Two years after the publication of his “East-West Theory of I and Hsia,” Fu set out in 1937 to search for the dawn of Chinese humanism and the origins of Confucian moral philosophy. The project, “The Disputation and Vindication of the Ancient Glosses on ‘Nature’ and ‘Destiny’” (Hsing ming ku-hsün pien-cheng) (1937) has been considered an illustration of the ideal combination of historical and philological approaches, an ideal incorporated in the name of the institute he established. But below the surface of his rigorous study were modern concerns. In the wake of the New Culture Movement, people had lost faith in the traditional Chinese value system, especially its moral philosophy. Many members of the May Fourth generation believed that the weakness of the nation was deeply rooted in its subjective thinking, introspection, passivity, moralizing, and mysticism. For this reason they had a deep animosity toward traditional introspective moral philosophy and thought it the source of the nation's ills. They proposed a positivistic mentality as the fundamental solution to these problems.

Several measures were taken to renovate the introspective and moralistic tradition, and the Movement for Rearranging the National Heritage (Cheng-li kuo-ku yün-tung) contributed to this enterprise. In a famous slogan, Hu Shih proclaimed that what was needed was a systematic critical reexamination of the Chinese tradition “to apprehend demons and beat ghosts.” A central purpose of this movement was to dispel romantic illusions about Chinese tradition by exposing its depraved state to the fullest extent.