A REPORT ON FINANCES
Showing for 1942-43 Greatly Exceeds College Hopes
A FINANCIAL REPORT MORE FAVORABLE than the College had any reason to expect at the start of the year was presented to the Dartmouth Board of Trustees last month by Halsey C. Edgerton '06, treasurer of the College. This summary of the fiscal year 1942-43, prepared as the annual report of Mr. Edgerton and Max A. Norton '19, bursar, was made at the fall meeting of the Board in Boston on November 12, and was received with more than usual interest because it covered the first full year of operation under the accelerated wartime program and the first involving contractual relations between the College and the Navy.
Major news of the report was that the College had been able not only to meet all its operating expenses for 1942-43 but also to put aside a substantial sum as a Postwar Reconversion Reserve, designed to prepare Dartmouth for the exigencies of the period immediately following the close of the war. The Alumni Fund, again playing the key role in Dartmouth's finances for the year, provided 138,180.06 to cover the difference between operating expense and income, and from its record-breaking total for 1943 also produced $189,389.96 for the postwar fund which President Hopkins, the Trustees, and alumni leaders have agreed upon.
In addition to the Alumni Fund, two important factors in the past year's favorable financial showing were the accelerated, three-term schedule, which produced in 1942-43 some of the income which normally would have been received later, and the operation at Dartmouth of the Naval Indoctrination School, which while not intended to create a profit did utilize a substantial part of the College plant and thereby prevent a loss which would have been incurred through its non-use by the regular College. The present Navy V-12 Program, in which the College provides instruction as well as plant facilities and meals, did not begin until July 1, 1943, and therefore does not come within the 1942-43 financial report.
Income from tuition under the accelerated schedule represented three full semesters in the case of upperclassmen and two and three-fifths semesters in the case of freshmen, but even so it decreased by about $50,000 from the previous year, due to reduced enrollment. Tuition from the short intersession, which the College conducted in May and June in order to bring its academic calendar into line with that of the Navy V-12 Program, was not treated as part of the income for the year 1942-43 but was carried to the Postwar Reconversion Reserve. This amounted to $84,525.62 and, with the Alumni Fund balance, raised the special reserve fund to $373,915.58.
"This Postwar Reconversion Reserve," Mr. Edgerton explains in his introduction to the 1942-43 financial report, "is an account set up to help in meeting the conditions which unquestionably will develop after the present war. The use of the term 'reconversion' does not contemplate much in the way of physical plant reconversion but is intended to cover reconversion of the institution as an educational organization. The term has some of the same connotations as the 'Reconstruction Account' set up by President Tucker in the nineties."
INCOME AND EXPENSE
After rising above the 2-million mark for the first time last year, expenses for 1942-43 were somewhat lower and were balanced at $1,967,617.49. As a result of leaves of absence granted many members of the faculty now serving beyond Hanover in the war effort, instructional expense was markedly lower than for the preceding year, $1,181,874.79 as compared with $1,260,953.60, and represented 60.07% of the total figure for the year as compared with 62.34% the year before. Administrative expense dropped from $220,265.10 to $211,802.12, and plant operation and maintenance, at $216,532.88, was $2,000 below 1941-42. Because of the Naval Indoctrination School, health service expense rose from $94,624.74 to $119,- 368.95; and general expense, at $115,- 083.44* was slightly higher than for the year before. Other figures remained approximately the same.
On the income side, student payments, after the deduction of scholarships, amounted to $891,044.32, compared with $941,353.66 the year before. Net income from investments rose from $724,568.75 to $739,162.29 and miscellaneous income was up from $120,471.18 to $139,262.32. A new item on the income side of the ledger in 1942-43 was the sum of $82,606.00 from the* Naval Indoctrination School. Payments covering housing and messing the school brought the total received to $535,147.12.
In his introductory analysis of the 1942- 43 financial report, Mr. Edgerton devoted a special section to government contracts, which, because of widespread alumni interest in the subject, is quoted in full:
"During the year the College operated through the Thayer School an Engineering, Science and Management War Training program of extension courses with the expenses met by the Government through the United States Office of Education. This in substance continued the program previously carried on under a slightly different name.
"Through the Dartmouth Eye Institute and the Department of Chemistry certain contracts have been undertaken for the Office of Scientific Research and Development. Our participation in projects of this nature is necessarily small in comparison with the projects undertaken by university organizations with personnel and facilities available for research.
"The Naval Training School of Indoctrination was started July 15, 1942 and continued through June, 1943 with successive groups of student officers. This comprised a series of two-month courses in which instruction was provided by Navy personnel, the College providing and operating facilities for quarters for the men and messing. This school utilized a substantial portion of the college plant which otherwise would have been idle or only partially used. The payments made by the Navy Department were not intended to nor did they provide profit for the institution. They did cover operating costs and absorbed costs which the College would otherwise have had to provide from other funds and gave a modest allowance for administrative expense and for use of plant. The receipts from this contract were as follows: general $82,606.00; credited in dormitory income $118,189.37; Davis Field House $1,935.00; messing $332,416.75; or a grand total of $535,147.12.
"In June, 1943 arrangements were made for the operation of a Navy V-12 Program starting July 1. Under this program Dartmouth has the largest V-12 Unit in the country consisting of 2,000 men including a group of about 650 Marines. The trainees in the main are college students including Dartmouth students who had selected the Navy for their branch of the service, men from other colleges in different parts of the country, and some men direct from the fleet. At the time of writing the full terms of the contract have not been completed but the general principles which apply are along the lines indicated above for the Indoctrination School contract. Under the new contract instruction is provided by the College faculty, in some cases in separate courses and in other courses with trainees and civilian students in the same sections.
