Foundations Investigation
The Select House Committee to Investigate Tax-Exempt Foundations held hearings during May and June, 1954
To be clear this article is an apologia containing the ‘official narrative’ articulated as a defense against the findings of the Reece Commission. This counter argument fails to go into the specific dialogues of certain foundation directors that prove the allegations of Norman Dodd.
See:
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The Select House Committee to Investigate Tax-Exempt Foundations held hearings during May and June, 1954, to determine whether tax-exempt educational and philanthropic foundations had used their funds for purposes other than those for which they were established. Particularly, the Committee wanted to discover whether such organizations had financed un-American and subversive activities, propaganda, and attempts to influence legislation.
After sixteen stormy days of testimony the Committee agreed July 2, by a straight party vote (3 Republicans-2 Democrats), to hold no more public hearings. At the time the Committee recessed (June 17), only one spokesman for foundations had been given the opportunity to testify.
The Committee permitted foundations to make written replies to the testimony within 15 days after it finished filing its material in the record. Chairman B. Carroll Reece (R Tenn.) stated that the staff material and the foundations' statements would be made public.
Some 12 foundations later submitted statements to the Committee, denying charges that had been made against them. Among these organizations were the Carnegie Corporation, Ford Foundation, American Council of Learned Societies, and the Rockefeller Foundation.
Background
References. “Foundation Probe,” CQ Almanac, Vol. IX, 1953, p. 315; “Foundations Study,” Vol. VIII, 1952, p. 269.
The Select Committee to InvestigateTax-Exempt Foundations was set up July 27, 1953, by a 209-163 House roll-call vote. The five-member group was a successor to the 1952 special Cox Committee which, after investigating possible subversive influences in foundations, issued a report January 1, 1953, saying it had found “very few” Communist sympathizers in influential positions in foundations.
In requesting House approval for another investigation of foundations, Reece July 27, 1953 stated that “some of these institutions support efforts to overthrow our government and to undermine our American way of life.” Critical of the work of the Cox Committee, of which he had been a member, Reece gave these statements as reasons for further investigation:
“Some officers of large and supposedly legitimate foundations were Communists”;
Numerous Communists had received grants from foundations;
Foundation grants had been given to many organizations, either designated by the Attorney General or described by Congressional investigative committees as “pro-Communist”;
Sworn testimony (at a Cox Committee hearing) that some of the trustees of a supposedly legitimate foundation were Communists.
In 1953 the Reece Committee was allotted $50,000 for its investigation. It gathered information but held no public hearings that year. On April 6, 1954, the House approved a request (H Res 433) for an additional $65,000 to continue the study. Feb. 12, President Eisenhower authorized the Internal Revenue Service to make available to the Committee tax-exempt foundations' returns for 1950–1953.
House
Committee. Select Committee to Investigate Tax-Exempt Foundations.
Hearings. May 10-11; 18-20; 24-26; June 2-4; 8-9; 15-17.
Testimony
May 10. Norman Dodd, the Committee's research director, testified that there were 6,000-7,000 tax-exempt foundations to which about $7.5 billion had been given and which distributed about $300 million annually. He outlined the results of the staffs preliminary investigation.
May 11. Dodd said that the staff had found a “tendency of foundation trustees to abdicate responsibility,” that some foundations were financing “ideas and practices incompatible with the fundamental concepts of our Constitution,” and some had become “propaganda machines.” The staff, Dodd stated, had recommended close study of the Ford Foundation and of “accessory agents,” such as the National Education Association, which cooperated closely with foundations.
Committee member Wayne L. Hays (D Ohio) suggested an investigation of “Facts Forum,” a tax-exempt organization, as a “propaganda machine”.
Committee counsel Rene L. Wormser said Internal Revenue records on “Facts Forum” had been made available to the Committee May 7.
May 18. As the hearings resumed, Rep. Hays questioned Dodd about the. May 10 staff report, which Hays claimed had been “doctored” with “last minute changes.” Dodd said the revised version did not change the conclusions in the report.
Dr. Thomas H. Briggs, retired professor of education at Columbia University, testified that he had resigned from the advisory committee of the Ford Foundation's Fund for the Advancement of Education because Fund personnel were inexperienced in the field and showed favoritism in their operations.
Teachers, he said, were “intimidated” from criticizing foundations because so many educators relied on money grants from tax-exempt organizations.
Under questioning by Hays, Briggs disagreed with the Committee staff report statement that the National Education Association and other groups “aim to exercise a monopoly over education.” He denied that NEA cooperated with foundations.
Social Scientists Criticized
May 19. Dr. A. H. Hobbs, assistant professor of sociology at the University of Pennsylvania, testified that social scientists—who, he said, get more foundation support than any other group—give the impression their work has the validity of experiments in the natural sciences. He cited Dr. Alfred Kinsey's books on human sex behavior, financed by the Rockefeller Foundation, as an example of a “pseudo-scientific technique.”
