Stone book in stone hand, William von Humboldt stares out at Berlin's traffic from the university he founded more than 180 years ago as a universitas litterarum striving to give a humanist education. His vision has not always appeared so unshakeable.

Directly across the road is Bebelplatz where, in 1933, students burned books by authors believed to undermine Nazi ideology.

By then, Berlin had already lost 32 per cent of its university teachers through laws forcing dismissal of anyone with Jewish blood or ideas opposed to Nazism. Two further major purges of the city's professors followed - first of Nazi sympathisers in 1945 and then, just five years ago, of those associated with the former East Berlin government.

Fewer than a third of staff who worked in 1989 at Humboldt University, the only one of Berlin's three universities to be governed by the former German Democratic Republic, remains.

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Now, with Humboldt reabsorbed into the rest of the city's higher education system and political life relatively stable, the universities should be able to concentrate on providing an intellectual background for Berlin's imminent change to become seat of government. Instead, academics are still finding themselves distracted by unacademic contemplations - this time involving cash.

Berlin's universities are broke. Worse still, they are broke when, until recently, they were relatively flush. Before reunification, the federal government paid 50 per cent of West Berlin's higher education costs, which included the Free and Technical universities while, on the other side of the wall, the GDR generously supported Humboldt as the jewel in the crown of its university system.

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Now the Berlin senate is finding itself having to pay all the costs of all three from a budget crippled by the costs of reunification.

At the same time, it is attempting to build up the Fachhochschulen, universities of applied science. These are becoming increasingly popular with students and employers alike because of shorter courses and small classes and, in the long-term, will be cheaper to run. Now, though, they are costing money.

Meanwhile, university expenses have soared because of increasing student numbers and the need to keep up with advancing technology.

The Berlin senate insists it has actually increased spending on higher education but has been unable to keep pace with these rising costs, made worse by the expense of integrating the Humboldt. All the universities know that they are hurting.

Under a programme started in 1992, funded student capacity in the city is to be cut by at least 15,000 over ten years to under 100,000. This will not reflect reductions in the number of actual students.

Even if universities introduce savage restrictions in the number of new admissions - something which goes against the valued German principle of open entry to university - they still have to cope with those already embarked on their studies and likely to stay, on average, seven years.

The situation has become so bad that a group of students late last year launched a poster campaign persuading the public that they were a cause worth supporting.

They believe the senate is more likely to come up with cash if "Middle Berlin" is behind them and argue that it is becoming impossible to study effectively in lectures for up to 2,000, not to mention packed libraries and little direct contact from professors.

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"We are having to cut the number of places in the universities more than we can in a good structured way," said Johann Gerlach, president of the Free University, which is facing cuts in funded student places of about 10,000 to around 30,000.

Since 1992, he said, his university had been forced to make DM70 million (Pounds 30.86 million) worth of savings from an annual budget of about DM750 million. This had meant losing 450 staff. "Reducing the budget in this crazy way when there are so many students means we are condemned to be not a good university but a school," he said.

"We realise in West Berlin that we have a special task for the reunification process. We have all guaranteed to reduce quantity and promote quality but this policy is not constructive."

Both the Free University and Humboldt have legal cases pending against the senate claiming certain faculties are not receiving enough money to allow them to carry out legal teaching obligations. The Technical University is watching closely.

It is facing particular problems because of its need to keep pace with the new technology and compete for expertise with the Fachhochshulen and the private sector. Nearly 80 per cent of professors at the TU are nearing retirement, thanks to a recruiting drive 30 years ago in response to increasing student numbers, and the university is having huge problems luring scientists away from more lucrative posts in industry to take their place. Machinery installed at about the same time as the professors is also having to be renewed.

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But over the past three years the university, which has an annual budget of about DM 680million, has had to save about DM 47million.

By the year 2003, the number of professorships will be reduced from 560 to 380 and the number of funded student places will drop from ,000 to 20,000. The number of actual students is now 38,000.

Ulrich Steinmuller, vice president of the TU, said: "We now have nearly two students sitting in every one place. We must be funded for the whole number of students. The government says we should reduce the length of time they study and I agree, we could be doing more for this. But most students cannot afford to go full-time."

Perhaps suffering most of all is Humboldt, which has spent the last five years struggling to bring itself up to date with western standards. Just 230 of the 730 professors and senior lecturers working in 1989 remain, three faculties have been abolished because they are no longer considered relevant and all members of staff have had to reapply for their jobs, many swapping permanent posts for short-term contracts.

Until now, it has escaped the savage cuts experienced by the west Berlin institutions. But this year it was told to save more than DM20 million over the next eight years, while continuing its development programme.

The university claims this is impossible. It is proud of the amount it has managed to achieve since 1990 and argues that some of this work could be made obsolete by cutbacks.

None of these universities can expect any immediate respite.

In fact, things could get worse. Following the shotgun remarriage of west and east Berlin, the city is now set for polygamy, planning imminent unions with the federal government and the state of Brandenburg, both of which are likely to prove expensive.

The proposed arrival of the federal administration has already caused difficulties for the universities because they lease many of their buildings from the government or foreign embassies which are now claiming them back. Union with Brandenburg is also likely to be problematic because many of its universities are new and hungry for both cash and professors.

Professor Gerlach said: "We are a poor marriage between west and east Berlin which we are now organising more or less well. Then we have a new marriage arranged with Brandenburg. It means we lose out each time."

He added that the danger was that Berlin's university system would be inadequate for its new position as an administrative capital.

But Ferdindand Schuster, spokesman for the department of science and research in Berlin, said: "We say the university sector is one of the most important in Berlin and in our budget it is the third-highest priority. We see it as a valuable investment for young people and their education and for research into producing new products."

Unedifying squabbles over cash certainly do not seem to have discouraged young people from choosing Berlin as a place to study.

It still attracts an unusual number from outside the immediate area, with about 40 per cent of students coming from elsewhere in Germany or abroad, probably because of its troubles rather than in spite of them.

The intellectually curious among students and professors alike are still drawn to its varied history and, above all, to the enduring chance of being involved in something new.

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