The oil leases on the Osage territory began to be issued in 1912, drawing oil magnates from around the world to bid fortunes under the so-called “Million-dollar Elm”, where an auctioneer sold off the rights to extract from the wells. The tribe’s sudden stroke of luck didn’t come with the usual benefits associated with the accumulation of massive wealth familiar to most Americans. Much of it was kept behind a wall of racist paternalism expressed through government-appointed guardianships, that assigned White men to oversee the expenses of the tribal members and the power to cut them off at their discretion.
It was the sort of draconian government overreach that Koch and the various organizations he funded to promote the idea of limited government might uphold as examples of the dangers he was fighting to avert. But, that would have been empty rhetoric like most of the arguments put forth by many of his political front groups like Americans for Prosperity or Citizens for a Sound Economy. The endgame for Koch and his clique of preposterously wealthy (mostly) men was a government stripped of all responsibility beyond the responsibility to protect their property.
Among the bidders gathered under the tree in Pawhuska, Oklahoma in the 1920’s was a representative of the Gulf Oil company, owned by the Mellon clan, one of the original robber baron families and pioneers of the use of philanthropy as both a means of tax-avoidance and anti-government messaging. One of the heirs to the Gulf Oil, Mellon banking fortune would become one of the country’s biggest backers of radical right wing ideology and a strategically important partner to Charles Koch’s own efforts.
The Silverspoon Radical
Richard Mellon Scaife never gave any interviews or public speeches, but he exerted incalculable influence over America’s public affairs through the multiple foundations he and his family set up.
Inheriting an obscene amount of money at the age of 26 is probably not the easiest thing to deal with for even the most level-headed youngster. But, by all accounts, Richard Scaife was leading the kind of dissolute life most of us expect the scion of inter-generational wealth would. Kicked out of the Deerfield Academy prep school at 14 for drinking, his reputation for alcohol-induced benders would follow him to Yale University, which would also expel him for it.
After his father died in 1958, Scaife assumed the role of financial manager for the fortune passed on to his mother, Sarah. She would create several trusts, continuing the family tradition of using non-profits as tax shelters. Eventually, Richard would consolidate all of the foundations under the umbrella of the Scaife Family Charitable Trusts, which would be used to disburse hundreds of millions of dollars to radical right organizations, politicians and causes.
The most important of these may well have been the Institute for Contemporary Studies (ICS), based out of California. This Scaife-funded think tank initiated a slew of projects meant to influence policy. One of these sought to learn what was being taught in pre-collegiate economics classes and propose more free market-friendly curricula. Another put future president Ronald Reagan in front of every high school student in the state’s eleven hundred school districts via PBS.
Reagan’s deep ties to the ICS can be traced to the presence of Edwin Meese III on the foundation’s board. Meese, who would later serve as Reagan’s Attorney General and, arguably, his most trusted advisor, was among the invitees to Jim Buchanan’s 1973 unveiling of the Virginia academic’s “Third Century Project” outlining the way in which corporate America would transform the nation’s courts. Just a week earlier, Buchanan had presented his plan to another room-full of sympathetic business men. “Conspiratorial secrecy”, he warned them, “is at all times essential”.
The institute would soon count multinational corporations such as Exxon, IBM, Chase Manhattan Bank, Shell and Texaco among its ranks, making it one of the most influential think tanks in the nation.
Rise of the Oligarchs
In 1973, the brand new Environmental Protection Agency took aim at the Olin Corporation, which had started nearly a century earlier as a mine explosives and small arms company. Government contracts during World War I and II would greatly buttress its bottom line and the family-owned concern would go on to form a huge conglomerate producing everything from Winchester rifles to rocket fuel.
Its chemical division had a large rap sheet of environmental pollution and found itself being sued by the Environmental Defense Fund, the National Wildlife Federation and the Audubon Society for releasing DDT-laced effluents into a wildlife preserve. Three years before the EPA came down on the company, they were charged with dumping mercury into the Niagara River and were later found to have falsified records showing it had dumped 66,000 tons of toxic waste into a Niagara Falls landfill.
The Olin Corporation’s criminal negligence and outright disregard for human or environmental health spanned decades. But, as public outcry around these issues began to grow and regulations were put in place John M. Olin – who was not even running the company by then – created the Olin Foundation to, in his words, “see free enterprise re-established in this country. Business and the public must be awakened to the creeping stranglehold that socialism has gained here since World War II.”
Olin, along with many other members oligarch class, were galvanized by the infamous Powell memo calling for American business owners to mount a “counterrevolution” against what they saw as an existential threat. Powell, a former director of the Phillip Morris tobacco company, laid out the game plan in his 5,000-word manifesto, which identified the judiciary system as a central focus of their attack strategy. Nixon would appoint Powell to the Supreme Court just two years later.
