A New Decade, A New Direction: President Neff’s Elimination of Debt and Increase of Endowment during the Depression

by Savanah Landerholm

The decade of the 1930s required reducing Baylor’s indebtedness and increasing endowment during the Depression. Not only was the nation suffering economically, but Baylor started off the decade in serious financial and administrative despair. In the year following President Brooks’ death on May 14, 1931, Baylor spiraled into deeper decline. “Without President Brooks, endowment income was next to nothing, and with the Depression, student enrollment was dropping, thus reducing current income from tuition and fees drastically” (Blodgett, 2007, p. 170). Baylor became a probational member of the Southern Association of Colleges and Secondary Schools due to its financial condition. The board continued to meet but struggled to find anyone to fill the presidency, yet they knew that finding a permanent leader was essential for Baylor to survive. As a member of the board, Governor Pat Neff’s name had come up at the beginning of the presidential search, but they had not pursued him. However, the board eventually returned to Neff in desperation and he accepted.

Courtesy of The Lariat
Coverage of President Brooks’ death in the campus newspaper, Courtesy of The Lariat

On March 8, 1932, the Baptist General Convention of Texas endorsed and pledged their support of Neff as president of Baylor. Neff began as president in June. “With the unrelenting Great Depression as a formidable foe, Neff had reason to be discouraged when he sat at his desk that first day. Baylor was back in debt—Brooks’ absence from the field meant endowment income was virtually zero and enrollment was dropping” (Blodgett, 2007, p. 174). However, Neff was working on behalf of Baylor long before his first day as president in June 1932.

Tackling Baylor’s Indebtedness

Under President Brooks’ leadership and with the help of the Baptist General Convention of Texas, the Greater Baylor Campaign began in 1928 to raise funds for Baylor University. It was an effort to get the everyman to give to the work of Baylor, but it was particularly concerned with four areas, the first of which was to “retire indebtedness of long standing” (“Official Speaker’s Manual,” 1928, p. 4). The campaign ran for about three years (from October 8, 1928 until November 3, 1931), but after Brooks’ death, it lost momentum. However, gifts of all sizes trickled in for this campaign into the early 1930s.

In the Report of the Treasurer of the Executive Committee of the Greater Baylor Commission, the treasurer, Jim Nash, explained:

“The depression during 1931 has effected [sic] us adversely in two ways; Many individuals and churches have been unable to meet their pledges when due and in some cases have actually cancelled them. Also, the volume of new pledges securing during the year has been disappointing. We had hoped to secure several large gifts that would enable us to close the Campaign successfully, but thus far such gifts have not been forthcoming. On the other hand, we have been encouraged because of the fact that only a few of the pledges have been dishonored. Many of the churches and individuals who have been unable to meet their obligations on due date, have assured us of their intention to liquidate their obligations honorably and several have executed new notes payable on future dates” (Nash, 1931, p. 2).

The Greater Baylor Campaign was helpful, but it did not provide enough to sustain Baylor University during the hard times experienced nationally and the loss of a beloved president locally.

Upon taking office, President Neff started addressing Baylor’s debt by cutting costs. This included replacing staff with students who would work to cover tuition expenses (work-study concept), firing underused faculty, and encouraging faculty and staff to stay in the dorms and subtracting room and board from their salary. This meant the university had to pay less money in salaries and the empty dorms were being used. “Neff knew that cutting expenses was not the total answer; he had to get out in the field and persuade students to come to Baylor who might otherwise stay at home” (Blodgett, 2007, p. 177).

Even before Neff officially took office, he took a month-long trip around Texas to hand out brochures about Baylor in countless small towns. Nineteen days after Neff took office, on a Sunday that had been declared Baylor Day, he and other Baylor officials and faculty spoke in seventeen Waco churches. However, the national Depression meant less money for people to give—the supporters in Waco, at Baptist churches around the state, and other individuals. Still, in October 1932, the Baptist General Convention raised $88,000 in pledges to help clear Baylor’s debt (“Letter from Baptist General Convention,” 1932). Although this was of great assistance, pledges were slow to flow in due to public economic strain. For example, the Baptist General Convention gave Baylor a monthly appropriation of $416.67. But, since the appropriation was based on the offerings given, the Baptist General Convention was not always able to pay the full amount. In correspondence with President Neff, the Baptist General Convention apologized for only paying 85 percent, expressing hopes to make it up by the end of the year.

