Mises Wire

Anonymous Funding of the Academic Right: William Volker and Henry Earhart

Mises Wire Gary North

One of the foundational principles of free market economics is the principle of personal responsibility. Individuals are responsible for their own actions.

This is true not simply in the realm of the free market itself. It also applies to the realm of nonprofits, including churches, foundations, and charitable institutions of all kinds. While there is no developed economic theory associated with nonprofit organizations, because without the market process there can be no sanctions imposed by consumers, individuals who make a decision on allocating money are nevertheless responsible for their actions.

In the history of both the conservative movement and the libertarian movement after World War II, there were almost no defenders of an unrestricted free market process. The defense of private property had fallen by the wayside during the Great Depression. This was true all over the world. This was the era in which the central governments of the world began to interfere with the market process, taxing and regulating the process in the name of the people.

There were a few exceptions. In Great Britain, there was F. A. Hayek. In the United States, there was Henry Hazlitt, who wrote for The New York Times. Hayek's book, The Road to Serfdom, appeared in 1944. Hazlitt's book, Economics in One Lesson, appeared in 1946. The book by Ludwig von Mises, Socialism (1922), was published in English in Great Britain in 1936. It was almost unknown in the United States until Hazlitt reviewed it in The New York Times (Jan. 9, 1938). World War II began in Europe on September 1, 1939. The war years erased all memory of Mises in academic world. He fled to the United States in 1940. He lived on charity from his friends until the Foundation for Economic Education came into existence in 1946. At some point, FEE began to provide a minimal salary.

I have written about the funding of Mises in the United States, beginning in 1946. When he went onto the faculty as an unpaid visiting professor at New York University's Graduate School of Business, there was at least a one-time funding by five nonprofit foundations. Two of them were sister foundations: the Relm Foundation and the Earhart Foundation. The third was the William Volker fund. I do not know the names of the two others. This was disclosed in a 2008 interview by Richard Ware, who was in a leadership position at both the Relm Foundation and Earhart Foundation for almost 30 years, beginning in 1954. He became president in 1971. He retired in 1984.

Anonymous Funding

Three men were crucial in the rise of the post-War intellectual movements of conservatism and libertarianism. They sought no publicity: William Volker, his nephew Harold Luhnow, and H. B. Earhart.

Volker did not actively participate in this funding. He died in 1947. In that year, his nephew Harold Luhnow took over the Volker Charities of Kansas City, Missouri. He was responsible for transitioning the foundation to supporting free market scholars and scholars in training. Through the National Book Foundation, it gave free market books to university libraries. Fortunately, there is a Wikipedia entry on him. There is a brief Wikipedia entry on Henry Boyd Earhart. There is almost no trace online of Relm (not Relm Foundation).

The story of the Volker Fund is better known than Earhart or Relm. A former employee of the Volker Fund, Richard Cornuelle, wrote a book on Volker in 1951: Mr. Anonymous. The Volker Fund is discussed in Brian Doherty's book, Radicals for Capitalism. The Earhart Foundation gets four references in relation to funding the Foundation for Economic Education. Relm gets one reference in one sentence.

In terms of funding the conservative movement, Earhart and Relm were far more important than the Volker Fund. The Volker Fund focused on libertarianism. So did the Foundation for Economic Education. Earhart and Relm supported scholars in both movements.

There is a list of the recipients of Earhart Fellowships. that list is virtually unknown to the general public. I was in Earhart fellow for two years in the late 1960's, and I only was sent a copy of this list two weeks ago. I did not know of its existence. In my view, the history of the intellectual conservative movement in the United States would have to include at least one chapter on the Earhart Fellows, the Weaver Fellows, and the impact that these recipients had on the movement.

There is an excellent brief summary of H. B. Earhart and Earhart Foundation in First Principles. It was published in 2011. It was written by Lee Edwards. the conservative activist and scholar. It is here. Earhart made his money in the oil industry: White Star Refining. Today, it is part of Exxon Mobil. He retired in 1932. Edwards continues.

Earhart devoted the final two decades of his life to philanthropy and the Earhart and Relm foundations. Earhart Foundation, founded in 1929, was a “family” foundation that initially concentrated its support on charitable and religious causes. But it soon broadened its mission to include research and education for leadership that would “eliminate” social ills rather than simply “relieve the results of social ills.”

In 1949, in response to what Harry Earhart regarded as increasing threats to the free enterprise system and “the great American heritage,” Earhart Foundation was reorganized, now emphasizing the support of research into economic freedom as the sine qua non of a truly free society. The following year, the Relm Foundation was created with a corporate life of twenty years and a similar mission. With the same trustees and staff, the two foundations differed only in their activities, with Earhart dispensing the H. B. Earhart Fellowships and Relm being responsible for nearly all the programs. In 1977, Relm’s trustees terminated the foundation and transferred all its remaining assets to Earhart Foundation to implement H. B. Earhart’s philanthropic goals.

He quotes Richard Ware, who was the major figure in both foundations after 1971.

