James Buchanan's Run-in with the Ford Foundation

Gordon L. Brady

This paper in honor of James M. Buchanan begins with his arrival as McIntire Professor of Economics and chair of the economics department at the University of Virginia in 1956. Having received his doctorate with high standing from the University of Chicago (1948), Buchanan gained several years' experience of successful research and teaching in public finance and social choice at Florida State University, where he served as chair. The paper focuses on the Thomas Jefferson Center in the context of the Virginia tradition of political economy, and its application for Ford Foundation funding in 1960-61.

The Thomas Jefferson Center

The Thomas Jefferson Center for Studies in Political Economy and Social Philosophy was established in 1957 by Buchanan and G. Warren Nutter, a colleague from the University of Chicago. As Buchanan explains in his memoirs, Virginia Political Economy was born in the foyer of the Social Sciences Building at the University of Chicago early in 1948.(1) The name of the Center was eventually shortened to the Thomas Jefferson Center for Studies in Political Economy, which reflected the movement away from philosophy towards an emphasis on economics.(2) A second explanation is that the name was simply too long.(3)

The Center was a community of scholars dedicated to the preservation of a social order based on individual liberty, an independent entity within the College of Arts and Sciences. The objective of the Center was to encourage students to understand the philosophical as well as the technical issues raised by problems of social organization. The Center's goals were clear. First, it was to create an intellectual environment to generate discussion of the basic ideals of Western civilization and of solutions to social problems most in accord with those ideals. Second, it was to encourage scholarship in broad problems of political economy and social philosophy as opposed to narrow disciplinary specialization. Third, the Center was to stimulate the permanent faculty and the graduate and undergraduate students to an awareness of the basic social issues of the times. And, fourth, it was to encourage research on particular problems of political economy and social philosophy. The staff was composed of faculty and scholars in economics, history, philosophy, and political science who wanted to extend their competence and interests beyond the narrowly technical subject-matter of their particular discipline.

The Center sought to bring in scholars from outside the University of Virginia. The first Distinguished Visiting Scholar was Frank H. Knight (1957-59). A number of outstanding scholars were mentioned as being of the caliber which they anticipated would hold this appointment: F. A. Hayek, John Jewkes, Lionel Robbins, George Stigler, Milton Friedman, David McCord Wright, P. T. Bauer, Michael Polanyi, Karl Popper, O. H. Taylor, Wilhelm Ropke, Gottfried Haberler, George Hildebrand, W. H. Hutt, F. A. Lutz, Leo Wolman, and A. A. Alchian. The Center's lecture series in 1957-58 included P. T. Bauer (Cambridge University); R. H. Coase (University of Buffalo(4)); and Charles E. Lindblom (Yale University).

Buchanan envisaged a simple organizational structure. The executive director was to act with the advice and counsel of the dean of the College of Arts and Sciences and the dean of the Graduate School of Arts and Sciences. The chairman of the Department of Economics or a representative designated by him was to serve as the executive director. Buchanan was the first executive director and Nutter was associate director. Leland B.Yeager, then assistant professor, was executive secretary. The advisory committee consisted of Colgate W. Darden, Jr., president of the University of Virginia, William L. Duren, Jr., dean of the College of Arts and Sciences, Lewis M. Hammond, dean of the Graduate School of Arts and Sciences, all of whom served as ex officio members. Charles C. Abbott, dean of the Graduate School of Business Administration, Rowland Egger, chair of the Department of Foreign Affairs and Political Science, and Hardy Dillard, professor of law at the University of Virginia, served as the working members of the committee. From its beginnings the Center was interdisciplinary and had a clear idea of its intellectual enterprise. At that time it was contemplated that the bulk of the support for the Center would be from foundation grants-in-aid from the Thomas Jefferson Memorial Foundation and the William Volker Fund. State and university funds would be used for office space and equipment for the Center, a small allowance for operating expenses, and the initial provision of salary for one clerical assistant.(5)

The proposal for the Thomas Jefferson Center reflected Jefferson's own vision of political economy. The University of Virginia began on January 25, 1819 in accordance with a plan largely developed by Jefferson. While the original schools as established by the General Assembly did not provide for a separate department of political economy, it was expected that this subject would be taught in the School of Law. In 1814 Jefferson had written: "In the philosophical department, I should distinguish, 1. Ideology; 2. Ethics; 3. The Law of Nature and of Nations; 4. Government; 5. Political Economy."(6) Jefferson emphasized the importance of political economy in the proposed curriculum on a number of occasions, but his death in 1826 prevented the realization of his plans for political economy, in which the moral philosophical aspect would be emphasized.

