The resignation of Barbara Debs marked the beginning of a period that defies direct comparison to any previous time in the Society's history. The combination of enormous—intransigent—financial problems and a lack of full-time admin­istrative leadership made it impossible for the Society to maintain an organized program of operations. As had been the case for some time, the board's focus could not be on supporting the Society's staff and overseeing their efforts to pur­sue its programmatic mission; the financial situation was simply too dire for that. At his first board meeting as interim chief executive, in November 1992, Norman Pearlstine reported that the "cash flow situation is much worse than anticipated and unless we receive a cash infusion in the near term, [there is] no other alter­native but to close the door at year-end."

At the senior staff level, Debs's departure created a power vacuum that fed a natural and growing rivalry among her three chief deputies: the vice president of external affairs, Juliana Sciolla; the director of the library, Jean Ashton; and the director of the museum, Holly Hotchner. Even in more stable financial times, with a strong full-time administrator at its helm, the Society's multidimensional structure was difficult to manage. Allocating scarce resources between the museum and the library, for example, had always been contentious and difficult.

It was even more so now. Pearlstine recognized that he could not manage the day-to-day operations of an institution in such turmoil on a part-time basis.

In late October, Pearlstine named Sciolla to be his interim chief financial officer. In her role as vice president for external affairs, Sciolla had been respon­sible for overseeing the development, membership, and public relations offices. She had also been the primary liaison between the Society and state representa­tives in Albany. Prior to joining the Society, Sciolla had been an administrator at the New York State Council on the Arts. For someone with no experience in financial management, hers was truly going to be a tremendous challenge.

With Sciolla responsible for management of the day-to-day finances, Pearl­stine concentrated on pursuing affiliations with other cultural institutions. Of the many contacts Pearlstine initiated, his conversations with the New York Public Library (NYPL) were the most serious and led to the possibility for a major col­laboration. On November 19, the NYPL board of trustees approved a plan to consider loaning the Society up to $1.5 million. In an article that appeared in the New York Times, Pearlstine explained that even though the Society had "made con­siderable progress over the past few years in preserving our collections and mak­ing them more available to the public,. . . the plain fact is that we have run out of cash and we have run out of time. . . . The library's assistance will give us time to consider appropriate options, including possible affiliations with the library or some other institution."^[130] Although Pearlstine did not rule out the possibility of working with other institutions, he indicated that he thought the library pro­vided the best hope for preserving the collections and keeping them in New York City. He added that "the Society's collections are uniquely complementary with" those of the NYPL.

For its part, the NYPL agreed that the Society's library collections were com­plementary to its own. In fact, because of the strength of the N-YHS library collections, the NYPL had shaped its acquisition policy so as not to duplicate the Society's holdings. Loss of local scholarly access to the N-YHS's collections was viewed by the NYPL as an intolerable prospect. The NYPL's chief interest in help­ing the Society, then, was to ensure that those collections remained publicly accessible and in New York City.

Closing the loan proved to be far more difficult than announcing an agree­ment in principle. In conducting its due diligence, five members of the NYPL's financial staff spent three weeks working full time at the Society with Sciolla, learn­ing all they could about the Society's financial situation and evaluating the Soci­ety's capacity to repay the loan.

The Society's precarious financial condition mandated that collateral for the loan was going to have to come from the Society's collections. Because of that necessity, the Society had to prove that it was acting within its rights to sell any works it was offering as collateral. In other words, the works had to be legally deaccessioned. Aside from being controversial, this fact meant that the attorney gen­eral would once again have to become involved to ensure that proper procedures were being followed.

The process of identifying collections for deaccessioning proved to be com­plicated, time-consuming, and expensive. Even after Hotchner and the museum staff and Ashton and the library staff had identified valuable items that were peripheral to the Society's core mission, it was difficult to determine whether the Society held clear legal title to the items to be deaccessioned. For many of the So­ciety's early acquisitions, record keeping had been poor, and the provenances of items were not clear. Not only was this identification process painstaking and slow, but because of the sensitivity of the issue, the advice of outside counsel was required to help staff members make these determinations.