The Olin Foundation immediately began funding projects focusing on the radical transformation of the American justice system. Among the first the Olin Foundation funded was a program run by an obscure law professor at the University of Miami, Henry G. Manne. Manne was bringing corporate-oriented and cost-benefit analysis approach to regulation in his Law and Economics Center in the then marginally known campus in Coral Gables, Florida.
Charles Koch, in particular, would find Manne’s ideas very appealing as they dovetailed so perfectly with his own master plan.
Koch’s Law Manne
Charles Koch was following in the tradition of his covenant ideology forbearers. He saw his project to transform American politics akin to the Protestant Reformation, casting himself in the role of Martin Luther declaring that like the rebellious cleric, he stood firm against the established order. “I can do no other”, Koch boasted in a 1999 speech.
By that time, the project had made great, if largely unnoticed, strides. Henry G. Mane was Dean of Koch’s pseudo-academic operation at George Mason University. Over the previous two decades, Manne had been so successful with his Law and Economics program funded to the tune of millions of dollars by the likes of the Olin Foundation, Charles Koch and U.S. Steel, that by the middle of George H. W. Bush’s only term in office, 2 out of every 5 sitting federal judges had participated in Manne’s training sessions, applying free market economics to legal decision-making.
The “Henry Manne Camp”, which counts current Democratic presidential candidate and reportedly reformed liberal Elizabeth Warren among its alumni, doled out rich honorariums to legal scholars to write papers with his particular twist on legal questions that would be published in legal journals, spreading the meme throughout the profession. More than 600 institutions would end up sending their best legal minds to attend Manne’s intensive two-week courses; typically held in posh tropical locales such as Key West. Some institutions, like the University of Virginia’s law school, adopted Manne’s approach in its entirety.
Koch and Manne identified what they considered the biggest threat to “economic freedom”. Together they determined that the environmental movement constituted the most clear and present danger to their designs as it sought to “control” corporate interests through “governmental regulation of business”. Government-backed health care also represented a danger since it “impaired the normal workings of labor markets”.
Tax policy, public education and feminism also sent shivers down their spines. The first because of the “inevitable egalitarian instincts” exhibited by “modern” democracies; education had to be curtailed because of the “community values” they considered to be “inimical to a free society”; and finally, feminism was too socialistic for their taste.
Bill Clinton’s re-election motivated Koch to take things up a notch and neutralize these threats, bringing the Nobel prize-winning James Buchanan directly into his operation. After years of funding Buchanan’s work through his various foundations, Charles Koch put up $10 million dollars to set up the James Buchanan Center at George Mason University. The new department would be an amalgam of Buchanan’s Center for Public Choice that the laureate had run at Virginia Tech and Koch’s long-time political hatchet man, Robert Fink’s Center for the Study of Market Processes.
The board of visitors would include William Kristol and Dick Armey, while Edwin Meese III sat as the board’s rector. Buchanan would ultimately be pushed out after getting wind of the illegal nature of the Center’s work. Ostensibly a philanthropic endeavor, registered as a 501 3(c) non-profit legally barred from engaging in politics, the Buchanan Center at GMU was being used as a political lobbying operation led by Koch operatives.
Koch Industries was growing at a frenetic pace, swallowing competitors and violating so many laws in the process, that attacking the system prosecuting them under these laws and imposing multi-million dollar fines on them made perfect business sense.
The Altar of Doom
In due course, the political discourse around the country would begin to reflect the radical, ant-government viewpoints espoused by the foundations and initiatives sponsored by the Kochs and partners like the DeVos family of the Amway fortune, the Coors brewing empire and many others.
Charles Koch issued his battle cry in 1978. “Our movement” he intoned, “must destroy the prevalent statist paradigm”. In the space of two decades his revolution had managed to seep into the national consciousness and its insane tenets would begin to spew from the mouths of his minion politicians. Thom Tillis, a U.S. Senator from North Carolina who owed his post to the Koch machine, wanted to do away with laws compelling restaurants to make employees wash their hands since, he claimed, “the market” would “take care of that”. The press was not immune, either. An editorial board member of the Wall Street Journal took a Koch-infused line against the need for public health officials, expressing her opinion that testing for lead levels in the blood of children was nothing more than an excuse to justify their jobs.
If we were to really look for justifications, we could simply take a closer look at the egregious practices Koch Industries has been employing in their pursuit of profit and unfettered growth. The lawsuit brought against them in 1995 by the EPA for spilling over 12 million gallons of oil across six states as a result of faulty pipelines is only one of many incentives this enormous corporation has to subvert the law and, the tremendous wealth at their disposal has allowed Charles Koch to go beyond mere court battles to burning the U.S. code itself upon the altar of free markets.
Go To Part Three >> KOCH BUST