If not socialism, the panorama seems to have overtones about it at least of quasi-socialism or, we may say paradoxically,
capitalist
socialism or social capitalism.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
In the class struggle under capitalism, Marx pointed out, the capitalists themselves contrive each other's destruction.
Some become bigger as others are crushed.
In the impersonal process (and Marx went astray on this prediction) everybody is proletarianized except the big capitalists.
Marx's error of anticipation stemmed from the fact that he failed to see the emergence with proliferating technology of a white-collar horde of corporate technicians and administrators, many of whom were to identify themselves psychologically, purely through physical association, with the upper owning classes.
Nor did he see the emergence of new interstitial enterprises, late reverberations as it were of an earlier upthrusting industrialism.
Even though accelerated by two gigantic wars, developments under capitalism proceeded at a slower pace than Marx predicted. But, in a Marxian view, the phenomenon of small capitalists being squeezed by big capitalists in their adroit manipulation of the state apparatus (which is Patman's basic thesis) is an important readily verifiable facet of class struggle.
Is it morally justifiable to feel politically irked? This is obviously a foolish question. If one is irked one is irked, a psycho-physical fact. How one now behaves, rationally or otherwise, is determined by one's intellectual analysis and program for eliminating or avoiding felt difficulties. Marx in his recommended political program, visualizing the forcible overthrow of capitalism by factory workers, was far more of a visionary than in his theoretical analysis, which was an attempt to find broad intellectual sanction for remedial political action of a fundamental nature. And even in his political program calling for revolution, Marx was far less of a visionary than many subsequent self-styled Marxists, notably Lenin.
For the Marxist revolution, Marx very practically held, could take place only in a very advanced capitalist country, such as England, the United States or Germany. And when it took place, just about all of the people--now all proletarians--would favor it. The actual revolution would be a small affair, easily throwing the few surviving big owners out. All very simple. Remaining would be a smoothly running technical system with the profit motive removed, everybody happy.
What confuses many who are superficially informed is that what is represented as Marxist revolution has taken place only in backward agricultural countries such as Russia and China, in the wake of debilitating wars. Although these were indeed revolutions, and might well have recommended themselves as such to Marx, who was by temperament as well as conviction a bone-deep revolutionary, they were far from Marxist revolutions.
No Marxist revolution, violent or peaceful, has ever taken place anywhere. But certain processes within capitalism, some of which Marx first discerned, some of which he foresaw and some of which he neither discerned nor foresaw (such as the effectiveness of piecemeal reform in modifying many conditions), continued to hold sway, transforming capitalism into its many different national guises. On the basis of his premature observations Marx considered all reform a misleading hoax.
But in the concept of class struggle, even though all history is surely not (as he asserted) the history of class struggle, Marx achieved an intellectually fruitful insight. And what are seen as leftist and rightist deviations from centrism (which upholds the status quo) are clearly instances, however ineffective, of class struggle or at least class protest.
Whereas the earlier leftist movements in the United States from Populism through Socialism and on into Communism of the 1930's were ventures in class struggle or protest carried out at least nominally on behalf of lower elements of society, the more recent rightist movements are ventures in the same sort of struggle waged by and supposedly for persons who futilely (in the long run) resist being squeezed out of existence or into less lucrative positions. As Marx pointed out, when men feel cornered they often elect to fight.
While earlier Populists and other leftists waged their struggles, which produced a certain amount of mild increasingly diluted reform (though it did not arrest a large and spreading impoverishment among the unskilled), persons situated in society at the levels where contemporary rightists now find themselves did not feel stirred. This was no doubt because they still identified themselves with the Rockefellers, Carnegies, Du Ponts, Fords, Mellons et al. Soon, too, they would be ascending those blessed golden peaks! Soon, too, their address would be 1 Wall Street, their summer address Newport or Bar Harbor.
Under the impact of recent pressures, however, it has begun to dawn on many of them that their address is far more likely to be the bankruptcy court. Many have already been displaced from the middle class, sons of former corporation executives who cannot "make it," inheritors of deflated estates and others of the nouveau dispossessed.
Looking about, they have concluded that one of the causes of their difficulties is the variety of social legislation called into being in three decades under the pressure of concrete phenomena such as unemployment. This legislation has had the effect, among other things, of depriving small operators of much cheap, profitable labor. This, they conclude, is tantamount to socialism and the sponsors are in effect socialists or communists.
And the big corporations, instead of continuing to fight this rise of "socialism," have finally compromised with it. Wealthy persons such as Henry Ford II and the Rockefellers now accept the mild, often diluted New Deal reforms. The only very wealthy hereditary group that still appears to support openly rightist causes is the Pew family of Philadelphia. Many medium corporations, however, join the Pews.
The big corporations, with their greater productivity and reserves, have indeed more or less acquiesced in the process after the failure of their political struggle in the 1930's against it, when the big Du Ponts led heavy industry, the banks and the newspapers against the New Deal. The big corporations are easily able to meet the major demands of organized labor, thus avoiding trouble and a poor public image, by passing increased costs on to consumers in administered prices. Most of the state right-to-work laws, forbidding the union shop, are noticeably located in the less industrialized regions. Attempts to supersede these low-wage laws by a federal law that would facilitate unionization are desperately fought by small high-cost producers as the encroachment of soul-destroying socialism.
It isn't the big companies, by and large, or the foundations, that lead this latter-day fight against the unions. For the big entities have found it profitable to fall into step with the welfare-warfare state. It is the small, often rightist businessman who favors the anti- union laws. Many of the regulations that small-business elements find distasteful were in fact devised over the years and made into public policy by representatives of the wealthiest and most Republican interests. 68 They wanted to squelch the small, market- upsetting wildcat operators. Only big, stabilizing centrally controlled units were wanted.
Not only are the small operators annoyed that the big corporations pay better wages and no longer fight the unions but they are annoyed at the ease with which the big operators, with the many fringe benefits they offer, are able to hire the cream of available personnel. Left to the small employer are the misfits, the restless, the inefficient.
As the rightists generally put their case, the small businessman is being squeezed between Big Unions and Big Government (the latter imposing more and more New Dealish "socialist" rules and thereby strangling freedom to deal properly with employees and customers). All this regulation smacks of what rightists understand as regimented socialist society. In most of its versions the analysis is unrealistic because canons of middle-class respectability lead most rightists to overlook the fact that Big Corporations are implicated in the squeeze. But to say this would make them sound like old-time long-haired socialists, thus defacing their self-image of respectability.
Political realists like Patman, however, do not overlook this factor in the equation. Nor were the ill-behaved Republican rightists at the famous convention of 1964, when they hissed and booed Nelson A. Rockefeller, unaware that he represented a genuine, blandly powerful adverse interest. Rockefeller, as a "liberal" Republican--that is, one willing to accept the New Deal approach--had become anathema to Republican rightists, many of whom more recently denounced him as a socialist.
The small businessman, if he were to read the signs in a Marxist way, would see that he is being slowly expropriated. He should, according to Marxist prescription, join the Marxist ideologues in seeking the day of mass deliverance. As he is biased by his middle-class point of view, envisioning himself as a potential original Rockefeller, Du Pont, Mellon or Ford--like them finding salvation in an unregulated market and society--he will have nothing to do with the doctrinaire Marxists. He therefore, wishfully, analyzes the situation not as one of big enterprise versus small enterprise but as "New Deal socialism" versus free enterprise. He lives within an economic as well as political myth, fails to see that free enterprise itself has long since been superseded by
corporate monopoly, leaving him uncomfortably in one of the remaining dead ends. He does not see that in the impersonal, at times slow, process of economic development he is marked for eventual destruction. He is expendable.
There is, alas, no place for him at 1 Wall Street--unless, perchance, he can inflame the masses with the demonic idea that Eisenhower, Henry Ford II and Nelson Rockefeller are secret card-carrying Communists. If he could get enough people to believe this, and to exert themselves appropriately, then perhaps the strait jacket of New Deal regulations and labor union contracts could be broken. With plenty of cheap labor again available, perhaps he could make a big low-tax profit, build up cash reserves and finally rent a palatial suite of offices at 1 Wall Street. Then all the people who laughed at him when he said he was going to be rich would change their tune. Then they would all see that he was, all along, really a superior fellow, sure to be a success, as good as Rockefeller or Carnegie and maybe even better. Then his wife or mistress would be particularly impressed as he circled his yacht and private island in his own jet plane after he took off for large conferences in Washington or Hong Kong.
But this crude fantasy, although firm in its lineaments, tends to vanish under the weight of heavy unequal taxes, rising labor costs, tightening New Dealish regulations, monopoly, high prices of materials and corporate automation. The outlook becomes darker as he looks across the way and sees one of the hundreds of plants of the Super- Cosmos Corporation churning out trainloads of goods in a profitable torrent. The Super- Cosmos parking lot is filled with the cars of union workers, who denounce him as a fink, a rascal, a Goldwater crackpot and his employees as incompetent, low-paid scabs. If not incipient socialism all this is surely something just as wicked.
Because the rightists have no program upon which to base a convincing mass appeal they are reduced to bringing forward whatever emotional irrelevancy they believe will gain them mass support. Thus they represent themselves as bone-crushing super- patriots, anti-internationalists, anti-foreigners, anti-Communists, anti-Socialists, anti- Semites, anti-atheists, anti-Negroes. They are anti-fluoridation of water, anti- vaccination and, indeed, against whatever is offensive to low-level mass pockets of folklore, superstition and misinformation.
