Introduction
According to the Merriam-Webster dictionary, merger is defined as “the act or process of merging, absorption by a corporation of one or more others or any of various methods of combining two or more organizations (such as business concerns).” [1] When one hears the term merger, often they think of law firms joining together or a business absorbing a competitor. Companies may choose to merge for a variety of reasons including but not limited to: value creation through the synergy between companies, diversification or for economic survival. [2] The education sector, while not the first thought when one thinks of merger, is no stranger to the topic. Between 2016 and 2020, about 31 mergers and acquisitions took place in higher education, a nearly threefold increase from 2001-2005. [3]
New York University and Tandon are no strangers to merging either, having gone through such an event as recently as 2007-2008. What is lesser known however is that the two institutions have actually merged once before, 30 years before they joined together once again. The late 1960s into the early 1970s were a time of great strife for Polytechnic Institute of Brooklyn (PIB) and NYU’s School of Engineering and Science (SES) as both schools struggled with heavy financial burdens, declining enrollment, and paltry research grants as New York faced one of the worst financial crises in its history. It was a time much different from the current day situation that we live in today. Faced with an insurmountable financial deficit, PIB and SES merged to become the Polytechnic Institute of New York, able to successfully balance the books and stabilize themselves. The results do not tell the full story however, as negotiations were complicated by NYU’s faculty, leading to a tense standoff that forced intervention in order to prevent both schools from going bankrupt.
School Background
In 1854 an upper-class college-preparatory and finishing school for young men named Brooklyn Collegiate and Polytechnic Institute was founded. In the late 1800s its focus swapped to a focus on engineering and science and in 1890 it changed its name to Polytechnic Institute of Brooklyn and became a college. [4] In 1917 it broke away from the preparatory division and by 1958 it moved to its present place. [4]. The institution has played host to a number of distinguished faculty including Herman Mark, Ernst Weber and Paul Ewald. Its Microwave Institute played a critical role in research during WWII and was one of the leading engineering schools in America. [4]. Also in 1854, New York University's School of Civil Engineering and Architecture was founded, later expanded in 1894. [5] The school underwent several name changes and expansions before becoming the School of Engineering and Science in 1963 [5]. In 1916 the school offered evening classes that in 1922 became complete criteria to earn degrees. [5]. Both institutions were powerful and known educational institutions in the fields of engineering and science, able to offer various Master and PHD degrees for such fields. [5]
Both institutions also had another thing in common: they faced large financial deficits. The principal cause of such a dire state of affairs was a decrease in both federal research funding and engineering enrollment. In Poly’s case, its financial woes began in the late 1960s, where from 1969-1975 it was forced to rely on state subsidies. [4] Undergraduate enrollment fell from 1,944 students in 1966 to 1,720 students in 1972. Polytechnic suffered an operating deficiency of $700,000 in 1969-70, and without state support would have gone bankrupt in 1971. [6]
Caption: A snapshot of excess expenditures over revenue for PIB take from the statement of current fund revenues, expenditures and appropriations for Polytechnic for 1970-71 [7]
NYU SES was not in a much better position. The school had an operating deficit of $700,00 in 1970-71, with a projected deficit to the tune of millions in just a couple of years. Similar to Polytechnic, enrollment was also down from 1,361 students in 1966 to 786 in 1972. Federal research funding had also declined drastically from $6 million in 1966 to $2.4 million in 1972-73. [6].
Caption: Consolidated balance sheet for NYU for 1970-71 [8]
With both institutions in such positions, the administrations of both Polytechnic and NYU began to look for ways to recoup the massive deficit their schools had accumulated. Though merger was not yet the action taken, it began to enter the heads of both schools as a way to save the institutions.
New York Background
New York is one of the powerhouses of America. In 2022 it had a GDP of about 1.6 trillion USD with a state GDP of 7.8% making it the third largest in America. Its unemployment rate was also 4.3%, below the worldwide average of 4.89%. [9, 10]. By all accounts, New York is one of the economic powerhouses of not just America but the world. This was not always the case however, and one needs only go back half a decade to see a far different New York compared to today.
