Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (6 page)

Blazing a trail that would later be followed by his sons, Koch tapped his fortune to subsidize his political activism. He underwrote the distribution of what he claimed were over two and a half million copies of his book, as well as a speaking tour. According to the Associated Press, during one speech in 1961 he told the members of a Kansas Women’s Republican club that if they were afraid of becoming too “controversial” by joining his fight against Communism, they should remember that “
you won’t be very controversial lying in a ditch with a bullet in your brain.” Such rants brought Koch to the attention of the FBI, which filed a report describing his rhetoric as “
utterly absurd.”

The John Birch Society’s views were primitive, but its marketing was quite sophisticated. Welch, the candy manufacturer who founded the group, urged organizers to implement a modern sales plan, advertising heavily and pushing pamphlets door-to-door. The movement flourished in Wichita, where Fred Koch frequently attended local John Birch Society meetings and was a generous benefactor.

Ironically, the organization modeled itself on the Communist Party. Stealth and subterfuge were endemic. Membership was kept secret. Fighting “dirty” was justified internally, as necessary to combat the imputed treacherousness of the enemy. Welch “explicitly sought to use the same methods” he attributed to the Communists, “manipulation, deceit, and even dishonesty,” recalled diZerega, who attended Birch Society meetings in Wichita in his youth. One ploy the group used, he said, was to set up phony front groups “pretending to be other than what they were.”
An alphabet soup of secretly connected organizations sprang up, with acronyms like TRAIN (To Restore American Independence Now) and TACT (Truth About Civil Turmoil). Another tactic was to wrap the group’s radical vision in mundane and unthreatening slogans that sound familiar today, such as “less government, more responsibility.” One of Welch’s favorite tropes, decrying “collectivism,” would cause some head-scratching more than fifty years later when it was echoed by Charles Koch in a 2014 diatribe in
The Wall Street Journal
denouncing his Democratic critics as “
collectivists.”

Welch was “
a very intelligent, sharp man, quite an intellectual,” Fred Koch’s wife, Mary, later told her hometown newspaper
The Wichita Eagle
. The family’s admiration for the John Birch Society, however, proved somewhat embarrassing on November 22, 1963, when President John F. Kennedy was assassinated. As Lee Fang recounts in his book,
The Machine: A Field Guide to the Resurgent Right
, when President Kennedy arrived in Dallas that morning, he was confronted by a hate-stoked, full-page newspaper ad paid for by several Texas members of the John Birch Society, accusing him of treasonously promoting “
the spirit of Moscow.” At the time, Kennedy had moved from trying to ignore the Birchers to realizing he needed to confront their increasingly pernicious fearmongering, which he denounced as “crusades of suspicion” and “extremism.”

In a hasty turnabout, soon after the assassination Fred Koch took out full-page ads in
The New York Times
and
The Washington Post
mourning JFK. The ads advanced the conspiracy theory that JFK’s assassin, Lee Harvey Oswald, had acted as part of a Communist plot. The Communists wouldn’t “rest on this success,” the ads warned. In the corner was a tear-out order form, directing the public to sign up for John Birch Society mailings. In response, the columnist Drew Pearson slammed Koch’s “gimmick” and exposed him as a hypocrite for having profited himself from Soviet Communism by building up the U.S.S.R.’s oil industry.

Fred Koch continued to be active in extremist politics. He provided substantial support for Barry Goldwater’s right-wing bid for the Republican nomination in 1964. Goldwater, too, opposed the Civil Rights Act and the Supreme Court’s landmark desegregation decision,
Brown v. Board of Education
.
Instead of winning, the Far Right helped ensure the Republican Party’s humiliating defeat by Lyndon Johnson that year. In 1968, Fred Koch went further right still.
Before the emergence of George Wallace, he called for the Birch Society member Ezra Taft Benson to run for the presidency with the South Carolina senator Strom Thurmond on a platform calling for racial segregation and the abolition of all income taxes.

