L. Ron Hubbard is widely rumored to have said "The way to make a million dollars is to start a religion." There are also variant rumors. For some reason, this is often mentioned on Usenet. Evidence is discussed below, but the short answer is that it's almost certainly true.
The Church of Scientology has actually taken German publishers to court for printing this story. Stern won (see below).
One form of the rumor is that L. Ron Hubbard made a bar bet with Robert A. Heinlein. This is definitely not true. It's uncharacteristic of Heinlein, and there's no supporting evidence. There is, however, inconclusive evidence that Robert Heinlein suggested some parts of the original Dianetics.
Another variant is that Hubbard talked of starting a religion to avoid taxes. Jay Kay Klein reports that Hubbard said this in 1947.
The Church's media guide tells reporters that the rumor is confused, and that it was George Orwell who said it. In 1938, Orwell did write "But I have always thought there might be a lot of cash in starting a new religion...". However, Robert Vaughn Young, who was Scientology's spokesman for 20 years, says that Hubbard learned about the Orwell quote from him. Young further states that he met three people who could remember Hubbard saying more-or-less the famous quote. Nor did Hubbard write a rebuttal of the rumor -- Young claims to have ghost-written the rebuttal in the Rocky Mountain News interview.
I found the following in books about Hubbard and Scientology:
"Whenever he was talking about being hard up he often used to say that he thought the easiest way to make money would be to start a religion."-- reporter Neison Himmel: quoted in Bare Faced Messiah p.117 from 1986 interview. Himmel shared a room with LRH, briefly, Pasadena, fall 1945.
"I always knew he was exceedingly anxious to hit big money - he used to say he thought the best way to do it would be to start a cult."-- Sam Merwin, then the editor of the Thrilling SF magazines: quoted in Bare Faced Messiah p.133 from 1986 interview. Winter of 1946/47.
"Around this time he was invited to address a science fiction group in Newark hosted by the writer, Sam Moskowitz. `Writing for a penny a word is ridiculous,' he told the meeting. `If a man really wanted to make a million dollars, the best way to do it would be start his own religion.'-- Bare Faced Messiah p.148. Reference given to LA Times, 27 Aug 78. Supposed to have happened in spring 1949.
"Science fiction editor and author Sam Moscowitz tells of the occasion when Hubbard spoke before the Eastern Science Fiction Association in Newark, New Jersey in 1947: `Hubbard spoke ... I don't recall his exact words; but in effect, he told us that writing science fiction for about a penny a word was no way to make a living. If you really want to make a million, he said, the quickest way is to start your own religion.'"-- Messiah or Madman, p.45. No reference given. Yes, the spelling of Sam's name differs: this book got it wrong, it has a "k". I don't know why the two books disagree by two years.
(Oddly, the same misspelling occurs in Eisenberg. From this and other similarities, it seems likely that Corydon is quoting the Eisenberg article, rather than quoting Moskowitz directly.)
The Encyclopedia of Science Fiction lists Sam Moskowitz as the first good historian of science fiction [among other things]. In 1994 Moskowitz wrote an affidavit which states:
"After speaking for about an hour at the meeting, Mr. Hubbard answered questions from the audience. He made the following statement in response to a question about making money from writing: `You don't get rich writing science fiction. If you want to get rich, you start a religion.'"
The affidavit states that this was the 7 Nov 1948 meeting of the Eastern Science Fiction Association, of which Moskowitz was the director.
Now, there is a problem with the three Moskowitz reports. Specifically, the Church obtained affidavits in 1993 from David A. Kyle and Jay Kay Klein. Both names are well-known in science fiction, and both say that they went to the 7 Nov 1948 talk by Hubbard. Both say that they didn't hear any such statement. Puzzling.
I believe that these dueling affidavits have met in court. Stern, a German magazine, was sued by the Church, and the suit was thrown out of court after they obtained the Moskowitz affidavit.
On 9apr94, firstname.lastname@example.org (Mike Jittlov) posted (about a conversation with Theodore Sturgeon):
Back in the 1940's, L. Ron Hubbard was a member of the Los Angeles Science Fantasy Society (when its old clubhouse was just north of Wilshire Blvd). Ted vividly recalled being a few yards from Hubbard, when he became testy with someone there and retorted, "Y'know, we're all wasting our time writing this hack science fiction! You wanta make _real_ money, you gotta start a _religion_!