It is in consequence of this kind of electorally necessary appeal that one finds in the rightist entourage such a variegated assortment of screwballs. But all movements when they promise the excitement of combat--left, right or center--have a similar appeal for the demented and half-demented. In time of war the center, for example, draws unfastidiously to its bosom every latent or overt votary of violence--sadists, xenophobes, paranoids, the suicidal. I put all this down because I don't want to be put into the position, generally taken by the left and the center, that there is something inherently deranged about the rightist position. Rightists, like other politicians, take people as they find them and try to bend them to their purposes. And all political positions--left, right and center--leave much out of account in their neat formulas.
If they were fully logical in their prescriptions for the Good Society, the rightists would call forthwith for the dissolution into their constituent parts of United States Steel, General Motors, Standard Oil of New Jersey, AT&T and the other big holding companies. They do not make such a demand because in fact they deeply venerate these enterprises, would themselves like to possess them, only wish that their own Calabash Oil and Swampwater Steel were similarly flourishing. As it is, when Standard Oil of New Jersey breathes a little more deeply than usual, Calabash Oil is suffocated.
Barring some extremely unusual set of developments, the center, the Establishment, seems likely to continue in its triumphant balancing act despite the noisome antics of the rightists. Little more than clamor seems likely to come from the political right, less even
in the way of enforced minor adjustments than came from the reformist demands of the more numerous working masses. The center, the Establishment, with its corporations, foundations, trust funds and family holding companies, clearly rules the roost, whether under Truman, Eisenhower, Kennedy or Johnson. And there is a deep reason for this, which is that by the Law of Inertia the center is bound up in golden links with the Good, the Beautiful and the True. Truth, or at least the routine profession of truth, is solidly on the side of the status quo. All else is error. . . .
Critics and the Foundations
In their patterns of granting funds the foundations display their power in ways that appear most fascinating to casual observers. While most citizens appear to accept dutifully the verdict of the corporate press that foundations exist in an unalloyed good cause, there are many critics of foundation patronage--insiders and outsiders, friendly, unfriendly and temperately judicious. These worthies bring into view a little noticed but wryly instructive aspect of the foundation phenomenon.
The individual critic in Foundationland, whoever he is, is much like a tourist in the Soviet Union. Upon his return home he tells what he liked, what he disliked. Here was a modern laboratory, there an advanced clinic, in another place a special school for backward children and there was, of course, the resplendent Moscow subway system-- all of this the tourist liked very much. On the other hand, what he saw of collective farms, country roads, new apartment houses, most stores and the Kremlin itself--these he disapproved. Still other things he had mixed feelings about, like the schools: too traditional and authoritarian but, on the other hand, very high standards and well equipped, teachers excellent.
And the judicious critic in Foundationland is like the tourist in the Soviet Union also in that whether or not he approves what he sees this is the way it is and this is the way it is going to be. In both cases his judgments, no matter how finely spun, count for naught. He is a cipher in a society of ciphers.
Naturally the managers of the foundations, like the managers of the Soviet Union, prefer that the observer like everything he sees. If not, it is nice that he finds something to endorse. But whether he likes everything or nothing, it is--general public-relations blarney apart--fundamentally of no concern to the managers because this just happens to be part of their plantation. And merely because one finds something on the tour that one likes does not imply, any more in Foundationland than in the Soviet Union, that the tourist and the higher-ups are enrolled in a common cause.
Visitors to big houses of the rich that have been thrown open to the public as museums show the same irrelevantly and futilely judicious attitude. They like the drawing rooms and the library--"Really magnificent, you know. " But, unfortunately, "They certainly showed poor taste in the deco? r of the bedrooms. And the solid gold bath tubs are ridiculous. " But whether the masters showed a lapse of taste in this or that matter or not, this is the way it was and no word of the visitors will change a bit of it.
Foundation Organization
Let us, in order to understand foundations better, leave off attempts to evaluate their distributive worth on a scale of zero to 100. Let us instead concede that they are perfect in their expenditures, thus bypassing an argument apparently as fruitless as the one about the Soviet Union. And let us now look to their organization.
At the top we find a board of trustees, all concededly doing only good. Among the Ford Foundation trustees we find Benson Ford and Henry Ford II and thirteen others of whom at least nine are surely from the world of finpolity and pubpolity. All of these are very able men; about this we need not dispute. But, except for the two Fords, all were
selected . . . by the Fords. The Fords, though, were neither selected, elected, co-opted or chosen by public examination. Nobody at all asked them to assume these arduous philanthropic duties, for which it might seem they chose themselves.
But neither they (nor the Rockefellers, Du Ponts, Mellons and others) did even this, although this is what the Soviet managers did. For the Soviet managers, out of the kindness of their hearts, themselves chose to lead a disbelieving world to the Promised Land of Communism, where the lion shall lie down with the lamb, the unicorn shall shed his horn, the meek shall inherit the earth and the State shall wither away.
The Fords, like their peers, were chosen before birth for their roles, which are (oddly in a democratic, republican or merely parliamentary context) purely hereditary. They are hereditary oligarchic philanthropists!
It is, then, by hereditary right that all these concededly beneficent expenditures are made. If it is not all done in the pure spirit of sacrifice it is, we are repeatedly assured by the corporate press, very close to it. It amounts, simply, to noblesse oblige.
As there are far too many foundations, even large ones, to scrutinize here in any detail, our attention will be largely confined to a few, including the Ford Foundation.
Orientation of Patronage Grants
Those foundations that regularly make substantial payouts--and as we have noticed they altogether paid out only 50 per cent of income through the 1950s--are in philanthropoid jargon said to be "discipline-oriented" or problem-oriented" or a little of both. They are also "friend-oriented," company-oriented," "profit-oriented" and "market-oriented. "
The discipline-oriented, like the Rockefeller group, mainly allocate money to institutions harnessed by intellectual disciplines--physical and social sciences, medicine and (much less so) the humanities. Except for the last, in the opinion of a leading philanthropoid (a very mentor of philanthropoids) these have been overstressed. 69 But heavily financed science (and perhaps this is pure coincidence) has thousands of profitable industrial applications of which the corporations have freely availed themselves. And medical advances are immediately available to the rich, much later if at all to the non-rich. There is little if any monetary profit in the humanities, however (perhaps only another coincidence).
The stress on science in American society has at least been reinforced if not originally invoked by the foundations, an obvious exhibition of power, and a scientist cited by Abraham Flexner believes it has been overstressed. The foundations, thus seen, are centers of self-serving hereditary power.
The Ford Foundation is problem-oriented. It is out to solve or at least make more manageable public problems of various kinds.
After the death of Henry Ford, the foundation, originally organized in 1936, began its larger operations on the basis of a Study Report. 70
The report laid out five Program Areas, as follows:
I. The Establishment of Peace. (Involving international programs; "peace" here, as Macdonald remarks, "means trying to make other nations more friendly to us and less to the Communists. ")
II. The Strengthening of Democracy (domestic civil liberties and politics),
III. The Strengthening of the Economy.
IV. Education in a Democratic Society. (As Macdonald remarks, the democratic society "is apparently ours. ")
V. Individual Behavior and Human Relations. (Macdonald believes this section could more accurately have been titled "Mass Behavior and Social Relations. " The Ford Foundation, however, does not formally concede there are "masses" in "our democratic society. ")
It was in the attempted implementation of this report that Paul Hoffman ran into the trouble with the rightists that led to his resignation two years later.
More recently the Ford Foundation has broken its problem areas down as follows: Education in the United States, Economic Development and Administration in the United States, Public Affairs, Humanities and the Arts, International Training and Research, Science and Engineering, International Affairs, Population and Overseas Development. These subdivisions in the voluminous annual reports are further subdivided into an astonishing array of grants for projects and individual scholarships and fellowships. The sun never sets on the works of the Ford Foundation.
So massive was the task of transferring its vast revenues found to be that the foundation early established and separately financed a number of independent sub- foundations, all under the guidance of philanthropoids: The Fund for the Advancement of Education, the Fund for Adult Education, The Fund for the Republic, Resources for the Future, various television entertainment-educational programs and its own special programs. 71
While the entire original program of the foundation came indiscriminately under attack from rightists, The Fund for the Republic, presided over by the far from diplomatic Robert M. Hutchins, provoked their especial ire because it was established for the entirely laudable purpose of bringing about "the elimination of restrictions on freedom of thought, inquiry and expression in the United States, and the development of policies and procedure best adapted to protect these rights in the face of persistent international tension. "
It aimed, quite simply, to defend civil liberties. As Hutchins took his commitment seriously, the rightists were doubly incensed; for, concerned only with their petty material affairs, they are opposed to civil liberties--for others--at all times.
As Chief Justice Earl Warren remarked in the middle 1950's, it is doubtful that Congress would pass the Bill of Rights if it were introduced today. By the same token, it is doubtful that more than a small minority of Americans favor it. For Americans, of all western peoples, are most committed in the grass-roots mass to the general denial of civil liberties to dissenters, outsiders and deviators. No doubt owing to the general insecurity of their social position, most Americans are rigidly and narrowly conformist, quick to smell out heresies (thus proving their loyalty) and to call for summary punishment of deviators in such a spontaneous way as to make them the envy of any Gestapo, GPU, MKVD or KGB functionary. Under appropriate circumstances, one is melancholically led to believe, rightists in the United States would have more of a field day than they ever had in Germany or Italy. Whereas in other countries the secret police are invariably unpopular, in the United States the FBI and the CIA have generally had the standing of folk heroes-mute testimony to the superior effectiveness of American propaganda methods and to the trend of popular feelings.
The foreign program under Hoffman, set to achieve an era of greater world friendliness for the United States, was attacked as communistic. It was, plainly, "internationalist," itself evil. (Whatever isn't American, inter alia, is wicked. ) And the educational programs, supporting progressive and adult education, were obviously communistic in that they deviated from traditional paths, trod by no others than our sainted pluperfect forebears.
