Background/Context: Endowments of institutions of higher education in the United States have attracted widespread attention in recent decades due to their meteoric rise in value and their precipitous decline during the recent recession. But there has been little research on the beginnings of the significant interest in and importance of endowments. Purpose/Objective/Research Question/Focus of Study: This study examines how the importance of endowment, the emphasis upon increasing it, the competition for it, and even its current meaning originated between 1890 and 1930. The research focused on the emerging meaning and significance of endowment in higher education in the United States, demonstrated by the eight universities that acquired the largest endowments during the period between 1890 and 1930. Research Design: This study presents a historical analysis relying on published documents and archival records from the period between 1890 and 1930. Conclusions/Recommendations: While colleges have long had permanent invested funds, endowment first acquired its meaning and significance in U.S. higher education between 1890 and 1930 as universities realized that their autonomy, stability, and comparative advantage over competitors depended heavily on the amount of their financial capital. The universities that first made this realization began to focus on increasing their endowment and thereby established an upper tier of wealthy universities that maintained this elite status through the ensuing century. Consequently, the inception of endowment between 1890 and 1930 had far-reaching influence on the stratification of higher education in the United States.