June 11, 1999
More on the Pioneer Fund
New York Press Counterpoint (June 30, 1999)
Silent Partner: How the South's
Fight To Uphold Segregation Was Funded Up North
New York Millionaire Secretly Sent Cash to Mississippi
Via His Morgan Account 'Wall Street Gang' Pitches In
By DOUGLAS A. BLACKMON
Staff Reporter of THE WALL STREET JOURNAL
JACKSON, Miss. - On the afternoon of Sept. 12,
1963, a vice president of Morgan Guaranty Trust Co. sent a telegram
to the Mississippi State Sovereignty Commission, the agency created
by local politicians to fight the civil-rights movement and preserve
A Morgan client, the telegram said, was "setting
aside as an anonymous gift" stock valued at $100,000. There
was one condition: "Donor would like the fact and amount
of the gift to be kept confidential."
The matter was referred directly to Mississippi
Gov. Ross Barnett, who agreed to the terms and, that same day,
sent Morgan instructions on where to send the cash.
Once the money arrived in Mississippi, it was
funneled to an account in Washington, D.C., where segregationists
were launching a fierce campaign to defeat landmark civil-rights
legislation abolishing segregation in most public facilities.
And in the ensuing months, the mystery contributor would follow
up with additional, substantial gifts to help the cause.
For nearly four decades, the role of that donor
remained concealed in the files of the now-defunct Sovereignty
Commission. But last year, a federal judge ordered the unsealing
of more than 130,000 commission files. The documents triggered
a painful examination of some of the South's most heinous racial
crimes. Little explored, though, was the trove of ledgers, invoices
and correspondence recording the commission's finances.
Those records show large transfers of money by
Morgan on behalf of a client who turns out be a wealthy and reclusive
New Yorker named Wickliffe Preston Draper. Mr. Draper used his
private banker to transfer nearly $215,000 in stock and cash to
the Sovereignty Commission for use in its fight against the Civil
Rights Act. The entire budget for the effort amounted to about
$300,000. Adjusted for inflation, Mr. Draper's contributions would
be worth more than $1.1 million today.
The Sovereignty Commission files do more than
simply document one man's role. They show that some of the most
virulent resistance to civil-rights progress in the 1960s was
supported and funded from the North, not just the South. The files
also highlight the ethical issues that confront an institution
like Morgan Guaranty, the private-banking unit of J.P.Morgan &
Co., when it is drawn, even unwittingly, into a client's support
for repugnant causes.
Since the 1930s, Mr. Draper had been a client
of Guaranty Trust, which became Morgan Guaranty when it merged
with J.P. Morgan in 1959. It isn't clear whether he used Guaranty
to help with funding some of his earlier race related efforts,
such as a program in the 1930s to encourage white military pilots
to have more children, or research in the 1950s to prove the superiority
of whites and the dangers of mixed-race marriages.
When Mr. Draper died in 1972, Morgan was an executor
of his estate, overseeing distributions totaling about $5 million
to two race-oriented foundations. The primary beneficiary was
the Pioneer Fund, an organization Mr. Draper helped found and
which became known in recent years for funding research cited
in "The Bell Curve," a book arguing that blacks are
genetically inclined to be less intelligent than whites or Asians.
In his will, Mr. Draper instructed that after his death, the Pioneer
Fund use Morgan for financial advice; the fund did so for two
Morgan today says that "racism is deplorable"
and that the bank doesn't "support institutions that further
racist causes." Moreover, the bank notes that it has been
a consistent donor to African American causes, giving more than
$3.3 million of its own money to civil-rights-related groups since
the late 1960s.
Morgan insists that the Sovereignty Commission
transactions it processed for Mr. Draper were routine procedures
carried out on behalf of a client, over which the bank had no
influence or control.
"A thousand times a day, somebody sends money
to an organization that 30 years later looks really terrible,"
says Morgan spokesman Joe Evangelisti. "We can't tell our
customers how to spend their money."
Mr. Evangelisti says the role Morgan played was
no different from the way Wall Street banks today facilitate gifts
to organizations that could be equally controversial. He cites
donations made to Planned Parenthood (often criticized for its
pro-choice stance), or to the Boy Scouts of America (which prohibits
gays from becoming troop leaders), Morgan's policy, he says, is
to pass no judgment on any client's / Please Turn to Page A8,
Column 1/ activities, except in the "rare situation"
when "the wishes of a client ... conflict with the principles
that we stand for as a firm." In those cases, the firm may
close a client's account, Mr. Evangelisti says.
Since the Sovereignty Commission was a legal,
state-created entity, says Hildy J. Simmons, a managing director
at Morgan Guaranty, the bank had no choice but to follow its client's
wishes. It would be no different today. "As long as the receiving
party is legal, we have no discretion," says Ms. Simmons.