The broad rightist attack, which according to Macdonald frightened Henry Ford II, although surveys showed that wild calls for boycotts had not hurt Ford Motor sales, was finally subdued in an ingenious way. Hoffman and his aides were ushered out and the attack was simply smothered in money. Unselectively, heavy grants in the hundreds of millions were ladled out year after year to all accredited colleges and universities, all hospitals and, later, all museums, all symphony orchestras; all of everything in the status quo. In the grants to colleges and universities, Catholic institutions were included (to their gratified consternation) in the greatest deluge of money they ever experienced. Nobody was spared.
This silenced the rightists, possibly because all the dry emotional tinder out in the grass roots had been thoroughly saturated in floods of money. It was difficult to maintain the idea before the public that the Ford Foundation was evil when it was spewing forth lifegiving money to all points of the compass like lava from a volcano. As no standards were observed it was all obviously democratic.
If the continual widespread distribution of money in large amounts is a good thing, then the Ford Foundation must be one of the best things that ever happened. Cui bono? The status quo is clearly made more bearable as its various cracks and fissures are plastered over, while thousands cheer. And the Ford Motor Company, the goose that laid this golden egg, is surely not hurt. The public-relations value of the Ford Foundation to the automobile company was not lost upon the more than 8,000 Ford dealers in the United States, who earlier in the 1950's were among those protesting that too much foundation money was being spent abroad on benighted aliens. 72 But, apparently unknown to them, Ford Motor is a big operation abroad as well.
Public Relations and Influence over Attitudes
Apart from their roles in corporate control, the big foundations, at home and abroad, have a public-relations "splash value. " What they give to approved medical, scientific and educational institutions tends to bathe in reflected radiance corporate enterprises that some critics quixotically consider ominous. It appears, on closer analysis, that this is a mistaken and possibly deranged judgment, and that all effort is really being expended for the benefit of humanity, naturally without forgetting the stockholders.
If not socialism, the panorama seems to have overtones about it at least of quasi-socialism or, we may say paradoxically, capitalist socialism or social capitalism.
The foundations, it is clear, represent to some degree a line of public-relations defense of the large corporations. General Motors, too, is not without its surrounding foundations--the Alfred P. Sloan Foundation, the Mott Foundation and a number of others. The big foundation, indeed, is the hallmark of corporate super-wealth.
As to giving money away, it is evident that these endowments could have been transferred in one original move to extremely capable hands. In education they could have been turned over to the Association of American Universities and similar bodies, in science to the American Association for the Advancement of Science, in medicine to the American Medical Association, and so on. But this would be the end of it all. The donor and his heirs would have no more participation in it.
By making serial gifts each year out of income from a perpetual principal fund the donor can keep prospective worthy recipients sitting around forever like a circle of hungry dogs, awaiting the next handout. In such an arrangement prospective institutional recipients are not likely to voice unwelcome socio-economic or politico- economic ideas. They are more likely to be careful to give utterance only to impeccably sound ideas, the kind one might hear in the top clubs. The general foundations, then, with their serial gifts, function pretty much as a carrot, rewarding those who are
cooperative and constructive, passing over the unworthy, the carping, the critical, the nonadmiring, the unsound.
Institutional administrators consequently find that it pays to stay clear of public controversies and to voice at best only tried-and-true platitudes: to show themselves at all times as sound men. While this reticence to some extent dims their true brilliance, in the long run it seems most rewarding. Robert Maynard Hutchins is one of the few on this circuit who for a long time seemed able to have his cake and eat it too, to function as a big institutional wheel and still enjoy the luxury of delivering himself of tart remarks at the expense of the many sorry spectacles around him. But after he rose to great foundation heights the forces of conformity at last caught up with him, in a latter- day version of a preordained cut-rate Greek tragedy. For the Fund for the Republic was cut loose from the Ford Foundation and left to face the hostile hordes with a dwindling mere $15 million.
The critic is often challenged to say how he would do it better, as though a judge who found an apple to be sour was under obligation to grow a sweeter one. But in the case of the foundations such a challenge would be easy to meet. In the case of the Ford Foundation a much more consequential commitment of its money would have been to devote it to making an adequate secondary-school education available to all promising students. Secondary education is the weakest link in the American educational chain. What the Ford Foundation could have done, and can still do, is to see that all promising students get into a good school, all expenses paid. As such schools are only rarely found in home neighborhoods it would be necessary that the students be boarded, sometimes clothed and supplied with travel expenses. Some could be placed in existing private schools, although they, too, are crowded. For others, regional private schools with highly motivated, well-paid faculties would have to be supplied.
The task could be left to other agencies, public and private, to see the Ford-grant graduates through college. As it is, a very large percentage of those entering colleges are poorly prepared to profit by college-level work. In my proposed Ford-grant system defects of preparation would be removed.
While the immediate impact of such expenditure would not be apparent, the long-term consequences would be enormous and beneficial.
Politically there is very little that could be said against this plan from any point of view.
Effects of Grants, Good and Bad
That the various foundation emphases in their grants are not without vast social effects we can see from the judgments of informed critics wandering more or less like unheeded ghosts through Foundationland.
As an example of what he considers mischief, Macdonald cites an early cause taken up by the Carnegie Foundation for the Advancement of Teaching. Andrew Carnegie had it brought to his attention how poorly teachers were paid, and he decided to do something about it--thus privately assuming a legislative function (which all the foundations do). So in 1905 he established his foundation to improve teaching, with the objective of giving every down-at-heels college professor in the country a free pension.
When it became evident toward 1920 that all of Carnegie's money could not fill this bill, existing contracts were frozen. There was then established the Teachers Annuity and Insurance Association, supported by contributions from teachers and colleges as well as by Carnegie money. Carnegie's heart, however, had been in the right place.
It had been initially necessary, though, to have a criterion of who was a worthy teacher and what was a college. Many places that call themselves colleges, then and now, are not. The then president of the Carnegie Corporation, Henry Pritchett, composed an "Accepted List" of colleges eligible for Carnegie pensions. An admirer of the German university system, Pritchett laid it down that qualifying colleges must have Ph. D. s as department heads. Many already had such cherished department heads and the Ph. D. up to that time had merely been a degree sought by people committed to research scholarship.
"This put pressure on colleges to qualify, which put pressure on professors to get
Ph. D. s, which brought about the present Procrustean situation where no amount of
scholarly brilliance or teaching flair will make up for lack of a doctorate. There are
those who see in the Ph. D. obsession a major cause of the sterility and mediocrity of our
academic life today, and the moral of that is: Doing Good Is a Complicated Business. " 73
Without intending to do so but by incautiously exerting their great power, the Carnegie interests, it is contended, actually devalued the Ph. D. degree to its present estate when it is most conspicuously borne by routine jobholders and bureaucratic academic administrators. As hordes of prospective jobholders, looking forward to tenured academic employment and distant pensions, besieged the graduate schools (of which many new ones set up shop to supply the demand) the graduate curriculum was purposely made mechanically more arduous in order to deter all except the most hardy plodders (getting the prized degrees began to take up to ten and twelve years in the less formalized subjects such as history, literature and philosophy). Brilliant minds, superior either as teachers or as scholarly producers, increasingly declined to subject themselves to what was often a creatively sterile grind.
While the Ph. D. requirement lent itself readily to the organizing American corporate approach, in England, not similarly scourged by the Ph. D. mania, one still saw hundreds of brilliant teachers and scores of internationally recognized scholars without the degree. Visiting the United States these English scholars, flaunting only a meager M. A. , often lecture to halls filled by goggle-eyed American Ph. D. s. Bertrand Russell was one such.
The point in all this is not that there is anything wrong with the basic idea of the Ph. D. The point is only that it is no longer indicative of a true scholarly interest, which can indeed be shown only by the nature of work done. Many Ph. D. s, too, have come to be awarded in ridiculous fields. Hutchins found one granted for work in automobile driver training!
So this heavy-handed Germanizing of American scholarship traces back to an original ex parte foundation decision.
Not all foundation efforts, by any means, have had such a disputatious outcome.
Carnegie money, for example, financed Abraham Flexner's great investigation of American medical schools. The report, which appeared in 1910, found nearly all of them far below par and some to be rackets, leading to extensive reforms that drove out the worst and converted the remainder from among the worst in the world to the best.
Again, Carnegie money financed Gunnar Myrdal and associates in the monumental study of the American Negro before World War II, titled An American Dilemma. It was on the basis largely of the findings in this report that the Supreme Court rendered its epochal school desegregation decision of 1954.
Rockefeller money largely financed Dr. Alfred Kinsey and associates in the study of sexual behavior which, despite methodological and other controversies that ensued, appeared to represent a long step toward greater light in a puritanically degraded area.
As Macdonald notes, "The Rockefeller agencies made medical history with such exploits as their worldwide campaigns to control malaria and yellow fever, and their detection--and subsequent elimination--of hookworm as a drain on the vitality of rural Southerners. " 74 It is evident that there is much one can find to set up on the credit side of the foundations.
And, yet, the critics still find many serpents coiled in the garden. William H. Whyte, in Fortune (November, 1955), held it a bad thing that foundation grants went more and more to institutions or to research teams, less and less to individual workers. As Macdonald reminds us, the greatest work has been done by individuals, and in the "soft" disciplines. 75
Not only must the foundations, with an eye to the cultural vigilantes, stick to safe, tried and true areas, but they cannot support pioneers, who automatically have the animal mobs ranged against them. Had they existed in an earlier day the foundations could not have sponsored Copernicus, Galileo, Vesalius, Darwin, Pasteur, Marx, Freud or many others. These were all, by public acclaim, reprehensible men; some still are.
