Brass Tracks

"I don't know much about economics. I'm a business man." This is how William H. Claflin, Jr. '15, describes himself in regard to his position as Treasurer of the University. Claflin insists that he performs his main job, the investment of Harvard's money, under the influence of no economic policy. When Edward Reynolds '15, administrative vice-President, replaced Claflin at the last minute to speak before the Associated Harvard Clubs in Milwaukee last spring, he said that "we just try to do the best we can under existing circumstances . . . we try to buy values, not hopes."

Casual as Claflin and Reynolds make the process sound, the University's money has been invested carefully enough to make the endowment, as of June 30, worth $194,402,876.91 on the market as opposed to $177,168,490.24 in the books. In other words, if you total the original value of Harvard's 1800 different endowment funds, you get $177 millions. If you went out and sold the various securities in which the funds have been invested; you would receive $194 millions.

The comparative amounts the University holds in bonds, common stocks, and real estate have shifted somewhat since 1936. Thirty-three percent of the total is now invested in government bonds. The University held no government bonds at all in 1936. Holdings in common stocks have also increased from twenty-nine percent in 1936 to thirty-six percent in 1947. Sign of the times: this trend continued during 1946-47, when the University added $6 million to its common stock investments. Claflin attributes to "larger dividends from common stocks" the fact that in 1947 balances were more favorable than in 1946. Both common stock and government bond rises have been balanced almost entirely by a sharp drop in other long-term bond holdings.

As for real estate, the figures "belie the impression held by many that Harvard owns all of Cambridge and most of Boston. Not only have the University's real estate and mortgage holdings decreased in the last ten years to less than two percent of the total at present, but this percentage is considerably lower than comparative figures for most of the major universities in the nation. The average amount invested in real estate by fifty-nine colleges and universities in 1946, including Harvard, was better than thirteen percent.

Like University investment policies throughout the country, Harvard's has been even more successful than those of insurance companies and savings banks, largely because there are comparatively few legal restrictions on university investments. The result is that Harvard is able to hold more than half its funds in securities of American corporations, an amount which insurance companies and savings banks cannot approach. It is particularly true, therefore, as a recent survey concludes, that the "growth and prosperity of American industry is of great benefit and importance to universities." Harvard's growing holdings in common stocks and Claflin's statement concerning the rising returns from these holdings and the consequent increase in favorable balances last year hardly contradict this line of reasoning.