly here, it might be
better for me to pause at this stage, because I could go on for quite
a while, and say to you that if there are questions the counsel would
like to raise, or anybody else, it might be better, and then if I have
further ideas I could bring them in . But I would like to complete
my visit with you today, so that if there are questions you want to raise,
I want to be sure we allow ample time for any questions .
   The CHAIRMAN . You may proceed, Mr . Koch .
   Mr. Kocx . Mr . Herring, first let me point out what my problem
and Mr . Wormser's problem is ; that is, to get the benefit of your points
of view-and, of course, we have already covered a lot of it-as to these
criticisms or suggestions that have been raised by previous witnesses .
   I want you to know that there was no intention on our part to make
any charges . Frankly, I don't think we have a right to . We have a
right to bring before the committee, who are the judges, such criticism
or arguments as have been made, and we now welcome your help in
helping us try to appraise whether some have merit or whether they
have not.
   Now, in that connection, I would like to review the particular points
that we are concentrating on, so that when we ask you questions
and I am going over your statement-you will have those in mind and
can give me whatever you like .
   For instance, we have, as you have heard before, the possible concen-
tration of power caused by united or concerted action on the part of the
larger foundations, thus tending toward conformity or a threat to a
free interplay of ideas . Always listen to the "possible" part, because
that has been mentioned by people who come as professors of eminent
universities . It has been raised, and there is the possibility, as far as
I am concerned-and certainly until all the facts are in I wouldn't
attempt to appraise the matter as to whether that is on the road to
control or it isn't .
   Then the possible creation of an elite group of social scientists who
are called upon from time to time to advise the Government on prob-
lems of importance in their field . And then, of course, whether certain
types of social-science investigations are not the proper subject of
grants ; that is, the results might be too questionable, or the particular
thing is too hard to appraise or too hard to control . You will recall
that that type of criticism has come before the committee .
   Then, of course, and you mentioned it before, but I will come to it
later, the presence of an interlock of directors and administrative heads
among the various foundations, which might lead to uniformity and
ideas or concerted motion in favor of certain types of action .
   And finally, even if nothing has been done by the foundations in the
past which was detrimental to the public, is there a latent power in the
foundation setup which, falling into hands less respectable than those
of yourself and the many others we have identified as the heads of
the foundations today, if that power gets into bad hands, would be of
danger to the public? And if so, is there anything we can do to protect
ourselves?
   Mr. HAYS . Are you asking those questions en bloc?
   Mr . KocH . No, Mr . Hays. I wanted to point out the particular
specific questions I am going into in an attempt to cover those points .
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I am certainly not asking him now to give us an answer on that . . But
those are the questions I feel he can be very helpful to us on, and those
are the things I feel eventually the committee will have to appraise .
   So with that in mind, I will go into your statements, and certain of
the questions won't follow the order of these general propositions .
   Now, I am referring to your introductory statement, Mr . Herring.
Near the bottom of the first page there is this sentence
   In view of the references to collectivism, I am sure that we share of a feeling
of caution concerning governmental intervention and control over education and
research .
   Now, if that control might be something other than governmental,
but still control, we would likewise be concerned about that, wouldn't
we, Mr. Herring?
   Mr . HERRING . That is right. There is no question about that .
   Mr . KocH. Now, let's skip to page 4 . A little bit more than half
way down on page 4 :
   I know of no reliable method of analysis for establishing cause and effect
relationships between such ideas and what has happened in our recent history .
   Now, for my help, do you believe that as a general statement we
                my
cannot establish a clear causal relationship between an idea and what
has happened?
   Mr . HERRING . Well, I think problems of historical causality are
exceedingly difficult ideas to work with . I recall we had a commit-
tee on historiography, and one of the problems discussed by that com-
mittee was the problem of causality . What causes what? This group
 of eminent historians went into that at some length, and just made the
 point that we tend often to be much too superficial in attributing,
 causal relationships . You can offer interpretations . It goes back to
 Congressman Goodwin's point again, that there are certain historical
 facts . You can say a certain thing happened on a certain date . But
 as Congressman Hays pointed out when they discussed this matter
 How do you get at any one definitive final causal statement? There
 are these matters of interpretation .