As recently as the 1920's they could not, owing to low-grade public opinion, support Mrs. Margaret Sanger in her timely but frustrated campaign to disseminate information about birth control. Margaret Sanger, like Socrates, fought as an individual and went to jail as an individual. The birth control movement was stalled, has been revived only recently under dire eleventh-hour necessity.
The original program of the Ford Foundation grew out of criticism by Edwin R. Embree, former president of the Julius Rosenwald Foundation, advanced in an article in Harper's Magazine in 1949 entitled "Timid Billions. " Embree held that, because foundations--mainly those of Carnegie and Rockefeller--had pioneered in medicine and health nearly fifty years before, these now highly developed fields had become placid foundation preserves, with about half of all grants going to them, another third to routine universities and colleges, and the rest to routine welfare agencies. He thought it time that new ground was broken, with the results seen in the successful know-nothing attacks on the Ford Foundation.
Embree criticized the foundations for "scatteration. " And in its more recent policy this is precisely what the Ford Foundation has come to.
The Guggenheim Foundation more conspicuously than others has awarded grants to the humanities and to individuals. Hundreds of writers and artists have received sustaining funds from this source.
As part of the favorable tax-financed public-relations image the foundations develop for corporations and founders that grew rich in questionable ways, they present the aspect of being highly civilized by proxy association with cultural heroes. Avoiding in their lifetimes creative persons like Margaret Sanger or Socrates who are invariably suspected by the ignorant multitudes of being up to no good, the foundations fondly embrace all established cultural heroes and those potential heroes working in popularly approved cultural channels. Not heroic themselves, they nevertheless exist in a soft, derived heroic light, invoking in the thoughtless gaping multitudes some feeling of being in the shadow of a cathedral. They are, on the contrary, basically demagogic; for the main thrust of their effort is not in any sense the deliverance of man but the protection of their sponsors' plantation. While this is surely narrowly intelligent of them, it is not, as I see it, something to induce public celebration.
And the fact that it is all done, really, with public money certainly puts anyone in the position of being gulled who applauds them more than mildly for good works. It should never be forgotten that if the Ford Foundation had never been founded every cent of the money would have been taken in inheritance taxes by the United States government, thus lightening the tax load for everybody. If the Fords, Dow, should achieve something humanly tremendous through their foundation they would not achieve it with their money but with our money. While not impugning the achievement, whatever it was, or the judgment that led to it, recognition of the nature of the transaction would certainly place it in a somewhat different light.
What the subsidy is in the case of any foundation of any considerable size one can readily ascertain by looking up what the estate tax rate was when it received its funds. This rate, ranging more recently up to 90 per cent, represents the portion of principal saved from taxes. Where income on the principal exceeds $100,000, the amount of taxes avoided, at present rates, is at least 70 per cent and has been as high as 91 per cent.
So, whatever good is accomplished by the foundations is largely accomplished with other people's money, a familiar finpolitan practice. And if one wishes to salute the original source of this beneficence it should be Congress, making free use of our money.
Money funneled into education has to some extent no doubt been of general benefit. However, much of this educational effort has been devoted to producing corporate personnel, with the primary mission of making profits. The Du Ponts have poured heavy sums into M. I. T. ; and Carnegie established the Carnegie Institute of Technology in Pittsburgh, a prime source of local plant and departmental managers and company officers. Even more general applications of educational funds can be shown destined primarily for the support of the corporate world.
It is a common experience in the United States for people to read in newspapers and magazines of great new medical advances and discoveries, but they little realize that most of these advances will never be available to them, will be available only to those who can afford them in a few centrally located medical centers. As I gave extended attention thirty years ago to these problems in which there has been little change since, the contemporary reader may be left to the references. 76
Scientific findings have been applied most assiduously in the amassing of corporate profits.
While it is generally gratifying to see so much human ingenuity displayed and developed, it is worth noticing that the fruits of all the effort are for the most part restricted in their distribution. The wide prevalence of slums would suggest to a visitor from another planet that there was little education, science or medicine available to anyone at all in the United States.
If it is nevertheless insisted that all this foundation effort represents philanthropic activity, then it is governmentally coerced philanthropic activity, under the threat of taking the principal in taxes if the income is not devoted to narrowly applied good works. The government, in brief, forces the rich to tend their own plantation.
Intellectual Sleight-of-Hand
I therefore cannot help seeing the entire American philanthropic movement, hailed as something unique in the world, as intellectual sleight-of-hand as far as its claimed disinterested benevolence and general distribution of benefits are concerned. There may have been some gain in allowing private dispositions of the money to be made, where it has been made in good faith, because one cannot suppose it would have been expended
more judiciously if left to run-of-the-mill pubpols. The prospect might have been far less entrancing if it had been left to the manipulation of the more self-oriented of these.
The Ford Motor Company does not claim to be philanthropic. But the Ford Foundation, which grew out of it and is the public halo of the company, is claimed to be philanthropic even though it is managed by the same people. When Henry Ford II presides over the Ford Motor Company he is nonphilanthropic, a business barracuda; but when he steps into his role as a trustee of the Ford Foundation he, like a Jekyll- Hyde, suddenly becomes a philanthropist. With the Ford Motor Company he endeavors to garner all the money possible; with the foundation he endeavors to give money--our money--away.
Is he--on balance--richer or poorer? As a result of establishing their many foundations and "giving away" hundreds of millions of dollars, are the Rockefellers and other foundation impresarios richer or poorer, more or less esteemed, more or less solidly ensconced, stronger or weaker?
The answer in every case of a surviving foundation family group is that the foundation has benefited its sponsors more than it benefited the world. Whatever benefit it has wrought for the world it has wrought, too, for the family group. For the world is their village, through which their personal interests ramify in a bewildering network. Why should they not wish to benefit the world as they, too, must live in it? And any benefit wrought, however minor, brings to them vast credit, enhances their status as exalted citizens of the world. They all rate at the highest level in mass-media esteem.
The main point I extract from this is that these are very subtly powerful people, far more powerful even than they are portrayed by a deferential press. Nor are they, despite the deft airbrush of the public relations man, especially benign, as is plainly evident in the heavy commitment to systematic extreme violence of the political system in which they have, by enormous margins, the largest stake.
Never registering opposition to any of the many wars, foreign police actions and military missions against the heathen in which the seemingly detached government engages, usually instead registering enthusiastic approval and giving full support, they must be considered integral to this way of conducting affairs. At the time of this writing this political system is using some of its vast firepower, much of its manpower, with which to establish new foreign bases, as in Vietnam. Although Vietnam is popularly accepted as an heroic dirt-level president's maximum effort, the operation has been formally and enthusiastically endorsed by Governor Nelson A. Rockefeller. It is, obviously, a venture carrying the highest finpolitan sanction. 77
While the Vietnam venture will indeed make all of us more secure against the devil of Communism (or will it? ), it is surely going to make some persons far more secure than others. To be entirely fair, we must concede that even the denizens of the slums, thanks to a foresighted president, will be made more secure in their slumminess. This boon happily works both ways: The rich and the poor are benefited by being fully protected in their respective statuses.
Proposed Foundation Reforms
Representative Wright Patman advanced concrete proposals for reforming the foundations, tightening the regulatory leash so they would not be quite so free to maneuver self-servingly as now. His recommendations were as follows:
1. Limit their life to twenty-five years, as in the voluntary cases of the Julius Rosenwald Fund and the foundation established by the late Arthur Curtiss James.
2. Prohibit them from engaging in tax-exempt business in unfair competition with taxpaying businesses.
3. Prohibit them from engaging in tax-free lending and borrowing.
4. Require them to engage in arm's length relationships--that is, prohibit them from extending intramural benefits, say, to the employees of a controlled company, a form of subtle unfair competition with others.
5. Prohibit them from soliciting or accepting contributions from suppliers to and patrons of their companies.
6. Prohibit foundations from owning more than 3 per cent of any corporation, thus shrinking them as factors in corporate control.
7. Make them conform to certain rules in the case of proxy fights in corporations where they hold stock ownership.
8. Prohibit them from trading in and out of securities in quest of capital gains.
9. Allow no tax exemption on contributions to a foundation until the money has been actually put to approved charitable use.
10. Deny tax exemption to any foundation if it has clearly been established for tax avoidance or to obtain financial benefits for the founder.
11. Compute donations of property to a foundation at cost or market value, whichever is lower, rather than on the present basis of market value which permits the evasion of taxes on appreciated assets.
12. In contributions made by corporations, let such contributions be credited to the stockholders, thus keeping untaxed contributions to present limits prescribed by law.
13. Treat all capital gains by foundations as expendable income and do not allow them to be converted into new capital.
14. Add money unreasonably accumulated by corporations controlled by a foundation under present laws to the foundation's own accumulation as if the two were one. "The use of subsidiary corporations should not be permitted to cloak actual accumulations, as is the case in the Howard Hughes Medical Institute of Miami Beach. "
15. Corporations controlled by foundations should be subject to taxes on unreasonably accumulated earnings, as prescribed by law for foundations.
16. From the base for the marital deduction there should be excluded amounts left to foundations that are henceforth untaxed. And while money given to foundations is not subject to gift and estate taxes, the rate brackets to be applied to moneys that are taxable should be the same as if the prescribed foundation portions were part of the taxable gifts or estate.
17. Regulation of the foundations by the Treasury Department should be tightened in many specifically indicated ways and the Treasury Department should be obliged by law to function actively in this area.
