Ron Paul doesn't seem to know much about his own newsletters. The libertarian-leaning presidential candidate says he was unaware, in the late 1980s and early 1990s, of the bigoted rhetoric about African Americans and gays that was appearing under his name. He told CNN last week that he still has "no idea" who might have written inflammatory comments such as "Order was only restored in L.A. when it came time for the blacks to pick up their welfare checks"—statements he now repudiates. Yet in interviews with reason, a half-dozen longtime libertarian activists—including some still close to Paul—all named the same man as Paul's chief ghostwriter: Ludwig von Mises Institute founder Llewellyn Rockwell, Jr.

Financial records from 1985 and 2001 show that Rockwell, Paul's congressional chief of staff from 1978 to 1982, was a vice president of Ron Paul & Associates, the corporation that published the Ron Paul Political Report and the Ron Paul Survival Report. The company was dissolved in 2001. During the period when the most incendiary items appeared—roughly 1989 to 1994—Rockwell and the prominent libertarian theorist Murray Rothbard championed an open strategy of exploiting racial and class resentment to build a coalition with populist "paleoconservatives," producing a flurry of articles and manifestos whose racially charged talking points and vocabulary mirrored the controversial Paul newsletters recently unearthed by The New Republic. To this day Rockwell remains a friend and advisor to Paul—accompanying him to major media appearances; promoting his candidacy on the LewRockwell.com blog; publishing his books; and peddling an array of the avuncular Texas congressman's recent writings and audio recordings.

Rockwell has denied responsibility for the newsletters' contents to The New Republic's Jamie Kirchick. Rockwell twice declined to discuss the matter with reason, maintaining this week that he had "nothing to say." He has characterized discussion of the newsletters as "hysterical smears aimed at political enemies" of The New Republic. Paul himself called the controversy "old news" and "ancient history" when we reached him last week, and he has not responded to further request for comment.

But a source close to the Paul presidential campaign told reason that Rockwell authored much of the content of the Political Report and Survival Report. "If Rockwell had any honor he'd come out and I say, 'I wrote this stuff,'" said the source, who asked not to be named because Paul remains friendly with Rockwell and is reluctant to assign responsibility for the letters. "He should have done it 10 years ago."

Rockwell was publicly named as Paul's ghostwriter as far back as a 1988 issue of the now-defunct movement monthly American Libertarian. "This was based on my understanding at the time that Lew would write things that appeared in Ron's various newsletters," former AL editor Mike Holmes told reason. "Neither Ron nor Lew ever told me that, but other people close to them such as Murray Rothbard suggested that Lew was involved, and it was a common belief in libertarian circles."

Individualist-feminist Wendy McElroy, who on her blog characterized the author as an associate of hers for many years, called the ghostwriter's identity "an open secret within the circles in which I run." Though she declined to name names either on her blog or when contacted by reason, she later approvingly cited a post naming Rockwell at the anonymous blog RightWatch.

Timothy Wirkman Virkkala, formerly the managing editor of the libertarian magazine Liberty, told reason that the names behind the Political Report were widely known in his magazine's offices as well, because Liberty's late editor-in-chief, Bill Bradford, had discussed the newsletters with the principals, and then with his staff. "I understood that Burton S. Blumert was the moneybags that got all this started, that he was the publisher," Virkkala said. "Lew Rockwell, editor and chief writer; Jeff Tucker, assistant, probably a writer; Murray Rothbard, cheering from the sidelines, probably ghosting now and then." (Virkkala has offered his own reaction to the controversy at his Web site.) Blumert, Paul's 1988 campaign chairman and a private supporter this year, did not respond to a request for an interview; Rothbard died in 1995. We reached Tucker, now editorial vice president of Rockwell's Mises.org, at his office, and were told: "I just really am not going to make a statement, I'm sorry. I'll take all responsibility for being the editor of Mises.org, OK?"

The early 1990s writings became liabilities for Paul long before last week's New Republic story. Back in 1996, Paul narrowly eked out a congressional victory over Democrat Lefty Morris, who made the newsletters one of his main campaign issues, damning them both for their racial content and for their advocacy of drug legalization. At the time, Paul defended the statements that appeared under his name, claiming that they expressed his "philosophical differences" with Democrats and had been "taken out of context." He finally disavowed them in a 2001 interview with Texas Monthly, explaining that his campaign staff had convinced him at the time that it would be too "confusing" to attribute them to a ghostwriter.

