Rhodes′ Financial Journey
By Daney Daniel Kepple
"Here was the chance of a lifetime," wrote President Charles Diehl of his decision to move Southwestern Presbyterian University, now Rhodes, from Clarksville, TN, to Memphis in 1925. “We had the opportunity to build an institution from the ground up, to make it efficient, to follow a chosen style of architecture, to have a harmonious unity.”
He went on to say, “Genuineness is characteristic of the heart of this institution, and we wanted this note sounded everywhere, even in the construction of the physical plant. It was to be enduring, for we were building for generations to come. It was to be beautiful, for the aesthetic side of man’s nature is important and a college of liberal culture dare not overlook it. It was to be genuine throughout, free from all substitutions and cheap, make-believe effects, for this college has a hatred for sham.”
To achieve his vision of building a magnificent residential place of learning from the ground up, though, Dr. Diehl was pushing the financial envelope. From the beginning, the college has been committed to maintaining the excellence and high ideals for which it is known, yet it has endured many years of financial uncertainty, a fact that may come as a surprise to many.
Before the move to Memphis, the college’s financials were rocky. A brochure published in 1927 titled “Face to Face with Hard Facts” stated: “Southwestern’s income has never been adequate,” and “through the half century spent at Clarksville, Southwestern never [received] adequate financial support …and as the result of this condition the college faced the alternative of closing or moving to a more strategic location.” The thinking was that locating the college in a large city that was a transportation hub would attract more students from afar. It did, and it does. However, tuition doesn’t cover everything.
Diehl’s passion for excellence required that no expense be spared in the drive to make the college comparable to the finest in the world, so it is not surprising that the institution was sometimes perceived as wealthier than it was. Far wealthier. The truth is that when Southwestern opened its doors in Memphis, it was $700,000 in debt—$8.1 million in today’s dollars.
Diehl tried valiantly to raise the necessary money. His correspondence of the early 1920s is filled with proposals to prominent Presbyterians all over the South, and refers frequently to just returning from or just leaving for a fund-raising trip. And yet philanthropic support was not forthcoming; he had no choice but to make a trip to the bank.
The staggering annual interest on the approximately $42,000 lien (some $487,000 in today’s dollars) was, in fact, the reason for the “Hard Facts” brochure, which clearly undertook to shock the Presbyterian synods into stepping forward. It said:
“The principal begins to fall due October 1, 1928, and a single default in interest or principal makes the entire sum due and payable immediately.
“This could mean only one thing—foreclosure.
“It would sweep away in one awful hour the accumulation of labor and love, giving and saving, sacrifice and suffering, prayer, hope and supplication, and leave the Presbyterian church of these four Synods in an educational morass, humiliated before humanity, defenseless amid sister denominations, shorn of self-respect, indicted before the whole world, and facing accusation before the final judgment seat of God.”
The strong language didn’t work, but neither did it stop. A development brochure from the 1940s chided, “The Synods cannot hope forever to operate the college and at the same time expect others to carry the financial burden.” Yet the same flier notes, “The science laboratories, aided by the General Education Board, are ideally equipped, affording better facilities than are found in many graduate schools.”
Here, in a nutshell, is the essence of the issue the college has faced throughout its existence: appearing to be wealthy while continuing to depend on philanthropic support to maintain an excellent institution.
“We’ve always been fighting above our weight class,” says trustee Bill Michaelchek ’69, chairman of Mariner Investment Group in New York.
The college struggled for more than 50 years before it began to gain an even footing.
How was that financial alchemy accomplished? Histories of the college document that Diehl attracted a faculty of very talented academicians and teachers, many of them Rhodes Scholars, but he did not do so by offering handsome salaries.
In 1934 he wrote: “In the heavy reduction in operating expenses last year, the faculty and the staff bore two-thirds of this burden by accepting further salary reductions .…The vision which Mr. Andrew Carnegie had, when he set out to make provision for college teachers, was characteristically fine and broad, so also are the policies of the great number of colleges which have the plan of the Sabbatical Year, which provide for retirement at the age of sixty-five, and which encourage the members of their faculties to continue their studies at the expense of the colleges which they serve. It has not been possible for us to enter upon any of these plans. Our men have gone forward steadily but without rest, and at their own expense.”