"These and other reforms," Mr. Patman gravely' concluded, "are vitally necessary. " 78 For what little it may be worth, I concur.
The Patman investigation has already influenced the passage of new laws regulating foundations in New York State, where most of them are chartered. The effect of these New York laws will probably be to drive many to states of easier virtue, as in the case of corporations that finally found lax regulatory states in Delaware and New Jersey.
Even though accelerated by two gigantic wars, developments under capitalism proceeded at a slower pace than Marx predicted. But, in a Marxian view, the phenomenon of small capitalists being squeezed by big capitalists in their adroit manipulation of the state apparatus (which is Patman's basic thesis) is an important readily verifiable facet of class struggle.
Is it morally justifiable to feel politically irked? This is obviously a foolish question. If one is irked one is irked, a psycho-physical fact. How one now behaves, rationally or otherwise, is determined by one's intellectual analysis and program for eliminating or avoiding felt difficulties. Marx in his recommended political program, visualizing the forcible overthrow of capitalism by factory workers, was far more of a visionary than in his theoretical analysis, which was an attempt to find broad intellectual sanction for remedial political action of a fundamental nature. And even in his political program calling for revolution, Marx was far less of a visionary than many subsequent self-styled Marxists, notably Lenin.
For the Marxist revolution, Marx very practically held, could take place only in a very advanced capitalist country, such as England, the United States or Germany. And when it took place, just about all of the people--now all proletarians--would favor it. The actual revolution would be a small affair, easily throwing the few surviving big owners out. All very simple. Remaining would be a smoothly running technical system with the profit motive removed, everybody happy.
What confuses many who are superficially informed is that what is represented as Marxist revolution has taken place only in backward agricultural countries such as Russia and China, in the wake of debilitating wars. Although these were indeed revolutions, and might well have recommended themselves as such to Marx, who was by temperament as well as conviction a bone-deep revolutionary, they were far from Marxist revolutions.
No Marxist revolution, violent or peaceful, has ever taken place anywhere. But certain processes within capitalism, some of which Marx first discerned, some of which he foresaw and some of which he neither discerned nor foresaw (such as the effectiveness of piecemeal reform in modifying many conditions), continued to hold sway, transforming capitalism into its many different national guises. On the basis of his premature observations Marx considered all reform a misleading hoax.
But in the concept of class struggle, even though all history is surely not (as he asserted) the history of class struggle, Marx achieved an intellectually fruitful insight. And what are seen as leftist and rightist deviations from centrism (which upholds the status quo) are clearly instances, however ineffective, of class struggle or at least class protest.
Whereas the earlier leftist movements in the United States from Populism through Socialism and on into Communism of the 1930's were ventures in class struggle or protest carried out at least nominally on behalf of lower elements of society, the more recent rightist movements are ventures in the same sort of struggle waged by and supposedly for persons who futilely (in the long run) resist being squeezed out of existence or into less lucrative positions. As Marx pointed out, when men feel cornered they often elect to fight.
While earlier Populists and other leftists waged their struggles, which produced a certain amount of mild increasingly diluted reform (though it did not arrest a large and spreading impoverishment among the unskilled), persons situated in society at the levels where contemporary rightists now find themselves did not feel stirred. This was no doubt because they still identified themselves with the Rockefellers, Carnegies, Du Ponts, Fords, Mellons et al. Soon, too, they would be ascending those blessed golden peaks! Soon, too, their address would be 1 Wall Street, their summer address Newport or Bar Harbor.
Under the impact of recent pressures, however, it has begun to dawn on many of them that their address is far more likely to be the bankruptcy court. Many have already been displaced from the middle class, sons of former corporation executives who cannot "make it," inheritors of deflated estates and others of the nouveau dispossessed.
Looking about, they have concluded that one of the causes of their difficulties is the variety of social legislation called into being in three decades under the pressure of concrete phenomena such as unemployment. This legislation has had the effect, among other things, of depriving small operators of much cheap, profitable labor. This, they conclude, is tantamount to socialism and the sponsors are in effect socialists or communists.
And the big corporations, instead of continuing to fight this rise of "socialism," have finally compromised with it. Wealthy persons such as Henry Ford II and the Rockefellers now accept the mild, often diluted New Deal reforms. The only very wealthy hereditary group that still appears to support openly rightist causes is the Pew family of Philadelphia. Many medium corporations, however, join the Pews.
The big corporations, with their greater productivity and reserves, have indeed more or less acquiesced in the process after the failure of their political struggle in the 1930's against it, when the big Du Ponts led heavy industry, the banks and the newspapers against the New Deal. The big corporations are easily able to meet the major demands of organized labor, thus avoiding trouble and a poor public image, by passing increased costs on to consumers in administered prices. Most of the state right-to-work laws, forbidding the union shop, are noticeably located in the less industrialized regions. Attempts to supersede these low-wage laws by a federal law that would facilitate unionization are desperately fought by small high-cost producers as the encroachment of soul-destroying socialism.
It isn't the big companies, by and large, or the foundations, that lead this latter-day fight against the unions. For the big entities have found it profitable to fall into step with the welfare-warfare state. It is the small, often rightist businessman who favors the anti- union laws. Many of the regulations that small-business elements find distasteful were in fact devised over the years and made into public policy by representatives of the wealthiest and most Republican interests. 68 They wanted to squelch the small, market- upsetting wildcat operators. Only big, stabilizing centrally controlled units were wanted.
Not only are the small operators annoyed that the big corporations pay better wages and no longer fight the unions but they are annoyed at the ease with which the big operators, with the many fringe benefits they offer, are able to hire the cream of available personnel. Left to the small employer are the misfits, the restless, the inefficient.
As the rightists generally put their case, the small businessman is being squeezed between Big Unions and Big Government (the latter imposing more and more New Dealish "socialist" rules and thereby strangling freedom to deal properly with employees and customers). All this regulation smacks of what rightists understand as regimented socialist society. In most of its versions the analysis is unrealistic because canons of middle-class respectability lead most rightists to overlook the fact that Big Corporations are implicated in the squeeze. But to say this would make them sound like old-time long-haired socialists, thus defacing their self-image of respectability.
Political realists like Patman, however, do not overlook this factor in the equation. Nor were the ill-behaved Republican rightists at the famous convention of 1964, when they hissed and booed Nelson A. Rockefeller, unaware that he represented a genuine, blandly powerful adverse interest. Rockefeller, as a "liberal" Republican--that is, one willing to accept the New Deal approach--had become anathema to Republican rightists, many of whom more recently denounced him as a socialist.
The small businessman, if he were to read the signs in a Marxist way, would see that he is being slowly expropriated. He should, according to Marxist prescription, join the Marxist ideologues in seeking the day of mass deliverance. As he is biased by his middle-class point of view, envisioning himself as a potential original Rockefeller, Du Pont, Mellon or Ford--like them finding salvation in an unregulated market and society--he will have nothing to do with the doctrinaire Marxists. He therefore, wishfully, analyzes the situation not as one of big enterprise versus small enterprise but as "New Deal socialism" versus free enterprise. He lives within an economic as well as political myth, fails to see that free enterprise itself has long since been superseded by
corporate monopoly, leaving him uncomfortably in one of the remaining dead ends. He does not see that in the impersonal, at times slow, process of economic development he is marked for eventual destruction. He is expendable.
There is, alas, no place for him at 1 Wall Street--unless, perchance, he can inflame the masses with the demonic idea that Eisenhower, Henry Ford II and Nelson Rockefeller are secret card-carrying Communists. If he could get enough people to believe this, and to exert themselves appropriately, then perhaps the strait jacket of New Deal regulations and labor union contracts could be broken. With plenty of cheap labor again available, perhaps he could make a big low-tax profit, build up cash reserves and finally rent a palatial suite of offices at 1 Wall Street. Then all the people who laughed at him when he said he was going to be rich would change their tune. Then they would all see that he was, all along, really a superior fellow, sure to be a success, as good as Rockefeller or Carnegie and maybe even better. Then his wife or mistress would be particularly impressed as he circled his yacht and private island in his own jet plane after he took off for large conferences in Washington or Hong Kong.
But this crude fantasy, although firm in its lineaments, tends to vanish under the weight of heavy unequal taxes, rising labor costs, tightening New Dealish regulations, monopoly, high prices of materials and corporate automation. The outlook becomes darker as he looks across the way and sees one of the hundreds of plants of the Super- Cosmos Corporation churning out trainloads of goods in a profitable torrent. The Super- Cosmos parking lot is filled with the cars of union workers, who denounce him as a fink, a rascal, a Goldwater crackpot and his employees as incompetent, low-paid scabs. If not incipient socialism all this is surely something just as wicked.
Because the rightists have no program upon which to base a convincing mass appeal they are reduced to bringing forward whatever emotional irrelevancy they believe will gain them mass support. Thus they represent themselves as bone-crushing super- patriots, anti-internationalists, anti-foreigners, anti-Communists, anti-Socialists, anti- Semites, anti-atheists, anti-Negroes. They are anti-fluoridation of water, anti- vaccination and, indeed, against whatever is offensive to low-level mass pockets of folklore, superstition and misinformation.
It is in consequence of this kind of electorally necessary appeal that one finds in the rightist entourage such a variegated assortment of screwballs. But all movements when they promise the excitement of combat--left, right or center--have a similar appeal for the demented and half-demented. In time of war the center, for example, draws unfastidiously to its bosom every latent or overt votary of violence--sadists, xenophobes, paranoids, the suicidal. I put all this down because I don't want to be put into the position, generally taken by the left and the center, that there is something inherently deranged about the rightist position. Rightists, like other politicians, take people as they find them and try to bend them to their purposes. And all political positions--left, right and center--leave much out of account in their neat formulas.
