The effects of the national economic panic of 1893 did not reach Missoula until about 1895. At that time most of the banks were hit hard and closed their doors. The exception, the A.B. Hammond-controlled First National Bank, backed with the resources of the Missoula Mercantile, survived the crises. Development south of the river stalled when capital dried up, but a rumor that the Great Northern Railroad might run a line through that part of town fueled speculation for lots. Despite economic setbacks, the city continued to slowly grow outward from the mill site north, toward the Northern Pacific tracks. Residents began to build on the blocks of East Pine Street adjacent to the downtown businesses, providing neighbors for the Francis Worden family who had escaped the clamor of the Front Street area by building in that isolated area in the mid 1870s.
After forming an alliance with representatives from Helena for a mutual agreement to support that city over Anaconda in its bid to become the state capital, Missoula won the vote to be the site of the new state university from the 1893 legislature. From that point on, Missoula donned the mantel of sophistication associated with a center of higher education. Classes were temporarily held at Willard School while plans for a campus progressed. As the university population grew, so did the economic and cultural benefits to the city. The South Missoula Land Company, owned by Hammond, Eddy and Marcus Daly joined with the Higgins family in donating land for the new campus. In June of 1898 the cornerstone for A.J. Gibson designed University Hall was laid and Missoula became “the University City.”
By that time the city had recovered from the economic downturn and was beginning a new construction boom that would take it well into the 20th Century. The downtown entered a phase in which buildings lost to a devastating fire in 1892 began to be replaced by brick structures. During this period A.J. Gibson, advertising himself as an “Architect and Practical Builder,” designed some of his most grand early works which include: University Hall; University Science Center; the Garden City Commercial College (Bab’s Apartments); the T.S. Greenough mansion; and scores of exceptionally elegant row houses and small homes throughout Missoula’s growing neighborhoods. Gibson’s creations dominated the new downtown streetscape.