(A Prelude to the General Conference Session of 1903)
During the decade that Ellen White was in Australia, the expansion of Seventh-day Adventist denominational institutions was phenomenal but financially irresponsible. Little restraint was exercised on the interlocking boards at the Battle Creek headquarters. As college debts increased, money was borrowed from the Review and Herald. The Review itself was heavily in debt but much trusted, and many Adventists chose to use it as their investment institution. [Savings passbooks, very similar to those used by banks, were printed by the review and herald and were furnished to Seventh-day Adventist investors. See DF 193c.] Dr. Kellogg pushed ahead in opening new sanitariums across the land, mostly on borrowed money. This created debts that he and his associates persuaded the General Conference Association, also a trusted investment institution among Seventh-day Adventists, to assume. The presidents of the General Conference (Elder O. A. Olsen from 1888 to 1897, and Elder G. A. Irwin from 1897 to 1901) seemed powerless to stem the tide. Each was surrounded by shrewd and much-trusted businessmen who were in sympathy with liberal financial policies that allowed seemingly unrestrained plunging into debt.
Elder Olsen was a deeply spiritual, highly respected man. Even though Ellen White recognized his weaknesses, she favored his reelection to the office of president of the General Conference in 1895 for a two-year term. She was later to write that in financial matters "he had not the courage to say, 'I cannot betray sacred trusts.' Instead, he linked himself with wrongdoers and thus made himself equally guilty with them."--Manuscript 144, 1902.
When Elder Daniells assumed the leadership of the denomination as chairman of the General Conference Committee in 1901, he soon discovered the church's very critical financial situation. There were no budgets. Indebtedness was being increased to put up new institutions and for the day-to-day operation of the work of the church.
The load of debt was staggering. As stated previously, the wage of ordained ministers and of skilled workmen in the publishing house was only $12 to $15 per week. Yet debts on educational institutions amounted to $350,000. The General Conference Association owed $288,000. By the end of 1902 the debts of the association exceeded the assets by $7,400. The General Conference itself was overdrawn in its account by $41,500 (The General Conference Bulletin, 1903, 19). The Battle Creek Sanitarium was carrying a debt of $250,000.
Elder Daniells was well acquainted with Ellen White's statements concerning the loading of church institutions with indebtedness. He determined as he came into office that the work should be operated on a pay-as-you-go basis. To do otherwise was suicidal. He had been in Australia as she wrestled with the debt problem there. While helping to establish the Avondale school, she counseled in 1896: "There must be a strict regard to economy, or a heavy debt will be incurred. Keep within bounds. Shun the incurring of debt as you would shun leprosy."--Letter 60, 1896.
Two years later she wrote: "The practice of borrowing money to relieve some pressing necessity, and making no calculation for canceling the indebtedness, however common, is demoralizing. "--Manuscript 168, 1898 (see also Colporteur Ministry, 96).
Writing of the Battle Creek College debt in 1899, she declared: "Methods must be devised to stop this continual accumulation of debt. The whole cause must not be made to suffer because of these debts, which will never be lifted unless there is an entire change and the work is carried forward on some different basis."--Manuscript 86, 1899.
Proposing a remedy for faulty school finance in which she advocated a proper tuition rate, she advised:
The teachers must cooperate in requiring from the students sufficient funds to cover running expenses, or they must themselves agree to do their work for lower wages. The estimate of the school expenses must be considered, and if there is no other way to keep free from debt, all are at liberty to arrange among themselves to donate a certain amount of their wages. It may be best to raise the tuition; then the teachers will have the privilege of using their means to help where they see that help is most needed.--Manuscript 58, 1898.
Still heavily burdened over the debts that the church's schools were carrying in 1899, and with little prospect of liquidating them, she "laid the matter before the Lord." She reports on the outcome:
There came to me the thought that I could give the book Christ's Object Lessons to the schools.... I could see no other way for the schools to be relieved than for me to give Object Lessons for this purpose, and I said, "It must be done."--Manuscript 48, 1902.
Of course, such a project called for well-organized effort, but by 1902 $200,000 had been raised for debt reduction (The General Conference Bulletin, 1903, 19), and by 1903 the amount was more than $300,000.
Concern Over the Battle Creek Sanitarium Debt
When the group of leading workers met for the council meeting in her home on the morning of October 19, 1902, as noted earlier, Ellen White launched into the question of rebuilding the Battle Creek Sanitarium, and declared: "I hope you will not incur large debts. I have been instructed to tell our people that they are not to erect such immense buildings for sanitariums."--Manuscript 123, 1902.