If they were fully logical in their prescriptions for the Good Society, the rightists would call forthwith for the dissolution into their constituent parts of United States Steel, General Motors, Standard Oil of New Jersey, AT&T and the other big holding companies. They do not make such a demand because in fact they deeply venerate these enterprises, would themselves like to possess them, only wish that their own Calabash Oil and Swampwater Steel were similarly flourishing. As it is, when Standard Oil of New Jersey breathes a little more deeply than usual, Calabash Oil is suffocated.
Barring some extremely unusual set of developments, the center, the Establishment, seems likely to continue in its triumphant balancing act despite the noisome antics of the rightists. Little more than clamor seems likely to come from the political right, less even
in the way of enforced minor adjustments than came from the reformist demands of the more numerous working masses. The center, the Establishment, with its corporations, foundations, trust funds and family holding companies, clearly rules the roost, whether under Truman, Eisenhower, Kennedy or Johnson. And there is a deep reason for this, which is that by the Law of Inertia the center is bound up in golden links with the Good, the Beautiful and the True. Truth, or at least the routine profession of truth, is solidly on the side of the status quo. All else is error. . . .
Critics and the Foundations
In their patterns of granting funds the foundations display their power in ways that appear most fascinating to casual observers. While most citizens appear to accept dutifully the verdict of the corporate press that foundations exist in an unalloyed good cause, there are many critics of foundation patronage--insiders and outsiders, friendly, unfriendly and temperately judicious. These worthies bring into view a little noticed but wryly instructive aspect of the foundation phenomenon.
The individual critic in Foundationland, whoever he is, is much like a tourist in the Soviet Union. Upon his return home he tells what he liked, what he disliked. Here was a modern laboratory, there an advanced clinic, in another place a special school for backward children and there was, of course, the resplendent Moscow subway system-- all of this the tourist liked very much. On the other hand, what he saw of collective farms, country roads, new apartment houses, most stores and the Kremlin itself--these he disapproved. Still other things he had mixed feelings about, like the schools: too traditional and authoritarian but, on the other hand, very high standards and well equipped, teachers excellent.
And the judicious critic in Foundationland is like the tourist in the Soviet Union also in that whether or not he approves what he sees this is the way it is and this is the way it is going to be. In both cases his judgments, no matter how finely spun, count for naught. He is a cipher in a society of ciphers.
Naturally the managers of the foundations, like the managers of the Soviet Union, prefer that the observer like everything he sees. If not, it is nice that he finds something to endorse. But whether he likes everything or nothing, it is--general public-relations blarney apart--fundamentally of no concern to the managers because this just happens to be part of their plantation. And merely because one finds something on the tour that one likes does not imply, any more in Foundationland than in the Soviet Union, that the tourist and the higher-ups are enrolled in a common cause.
Visitors to big houses of the rich that have been thrown open to the public as museums show the same irrelevantly and futilely judicious attitude. They like the drawing rooms and the library--"Really magnificent, you know. " But, unfortunately, "They certainly showed poor taste in the deco? r of the bedrooms. And the solid gold bath tubs are ridiculous. " But whether the masters showed a lapse of taste in this or that matter or not, this is the way it was and no word of the visitors will change a bit of it.
Foundation Organization
Let us, in order to understand foundations better, leave off attempts to evaluate their distributive worth on a scale of zero to 100. Let us instead concede that they are perfect in their expenditures, thus bypassing an argument apparently as fruitless as the one about the Soviet Union. And let us now look to their organization.
At the top we find a board of trustees, all concededly doing only good. Among the Ford Foundation trustees we find Benson Ford and Henry Ford II and thirteen others of whom at least nine are surely from the world of finpolity and pubpolity. All of these are very able men; about this we need not dispute. But, except for the two Fords, all were
selected . . . by the Fords. The Fords, though, were neither selected, elected, co-opted or chosen by public examination. Nobody at all asked them to assume these arduous philanthropic duties, for which it might seem they chose themselves.
But neither they (nor the Rockefellers, Du Ponts, Mellons and others) did even this, although this is what the Soviet managers did. For the Soviet managers, out of the kindness of their hearts, themselves chose to lead a disbelieving world to the Promised Land of Communism, where the lion shall lie down with the lamb, the unicorn shall shed his horn, the meek shall inherit the earth and the State shall wither away.
The Fords, like their peers, were chosen before birth for their roles, which are (oddly in a democratic, republican or merely parliamentary context) purely hereditary. They are hereditary oligarchic philanthropists!
It is, then, by hereditary right that all these concededly beneficent expenditures are made. If it is not all done in the pure spirit of sacrifice it is, we are repeatedly assured by the corporate press, very close to it. It amounts, simply, to noblesse oblige.
As there are far too many foundations, even large ones, to scrutinize here in any detail, our attention will be largely confined to a few, including the Ford Foundation.
Orientation of Patronage Grants
Those foundations that regularly make substantial payouts--and as we have noticed they altogether paid out only 50 per cent of income through the 1950s--are in philanthropoid jargon said to be "discipline-oriented" or problem-oriented" or a little of both. They are also "friend-oriented," company-oriented," "profit-oriented" and "market-oriented. "
The discipline-oriented, like the Rockefeller group, mainly allocate money to institutions harnessed by intellectual disciplines--physical and social sciences, medicine and (much less so) the humanities. Except for the last, in the opinion of a leading philanthropoid (a very mentor of philanthropoids) these have been overstressed. 69 But heavily financed science (and perhaps this is pure coincidence) has thousands of profitable industrial applications of which the corporations have freely availed themselves. And medical advances are immediately available to the rich, much later if at all to the non-rich. There is little if any monetary profit in the humanities, however (perhaps only another coincidence).
The stress on science in American society has at least been reinforced if not originally invoked by the foundations, an obvious exhibition of power, and a scientist cited by Abraham Flexner believes it has been overstressed. The foundations, thus seen, are centers of self-serving hereditary power.
The Ford Foundation is problem-oriented. It is out to solve or at least make more manageable public problems of various kinds.
After the death of Henry Ford, the foundation, originally organized in 1936, began its larger operations on the basis of a Study Report. 70
The report laid out five Program Areas, as follows:
I. The Establishment of Peace. (Involving international programs; "peace" here, as Macdonald remarks, "means trying to make other nations more friendly to us and less to the Communists. ")
II. The Strengthening of Democracy (domestic civil liberties and politics),
III. The Strengthening of the Economy.
IV. Education in a Democratic Society. (As Macdonald remarks, the democratic society "is apparently ours. ")
V. Individual Behavior and Human Relations. (Macdonald believes this section could more accurately have been titled "Mass Behavior and Social Relations. " The Ford Foundation, however, does not formally concede there are "masses" in "our democratic society. ")
It was in the attempted implementation of this report that Paul Hoffman ran into the trouble with the rightists that led to his resignation two years later.
More recently the Ford Foundation has broken its problem areas down as follows: Education in the United States, Economic Development and Administration in the United States, Public Affairs, Humanities and the Arts, International Training and Research, Science and Engineering, International Affairs, Population and Overseas Development. These subdivisions in the voluminous annual reports are further subdivided into an astonishing array of grants for projects and individual scholarships and fellowships. The sun never sets on the works of the Ford Foundation.
So massive was the task of transferring its vast revenues found to be that the foundation early established and separately financed a number of independent sub- foundations, all under the guidance of philanthropoids: The Fund for the Advancement of Education, the Fund for Adult Education, The Fund for the Republic, Resources for the Future, various television entertainment-educational programs and its own special programs. 71
While the entire original program of the foundation came indiscriminately under attack from rightists, The Fund for the Republic, presided over by the far from diplomatic Robert M. Hutchins, provoked their especial ire because it was established for the entirely laudable purpose of bringing about "the elimination of restrictions on freedom of thought, inquiry and expression in the United States, and the development of policies and procedure best adapted to protect these rights in the face of persistent international tension. "
It aimed, quite simply, to defend civil liberties. As Hutchins took his commitment seriously, the rightists were doubly incensed; for, concerned only with their petty material affairs, they are opposed to civil liberties--for others--at all times.
As Chief Justice Earl Warren remarked in the middle 1950's, it is doubtful that Congress would pass the Bill of Rights if it were introduced today. By the same token, it is doubtful that more than a small minority of Americans favor it. For Americans, of all western peoples, are most committed in the grass-roots mass to the general denial of civil liberties to dissenters, outsiders and deviators. No doubt owing to the general insecurity of their social position, most Americans are rigidly and narrowly conformist, quick to smell out heresies (thus proving their loyalty) and to call for summary punishment of deviators in such a spontaneous way as to make them the envy of any Gestapo, GPU, MKVD or KGB functionary. Under appropriate circumstances, one is melancholically led to believe, rightists in the United States would have more of a field day than they ever had in Germany or Italy. Whereas in other countries the secret police are invariably unpopular, in the United States the FBI and the CIA have generally had the standing of folk heroes-mute testimony to the superior effectiveness of American propaganda methods and to the trend of popular feelings.
The foreign program under Hoffman, set to achieve an era of greater world friendliness for the United States, was attacked as communistic. It was, plainly, "internationalist," itself evil. (Whatever isn't American, inter alia, is wicked. ) And the educational programs, supporting progressive and adult education, were obviously communistic in that they deviated from traditional paths, trod by no others than our sainted pluperfect forebears.
