Fr. Yates Answers "Friends of SFS"

the Rev. Gerard F. Yates, S.J.
Dean Emeritus
of the Graduaste School
Professor of Government

[The HOYA, Tuesday, March 20, 1969, p. 15.]

Georgetown University, like other institutions, has been injured in the past by rumors which have been widely circulated and which always grow in the retelling. Such tales have rarely been formally denied because, I suppose, one does not wish to dignify silly stories by taking any notice of them. Also because a denial rarely gets the circulation that a sensational rumor does.

Today's society, however, is more image-conscious and more record-conscious. One particularly vicious rumor has recently been given extensive airing on the campus, and I believe that it should be exploded now, while men still live who know the facts and believe that they should be correctly stated, once and for all. I refer to the story of the unification of the finances of the University, and particularly to the version of the "taking over" of the assets of the School of Foreign Service in 1951, circulated as a mimeographed open letter to the students of the School of Foreign SerVice, dated Feb. 25, 1969, over the signature "Don Panzera Friends of the School of Foreign Service." (An essential date in this letter, incorrectly given, was subsequently corrected.)

It would take more space than I can claim to refute all the direct charges and indirect insinuations found in this letter. I shall address myself only to the most blatant of them.

I was dean of the Graduate School from February 19, 1949, until June 1954. During the same period I was a member of the Board of Directors of the University. At this time, the University, under its newly appointed president, the Very Rev. Hunter Guthrie, S.J., was strenuously engaged in restoring academic standards that had inevitably been loosened during World War II. It was also trying to reorganize itself and strengthen itself financially, a task that became even more imperative after the Korean War began in June 1950.

Federation of Schools

The University at this time operated as a loosely organized federation of schools. However, there was but one legal entity, Georgetown University, whose legal title was "The President and Directors of Georgetown College." Before the end of 1950, in furtherance of the effort toward reorganization in fiscal matters, the College, Graduate School, Dental School and Nursing School had centralized their finances under the Treasurer of the University.

During this year, President Guthrie engaged a consultant, Dr. Clarence Scheps, who at that time was comptroller of Tulane University and is now its executive vice president, a recognized authority on college and university finances, author of Accounting for Colleges and Universities (Baton Rouge: LSU Press, 1949), past president, National Association of College and University Business Officers. By the end of 1950, he had prepared a 20-page report and recommendations regarding the fiscal organization of Georgetown University. In it, Scheps was highly critical of the decentralized spread of Georgetown's fiscal operation. Here are some typical extracts:

"The preparation of University-wide financial statements can be achieved only at great difficulty and expense.... The President of the University is being deprived of a considerable volume of information which he needs to properly manage and direct the institution for which he is responsible.

"...No allocation of joint university costs is made against these separate units. For example, the School of Foreign Service presently is operating on the basis of a rather substantial surplus. This is not a true surplus, however, when one understands that only a nominal charge is made against the school for building rent, with no attempt being made to prorate the many other joint costs which are essential to the operation of the School of Foreign Service and Georgetown University as a whole.."

"The School of Foreign Service had on June 30, 1950, approximately $1.3 million in uninvested cash in the bank. At least part of this sum, regardless of its intended future use, should be invested in order to earn an additional income for the School of Foreign Service or for the University."


Some of Schep's essential recommendations follow:

"...There is great and urgent need for complete fiscal unification and reorganization at Georgetown University. Every sign points to a very difficult period ahead in college administration. Institutions of higher learning are going to be in grave financial difficulties especially those like Georgetown University which are dependent almost entirely on tuition from students for their support. The values which Georgetown University has bestowed upon the culture and education of our country must not be permitted to be lessened or endangered by a loose and inefficient fiscal system. It is recommended and urged that Georgetown University accept the basic philosophy of fiscal administration which prevails in practically every major institution in the country &emdash; namely that the University and not the individual college is the fiscal enffty." (Report, pp. 7, 8, 9, 10. The report is deposited in the Georgetown University Archives.)