With Ashton and Hotchner focused on deaccessioning, Sciolla, whose title was changed from chief financial officer to chief operating officer at the De­cember board meeting, concentrated on trying to manage the Society's cash flow. Sciolla canvassed donors of various restricted appropriations to urge them to remove restrictions on their grants so that the funds could be used to meet general operating expenditures during the transition period. In addition, Sciolla was holding payment on nearly $300,000 in invoices, telling creditors that they would be paid when the NYPL loan became available. Finally, she continued to pursue the cash payments on contributions that had been promised but had not yet been received. Even with these steps, there was some question whether the Society would be able to make its Christmas Eve payroll. In early December, the Society had only $55,000 left in its unrestricted account; its projected December payroll was nearly $140,000.

Negotiations between the library and the Society bogged down. As a non­profit institution with a fiduciary responsibility to protect assets held in public trust, the New York Public Library had to approach the loan with extreme caution. Dis­cussions were at an impasse on several points, including the total amount of col­lateral required (NYPL wanted 300 percent, or $4.5 million), how much of the collateral would have to be formally deaccessioned at the closing (NYPL wanted 50 percent), and whether the loan would be provided as a line of credit (NYPL's preference) or cash up front. At this point, Wendell Garrett, a member of the Society's board and a senior vice president of Sotheby's, suggested that perhaps Sotheby's would be willing to loan the Society the money under more flexible terms. Negotiations that the Society and the NYPL had been unable to com­plete in nearly a month were completed in two-and-a-half days. Sotheby's agreed to loan the Society $1.5 million for a period of one year. It required 200 percent ($3 million) of the loan amount in collateral and was willing to provide the Soci­ety with the full amount in cash at the closing. Although the Sotheby's deal was agreed to by all parties in mid December, it was decided that it would not be announced publicly until after the Society's January board meeting.

Everyone was aware that this unusual liaison between an auction house and a museum would be controversial. The Society explained that the Sotheby's loan was "an extraordinary goodwill gesture to a troubled institution that has been get­ting very little support from the traditional sources."^[131] It also pointed out that the approximately 150 items identified as collateral had been previously selected by Society curators for sale and that they had been approved both by the Society's board of trustees and by the New York State attorney general. A spokesman for Sotheby's said his company's motive was strictly that of "being a very good cor­porate citizen. ... It would have been a commercial arrangement if we stood to make a profit. However, in the worst-case scenario, we would not make a profit. The collateral would be sold, and we would be reimbursed only for the amount of the loan and the interest on the loan." He added that "the library support wasn't coming fast enough for [the Society's] needs, whereas we acted on very short notice."^[132] As part of the effort to diffuse criticism, for the second time in five years, the Society named an outside panel of experts to advise its board on possible future strategies.

Despite efforts to make the situation palatable, museum administrators were critical of both the loan and even the basic concept of putting collections up as collateral for a loan. Robert MacDonald, director of the Museum of the City of New York and a past president of the American Association of Museums, said, "The museum has jeopardized its soul. Losing a collection like this that relates to the city of New York would be a major tragedy." He added that use of a museum's collection to raise money would be "contrary to long-held ethical standards unless the money was used for new acquisitions." Steven Miller, director of the Western Reserve Historical Society in Cleveland, said: "The collection is a pub­lic trust. You don't turn it over to the development office."^[133]

The closing of the Sotheby's loan and its associated public controversy marked the beginning of yet another chapter in the Society's saga. The special advisory committee, like its predecessor five years before, was charged with recommend­ing a course for the Society, which ranged from pursuing mergers and affilia­tions to the possibility of total dissolution. The committee was chaired by Wilbur Ross, senior managing director at Rothschild, Inc., an investment bank, and chair­man of the National Museum of American Art in Washington, D.C.^[134] Ross's professional specialty, restructuring troubled and bankrupt companies, seemed tailor-made for the Society's financial difficulties.

Under Ross, the advisory committee wasted no time taking bold and decisive action. At its first meeting, on February 3, 1993, it voted to close the Society, recommending that forty-one of the Society's seventy-six remaining employees be relieved of their duties. The action, which was scheduled to take effect on Feb­ruary 19, would end public access to the Society's library and would discontinue the Society's lecture series and school programs. (Museum exhibitions had been closed since January 1.) Only a core group of employees would be retained to maintain the collections and participate in long-range planning. In a press release issued by the Society, Pearlstine said: "It is sad that we have reached this point, but without substantial public support or a radical restructuring, the Society simply cannot exist. The tremendous gains made by the staff over the past four years are outweighed by the formidable financial requirements to operate an institution of this size and stature. Until a long-term solution can be reached, we are forced to make hard decisions and prepare for the possible dissolution of the Society."