The situation was not a great deal better 20 years later. In 1956, President Peyton Rhodes, in a letter requesting a donation from cotton merchant A.E. Hohenberg, stated his goals for the year as follows: “To close our fiscal year on June 30 in the black and to get our full-time professors of long tenure up to a salary level equal to the average earnings of union bricklayers in Memphis before the recent increase in their pay.”
In fact, for the fiscal years ending in 1953 through 1960, the college began every year with a deficit budget, necessitating President Rhodes to spend the months between July 1 and June 30 trying to raise enough money to balance the accounts by year-end.
Eventually, several events combined to turn the tide. President James H. Daughdrill, noted for his business acumen, was also a gifted fundraiser. He continued the trend that began with the move to Memphis—shifting control and dependence away from the synods and toward other avenues of support, including Presbyterian churches and their members, Memphis businesses, alumni and others.
That shift was described in a 1999 letter from Presbyterian minister Paul Tudor Jones ’32 as “the program of finance that has been developing in place of the old Synodical scheme. Presbyterian local congregations and Presbyterian families and individuals have been in ever increasing numbers making their gifts to the college directly. It is Presbyterian people, not Synods, who have the money.”
Jones noted at the time that three Memphis churches—Evergreen, Idlewild and Second Presbyterian—have been, and remain, faithful financial supporters, and that several campus buildings were largely financed by Presbyterians: Burrow Library and Refectory, Buckman Hall, Trezevant Hall and the Bryan Campus Life Center.
A case can also be made that the infusion into the endowment in 1982 from the Bellingrath bequest of almost $22 million—at that time the largest gift in the college’s history—marked a turning point. There have been others since then:
- The Bonner Scholarships, established in 1992, are awarded to students with financial need and a passion for community service who devote 10 hours a week to service and leadership training in return for tuition assistance. In 2006, an endowment challenge was met with a gift of $4.5 million that ensured the continuation of the scholarship program.
- In 2002, Rhodes received $6 million from the Robert and Ruby Priddy Charitable Trust to establish Rhodes CARES (Center for Academic Research and Education through Service), a student service and community research program that also aims to make a Rhodes education affordable for students from lower- and middle-income families. In 2004, the Priddy Trust gave an additional $5 million to establish the Center for Outreach in the Development of the Arts (CODA).
- The transformative gift of $35 million from the Paul Barret Jr. Trust financed the new library, which has physically re-centered the campus and become the vibrant hub of academic and social life.
- Most recently, music industry legend Mike Curb awarded Rhodes $5 million to establish the Mike Curb Institute for Music, which promises to capitalize on the research and creative skills of talented faculty and students to help preserve the Mid-South region’s rich musical heritage.
“My challenge has been different from those of my predecessors,” current President William Troutt explains. “Through such generous gifts as these, we don’t have to worry about foreclosure, as President Diehl did. Today, Rhodes has a superior academic program and a magnificent campus. As the Rhodes Vision states, and as Dr. Diehl foresaw it, the college aims to provide ‘a residential place of learning that inspires integrity and high achievement through its beauty, its emphasis on values, its Presbyterian history and its heritage as a leader in the liberal arts and sciences.’
“Although there is a solid foundation in place, there is a critical need to build on that foundation to support students, faculty and staff at Rhodes. "The good news is that support for the vision is strong throughout the Rhodes community, so I am confident that we will succeed in doing what the Board of Trustees challenged me to do when I came here—to advance this college from one that is excellent to one that is truly extraordinary.” Once again, we have before us the opportunity of a lifetime.
Editor’s note: Special thanks to Rhodes archivist Elizabeth Gates and assistant comptroller Kyle Webb for their invaulable assistance in researching this article.