The Bankruptcy That Built a Religion: Connections Part IV — Independent Scientology

Hi, and welcome to another Scientology Outside of the Church podcast. This is Season 14, Episode 4, Part 4 of our Continuing Connections series. This is going to be something I've never seen on YouTube, at least, and mostly just in LRH lectures. So we're going to get going here real quick. We're going to start off on a stage in Wichita. Picture this. 13 August, 1951, Wichita, Kansas. It's a hot day in August in Wichita. LRH on stage delivering the special course in human evaluation. There's 43 Wichita-era lectures in our lecture library here on AOGP, and this is one of them. This here in Kansas is one of the best documented stretches of the entire early LRH lecture corpus. So here's the chain's loop. In this very lecture, the man tracing his own derivation chain on stage was, at that moment, living through the crisis that would force the chain's next link. Twelve months earlier, Dianetics was a national phenomenon with foundations in six cities. Twelve months later, the word Scientology officially exists, and it was suggested by his wife, Mary Sue Hubbard. In LRH's driving to Phoenix, what happened in between happened almost entirely in this one city. I remember there weren't any cell phones in the 50s or anything like this, so nobody found out anything until they got to their destination because there was no way to get a telex to them or anything else. They had to wait until they got to a phone. So this was sort of the situation of he's on a trip to Phoenix, and we're going to get going here with a little bit more detail in the next section. That pretty much paints the picture for all of our listeners. And with this, because we have this inside of our archives, we know exactly what he was teaching on. We know week by week how he was breaking this thing down. And so as the walls start coming down around what was presented and what was there, now we have a full accounting. So this is good that we have that information. Yeah, and it's an interesting one here because you have a situation where this is just hard luck and bad stuff's happening, but there's no villain. The two men who both believed and a ruling that neither caused. It's just, it is what it is, kind of a situation. All right, so how they got to Kansas. Now this, the 1950, you have this boom that occurred, and then 1951, there's a fall. Looking at the rise, after May 9, 1950, the Hubbard Dianetic Research Foundation opens up, which opens up in Elizabeth, New Jersey, following up across the country. You had New York, you had Washington, you had Chicago, Honolulu, Los Angeles, courses full. The book stays on the bestseller list for months. Expansion is bought at maximum speed. And then the fold. The same speed runs the operation past its funding. Through 1951, the foundation's costs outrun their income. Branches are closing. The original Elizabeth Foundation winds towards insolvency with debts on its books. The boom's bill comes due inside 18 months of the book's landing. Now the lifeline here is, you have one supporter who steps in in Wichita, an oil man who had already funded the Foundation's Kansas branch. The operation consolidates in Wichita, 211 West Douglas Avenue, where LRH lectures and publishes through late 1951, including Science of Survival. The subject's whole institutional existence now runs through one building in one city on one man's money. Yeah, this is interesting because when you see this kind of expansion, like, and you see an organization that goes into power like that, I mean, you're expanding that quickly, like six cities back to back to back in a year and a half. And we talked about this kind of episode one, that there was a compression that was coming. We kind of alluded toward it. This is exactly what started to happen here. With everything that was expanding, everything that was going, it then gets collapsed into this one location. They try to survive. It goes into a danger condition. Right, and it's important to point out that this 1951, for any independent Scientologist listening or any critics that might say, well, you know, he was screwing it up from the beginning. This is all part of the developmental line. We didn't have ethics conditions. We didn't have financial conditions. Same thing. He didn't operate on statistics. This was all new to LRH as well. He had had a bestseller. He didn't expect it to be as big as it was. He was pretty young himself and still new to success. He wasn't doing this on credit, so to speak. He was doing it off of donations and people who were actual parties that were interested in the subject of Dianetics at the time. So that needs to be put into perspective as well. And after this, you'll see, as we detail this, he learned his lesson on how to go about these things more than once. Just to give a different viewpoint, my strength is admin, admin tech. I've studied a whole lot of admin. I'm a machine at OEC completion. Having done that, this sudden growth. I mean, he does talk about it much later in other materials, like how you need to set up for the growth. If the growth happens and you don't have administration set up to handle it, it's going to crush you. And literally, this is it. For me, this derivation here, this link shows where he would be an expert, even on the subject of how do you get back from when things collapse. But just to bring everyone back, at this point, you have an organization that's been built nationally, but now has to fit in one address. In 1950, 1951, there's no cell phones, there's no internet, there's no fast communication lines, but the communications somehow have to keep it sustained. And it just was not there. Like, this