It had been determined that the Sotheby's loan for $1.5 million, which had become official only a week before, did not provide the amount of cash neces­sary to keep the Society open through June as originally expected. The com­mittee decided it did not make sense to continue to fund the Society's persistent structural deficit. Closing the institution would allow the Society to conserve its limited remaining resources until an appropriate solution could be reached. Ross, the advisory committee's chairman, explained: "Our primary focus at this point must be the safety of the Society's magnificent collections. We will direct all our actions towards guaranteeing the best possible outcome for the library and museum holdings."

Remaining members of the Society's staff moved quickly to make their con­cerns known to the advisory committee. In a memo written on February 3, fifteen members of the Society's senior curatorial staff expressed in strong terms their desire not only to be kept informed about the progress of the advisory commit­tee's deliberations but to be involved in them as well. The memo implored the committee to make every effort to maintain an independent organization that "honors the intellectual integrity and unity of the collections." The memo also stated that further deaccessioning under the circumstances was "both impru­dent and inappropriate" and that the staff expected to contribute directly to the deliberations that affect the future of the collections.

The advisory committee's first steps centered on finding partners for the in­stitution. A planning document written for the committee's first meeting outlined its objectives. "Longer term, the Society must affiliate with one or more institu­tions, and likely will divest of some of its assets. . . . Affiliation should result in more assured revenues and lower operating costs. It is conceivable that three or more affiliations might be needed, one for the Library, one or more for the col­lection and one for the real estate." Attached to the document was a list of eighty-five nonprofit institutions, corporations, and wealthy individuals and families who were to be approached about participating in possible affiliations.

Outside of the Society, reaction to the announced closing was swift and dra­matic. Particularly vocal in its response was the scholarly community, who con­sidered access to the Society's library collections irreplaceable. In less than a week, a petition had been signed by six hundred scholars at forty campuses across the country urging state and city officials "to fashion a solution that will keep the collections intact and available to all New Yorkers."^[135] Stanley Katz, the president of the American Council of Learned Societies, expressed his opinion of the sit­uation quite succinctly: "It's the institution of continuity in the city. This could never happen in the South or in a city like Chicago because of the civic pride there. ... If we can't keep all this in New York, the city will be committing cul­tural suicide."^[136] Letters to the editor at the New York Times illustrated the diversity of the Society's collections. One lamented the possible loss of access to the Soci­ety's Audubon collection. Another called attention to the Society's rare and price­less collections of African-American documents from New York's early history, including one-of-a-kind papers from the city's first black school and first black church and the city's (and country's) first black newspaper.

Public pressure and concern continued to mount as the February 19 closing date approached. Responding to the attention, the advisory committee issued a statement reporting on the progress of its deliberations. It declared that the com­mittee was "absolutely committed to preserving the Society's valuable collec­tions intact, to maintaining public access to them, and to keeping them in New York where they so rightly belong. We believe just as firmly, however, that any solution will ultimately require significant aid from the public and private sectors." In addition, the committee reasserted its position regarding possible affiliation say­ing that the "Society can no longer remain viable independently and that any solution must involve a merger or affiliation with one or more institutions."

The outpouring of public support for the Society's collections and the increasing media scrutiny (several newspapers wrote editorials on the eve of the Society's closing) attracted the attention of local, city, and state politicians. Ruth Messinger, the Manhattan borough president, said that "the important work of the Society must be sustained." Mayor Dinkins voiced his support, saying that "the preservation of the important collections of The New-York Historical Society is a high priority."^[137] New York State Attorney General Abrams issued a statement in which he indicated that his office was "committed to the goal of keeping the invaluable collections of The New-York Historical Society in the public domain." And finally, Governor Mario Cuomo weighed in, praising the Society as "a vital part of the cultural heritage of New York State. If disbanded, the legacy of this venerable institution could never be reconstructed."^[138]

The Society closed its doors, as scheduled, at the end of the day on Friday, February 19. More than a hundred scholars demonstrated on the front sidewalk, holding placards pleading for the rescue of the Society. Inside the library, 105 researchers—more than three times the usual number—used the Society's col­lections for what they feared might be the final time.^[139]

Commentary on the Society's plight grew even more dramatic with the clos­ing. Wilbur Ross said that he viewed the Society as "a metaphor for New York City. ... If we let this go into dissolution, we're saying a lot about ourselves." Ruth Messinger echoed this sentiment: "You don't close collections unless you're opt­ing out of civilization." She expressed her hope that a way could be found to keep the library open, even if on a part-time basis.