In the early days, Earhart and Relm “were nearly alone” in their patronage of the conservative movement. They assisted members of all three groups that then constituted that movement—the anticommunist cold warriors, the cultural conservatives, and the free- market economists. However, as Richard Ware, longtime president of the Earhart Foundation, pointed out, both Earhart and Relm worked with “outside” individuals and organizations sharing “some but not all of the conservative philosophy.” Scholarship of high quality and a willingness to allow “chips to fall where they may” have been the hallmarks of staff recommendations and trustee decisions.

The classic example of this was Earhart's award of a fellowship to a Marxist graduate student at the University of Chicago, Thomas Sowell. His sponsor was Sowell's mentor, George Stigler, who later won the Nobel Prize. According to a 2008 interview with Ware, Stigler told Ware that Sowell was too smart to remain a Marxist. He was correct.

Among those supported by Relm-Earhart over the decades have been six Nobel laureates in economics: F. A. Hayek, Milton Friedman, George J. Stigler, James M. Buchanan, Ronald H. Coase, and Gary Becker. Since the early 1950s, more than 2,500 graduate students have received assistance as H. B. Earhart Fellows. In the field of political philosophy, support was extended to Leo Strauss and Eric Voegelin. In international affairs, the work of Peter Bauer was funded along with such institutions as the Mont Pelerin Society and the Institute of Economic Affairs in London.

I received Earhart fellowships in 1966-67 and 1967-68.

In 1964, Earhart began funding the Weaver Fellowships that were granted to grad students by the Intercollegiate Studies Institute, which had been founded in 1953 by William F. Buckley, libertarian Frank Chodorov, and Vic Milione as the Intercollegiate Society of Individualists. I was a Weaver Fellow in 1969-70.

Earhart Fellows and Pareto's Curve

I have skimmed through the list of recipients of these fellowships. The list is 519 pages. It is here. There are somewhere between six and seven recipients per page. The other information on the pages involves who sponsored them, where they were studying, and when they received their doctorates. I found it interesting that the information on me was incorrect in two respects. First, it lists me as an economics student. This is understandable, since I was recommended by two different economists. I was a history student. Second, it lists me as having received my doctorate in 1971. I received it in 1972.

What struck me as I read through the list was this: I have heard of so few of the recipients. There were approximately 3,000 of them. I read for pages without recognizing any name. Part of this is my unfamiliarity with the academic disciplines' outlets.

This is not a criticism of the recipients. It is one more example of something like Pareto's law of distribution. In any list of performers, about 20% of them will produce 80% of the output. About 4% of them will produce about two-thirds of the output. Fewer than 1% generate half of the output. We find this across every field. We find it in the distribution of wealth and income in every country.

This reminded me of the inescapable fact that most of what charities give away will produce few visible results. A few programs will produce most of the results. This inequality is basic to at least human existence, and possibly beyond into nature. Scholars don't like to talk about it because they can't explain it. But the phenomenon exists.

The Ph.D. glut hit in the spring of 1969. The academic administrators had known this was coming for at least five years. I had been warned of it by the president of the University of California, Clark Kerr. Another senior administrator who had seen this coming in scientific disciplines was Allan Cartter, the president of New York University. After 1968, it became increasingly difficult for all but the best-connected graduates of Ph.D. programs in the best universities to get college teaching jobs, especially tenure-track teaching jobs.

Very few Ph.D. holding scholars ever publish anything except possibly an article in the journal related to their dissertation. They may get an academic press to publish a reworked version of the dissertation. After that, their influence does not extend beyond the classroom.

Getting published in journals and magazines that appeal to conservatives and libertarians is always difficult. This is getting easier with the development of the World Wide Web, but this has been a recent development. So, most of the recipients of the Weaver and Earhart fellowships disappeared from public view. They taught and teach in colleges, and they presumably have influence on about 20% of the students who take their classes over a career.

The leverage from these fellowships has always come from a relative handful of recipients who were able to find editors who published at least some of their materials. Some of these journals and magazines were read by intelligent laymen. An article published in a scholarly journal is read by hardly anybody. The subscribers don't read most of them. At a Philadelphia Society conference in Chicago in 1974, Stigler stood up in front of the assembled scholars in a question and answer session and asked this rhetorical question: "Why is it that I don't find a single article worth reading in the academic journals?" I was there. It was a memorable meeting because of his statement. Robert Nisbet in the late 1970's told me that he had stopped reading any professional journals in the field of sociology years before.

I received my first Earhart Fellowship in the fall of 1966. In February 1967, I had my first article published in The Freeman. Earhart money over those two years helped finance indirectly my first book, Marx's Religion of Revolution, which appeared in 1968. It was on the basis of that book that I won a Weaver Fellowship in 1969. I had applied for the fellowship in 1968, before the book was published, and I had not won.

Richard Ware had taken a chance on me in 1966. He deferred to the opinion of my sponsor, economist Donald Kemmerer. In retrospect, I don't remember how I got into contact with Kemmerer. I should, but I don't. Somehow, he took a chance on me.

This is why investing money early in young scholars is truly uncertain. There is no way to know in advance which fellowship is going to produce changed minds. All that the committee can do is hope for the best. The law of large numbers then takes over. Some of these fellows will go on to be highly productive. They will change many minds. Solomon offered this advice 3,000 years ago: "Cast thy bread upon the waters: for thou shalt find it after many days" (Ecclesiastes 11:1). We cast our bread (seeds) in faith.

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