The 1970s was not a time period looked fondly upon by America. The economic boom post World War II was finally peetering out, and the economy began to trend downward. While the nation itself was still wealthy, its citizens dealt with rising inflation, unemployment and even energy crises [11]. Reforms attempting to target the increased poverty and unemployment stalled, and Americans watched as inflation climbed all the way to 14% by 1980 and a 12% unemployment rate in 1975 . [11, 12, 13]
Caption: Trash builds up outside a subway station entrance after sanitation workers go on strike in NYC. [13]
New York was not immune to such dire straights, and struggled through this period of economic woe. Faced with unprecedented levels of economic stagnation, unemployment and a general decline of industry, “the City of New York responded by laying off city workers and cutting municipal services such as sanitation and after-school programs.” [13]. As one can imagine, these actions did little to help, and more than 820,000 fled the state, looking anywhere for work. [13] Those that stay directed their anger to the city, as theft, vandalism and drug use skyrocketed. The declining state of the city reached its peak on July 13, 1977 when the power failed and would not come back on for another 25 hours. Almost immediately afterwards, looting began, hundreds of fires causing millions of dollars of damage ravaged the city, and thousands of people had their lives upended. [13] It is one of the darkest days in New York’s history, and symbolizes how dire the situation was in New York and America as a whole during the 1970s.
New York’s grim financial situation contributed to both PIB and NYU’s financial difficulties as a worse economy meant less money for research grants and tuition funds. New York’s situation also put pressure on both schools to find a way to survive as failure would mean becoming bankrupt and unemployed in such a terrible economy, which no one in either school wanted.
Steps Taken Before The Merger
Of course, merger is rarely the first course of action. Such a massive thing should only be used as a last resort. Both Polytechnic and NYU sought alternate avenues to help resolve their crippling financial deficits without causing too drastic a change to the schools.
Poly underwent a number of ventures in its pursuit to save itself. First, the school attempted to find compromises with a number of outside institutions. These included SUNY, Pratt Institute, Mount Sinai Hospital’s new medical school, Hofstra and Adelphi Universities, and the City College of New York. Though some of these negotiations progressed to the point where agreements and drafts could be drawn, ultimately none of these worked out. [5] In September of 1966, PIB once again contacted SUNY about a possible affiliation. In the proposal Poly argued that this would avoid the loss of an educational resource and fulfills the need for a technological institute. [14] Talks began and progressed to such a stage that even a possible merger was beginning to be considered. In a letter to Governor Nelson A. Rockefeller from the graduate and undergraduate students of Poly, the students explained that by 1968 talks had stalled, and urged the governor to assist. The students explained that Poly was in a serious financial crisis that threatened to “terminate a century of academic excellence” and that they are strongly in favor of a complete merger. [15] This letter represented the seriousness of Poly’s financial crisis, and how desperate its staff was at resolving it. Unfortunately, though a preliminary agreement was drafted, affiliation efforts ultimately failed due to SUNY budget restriction, CUNY objecting to the affiliation and private institution objection [5]. Poly was once again looking for a way to save its school.
