0.7 Chapter five: new initiatives and economic shocks, 1982-1987  (Page 15/18)

The actions taken at the May trustee meeting were an overwhelming defeat for Goelet. It was clear that Goelet no longer had the support of his fellow trustees. As it turned out, the May meeting was the last meeting Goelet would attend. He did not appear at either the July or the September meeting, and at the November meeting he submitted his resignation. Albert Key was elected to replace him.

Barbara Debs also submitted her resignation at this time, but for reasons unrelated to Goelet's decision. Debs resigned to protest what she viewed as irre­sponsible oversight and care of the collections by the Society's board. It was Debs's opinion that the trustees were going to attempt to raise money through deaccessioning without following proper procedures and without careful consideration from the Society’s curatorial staff.

Stock market crash and a desperate search for funds, 1987-1988

In replacing Robert Goelet, Albert Key took the reins of an institution at the financial precipice. As it reviewed the fiscal year 1987-1988 budget, the board once again engaged in extensive discussion about how to deal with the continuing operating deficits. Key emphasized the need to put the fiscal house in order but moved to end discussion by recommending that the board approve the budget with the understanding that "vigorous efforts would continue ... to keep expenses under control and to increase revenues." The budget was approved on that basis.

In the fall of 1987, representatives of Fiduciary Trust International, the in­vestment management firm responsible for the Society's endowment portfolio, reported to the board. In the presentation, Jeremy Biggs noted that the perfor­mance of the portfolio since 1978 had been good but warned that "a substantial portion of realized capital gains had been distributed from the portfolio to the Society's operating accounts rather than reinvested." Platten noted that present economic conditions indicate that the Society should "make every effort to hold further distributions from the portfolio to a minimum."

If it hadn't been clear before, the stock market crash in October 1987 finally made it undeniable that the Society could not indefinitely hide its operat­ing deficits behind transfers of realized gains from the endowment. Responding to the crisis, President Key established an ad hoc committee on the budget. The com­mittee recommended that the Society "undertake an austerity program for the cur­rent fiscal year which will incorporate inter alia a freeze on hiring and capital expenditures, the elimination of overtime, the reduction of travel and entertain­ment expense, together with ... a reduction of seven staff personnel" engaged in the registrar program. In addition, the Society's board retained the consulting firm Cambridge Associates to conduct a "financial equilibrium assessment."

With the Society facing an uncertain future, it once again looked at its collec­tions, and specifically its European paintings, as a potential savior. Just prior to the stock market crash, the committee had recommended that the Society pursue an active program to dispose of items "in cases where other institutions or collec­tors would be more suitable owners." It was reported that the board was "keenly interested in how this project develops." After the crash, the collections committee recommended "the sale of all the remaining European paintings in the Bryan Col­lection" and later retained Christie's, the international auction broker, to represent the Society in such a sale. The collections committee also recommended a "small change in that section of Collections Management Policy relating to funds realized from sales" (emphasis added). The changed paragraph was to read as follows: "Un­less there is a restriction on the use of proceeds realized from the sale of an object, such net proceeds and the income thereon may be used for any lawful purpose as the board of trustees may determine. Acquisitions made by use of such proceeds, and objects received in exchange, will be recorded in the name of the original donor, if any."