May 20. Hobbs urged the Committee not to try to enact laws dealing with research work financed by foundations. Organizations themselves, he said, should keep their social science grants “in balance.”
May 24. Aaron M. Sargent, lawyer and former chairman of the Committee on Americanization of the Sons of the American Revolution, testified that foundations had made large grants to advocates of socialism while denying money to anti-radical projects. He listed Sen. Paul H. Douglas (D Ill.) as a former member of the Intercollegiate. Socialist Society and one who had helped Fabian socialism get a “beachhead” in America.
Rep. Hays charged that Sargent had implied that Sen. Douglas was a Socialist and cited a Committee rule that witnesses should be heard first in closed session if their testimony would “injure the reputation of others.” Hays moved that the Committee hear Sargent's further testimony in executive session. The motion was defeated 2-3, with Chairman Reece casting proxies for the two absent Republican committee members, Reps. Jesse P. Wolcott (Mich.) and Angier L. Goodwin (Mass.).
Democratic Walk-Out
The two Democrats, Reps. Hays and Grade Pfost (Idaho), walked out of the hearing in protest.
(Sen. Douglas later stated that he had belonged to the Intercollegiate Socialist Society 40 years before, as a student at Columbia University, and that the group had no connection with the Socialist Party.)
May 25. With the full Committee present, Hays moved that Sargent be heard in closed session to prevent further “name dropping.” Pep. Wolcott countered with a motion for continued public testimony and was upheld, 3-2.
Declaring that America's greatest danger was not communism but Fabian socialism of a kind that “destroyed Great Britain,” Wolcott said the Committee should find out whether foundations were sponsoring such a movement.
Sargent read from books and pamphlets which he said favored socialism or collectivism and which had been sponsored by unnamed foundations.
May 26. Sargent directed his charges against the National Education Association. The NEA, he said, had actively promoted a series of textbooks, “Building America,” financed by the Rockefeller Foundation, which had been banned by the California legislature from state schools in 1946 as subversive. Sargent said 113 “Communist-front” groups and 50 “Communist-front” authors had participated in the series.
(NEA's executive secretary. William G. Carr, in a public statement replied that “the NEA has a proud record of 100 years of patriotic public service … The American people will not be deceived.”)
Move to Halt Hearings
June 2. Rep. Pfost moved that the Committee suspend its hearings until all members had been briefed on the mature of the inquiry. She said the investigation “now appears … not to be an objective inquiry to get the facts, but rather a sounding board for propounding loaded evidence.” The motion was defeated, 2-3.
The Commissioner of the Internal Revenue Service, T. Coleman Andrews testified briefly and said some tax-free groups. might be violating their privileges.
Assistant Commissioner Norman A. Sugerman stated that in the period June, 1951-June, 1953, Internal Revenue had revoked tax exemptions from 55 out of 30,000 organizations studied. He did not specify how many of the 55 were foundations. (About 120,000 organizations are exempted from taxation.)
Questioned by Committee counsel Wormser about “lobbying” by foundations, Sugerman said some foundations apparently had registered under the Lobbying Act “from an excess of caution, not because they think they are lobbyists.” The law permits tax-exemption as long as “no substantial part” of a foundation's activities is devoted to “propaganda”, Sugerman said.
June 3. Thomas M. McNeice, associate research director of the Committee, stated that the staff had evidence indicating that funds from tax-exempt groups had “promoted a worldwide social revolution.”
McNeice named the American Council of Learned Societies, American Historical Association, Social Science Research Council, National Academy of Sciences, and the American Council on Education as channels for foundation grants to leftist groups whose activities were not “in the public interest.”
June 4. Professor David N. Rowe of Yale University, a trustee of the Institute of Pacific Relations from 1947–1950, said foundation grants to the IPR had helped “people who did not have the best interests of this country at heart.” Rowe said several foundations had continued to contribute to the IPR after disclosures of pro-Communist influences in the organization (CQ Almanac, Vol. VIII, 1952, p. 255).
June 8. Criticism of foundation grants to the IPR came from another ex-member, retired Northwestern Professor Kenneth W. Colegrove, then teaching at Queens College, N.Y. He said the Rockefeller Foundation should have investigated the IPR in 1945, “when the situation was brought energetically to its attention by Alfred Kohlberg,” head of the American China Policy Association.
Encyclicals “Communistic”
June 9. With staff member Thomas M. McNeice on the stand, Rep. Hays sought to demonstrate “the danger of lifting a sentence or paragraph out of context to prove a point.” Without giving their authorship, Hays read excerpts from papal encyclicals by Popes Leo XIII and Pius XI on labor and social justice.
McNeice said the statements were “closely comparable to Communist literature” and “parallel very closely communistic ideals.”