Morgan did close the asset-management account
it maintained for the Pioneer Fund after the furor erupted over
"The Bell Curve" in 1994, according to people familiar
with the situation. The bank won't give details on why it did
That option is something banks should consider,
says Thomas Donaldson, a business-ethics professor at the Wharton
School of the University of Pennsylvania in Philadelphia. "Good
bankers should have the words 'Know thy client' tattooed somewhere
on their chests," Mr. Donaldson says. "When the activities
of the client or customer reach the point where they offend vital,
deeply held values of the institution, you have to say no."
But many banks aren't comfortable with that posture,
and with good reason, says George J. Benston, a banking professor
at the Goizueta Business School at Emory University in Atlanta.
"One would like any institution to operate with its customers
neutrally. You don't want some bank officer making a judgment
on whether a customer's donations are moral."
Wickliffe Draper was, in many ways, a typical
Yankee aristocrat. He was born in Hopedale, Mass., in 1891. His
father was a top executive in the textile-machinery giant Draper
Corp. His mother was from a blue-blood Kentucky family. An uncle
was a Massachusetts governor. His younger sister married a nephew
of President William Howard Taft.
Mr. Draper reveled in adventure. At Harvard College,
from which he graduated in 1913, he excelled in shooting. A volunteer
in both world wars, he used the title "colonel" for
most of his life. In 1924, he inherited about half of his father's
estate, which was valued at the then-enormous sum of nearly $11
million. In 1938, he reported to his Harvard classmates that his
diversions over the 25 years since college included "shooting
jaguar in Matto Grosso and deer in Sonora, elephant in Uganda
and chamois in Steiermark, ibex in Baltistan and antelope in Mongolia;
pigsticking in India."
By the late 1930s, for reasons that still aren't
clear, Mr. Draper had also developed a fascination with racial
genetics. In 1937, he helped found the Pioneer Fund. The foundation
was devoted to supporting eugenics, a school of thinking which
held that races can be genetically "improved" through
mating practices, such as encouraging intelligent people to marry,
or sterilizing handicapped individuals. Many eugenicists of the
day, including some Pioneer founders, believed that whites were
superior to blacks in intellect and other attributes, says Barry
Mehler, a historian at Michigan's Ferris State University, who
has studied the fund extensively.
The charter of the Pioneer Fund said the organization
would support research and programs aimed at "race betterment,"
Scholarship programs would give special consideration to "children
who are deemed to be descended predominantly from white persons
who settled in the original 13 states." (In 1985, Pioneer
amended its charter, saying it supports programs aimed at "human
race betterment," and also deleting the reference to "white
Today, officials of the fund deny that it seeks
to prove the inferiority of any race and maintain that it funds
only legitimate genetic research, regardless of its findings.
The organization says its past and present leaders were not biased
for or against any race.
One of the first major projects of the Pioneer
Fund under Mr. Draper was a program to encourage officers of the
all-white U.S. Army Air Corps, predecessor of the Air Force, to
have more children. Mr. Draper and other directors of the foundation
believed that the Pioneer Fund should encourage a higher birth
rate among the best of the white race. So the fund offered to
establish annuities to pay for the education of any child born
in 1940 to a pilot who had already fathered at least three children.
Among the original Pioneer Fund directors who
endorsed the plan was John Marshall Harlan II, a prominent New
York attorney who would be appointed to the U.S. Supreme Court
in 1957. President Franklin D. Roosevelt's secretary of war, Harry
H. Woodring, personally approved the plan, according to Justice
Harlan's papers, now stored at Princeton University.
Memos to Mr. Harlan make clear that the plans
were fulfilled. "During the calendar year 1940 there were
12 children born to officers in the Army Air Corps ... eligible
to receive scholarships," wrote a psychologist hired to oversee
the program. Mr. Draper made arrangements, according to records
kept by Mr. Harlan, for an annuity to be established for each
of the children at Guaranty Trust, the predecessor to Morgan Guarantee.
After World War II, the never-married Mr. Draper
became increasingly reclusive. He stopped submitting updates to
his Harvard class and lived alone in Manhattan, in a spacious
East 57th Street penthouse duplex, surrounded by hunting weapons
and mounted animal heads. For several years, he paid young researchers
to visit his apartment and teach him genetic theory.
"For $10 an hour, I tutored Draper ... every
time I was in New York," says Bruce Wallace, a retired Virginia
Polytechnic University professor who adds that he disagreed with
Mr. Draper's views. "His contention was that the-geneticists
had all the figures but they were afraid to add them all up....