Similarly to PIB, NYU SES also went through steps to save its school. Unlike PIB, who attempted multiple compromises and agreements, NYU made one significant decision. In February 1972, Governor Rockefeller proposed that the Washington Heights campus be sold to the state to be used by the Bronx Community College. The fact that the administration had reluctantly accepted the proposal indicated how dire the financial prospects for the school were. [5] This proposal stemmed from two major reasons: first, it provided a way for the university to take a large step in resolving its financial deficits, due to how much money it could recoup from the sale. Second, it was simply unviable to maintain the height’s campus. Beyond NYU’s financial situation, urban decline around the Bronx area had caused public perception to lower concerning the height’s campus. Stories about the decline of Grand Concourse and rising crime drove enrollment down, making the campus worse by the day. [16]. Regardless of how inevitable it was, the proposal and subsequent acceptance came as a shock to the faculty and students. For the faculty living in 1970s NYC, concerns about the future of their jobs began to erupt as the city’s overall economic situation worsened. Students meanwhile felt that their degrees would be less valuable should their campus cease to exist, which may impact their ability to obtain jobs in an economy with such a high unemployment rate. For both, the sale represented both the rising water surrounding NYU, and that change was afoot. [5, 17]. In spite of this, the faculty attempted to rally, petitioning the governor to block the proposal while proposing alternate paths of action. These actions ranged from affiliations, to renting out the campus. Alas, each was struck down by legislative leadership for their political and financial unviability. [5,18, 6] The sale of the campus was the only course of action the legislature agreed on.
Caption: An aerial view of the University Heights campus [19]
Though some steps were taken, both schools still had financial difficulties and in 1972 merger began to become an increasingly viable option, if not the only one. Prior attempts to save their respective schools failed, and the administration of both schools increasingly looked at merger as the final hope. These two schools specifically decided to merge with each other due to their shared goals. Both schools were premier engineering and science schools offering high quality education. The New York area needs an engineering school of excellence and stature which the merged institution can achieve. As the economy recovers, the school will provide a massive source of potential. [20]. The state and legislation understood this, and thus offered their support in this plan of action. [5,18]. In May of 1972, merger negotiations began in earnest.
Merger Negotiations
In early 1972, merger negotiations between the schools began in earnest. Soon after an ad hoc committee of corporation members was created to assist in negotiations and summarize the thoughts of the members. In short, this summary was:
1) The New York area needs an engineering school of excellence and stature which the merged institution can achieve. As the economy recovers, the school will provide a massive source of potential
2) Negotiations should focus around the full joining of forces, while respecting the freedom of choice of individual faculty and students.
3) Negotiations require a free sharing of information, especially assets.
4) While risks, doubts and complications exist, they should not obstruct the vision the negotiations seek to realize [19]
In March, an early proposal was drafted. In response to this chapter 463 of the laws of 1972 was passed, calling for the sale of NYU’s height campus for use by the Brooklyn Community College and for the merging of its school of engineering with PIB. [20]. Negotiations went by rather smoothly, and by June of 1972 a merger agreement was drafted and accepted. There was only one final condition that needed to be met before the merger could be finalized. This condition was for NYU SES faculty to accept the letters of employment that were sent out. On July 30, the letters were officially sent out. Of the 94 faculty offered jobs, only 9 accepted with the remaining 85 rejecting the invitation. Accordingly, the merger agreement fell through. [19, 5]
There are a couple important things to note about the context around these negotiations. The first is that NYU SES faculty looked down on PIB. They believed that their school was of superior quality to PIB and that their facilities were far better than the older facilities of PIB. [16] In addition to this, these negotiations, I will refer to as the first round for clarity sake, took place while the sale of the University Height’s campus was proposed but had not yet gone through. In rejecting the merger, the faculty hoped to upset the proceedings and propose alternatives to prevent the merger and sale of the school. [6,19] Though the previous section reveals that their efforts would be unsuccessful, at the time their rejection had essentially ground negotiations to a halt. [21]
Caption: The letter Commissioner Ewald B. Nyquist sent offering his help in negotiations [22]