Hays said the Committee staff similarly had cited excerpts “to prove a point when actually they prove nothing.” McNeice said he had not misrepresented the contents of any material he presented.
June 15. Ken Earl, a former staff member of the Senate Internal Security Subcommittee, described his study of the League for Industrial Democracy, a tax-exempt educational organization. Earl called the League “an adjunct of the Socialist Party.”
June 16. Pendleton Herring, president of the Social Science Research Council, took the stand to answer criticism of his group made previously by members of the Committee staff. He said the Council was “not engaged in developing or in advocating public policies or political programs, or in directing or shaping educational objectives and policies.”
Hearings Recessed
June 17. Chairman Reece recessed the hearings after an angry exchange with Rep. Hays, who described the investigation as an “Alice-in-Wonderland” probe, “in which a verdict against foundations was rendered before the evidence was heard.”
Reece said the recess was necessary to determine how to “protect the Committee staff and witnesses” and “maintain the dignity of the Committee.” Herring was on the stand under cross-examination when the session was terminated.
Arthur S. Adams, president of the American. Council on Education, and the next scheduled witness, submitted a statement for the record.
Educational organizations, he said, had been granted tax-exemption as a protection against federal control of education. Asserting that such control could result either through direct regulation or by threat of removal of the tax-free status, Adams asked the Committee to make clear “the extent to which it believes federal control of tax-exempt institutions is justifiable.”
Adams did not dispute the right of the Committee to discover to what extent foundations and other organizations had spent money to promote a special theory of constitutional law. He denied, however, that the nation's educational institutions and a group of national organizations (including the American Council on Education) had been engaged in promoting so-called revolutionary changes. He said the members of the American Council on Education were institutions and organizations, not persons, and that most were colleges and universities with widely differing curricula.
Public Testimony Cut Off
On July 2 the Committee, by a straight party vote (3 Republicans — 2 Democrats) agreed to end public hearings and receive from foundations written statements rather than public testimony. These statements would be accepted until 15 days after the Committee finished filing its material in the record.
The two Committee Democrats contended that foundations should have a chance to testify in public session. But Reece said “obstructionist tactics” by Hays had frustrated the hearings.
Foundations' Statements
July 11. Charles Dollard, president of the Carnegie Corporation, issued a statement replying to charges made before the Committee about his organization. He said the Committee had heard a “shocking combination of innuendo and implication” regarding the patriotism of foundations, plus “completely unfounded charges” and numerous “errors of fact and interpretation.” Corporation Counsel John E. F. Wood added that the Committee's decision to end public hearings was “obviously unfair and prejudicial.”
In his statement Dollard denied charges that the Corporation engaged in propaganda to influence public attitudes. The Carnegie Corporation since its founding in 1911, he said, had voted grants of $253,220,000 for research and educational projects in more than 700 American colleges, universities, and schools. About $100,800,000 in grants, he added, had gone to four other trusts established by the late Andrew Carnegie.
July 15. Harry W. Laidler, executive director of the League for Industrial Democracy, sent the Committee a letter and an accompanying statement describing the League's recent activities and replying to adverse testimony given in the hearings. Specifically, he challenged the validity of Ken Earl's testimony that the League propagandized for socialism.
He said Earl's definition of education — which he contended was rejected by educators, the Internal Revenue Service, and “the Federal Circuit Court of Appeals — was so restricted that any course in the social sciences could be considered political activity, not education.
The League, he said, was a 49-year-old non-profit, educational organization, not a foundation. Laidler expressed astonishment at the “unfounded” contention made during the hearings that the League helped to determine the flow of grants from large foundations.
Slander Alleged
July 20. Paul G. Hoffman, chairman of the board of the Fund for the Republic, released a statement denying charges about the Fund and himself made in a 1953 House speech by Rep. Reece. Hoffman declared that Reece's remarks that the Fund was a “king-sized Civil Rights Congress … given liberal respectability” by Hoffman's appointment as chairman would be actionable as slander except for Congressional immunity. He further denied Reece's charge that the Fund was established to attack Congress for inquiring into the nature of the Communist conspiracy.
The Fund for the Republic, Hoffman stated, was a tax-exempt membership corporation engaged in research and education. Though granted $15,000,000 by the Ford Foundation, it “is completely independent,” he said. Among projects the Fund had financed were studies on individual rights as affected by national security and “an inquiry into the nature and extent of the internal Communist menace.”
Conspiracy Denied
July 21. Mortimer Graves, executive director, and Cornelis W. de Kiewiet, board chairman, of the American Council of Learned Societies branded as “fantasy” suggestions that the Council was “engaged in some kind of conspiracy with the foundations.” De Kiewiet, president of the University of Rochester, stated that “to lay broad and loose charges against education can itself become a form of subversion against which it is a duty of intellectual leaders to speak forcibly and emphatically.”
