The disposition of the money derived from the Morrill Land Grant Act passed by Congress in 1862 led to the founding of Virginia Agricultural and Mechanical College. The location of the college at Blacksburg was the result of several years of legislative debate, dubbed the 'War of the Colleges' by the press.
Claims for the money were made by some twenty-four different schools in the state. Many different proposals were also made as to the disposition of the fund. One proposal was that the money be given to a new school or to one that would give up its charter and become the Agricultural and Mechanical College. Another proposal was to divide the money between whites and blacks and establish a new school for blacks.
At the time, the Preston and Olin Institute at Blacksburg was in financial difficulty and its trustees decided to ask the legislature for the fund. It did so by means of a letter to Senator John E. Penn who represented the Blacksburg District. Penn was willing to support the request, and apparently at his suggestion the trustees of the Preston and Olin Institute promised to permit the reorganization of the school into an agricultural and mechanical college in return for the land-grant money. At the same time the people of Montgomery County pledge $20,000 to the new school if established.
In the State Senate, Penn secured the whole hearted support of Gabriel C. Wharton in the House of Delegates, and these two after a long and often bitter and acrimonious struggle succeeded in getting a bill passed which provided that one third of the land-grant fund be donated to the Hampton Normal and Industrial Institute for the blacks, and two thirds to be donated to the Preston and Olin Institute, if the latter institute relinquished its charter, donated its property to the state and reorganized as the Virginia Agricultural and Mechanical College. Governor Walker signed the bill on March 19, 1872.
The Virginia Agricultural and Mechanical College was thereby born.