Along with the funding, prior to the 30's/40's guys like Norbert Weiner were excluded from places like Harvard due to their race, and ended up turning MIT into a powerhouse (on top of the federal funding).
This is a really good point. They talk about this in "A Beautiful Mind". It was a big divider between places like Harvard and Princeton, and places like MIT and Carnegie Mellon. The latter would take in Jews and other immigrant populations. This pissed off Nash (an undergrad from CM and a Phd at Princeton) to no end.