The broad rightist attack, which according to Macdonald frightened Henry Ford II, although surveys showed that wild calls for boycotts had not hurt Ford Motor sales, was finally subdued in an ingenious way. Hoffman and his aides were ushered out and the attack was simply smothered in money. Unselectively, heavy grants in the hundreds of millions were ladled out year after year to all accredited colleges and universities, all hospitals and, later, all museums, all symphony orchestras; all of everything in the status quo. In the grants to colleges and universities, Catholic institutions were included (to their gratified consternation) in the greatest deluge of money they ever experienced. Nobody was spared.
This silenced the rightists, possibly because all the dry emotional tinder out in the grass roots had been thoroughly saturated in floods of money. It was difficult to maintain the idea before the public that the Ford Foundation was evil when it was spewing forth lifegiving money to all points of the compass like lava from a volcano. As no standards were observed it was all obviously democratic.
If the continual widespread distribution of money in large amounts is a good thing, then the Ford Foundation must be one of the best things that ever happened. Cui bono? The status quo is clearly made more bearable as its various cracks and fissures are plastered over, while thousands cheer. And the Ford Motor Company, the goose that laid this golden egg, is surely not hurt. The public-relations value of the Ford Foundation to the automobile company was not lost upon the more than 8,000 Ford dealers in the United States, who earlier in the 1950's were among those protesting that too much foundation money was being spent abroad on benighted aliens. 72 But, apparently unknown to them, Ford Motor is a big operation abroad as well.
Public Relations and Influence over Attitudes
Apart from their roles in corporate control, the big foundations, at home and abroad, have a public-relations "splash value. " What they give to approved medical, scientific and educational institutions tends to bathe in reflected radiance corporate enterprises that some critics quixotically consider ominous. It appears, on closer analysis, that this is a mistaken and possibly deranged judgment, and that all effort is really being expended for the benefit of humanity, naturally without forgetting the stockholders.
If not socialism, the panorama seems to have overtones about it at least of quasi-socialism or, we may say paradoxically, capitalist socialism or social capitalism.
The foundations, it is clear, represent to some degree a line of public-relations defense of the large corporations. General Motors, too, is not without its surrounding foundations--the Alfred P. Sloan Foundation, the Mott Foundation and a number of others. The big foundation, indeed, is the hallmark of corporate super-wealth.
As to giving money away, it is evident that these endowments could have been transferred in one original move to extremely capable hands. In education they could have been turned over to the Association of American Universities and similar bodies, in science to the American Association for the Advancement of Science, in medicine to the American Medical Association, and so on. But this would be the end of it all. The donor and his heirs would have no more participation in it.
By making serial gifts each year out of income from a perpetual principal fund the donor can keep prospective worthy recipients sitting around forever like a circle of hungry dogs, awaiting the next handout. In such an arrangement prospective institutional recipients are not likely to voice unwelcome socio-economic or politico- economic ideas. They are more likely to be careful to give utterance only to impeccably sound ideas, the kind one might hear in the top clubs. The general foundations, then, with their serial gifts, function pretty much as a carrot, rewarding those who are
cooperative and constructive, passing over the unworthy, the carping, the critical, the nonadmiring, the unsound.
Institutional administrators consequently find that it pays to stay clear of public controversies and to voice at best only tried-and-true platitudes: to show themselves at all times as sound men. While this reticence to some extent dims their true brilliance, in the long run it seems most rewarding. Robert Maynard Hutchins is one of the few on this circuit who for a long time seemed able to have his cake and eat it too, to function as a big institutional wheel and still enjoy the luxury of delivering himself of tart remarks at the expense of the many sorry spectacles around him. But after he rose to great foundation heights the forces of conformity at last caught up with him, in a latter- day version of a preordained cut-rate Greek tragedy. For the Fund for the Republic was cut loose from the Ford Foundation and left to face the hostile hordes with a dwindling mere $15 million.
The critic is often challenged to say how he would do it better, as though a judge who found an apple to be sour was under obligation to grow a sweeter one. But in the case of the foundations such a challenge would be easy to meet. In the case of the Ford Foundation a much more consequential commitment of its money would have been to devote it to making an adequate secondary-school education available to all promising students. Secondary education is the weakest link in the American educational chain. What the Ford Foundation could have done, and can still do, is to see that all promising students get into a good school, all expenses paid. As such schools are only rarely found in home neighborhoods it would be necessary that the students be boarded, sometimes clothed and supplied with travel expenses. Some could be placed in existing private schools, although they, too, are crowded. For others, regional private schools with highly motivated, well-paid faculties would have to be supplied.
The task could be left to other agencies, public and private, to see the Ford-grant graduates through college. As it is, a very large percentage of those entering colleges are poorly prepared to profit by college-level work. In my proposed Ford-grant system defects of preparation would be removed.
While the immediate impact of such expenditure would not be apparent, the long-term consequences would be enormous and beneficial.
Politically there is very little that could be said against this plan from any point of view.
Effects of Grants, Good and Bad
That the various foundation emphases in their grants are not without vast social effects we can see from the judgments of informed critics wandering more or less like unheeded ghosts through Foundationland.
As an example of what he considers mischief, Macdonald cites an early cause taken up by the Carnegie Foundation for the Advancement of Teaching. Andrew Carnegie had it brought to his attention how poorly teachers were paid, and he decided to do something about it--thus privately assuming a legislative function (which all the foundations do). So in 1905 he established his foundation to improve teaching, with the objective of giving every down-at-heels college professor in the country a free pension.
When it became evident toward 1920 that all of Carnegie's money could not fill this bill, existing contracts were frozen. There was then established the Teachers Annuity and Insurance Association, supported by contributions from teachers and colleges as well as by Carnegie money. Carnegie's heart, however, had been in the right place.
It had been initially necessary, though, to have a criterion of who was a worthy teacher and what was a college. Many places that call themselves colleges, then and now, are not. The then president of the Carnegie Corporation, Henry Pritchett, composed an "Accepted List" of colleges eligible for Carnegie pensions. An admirer of the German university system, Pritchett laid it down that qualifying colleges must have Ph. D. s as department heads. Many already had such cherished department heads and the Ph. D. up to that time had merely been a degree sought by people committed to research scholarship.
"This put pressure on colleges to qualify, which put pressure on professors to get
Ph. D. s, which brought about the present Procrustean situation where no amount of
scholarly brilliance or teaching flair will make up for lack of a doctorate. There are
those who see in the Ph. D. obsession a major cause of the sterility and mediocrity of our
academic life today, and the moral of that is: Doing Good Is a Complicated Business. " 73
Without intending to do so but by incautiously exerting their great power, the Carnegie interests, it is contended, actually devalued the Ph. D. degree to its present estate when it is most conspicuously borne by routine jobholders and bureaucratic academic administrators. As hordes of prospective jobholders, looking forward to tenured academic employment and distant pensions, besieged the graduate schools (of which many new ones set up shop to supply the demand) the graduate curriculum was purposely made mechanically more arduous in order to deter all except the most hardy plodders (getting the prized degrees began to take up to ten and twelve years in the less formalized subjects such as history, literature and philosophy). Brilliant minds, superior either as teachers or as scholarly producers, increasingly declined to subject themselves to what was often a creatively sterile grind.
While the Ph. D. requirement lent itself readily to the organizing American corporate approach, in England, not similarly scourged by the Ph. D. mania, one still saw hundreds of brilliant teachers and scores of internationally recognized scholars without the degree. Visiting the United States these English scholars, flaunting only a meager M. A. , often lecture to halls filled by goggle-eyed American Ph. D. s. Bertrand Russell was one such.
The point in all this is not that there is anything wrong with the basic idea of the Ph. D. The point is only that it is no longer indicative of a true scholarly interest, which can indeed be shown only by the nature of work done. Many Ph. D. s, too, have come to be awarded in ridiculous fields. Hutchins found one granted for work in automobile driver training!
So this heavy-handed Germanizing of American scholarship traces back to an original ex parte foundation decision.
Not all foundation efforts, by any means, have had such a disputatious outcome.
Carnegie money, for example, financed Abraham Flexner's great investigation of American medical schools. The report, which appeared in 1910, found nearly all of them far below par and some to be rackets, leading to extensive reforms that drove out the worst and converted the remainder from among the worst in the world to the best.
Again, Carnegie money financed Gunnar Myrdal and associates in the monumental study of the American Negro before World War II, titled An American Dilemma. It was on the basis largely of the findings in this report that the Supreme Court rendered its epochal school desegregation decision of 1954.
Rockefeller money largely financed Dr. Alfred Kinsey and associates in the study of sexual behavior which, despite methodological and other controversies that ensued, appeared to represent a long step toward greater light in a puritanically degraded area.
As Macdonald notes, "The Rockefeller agencies made medical history with such exploits as their worldwide campaigns to control malaria and yellow fever, and their detection--and subsequent elimination--of hookworm as a drain on the vitality of rural Southerners. " 74 It is evident that there is much one can find to set up on the credit side of the foundations.
And, yet, the critics still find many serpents coiled in the garden. William H. Whyte, in Fortune (November, 1955), held it a bad thing that foundation grants went more and more to institutions or to research teams, less and less to individual workers. As Macdonald reminds us, the greatest work has been done by individuals, and in the "soft" disciplines. 75
Not only must the foundations, with an eye to the cultural vigilantes, stick to safe, tried and true areas, but they cannot support pioneers, who automatically have the animal mobs ranged against them. Had they existed in an earlier day the foundations could not have sponsored Copernicus, Galileo, Vesalius, Darwin, Pasteur, Marx, Freud or many others. These were all, by public acclaim, reprehensible men; some still are.
As recently as the 1920's they could not, owing to low-grade public opinion, support Mrs. Margaret Sanger in her timely but frustrated campaign to disseminate information about birth control. Margaret Sanger, like Socrates, fought as an individual and went to jail as an individual. The birth control movement was stalled, has been revived only recently under dire eleventh-hour necessity.