It should be noted that all assets of whatever kind, however they were held, were legally the property of Georgetown University, under the control of the president and directors of Georgetown College, not of any individual school. To secure a clear, unchallengeable directive regarding the control and administration of these assets, President Guthrie wrote to the General of the Society of Jesus, since he and all the members of the Board of Directors were Jesuits, and basic Jesuit rules applied to the administration of property, under both civil and ecclesiastical law. The directive received was fully congruent with the recommendations of the Scheps report, namely that there should be one central treasurer's office.

The Scheps report was discussed at two meetings of the Board of Directors in January 1951. The late Rev. Edmund A. Walsh, S.J., was present at both of these meetings. Father Guthrie stated in a covering memorandum, sent with the report to the Board of Directors:

"[Financial unification] is not intended as a mean to suppress or lessen the initiative or enterprise of any division of the University, nor to bleed one school for the benefit of another.... It places the funds of the University in the hands of one man whose sole duty is their management. It removes from the regents and deans the extra and incongrnous burden of financial cares, business and maintenance management, thereby permitting them to concentrate or their duty ...the policy and academic direction of their respective schools. It stops the waste and unavoidable inefficiency of five financial bureaus, reducing them to one.... It will now be possible for the treasurer to present a monthly report to the president and directors which will be a true University report, highlighting for, all to see the progress or retrogression of the whole as well as its parts...."

Extensive Discussion

Discussion in these two board meetings, both of which I attended, was extensive. Father Walsh took exception to some of the language in the Scheps report which might be interpreted as implying inefficient management of the School of Foreign Service. In the end, he accepted the decision to unify, as did all the members of the board. It should be noted that, under Jesuit rules, Father Walsh had an unquestionable right to appeal the decision up to the highest possible level. It was decided to take steps to integrate the finances of the University by March 1, 1951, including central budget control and central purchasing.

The Rev. James T. Wilkinson, S.J., at that time treasurer of the University and now treasurer of Gonzaga College High School, states that shortly thereafter Father Walsh paid over by check, drawn to the order of the Univesity, a sum of just under $1,200,000.00. This money was in turn transferred to the Chase National Bank of New York for investment, since the Chase Bank was handling all investment funds of the University. The amount turned over by Father Walsh was, however, earmarked for a new building -- the purpose for which he had accumulated it. This building was in fact constructed and dedicated to Father Walsh after its completion on Oct. 13, 1958, by President Dwight D. Eisenhower. Father Wilkinson denies that any such episode as the so-called "midnight raid" occurred.

In sharp contrast, therefore, to the allegations and insinuations of Mr. Panzera, the facts of Georgetown's financial unification as it affected the School of Foreign Service are as follows:

1. Father Walsh had no legal authority over the "independent treasury" of the School of Foreign Service.

2. The accumulated surplus -- $1.3 million according to the Scheps report, not $2 to $4 million -- did not represent, in the eyes of a qualified expert, a true surplus, and the school was not paying its share of common University expenses.

Construction Costs

3. Nevertheless, the moneys that Father Walsh had set aside (in a checking account, oddly enough, rather than in investments) were in fact expended for a building to house the School of Foreign Service and its dependent Institute of Languages and Linguistics. The total cost of this building required the expenditure of additional University funds.

4. The so-called "midnight raid" did not take place. Father Walsh turned over by check the funds he held to the treasurer of the University.

5. Father Walsh knew well in advance, at least from January 1951, that the finances of the University were to be unified. This is clear from documents already cited above. But in addition, at the time that Father Guthrie requested a clarifying directive from Rome, one of Father Walsh's closest, lifelong friends, the late Rev. Vincent A. McCormick, S.J., was American Assistant to the General of the Society of Jesus. As such matters crossed his desk for comment and action suggestions, it is most unlikely that Father Walsh was not aware of the impending change. And his interests and those of the school were well understood and evaluated in Rome.

All these assertions will be confirmed by the following, in addition to myself, who are still actively engaged in Washington and who were members of the Board of Directors at the time: the Revs. Edward B. Bunn, S.J., Francis E. Lucey, S.J., and Brian A. McGrath, S.J., of Georgetown, and James T. Wilkinson, S.J., of Gonzaga. To describe the fiscal unificaffon of the University, and the reasons for it, in terms of a plot intended to undermine the School of Foreign Service, and the transfer of funds as an "act of legal piracy" is to show a stunning disregard for the trutb.


Click here for the rebuttal
Terrence J. Boyle