Elder Daniells replied:
After the fire, Dr. Kellogg called some members of the General Conference Committee to Battle Creek to counsel with the Sanitarium Board. We counseled together, and we positively stated over and over that a debt should not be made on the new Sanitarium. Brother Prescott, Brother Cottrell, Brother Evans, and I were there, and we laid it all out. We made provision that when that institution was up, not a dollar of additional debt should rest upon it. They were then in debt $250,000--a quarter of a million; and that was on the land and property that remained after the main buildings were burned.
The General Conference Committee took the position that the Sanitarium debt ought not to be increased. They had all the debt they could carry. We spent two days with them in counsel. After our discussions and arrangements, Brother Prescott said, "We want it thoroughly understood that we agreed that this building shall not cost more than $250,000, and that this money is to be raised from the $150,000 insurance money and from the donations of the Battle Creek citizens." He laid it all out the last thing before the council closed. "When this thing is done," he said,"we are not to have a dollar added to our debt." This was agreed to by all.-- Ibid.
But Elder Daniells added:
It now looks as if a large amount of indebtedness would be added to the Sanitarium. The General Conference is not responsible in any way, shape, or manner for a dollar of that. We did not put our hands to any such movement.--Ibid.
To this Ellen White replied:
I hope you will maintain this position in regard to the matter. Dr. Kellogg must not think that because he does this, you must succumb. But God has permitted things to come to such a pass that you can clearly see your duty to refuse to bear the burden of this additional obligation.--Ibid.
Crisis in England
A crisis in the Daniells-Kellogg relationship had been reached only a few weeks before at a committee meeting held in the denominational publishing house in London. For a year following the General Conference of 1901, there had been a close working relationship between the two men. It was Kellogg, at the meeting of the General Conference Committee held at the 1901 General Conference session, who had nominated Daniells to serve as chairman of the Committee and thus leader of the church (DF 15a, AGD, "How the Denomination Was Saved From Pantheism," copy A, p. 6).
General meetings were held in Europe in the summer of 1902. Dr. Kellogg, a member of the General Conference Committee, was asked by Daniells to attend these meetings and bring strength to the medical work there. Kellogg was eager to start a sanitarium in England. He found an attractive property near London and sent a cable to Elder Daniells, then in Christiana (Oslo), Norway, asking him to come to see a property available at a reasonable price. Daniells dropped his work and took three of his associates with him to London, where they met Kellogg at the publishing house. The committee meeting that day was a stormy one, with tears and threats.
In spite of all that had been said about debt and the importance of a cash policy at the time an agreement had been entered into concerning the rebuilding the Battle Creek Sanitarium, the doctor proposed the purchase of the prospective sanitarium property at a cost of $30,000, on the basis of the British brethren assuming $5,000 or $10,000 of the obligation and the General Conference $20,000. Daniells was the first to speak:
"Doctor," he said, "that would be creating a debt here of $25,000."-- Ibid., 8. Kellogg agreed that that would be so. Daniells continued: "And you are aware that we have been working night and day for two years with [Christ's] Object Lessons to roll away the reproach of debt from the schools?" The doctor was aware of that. Then Daniells pointed out that with the church members working so hard to clear debts, he did not see how the General Conference could assume more debt without their approval.
But Kellogg would not take defeat. He blurted out, "You do not want to have any medical work done in England. You are blocking everything."-- Ibid.
Before the day was over, Dr. Kellogg pushed Elder Daniells into the washroom, stood against the door, and for nearly two hours harangued him over a "cash policy" that he declared the church had never followed, not even at the beginning. "We had always assumed obligations," he said, "and worked them out and raised the money."--Ibid., 9.
"I know we have always assumed," replied Daniells, "but we have never paid up yet, and we are in debt heels over head everywhere.... I am pledged to my committee and to our people not to go on any longer with this borrowing policy."-- Ibid.
Kellogg retorted angrily that Sister White would "roll ... [Daniells] over in the dust" if he took such a stand. After more stormy debate, the discussion terminated with Dr. Kellogg's saying, "Well, sir, I will never work with you on this cash policy. I will see you in America. Good day."-- Ibid., 9, 10.