was inevitable, technically speaking. I mean, that speed was just way too much. And this is where we're at. And it's a different thing, because I've never actually had anyone bring this up. Like, that period, what actually happened? You have six cities collapsed into one address on one man's money. And the lecturing, here's the thing, though, the lecturing never stops. You have constraints that arrive, the evolution continues. Well, and this is where an old Wichita oil man came in. And he came in and bailed out the foundation. His name was Don Purcell, Don G. Purcell. And he was a neutral point, but he came with oil money. He came with receipts. He came ready to grow this thing. He was a, lack of a better expression, he was a true believer in the tech at the time and the way it was being delivered. And so from every account of that period, he was a real, genuine believer in Dianetics, and he wanted to be the one to back it. He was not just a casual, let me throw some money at it and see what sticks. Like, he wanted to make this thing grow. And so he funded the Wichita branch before it collapsed. And then when things started to fall apart, he was the one who actually rescued the whole operation. Now, this is all public record, so I'm just giving you what we know here. He financed the Consolidated Foundation. He served as its president with LRH as the chairman and VP, vice president. And he's not some background figure. So he actually showed up by name in eight surviving lectures. He was on the lines. He was helping to build. He was a part of the actual working scene day to day. This wasn't just some investor who was quiet. He was there checking things out, making sure that things were going to be working based on obviously being an investor. He wanted to make sure it was going to work long term. And this was a man who bet on what he believed in. Okay? Now, I want to put it out front that because of all this happening, all this expansion still going on, it's worth noting that later on, these two men, LRH and Purcell, their visions and their versions of the way things needed to go started to diverge. Purcell being the financier and also in the foundation, and the LRH obviously being the founder and the discovery of all this material, you know, they had these differing viewpoints. And so what shows up later is the way this divergence happened. It starts to come out later in litigation. It started to come out in how they move things along. And so we're documenting this and we're stating this because, again, this whole thing is talking about connections. This whole series is talking about how all of this stuff starts to come about. And you as an independent Scientologist listening now have the opportunity to hear, based on LRH's own testimonies and lectures that he gave, this thing starts to unfold. We have this accounting. And so when the story actually ends, we're going to break this down later on. We actually get to how this neutral register right now wasn't far off from being something totally different, but it all lays out in a very accurate way. So we have an accurate accounting. As a modern day example, you have one of the founders of OpenAI, along with Sam Altman, is Elon Musk. And Elon had a different view of how the company should go and should grow. And he and Sam had very large differences, which ended them up in court just recently. It's not any more dissimilar to what LRH was experiencing with Don Purcell. It all started out in a, yeah, we have a common goal. But as time went on, he saw that Don Purcell had a different viewpoint than he did. Same thing with Elon and Sam. It's the exact same situation. Modern as in past. As everybody is in ARC, everybody's, yeah, let's do this. But when other things start to enter in and there's all of this success and activity and everything like that. Whoa, whoa, whoa. I thought you wanted to do this. And whoa, whoa, whoa. I thought you meant that. This is exactly what happened with LRH and Don Purcell as well. I'll say this. And I actually just looked it up. Compared to 1950s currency, the dollar in 1950, compared to the dollar today. Okay. I want you to get an idea of what these numbers look like. Based on the numbers that we have, it looks like they were spending about, at the time, it was about 13.86 million in today's dollar. 13.86 million was spent. They got about $2.77 million in debt compared to today. Back then it was like $200,000 in debt. But they were, I mean, for that time period, that was a pretty substantial number and $2.77 million in debt. And so when Purcell came to bail it out, he was serious. Like he put his money where his mouth was, seriously. You look at it like the guy risked not just the money though, also his local reputation. I mean, he's a successful businessman, obviously. An oil man at that time, definitely his reputation was way up there. And what kind of conviction does that take in 1951, Kansas? That was happy. This guy was no bystander at all. He was a firm believer in the name on the building. And you hold the verdict. The ending, well, belongs to him. Right. Now, this leads us to what the killing blow was, that neither of them caused. So by early 1952, the courts determined the Wichita Foundation stands liable for the debts of the defunct Elizabeth New Jersey Foundation organization. Quenton just mentioned, okay? So these obligations collapsed the 1950 boom, all right? Corporate ancestor, half, well, actually three quarters of the way of a country away, land on this one entity still operating, okay? This would be like having eight McDonald's and all of them closed and there's just one left. And McDonald's went through similar things as well, just to note. So