Though finances were tight and enrollment was down, Neff encouraged the faculty and cast a vision for a day when the campus would flourish and when new buildings would be needed. In 1933, he announced that Dr. J. B. Tidwell, after twenty-five years of service, deserved a building for his Bible collection and that Dr. A. J. Armstrong deserved a building for his growing Browning collection (Blodgett, 2007, p. 195). Neff laid the groundwork and gave hope that excited them for the day when Baylor would thrive again.

By November 1934, Neff reported to the Baptist General Convention that the school had paid every monthly salary and had not added any debt. This was a noteworthy accomplishment because when Neff began work at Baylor, the debt was increasing and faculty salaries had not been paid for three months. By 1936, Neff reported to the Baptist General Convention that Baylor had not borrowed any more money and was paying off debt from previous years (Dawson, 1931, pp. 26–45).

The breakthrough year came in 1937 when Neff reported that Baylor was out of debt and had paid off $453,837 in debt and interest since 1932 (Brooks & Harlan, 1981, p. 240). This was accomplished both through the funds from the Baptist General Convention and the money from the Greater Baylor Campaign. Meanwhile, Neff was reporting increased enrollment every year. Enrollment had declined by 100 students in the fall of 1932 when Neff took presidency. By 1935, Neff reported the largest enrollment in Baylor history, and it continued to rise each year. Although this was ultimately a sign of good health for the university, it strained the faculty and facilities (Blodgett, 2007, p. 187). Baylor needed to begin to plan for new buildings, but now with enrollment on a steady upward trend and debt eliminated, it was more realistic.

In a letter from September 17, 1938, Pat Neff writes to Mr. J. H. Frost, at First National Bank in San Antonio, about getting a loan to launch his first building project:

“I have been President of Baylor for six years, during which time we have not borrowed one dollar from anybody. This statement is significant, especially in view of the fact that when I came the University had not paid the salaries of employees for three months and we had no money. During these six years we have paid salaries each month promptly and we have paid back indebtedness…. During these lean years we paid Baylor University out of debt without receiving one dollar from any outside source. Since last November, Baylor University has not owed anybody anything for the first time in the history of the University. These statements have been made in order that you may understand that I am reluctant about borrowing money and paying interest” (Neff, 1938).

Though reluctant, Neff knew what the university needed and worked tirelessly to get it, just as he had to eliminate its’ indebtedness.

Building up Baylor’s Endowment

Historical Context

In the 1920s, Baylor conducted an Endowment Enlargement Campaign as a part of the Greater Baylor Campaign. The Official Speakers’ Manual brochure for the campaign lists “to provide additional endowment” as one of four reasons for conducting the campaign to secure $2,000,000, but very few gifts were initially directed toward the endowment (“Official Speaker’s Manual,” 1928, p. 5). Also, the brochure gives a comprehensive explanation of the importance for a university to depend on endowment rather than primarily depending on tuition from students. Describing the latter as an institution that “over night could be wiped out,” and stating directly, “the permanence of this great asset to Texas and Texas Baptists can only be assured by a large endowment” (“Official Speaker’s Manual,” 1928, p. 5). It even concludes the section with a claim that “all great universities have become great for two reasons: teachers and endowment” (“Official Speaker’s Manual,” 1928, p. 5). These strong statements suggest deep conviction that the endowment needed to increase. However, very little changed in the early years of the campaign.

Greater Baylor Campaign headquarters on campus, Courtesy of the Texas Collection

By April 1929, the Greater Baylor Campaign had raised endowment funds totaling $30,489.23, with an additional $92,833.35 pledged for the endowment but not yet given. All together this would amount to $123,322.58 in endowment funds, if everyone who pledged actually fulfilled their pledges (Nash, 1929).

Baylor’s endowment in 1929 totaled $566,979.22 (“Memoranda about Endowment,” n.d.). Though this may sound acceptable for this time, it was not considered substantial. For example, even though Harvard is a much older institution, their endowment in 1929 was just over 92 million dollars (“Harvard Expenses are $11,000,000 in Past Year,” 1929). This provides perspective that the amount raised (and pledged) for the endowment was not an impressive figure. However, just over a year later, with the generosity of the Hardin family, the endowment monies increased dramatically.

Major Shift

The 1930s were focused on increasing Baylor’s connections in major cities and working to increase the university’s network to find more donors. President Neff’s strategy was to increase connections through people who shared about Baylor wherever they lived. D. K. “Dock” Martin was a notable success at speaking on Baylor’s behalf, so he served in a more formal role of fundraising for the university. Others were simply Baptist parishioners who read aloud Baylor materials at their local church or club meeting.

