Winter 2009: Features
Please—Keep the Cow
Times may be tough, but Emory has weathered many a financial storm with innovation, optimism, and good humor
By Gary S. Hauk 91PhD
The economy in 2008 was not exactly good news for higher education, but in some ways it was old news for Emory. While many recall the Woodruff gift of 1979 and the relatively flush years for Emory that followed, the truth is that Emory has had far more lean years than fat. Emory was born in recession, was weaned on bankruptcy, and apprenticed to hard times for decades. The Great Depression was Emory’s graduate-degree program. It’s been a hard-knock life.
When Emory’s founders received a charter for Emory College in December 1836, President Ignatius Few set about gathering pledges to endow professorships. On the strength of those pledges the trustees then borrowed enough money to build classrooms and a chapel on the new campus. Six months later, in May 1837, a run on New York banks caused by panic in the investment markets forced a third of the nation’s banks to close and created losses of more than $100 million in two months (about $2.3 billion in 2008 dollars). Many of Emory’s generous promise-makers suddenly had no money to pay up their pledges, and the debt with which the College began life would take years to overcome.
After Few retired, President Augustus Longstreet, a best-selling author and gentleman of means, helped keep the College afloat by drawing on his own savings. When he resigned in 1848, after eight years in Oxford, he offered to write off the $4,800 the College owed him (about $135,000 in 2008).
It would not be until 1859 that the College’s income could meet salaries and other expenses. By the fall of 1860, enrollment was higher than ever, the budget was balanced, and things were looking up. And then came war.
The Civil War devastated the College, leaving in its wake both physical destruction of the campus and almost complete evanescence of the endowment, which had been invested in the Confederate war effort. Rescue came in a state “GI Bill” that paid tuition for poor and wounded Confederate veterans—enough to keep Emory on life support while it recovered from the blows of defeat.
Despite having to weather another panic in 1873, by the early 1880s finances had become somewhat stable, if fragile. Happily, the year 1880 and a stirring Thanksgiving sermon by President Atticus Haygood brought Emory to the attention of a Northern banker and railroad magnate named George Seney. For various reasons—including his interest in starting a railroad in Methodist-dominated Georgia—in 1881 Seney thought it good to help endow the little college in Oxford. Some cash for a new building (Seney Hall) and some railroad stock for the endowment seemed just the ticket.
And then, in 1884, a recession caused by railroad speculation took down George Seney’s Brooklyn bank and the value of the railroad stock he had given to Emory College—leading to a 22 percent drop in income that year. Haygood’s biographer, Harold Mann 47Ox 49C 50G, notes that it would take another three years for income to return to its 1883 level. In 1888 the endowment finally regained its 1884 value of $108,000 (about $2.5 million today).
Emory presidents’ reports and the minutes of trustee meetings give one the sense that running a college is a hand-to-mouth enterprise. Professional fund-raisers—once called “college agents”—have been on the scene almost from the beginning, and for Emory they have been vital, especially in lean times.
A fund-raising campaign from 1890 to 1892 raised $100,000 ($2.4 million today). A wealthy trustee had pledged one quarter of that amount as a challenge to the board, the alumni, and churches to raise one quarter each. But a depression in real estate values beginning in 1893 made it difficult for the challenger to uphold his pledge of cash, so instead he gave land he owned in Texas—land that turned out later to be worth quite a bit more than his offer.
Despite a recession lasting from 1893 to 1896, President Warren Candler’s administration (1888–1898) was able to eliminate the College’s debt, add $93,000 in contributions to the endowment, raise $16,000 ($413,000) for a new building, and break ground for a new library. Candler also worked with alumni and friends to create a fund for interest-free loans to needy students (shades of Emory Advantage!).
Not all fund-raising in the face of recession met with such success. At the turn of the twentieth century President James Dickey and the trustees planned an endowment campaign to raise $300,000. With impeccable timing, the campaign kicked off just as a yearlong recession began in 1907. While Emory gathered pledges for the entire $300,000, only $127,000 of those pledges had actually been paid by 1913. Before then the United States experienced yet another recession, and only the largesse of Asa Candler kept the college out of debt.
Of course nothing affected the budgets of Emory and every other institution in America quite like the Crash of 1929. Just three years earlier the University had launched the most ambitious fund-raising campaign in the history of the South, with the grand title “Ten Million in Ten Years” (about $120 million today). After a year things were looking not bad—$800,000 had been raised. But for some reason no more mention is made of the campaign in later reports of the president, and within another two years the issue became moot, as the country slumped into 25 percent unemployment and rampant bankruptcy.
Enrollment in 1932 fell enough to warrant closing one dormitory; President Harvey Cox announced salary reductions of 5 to 11 percent. Two years later salaries were cut a further 10 percent. Budget deficits grew yearly, exceeding $27,000 in academic year 1933–1934—fully 10 percent of the budget.
At last, by 1937–1938, the University was beginning to emerge from the hardship. Nine years after the Crash, salaries were fully restored to pre-Depression levels; the base salary for full professors was $3,600—$51,000 today—but President Cox noted that this was not on par with institutions that Emory wanted to compete with for hiring faculty.
One truly miraculous success story is the University’s cooperation with Agnes Scott College in meeting a challenge from the Rockefeller-funded General Education Board (GEB). Emory was offered $2 million if it could raise an additional $4 million, and Agnes Scott College was offered half a million for raising $1 million. As it turned out, the two schools raised more than $10 million, about $8.5 million of it for Emory.
The miracle is that anything was raised. As Agnes Scott’s president reported to the GEB in a letter dated January 1, 1942, the campaign had been announced on the day that Germany invaded Poland. And just as the campaign moved into its final month, Japan bombed Pearl Harbor. Despite these obstacles, the effort succeeded, and both Emory and Agnes Scott gained strength from infusions to their endowments.
Perhaps the biggest lesson in all this is how abnormal our own recent decades of prosperity appear in retrospect. If hard times of old reassert themselves, we may see more alumni follow the lead of President Haygood, who in personal bankruptcy in his later years could not pay his pledge to the College in money, so offered instead his handmade desk and a cow. No doubt, as in 1889, Emory will decline such sacrifice with a note of gratitude for the loyalty it bespeaks.