the Wichita operation was surviving, but not thriving. It could carry its own costs, but not all the weight of that burden combined on its own. So with this court ruling, the insolvency stopped. It stopped being a risk and becomes pure math. No decision made in Wichita produced this outcome. This was all things that had happened by places and people that LRH couldn't control because, like we said, the fastest thing they had was Western Union. Telexes didn't even exist. So, I mean, seriously. And that was Western Union back when you had to ride the horse. Remember, that was the original logo with the horse. And they were still on horseback at that time and just starting to pick up motorcycles, okay? So that was the fastest thing they had at the time. So you could see how this was a slow roll. And by the time everybody found out what was going on, it was far, far too late. So it's easy to see how this sort of thing could happen. So back in episode one, all of the endpoints was somebody's starting point. So, this is the dark version of that, and this had to happen, but out of this we get Scientology. All right. So the 1950s expansion's unpaid bills became the 52-court crisis. And this is all part of the Dianetics and Scientology developmental line and really is a situation of making lemonade out of lemons. Ultimately, we get to a place where the successor liability landing on the surviving entity. Everything fell on this one organization to try to keep it alive, try to make it work. And there was no financial exit left. There was no way that all of these lines and all of these financial debts could be sustained by this one organization. And so that was the mechanics of the liability at that time. It just wasn't no one's fault. It was just way too much at that moment. Yeah. I mean, you have two believers here reading that same ruling and on the same building. Both realizing the operation as it is. And it was basically finished. And that's what it was. The fatal blow. And it's just one thing to look at also. The fatal blow came from neither man. It changed back to the boom, the boom's own debts and liabilities, where it's where the connection is. So now, taking a look at February 1952, you have a petition, a resignation, and a college across town. The break here is dated, it's factual, and it's fast. Now, late February 1952, you have a petition date carried in the record in 22 February. The Wichita Foundation heads into voluntary bankruptcy, LRH resigns its positions, sells its stock to Purcell for a nominal figure, and within days opens the Hubbard College on the other side of Wichita, teaching independently while the foundation's affairs wind through the court. The show must stay, the show must go on, I guess. And then you have the auction. That spring, the foundation's assets pass to Purcell as purchaser, including the foundation name, the publishing rights, and the copyrights on the existing Dianetics materials. The founder walks out of the crash with his next lectures and little else on paper. What to watch, not the wreckage. What to watch here is, you've got this intrusive fact, which is the interval, the gap between the resignation and the new operation, and it's measured in days. This was fast. Whatever else February 1952 was, it was not a stop on the developmental line. The line was about to produce the biggest fork yet, and it needed a new name to do it. Right. So, basically, you get a court ruling, and he's had to sign over the rights to everything he created over the last 20 or so years. And within a couple of days, and I'm sure I've been to some of the restaurants that he and Mary Sue ate at in Wichita, where they were trying to plan their first move. So, this was a lot for him and Mary Sue to take in, and all of the Scientologists or Dianeticists at the time. And we do this all the time. And we will see this play out here as we continue and throughout this season. But this was the point where LRH had to take stock. Okay, what we had, what do we have, and what do we do with what we have? And so, I'm sure at some point within the last few weeks of this, he and Mary Sue Hubbard were talking about, Okay, we're in deep doo-doo, and we need to fix this. So, what did they do? They applied danger. And that is the condition that LRH would later create, almost 15 years later, an LRH policy. And so, the condition of danger was applied. And in so doing, they came up with a new word, based off of a German book from the 1930s, which was Scientology, with an IE. And you can find this book in used bookstores throughout Europe, as it was a European publication in German. And she was aware of this, and what it meant in the definition of Scientology was knowing how to know. Now, it's important to point out that LRH had come to realize that there was more to Dianetics than just the body, that there was a Thetan. Now, at the time, the term Thetan did not exist, believe it or not. And later on, LRH would depict this in a 1961 lecture on the briefing course. I've mentioned this a few times in our podcast, that the analytical mind became the word Thetan. So, these are all the connections and how they got laid into this fabric and timeline for Dianetics and Scientology. And that word, that word is now spoken, is now out there. And even the meter comes on the table around spring 1952 in Wichita. So, we start to see a pivot happen after the bankruptcy, after the resignation and all the stuff got signed over and all that stuff. After all of this, in the middle of all this wreckage, they're, like you said, sitting at this cafe or whatever, having these conversations, and they're trying to figure all this stuff out. And while the bankruptcy is still in motion, LRH