Every year the American Historical Association honors nearly two dozen outstanding members of our profession for teaching, scholarship, and service. The recognition we thus accord these distinguished colleagues carries enormous weight—personally for the winners in the satisfaction it brings from peer recognition of skills carefully honed after long years of dedicated effort, for colleagues and employers in the certification of merit that it conveys, and, perhaps most important, for the rest of us—in the reminder and celebration of professional standards that we, and hence the AHA, all strive to maintain. The Association cannot extol achievements of this order too highly or too publicly. They lie at the heart of the excellence in historians' practice that the AHA was founded to nurture, and making these awards is a prominent way in which we do so.

Those of you who attend the general meeting on Friday evening at the AHA's annual gathering each January hear the president-elect introduce the winners of that year's book prizes, honor senior colleagues and international visitors for scholarly distinction, and present awards for teaching. For me last year, an inspiring highlight of the occasion came in greeting that eminent group of honorees and in reading out their achievements. It's a considerable tribute to what they accomplished, and to them personally, when presentation of these awards ranks with the other privilege that the president-elect enjoys that evening: the introduction of the Association's president and listening to a presidential address as accomplished, wise, and engaging as were Joyce Appleby's remarks to a full assembly hall in Seattle. The names of those honored, along with citations to their outstanding achievements, are then published each year in the March issue of Perspectives, to inform—indeed, inspire—members of the Association unable to be present and the public.

Most of the winners return home basking in this strong confirmation of the professional esteem that they enjoy, along with the additional personal satisfaction of a monetary award. The AHA is able to supplement many of its awards with money because, in years past, generous benefactors have donated funds to honor and perpetuate the contributions to history of mentors, friends, and colleagues, through establishment of prizes and awards that would inspire winners to emulate the exemplary standards they set. Other historical societies affiliated with the AHA share in support of a few prizes and participate in selecting winners. Beyond the historians, scholars, teachers, and friends to whom the AHA prizes pay homage, in a few important instances the names of the awards also memorialize nonprofessionals whose leadership and generosity have sustained the Association through many years. The reality is that maintenance of high professional standards requires financial support as well as intelligence, time, and dedicated effort.

To talk of the dollars and cents behind the prizes and awards (or for some of the award winners even to open the envelope after leaving the ceremonies) brings a vague feeling of descending to matters base and inappropriate. It may thus be our concentration on the honor of the awards process that has left their monetary aspects largely unnoticed, buried—though published each year for all to see—in the Association's audited financial statements. The Association has a primary fiduciary responsibility for these prize funds to their donors, some of them several generations back, others more recent, and often including continuing contributors to them. Legal documents supporting these bequests set conditions for the awards and for uses that the AHA can make of the funds. Members of the Association, represented by colleagues appointed to the AHA prize committees, select winners each year within the stipulated terms. Council, under its constitutional responsibility for the Association's funds—whether general revenues from dues and fees or gifts restricted for such specific uses as the prizes—determines the sizes of the checks that come along with the prizes. It deliberates with guidance from our legal and accounting advisers who make sure that Council members do not inadvertently neglect those terms. In respecting fiduciary responsibilities to donors, which include the commemorative purposes of their gifts as well as suitable recognition of the winners of the awards they support, Council confronts, on multiple levels, all the familiar dilemmas of combining honor with money: like oil and water, they are hard to blend in a smooth dressing, as all of us know who relish our salads with vinaigrettes.

Councils for many years felt that substantial checks made the honor tangible and set relatively generous, uniform levels for most awards, regardless of the income earned from the invested funds supporting them. Because some funds were much larger than others, and because restrictions limited the use of each fund to support of the prize carrying its name, that policy effectively reduced small funds by appropriating appreciated principal from them to prizewinners while allowing larger ones to grow from reinvestment of earnings in excess of the prize. In more recent years, to protect prize endowments and to draw equally from them all, Council has put each fund on a "pay-as-you-go" basis, setting the amount of each check accompanying a prize according to the previous year's earnings on its principal, believing that the honor meant more to winners than the money that might accompany it. This policy preserved the principal for awards in future years but meant that some honorees received checks in amounts significantly smaller than the previous uniform standard. It was the same policy that Council applied to transfers of income from unrestricted portions of the endowment to its operating accounts.

In recent years, of course, market valuation of securities has risen faster than earnings, sometimes much faster. But appreciation in the value of AHA investments increased prize amounts (and, for that matter, returns available for operations) only as growing asset values reflected higher interest earnings and dividends—which they sometimes did not accrue. The Association's trustees, skilled financial professionals who manage all AHA funds, have captured some of these market gains for our benefit, but to do so they have moved away from earlier, more conservative investment strategies emphasizing income over appreciation. As one unintended effect of these otherwise effective general procedures, income-based calculations of specific AHA prize moneys fell below levels that—in current economic conditions—seemed to express the enthusiasm of the donors and the Association in recognizably pecuniary terms. To the Council's further concern, the procedures have also diminished the satisfaction that some fine historians could have derived from the honor conferred by their awards.

This year, with the encouragement of our financial advisers, Council adopted a policy of drawing from the portfolio according to a calculation of "total returns," a policy that has become common among organizations like the AHA. Such a "total return" updates Council's interpretation of its responsibility for protecting the Association's funds by tapping a judicious portion of their appreciation in value as well as using only current earnings to support member services and other programs. To lessen the impact of possible downturns in market values—a likelihood hinted at by recent events—and to avoid the temptation to spend unsustainably large gains from good years, the policy averages gains and losses over the three most recent fiscal years in calculating the basis on which we draw a fixed percentage, currently set by Council at 5 percent.

On the theory that a policy that Council views as prudent for the Association's general funds is also a sensible one for the prize funds it safeguards, the monetary tokens accompanying its honors will reflect calculations made on that same basis, starting with the awards to be announced this coming January (subject in some instances to certain additional legal restrictions, and in all cases also to subtraction of administrative fees—allowed by the terms of the bequests—for fund management and for staff support of the award committees' work). The good news is that the checks accompanying the prizes to be awarded in January 1999 will come in amounts significantly higher than in the recent past. The hint of bad news in my phrasing of the policy's effect comes from the fact that the recent gains of extraordinary proportions in the Association's equity portfolio make these amounts higher than they may be again soon. Future figures will reflect a three-year average of whatever recent performance the market will have shown by then.

Whether or not the world economy grows or contracts in coming years, the dedication of the AHA to superlative standards of historical practice, and the lofty honor that the Association accords through the prizes recognizing them, will remain undiminished. Nonetheless, I write here about their financial aspects because there are many interested in the dilemma—how to mix money with honor in palatable proportions—that accompanies this important activity of the Association. The contributors to the prize funds; our partner societies in making the awards; doubtless some winners who may have made financial sacrifices to carry their research to exemplary levels, or who may have incurred significant expenses traveling to the annual meeting to accept their awards in person; and most of all, AHA members, are all concerned about how Council wrestles on their behalf to properly gild the honors conferred.

No one can be sure that any formula will protect viable balances, philosophical as well as financial, if—and the pessimists among you may be thinking when—the economic bubble bursts. Some future Council may then decide that the principal of the funds backing AHA prizes is sufficient to justify drawing a higher percentage of "total return" to provide checks in amounts it deems honorific. However tricky the financial trade-offs inherent in responsible fiscal management may be, they are unlikely to perplex my successors as profoundly as the persistent conceptual challenge of mixing money and honor.

—Joseph C. Miller (University of Virginia) is president of the AHA.