Whether Dr. Kellogg knew it or not, Elder Daniells had Ellen White's strong support in avoiding further debts. Kellogg returned to Battle Creek and labored hard to alienate the General Conference Committee members and workers generally. With this experience and the mounting costs of rebuilding of the Sanitarium, for which no provision had been made, tensions grew. It was at this point that Daniells arranged for the General Conference Committee to meet in Battle Creek on November 10, 1902.
On Sunday morning, October 26, 1902, just a week after the momentous October 19 meeting at her home, Ellen White wrote in her diary:
During the past night I have slept but little.... I have spent the greater part of the night praying that the Lord, by some way of His own choosing, will open Dr. Kellogg's understanding, that he may see that he is departing from the faith. Unless he is led to realize his true spiritual condition, he will walk away from Christ into false paths.
I am greatly burdened by the thought that those connected with the doctor in medical missionary work do not see that he is not standing on the platform of Bible truth. Unless there is a change, grave errors will be brought in. These will be rejected by some, but by others they will be accepted. Dr. Kellogg will have a sad account to give unless he sincerely repents for lifting himself up unto vanity and assuming over souls a power that has hurt them spiritually.--Manuscript 137, 1902.
On Thursday of that week a telegram addressed to W. C. White was received at Elmshaven from Elder Daniells at the church headquarters in Battle Creek. It read: "Important conference meeting at Battle Creek, November tenth. Come without fail. Bring Knox and Alonzo [A. T. Jones]. Signed, A. G. Daniells." (20 WCW, p. 552).
This was a call of distress, a summons to General Conference Committee members on the Pacific Coast to hasten to Battle Creek for an important meeting. It was to be a forerunner of the Autumn Councils (now called Annual Councils) of the General Conference Committee that from year to year deal with the finances of the denomination. It was precipitated by Dr. Kellogg's insistence that the denomination should not be dominated by men who stood for a no-debt policy. He consistently took the position that since sanitariums were philanthropic institutions they should be launched without expectation of returning the capital investment nor even be burdened with the interest.--28 WCW, p. 452.
Kellogg had come back to the issue again and again, begging, arguing, and finally weeping as he pleaded for permission to go further into debt (DF 45h, JHK to EGW, December, 1902).
The financial situation in the denomination was deteriorating. Daniells wrote to one member of the General Conference Committee on November 6:
I presume that you have heard that recently very heavy pressure has been brought to bear upon the General Conference Committee to become party to the debt-making policy in carrying on the medical work. During the past summer, four medical institutions have been erected, or launched, at a cost of at least $30,000. This does not include the Battle Creek Sanitarium, which in all probability will add $300,000 to its indebtedness. Thus in one short year, almost half a million dollars of sanitarium and food factory debts have been created.--AGD to N. W. Allee, November 6, 1902 (29 AGD, pp. 44-45).
The issues were clear-cut, and Daniells was a man of principle. He took his stand upon sound business principles and the principles Ellen White had enunciated and urged. He had heard her say in the council meeting at Elmshaven only three weeks before the Battle Creek meeting, "I hope you will not incur large debts."-- Manuscript 123, 1902. When he reported the firm stand in England to Ellen White and the proposition that "when we have the money in hand, we will be ready to invest" (Ibid., 1902) she had commented,"But that is not Dr. Kellogg's manner of working," and she urged Daniells to stand firm. He did.
The thrust of the November meeting was clear, and with the issues and personalities involved, it was a stormy one. During the two-week session a number of communications were received from Ellen White giving encouragement and support. She was in earnest.
Dr. Kellogg declared to some of his friends that Elder Daniells would have to be turned out of office. He suggested a successor, Elder A. T. Jones. To replace Daniells would have been quite possible under the faulty provision made at the 1901 General Conference session for the choice of a leader for the church. A majority of the General Conference Committee--thirteen men--could at any time change the chairmanship and thus the leadership of the church. The Doctor threatened to renew the controversy at the next General Conference session, which was only a few months away. Elder Daniells commented:
I presume no General Conference officer has ever come into more violent controversy with him [JHK] than I have, and I cannot hope to have his friendship again unless the Lord works a marvelous change.--AGD to O. A. Olsen, December 1, 1902.
"I must confess that I do not like this strife," he wrote. "I am not a fighter; I do not like to disagree with men. I would rather pack my satchels and go to the heart of Asia."--AGD to W. O. Palmer, December 4, 1902.
Fully conversant with Ellen White's counsel, the General Conference Committee took a firm position on financial matters.