begins to teach on a new subject. It's called Scientology. And it's not necessarily a rebrand of convenience, because the copyrights of Dianetics material and stuff like that was handed over to the purchaser. And the research itself, you know, has moved past the 1950s books. LRH, like you said, Jonathan, LRH had already started to recognize that, wait a minute, there's something back of the mind. There's something that's still there that is aware of being aware. And so, with this, this quote-unquote rebrand of this shift starts to take place. And the constraints and the evolution arrive all in this one event, all in this happening. And so, the receipts we have is this. In March of 1952, Wichita, okay, included in a lecture, it's called Indoctrination in the Use of the E-meter Part 1, okay? And the title alone kind of starts to suggest that there is this new way of doing things. There's this new instrument that we can now use. And weeks after the resignation, this instrument starts to get put into how we can start to move the needle, no pun intended, or maybe a little bit unintended. How we can move the needle in Scientology, and the meter now is on the table, and we can start to make things happen. So, this chain position with the word is that every episode that we're going to be talking about has been tracing up to this point. And now flowing into the new subject, which is Scientology, this is the moment. This is that pivotal moment. And I use the word pivotal literally. This is the pivotal moment where things start to get interesting. And the name arrives, and the name represents a triumph over the bankruptcy, over the loss of the ownership rights, over all this stuff. And this constraint forces an evolution. And this episode and the continuing episodes will kind of show you how all this stuff continues to evolve. And I think it's so fascinating that we're talking about this. And it's all hinged upon this new word, Scientology. Jonathan, you were saying? Well, it's funny how, like I was saying, you're making lemons. You're making lemonade out of lemons. I always get that backwards. Because at the same time, there were these personal connections going on, which we will detail in full as we move forward throughout the series, that nothing happens by accident. Everything happens for a reason. And if these things hadn't unfolded in the way that they did, we would not be here today talking about it in this podcast. Literally. These things had to happen. So, you can see the line. And this goes all the way back. And we will trace these connections as we go on. That sometimes, out of the worst things come the best. And those bad things actually lead to the best outcomes. And that's something that I really want to stress in all of this. Because there was a reason that it happened. And you're going to find out why. I love it. I love it. So, then the word Scientology was first taught in the shadow of the bankruptcy. And then there's a meter that's now on the table. The meter is now on the table. And then all of these things show up in this one event with this evolution that's now on the lines. Yeah, I mean, it's quite interesting how this reframes everything. Like you look at the word and how it lands now that you know when it was first spoken and how it started in like mid the bankruptcy and everything that was happening. And then in 1952, April, there's a drive to Phoenix. Along, what was this, 1405 North Carolina Avenue. That's where the subject changes states. But then there's the move. So, April 1952, LRH leaves Wichita for Phoenix, Arizona, where the Hubbard Association of Scientologists sets up at 1405 North Central Avenue. There's that address. The new subject gets a new city, a new organization, and an open road between it and the bankruptcy court. Now, what does Phoenix become? Over the next two years, out of that address, it produces the Philadelphia Doctorate Course aftermath, the 1954 ACC, which is the Advanced Clinical Courses, and the Phoenix Lectures. The material are episode six is built on that. The most source crediting stretch of LRH's lecturing life happens immediately after the hardest luck stretch in his organizational life. The seasons through line here is, you have Wichita that didn't interrupt the developmental line. It renamed it, instrumented it, and relocated it. Three episodes ago, the subject was a bestseller. Now, it is named a subject with a meter and a Phoenix address. Every element of that sentence traces to the collapse. And so, with this relocation over to 1405 North Central in Phoenix, we see this starting to produce something new in earnest. Like, it's no longer in Wichita. It's now in Arizona. We see a whole new organization starting to develop here. So, I think it's really interesting. It's like a fresh start to the subject of the study of the mind. Psychology, that's what the word means, actually. Like, the study of the mind. Suddenly, it's something else. But he held to the facts. What the record shows is output. The densest lecturing years of the decade follow immediately after the change. Yeah. Well, he had heard and gotten letters from people in Phoenix, Arizona that led him to believe that he needed to start with a fresh slate. And so, he and Mary Sue set off. I've actually driven, for the most part, the same path. What was it? 52 years later on an extremely cold and snowy, blizzard-ridden, polar vortex night and next day from Wichita to Phoenix. And I've made that whole stretch myself. And it's a flat, lonely drive. And then you get into the Rockies, into New Mexico. And it becomes beautiful. And I can only imagine what was going through their minds at that time. That they were basically starting anew and