He was quite set on the idea that there was superiority and inferiority.
I don't think he would have placed blacks among the superior."
The theories embraced by Mr. Draper fell out of
favor after the war, and as the horrors of the Nazi regime became
apparent, many of his old allies distanced themselves from their
previous work. But through the 1950s, Mr. Draper continued to
push for research to demonstrate white superiority; he also espoused
sending American blacks, on a voluntary basis, to live in Africa,
says the Pioneer Fund.
In 1957, the state of Mississippi created the
Sovereignty Commission. Operating on an appropriation of about
$100,000 a year, the commission penetrated most of the major civil-rights
organizations in Mississippi, even planting clerical workers in
the offices of activist attorneys. It informed police about planned
marches or boycotts and encouraged police harassment! of African
Americans who cooperated with civil rights groups. Its agents
obstructed voter registration by blacks and harassed African Americans
seeking to attend white schools. On occasion, the commission also
took steps to discourage violence by the Ku Klux Man and other
Precisely how Mr. Draper became connected to the
commission isn't clear. But the relationship appears to have blossomed
shortly after a national address by President John F. Kennedy
in June 1963. The president proposed wide-reaching legislation
to outlaw segregation in public facilities. Mississippi leaders
scrambled to mount a vigorous fight.
They turned to John C. Satterfield, a brilliant
litigator from Yazoo City, Miss., and the immediate past president
of the American Bar Association. By the end of the 1960s, Time
magazine would label him "the most prominent segregationist
lawyer in the country."
Within days of President Kennedy's speech, Mr.
Satterfield headed to Washington to meet with top politicians
and leaders of major trade organizations and business groups.
The response was encouraging. "We in the South now have new
and important allies who never before seemed seriously concerned,"
wrote Erle Johnston Jr., director of the Sovereignty Commission.
"It was a thrill to me to see how the gentlemen at these
meetings looked to Mississippi for leadership."
The result was a new national lobbying organization,
called the Coordinating Committee for Fundamental American Freedoms.
The Sovereignty Commission provided money to rent a Washington
office and hire staff, and largely controlled the group from Mississippi.
On July 22, 1963, Mr. Satterfield received the
first private contribution to the cause, a $10,000 Morgan Guaranty
cashier's check drawn from Mr. Draper's accounts. It was deposited
into a special account in the Mississippi state treasury and logged
into Sovereignty Commission records with a simple notation: "Morgan
Guaranty Trust Co."
Over the next year, Mississippi leaders repeatedly
claimed that the campaign was being financed by broad grass-roots
support in Mississippi and across the U.S. In truth, contributions
from Mississippi citizens never topped $30,000. A surviving partner
of Mr. Satterfield's law firm says the attorney obliquely referred
to the source of the big money simply as "the Wall Street
On Sept. 12, Mississippi Gov. Barnett received
the telegram in which Morgan Vice President Arthur W. Rossiter
Jr. said $100,000 in stock had been earmarked for the Mississippi
commission. After the shares were sold, the gift totaled $98,612.
It was entered into Sovereignty Commission records as "Donation
from Morgan Guaranty Trust Company." Four months later, another
telegram arrived from Mr. Rossiter, this time signaling the impending
arrival of an additional $105,000 from Mr. Draper.
The money was derived from Mr. Draper's shares
of Reynolds Tobacco, General Motors, Standard Oil of New Jersey
and Addressograph-Multigraph. Morgan sold the stock at Mr. Draper's
direction, collected commissions on the sales, and moved the proceeds
into what it calls a temporary Sovereignty Commission account
at Morgan Guaranty. The Sovereignty Commission eventually forwarded
the funds to Washington.
Throughout, Mr. Rossiter insisted that the source
of the money never be disclosed. "This represents an anonymous
gift to your Commission and the donor has specifically requested
that the fact and the amount of the gift be kept strictly confidential,"
he wrote in one letter.
Mr. Draper's money buoyed a sweeping attack on
the civil-rights bill. The Sovereignty Commission's Washington
arm coordinated opposition efforts among less-organized groups,
pushed trade associations to fight the bill and lobbied Congress.
It sent ghost-written editorials to newspapers around the country
and bought ads in 500 daily and weekly papers. By April 1964,
the group had distributed 1.4 million pamphlets and mailings,
Sovereignty Commission records indicate.
The opposition effort was swathed in the issues
of protecting states' rights and . reining in an overreaching
federal government. The advertisements said the bill would create
an "omnipotent president" and a "dictatorial attorney
But commission records make clear that the effort
co-financed by Mr. Draper was grounded on bitterly racist notions.