David and Charles absorbed their father’s conservative politics and joined the John Birch Society too, but they did not share all of his views. According to diZerega, who befriended Charles in the mid-1960s after meeting him while browsing in a John Birch Society bookstore in Wichita, Charles didn’t accept all of the group’s conspiracy theories. He recalls that Charles, who was several years older, steered him away from the Communist conspiracy books and toward the collection of antigovernment economic writers whose work he found especially exciting. “This is the good stuff,” he recalls Charles telling him. The founder of the John Birch Society, Welch, was a board member of the Foundation for Economic Education, which spread a version of laissez-faire economics so extreme “
it bordered on anarchism,” as Rick Perlstein writes in his history of Goldwater’s ascent,
Before the Storm
. Unlike his father’s conspiracies, these were the theories that captivated Charles.

The postcollege years were a restless period in Charles’s life. In 1961, when he was twenty-six, his father, whose health was failing, persuaded him despite his doubts to return to Wichita to help run the family business. After graduating with a bachelor of science in engineering and master’s degrees in nuclear and chemical engineering from MIT, where his father was on the board of trustees, Charles had been enjoying his freedom working in Boston as a business consultant. Convinced that his father would sell the company otherwise, Charles reluctantly returned to Wichita to help but found himself intellectually hungry back in his hometown. In his telling, he was almost feverishly bent on finding some overarching system of political theory to bridge his father’s emotional anti-Communism with his own more analytical approach to the world. He also wanted to merge his thinking about business and his interests in engineering and mathematics. “I spent the next two years almost like a hermit, surrounded by books,” he told
The Wall Street Journal
in 1997. Visitors to his apartment recall him littering almost every surface with abstruse economic and political texts. He later explained that having learned that “
there are certain laws that govern the natural world,” he was trying to discover “if the same isn’t true for the societal world.”

Contributing to Charles’s intellectual ferment at this time were his father’s dinner table diatribes against taxation. Fred saw taxes in America darkly, as incipient socialism.
Early on, the Internal Revenue Service had sued his company for underpayment of taxes, requiring a large additional payment as well as penalties and legal fees.
He remained vehemently opposed to estate taxes, and told Charles that he feared the U.S. government would tax him so heavily it might force him to sell the family business, diminishing his sons’ inheritances. To minimize future taxes, Fred Koch took advantage of elaborate estate planning.
Among other strategies, he set up a “charitable lead trust” that enabled him to pass on his estate to his sons without inheritance taxes, so long as the sons donated the accruing interest on the principle to charity for twenty years. To maximize their self-interest, in other words, the Koch boys were compelled to be charitable. Tax avoidance was thus the original impetus for the Koch brothers’ extraordinary philanthropy. As David Koch later explained, “
So for 20 years, I had to give away all that income, and I sort of got into it.”

Fred Koch’s estate plan treated each son equally, but according to Coppin, to ensure that his offspring would continue to obey him,
he arranged to pass his fortune on to them in two stages, with the second half passing on only after his death. The first distribution gave all four boys equal ownership of Koch Engineering, the smaller of his two companies. The later distribution thus hung over his sons’ heads, subject to their father’s whim.

Charles’s embrace of the John Birch Society, according to Coppin, was in part designed to please the old man. According to diZerega, whom Charles invited to participate in an informal discussion group at the Koch mansion during this period, “
It was pretty clear that Charles thought some of the Birch Society was bullshit.” He recalls that “Charles was bright as hell.” And in fact, in 1968, the year after his father died, Charles resigned from the organization over its support for the Vietnam War, which he opposed.

A
related fringe group, though, became seminal to Charles Koch’s political evolution during this period, the Freedom School, which was led by a radical thinker with a checkered past named Robert LeFevre. LeFevre opened the Freedom School in Colorado Springs in 1957 and from the start there were close ties to the John Birch Society. In 1964, Robert Love, a major figure in the Wichita branch of the John Birch Society, introduced Charles to the school, which offered one- and two-week immersion courses in “the philosophy of freedom and free enterprise.” Robert Welch, the John Birch Society’s founder, also visited. But LeFevre’s preoccupations were slightly different. He was almost as adamantly opposed to America’s government as he was to Communism.