Besides Ron Paul and Lew Rockwell, the officers of Ron Paul & Associates included Paul's wife Carol, Paul's daughter Lori Pyeatt, Paul staffer Penny Langford-Freeman, and longtime campaign manager Mark Elam (who has managed every Paul congressional campaign since 1996 and is currently the Texas coordinator for the presidential run), according to tax records from 1993 and 2001. Langford-Freeman did not respond to interview requests as of press time. Elam, president of M&M Graphics and Advertising, confirmed to reason that his company printed the newsletters, but said that the texts reached him as finished products.

The publishing operation was lucrative. A tax document from June 1993—wrapping up the year in which the Political Report had published the "welfare checks" comment on the L.A. riots—reported an annual income of $940,000 for Ron Paul & Associates, listing four employees in Texas (Paul's family and Rockwell) and seven more employees around the country. If Paul didn't know who was writing his newsletters, he knew they were a crucial source of income and a successful tool for building his fundraising base for a political comeback.

The tenor of Paul's newsletters changed over the years. The ones published between Paul's return to private life after three full terms in congress (1985) and his Libertarian presidential bid (1988) notably lack inflammatory racial or anti-gay comments. The letters published between Paul's first run for president and his return to Congress in 1996 are another story—replete with claims that Martin Luther King "seduced underage girls and boys," that black protesters should gather "at a food stamp bureau or a crack house" rather than the Statue of Liberty, and that AIDS sufferers "enjoy the attention and pity that comes with being sick."

Eric Dondero, Paul's estranged former volunteer and personal aide, worked for Paul on and off between 1987 and 2004 (back when he was named "Eric Rittberg"), and since the Iraq war has become one of the congressman's most vociferous and notorious critics. By Dondero's account, Paul's inner circle learned between his congressional stints that "the wilder they got, the more bombastic they got with it, the more the checks came in. You think the newsletters were bad? The fundraising letters were just insane from that period." Cato Institute President Ed Crane told reason he recalls a conversation from some time in the late 1980s in which Paul claimed that his best source of congressional campaign donations was the mailing list for The Spotlight, the conspiracy-mongering, anti-Semitic tabloid run by the Holocaust denier Willis Carto until it folded in 2001.

The newsletters' obsession with blacks and gays was of a piece with a conscious political strategy adopted at that same time by Lew Rockwell and Murray Rothbard. After breaking with the Libertarian Party following the 1988 presidential election, Rockwell and Rothbard formed a schismatic "paleolibertarian" movement, which rejected what they saw as the social libertinism and leftist tendencies of mainstream libertarians. In 1990, they launched the Rothbard-Rockwell Report, where they crafted a plan they hoped would midwife a broad new "paleo" coalition.

Rockwell explained the thrust of the idea in a 1990 Liberty essay entitled "The Case for Paleo-Libertarianism." To Rockwell, the LP was a "party of the stoned," a halfway house for libertines that had to be "de-loused." To grow, the movement had to embrace older conservative values. "State-enforced segregation," Rockwell wrote, "was wrong, but so is State-enforced integration. State-enforced segregation was not wrong because separateness is wrong, however. Wishing to associate with members of one's own race, nationality, religion, class, sex, or even political party is a natural and normal human impulse."

The most detailed description of the strategy came in an essay Rothbard wrote for the January 1992 Rothbard-Rockwell Report, titled "Right-Wing Populism: A Strategy for the Paleo Movement." Lamenting that mainstream intellectuals and opinion leaders were too invested in the status quo to be brought around to a libertarian view, Rothbard pointed to David Duke and Joseph McCarthy as models for an "Outreach to the Rednecks," which would fashion a broad libertarian/paleoconservative coalition by targeting the disaffected working and middle classes. (Duke, a former Klansman, was discussed in strikingly similar terms in a 1990 Ron Paul Political Report.) These groups could be mobilized to oppose an expansive state, Rothbard posited, by exposing an "unholy alliance of 'corporate liberal' Big Business and media elites, who, through big government, have privileged and caused to rise up a parasitic Underclass, who, among them all, are looting and oppressing the bulk of the middle and working classes in America."

