When Jack Allen ’74 sat down in the winter of 1973 to write his senior thesis, his Silliman College room lacked what many current Yalies take for granted: heat.

Allen tried to keep the room warm by burning wood in the fireplace, but the room stayed cold.

[ydn-legacy-photo-inline id=”8345″ ]

“I always blamed that fireplace as a reason my paper didn’t turn out all that well,” he said.

Allen’s frigid room was just one of many consequences of Yale’s economic struggles during the 1970s, a time of unbalanced budgets, fruit rations and cold students. But with deeper budget cuts announced by University President Richard Levin yesterday — including a slight readjustment of Yale’s thermostats to cut energy costs — current Yalies may begin to notice the consequences of the University’s new budget cuts.

Though Levin called the current crisis “the largest short-term shock to the size of the Yale endowment in the entire post-Warld War II period,” the University today is in a much stronger position financially than it was in the seventies, he said. Yale is better prepared to weather the current crisis than previous economic storms, Levin said, citing Yale’s cash reserves, surplus budget and good campus condition when the current crisis began. Still, with parallels to the present, Yale’s previous financial woes provide a reminder of how life at Yale has changed in times of economic hardship.

TROUBLE BREWING

The 1960s were a relatively prosperous decade, and with an annual operating budget of $100 million in 1969, Yale seemed to be in good shape for the coming decade.

Given the favorable market conditions, Yale altered its investment policies in the late 1960s — a decision that would have debilitating ramifications for the decade to come.

The proposal was simple and seductive: As the President of the Ford Foundation, which provided funds for scientific research to many universities in the 1960s, McGeorge Bundy ’41 urged universities to invest larger portions of their endowments instead of turning to the foundation for financial support.

“Don’t come to the foundation. Start investing your money intelligently,” Yale historian Gaddis Smith ’54 GRD ’61 said to summarize Bundy’s message.

And Yale did just that.

The Yale Corporation took the first step down this path in the 1966-’67 school year, when it formed the Endowment Management and Research Corporation, an experiment in endowment management that implemented many of Bundy’s recommendations.

“Yale became much more adventurous at the end of the 1960s,” said Smith, and the University invested in “high-flying stocks” that promised high returns.

That same year, the Yale Corporation decided to use the “university equation” to measure endowment performance. The equation measured performance in total returns — which includes not only fixed-income investments like dividends but also capital appreciation from the changing prices of stocks on the market. The equation allowed Yale to take on more high-risk investments, Smith said.

The strategy worked for some time, but the stock market peaked in 1968, and when Richard Nixon imposed wage and price controls in 1971, Yale’s budget began to suffer. Then-Provost Hanna Gray wrote in a 1977 report on the University’s finances that, in hindsight, “It is clear in retrospect that the spending rate was significantly in excess of the rate of return.”

Combined with a generally poor economic climate, Yale’s gratuitous spending forced the administration to make deep cuts, freezing all clerical and technical positions and cutting faculty, the News reported at the time.

The situation was exacerbated when former University Treasurer John Ecklund ’38 LAW ’41 mysteriously and notoriously miscalculated the 1970-’71 budget deficit by $4.7 million, delaying reform plans and generating rumors about Yale’s ability to keep a reign on its finances, according to a previous issue of the News.

The University created special committees to resolve its financial woes. The Summer Study Committee, formed in 1971, proposed that Yale reform its calendar to a trimester system, adding a summer term in order to make constant use of Yale’s facilities and to increase enrollment — an idea that engendered so much consternation among faculty that it was tabled for four years despite Yale’s troubled finances, the News reported at the time.

“What if a student is a star football player and he’s not there during the fall term?” said Smith, Pierson College Master at the time, describing some of the plan’s problems.

FROM BAD TO WORSE

But there was a silver lining to Yale’s financial woes in the early 1970s: A major oil energy crisis crippled the economy beginning in 1973, a downturn that would have been catastrophic had Yale not enacted reforms before it began.