Tidwell's booklet on University Endowment, Courtesy of The Texas Collection
Tidwell’s booklet on University Endowment, Courtesy of The Texas Collection

J.B. Tidwell wrote a booklet entitled Baylor University Endowment: Why, How, and Who. The exact date is unknown, but based on the content, it is estimated to have been from the late 1920s or early 1930s. The small stapled and embossed booklet seeks to answer the three main questions for readers (or listeners) contained in the title. Tidwell gives twenty reasons why, ten ways how, and fourteen people groups who can endow Baylor University (Tidwell, n.d.).

As a practical step, this booklet made giving approachable to the average person. Why give to Baylor University? Not only because Baylor is true to Baptist principles or because of what she may become, but also:

because of the service she has rendered to Texas and Texas Baptists. Her presidents and faculties have stood for every forward movement in government and society. Her students have led in every denominational enterprise. Take her men and their influence away and the denomination would be robbed of its prestige and power. Baylor has shown herself worthy of the best (Tidwell, n.d., p. 3).

How can people give to Baylor? Tidwell gives ideas ranging from endowing professorships to giving life insurance policies. During a time when money was tight for everyone, this booklet gave donors suggestions of nontraditional ways to support Baylor. Who can give? Tidwell creatively includes people from every group he can label from leaders of other denominational enterprises to Sunday school workers to Rich Baptists to Poor Baptists. Most people would fit in multiple groups, but nearly everyone would fit in at least one of his categories. All sixteen pages are filled with similarly compelling language, and it concludes with Tidwell’s challenge: “We can, we must, and we will” (Tidwell, n.d., p. 16).

The Role of Major Donors

On May 1, 1930, Baylor University entered into an annuity contract with John and Mary Hardin, who were responding to the Greater Baylor Campaign. The Hardins gave assets (government bonds and mortgage loans) of $400,000 as an annuity gift to Baylor. The Hardins would live off of eight percent, which they received every year as a part of the agreement (“Endowment Gift Agreement,” 1930). However, hardly nine months later, the Hardins gave $50,000 more in bonds to Baylor. The Hardins would get eight percent of the new total, $450,000 (Mason, 1935). The Baptist Foundation of Texas was appointed to manage the endowment account for Baylor.

Oftentimes one big donor provides great momentum for a campaign. John and Mary Hardin provided the push that Baylor needed in the 1930s, but the shocking reality is that the Hardins were able to do this for several other Baptist colleges and universities in Texas during this same time period. Nonetheless, the impact this family had on Baylor University was substantial. After their initial $400,000 gift and quick addition of $50,000 more, the Hardins continued to give several more large gifts.

In March 1932, the Hardins gave $100,000 more in mortgage loans. Off of this $100,000 gift, they would receive an annuity of 6%. By December of the same year, the Hardins gave $95,000 in the form of Frederick Hotel in Oklahoma, which was not included in the annual annuity payment. And finally, over a year later, in January 1934, the Hardins gave $200,000 (in the form of a note from Security National Bank of Wichita Falls and mortgage loans and bonds) (Mason, 1935). All of their gifts to Baylor totaled $845,000 and were turned over to the Baptist Foundation of Texas for administration. The annuities were broken down as eight percent on $450,000 and six percent on $300,000, totaling a payment of $54,000 a year to the Hardins. The Hardins’ generosity shifted the future of Baylor University.

The Role of the Baptist Foundation of Texas

Until the gift from the Hardins, it appears that Baylor managed their own endowment funds. However, with the contract of the Hardin Trust, Baylor agreed for the Baptist Foundation of Texas to manage and invest these endowment funds. The Baptist Foundation of Texas is a denominational organization, which began under the umbrella of the Baptist General Convention of Texas after an annual session in Amarillo, Texas, on November 14, 1930, and it was chartered as a corporation by the state of Texas a couple months later (“Additional Gift Annuity Agreement,” 1931). The Baptist Foundation of Texas took the responsibility of paying Baylor University the income from the Hardins’ gift of $450,000. The foundation would send the unrestricted endowment income to them regularly by the end of the 1930s. The Executive Board of the Baptist General Convention of Texas underwrote and agreed to pay the annuity (“Additional Gift Annuity Agreement,” 1931).

