The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-05-26
Shocking Lack OF Business Methods
I'm the Investment Of the Legacy
from the DePauw Estate.
COMPLETE LOSS OF $4,000
ENDOWMENT OF 1850, 900 sHRIyKs
TO LESS THAN 100000.
Dean Howe's Music School Lost 80.
900, and Thousands Sunk in the
DePauw Enterprises.
Special to the indianapolis Journal.

Special to the Indianapolis Journal
GREENCASTLE. Ind, May 25.-In the
statement printed in yesterdays Journal
concerning DePauw University and the res
ignation of President J. P. d. John the
financial blunders that have resulted in
a lavish waste of the university funds were
casually referred TO as q financial scandal.
That statement was not overdrawn. The
Journal correspondent, being an alumnus
Of DePauw, was loath TO make the charge
until indisputable and overwhelming evil
dence was laid before him by men thor
oushly familiar with the subject. These
men were also unwilling to make the mat
ter public, until finally convinced that it
was demanded by the good of the institu-
tion which the late Washington c. DePauw
intended TO endow SO munifcently In one
instance. at least, the funds have been used
to cover a transaction that looks very
questionable, and in other cases the funds
were poured into schemes in a way that
tends to show those handling the money
were the victims OF misplaced confidence
to say the least
The public has understood in a general
way that Washington c. DePauw had en-
dowed the university with a large sum OF
money; that the institution had realized
handsomely from his bequests, and that
with the final settlement of the estate other
large sums would come into possession of
the school. When officials have been ques-
toned as to the magnitude of the sums
that DePauw University had realized, and
what it expected to realize, the responses
have been vague and in such general terms
as to justify the suspicion of evasion. IN
quiry into fields of information that are
entirely trustworthy reveals not only the
fact that the financial benefits that have
been derived from the DePauw estate are
far short of what the public generally has
understood, but reveals, also, the further
fact that the business management has been
such that in the end there could be but
one result, and that financial wreck. This
mismanagement is the cause of the en-
barrassed condition in which the institu-
ton finds itself.
When Washington c.. DePauw drew the
will that gave to the university 40 per cent.
Of all his estate his shrewd business in
sight appears TO have enabled him to fore
see some OF the very contingencies that
have arisen, and every possible safeguard
was provided TO the end that the perma-
nent endowment fund TO be. realized from
MS estate should be protected from inroads
OF account OF current and other expenses.
Inc board or trustees and the various COM
mlttees have not protected the endowment
fund In accordance with the designs of the
ttessntator; tesnI The principal reason for this
ialiure was that the trustees were ayerse
10 holding the DePauw heirs to good busi-
ness ness methods and that strict accounta-
actions would Indicate
A SAMPLE ILLUSTRATION.
The disposition that was made of eighty
acres of land near Chicago. in 1890 or 1901
may be cited as illustration BY reason
of the proximity of this land to the CITY
OF Chicago it had become very valuable
and an offer of 5000 an acre, or $3.50. 900
for the tract. was made. BY the terms
OF the will the university was entitled TO
~ per cent of the proceeds of the sale
or this land when ii should be disposed of.
Under the terms of the will, also, the
land could not be sold until ten years after
the death of the testator without the con-
sent OF both the heirs and the trustees
OF the university. Both agreed, however
to the sale of the land. and it was sold
unoer the order and approval of the court.
The terms were one-fifth in cash and the
balance in notes of one. two, three and
four years. The university was entitled to
4O per cent. of the cash and 40 per cent
Of the collateral, amounting to ssi. 900 in
the verbal promise or understanding that
when ten years has elapsed from the
the heirs would pay the university $64, 600
from the proceeds of their share of the
estate. No other security was given The
surviving DePauws got the s160,v0 in cash
and notes. The university has lost what
would have come to it in the way of the
Increased value OF the property and has
heirs ever being able to reimburse it for
its share in the proceeds of the sale.
This was only one Of number of ir-
Another provision of W. C. DePauw's
will was that the university should re-
er ten irS GEARS s to sca
In the end. The first two years this sum
was to be 5000 year; the next two
the last two Of the ten syears. when it
was to be $4,000 year. Eight of the
years have now passed. but DePauw Uni
accordance with the will. At the meeting
of the trustees in June of last year it
was shown that the estate was $4,000 In
arrears TO the university In the annual
installments that the will provided should
be paid for current expenses, and a request
was made to the executors for a settle
to 't turn over eea one of of the notes of MT.
Bifert, who was the purchaser of the Chi
cago real estate mentioned above, amount
ing to SO, ,000 On this note Bifert was able
to pay only $1,000 and it was agreed that
the balance, as it was paid. should go
tHst shoue he due om ths
annually for current expenses. This use of
property for current expenses, which the
will expressly provided should go TO swell
the endowment fund, was in direct viola
ton of the provisions OF the VIII, and Ii
Is held by good legal authority that the
trustees using it with that knowledge have
laid the university open to contest against
any further payments TO the university by
the estate.
The management has been hampered by
some of the conditions that have been at
tached to portions of the permanent en-
dowment fund. BY the terms or the will
800 600 of permanent endowment was paid
TO the university soon after the death of
Washington DePauw. One OF the condi-
tions of this particular bequest was that a
6 per cent. annuity on this amount was to
be paid back to the heirs As part OF the
cepted $4,000 I'm notes, on most Of which
the interest has been allowed to lapse. and
all of which has now come TO be doubtful
paper. This endowment. therefore, Instead
of being a source OF revenue, finds ii diff
ficult to make the annuities to which the
heirs. under the terms OF the bequest, are
entitled. Thus while the university ha.
not received it's $4,000 annually from the
DePauw estate. which Mr.. DePauw I'm
tended. 1T has been compelled 10 pay the
DePauw heirs 50. 100 annually as interest or
OTHER INVESTMENTS.
The bad investment Of the university
funds. however, has resulted in the most
loss which the institution has suffered
The record of the investment committed
shows that money was loaned sometime.
with doubtful security. and sometimes with
no securifv Somefhin9 like 90 600 was lbs,