al Building was completed.

The affairs of the University were in a critical state by 1843. The sale
of the state lands had resulted in no such sum as had been expected; the
branches had been eating up what little income there was; while an
unfortunate bit of financiering on the part of the Regents in 1838,
involving a loan of $100,000 from the State for the immediate completion
of the necessary buildings and the establishment of the branches, only
added to the difficulties. The history of this loan is a complicated one
which does not need to be detailed here. The expense incurred in
establishing the branches, the purchases for the library and mineral
collections, and the erection of the buildings practically exhausted
it. When it was made the Regents supposed that the income from the state
lands would more than cover the interest, but this proved a vain hope.
Practically every bit of the University's income was needed for this
purpose. The situation was only saved in 1844 by the Legislature
permitting the Regents to apply depreciated treasury notes and other
state scrip received for the sale of University lands at a fixed
valuation in the payment of this debt, as well as accepting some
property in Detroit. This relieved the situation so that soon after that
time the Regents were able to report that the disbursements were less
than the receipts. For several years the State exacted interest for this
loan and in 1850 deducted $100,000 from the University fund held by the
State. Three years later, however, the Legislature directed that the
interest upon the whole amount of the lands sold be paid to the
University. This was done by successive Legislatures until in 1877 the
$100,000 was finally returned to the University fund through an
adjustment of the accounting system of the State. Whether the return of
this $100,000 constitutes a gift to the University by the State is still
a matter of discussion. Professor Ten Brook, in his "History of American
State Universities," written, however, in 1875, before the final
adjustment was made, maintained that the University had already paid
this debt, while Professor Hinsdale, in his later "History of the
University," more properly insisted that actually the University never
repaid the debt, and that this $100,000 was eventually made a gift and
thus became the first direct state support of the University of
Michigan.

The whole history of the early finances of the University is one