Dark Money

by Jane Mayer

  The results of these efforts became visible in 1980. At the top of the ticket, Reagan, a movement conservative, overwhelmingly defeated Carter. Conservatives, whose obituaries had been written by the liberal elite just a few years before, were stunningly resurgent. The upset reverberated at every level, including the Senate, where four liberal marquee names, George McGovern, Frank Church, John Culver, and Birch Bayh, were all defeated.

  Scaife, like the Kochs, hadn’t initially backed Reagan’s candidacy in 1980. In the primary, Scaife preferred John Connally. It barely mattered, though. By creating their own private idea factory, extreme donors had found a way to dominate American politics outside the parties. Once elected, Reagan embraced the Heritage Foundation’s phone-book-sized policy playbook, Mandate for Leadership, and distributed a copy of it to every member of Congress. His administration soon delivered an impressive number of items on its wish list. Heritage had laid out 1,270 specific policy proposals. According to Feulner, the Reagan administration adopted 61 percent of them.

  Andrew Mellon himself would have been pleased with the succession of hefty tax cuts that Reagan pushed through Congress. He slashed corporate and individual tax rates, particularly helping the wealthy. Between 1981 and 1986, the top income tax rate was cut from 70 percent to 28 percent. Meanwhile, taxes on the bottom four-fifths of earners rose. Economic inequality, which had flatlined, began to climb.

  The fossil fuel industry’s fondest wishes were also fulfilled. Following proposals set forth by the Heritage Foundation, as soon as Reagan entered the White House, he abolished the economic controls on oil and gas that Nixon had imposed in order to address the energy crisis. These were among the regulations that Charles Koch had so bitterly opposed. He also cut taxes on oil profits. Koch Industries’ profits, predictably, skyrocketed. Forbes noted that Koch, though little known, “may well be the most profitable private business in the U.S.”

  The new conservative nonprofits were thriving, too. By 1985, the Heritage Foundation’s budget equaled that of Brookings and AEI combined. Scaife, who by then had donated $10 million to the think tank, was contributing at a rate of $1 million a year. He had gone far to turn Lewis Powell’s dream into a reality. But one key part of Powell’s agenda remained unfinished. Conservative foundations might have financed a parallel intellectual establishment of their own, but the League to Save Carthage still hadn’t conquered America’s colleges and universities. The Ivy League was no more hospitable to Scaife and his ilk than it had been the day he was expelled. Scaife claimed he was thankful to have been spared the liberal indoctrination. “I was lucky. Higher education did not push me left, and I’ve never regretted it,” he wrote in his memoir. “I’d say the main reason that rich people feel guilty is that the schools teach them they should.”

  That was about to change.

  CHAPTER THREE

  Beachheads: John M. Olin and the Bradley Brothers

  If there was a single event that galvanized conservative donors to try to wrest control of higher education in America, it might have been the uprising at Cornell University on April 20, 1969. That afternoon, during parents’ weekend at the Ithaca, New York, campus, some eighty black students marched in formation out of the student union, which they had seized, with their clenched fists held high in black power salutes. To the shock of the genteel Ivy League community, several were brandishing guns. At the head of the formation was a student who called himself the “Minister of Defense” for Cornell’s Afro-American Society. Strapped across his chest, Pancho Villa–style, was a sash-like bandolier studded with bullet cartridges. Gripped nonchalantly in his right hand, with its butt resting on his hip, was a glistening rifle. Chin held high and sporting an Afro, goatee, and eyeglasses reminiscent of Malcolm X, he was the face of a drama so infamous it was regarded for years by conservatives such as the journalist David Horowitz as “the most disgraceful occurrence in the history of American higher education.”

  John M. Olin, a multimillionaire industrialist, wasn’t there at Cornell, which was his alma mater, that weekend. He was traveling abroad. But as a former Cornell trustee, he could not have gone long without seeing the iconic photograph of the armed protesters. What came to be known as “the Picture” quickly ricocheted around the world, eventually going on to win that year’s Pulitzer Prize.

