The University's Investment Policy

IF THERE is any part of University policy where it is easy for critics to go berserk, it is the area of University investments. Given the present goals and practices of American business, as well as the present purposes for which the government awards many contracts, it would be hard to find a single large company that is not engaged in some sort of objectionable activity. An institution like Harvard-with more than a billion dollars to invest somewhere -is almost inevitably bound to embrace a few of the corporate ogres somewhere in its stock portfolio.

In most cases, it is hard to make a plausible argument against the University's holdings. We know, for example, that a small portion of Harvard's money is invested in Pan Am-and that. Pan Am makes a small portion of its profit by shipping dead servicemen home from Vietnam. But it does not necessarily follow that Harvard must dump Pan Am or face charges of war profiteering. To ask that would require a highly simplified and unrealistic view of the situation, one in which Harvard's tiny bole of shares could control Pan Am policy and Pan Am could control the conduct of the war.

But there is a line that separates these accidental entanglements from cases where the University's responsibility is more distinct. The Middle South Utilities company clearly fits into the second category. Harvard's investment in the Middle South chain is more than merely accidental: under the tutelage of Treasurer George Bennett, the University has plowed more than $15 million into stocks and bonds of Middle South and its subsidiaries. Bennett, who sits on the Middle South board of directors, wisely recognized the tremendous growth potential that Soutbern utility companies offered during the forties and fifties. He not only hitched Harvard's money to the rising Middle South star, but also put about $9 million of his State Street Investment Fund's stock into the company.

In the last five years, while the financial lustre of the Middle South investments has dimmed, the social propriety of Harvard's holdings there has also been questioned. Northern students, conditioned during the mid-sixties to attack anything with the word "Mississippi" attached to it, singled out Middle South and one of its subsidiaries-the Mississippi Power and Light Company-as targets for criticism.

BUT through those years of complaint. Harvard was able to hold off the critics with unanswerable assertions. When Bennett and other officials-who were, presumably, well informed on Middle South events-said that their personal studies had uncovered none of the hiring discrimination students complained about, there was simply no answer that Cambridge-based critics could give.

The remarkable disingenuousness of Bennett's actions became clear only last week. The Federal government has been making its own studies of Middle South, and its findings have been less rosy than Bennett's. The figures that Federal investigators collected on Mississippi P and L form a paradigm of discriminatory hiring patterns in the South. Operating in a region where the population is 35 to 50 per cent black. Mississippi P and L's own cosmos is only 4.5 per cent black-with nearly all of those filling traditional roles as janitors or unskilled workers. Preliminary reports on other Middle South companies in which Harvard holds direct bonds-Arkansas Power and Light and Louisiana Power and Light-show equally debilitating hiring bias.

There are heavy obstacles that even the best-intentioned company faces in breaking discriminatory hiring patterns; the employment charts for Mississippi P and L could conceivably mean that the company had been trying hard but had not yet made headway. Significantly, the Federal records suggest exactly the opposite case. According to officials in the Equal Employment Commission, both Middle South and its subsidiaries have failed several times to submit employment reports, to adopt affirmative-action plans, or to put any muscle behind their vague claims of good intent.

The conclusion that this recent evidence leads to is not that Harvard should abandon its Middle South investments, or that students should begin another round of the old flagellate-the-Southerners game. The point, more simply, is that Harvard should stop pretending that the situation is under control and start thinking about using its influence responsibly. While the University does not own anything like a controlling interest in Middle South, it is one of the larger and more prestigious institutional investors. That lever-combined with Bennett's seat on the Middle South board-should give Harvard the influence it needs to make its involvement with Middle South something to be proud of, rather than another case of taint by association.

THE University's argument that it needs to make a profit in the stock market is undoubtedly true. But that reasoning does not cover either Harvard's lethargic attitude toward Middle South or its recent decision in the GM proxy fight. In neither case is Harvard being asked to take a financial loss in the name of social justice. The request is that Harvard, when faced with a choice that will not cost it money, use its business force to advance the ideals it stands for as a university.

Harvard representatives have replied that such an argument has no bounds: if the University enters these proxy fights, where can it stop? It should be clear that both GM and Middle South involve especially compelling sets of circumstances. In Middle South, the flagrancy of the violations and the potential benefits of Harvard's influence are too great to justify further inaction. With GM, the University should realize that it is dealing with a problem of unique national magnitude. When a proxy fight offers hope of reforming the company responsible for more traffic deaths and more pollution than any other corporation in the world, Harvard can set aside some of its traditional hesitation.

The fact that several Faculty members are considering taking the issue to a Faculty meeting-not to mention the overwhelming student opinion shown in polls-demonstrates the exceptional nature of this proxy fight. The President, Fellows, and Treasurer of Harvard probably look with unease at the growing clamor from Faculty and students on investment issues. They could soothe much of the turmoil by handling the investments more responsibly themselves.