One of the strongest endorsements of the importance of political economy made by Jefferson was to Joseph C. Cabell, who collaborated with him in founding the University of Virginia. He stated that "there is no branch of science of which our countrymen seem so ignorant as political economy." He urged Cabell to undertake the translation of Jean-Baptiste Say's Traite d'economie politique, and wanted Say to be a member of the faculty of the Central College, the institution from which the University of Virginia evolved.(7)

Jefferson was familiar with other economists and was most impressed by the work of the physiocrats, in whose work he was well read. Struck by the lack of an English language treatise on political economy, Jefferson chose Comte Destutt de Tracy's Traite de la volonte, the publication of which had been forbidden under Napoleon. Jefferson commissioned a translation of de Tracy but, not being satisfied with the result, he himself revised and corrected the translation, to which he also wrote the prefatory note, and oversaw its publication in 1818.(8)

In the preface to The Economics Department at the University of Virginia, 1825-1956, Tipton R. Snavely notes that "[a] new and larger faculty is now guiding the department, and another chapter is being written, one that should eventually be added to this volume and that should form a more impressive and lofty chapter than those already recorded."(9) It is interesting that, from the perspective of the 1960s, Snavely viewed 1956 as a watershed year by which time the economics department had acquired its reputation as one of the best in the country. Although viewed as a southern institution, it gained increased recognition in the 1940s and 1950s through its doctoral program. Snavely acknowledges his debt to colleagues Rutledge Vining, James M. Buchanan, G. Warren Nutter, Alexandre Kafka, Leland B. Yeager, and Gordon Tullock, who, under the leadership of Buchanan, inaugurated the Virginia school of political economy.

The Ford Foundation proposal

Nutter informed the Ford Foundation of the Center's intention to submit a proposal in a March 31, 1960 letter to Mariam Chamberlain, assistant to the vice president of the Ford Foundation. Apparently Nutter knew Chamberlain since he also mentioned a recent visit by him and his wife Jane. Nutter invited Chamberlain to visit the Center in order to discuss informally the proposal he had in mind. She replied that a visit was not possible at that time, but an informal review of the proposal would be welcome, and noted that Mr. Neil, director of the Program in Economic Development and Administration, had been replaced by Kermit Gordon. She advised that Nutter should direct his inquiry to either her or Gordon.

The formal application for funds in support of the Thomas Jefferson Center was submitted to the Ford Foundation on August 5th, 1960. It seems that Buchanan's decision to submit a proposal to the Ford Foundation was based on the fact that the University of Virginia had never approached the Ford Foundation, which thus remained an unexplored and potentially very large source of funding. Buchanan found that in 1958-59 the University of North Carolina had received $773,100 from the Ford Foundation. Buchanan noted that several of these grants had been in the broad area of economics ($382,600) and that "on the basis of scholarly competence, our faculty is superior to that of North Carolina in this field."(10) He also observed that former UVA president Colgate W. Darden, Jr., "did not encourage applications to Ford, and, in one or two cases, actively discouraged preliminary efforts."(11)

On August 31st, 1960, Buchanan, Nutter, and Edgar F. Shannon, president of the University of Virginia, visited with Ford Foundation representatives Thomas Carroll and Kermit Gordon. In notes made immediately after the meeting, Buchanan observed that, from the outset of the meeting, the reaction of the Ford representatives had been "wholly negative."(12) Buchanan further noted that Gordon had stated at the outset of the discussion that any application of this nature must necessarily be considered in the light of the general policy of the foundation, and had observed that the Ford Foundation was moving in the direction of "research and graduate student assistance made on the basis of national competitions and less in the direction of fluid grants to particular institutions."(13) Gordon had explained the difficulty of discriminating among separate institutions when fluid grants were made. President Shannon had described the interest of the University of Virginia in the project and emphasized the unique position of Virginia in evaluating the institutions of the free society.(14) Buchanan had explained that this application was not for fluid research and graduate student support through the economics department, but rather should be considered on the basis that there was no other comparable program in the country, that the Center was a going concern, and that its success required continuity in support. Apparently in order to soften the blow of Ford's refusal to provide funding for the Center to use at its discretion, Carroll and Gordon had mentioned the possibility of personal travel grants to bring scholars with associated interests to the Center from other parts of the world. Although this was not discussed at the meeting, the Ford Foundation would thus have retained control over who visited the Center.

At this point, Gordon had specifically asked the question whether or not they considered the Center's program reflected a single "point of view." Buchanan defended the programs of the Center as sufficiently broad that they encompassed wide and divergent points of view that related to an interest in a common set of problems and to a common political and philosophical base, namely, a desire to preserve the free society.