  Traveling almost as fast was the news that Cornell’s administrators had quickly capitulated to the demands of the black militants, rather than risk a bloody confrontation. Under duress, the university’s president had promised to accelerate plans to establish an independent black studies program at Cornell, as well as to investigate the burning of a cross outside a building in which several black female students lived. And to the deep consternation of many conservative faculty members and students on campus, the president also agreed to grant full amnesty to the protesters, some of whom were facing previous disciplinary proceedings following an earlier uprising in which they had reportedly flung books from the shelves of Cornell’s libraries, denouncing the works as “not relevant” to the black experience.

  By all accounts, the confrontation was especially distressing to Olin. Cornell’s library was one of four buildings on the Cornell campus bearing his family’s name. Both he and his father had graduated from the school and had been proud and generous donors. Almost worse than the behavior of the protesters, from his standpoint, was the behavior of Cornell’s president, James Perkins, a committed liberal who had gone out of his way to open the university’s doors to inner-city minority students and now seemed to be bending the curriculum and lowering disciplinary standards to placate them.

  “The catastrophe at Cornell inspired Olin to take his philanthropy in a bold, new direction,” according to John J. Miller, whose authorized biography, A Gift of Freedom, provides a treasure trove of original research on Olin’s life and legacy. Olin “saw very clearly that students at Cornell, like those at most major universities, were hostile to businessmen and to business enterprise, and indeed had begun to question the ideals of the nation itself,” an Olin Foundation memo recounts.

  As a result, according to Miller, instead of continuing to direct the bulk of his charitable contributions to hospitals, museums, and other standard patrician causes, as he had in the early years after he set up the John M. Olin Foundation in 1953, Olin embarked on a radical new course. He began to fund an ambitious offensive to reorient the political slant of American higher education to the right. His foundation aimed at the country’s most elite schools, the Ivy League and its peers, cognizant that these schools were the incubators of those who would hold future power. If these young cadres could be trained to think more like him, then he and other donors could help secure the country’s political future. It was an attempted takeover, but instead of waging it with bandoliers and rifles, he chose money as his weapon.

  By the time the John M. Olin Foundation spent itself out of existence in 2005, as called for in its founder’s will, it had spent about half of its total assets of $370 million bankrolling the promotion of free-market ideology and other conservative ideas on the country’s campuses. In doing so, it molded and credentialed a whole new generation of conservative graduates and professors. “These efforts have been instrumental in challenging the campus left—or more specifically, the problem of radical activists’ gaining control of America’s colleges and universities,” Miller concluded in a 2003 pamphlet published by the Philanthropy Roundtable, an organization run for conservative philanthropists.

  “These guys, individually and collectively, created a new philanthropic form, which was movement philanthropy,” said Rob Stein, a progressive political strategist, speaking of the Olin Foundation and a handful of other private foundations that funded the creation of a conservative counter-intelligentsia during this period. “What they started is the most potent machinery ever assembled in a democracy to promote a set of beliefs and to control the reins of government.” Stein was so impressed that he went on to try to build a liberal version of the mode
l. Each side would argue that the other had more money and more influence, depending on how broadly they defined the rival camp. But beginning in the 1970s, the Left felt hard-pressed to match the far-ranging propagation of ideology pioneered by a few enterprising donors on the right.

  There is little doubt that the Cornell uprising radicalized Olin’s philanthropy, but the official account citing this as the key to his thinking is incomplete. The protest took place in 1969, and Olin didn’t begin to transform his foundation into an ideological instrument aimed at “saving the free enterprise system,” as his lawyer put it, until four years later, in the spring of 1973. On closer inspection, it appears that there were additional factors involved that shed less flattering light on his motivations.

