GW, one of the leading landowners in the District, is in good financial standing now, but that has not always been the case. More than once in its 179-year history GW found itself in significant financial trouble, saved once by Congress.
Struggling to become solvent and determine its educational mission, the Columbian College – GW’s name until 1904 – faced a tremendous financial crisis that threatened to bring the burgeoning institution to its knees.
Soon after its inception, the college, which had ties to the Baptist Convention, found itself in dire financial straits. While many of the college’s founders maintained a cheery outlook, some recognized the reality of the situation and appealed to a variety of financial outlets for loans. The attempts were generally unsuccessful.
In 1825 about $110,000 of unavailable money was floated for the acquisition of another building for the college along with various supplies, as well as purchasing some bank stock and paying off previous debts. With the amount of money on hand and the funds expected from wills and donations, GW’s total amount of debt in 1825 was $30,000, equivalent to $452,000 today, according to Lyle Slovich, the University’s assistant archivist.
School representatives made constant appeals to private citizens and the government in desperate attempts to finance the purchase of more space and supplies and to pay off debt. The college also appealed to the Baptist Convention for money, but the organization was more concerned with missionary work than education, its secondary goal.
Much of the responsibility for these actions fell squarely on the shoulders of Rev. Luther Rice, the treasurer of Columbian College.
The constant pressure on Luther Rice as treasurer and agent became increasingly severe, University Historian Elmer Louis Kayser wrote in his book, Bricks Without Straw. Facing him constantly were demands for running expenses and for meeting payments on outstanding obligations. So harassed was he that at times would ask his friends to refrain from telling of his proposed visits to College Hill for fear that he would be besieged by creditors were his presence known.
Rice was hounded constantly and ultimately became the scapegoat for the University’s financial troubles.
Some men have a genius for keeping orderly accounts, Kayser wrote. Luther Rice certainly did not.
Known for inscribing all debts and acquisitions together in the same book and for regularly making errors in financial presentations to the Board of Trustees, Rice’s ability and leadership were continually questioned.
The Columbian College’s financial troubles escalated in 1827 when classes were cancelled because the college could not afford to pay professor salaries. The school’s 77 students were dismissed. The future of the college was in extreme doubt.
If not for the actions of 10 students who signed letters outlining their intent to stay at the school, GW would probably not exist, or at least not exist as it does today. The college declared a vacation from May to September and set out to craft a plan to pay professors. In a last-ditch attempt to restore financial credibility to the school, on March 26, 1827, the Board of Trustees begged creditors for a two-year grace period in which they would promise not to file suit against them.
The students departed and promised to return, but, in another blow to the college, the professors refused to accept the finance plan. Responding to the dire straits of Columbian College and the public revelation that the college was never properly financed in the first place, Congress passed a bill transferring the school’s $30,000 debt to the U.S. government.
Following lawmakers’ lead, private banks began to forgive the school’s debt as well, including about $6,000 from the Philadelphia branch of the Bank of the United States. The Board of Trustees set tuition at $30 for the first semester and $20 for the second – equivalent to about $450 and $300 today.
Rice resigned and Columbian College President William Stockton also gave his resignation a few days later. Congress and several banks forgave the college for its debts and a firm financial recovery plan was put in place. After Stockton’s resignation and after a number of deals were cut and signed, the school seemed to find itself on the road to financial recovery.