The efforts of the advisory committee, together with the huge outpouring of public concern for the collections, were successful in postponing a permanent closing of the Society. On February 23, the Society received an emergency grant in the amount of $66,000 to be used to reopen the library and keep it open for three days per week through April 2. The grant was pieced together from funds contributed by the city (through the Department of Cultural Affairs), the state (through the New York State Council on the Arts), the Manhattan borough pres­ident's office, and the city council.

The emergency grant, small as it was, marked the first time the Society had received financial support for general operations from the public sector in more than a century. It had taken the threat of total dissolution to make it happen. In discussing why the Society had been denied membership in the CIG in previous years, Luis Cancel, the commissioner of the Department of Cultural Affairs, pointed to the Society's narrow constituency. He noted that although he had re­ceived many calls from architects and historians bemoaning the loss of the Society, there had been little public outcry. He said, "We're not waiting for a groundswell of support before we try to rescue [the Society], but we recognize this lack of response as indicative of how thinly based this organization is and why it needs to take a hard look at itself, while we try to figure out how to keep it alive."^[140]

Public attention and sentiment soon shifted away from the importance of the Society's collections toward a general questioning of how the institution itself could be in such bad financial shape. Articles more investigative in tone appeared in both the New York Times and the New York Observer. The Observer article was the first to take direct aim at the Society's most recent leadership. It criticized increases in ad­ministrative expenditures during Debs's tenure, questioned why the Society pro­vided space to the Jewish Museum rent-free, and took the Debs administration to task for the continued erosion of the endowment. It was apparent that some of the information critical of the Society came from the advisory committee. The article quoted an unnamed member of the committee, who said: "How can it be that year in and year out they were dissipating the endowment without any sign of improvement? It makes you wonder what was going on?"^[141] The Observer article was followed a week later by an editorial stating that the Society's "rehabilitation process will require an extended recovery from the stewardship of Norman Pearlstine.”^[142] The editorial specifically criticized the Society for its deficit spending, for what it called the continued raiding of the endowment, and for rising administrative expenses.

Meanwhile, the advisory committee was working feverishly to finish its report by mid-March. One aspect of its work was preparing an operating budget that had a realistic chance of success. On the expense side, that involved contemplat­ing a variety of serious cuts and/or structural changes to the Society's mode of operation. The question of whether the Society's museum and library could con­tinue to be part of a single institution was raised, and the remaining staff were re­quested to prepare detailed operating budgets going forward for the library alone, for the museum alone, and for a single institution comprising both units. On the revenue side, committee deliberations involved a reopening of the various options for monetization of the Society's illiquid assets, including the sale or development of its real estate and deaccessioning of its collections. The possibility of deaccessioning once again raised the question of the relevance of the Society's mission. There had been calls for the Society to narrow its mission, and the advisory com­mittee consulted with the staff in preparing a new mission statement.

On March 11, 1993, the advisory committee report was released to the pub­lic. In addressing the Society's financial difficulties, the report focused primarily on the Society's sources of revenue rather than on its level of expenditures. It em­phasized that although the Society owned over $1 billion in assets, it was able to generate less than $1 million in recurring revenue. For the Society to survive, it said, it would simply have to find ways to generate more annual revenue. The rec­ommendations of the committee centered on four primary components, all of which would have to be implemented simultaneously for the plan to succeed: (1) a new mission statement, (2) refinement of the collections, (3) development of real estate, and (4) major public sector support for both operating and capital expen­ditures. In addition, the committee called for major trustee giving and for increased emphasis on generating revenue from earned income opportunities. Although the committee's emphasis was definitely on revenue, the report also recommended major cuts in operations, presenting an annual operating budget of $4.95 million for the new institution.

The first component of the advisory committee's plan offered a more nar­rowly defined mission statement: "The primary mission of The New-York Historical Society shall be to develop, preserve and interpret to the broadest possi­ble public material relevant to the rich history, cultural diversity and current evolution of New York City and State and the surrounding region." The com­mittee viewed the new mission as the central component of its plan. Not only did other recommendations flow from it, but the mission also informed the commit­tee as to how certain aspects of the Society ought to be organized and managed. For example, it was perceived as essential to the mission that the collections of the library, museum, and decorative arts collections be integrated into a seamless whole and that access to them be brought technologically up-to-date. The committee gave an example of how a visitor should be able to come into the Society, key in to a computer a request for information, and be able to retrieve and display all relevant information on that topic in the Society's possession. It was hoped that by using new technologies, the Society could provide one window of access into its various collections, be they paintings, manuscripts, or colonial carriages.