fresh. Because Phoenix is where the axioms were founded. And this was an extremely important period. And I know that he had to be formulating these things. Because there's not a whole lot to do when you're driving except think. And he was blotting out how he was going to get all of this on paper. And in what would later become the Q's, logics, pre-logics, and Scientology axioms, as well as the Dianetic axioms, came out around the same time. And all of this happened in Phoenix. Now, this leads us to the next portion of this podcast. In the Journal of Scientology, issue 36G, this was a few months after, from April to September, and a couple of years, 1954, published from Phoenix on the front page, Dianetics and Scientology Organizations United Again. LRH says, in a surprise action, John Don, sorry, Freudian slip, Don G. Purcell, has offered to L. Ron Hubbard and the Hubbard Association of Scientologists International all the corporation's books, properties, and copyrights of Dianetics. This was completely, completely unexpected. Don had a change of heart. So, the offer contained the line, Anything I've got that bears the label, Dianetics, is yours for the asking. Just say the word. The page also prints the journal's own framing. Don Purcell, excuse me, Don Purcell's action was motivated by no other factor than his goodness of heart and probably his feeling that unity of the new and remaining organization, organization organizations could be brought about again. Rights, books, ledgers, you name it. Science of survival named, rosters and files were all returned. So, it wasn't a villain, it was just a crappy situation is what it comes down to. After two years of contest and litigation between the two camps, the story actually ended in a voluntary gift from Don and printed, thank you. Whatever bitterness that was there between the two of them held, the period document that closes our Wichita chapter closes it in exactly the register this season keeps. Two believers. And they knew one thing, and that was that the technology worked. And all of this other stuff was unimportant. They kissed and made up, basically. Well, very well done, Don. So, that brings us to what happens next. Well, also, too, I think that the chain is noteworthy because returning those copyrights for Dianetics and Science of Survival, whatever, those, both on the Dianetics line and even on the Scientology line, all run together up to about 1954, because about two years of battling or two years of dealing with all this, up until 1954. And so, the archive, like you said, the developmental line, the technology and the workability of the technology, all that was able to be preserved because of this gesture by Don Purcell and making sure that we were able to keep this in and keep this going. And so, I think that was really notable. Yeah, I mean, you have the man who bought the wreckage, giving it back, unasked for. Like, that's quite something. That's definitely quite something. So, you have the Wichita story ending with a gift. Anything I've got that bears the label Dianetics is yours for the asking. Just say the word. No villain. The period record says so itself. Right. And that's not something that happens very often. But what it tells you is that Don understood the greatest good for the greatest number of dynamics. That's really what happened. And so, where this puts us is you had this organization that collapsed, it lost its name, and okay, so what do we learn from all of this and how do we move forward? So, by late 1954, even Wichita was closed by both of these guys, okay? And they said, okay, let's let bygones be bygones, and we're going to just move forward. Here you go, Ron. Continue your work. So, this ends up with the meter, what we would later know as the meter, that was on the Wichita table in March 1952. And LRH moved on through all of this. And this would include the Milestone 1 lectures and so on. So, these are the connections. In the next episode, the meter that heard its own lecture. Mathison's Electro-Psychometer, the credit LRH gave him on tape. The split told in conflicting accounts, as conflicting accounts, and the fork that ends with a theta meter on AOGP's own remote lines today, and soon to be our own meter as well. More on that soon. So, we hope you've enjoyed this podcast and the delineation of how Dianetics became and shared the table and the libraries with the subject of Scientology, and how all of these things move forward. Anything from you guys before we close for the day? Is that right? Yeah, it's actually an interesting thing here. You've got, we're going from Kansas to the meter to our own lines in 2026. The next episode is going to be very interesting because it connects them in one unbroken run. It's going to be cool. I would say for me, the fact that all of this kind of starts to come together in these stories, and I'll say it this way. I mean, obviously, this is history because these are accounted, documented events, whether it be through lectures or through court filings or whatever. But I think that understanding the history and understanding what LRH went through for all of this, understanding how it went back to even, you know, Kant and, you know, Mathison. Freud. We're talking about Freud. Yeah. All of these. I think it starts to make it more real, where it's like, it's not just this made up concept. It's actually a workable, discoverable, walkable journey. And so I like this. Yeah. So, you know, out of the worst things come some of the best things, and there's quite a bit more to come. We'll see you for the next podcast in the next couple of days. We hope you're enjoying the series on connections. Namaste, and we love you. Bye-bye. Peace. Yep.