The Council's statement declared that “to the knowledge of the Council” none of its members or of its board was or had been a Communist, nor had any of its 25 constituent societies been cited by the Attorney General as a subversive organization.
July 24. H. Rowan Gaither, Jr., president of the Ford Foundation, sent a state- ment to the Committee charging that the decision to end public hearings before foundation witnesses had been heard was “a puzzling and unexpected act of injustice.”
The Ford Foundation, he said, had not used any of its resources for un-American or subversive activities nor for “political purposes, propaganda, or attempts to influence legislation.” The Foundation asked the Committee to testify to the worthwhile objectives of “the vast part of American philanthropy.”
Aug. 4. The Committee received a joint statement from the Rockefeller Foundation and General Education Board, signed by Dean Rusk, president of both groups. Emphasizing the independence and decentralization of educational institutions, Rusk called “baseless” charges that foundations had the power “to impose conformity” on schools and curricula, or that the Rockefeller Foundation had “exerted pressure to produce such uniformity.”
He asked the Committee to give foundations “an opportunity to be heard on the draft of any report the Committee proposes to submit,” and he suggested that the Committee investigation went beyond its announced purposes.
The Committee also received statements from the following foundations which had been criticized during the hearings: the American Historical Association; Carnegie Endowment for International Peace; National Education Association; Foreign Policy Association; and the Anti-Defamation League of B'nai B'rith.
Related Developments
An amendment dealing with foundations was included in the tax-revision bill (HR 8300) passed by the Senate July 2. The amendment, sponsored by Sen. Pat McCarran (D Nev.), would have denied tax exemption to foundations which supported subversive organizations or individuals (see page 486). The amendment was deleted from the bill in conference with the House.
On July 29 Sen. McCarran told the Senate his amendment was aimed, not at subversive organizations, but at “fat-cat” foundations run by “fat-headed professional do-gooders” who had not been careful about dispersing their funds.
The tax bill as enacted, however, contained a provision denying tax-exempt status to foundations that tried to influence legislation or took part in a political candidate's campaign.
House Criticism
On July 20 Rep. Jacob K. Javits (R N.Y.) introduced a resolution (H Res 649) calling on the Rules Committee to report on whether or not the Foundation Committee's activities should be terminated. Javits declared that “terminating public hearings when only one side has been heard is not the American way.” (The resolution was not adopted.)
Rep. Charles R. Howell (D N.J.) Aug. 5 declared that the denial of a public hearing to foundation spokesmen was “a shocking example of the injustices practiced by some Congressional investigating committees.”
Report Issued
In a report (H Kept. 2681) dated Dec. 16, the special Committee said that “With several tragically outstanding exceptions, such as The Institute of Pacific Relations, foundations have not directly supported organizations which, in turn, operated to support Communism. However, some of the larger foundations have directly supported ‘subversion’ in the true meaning of that term, namely, the process of undermining some of our vitally protective concepts and principles. They have actively supported attacks upon our social and governmental system and financed the promotion of socialism and collectivist ideas.”
The report said the country is faced “with a rapidly increasing birth-rate of foundations” motivated by “tax planning rather than ‘charity’ … a large part of American industry may eventually come into the hands of foundations …”
Among other Committee findings: “The power of the individual large foundation is enormous … influence (on) national policy is amplified tremendously when foundations act in concert”; a “professional class of administrators of foundation funds has emerged …”; and “foundations are clearly desirable when operating in the natural sciences and when making direct donations to religious, educational, scientific, and other institutional donees. However, when their activities spread into the field of the so-called ‘social sciences,’ or into other areas in which our basic moral, social, economic, and governmental principles can be vitally affected, the public should be alerted to these activities and be made aware of the impact of foundation influence on our accepted way of life.”
The majority report was submitted over the signatures of the three Republican members, Chairman B. Carroll Reece (Tenn.), Jesse P. Wolcott (Mich.), and Angier L. Goodwin (Mass.). However, at his home in Massachusetts, Rep. Goodwin said that his signature should be taken as “unauthorized” because his statement of “strong reservations” arrived too late and was not included.
Democrats Wayne L. Hays (Ohio) and Gracie Pfost (Idaho) dissented. The Democrats submitted minority views in which they said the “theme of prejudgment … characterized the entire course of this Committee's activities” and that with few exceptions only anti-foundation witnesses were called.
EDUCATION AND WELFARE
Document Citation
"Foundations Investigation." InCQ Almanac 1954, 10th ed., 04-238-04-241. Washington, DC: Congressional Quarterly, 1955. http://library.cqpress.com/cqalmanac/cqal54-1358084.
Document ID:cqal54-1358084
Document URL:http://library.cqpress.com/cqalmanac/cqal54-1358084