    Mr . HAYS. Well, you might ask this question . Back in the 1930's,
 I very well remember that there were farmers with pitchforks out
 threatening tax collectors, and notably in the very conservative State
 of Ohio. Do you know whether there is any way you can figure out
 whether any idea caused them to go out there, or the economic condi-
 tions of the time
    Mr . , HERRING . That is right. I get my sensitivity by associating
 with historians, who are even more sensitive about it . But how can
 you get at these sweeping generalizations? It is said, for example,
 that a decline in the production of wheat would cause certain political
 repercussions. That is a sweeping assertion that is made . The his-
 torian has to go to the place of wheat at a certain place at a certain
 point in time and see whether it was that price of wheat at that point
 in time that bore some relationship to this hypothesis as to cause .
    The CHAIRMAN . Insofar as we members of the committee can re-
 strain ourselves, I am inclined to think that it would make for expe-
 dition and orderly procedure if we were to let the counsel conclude his
 questions, and then we will have ample opportunity to raise any ques-
 tions that we want to raise . That does not mean that we should not,
 interrupt, but I am just throwing out a caution in that respect .
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  Mr. HAYS . I will try to abide by your wishes, Mr . Chairman,, but I
fear that it is going to be very difficult for me at times to restrain
myself.
  The CHAIRMAN. But the depression and pitchforks against~' tax-col-
lectors is not now particularly pertinent .
  Mr. HAYS . It is very pertinent, if you will read from the portion on
page 4, as to whether or not you have any-
reliable method of analysis for establishing cause and effect relationship between
such ideas and what has happened in our recent history .
   Now, if you can think of a more pertinent example, Mr . Chairman,
I would be glad to have it .
   There may be one coming up in November, if you want to go . out
and be a prophet, about the price of wheat, as somebody has men-
tioned, and what may happen next November . There might . be a
very interesting possibility for some research there.
   Mr . GOODwIN. You will have some others under strong temptation
to make speeches here if you continue.
   Mr. HAYS . My best political advice, Mr . Goodwin-and I wouldn't
care to offer it to you, but to anyone coming from a district in New
England, where there isn't much wheat raised-would be just, to . stay
out of that wheat argument and try to get elected on some other
ground .
   Mr. KOCH . Now, Mr. Herring, isn't it part of the claim of the
social scientists, particularly those that specialize in the empirical
research, that by observing the behavior of man and what is going on
in society, one can establish such a cause-and-effect relationship?
  Mr. HERRING . I am very glad you raised that question, Mr . Koch,
because it gives me a chance to explain a point .
  Mr. HAYS . Right there, would you mind repeating the ;.,question?
I didn't hear the first part of it .
  Mr. Kocx . Yes . Isn't it a part of the claim of the social scientists,
especially those that are specializing in theempirical research, that
by observing the behavior of man and what is going . onn in society, one
can establish such cause-and-effect relationship?
   Mr . HAYS . Thank you.
  Mr. Kocx . Now, will you help us out?
   Mr. HERRING . Take your own language, Mr . Koch : Observing the
behavior of man and what goes on in society . Social scientists do
not attempt to observe the behavior of man. "Man" is an abstract .
You can observe the behavior of Mr . Koch.
  Mr. Kocx . I would rather you would not . But go ahead.
   Mr. HERRING. You can analyze the words he uses . You can observe
his gestures . You can give him certain tests . You can measure his
I. Q . with a fair amount of certainty . In college, if you take scholastic
aptitude tests, you would find over the years that those tests would
indicate pretty clearly whether you are going to be a pretty good
student or not .
  The important thing to nail down here is that this empirical work
doesn't operate at this range of generality about man and society .
It deals with men that you can observe, doing things that you can
observe, and then figuring out if there is some way, in this particular
instance, with respect to the particularities, under which hypothesis
can be adumbrated with reference to the observed behavior . It is not
man in the abstract .
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   Mr. KOCH . Isn't it possible then for the social scientist to know ass
well whether I am going to explode, as whether Mr . Franklin's boiler
is going to explode? Those scientists have a much easier job to check
on the social effects, don't they, in the physical sciences?
   Mr. HERRING . I am much impressed with advances that have been
made in fields dealing with human tensions and mental illness . It is
one of the most important problems before us at the present time .
As a matter of fact, it was the illustration I was going to offer earlier,
because I think it is so important .
   We have in our hospital beds in this country about half a million
mentally disturbed patients, and the problem of what to do with
that great burden of the mentally ill is not only a problem of a human
sort . It is a terrific tax problem . It is one of the great drains on
our resources .