Having a third party manage the funds has its advantages and disadvantages, but at this time, with no evidence of an established development office, the Baptist Foundation of Texas alleviated pressure by properly caring for the Hardin Trust. This setup allowed people a secure avenue to give to Baylor while also having a clearly Baptist link. Still today, the Baptist Foundation of Texas operates “to manage endowment funds of Baptist institutions and agencies. Funds entrusted to us for management are invested according to the needs of the client ministries we serve to further their own mission” (“Who we are…What we do,” 2011). For many years the Baptist Foundation of Texas managed a part of Baylor’s endowment.

The Role of the President

President Pat Neff’s vital role cannot be ignored. From before he took office, Neff knew that it would be challenging work. In correspondence, Neff would express the tension between the need to simultaneously be on the road and be on campus. “He felt he had to go out and bring in students and money, and he spent many hours on the road” (Blodgett, 2007, p. 188). This included fundraising and networking to promote the university. Though the president of a university still plays an important role traveling around as the figurehead and fundraiser, Neff had a particularly grueling task since it appears that Baylor was operating without a development office or staff at this time. President Neff fulfilled the functions of the development office or found others who could. He used a little of both of these strategies by employing people that loved to share about Baylor, like D. K. Martin, who helped raise capital funds.

Because of his work in the 1930s, Neff clearly recognized the value of building an endowment and this carried as a primary focus into the next decade of his work at Baylor. From 1943-1945, Baylor began an Endowment Campaign, and the Baptist Foundation of Texas held an endowment campaign as well (of which, Baylor would get a slice of the whole). On September 5, 1944, a board meeting agenda shows us that Neff spoke to the Executive Board about Endowment: A Necessity for our Schools and Hospitals. Obviously, President Neff was committed to increasing the stability of the university through its’ endowment.

Conclusion

With the influence and leadership of President Neff, the decade of the 1930s for Baylor University shifted from a time of financial stress to financial success. Neff’s determination to see Baylor recover from indebtedness and tuition dependency was transformative for the university. During the time of the deepest national Depression, President Neff found economic success through the hard work and generosity of rich and poor Sunday-school-attending Baptists (Tidwell, n.d.). The 1930s resulted in a new direction for Baylor University as it headed into a decade of further growth.

References

Agreement between John and Mary Hardin and Baylor University. (1930, May 1). State of Texas, County of Wichita. The Texas Collection, Baylor University, Waco, TX.

Agreement between John and Mary Hardin and Baylor University, Additional Gift. (1931, January 19). The Texas Collection, Baylor University, Waco, TX.

Blodgett, D. (2007). The Land, the law, and the Lord: the life of Pat Neff (1st ed.). Austin, Tex: Home Place Publishers.

Brooks, S. P., & Harlan, A. E. B. (1981, 1982; 1983; 1984). Oral memoirs of Sims Palmer Brooks and Aurelia Emma Brooks Harlan. Retrieved from http://digitalcollections.baylor.edu/cdm/ref/collection/buioh/id/1471

Dawson, J. M. (1931). Brooks takes the long look. Waco, TX: Baylor University Press.

Harvard Expenses are $11,000,000 in Past Year. (1929, December 20). The Harvard Crimson. Retrieved from http://www.thecrimson.com/article/1929/12/20/harvard-expenses-are-11000000-in-past/

Letter from Baptist General Convention to Neff. (1932, October 1). The Texas Collection, Baylor University, Waco, TX.

Mason, G. J. (1935, November 31). Brief History of Annuity Gifts of John G. and Mary C. Hardin to Baylor University Endowment Fund. Baptist Foundation of Texas.

Memoranda about Endowment. (n.d.). The Texas Collection, Baylor University, Waco, TX.

Nash, J. (1929). Report of the Treasurer, Executive Board, Greater Baylor University Campaign (Financial) (p. 1). Waco, TX: Baylor University.

Nash, J. (1931). Report of the Treasurer of the Executive Committee of the Greater Baylor Commission (Financial) (p. 2). Waco, TX: Baylor University.

Neff, P. (1938, September 17). Letter from Neff to Frost. The Texas Collection, Baylor University, Waco, TX.

Official Speaker’s Manual: Greater Baylor University Campaign. (1928). The Texas Collection, Baylor University, Waco, TX.

Tidwell, J. B. (n.d.). Baylor University endowment: why, how, and who. Waco, TX: Baptist Education Board.

Who we are…What we do. (2011). [Organization]. Retrieved September 27, 2014, from http://www.bftx.org/who

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