Ed. note: This two part series addresses repeated media errors about the role of Charles Koch in the formation of the Institute for Energy Research (IER) in 1989. Part I below covers the history of the Institute for Humane Studies–Texas, the forerunner to IER. Part II tomorrow reviews the formation and early history of IER, then based in Houston, Texas.
Q1. Robert Bradley: A recent article in the Austin American Statesman (since corrected) tied Charles Koch to the founding of the Institute for Energy Research (IER) back in 1989. Since this erroneous association is oft-repeated, I want to develop the historical record with you, the first and only employee of IHS–Texas, the predecessor to IER.
First, Greg, explain how IHS–Texas came to be founded.
A1. Greg Rehmke: A long time ago, as I remember it, the Foundation for Advanced Studies in Liberty (FASL) and Olin Foundation put up money for three years of Economics in Argumentation. In 1981, or in year two, I started working for George Pearson in Wichita, where I resided for a year.
Q2. George Pearson worked for Charles Koch at Koch headquarters in Wichita, right?
A2. Yes. This was an in-kind donation, so to speak. But there were no donations from Koch entities. Or funding for travel or anything I can recall. George worked for Charles on projects that Koch did not fund, such as mine.
My Economics in Argumentation program had office space at first near George, then later a few hundred yards away in a separate Koch Industries building.
It was my task to raise outside funding (donations) to pay for program operations. The original three-year grant was to bring the program to be self-supporting.
The program had a part-time director, Robert Corn, for the first two summers. I was hired part time with a plan to work for Harry Langenberg in St. Louis six months of year. However, early success raising funds in Texas allowed me to work from Wichita for, I think, a full year before joining IHS in Menlo Park. I went on their payroll and continued to raise funds for debate program and for IHS.
Q3. I guess there was no energy orientation in your program except that oil and gas issues were a major area coming out of the 1970s’ hyper-regulation.
A3. Correct. And this was before the Global Warming issue. Energy (“scarce natural resources”) was the national debate topic. The 1975-76 topic was:
Resolved: That the development and allocation of scarce world resources should be controlled by an international organization.
The goal of the Economics in Argumentation program had little to do with oil or energy. The mission was to reach self-selected and motivated young people interested in public policy. George Pearson’s secretary was the wife of high school debate coach and helped her husband coach students, incidentally.
Q4. What led you to move to Houston?
A4. I had some successes that first year fund-raising with George Pearson accompanying me or arranging introductions. Some of my early supporters were Bev Armstrong of Texas Steel in Ft. Worth and Robert Perry Homes of Houston (with Ron Paul intro). These were $5,000 donations, which was a lot of money in those days.
Again, I was in Wichita for a year in 1982/83, then was transferred to IHS headquarters in Menlo Park where I worked on Liberty and Society programs with Walter Grinder. I was allowed to work on the debate program only on Fridays.
I had more fundraising success in Houston (this was before the oil crash of 1986). I met George Roberts at Rolland’s office and he arranged a meeting for me with Brock Hudson, Henry Groppe, Frank Liddell, John Mundy, George Watford.
After a year at IHS in Menlo Park, with trips to Houston and around country for debate workshops and for IHS seminars, I announced I wanted to move to Houston, which I did in October 1984, the same month IHS–Texas was designated an educational nonprofit by The State of Texas.
IHS–Texas was formed given the Texas donor base and the realization that Texas donors were not as likely to donate to a California nonprofit.
Q5. Who were the key Houston individuals for you?
A5. Rolland Storey, who had founded the Free Enterprise Education Center, offered me an office at his location at 4800 San Felipe Suite 440. George Roberts made most of the introductions above and was my mentor in this area. Paul Heyne recommended I meet with David Smith, so that was how I connected with David and his wife Charis.
Q6. Any contribution from Charles Koch?
A6. In all this time, I never had direct contact with Charles Koch. Never met him or talked on the phone, even the year I was working in Wichita with George. Never met him in the year at IHS. No money either—the idea was to branch out from the then-Koch network.
Q7: But George Pearson was an ‘in-kind’ contribution?
A7. Yes, in-kind. I was on my own, with Rolland Storey and George Roberts advising. I’d attend Heritage, Cato, and Liberty Fund events and try to raise funds for debate programs.
I was in touch with George Pearson about prospective donors, but I don’t remember details. John Blundell came to Houston to raise funds with me for IHS.
Q8: When was IHS–Texas founded?
A8: October 24, 1984. The Unanimous Consent of Directors and the Bylaws are dated December 12, 1984. The officers of the new organization were Leonard Liggio, President, and Walter Grinder, Executive Vice President, Secretary, and Treasurer. These were the same titles they had with the parent in Menlo Park, California.
The directors of IHS–Texas were the same as the parent: Charles Koch, William Law, and Jay Humphreys.
Q9. What was your title at IHS–Texas?
A9. Director of Programs.
Q10. And funding?
A10. Technically, I was funded by IHS out of Menlo Park, which is where the money I raised was going to as the tax-exempt organization. After its formation, IHS–Texas was where the money went and was disbursed.
Q11: What came next?
A11. IHS decided to hold their board meeting in Houston, not sure what year but likely near end of my time in Houston. Here, I met Charles Koch for the first time. I think the meeting was not long before I left IHS–Texas for FEE.
I remember Charles wishing me well at FEE and commenting that organizations with large boards often had management challenges and were usually run by staff. I think the first time I talked to Charles at any length (10 minutes) was at IHS’s 40th reception in DC (so 2001).
But things had changed in Houston with the further weakening of oil prices in 1985 and collapse in 1986. New fundraising prospects were scarce, and existing contributions were uncertain. So that is when I started looking to start anew outside of Texas.
Q12. How did the transition to the Foundation for Economic Education (FEE) come about?
A12. Rolland Storey’s programs were an arm of FEE with all their speakers, plus me and Ron Paul. So, I met Bob Anderson, executive director at FEE, who offered me the Director of Seminars position, which I accepted in late 1985. I concurrently moved to Irvington-on-Hudson, New York, FEE’s headquarters.
Q13. IHS–Texas led to the formation of the Institute for Energy Research (IER) in 1989 with a name change as a 501©(3) organization.
A13. Yes, I would later learn that.
Q14. But IER has time and again been associated with Charles Koch from the IHS side. But as you have stated, Charles’s role was passive, indirect.
A14. The overlap was with you, Rob, given your assumption of IHS–Texas in its last years on a volunteer, part-time basis with the summer seminar in Kerrville and then your founding of IER. Your father, who was a contributor to IHS–Texas, was also very involved, as I understand it.
Q15. Moving a Houston-based classical-liberal organization to energy and given your research-and-writing focus was a natural.
Q15: Yes, it was. And for the record, Charles Koch was not involved in this transition except for resigning from the IHS–Texas board along with the other IHS directors (J. P. Humphreys; W. L. Law) and officers Leonard Liggio and Walter Grinder. There was no contact with Charles Koch or anyone else at Koch, no request for funding, and no money received.
Q16: It was in independent start-up, then. I hope that sets the record straight given that IER’s founding was independent of Charles Koch and the Koch network. Thank you Greg.
A16. Thank you Rob