Yale continued its cuts from before the crisis — eliminating faculty, reducing wage hours and even proposing at one point to entirely dismantle the undergraduate drama major — but the administration focused more heavily on cutting energy consumption, according to a News article.

Devices called “econstats” were installed in all undergraduate residences in 1974. The machines offered heat to rooms sparingly, allowing students no heat if the temperature was above 60 degrees, 20 minutes of heat at 50 degrees, 40 minutes at 40 degrees and continuously below 30 degrees. Heaters automatically shut off between 12 and 8 a.m.

Although the administration claimed “the thick stone walls of the colleges retain heat quite well,” according to the News article, students begged to differ.

“It was definitely cold — more Motel 8 than four-star hotel,” recalled John Pellico ’77.

In a spirit of this austerity, the University turned its frugal eye toward dining, as well. Yale’s total food expenditure increased by 27 percent due to rising prices in 1973, and Albert Dobie, the director of University dining halls, was forced to ration students one piece of fresh fruit per day, and to limit servings of meat. At the time, Yale’s dining halls had no swipe card method; only by undergraduates’ voluntary compliance with dining regulations did Dobie avoid imposing “some ridiculous method like punch cards to help the students comply,” the News reported. Students did their part, too, conserving food and proposing a weekly Poverty Day to reduce food consumption.

The food in the dining halls suffered so much from cuts that, at one point, students suspected the dining hall fare was responsible for a campuswide bout of food poisoning.

“It was a plague,” said John Aber ’71 GRD ’76. “The infirmaries were full.”

Despite cuts and conservation, the deficit kept rising, and the administration was forced to enact more drastic measures.

Faculty hiring was almost frozen, and as Claude Buxton, a psychology professor at the time, told the News at the time: “They’ve gotta wait for us old birds to die off” before hiring new faculty.

To conserve energy, former President Kingman Brewster shut down the University for the week beginning Dec. 22, 1973, turning off hot water in most buildings and gathering all international students into a single dorm.

The 1974 Campaign for Yale capital campaign relieved some of the stress, but it was not enough. In 1974 the University finally approved the summer term plan, meant to make use of Yale’s buildings and bring in tuition revenue: Yale admitted 100 transfer students, despite many students’ “strong condemnation” of the action, then-YCC President David Ruben ’76 told the News at the time.

Nothing worked. Yale adopted a deferred maintenance policy throughout the 1970s and into the 1980s, siphoning resources away from building maintenance and causing many facilities to fall into disarray. Students going to study found puddles in Cross Campus Library in 1979. Responding to complaints from students, Michael Casella, then University’s physical plant manager, said the puddles caused “some cosmetic, but no structural damage,” according to the News. The budget deficit reached a then-record $6.6 million in 1976-’77.

WARMING UP?

But as the energy crisis waned, Yale’s costs dropped, and the administration adopted more moderate endowment rules — for instance enacting a partial-adjustment rule that accounted for annual market fluctuations and prevented Yale from spending too much of the endowment returns at once. With the later arrival of Chief Financial Officer David Swensen in 1985, Yale’s finances began to take off. Until last year, Yale’s endowment grew by an average of 16.8 percent every year for two decades.

Today, Levin said, Yale has learned several important lessons from the University’s responses to past recessions. For example, he said, because Yale suspended maintenance to its physical plant in the seventies and eighties, the facility deteriorated into “horrible shape.” In contrast, although the University today has frozen new building projects, it is continuing to do routine maintenance, Levin said.

And, as Levin and Provost Peter Salovey announced in their budget memo to faculty and staff Wednesday, Yale is borrowing a page from its previous administrations. To save money, the University will hold thermostats constant at 68 degrees Farenheit in the winter, compared to the previous 70 to 73 degrees, and in the summer, buildings will be kept at 75 degrees, up from 73.

But unlike in the past, current faculty and dining are safe, preventing faculty cuts and food poisoning, but students have already noticed some minor changes around campus, though by no means as drastic as previous cuts.

“They stopped providing the squash courts with water jugs,” said David Edwards ’12.