The original program of the Ford Foundation grew out of criticism by Edwin R. Embree, former president of the Julius Rosenwald Foundation, advanced in an article in Harper's Magazine in 1949 entitled "Timid Billions. " Embree held that, because foundations--mainly those of Carnegie and Rockefeller--had pioneered in medicine and health nearly fifty years before, these now highly developed fields had become placid foundation preserves, with about half of all grants going to them, another third to routine universities and colleges, and the rest to routine welfare agencies. He thought it time that new ground was broken, with the results seen in the successful know-nothing attacks on the Ford Foundation.
Embree criticized the foundations for "scatteration. " And in its more recent policy this is precisely what the Ford Foundation has come to.
The Guggenheim Foundation more conspicuously than others has awarded grants to the humanities and to individuals. Hundreds of writers and artists have received sustaining funds from this source.
As part of the favorable tax-financed public-relations image the foundations develop for corporations and founders that grew rich in questionable ways, they present the aspect of being highly civilized by proxy association with cultural heroes. Avoiding in their lifetimes creative persons like Margaret Sanger or Socrates who are invariably suspected by the ignorant multitudes of being up to no good, the foundations fondly embrace all established cultural heroes and those potential heroes working in popularly approved cultural channels. Not heroic themselves, they nevertheless exist in a soft, derived heroic light, invoking in the thoughtless gaping multitudes some feeling of being in the shadow of a cathedral. They are, on the contrary, basically demagogic; for the main thrust of their effort is not in any sense the deliverance of man but the protection of their sponsors' plantation. While this is surely narrowly intelligent of them, it is not, as I see it, something to induce public celebration.
And the fact that it is all done, really, with public money certainly puts anyone in the position of being gulled who applauds them more than mildly for good works. It should never be forgotten that if the Ford Foundation had never been founded every cent of the money would have been taken in inheritance taxes by the United States government, thus lightening the tax load for everybody. If the Fords, Dow, should achieve something humanly tremendous through their foundation they would not achieve it with their money but with our money. While not impugning the achievement, whatever it was, or the judgment that led to it, recognition of the nature of the transaction would certainly place it in a somewhat different light.
What the subsidy is in the case of any foundation of any considerable size one can readily ascertain by looking up what the estate tax rate was when it received its funds. This rate, ranging more recently up to 90 per cent, represents the portion of principal saved from taxes. Where income on the principal exceeds $100,000, the amount of taxes avoided, at present rates, is at least 70 per cent and has been as high as 91 per cent.
So, whatever good is accomplished by the foundations is largely accomplished with other people's money, a familiar finpolitan practice. And if one wishes to salute the original source of this beneficence it should be Congress, making free use of our money.
Money funneled into education has to some extent no doubt been of general benefit. However, much of this educational effort has been devoted to producing corporate personnel, with the primary mission of making profits. The Du Ponts have poured heavy sums into M. I. T. ; and Carnegie established the Carnegie Institute of Technology in Pittsburgh, a prime source of local plant and departmental managers and company officers. Even more general applications of educational funds can be shown destined primarily for the support of the corporate world.
It is a common experience in the United States for people to read in newspapers and magazines of great new medical advances and discoveries, but they little realize that most of these advances will never be available to them, will be available only to those who can afford them in a few centrally located medical centers. As I gave extended attention thirty years ago to these problems in which there has been little change since, the contemporary reader may be left to the references. 76
Scientific findings have been applied most assiduously in the amassing of corporate profits.
While it is generally gratifying to see so much human ingenuity displayed and developed, it is worth noticing that the fruits of all the effort are for the most part restricted in their distribution. The wide prevalence of slums would suggest to a visitor from another planet that there was little education, science or medicine available to anyone at all in the United States.
If it is nevertheless insisted that all this foundation effort represents philanthropic activity, then it is governmentally coerced philanthropic activity, under the threat of taking the principal in taxes if the income is not devoted to narrowly applied good works. The government, in brief, forces the rich to tend their own plantation.
Intellectual Sleight-of-Hand
I therefore cannot help seeing the entire American philanthropic movement, hailed as something unique in the world, as intellectual sleight-of-hand as far as its claimed disinterested benevolence and general distribution of benefits are concerned. There may have been some gain in allowing private dispositions of the money to be made, where it has been made in good faith, because one cannot suppose it would have been expended
more judiciously if left to run-of-the-mill pubpols. The prospect might have been far less entrancing if it had been left to the manipulation of the more self-oriented of these.
The Ford Motor Company does not claim to be philanthropic. But the Ford Foundation, which grew out of it and is the public halo of the company, is claimed to be philanthropic even though it is managed by the same people. When Henry Ford II presides over the Ford Motor Company he is nonphilanthropic, a business barracuda; but when he steps into his role as a trustee of the Ford Foundation he, like a Jekyll- Hyde, suddenly becomes a philanthropist. With the Ford Motor Company he endeavors to garner all the money possible; with the foundation he endeavors to give money--our money--away.
Is he--on balance--richer or poorer? As a result of establishing their many foundations and "giving away" hundreds of millions of dollars, are the Rockefellers and other foundation impresarios richer or poorer, more or less esteemed, more or less solidly ensconced, stronger or weaker?
The answer in every case of a surviving foundation family group is that the foundation has benefited its sponsors more than it benefited the world. Whatever benefit it has wrought for the world it has wrought, too, for the family group. For the world is their village, through which their personal interests ramify in a bewildering network. Why should they not wish to benefit the world as they, too, must live in it? And any benefit wrought, however minor, brings to them vast credit, enhances their status as exalted citizens of the world. They all rate at the highest level in mass-media esteem.
The main point I extract from this is that these are very subtly powerful people, far more powerful even than they are portrayed by a deferential press. Nor are they, despite the deft airbrush of the public relations man, especially benign, as is plainly evident in the heavy commitment to systematic extreme violence of the political system in which they have, by enormous margins, the largest stake.
Never registering opposition to any of the many wars, foreign police actions and military missions against the heathen in which the seemingly detached government engages, usually instead registering enthusiastic approval and giving full support, they must be considered integral to this way of conducting affairs. At the time of this writing this political system is using some of its vast firepower, much of its manpower, with which to establish new foreign bases, as in Vietnam. Although Vietnam is popularly accepted as an heroic dirt-level president's maximum effort, the operation has been formally and enthusiastically endorsed by Governor Nelson A. Rockefeller. It is, obviously, a venture carrying the highest finpolitan sanction. 77
While the Vietnam venture will indeed make all of us more secure against the devil of Communism (or will it? ), it is surely going to make some persons far more secure than others. To be entirely fair, we must concede that even the denizens of the slums, thanks to a foresighted president, will be made more secure in their slumminess. This boon happily works both ways: The rich and the poor are benefited by being fully protected in their respective statuses.
Proposed Foundation Reforms
Representative Wright Patman advanced concrete proposals for reforming the foundations, tightening the regulatory leash so they would not be quite so free to maneuver self-servingly as now. His recommendations were as follows:
1. Limit their life to twenty-five years, as in the voluntary cases of the Julius Rosenwald Fund and the foundation established by the late Arthur Curtiss James.
2. Prohibit them from engaging in tax-exempt business in unfair competition with taxpaying businesses.
3. Prohibit them from engaging in tax-free lending and borrowing.
4. Require them to engage in arm's length relationships--that is, prohibit them from extending intramural benefits, say, to the employees of a controlled company, a form of subtle unfair competition with others.
5. Prohibit them from soliciting or accepting contributions from suppliers to and patrons of their companies.
6. Prohibit foundations from owning more than 3 per cent of any corporation, thus shrinking them as factors in corporate control.
7. Make them conform to certain rules in the case of proxy fights in corporations where they hold stock ownership.
8. Prohibit them from trading in and out of securities in quest of capital gains.
9. Allow no tax exemption on contributions to a foundation until the money has been actually put to approved charitable use.
10. Deny tax exemption to any foundation if it has clearly been established for tax avoidance or to obtain financial benefits for the founder.
11. Compute donations of property to a foundation at cost or market value, whichever is lower, rather than on the present basis of market value which permits the evasion of taxes on appreciated assets.
12. In contributions made by corporations, let such contributions be credited to the stockholders, thus keeping untaxed contributions to present limits prescribed by law.
13. Treat all capital gains by foundations as expendable income and do not allow them to be converted into new capital.
14. Add money unreasonably accumulated by corporations controlled by a foundation under present laws to the foundation's own accumulation as if the two were one. "The use of subsidiary corporations should not be permitted to cloak actual accumulations, as is the case in the Howard Hughes Medical Institute of Miami Beach. "
15. Corporations controlled by foundations should be subject to taxes on unreasonably accumulated earnings, as prescribed by law for foundations.
16. From the base for the marital deduction there should be excluded amounts left to foundations that are henceforth untaxed. And while money given to foundations is not subject to gift and estate taxes, the rate brackets to be applied to moneys that are taxable should be the same as if the prescribed foundation portions were part of the taxable gifts or estate.
17. Regulation of the foundations by the Treasury Department should be tightened in many specifically indicated ways and the Treasury Department should be obliged by law to function actively in this area.
"These and other reforms," Mr. Patman gravely' concluded, "are vitally necessary. " 78 For what little it may be worth, I concur.
The Patman investigation has already influenced the passage of new laws regulating foundations in New York State, where most of them are chartered. The effect of these New York laws will probably be to drive many to states of easier virtue, as in the case of corporations that finally found lax regulatory states in Delaware and New Jersey.
