Interesting story behind how the Koch Brothers accumulated their wealth. It was from the helping hand of Josef Stalin.
Dance with the Devil
The good news in 1929 for young MIT chemical engineer Fred Koch was that he had successfully developed a superior oil refinement process with a business partner. The bad news is that he had a bitter lesson to learn about his laissez-faire competitors when virtually every major US oil company gobsmacked him with 15 year’s worth of patent infringement lawsuits. The net effect was that one cease-and-desist order after another was issued from the judge’s bench, and until the legal process could sort itself out, Fred Koch was – for all practical purposes – aced out of the US oil market. And the bills still needed to be paid.
So what to do? Fortunately, the Unseen Hand pointed the way to Soviet Moscow, where totalitarian dictator Josef Stalin was rolling out his first Five Year Plan for sweeping industrialization. And he was especially interested in oil engineers.
“We are the world’s greatest market, and we are prepared to order a large amount of goods and pay for them,” - Josef Stalin, 1932
Fred Koch answered the call, and signed a $5 million deal in 1929 to build 15 refineries in the Soviet Socialistic Republic, thus providing a substantial wet kiss to the cause of worldwide socialism everywhere. Koch and his partner provided equipment and oversaw construction and installation, and quickly became Comrade Stalin’s number one go-to refinery contractor.
Flouride in the Water
Koch Daddy Fred returned to Wichita, KS in 1933 having made $500,000 in profits through his business dealings with Josef Stalin. One might think that he would be graciously inclined towards the Soviet system, given that socialism treated him much better than his own litigious, monopolistic and cudgel-wielding US oil fraternity, but that was not the case. He hated the Soviets.
Not based much on logic or reason, mind you, but he hated them anyway. In 1961, Fred Koch’s pamphlet, “A Businessman Looks at Communism“, lends invaluable insight into Koch’s thinking process on this. Long on alarmist rhetoric, broad, rambling generalizations, and less-than-logical conclusions, this work is unsettlingly reminiscent of Glenn Beck in many ways.
Koch’s focus seems to be centered around one singular, eccentric individual and unlikely travelling companion – a Russian ex-pat Communist by the name of Jerome Livshitz. Livshitz took part in the 1905 revolution, and spent some time as a revolutionary in the US – mostly in jail. Although unconfirmed, the descriptions ‘alcholic’ and ‘paranoid/schitzophrenic’ have been attributed to Livshitz. Fred Koch apparently formulated his thought process about the clear and present danger of the Communist threat from listening to Livshitz, who would tell Koch how the Commies were going to infiltrate the US in schools, universities, armed forces, and “make you rotten to the core.”
Whatever negative predispositions to Communism Koch may have had, he kept them to himself until 1956 – a period of time which nearly coincides perfectly with the timeframe during which he was still doing business with godless Stalin. After a business trip to Soviet Russia, Fred funded a John Birch Society chapter in Wichita and opened a Bircher bookstore, which ultimately closed.
“Maybe you don’t want to be controversial by getting mixed up in this anti-communist battle,” Koch said in a speech to a Women’s Republican Club in 1961. “But you won’t be very controversial lying in a ditch with a bullet in your brain.”
While the once-influential John Birch Society eventually dwindled into conspiracy theories about flouride in the water – and sported bumper stickers like “Cut the Red China Connection”, which persuaded their own fellow capitalists to hide them under the bed – the lessons of the generation were dutifully passed along to Fred Koch’s sons.
Koch’s Josef Stalin connection was the deal that got the Koch family fortune rolling downhill fast. Seemingly, Fred Koch came to the conclusion that ethics were optional when it came to the chase for the almighty ruble dollar, and a few short years later, the Bush family apparently made a similar calculation when they signed a business compact with Adolph Hitler.]