The question of a single point of view was discussed at length, and Buchanan felt Gordon was sincere in his belief that neither Yale nor Harvard reflected a "point of view" in their departments of economics. Nutter cited his experience of seven years on the faculty at Yale and openly challenged Gordon. Gordon was surprised that anyone should charge that Yale and Harvard departments were biased towards a particular "point of view." One may interpret this exchange in one of two ways: Gordon was either naive or else economical with the truth. Carroll then appeared to sense the discussion as having established the notion that the Ford Foundation, being a national foundation, could not in fact promote a "point of view." Not to miss an obvious point and picking up on this important observation, Buchanan argued that it was precisely because Ford was a national foundation that the Center would seek funding from them. According to Buchanan, Carroll's comments at this stage of the conversation implied the possible support of the Ford Foundation. However, Carroll then retired from the conversation and Gordon attempted to return the discussion to the question of fluid grants versus national competition which he had stated at the beginning. The conversation ended with the commitment on the part of Gordon to communicate with President Shannon before the end of the year.

Upon his return to Charlottesville, Buchanan shared the details of the meeting with Ronald Coase who was about to return from England in early September. Buchanan thought that, since Gordon had a high opinion of Coase's work, Coase might visit with Gordon and provide another perspective on Virginia political economy. However, Coase's reflections on the meeting with Gordon and Oscar Harkavy of the Foundation and follow-up letters were equally dismal. Coase emphasized the serious research program of the Center and told them of the wide divergence of views on the faculty. Gordon remained unimpressed and the discussion continued. Gordon took offense at a statement in the Center brochure which indicated that the Center encouraged scholars who were "dedicated to individual liberty,"which raised a red flag to the Ford Foundation whose concern was that scholars should inquire into individual liberty rather than be dedicated to it.(15) Coase thought Gordon interpreted a belief in individual liberty as opposition to government intervention in the economic system. The Ford Foundation chose to criticize the Center for the orientation of its faculty, which the Center had stated was the study of the institutions that preserve individual liberty. Ford either mistakenly or willfully interpreted this to be the faculty holding a particular point of view, and this, rather than the competence of the faculty, was used as the criterion for evaluating the proposal. In a subsequent letter dated December 19th, 1960, Gordon announced that he had withdrawn from the evaluation of the proposal. But the damage had been done as he had sensitized the Ford Foundation staff to his concerns. Carroll soon departed to a deanship at the University of Maryland. Later, Gordon was appointed to the Council of Economic Advisors under President Kennedy.

The end result was that funding was not to be theirs. Ultimately, the frustration and disappointment of the Ford episode cast the department in a bad light within the university administration and led to harassment which did not end until the dissolution of the Thomas Jefferson Center in the late 1970s (will get date). However, further efforts were subsequently made to seek funding from the Ford Foundation, and a post-doctoral fellowship was obtained for the Harvard-trained James R. Schlesinger in 1962-63.

Concluding thoughts: What did we learn?

I suggest that the encounter with the Ford Foundation and the fall-out from the university administration had positive effects: they sharpened Buchanan's focus and strengthened his resolve and commitment to principle. This story demonstrates that Thomas Jefferson's vision of political economy can survive and transcend the hostility of major institutions, even that of his own university. I believe that his legacy of individual liberty under law -- with a Madisonian twist -- will surely endure, not least because of James M. Buchanan, whose life, work, and writings we honor on the occasion of his eightieth birthday.

1. Buchanan, J. M., Better than Plowing and Other Personal Essays, Chicago: University of Chicago), 1992, 95.

2. Brady, G., "Gordon Tullock: His Development as an Unconventional Economist, 1947-62, "presented presented at a conference in honor of Gordon Tullock, 22 May 1999, Tucson, Arizona. This statement was based on an interview with Tullock on 14 April 1999.

3. Buchanan, J. M., Better than Plowing and Other Personal Essays, (Chicago: University of Chicago), 1992, 94.

4. Now the State University of New York at Buffalo.

5. Letter and Enclosure 1 to James M. Buchanan to William L. Duren, Jr., dated 25 March 1957.

6. Letters of Thomas Jefferson and Joseph C. Cabell (Richmond, 1856), 386.

7. Say's work was eventually translated and published in the U.S. Jean-Baptiste Say, A Treatise on Political Economy: Or, the Production, Distribution and Consumption of Wealth, 2 vols., ed. Clement C. Biddle. (Boston: Wells and Lilly, 1821).

8. Antoine Louis Claude Comte Destutt de Tracy, A Treatise on Political Economy (Georgetown, D.C.: Joseph Milligan, 1817 [ie, 1818]).

9. Tipton R. Snavely, The Department of Economics at the University of Virginia, 1825 - 1956 (Charlottesville: The University Press of Virginia, 1967), viii.

10. Memorandum from James M. Buchanan to Edgar F. Shannon, 29 August 1990.

11. Ibid.

12. Memorandum from James M. Buchanan to Edgar F. Shannon regarding conversation with Ford Foundation, 31 August 1960.

13. Ibid.

14. Ibid.

15. Notes by James M. Buchanan regarding a telephone conversation with Edgar F. Shannon, 29 January 1961.