LeFevre favored the abolition of the state but didn’t like the label “anarchist,” so he called himself instead an “autarchist.” LeFevre liked to say that “government is a disease masquerading as its own cure.” Doherty, the historian of the libertarian movement, related that “
LeFevre was an anarchist figure who won Charles’s heart” and that the school was “a tiny world of people who thought the New Deal was a horrible mistake.” An FBI file on the Freedom School shows that by 1966 Charles Koch was not only a major financial supporter of the school but also an executive and trustee.

LeFevre, who looked like a jolly, white-haired Santa, had reportedly been indicted earlier for mail fraud in connection with his role in a cultlike right-wing self-actualization movement called the Mighty “I AM” that worked audiences into frenzies as they chanted in response to Franklin and Eleanor Roosevelt’s names, “Annihilate them!”
As the journalist Mark Ames recounts, LeFevre escaped prosecution by becoming a witness for the state, but he continued on a wayward path, claiming to have supernatural powers and struggling through bankruptcy and an infatuation with a fourteen-year-old girl. Later, at the height of Senator Joe McCarthy’s anti-Communist crusades, LeFevre became an FBI informant, accusing Hollywood figures of Communist sympathies and leading a drive to purge the Girl Scouts of Reds. A stint writing editorials for the archconservative
Gazette-Telegraph
in Colorado Springs enabled him to drum up funds to launch the Freedom School on a rustic, five-hundred-acre campus nearby. There, he assumed the title of dean.

The school taught a revisionist version of American history in which the robber barons were heroes, not villains, and the Gilded Age was the country’s golden era. Taxes were denigrated as a form of theft, and the Progressive movement, Roosevelt’s New Deal, and Lyndon Johnson’s War on Poverty, in the school’s view, were ruinous turns toward socialism. The weak and poor, the school taught, should be cared for by private charity, not government. The school had a revisionist position on the Civil War, too. It shouldn’t have been fought; instead, the South should have been allowed to secede. Slavery was a lesser evil than military conscription, the school argued, because human beings should be allowed to sell themselves into slavery if they wished. Like Charles Koch during this period, the school tried to meld its version of history, economics, and philosophy into one theoretical framework, which it called “Phronhistery.”

A group of Illinois teachers sent to a session at the school in 1959 by a local chamber of commerce returned so shocked that they notified the FBI and published a letter denouncing the school for advocating “no government, no police department, no fire department, no public schools, no health or zoning laws, not even national defense.” They noted that “this of course is anarchy.” They also described the school as proposing that the Bill of Rights be reduced to “just a single one: the right to own property.”

In 1965,
The New York Times
ran a feature describing the school as a
bastion of “ultraconservatism” and mentioning that among the prized alumni whose lives had been transformed by its teachings was Charles Koch. He had obtained a second graduate degree from MIT in chemical engineering, the
Times
reported, after realizing that his previous degree in nuclear engineering would have required him to work closely with the government. At the time, according to the paper, the school was so implacably opposed to the U.S. government it was proposing that the Constitution be scrapped in favor of one that limited the government’s authority to impose “compulsory taxation.” The
Times
described LeFevre as also opposing Medicare and antipoverty programs and hinted that the school opposed government-sponsored integration, too. LeFevre told the paper that black students, of which the school had none, might pose a problem because, the
Times
wrote, “some of his students are segregationists.”

Charles Koch was so enthusiastic about the Freedom School he talked his three brothers into attending sessions. But Freddie, the outlier in the family, who had spent more time than the others studying history and literature, disparaged the curriculum as bilge. He said that LeFevre reminded him of the con artists in Sinclair Lewis’s novels.
Charles was so incensed by his brother’s apostasy, Fred told people later, he threatened to “deck” him if he didn’t toe the line.

DiZerega says that Charles arranged for him to attend a session at the school, too, and, he believes, paid his tuition. At the time, the only other faculty member he recalls besides LeFevre was
James J. Martin, an anarchist historian who later won a reputation as a notorious Holocaust denier for his “revisionist” work with the Institute for Historical Review, in which he described claims of Nazi genocide in World War II as “invented.” “
It was a stew pot of ideas,” recalled diZerega, who later became a liberal academic, “but if you grew up with more money than God, and felt weird about it, this version of history, where the robber barons were heroes, would certainly make you feel a lot better about it.”