Citing several white-supremacist tracts, an internal memorandum
by Mr. Satterfield said Americans had to be shown that the conditions
of blacks in the U.S. were the result of "heredity ... not
discrimination." At the heart of the matter, the memo said,
were "the intelligence, criminality and immorality of the
The Sovereignty Commission campaign triggered
thousands of letters. Despite that, Congress approved the Civil
Rights Act of 1964, and President Lyndon B. Johnson signed it
Frustrated by the defeat, Mr. Satterfield pressed
Mississippi's new governor, Paul Johnson, to help start a new
national organization, designed to demonstrate that the plight
of blacks in the South was the result not of "mistreatment
and discrimination" but the "completely different nature
of Negro citizens and white citizens," he wrote the governor.
"Certain groups in the east who prefer anonymity"
were ready to back the effort with $200,000, Mr. Satterfield wrote,
if the state would match the contribution. As a gesture of seriousness,
an unnamed northern benefactor had sent $50,000.
The donor was, again, Mr. Draper. His gift arrived
via Morgan on June 2, 1964. Gov. Johnson endorsed the plan, and
the Legislature quickly appropriated $200,000.
But the segregationists suffered another setback,
this time at the hands of their most rabid elements. Klan members
abducted civil-rights workers Michael Schwerner, Andrew Goodman
and James Chaney in the town of Philadelphia, Miss. The three
were beaten, shot to death and buried in an earthen dam. Six weeks
later, the workers' 1963 Ford station wagon was found burned along
an isolated road, still bearing Mississippi license tag H 25503,
a number logged into Sovereignty Commission files by an informant
a few weeks earlier.
The national outcry brought an end to the new
alliance between Mississippi officials and Mr. Draper. Gov. Johnson's
office was flooded with telegrams, many simply repeating the words
"justice, justice, justice." Increasingly isolated,
Mississippi leaders took at least symbolic steps to halt violence.
The state's own $200,000 appropriation was quietly returned to
the Mississippi treasury.
Later, the $50,000 from Mr. Draper was returned
to his attorney in New York, Harry F. Weyher, who deposited it
into the escrow account of his firm, records show. Mr. Weyher,
who has been president of the Pioneer Fund for more than 40 years,
says he doesn't recall the flow of funds, though he did remember
meeting with Mr. Satterfield in the 1960s.
Mr. Draper maintained his interest in the fight
to preserve segregation in the South. In the late 1960s and 1970s,
he sent dozens of checks to private academies that had opened
up to accommodate white families fleeing newly integrated public
schools, estate records show.
After Mr. Draper died in 1972, Morgan continued
to manage his holdings while the will was being sorted out. Five
years later, his assets were distributed according to Mr. Draper's
He gave about $1 million to family members, and
also bequeathed $3.3 million to the Pioneer Fund and $1.7 million
to the Puritan Foundation. (The Pioneer Fund isn't related to
the mutual fund of the same name.) The Puritan Foundation listed
as its address the law firm of Mr. Satterfield, the Mississippi
lawyer. In 1978, the fund was merged into another nonprofit called
the Council School Foundation, according to Rutgers University
Prof. William Tucker, who is researching Mr. Draper's activities.
That Mississippi group was created to support private schools
that catered to white students.
A State's Stigima
Citing bank policy, executives at Morgan won't
discuss whether the bankers who worked with Mr. Draper knew of
his racial leanings or the true nature of the Sovereignty Commission.
Still, Morgan was dealing with prominent Mississippi
segregationists at a time when the national media were focused
on the state, and when some on Wall Street and in New York's political
community were concerned about maintaining business ties there.
Mr. Barnett, the governor of Mississippi, had been pictured on
the front page of the New York Times in 1962 during a bloody standoff
with federal troops forcing the integration of the University
The Mississippi state treasurer at the time, William
F. Winter, said that Wall Street firms charged higher interest
rates on the state's bonds, due to the stigma of having ties to
Mississippi. In 1965, one such issue was canceled due to a lack
of bids on Wall Street.
Morgan says none of that is relevant. The bank
likely had clients supporting the civil-rights movement as well,
executives say. And, adds Mr. Evangelisti, "doing business
with a particular client doesn't mean that we endorse that client's
beliefs of actions." It would be "offensive" for
a bank to police how its clients conduct their affairs.
"That's a privilege of being rich in America,"
says Ms. Simmons at Morgan. "You can spend your money the
way you want to."
Douglas A. Blackmon, "Silent Partner:
How the South's Fight To Uphold Segregation Was Funded Up North,"
Wall Street Journal (Friday June 11, 1999) p. 1; A8.
Blackmon, Douglas A. "Silent partner: How the South's fight to uphold segregation was funded up North." Wall Street Journal. 11 Jun. 1999.