"Separate contracts are being arranged for Medical School students, one for the Navy and another for the Army."
The grand total of Dartmouth College assets on June 30, 1943, was $28,608,- 817.34, only about $163,000 greater than the figure of one year earlier. This is divided into the three major classifications of endowments, plant, and current accounts. The total of endowment and similar funds is reported at $19,715,275.74 and the value of the educational plant at $7,639,612.32, the latter figure not including dormitories and certain service properties carried, in accordance with College practice, as investments of endowment funds. The inclusion of dormitories raises the value of the Dartmouth plant to $lO,- 655,613.
The increase in endowment funds during rife past fiscal year was the smallest for some time, amounting to only $47,000. The valuation of Dartmouth's educational plant also increased only slightly, by $39,000. Part of the increase in the plant figures was represented by the completion, in so far as wartime conditions permitted, of the addition to Baker Library, to house the growing collection of books. A further transfer from the William N. Cohen unrestricted fund was made to cover the balance of this cost, and an appropriation of $20,000 from current income was made to
complete the balance on the Reed Hall Reconstruction Account. This eliminated the last item of Dartmouth's unfinanced plant construction.
The average net return from all investments for the year 1942-43 was 3-74% as compared with 3.81% the year before. The rate of return realized was 5-49% on preferred and guaranteed stocks, 4.28% on common stocks, 3.63% on bonds, 3.26% on real estate mortgages, 3.14% on dormitories, 2.90% on other Hanover real estate, 1.20% on Tuck School dormitories and refectory, and .39% on real estate outside of Hanover.
The book value of College investments on June 30 last was $20,427,782.79. The percentage of investments represented by bonds rose from 33.86% to 35.09%, while common stocks, which dropped from the lead the year before, underwent a further slight decrease, from 33.21% to 33.03%. In percentages of security holdings as distinguished from percentages of total investments, Dartmouth College has 46.4% in bonds, 43.7% in common stocks, and 9.9%
in preferred and guaranteed stocks. These security holdings are 26.0% in public utilities, 25.4% in industrials, 22.2% in railroads, 9.5% in mining and oil, 8.8% in government and municipal bonds, and 8.0% in financial. Holdings of United States Government bonds increased during the year from $588,449.50 to $836,608.50.
The foregoing figures represent book values. At the end of the year the market values as compared with book values were 98.7% on the whole, 105.7% on bonds, 107.3% on preferred and guaranteed stocks, and 89.3% on common stocks, all classifications showing marked increases over the previous year. Common stocks especially were up, from 63.3% to 89.3%, while bonds rose from 93.2%, preferred and guaranteed stocks from 82.2%, and the over-all value from 93.2%.
In closing his introductory analysis of the 1942-43 financial report to the Trustees, Mr. Edgerton hailed the 1943 Alumni Fund for its vital role in the successful financing for the year:
"Year by year we have seen new records established by the Dartmouth College Alumni Fund on the Tucker Foundation. At the beginning of the year it did not appear possible that this could continue for 1942-43. Nevertheless it did and the men of Dartmouth established a new record of which we are extremely proud.
"Contributions for the year, including the income from special funds, total $345,- 670.52 as against a comparable figure for the previous year of $195,715.98. After meeting the expenses chargeable to the fund and after applying the income from the general fund and certain loan fund collections the net amount of the fund available for the year was $231,470.02. Contributions from 12,279 persons made this result possible.
"The fund was applied as follows: Thayer School, $3,900; meeting operating expenses of the College to cover what otherwise would have been a deficit, $38,180.06; added to the Postwar Reconversion Reserve to meet the exigencies which will develop at the conclusion of present hostilities, $189,389.96.
"It is entirely beyond my power to express adequate appreciation either for this generous support or for what it means to Dartmouth College. I do, however, want to record the deep feeling of gratitude which the officers of the College have to all those men of Dartmouth who have contributed so generously of their time and money to produce such a wonderful result. Never before has the College enjoyed such a display of loyalty and affection on the part of her alumni. It is a challenge to others and a challenge to ourselves."
Printed copies of the complete Financial Report for i94a-4g are available upon application. Alumni not already on the mailing list may obtain copies by writing to the Treasurer's Office, Dartmouth College, Hanover, N. H.
TREASURER HALSEY C. EDGERTON '06, key man in Dartmouth's financial organization, who made his report on November 12.
MAX A. NORTON ' 19, Bursar of the College, who shared in the task of preparing the report on 1942-43 financial operations.
TABULATION OF INCOME AND EXPENSE FOR 1942-43 Income Students Navy Indoctrination School General Net Income from Investments Miscellaneous Gifts Expenses Instructional including Library Health Service Administration General Plant Operation and Maintenance Restricted Current Funds Annuities and Additions to Principal Amountfor Year 1891,044.32 82,606.00 789,162.29 139,262.32 115,542.56 $1,967,617/49 $1,181,874.79 119,368.95 211,802.12 115,083.44 216,532.88 60,541.64 62,413.67 $1,967,617.49 Proportionof Total 45.29% 4.20 37.57 7.08 5.87 100.% 60.07% 6.07 10.76 5.85 11.00 3.08 3.17 100.%