The committee also suggested that the Society do more to make its exhibits more contemporary and politically relevant. The report cited as an example how the Society could have mounted an exhibit of its collections pertaining to the lower Manhattan Negro Burial Ground while it was the subject of much attention in the city. It was thought that such approaches would make the Society a more invit­ing and more exciting place for visitors, resulting in significant improvement in the Society's revenue-generating capacity through increases in admissions, membership, gift shop, and restaurant revenues.

Another major component of the plan flowed from the development of the new, more narrow mission involved deaccessioning. The Society's new focus would allow it to raise funds through the sale of a portion of its collections. Library deaccessioning of redundant items and materials of little or no usefulness would free storage space, helping reduce annual expenditures on outside stor­age, while museum deaccessioning of out-of-scope objects would help raise endowment capital. Proceeds from deaccessioning were projected to total approximately $20 million. Detailed explanations for why the deaccessioning was justified, along with steps for how proceeds were to be used and how the Society would attempt to ensure that deaccessioned collections would remain in the public domain, were also described.

Because deaccessioning is such a controversial topic, the committee lob­bied the Association of Art Museum Directors (AAMD) to convince them that these steps were necessary. Rather surprisingly, the advisory committee was able to convince the association to issue a statement that did not challenge the com­mittee's recommendations. It said, "In acknowledging the necessity of the actions being taken .. ., the AAMD recognizes that the N-YHS is not solely an art museum, but is an institution with a multiplicity of responsibilities. We strongly urge the Society... to avoid any permanent policy that earmarks proceeds from disposition of works of art for purposes other than the replenishment of the col­lection." Though the AAMD statement stopped short of endorsing the com­mittee's recommendation, given the strong feelings in the museum community on the issue, the fact that it did not actively oppose the plan was truly a victory for the committee.

The third component of the committee's recommendation centered on how to generate both endowment capital and a recurring revenue stream from the Society's real estate holdings. Recognizing that real estate development had been rejected by the Society's neighbors and the Landmarks Preservation Commission in the mid 1980s, the committee wrote that it had "no desire to re-inflame old pas­sions, but assumes that a pre-condition of governmental support will be that the Society monetize its real estate." The difference this time would be that the So­ciety would be sensitive to community concerns concerning the scale of the project. It recommended that a community advisory board be established to com­municate with the Society about neighborhood concerns. The committee rec­ommended that the Society invite a variety of developer-architect teams to submit plans that could be discussed and approved by the various concerned constitu­encies at each step along the way. It was estimated that $15 million could be generated up front, along with $825,000 of annual income from real estate de­velopment.

Even with deaccessioning and real estate development bringing the Society's endowment up to $40 million, there was still a need to generate significant income through other methods. Using a spending rate of 5.5 percent, the committee de­termined that the new endowment could generate $2.2 million of the projected $4.95 million budget. The remaining $2.75 million was to be generated through trustee giving ($1 million), other annual private fundraising ($300,000), admissions and membership ($125,000), royalties and rights fees ($150,000), state library fund­ing ($225,000), and annual operating support from the city ($950,000). The com­mittee did not believe that requesting nearly $1 million in annual support from the city was unreasonable. For comparative purposes, the committee identified the annual appropriations of several other city cultural institutions that were members of the city's CIG. The contributions ranged from $2.5 million for the Brooklyn Botanic Garden to $13.7 million for the Metropolitan Museum of Art.

But $950,000 was just one part of what the committee's plan required of the public sector. In addition to the annual operating support, the committee also appealed to government for capital support. Serious building problems continued to exist, and it was estimated that approximately $10 million would be required to refurbish the building. Moreover, the committee's recommendations were not going to result in an immediate influx of cash to the Society's accounts. The com­mittee estimated that it would take over a year to realize the various goals outlined in the report. The committee requested $2.6 million, again from government, to underwrite this transitionary period.

In summing up the Ross advisory committee's recommendations, several notable aspects should be highlighted. First, in making its recommendations, the advisory committee emphasized that all components of its report were absolutely interdependent. If even one of the major components could not be fulfilled, the plan would fail. It argued that the recommendations should be implemented only if it were clear that deaccessioning would take place, that real estate development would happen, and that significant public sector support was