Anyone with doubts about the composition of the "parasitic Underclass" could look to the regular "PC Watch" feature of the Report, in which Rockwell compiled tale after tale of thuggish black men terrifying petite white and Asian women. (Think Birth of a Nation crossed with News of the Weird.) The list of PC outrages in the February 1993 issue, for example, cited a Washington Post column on films that feature "plenty of interracial sex, and nobody noticing," a news article about black members of the Southern Methodist University marching band "engaged in mass shoplifting while in Japan," and a sob story about a Korean shop-owner who shot a black shoplifter and assailant in the head: The travesty is that Mrs. Du got five years probation, and must cancel a trip to Korea.

The populist outreach program centered on tax reduction, abolition of welfare, elimination of "the entire 'civil rights' structure, which tramples on the property rights of every American," and a police crackdown on "street criminals." "Cops must be unleashed," Rothbard wrote, "and allowed to administer instant punishment, subject of course to liability when they are in error." While they're at it, they should "clear the streets of bums and vagrants. Where will they go? Who cares?" To seal the deal with social conservatives, Rothbard urged a federalist compromise in their direction on "pornography, prostitution, or abortion." And because grassroots organizing is "plodding and boring," this new paleo coalition would need to be kick-started by "high-level, preferably presidential, political campaigns."

The presidential campaign Rothbard and Rockwell supported in 1988 was Ron Paul's run on the Libertarian Party ticket. In 1992, they were again ready to back Paul, until Pat Buchanan convinced the obstetrician to withdraw and back his conservative challenge to then-president Bush. "We have a dream," Rockwell wrote in that same January 1992 edition of RRR, "and perhaps someday it will come to pass. (Hell, if 'Dr.' King can have a dream, why can't we?) Our dream is that, one day, we Buchananites can present Mr. and Mrs. America, and all the liberal and conservative and centrist elites, with a dramatic choice….We can say: 'Look, gang: you have a choice, it's either Pat Buchanan or David Duke.'"

Carol Moore, a left-libertarian activist who opposed Rothbard, Rockwell, and Paul at the late 1980s Libertarian conventions that led to the paleo split, theorizes that the defeat made them bitter. "They had a tendency to be anti-PC," Moore told reason, "and it was really stepped up after they lost. They were really angry and not that funny."

They are less angry these days. Visitors to LewRockwell.com or Mises.org since 2001 are less likely to feel the need for a shower. One can almost detect what sounds like mellowing in Rockwell's reflections on the high and heady paleo days, unburdened by ominous warnings of the looming race war. Nowadays the fiery rhetoric is directed at the "pimply-faced" Kirchick, "Benito" Giuliani, and the "so-called 'libertarians'" at reason and Cato.

But perhaps the best refutation of the old approach is not the absence of race-baiting rhetoric from its progenitors, but the success of the 2008 Ron Paul phenomenon. The man who was once the Great Paleolibertarian Hope has built a broad base of enthusiastic supporters without resorting to venomous rhetoric or coded racism. He has stuck stubbornly to the issues of sound money, "humble foreign policy," and shrinking the state. He wraps up his speeches with a three-part paean to individualism: "I don't want to run your life," "I don't want to run the economy," and "I don't want to run the world." He talks about the disproportionate effect of the drug war on African-Americans, and appeared at a September 2007 Republican debate on black issues that was boycotted by the then-frontrunners. All this and more have brought him $30 million-plus from more than 100,000 donors; thousands of campaign volunteers; and the largest rallies he's ever spoken to, including a crowd of almost 5,000 in Philadelphia.

Yet those new supporters, many of whom are first encountering libertarian ideas through the Ron Paul Revolution, deserve a far more frank explanation than the campaign has as yet provided of how their candidate's name ended up atop so many ugly words. Ron Paul may not be a racist, but he became complicit in a strategy of pandering to racists—and taking "moral responsibility" for that now means more than just uttering the phrase. It means openly grappling with his own past—acknowledging who said what, and why. Otherwise he risks damaging not only his own reputation, but that of the philosophy to which he has committed his life.

Julian Sanchez is a contributing editor and David Weigel is an associate editor of reason.