A short time later, the New York State Commissioner of Education Ewald B. Nyquist sent a letter to both schools. In the letter Nyquist stated that “the preservation of the educational resources available at both New York University and the Polytechnic Institute of Brooklyn is essential to the education needs of the people of New York state” and that the merger would occur if both schools had a third party to assist. [22] Accordingly, Nyquist offered to directly intervene and re-establish merger negotiations. Nyquist continued by reminding the schools that by laws passed earlier in the year, the two schools must merge by July 1, 1973 and have a plan to balance the merged institution’s budget within a few years. Nyquist then stated that should no agreement be ratified by March 15, 1973 each party will submit its own merger agreement and he will make his own. Nyquist ended by saying the merger should cover the following matters: Merging of appropriate educational and research programs and faculty, strengthening its programs, considering the possibility of establishing PIB as an affiliated engineering institution of NYU. [22]
Caption: A newspaper article released after Nyquist’s offer was agreed upon. [23]
Nyquist’s letter doomed the NYU faculty's efforts to failure. Through it, it essentially became a fact that the schools would merge, and the NYU faculty were forced to face the inevitable. [6] On November 21, 1972 the presidents of each school signed Nyquist’s letter, signaling their agreement to his offer. The next day, negotiations began anew. [5, 24]. While it is outside the scope of this site to describe the negotiations in detail, Dr. John R. Haines, a man who attended all the faculty sessions, said that it was “Pearl Harbor all over again” [11->5], so one can only assume they went rather well. With Nyquist’s deadline fast approaching, the representatives from each school met multiple times through December and into early January of 1973. At the end of such a tense few weeks, the group had come to an agreement on 10 core items [5]:
- The merged institution (MI) will have a new name, admin and structure
- No members of either institution will be terminated
- No degrees from either institution will be terminated
- The MI will be affiliated with NYU while assuring the self-determination and fiscal independence of both institutions
- Teaching and research will take place at sites other than the Brooklyn Campus
- Both schools will consider the possibility for MI to offer undergraduate programs at Farmingdale and graduate programs in the Bronx and Westchester
- The people of both schools will address how MI will become self supporting by the 1975-76 academic year
- Both schools will study ways to foster joint educational and research programs involving NYU and MI
- “SES faculty would have their prior services count toward seniority, sabbatical leaves, and retirement as if it had been at PIB”
- All faculty who had tenure during the 1972-73 academic year will keep tenure in MI
After a couple more months to finish negotiations, the merger agreement was approved in March of 1973 by both faculties. [6, 25] The merger officially took place on July 1, 1973. [6]
Merger Agreement
Caption: The first page of the merger agreement. [26]
On March 26, 1973 it was announced that an agreement was reached and the merger was finalized. The merger agreement contained 10 articles describing all aspects of the process and future running of the merged institution (MI). The following information all comes from said merger agreement. [26]
Article 1 restates that all parties agree to merge and that a new name will be chosen for MI.
Article 2 deals with the various governing and administrative processes for the MI. It first discusses the governance of MI, explaining the objectives of the new governing body which included fostering the growth of the MI, protecting the interests of the parties and reaffirming faculty responsibility and input for the choosing of administrators and educational policies. This article also tackles how the board of trustees shall be remade after the merger including info about the voting process, size limit, and how to deal with disagreements. The article then goes into academic and administrative structures. This section details how the academic and administrative structures of MI will be remade, including calling for the resignation of all current academic administrators and allowing acting admins to be appointed by the president and approved by the board of trustees. The next section establishes a faculty advisory committee to assist the president, terminating on June 30, 1973 as well as establishing search committees for administrative positions. The next section concerns faculty governance, calling for the faculty to elect a chairman-elect for the senate, additional members of the executive committee and coordinating faculty members to assist various committees. The article concludes by saying that the trustees shall petition for amendments of the charter to authorize the offering of various programs in different places.
Article 3 concerns the students of the pre-merged institutions. Section 1 focuses on current NYU/SES students who transfer to MI, explaining that they will receive full transfer credits for both undergraduate and graduate degrees. Transfer students would be allowed to earn equivalent degrees at MI. Financial aid would be granted to students who transfer equivalent to that of which students at Poly received. Concerning students enrolled at Poly, the article gave students the option to indicate which courses they took at Poly and which at MI, as well as adding the Poly name to MI diplomas in the event of a name change.
