A Financial History of Cooper Union
Cooper-Hewitt Mega-Philanthropy Ends, and Chrysler Revenues Level Off
In the 1950s, Cooper Union received the largest cash endowment gift in its history to date, from Peter Cooper Hewitt, the grandson of the founder and the inventor of the mercury vapor lamp. In 1966, a bequest of $5.7 million ($24.5 million today) was received from the estate of Princess Viggo of Denmark, a descendent of Peter Cooper. The latter was received just two years after Cooper Union President Richard Humphreys’ somber financial assessment,[i] and temporarily replenished the unrestricted funds that had been depleted by persistent cash deficits and the construction of the engineering building.
Princess Viggo’s gift was the last mega gift from the Cooper-Hewitt lineage. Time and again, from 1859 to 1966, Peter Cooper and his descendants rescued the institution, filling the void that the founder had hoped would be filled by others.
Meanwhile, the growth rate of the Chrysler revenue was not what it once had been. “Although the Lexington Avenue property income doubled in the following twenty years,” there was “a marked leveling off in recent years”. Humphreys lamented in 1964 that while the financial windfalls over the course of the first half of the 20th century:
“might strike one as true affluence…. never could figures be more deceptive, for education is not the bargain it once was any more than the dollar that finances it is the same.” “This institution faces once again the dilemma of 1898, the time before the financial breakthrough of 1899-1990…. A latter-day equivalent of Mr. Halstead or Mr. Carnegie would be warmly welcomed but is not to be counted on”.[ii]
Thus, as early as the closing of the Cooper-Hewitt Museum in 1963, and Humphreys’ announcement about Cooper Union’s condition in 1964, there was a clear and public warning that the institution might not be sustainable. Humphreys framed the three underlying structural causes of the unsustainability as: 1) the absence of transformative donations; 2) “a marked leveling off” of the Chrysler revenues; and 3) inflation (“the dollar that finances” education was not what it once was).
These have remained the structural causes of unsustainability ever since.
President Humphreys died suddenly in 1968, and was succeeded by John F. White in the midst of the transfer of the Cooper-Hewitt. White's entire presidency was consumed by Cooper Union's bleak financial prospects. He was forced to make one tough decision after another -- decisions that sparked repeated protest and battles over the unionization of the faculty.
In his Financial Report: 1969-1970, White built on his predescessor's historical analysis and sought to frame a sustainable model for the future:
“It is often assumed, incorrectly, that when Peter Cooper founded The Cooper Union in 1859, he provided a large initial cash endowment. In reality, he started his new institution for higher education with a five-story building, a miniscule endowment, and a hope that others would give it financial strength. His appeal, however, went largely unheard”.[iii]
White elaborated on President Humphreys’ structural diagnosis (Chrysler revenues were not keeping up with inflation) but with greater specificity:
“The college is too heavily dependent on investment income, which cannot keep pace with rising educational and general expenses”. “Under the long-term lease of the [Chrysler] property, increases in this major source of revenue are unlikely to average more than 3% to 4% per year. This is well below the average rise in educational and general costs.”
President White calculated that while in 1967-1968 Chrysler revenues covered 87% of educational and general expenditures, by 1969-1970 that percentage had dropped to 75%. As the percentage of the budget covered by the Chrysler building dropped, the remainder of the budget had to be covered by drawing down the unrestricted pool of funds.
[i] Richard F. Humphreys, “To Correct a Prevailing Impression…”, At Cooper Union, 1964 (Fall).
[iii] John F. White, The Cooper Union Financial Report, 1969-1970.