Though I didn't ask, I think Ted would've mentioned it if the second person was Heinlein or another author of note. He had an extremely accurate memory, and I'd trust Sturgeon over anyone else's account.
Reportedly Sturgeon also told this story to others. Theodore Sturgeon was one of the truly great science fiction writers, and someone whose word and memories were trusted. (John W. Campbell commented that Sturgeon should have written the definitive history of SF fandom.) Mike Jittlov is a respected Hollywood filmmaker and stopmotion actor, and can be found on the net at "alt.fan.mike-jittlov".
Lloyd Arthur Eshbach was a science fiction writer and publisher between 1929 and 1957. His autobiography, says on pages 125 and 126 (about the events of 1948 and 1949):
I think of the time while in New York I took John W. Campbell, Marty Greenberg, and L. Ron Hubbard to lunch. Someone suggested a Swedish smorgasbord, and I had my first--and last--taste of kidney. Yuck! Afterward we wound up in my hotel room for related conversation.
The incident is stamped indelibly in my mind because of one statement that Ron Hubbard made. What led him to say what he did I can't recall--but in so many words Hubbard said:
"I'd like to start a religion. That's where the money is!"
Eshbach based his autobiography on detailed records and dated diary entries, and is therefore likely to be quite accurate on this point.
Harlan Ellison is a science fiction author and movie scriptwriter. In an interview, he has said such things as "I was there the night L. Ron Hubbard invented [Dianetics]". In a 1999 telephone interview, Mr. Ellison gave more details. In 1950, when he was 15, Ellison attended meetings of the Hydra Club. This was a New York club of science fiction writers, and he remembers Hubbard taking part in a discussion of how well a religion would pay. Ellison quoted the phrase as "what you need to do is start a religion", but did not claim to have remembered it word-for-word after 49 years.
Reportedly, a Vonnegut biography mentions the Hubbard quote. If anyone can find an exact reference, I would appreciate email. Randall Garrett also supposedly talked about this. Again, I would appreciate email.
To summarize: we have nine witnesses: Neison Himmel, Sam Merwin, Sam Moskowitz, Theodore Sturgeon, Lloyd Arthur Eshbach, Harlan Ellison, and the three unnamed witnesses of Robert Vaughn Young. There is some confusion and doubt about one of them (Sam Moskowitz). Two are reported via Russel Miller: one is reported via Mike Jittlov: one reported in his autobiography; one reported in an affidavit; and one reported to me in person. The reports describe different events, meaning that Hubbard said it perhaps six times, in six different venues - definitely not just once. And the Church's official disclaimer is now reportedly a flat lie.
Conclusion: He definitely said it more than once.
Bare-Faced Messiah, The True Story of L. Ron Hubbard by Russell Miller (N.Y.: Henry Holt & Co., 1987) ISBN 0-8050-0654-0. $19.95 London: Michael Joeseph Penguin Book Ltd, 1987. See the Access FAQ for reviews.
L. Ron Hubbard: Messiah or Madman? by Bent Corydon and L. Ron Hubbard Jr. a.k.a. Ronald DeWolf.(Secaucus, NJ: Lyle Stuart, 1987) ISBN 0-8184-0444-2 In 1992, from Barricade Books, dist. by Publishers Group West, $12.95. See the Access FAQ for reviews.
The dangerous new cult of Scientology by Arlene and Howard Eisenberg, Parents Magazine, June 1969, pages 48-49 and 82-86.
Lloyd Arthur Eshbach autobiography: Over My Shoulder: Reflections of the Science Fiction Era, Oswald Train: Publisher, Phila. 1983, limited edition)
Ellison interview: The Saturday Evening Wings, Nov-Dec 1978, p.32. Reportedly Ellison also said similar things in _TIME OUT_, UK, no. 332. Ellison informed me in a 1999 interview that the Wings article is only a unverified transcript of a casual conversation, although it is broadly correct.