Article 4 discusses personal. First, the article outlined the goals for MI, including maintaining levels of academic staff, evaluating programs, and recognizing faculty that enhance the reputation of MI. The next section concerns NYU faculty appointments. Importantly, all faculty members that had tenure would continue to have tenure at MI, as well as offering any faculty appropriate positions at MI. The next section concerned PIB and NYU faculty. This section ensured fair and equal treatment, discussed retirement age, teaching assignments, faculty salaries, etc. The following sections discuss employment of support staff, research staff and reappointment possibilities.
Article 5 discusses program and research locations, explaining that locations will be considered on their merit and determined by taking into account multiple factors including student recruitment and retention, finances and facilities.
Article 6 concerns undertakings by NYU. Specifically, NYU was required to inform students of the merger, provide details to MI of Alumni, and grant MI needed equipment, contracts/grants and access to the library.
Article 7 establishes that MI was to become affiliated with NYU, which allowed for joint use of facilities, joint degree programs, cross-registration by students and mutual benefits for faculties.
Article 8 discusses miscellaneous representations. Both institutions agreed to keep the state education department informed, agreed to perform all actions needed to ensure the success of the merger, agreed that they were following the law and received permission from the facilities and board of trustees to go through with the merger.
Article 9 goes over mutual indemnities, clearly explaining the compensation MI owes NYU and vice versa, as well as anything excluded from compensation.
Article 10 closes the merger agreement by outlining when the consummation of the merger will occur, when the transfer of staff will occur, and how a take force will be appointed to move equipment.
Aftermath
Caption: A Sunday News article released after the merger was announced. [22]
In early May the news was released. It was official: Polytechnic Institute of Brooklyn and New York University were merging. This news was a shock to the New York community, described as a historic event since the death of any college, especially one with as storied a history as NYU SES, seemed impossible. [22]
As outlined in the merger agreement, the faculty of both institutions were offered positions at the newly named Polytechnic Institute of New York, as well as opportunities for students to transfer to the merged institution. To the admin’s delight, numerous faculty and students made the switch, ensuring the institution had quality staff to help navigate it through its turbulent initial years. [27]
And turbulent those times were. Though the merger was celebrated by the state government, PIB and NYU admin, it brought with it a host of challenges the newly appointed administration, faculty and students would have to navigate. Some of these issues included actually merging two faculties from different schools, addressing the dire situation of research and teaching productivity, boosting undergraduate recruitment, opening up a Long Island campus to reduce operating cost burden on the center establishing the institute as a powerful, high-standing source of quality engineering degrees, initiate a search for long-term fulfillment of administrative positions and of course the massive financial deficit that had driven the merger in the first place. [28,5] To be a bit more specific, overall research support was $2.97 million in 1972-73, and student to faculty ratio was a very low 9.0, illustrating the dire straits of the institution following the merger. [28]
Fortunately, the faculty and president of the newly merged institution proved up to the massive task, able to make enormous progress on these issues and more within a span of three years. The faculties were seamlessly integrated, stronger pushes for funding allowed for an increase in research productivity, freshman recruitment programs were described as most successful, the Long Island campus was successfully established, a grant from the Carnegie Foundation allowed the institute to develop long-term plans, and administrative positions have been filled while upholding the standards of the institute. [28, 5]. Research support rose to $3.8 million in 1974-75 then $4.3 million in 1975-76, and the student to faculty ratio rose to 13.7 in the same year.
