Records Management in the News …. in 1826

Five weeks into my tenure as university archivist at George Washington University, I am working hard to learn its history. In the course of my study, I came across an incident that I thought was interesting from both a historical and a records management perspective: the 1826 scandal over recordkeeping that precipitated the institution’s first major financial crisis, and nearly caused its early demise.

The only known portrait of Luther Rice, 1830

Luther Rice is generally remembered today as a founder of the college that became GW, as well as a tireless fundraiser for both the college and the international missionary work of the Baptist church. Beginning in 1820, the year before the congressional charter for the college was passed, Rice served as the fledgling institution’s agent and treasurer.

For the next five years, Rice tirelessly traveled throughout the country soliciting subscriptions (conditional promises of donations) and collecting on earlier subscriptions for the support of both the college and Baptist missionary work. As treasurer for the college, he was also responsible for the outlay of funds and the maintenance of financial records. While universally praised for his abilities as agent, or fundraiser, his weaknesses as treasurer nearly derailed both the college and his legacy.

Rice was required by the Baptist convention to which he reported to separate the funds he raised and disbursed for educational purposes from those he raised for missions. However, as noted by one historian of the early college:

This separation of funds was never made by Rice in his curious bookkeeping. His receipts and expenditures for all purposes, including his own personal expenses, were entered day by day in his Journal. Moving rather rapidly from place to place as he did much of the time, collecting for missions, education, periodicals, and special funds, perhaps it was too much to expect him to keep an orderly set for books. When the time came for a report to the convention or to the board, he would undertake to separate debits from credits and one account from another, and produce an itemized report down to the smallest items, even to gifts of 6¼ cents at times. He frequently protected himself by saying that any inaccuracies noted would be corrected in a later report. Some men have a genius for keeping orderly accounts. Luther Rice certainly did not. When criticism came, it was difficult to meet. (Bricks Without Straw, 60-61)

The criticism came in 1826 when the college’s president presented to the board of trustees what the minutes describe as “sundry statements comprising the accounts of the College,” in response to ongoing questions regarding its financial health. As the aforementioned history describes it:

These were referred back to him with instructions to prepare them in a proper manner. While these papers are not so identified, it is more than likely that they were Rice’s unorganized records which were so baffling and time-consuming to those who made an effort to digest them and produce a balance sheet. Certainly there had developed a deep concern for the College’s financial standing, deep enough to become a matter of general knowledge (ibid., 61)

On April 26, 1826, on the first day of the fifth triennial meeting of the Baptist Convention to which he reported, Luther Rice moved for the appointment of a committee to investigate his own official activities. Rice submitted his triennial report as agent, but when the auditing committee reviewed it,

In utter frustration, the Committee on Agents’ Accounts reported that they had been referred to earlier numbers of the Luminary [a Baptist convention publication] and Annual Reports and a recent Manuscript Account, and they were not able ‘to accomplish an investigation from such resources’ (ibid., 62-63)

One of the committee’s concerns related to the finances of the Luminary, a Baptist publication founded and financed by Rice through his work for the convention. Unfortunately, it was found that Rice had used money raised through subscriptions to the Luminary and other publications to meet the increasingly pressing financial demands of the college. The committee investigating Rice attempted to determine the business’s debts before and after a transfer of property to the convention, however they found the records he kept to be insufficient to this task:

[The committee reported that] ‘No leger [sic] or daybook had ever been kept in the office. The whole pecuniary accounts were noted in a subscription book. Mr. Rice informed us that he has always made minutes in his journal of whatever moneys he has received, but that these minutes are scattered through his journals ever since the work began.’ An accountant was at work on these papers, but it would be a month before he could finish his task. The committee was at sea. (ibid. 64)

Unable to make a determination on the status of many of the accounts, some a nearly a decade old, the committee and ultimately the convention absolved Rice of any immoral conduct related to his work and found that the “urgent embarrassments” (i.e., debts) of the college partially mitigated his actions, but resolved that he was a “very loose accountant … with very imperfect talents for the disbursement of money.”

Rectification of the “embarrassments” created or exacerbated by Rice’s lackadaisical recordkeeping involved not only fiscal and administrative reforms, but the institution of “a committee of five men of considerable distinction … to ensure public confidence.” Rice was removed from his position as treasurer, but continued on as agent, charged with collecting outstanding subscriptions and seeking new ones to defray the College’s debt. The college eventually recovered, but Rice’s reputation as a recordkeeper did not.

 

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