C. Wright Mills, from the Left, called it the Power Elite. William – Buckley calls it the (liberal) Establishment. But whatever it’s called, the large _ tax-exempt foundation is one of its _ chief instruments of organization and influence. Today these foundations are _ very much on the defensive—indeed, as _ they acutely sense, in some danger; and they therefore are bringing to bear their immense economic and _ political resources, as well as their formidable public relations skills, in defense of ‘their controversial position within _ American society. ___ Last February, the House Ways and Means Committee, which, under the chairmanship of the redoubtable Wilbur Mills, initiates all tax legislation, _ began a much awaited—and feared— _ inquiry into the foundations. Its proposals with regard to the foundations re part of its recommendations on tax _ reform which the House has now passed. _ The Ways and Means Committee has not been the only body raising questions about foundations. A private commis_ sion, composed of a dozen or so distinguished citizens, and led by Peter Peterson, Charles Percy’s successor as chairman of the board at Bell and Howell, will issue its own report on the foundations later this year. The American Conservative Union has already cast a cool eye on the subject in a _ report entitled “The Financiers of Revolution.” From the far Left, Ramparts has attacked the foundations as _ —Surprise!—instruments of capitalist ~ domination. _ In scrutinizing the foundations Wilbur Mills, Peterson, the ACU and _ Ramparts are neophytes compared with the near-legendary Wright Patman, Congressman from the First District of Texas, who is sometimes known as “the last of the populists.” For the past eight years, Patman’s own foundations subcommittee has been conducting an exhaustive investigation and accumulating thousands of pages of testimony. Wright Patman’s skeptical attitude toward the foundations is part of a general distrust of big money, especially big Eastern money, which was virtually bred in his bones. In 1932, as a young congressman, Patman once rose in the House and declared: “On my own authority, as Congressman from the First District of Texas, I hereby impeach Andrew W. Mellon, Secretary of the Treasury, for high crimes and misdemeanors.” He wasn’t joking, it became painfully clear to Mellon and his thirteen lawyers, as Patman spelled out his case in two weeks of testimony before the Judiciary Committee. President Hoover decided to rescue Mellon by appointing him ambassador to the Court of St. James’s. Now 75 and in his twenty-first term as a congressman, Patman is a maverick and an original, a glorious figure in his way. His district is red-dirt rural, and divided its votes between Humphrey and Wallace in 1968; but Patman is thornily independent. When the Reverend Abernathy and his followers set up Resurrection City in Washington last year, Patman commented that they had just as much right to be there as any other lobbyists, and that it was a citizen’s privilege to petition Congress. His votes are pro-labor. The First District swallows this, but only because he’s Wright Patman. In Congress, he is a formidable adversary because he does his homework. A rotund, benign, almost elfin presence, he likes to affect an uncomprehending —fuzzymindedness— but this is merely a diversionary tactic, possum-playing, and in the end Patman’s opponent usually throws up his hands. For, under the benignity and slightly fey demeanor, Patman is hard as nails, essentially unchanged from the days when, as District Attorney, he cleaned up Texarkana, a tough boom town, closed two dozen brothels in an afternoon and was so relentless in harrying the gamblers that they brought in hired thugs from Chicago to kill him. Patman had to be protected by a contingent of Texas Rangers. Patman, for the last eight years, has been as relentless in his pursuit of the foundations as he once was with the gamblers and the brothels, for it is clear that he considers them to be about on the same moral plane. Patman is the very type of anti-establishmentarian American, — skeptical, thorny, iconoclastic. He has been in Congress for half a century and he is enormously knowledgeable about financial matters. But he is utterly unclub- | bable, and so he has received, for ex- . – ample, only two honorary degrees—one from East Texas Baptist College, and one from Cumberland. University at – Williamsburg, Kentucky, where he received his law degree. Nevertheless, to- : day, nobody at the Ford Foundation is laughing, nor at the Rockefeller Foundation, and nobody.on the Council on Foreign Relations, or at Time or _ Fortune or the Times thinks he’s funny either. For the first time since 1915, when the Walsh Committee looked into the activities of the private foundations, serious reform seems to be in the air. In the very command: posts: of the _ Establishment, men like Ford Foundation President McGeorge Bundy and Rockefeller Foundation President: J. George Harrar, remembering Andrew Mellon, would do well to reflect on T. S. Eliot’s lines about the drowned Phoenician sailor, who. “was once handsome and tall as you.”
THE FOUNDATIONS, which come in all sizes and shapes, are suddenly vulnerable for three main reasons. The first two are relatively straightforward: 1) many operate solely or mainly as tax-dodges, and 2) many are frivolous to the point of kookery in the way they dispose of their tax-exempt funds. Though these two kinds of abuse are serious, they are not especially compli- – cated, and should be readily correctable: reasonable criteria can be established and enforced. The third problem, however, is deep and complicated: the huge foundations, such as Ford and_ Rockefeller, dispose of enormous amounts of money and exercise great power; yet they are run by men elected by no one, and accountable only to self-perpetuating boards of directors. These large foundations, moreover, are now embarked upon a course which brings them directly into the political arena: their power is brought to bear for one interest or one cause and against another. Yet this power is arbitrary power, unaccountable and, _ therefore in the strictest sense of the word, irresponsible. Let us look briefly _ at the first two problems before turning to the third. First of all, private foundations have been proliferating at a fantastic rate. Two thousand new ones were born in _ 1968 alone. And anybody can start one. All you have to do is fill out and return IRS Form 1023, which asks two pages of simple questions, most of them answerable by yes or no. To qualify for tax-exemption, a group must be religious, educational, scientific, literary or charitable. In practice, these cate- ~ gories are .almost infinitely ‘ elastic. What, for example, could not be considered “educational”? If you want to start a foundation,.and you can think of a rationale that seems to fit into one of these categories, then you have it – made. You put a solid chunk of your . money into your foundation, thus protecting it from the tax-collector. Then you do your thing. You can hire your wife as “educational director,” and your son as “coordinator.” Patman has turned up foundations that support mis-: tresses, widows, divorcées, foundations to recruit football players, foundations to underwrite banquets. One man set up a foundation, donated his house to the foundation, then continued to live in the house, charging his expenses off to the foundation. The possibilities are fascinating: your foundation could have your portrait painted, or your biography written, thus making contributions to “art” and “history.” | The tax-dodge works on the large scale even more efficiently than on the small. Take the Ford Foundation. By 1935, Henry Ford and his son Edsel owned 97 per cent of Ford Motor stock. As the Sage of Dearborn began to feel what Samuel Johnson called kind nature’s signal of retreat, it dawned on him that if he and Edsel left all their stock to the Ford children, most of it: would have to be sold to pay the inheritance taxes. The solution: was obvious. Ten per cent of the stock went to the children, 90 per cent to establish the Ford Foundation, thus protecting it from taxes. And there were refinements pleasing to the connoisseur. The Foundation’s stock was designated “non-voting,” thus keeping Ford Motors under family control. And the Foundation’s first “philanthropy” was to pay the inheritance tax on the 10 per cent of the stock that went to the children. As Wright Patman comments sardonically in his mild Texas drawl: “T have nothing against the foundations. I just think it is unfair for people generally to pay taxes while some few have special privileges and don’t have to pay taxes. I just think we should all be treated alike. If Ford and Rockefeller have their foundations, I think we should all be able to have foundations. I’m going to advise the people in my district how to set up their own foundations. ’’m going to give my folks the – forms and everything else they need to © get started, because I want them to be © treated just as good as the Fords and — the Rockefellers.”
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