   Mr. HAYS . Yes, but, Dr . Herring, I am trying to be helpful, and
I don't think you are quite specifically getting at the question Mr .
Koch asked . I will rephrase it in my own words as I see it. Maybe
I am not, either . What he is saying, I think, is that you can put
a pressure gage on a steam boiler that will tell you within a few
degrees of the probability that that thing will explode if it goes be-
yond a certain range, but you can't put any gage up to a human brain
to tell you at what point it is going to be so overtaxed that it becomes
necessary for the possessor of it to become a patient in one of these
beds.
   Mr. KOCH. That is right . And by merely counting the number of
 patients in the hospitals and also finding out that so many came from
 the slums and so many came from the union of first cousins, that still
 won't tell you the whole story. I mean, you may have to go into their
 religious background, the background of the patients, and what not .
 And so that is the problem . How accurate can they be in the social
 sciences?
   Mr. HERRING. Well, you haven't even started to ask the questions
 that have to be gone into. You haven't even scratched the surface .
 If you want to get involved in psychoanalysis, there is just no end to
 the matter of what you go into . But the point that I would defend
 here and try to explain to the committee is that when you are faced
 with a problem such as mental illness, you want to use every device that
 you can think of for understanding the character of the mental dis-
 order . But obviously you haven't gotten very far if you have just
 counted the number of sick people you have . But you want to under-
 stand all you possibly can about their personalities and their develop-
 ment as individuals and their family relations and the whole history .
 And you want to go beyond those superficial matters and get some
 understanding at a deeper level of them as human beings . And what
 I wanted to say was that I think that a very encouraging amount of
 work is going forward in trying to penetrate further and further
 into the nature of human personality .
   Mr. Kocx. Now, on page 5, Mr . Herring, at the bottom, with respect
 to this sentence :
  The staff has tried to call into question the efforts of the very individuals and
institutions who are devoting their resources and energies to the increase and
dissemination of knowledge and the protection of the. American way of life .
The picture that has been presented to the committee does not accord with my
own observation and experience .
      49720-54-pt ; 1-•- 55
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  Well, now, you wouldn't claim, however, that the social scientists
have a monopoly on the dissemination of knowledge and the protec-
tion of the American way of life?
  Mr. HERRING. Not for a moment .
  Mr.. KOCH . I imagine to a very minor extent the lawyers may have
their ideas, the ministers theirs, and you don't claim that you have a
monopoly on the part of your social scientists?
  Mr. HERRING . Not for a minute .
  Mr. Kocx. Page 6 :
  We are told, in effect, that a few organizations constitute an efficient inte-
grated whole, tending to work against the public interest .
   Would you agree with me that if we were to find that there are a
few organizations who constitute an efficient integrated whole, and
further find that they are harmless, or even beneficial-do you, as a
political scientist agree it is against public policy in the United States
to let such an efficient integrated group become too powerful?
   Mr . HERRING. Well, as a political scientist, if you want to drape
that cloak around me, which I haven't had the privilege of wearing
professionally and actively, I would, going back, be very hesitant
indeed to offer any unconsidered horseback judgments on a highly
hypothetical question . So don't rouse my professional instincts here
with that kind of a question .
   If you phrase it, perhaps, in more down-to-earth terms, and say
"As a man in the street, what do you think of," whatever it is, J~
will try to give you a horseback judgment .
   Mr. KocII . You go around with a lot of people who have probably
voiced their opinions on matters of this sort . If you have no opinion
whatsoever, we, of course, will skip it . But if you have, it is a problem
that interests me, and if you have an opinion, I would respect it,
even though you don't .
   Mr. HERRING. Well, now, let's get it clear . "A few organizations
constitute an efficient integrated whole ." Well, I don't know what
they are and never heard of them, and if you can name them to me,
I can respond . But I can't give any answers in general about un-
named organizations . So you name them, and I will respond.
   Mr. KOCH . No. The theme is this : And as I say, whether the facts
support it, I am a long way off from deciding . But there evidently
is this fear expressed that through the social-science group we may
be creating an elite group of social scientists, who are very capable
men and are very honorable men, but they are so capable that when
we have problems in government, the Government, being busy as
it is, the Congressman, et cetera, would naturally run to the experts .
   Now, if it is only one group, without a competing group, and that
one group, isn't elected by the people, isn't removed by the people,
isn't appointed by gove