Sound Financial Policies Adopted
The action of primary importance taken at this council was:
Whereas, the work of carrying on the third angel's message is rapidly enlarging and extending into new fields; and, whereas, Unless careful management be given to the operations in extending the message, large debts will be contracted; therefore, 1. We recommend, That all evangelical and missionary enterprises carried on in the name of the denomination, or under the denomination's support, be conducted on a strictly cash basis.--The Review and Herald, December 9, 1902.
Another of the significant actions that cut across Kellogg's views on finances read:
We further recommend, (a) That the General Conference or Mission Board from this day be not held financially responsible for any obligations which they have not assumed by their own action.
(b) That the foregoing be the general policy of the union and State conferences and other organizations and institutions of the denomination.
(c) That all parties undertaking local enterprises, such as institutions, church buildings, and other undertakings in this country, secure their means in their respective local territories, and not by general call for means unless previously arranged.-- Ibid.
As to the Sanitarium that was nearing completion in Battle Creek, the Council wrote into the record:
That this General Conference Committee and council renew our hearty cooperation with the Battle Creek Sanitarium board and the Medical Missionary Association in their plans and work to recover from the effects of the fire, to renew the institution, and to promote their work as never before.
That this council approve of the Sanitarium getting money on bonds to satisfy its indebtedness, from whomsoever it may be able, at the lowest possible rate of interest.-- Ibid.
At the close of the meeting Elder Daniells reported to Elder C. P. Bollman:
We have had probably the most severe crisis the General Conference Committee has ever experienced with the Doctor. We have endeavored to hold our ground, and I think we have been successful.--AGD to C. P. Bollman, November 26, 1902.
And to Elder N. P. Nelson he explained:
You will learn ... of the terrible time we had during our council. It was very clear from the start that Dr. Kellogg occupied what we would call a hostile attitude. Of course, he declared that he was on the most friendly terms with us personally, and charged all the hostility to us. I know better.
I know very well how hard I worked for him in Europe, how we differed in our views of finances, and what heavy pressure he brought to bear upon me to yield my convictions.... On my return to America, I found that he had been talking to my friends against me, and was doing all he could to prejudice them. He continued this work until our council opened, and then a fierce struggle began....
I took the position that the time had come to stop the work of debt making.... In the next place, I claimed the right to think for myself and to express my convictions in any board meeting or publicly without being held up to ridicule, and charged with being an obstructionist, and unwilling to cooperate with those with whom I differed. These were really the two questions over which our battle was fought. Without boasting, I can say that the Lord gave the General Conference Committee a victory.--AGD to N. P. Nelson, November 28, 1902.
At this November meeting not only was there disagreement on financial issues, but theological matters were beginning to loom. It was here that the issue of the teachings of Kellogg's book The Living Temple came into the open, an issue with which Ellen White would become deeply involved. Daniells wrote of issues of prime importance:
One was the securing of money for the Battle Creek Sanitarium; another was the circulation of The Living Temple on the same plan of Christ's Object Lessons. Growing out of the latter was another issue, and that was regarding the character of the teaching or doctrines set forth in The Living Temple.--AGD to G. A. Irwin, December 12, 1902.
Apparently defeated in his financial maneuvering, Dr. Kellogg did not wait for the General Conference session. In December he dictated a seventy-page letter to Ellen White--a letter clearly aimed at alienating her from Arthur Daniells and gaining her support for himself. It was a letter in which the doctor used every possible argument he could summon to influence her. A close associate of Elder Daniells learned of the letter and reported the matter to him. He decided he must write to Ellen White presenting his side of the story. That evening he sat down and wrote one page and started on another. Then he came to himself.
"'What are you doing?'" he asked himself. "'Are you helping the Lord to give Sister White information which she should have? I guess He is able to do it Himself.'"--DF 15a AGD, "How the Denomination Was Saved From Pantheism," copy A, p. 15. He tore up the sheet, "threw it into the wastebasket, and never wrote her a line" (Ibid.). But in his mind he pondered. He knew well that if any man could influence Ellen White, it was Dr. Kellogg.
Kellogg's seventy-page letter was not mailed until early or mid-February. It was read to Ellen White on March 16 (21 WCW, p. 270). It betokened a storm ahead. Would the messenger of the Lord be influenced? The answer came in March, 1903, at the General Conference session. It was a decided No; she was not influenced.
In the meantime, on the night of December 30, 1902, the Review and Herald publishing house burned to the ground. Disaster was following disaster.