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  By 1973, the Olin Corporation was embroiled in multiple, serious controversies over its environmental practices, undermining its reputation, threatening its revenues, and ensnarling the company in expensive litigation. Founded by Olin’s father, Franklin, in 1892, the company had begun in East Alton, Illinois, as a manufacturer of blasting powder for coal miners but expanded into making small arms and ammunition. Like the Koch sons, Olin followed closely in his father’s path. After attending prep school, he entered his father’s alma mater, Cornell, where he struggled until he was allowed to conduct chemical research relating to his family’s company. He graduated in 1913 with a degree in chemistry. He then returned to Illinois to join the family business.

  Although Olin regarded himself as self-made and disapproved of the New Deal–era government social programs, beliefs that fueled his later financing of free-market ideology, the federal government was one of the greatest contributors to his company’s growth and his personal wealth. As Miller’s biography details, the firm’s huge government arms contracts in World Wars I and II dramatically improved its bottom line. Revenues quintupled during World War I and exploded during World War II. Olin complained about the government’s interference and inefficiency, but his company reaped $40 million in profits during World War II alone. By 1953, it was being celebrated by Fortune as one of the few great family-owned corporations.

  In 1954, the company went public and merged with the Mathieson Chemical Corporation, doubling in size, diversifying its operations, and eventually changing its name to the Olin Corporation. The conglomeration, whose revenues were half a billion dollars a year by then, made everything from pharmaceuticals in its Squibb division to cigarette paper. It manufactured Winchester rifles and, later, the hydrazine rocket fuel that powered Neil Armstrong’s 1969 lunar landing. Meanwhile, Olin’s national profile was growing. By 1957, Fortune ranked John M. Olin and his brother Spencer, who had taken over the company from their father, as the thirty-first wealthiest Americans, with fortunes estimated at over $75 million. Honors proliferated along with Olin’s great wealth. Following his retirement as the company’s executive committee chairman in 1963, he devoted himself to serving on the boards of several prestigious universities, including Cornell, and to his passion for the outdoors. He had appeared on the cover of Sports Illustrated with his wife in 1958, carrying shotguns and dressed in natty tweeds amid picturesque tall grass, for a profile highlighting his role as a hunter, and a breeder of champion dogs. Known as a conservationist, he was a director of the World Wildlife Fund.

  So it must have been a rude blow to him personally, as well as to the prestige and bottom line of his company, when in 1973 the Environmental Protection Agency singled out the Olin Corporation as one of its first targets, soon after Richard Nixon signed the agency into existence. Suddenly under tougher scrutiny, the company that Olin had built was an outlaw, facing charges of egregious pollution practices in several states at once.

  In Alabama, the Olin Corporation became embroiled over its production of DDT. Rachel Carson, in her book Silent Spring, had identified the pesticide as a deadly contaminant to the biological food chain. The Olin Corporation had been producing 20 percent of the DDT used in the United States. Soon it was fighting a vigorous but losing battle with federal officials against new pollution standards tightening the chemical’s production and use, which the company said would make it impossible to keep its plant open. In addition, three conservation groups, the Environmental Defense Fund, the National Audubon Society, and the National Wildlife Federation, were all suing the company to enjoin it from releasing effluents laced with DDT into a national wildlife preserve near Olin’s Alabama plant. In 1972, the federal government banned the use of DDT altogether, forcing Olin to shut its production down.

  The company’s extensive use of mercury in its production of chlorine and other products had also become a huge problem. In the summer of 1970, according to a front-page story in The New York Times, the U.S. Interior Department charged the Olin Corporation with dumping 26.6 pounds of mercury a day into the Niagara River in upstate New York. Mercury was by then a known human health hazard. Scientists had documented its damage to the human brain and reproductive and nervous systems. Subsequently, the Justice Department also charged the Olin Corporation with falsifying records, showing that the company had dumped sixty-six thousand tons of chemical waste, including mercury, into a landfill in Niagara Falls, New York. The Hooker Chemicals and Plastics Corporation was simultaneously charged with dumping toxic chemicals at the same site, as well as the nearby “Love Canal,” which became an international symbol of toxic pollution. Eventually, the Olin Corporation and three of its former corporate officers were convicted of falsifying records in the dumping case, after which the presiding judge imposed the maximum available fine of $70,000 on the company.

