I have referred to the dissatisfaction of Grand Duke Timothy Hopkins at the coming into power of a progressive government in California. This event was especially embarrassing to the Stanford trustees, because of a family skeleton which for many years they had been hiding in their academic closet. You understand that these high-up masters of finance have an elaborate system for plundering the railroads and public utility companies which they control. They have holding companies and investment companies and subsidiary concerns of various sorts, whereby they skim off the cream of the profits, without interference by public commissions. Nobody but a few insiders today can form any idea where the profits of an American railroad or public utility corporation are going, or what should be the income from any particular investment. And now, here are these same smooth gentlemen administering the investments of a university; what more natural than that it should occur to them to handle these funds in the same manner?
Apparently old Senator Stanford foresaw this, for his trust deed provided that the Governor of the state should receive a complete report each year upon the financial affairs of the trust. But the Governor of the state never received that complete report. For many years the faculty of Stanford, who were living on short rations, could get no statement whatever; the trustees allowed the university the lump sum of eight hundred thousand dollars a year, and no explanations. Finally, about 1908, after some years of agitation, a statement was prepared and circulated at a board meeting. It was the first financial statement which President Jordan had ever seen, and he badly wanted a copy of it, so he “swiped” it—at least so he told a member of the faculty, who told me. He called a meeting of the full professors, to whom he gave certain figures purporting to be the income of the university trust as communicated to him, but one of the professors who had made a detailed study of the court schedule of Mrs. Stanford’s estate pointed out that the interest on the bonds there scheduled amounted to more than the purported total submitted by President Jordan—this not counting other sources of income. And Trustee Crothers, in a letter to me, admits that during the period he held the Pacific Improvement stock in trust the income from this one item amounted to two million dollars in thirty-one months, which is just about eight hundred thousand dollars a year! After that nothing more appears to have been heard or seen of this financial statement.