Caption: A chart showing Polytechnic’s revenue in millions of dollars over the years. [29]
With such adequate answers to the many problems the institute faced, we are left with the elephant in the room: could the institution face the massive financial deficit and balance its budget for the first time in over a decade? The answer was a resounding yes. The 1974-75 Provost’s report proclaimed there was a decisive reversal of downward trends seen prior to the merger in 1973, and that “the overall financial condition of the Institute has markedly improved since the merger.”[29] While the merged institute still operated at a $457,000 deficit in 1974-75, the increase in student enrollment, research grants, and ability to operate with less state assistance provided the hope the institution needed. Finally, by 1980, “Polytechnic had completed the difficult period of financial readjustment.” [30] 1986 felt like a completely different time for Polytechnic. Revenue was increasing by 7-9% annually, its budget was balanced, and the institution could finally look towards the future. Though budget challenges still remained, such as a meager $14 million endowment forcing tight budget restraints, the institution was in a much healthier position compared to before the merger. [30] When New York’s difficult economic situation is also factored in, the merged institution's financial turnaround looked like a downright miracle. Thus while not perfect, we may safely say that the merger successfully saved both institutions from financial ruin in a turbulent 1970s New York.
Conclusion and Analysis
In the introduction, I stated that the results do not tell the whole story. This applies not only to the merger negotiations, but also in the formulation of this site.
First, I would like to add my own thoughts and analysis to the before and during the merger negotiations. An attentive reader would notice how I said that the first set of negotiations went rather smoothly up until the NYU faculty’s rejection. The second set, meanwhile, required a lot more discussion and negotiation. The answer to why this is lies in the timing and circumstances surrounding each set of negotiations. The NYU faculty’s overwhelming rejection of the first set of negotiations, as well as how many of them sent a similarly formatted letter of rejection indicates that a majority of them never intended to even attempt to negotiate. It is rather easy to make an agreement with a brick wall, though getting it to sign the agreement is another matter. While the first set of negotiations were going on, the sale of the University Heights campus was proposed but not yet finalized. This is what I believe to be the reason the faculty opposed the merger. While it is true the NYU faculty looked down on PIB, the larger factor was that entertaining and agreeing to the merger would most certainly lead to the sale of the Heights campus, which is something the NYU faculty were opposed to. Thus, logically the faculty were against the merger. By the time of the second set of negotiations, the sale of the Heights campus was all but assured. Faced with the choice between merger or the loss of jobs, it comes as no surprise that the NYU faculty chose the merger. Now wishing to participate, negotiations must include their wants. Rather than say that the second set of negotiations were more difficult, I would say that the second set were the “true” negotiations.
Next, a reader may notice how there is a lack of first hand accounts of the merger negotiations, the protests to the merger, the daily life of people during this time, etc. While there are documents and letters, these are, for lack of a better word, more official documents and letters directly concerning the proceedings. I promise that this was not me ignoring the personal aspect of the people directly involved and impacted by the merger. Rather, this is a limitation of the archives. Much of the information I found and utilized come from the Poly Archives and secondary sources. The Poly Archives not only focuses more on Poly, but the box containing information about the merger has less of an incentive to include primary sources about the specific protests and student newspapers concerning the merger. The archives were dominated by official letters between presidents concerning the proceedings, statements of intent, financial records, proposed agreements, etc. It is outside the scope of this specific archive to document the personal opinions of everyone involved or to record every op-ed concerning the merger. Similarly, secondary sources can only look at events from a bird-eye view. If you read a story about a town flooding, for example, you will be told the overall impact of the local’s lives, and perhaps an interview with one such victim. You will not, however, find every single victim’s personal accounts of their experience during and after the flooding, as that is simply outside the scope of the source. The limitations of my primary sources of information therefore affected how I can write my site. Though I can write that the NYU faculty protested and why, I cannot dig into their personal lives and opinions during this time, as that is outside the scope of both my sources and my site.
Finally, concerning my historical argument. I believe that the merger was a success beyond a purely financial standpoint. It was able to make headway utilizing the research funding it received, was able to seamlessly integrate the two faculties together, and continued its excellent engineering and science education. In addition to this, a hindsight analysis of the merger shows that the faculties of both schools were able to successfully integrate with one another and that the reputation of the school was restored, shown by an increase in enrollment. [5] Though one can argue the merger failed in the long run because of the existence of the second merger being needed, I would argue that the 2008 merger would not have happened had the 1973 one had not, as both schools would have been bankrupt and gone at that point.
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