  In the tiny Appalachian town of Saltville, Virginia, meanwhile, in the far southwestern corner of the state, the Olin Corporation was facing an environmental crisis of such major proportions that it threatened to end not only Olin’s industrial operations there but also the entire town’s way of life for years to come. The Olin Corporation’s pollution was so extensive and intractable that the company faced the prospect of tens if not hundreds of millions of dollars in cleanup costs, with no end in sight.

  For decades, Saltville had been a prototypical company town, owned and run in an almost feudal fashion by its only large employer, the Olin Corporation. The company owned ten thousand acres in the ruggedly beautiful mountainous gap, as well as 450 modest clapboard houses that it rented to the town’s 2,199 residents. It also owned the local grocery stores, the water system, the sewerage system, and the only school, which many workers left after no more than sixth or seventh grade. The company prided itself on paternalistic flourishes like a swimming pool and a small stadium for residents. When employees got sick, the company paid for the doctors. The mayor and virtually everyone else in Saltville worked in the chemical plant, which Olin acquired in its merger with the Mathieson Chemical Corporation in 1954. The town’s vast natural salt deposits made it a perfect place to produce chlorine and salt ash, and for years it was the picture of American industrial prosperity, at least for its owners. But for the employees, there was an ominous, unaddressed issue. Olin’s chlorine production process used huge quantities of mercury, which the plant leaked into the public waterways on a daily basis. From 1951 to 1970, the company estimated its factory spilled about a hundred pounds of mercury every day. Most of it emptied directly into the North Fork of the Holston River, which ran picturesquely along the town’s edge. An open sediment pond, meanwhile, into which the company dumped its mercury waste, contained an astounding fifty-three thousand pounds of the toxic substance.

  “They all knew the dangers back then. They had some really good scientists and chemists. But you didn’t have the regulations,” says Harry Haynes, who runs a small history museum in Saltville and whose father used to work at the Olin plant. “We all played with the mercury as children,” he recalls. “Daddy brought it home from the chemical plant. You’d drop it on the floor, and it would explode into a zillion little bits, and then sweep it together and it would clump back together again.” The company issued gas masks to work
ers because of the pervasive chemical vapors, but, another resident recalled, “no one wore them.”

  In 1972, however, the world recoiled at photographs of birth defects resulting from severe mercury contamination at Minamata Bay in Japan. Scientists definitively linked the birth defects—as well as other health horrors including cerebral palsy, mental retardation, blindness, deafness, coma, and death—to consumption of seafood that had been contaminated by mercury waste in local fishing areas. After having been dumped in the water, the mercury had broken down into a soluble form toxic to aquatic life and to those ingesting it. The nightmare at Minamata drew concern about the effects of mercury pollution elsewhere, including at the Olin plant in Saltville. Testing conducted by the state soon revealed high levels of mercury in the sediment in the North Fork of the Holston River, which ran from Saltville on down to Tennessee, where it flowed into the Cherokee Lake recreation area, a favorite fishing destination. Dangerous levels of mercury were discovered in the fish for eighty miles south of the Olin plant, according to one report.

  In response to the rising concerns in Saltville, in 1970 Virginia passed strict new standards that the company said it couldn’t meet. As a result, Olin said, it would cease operations in Saltville by the end of 1972. The company actually had several other reasons for shutting the plant. It was unable to compete with more efficient western salt ash manufacturers. Also, it was under pressure from the United Mine Workers union, which had succeeded after bitter battles in representing the employees. In all likelihood, the factory was doomed not just for environmental reasons.