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The school was founded by the late Rev. Dr A W E Appiah on 22nd January 1940 with six boys. He named the school Aggrey Memorial College after his Uncle, Dr. J E Kwegyir Aggrey. His aim was to perpetuate the memory of his uncle by means of an institution which would give young boys and girls adequate secondary education that would fit them into higher fields of learning. The school is thus a living tribute to that great son of Africa - Dr Kwegyir Aggrey.

During the first few years, the school occupied successive buildings in the heart of Cape Coast town. The first home was 'Tandoh Kuma' (Hse no.39), Jukwa Road which also served as the Headmaster's residence. In April 1940, with an enrollment of 10 boys, the school moved to 'Bucknor Villa'. Due to unhealthy conditions, the school moved yet another time to a house rented by a football team. This was on the 1st of November 1940. There were 20 boys in the school, 9 of them being in the preparatory classes.

The school went on the first christmas break on 10th December 1940 and resumed on 21st January 1941 to meet another misfortune. Just a day to the re-opening, the football team decided not to share the premises with the school. The second year was therefore started in the Headmaster's residence at no. 40 Royal Lane with 9 boys which later decreased to 5 in the second term.

Dark ominous clouds gathered but the school stood firm. The year 1942 ended with the school
well shaken and battered but the Founder was undaunted. On February 8th 1943, the school moved to a new house (no. C20/1 Commissioner Road) owing to the growing number of students. The Founder established the primary and intermediate section of the school in this year to buttress the secondary department.

On October 1, 1943, with an enrollment well beyond 200 students, the top section of the school (i.e.. Standard 3, Intermediate and Secondary Department) moved to the sixth home of the school at Old Swanzy Factory, which belonged to the United African Company, at no. 1 Royal Lane.

Up to this time, the Headmaster was the only member of staff. In January 1944 however, Mr Henry Abadoo-Brew was appointed the first Assist. Headmaster of the school. The late Mr. Kofi Bentsi-Enchill, a Cape Coast Merchant very generously offered to pay his salary and the rent for the premises.

In 1945, a Board of Trustees and Management known as the 'Aggrey Society' was formed and the school's management came under the Board. Members were Mr Kofi Bentsi-Enchill (chairman), Dr J W Degraft-Johnson, Mr W W O Lindsay, Mr J Magnus Sampson, Mr S S Wood and Chief Kweku Egyir Gyepi II. The Secondary Department was separated from the Primary Department in February 1946. Within this period that the school managed to exist students were attracted from all places including particularly those who had been ,