The Band's advertisement was entirely inadvertent, of course, and if the University were to place a large supply order with a company in which it hold shares, it would be equally unintentional. Cabot firmly believes it is "much better that the purchasing agent doesn't know where the investments lie." To do otherwise "would be a mistake."

And just as the investment holdings have had no indirect effect on University policy, Harvard has not endeavored to have any direct effect on these companies except in the role of a minority stockholder. "We have never tried to assert control," reports Cabot.

On the other hand, the Treasurer bristles at the suggestion that the College is a more proxy-signer. He votes with the University's interest in mind at all times, and this does not mean that he automatically supports a company's management.

While making the investment decisions and voting the shares, Cabot rarely sees a security. "We only see them," he says, "when a man comes in to give some." Even then, the donor is hustled over to the New England Trust Co.--perhaps by subway or taxi depending upon the size of the gift.

The University has a special contract with the Trust Co., which keeps Harvard's securities in its vaults as well as collecting dividends and clipping coupons for the busy Treasurer. The latter job, by the way, undoubtedly involves countless man-hours, for the current market value of the school's bond portfolio approximates $130,000,000.

With the paper work done by outsiders, Cabot and his staff are able to spend all of their time in the study of investment prospects. In the last fiscal year, their research paid off to the tune of a 5.05 percent rate of return on the historical cost of investments, and in the year before that, the income equalled 5.08 percent--the highest in 20 years. During Cabot's five-year career, he has increased the General Investments more than $104,000,000, which is a phenomenal rise of over 50 percent.

While earning a 5.05 percent rate of return in 1953, Cabot paid into the endowment funds only 4.6 percent, with the remainder being set aside in an unapportioned income reserve. The percentage to be paid is announced in advance each year under a system devised by Henry L. Shattuck '01, one of Cabot's predecessors. The rate has climbed from 4.0 percent in 1945-49 to 4.2 in 1950, to 4.3 in 1951, and 4.5 in 1952.

Shattuck's procedure, which provides for building a reserve in good years and withdrawing from it in bad ones, has two advantages. In the first place, it makes budgeting easier because of the previously announced and promised return, and secondly, the reserve fund relieves the pressure on the treasurer. As of last June, there was over nine million dollars in this unapportioned balance--just a few thousand dollars shy of the Treasurer's goal.

In analyzing Cabot's work, George Putnam Jr. '49 of the Putnam Management Co., states that the Treasurer has "followed the accepted Massachusetts Trustee Practice of maintaining a balance between good quality common stocks and high-grade fixed income securities." In conclusion, Putnam reports that the "Harvard Endowment Fund again stands as a tribute to skillful management."

Yet there is something illusory about the millions of dollars received in investment return, and Cabot is the first to admit it. For one thing, the huge numbers sometimes deter would-be benefactors from giving to an institution which they think--mistakenly--does not need the money.

Most important, however, is the fact that costs have risen greatly and that investment returns, which made up 64 percent of Harvard's income in 1845, today amount to only 26 percent, Currently, tuition comprises 22 percent, and "gifts for immediate use" account for another fifth.

"Sof Money"

Cabot refers to these latter gifts as "soft money," and while he is glad to have them, he points out that in these times, such donations are here today and gone almost before tomorrow. This is inevitable when investments provide proportionately only half the income they did in 1920 despite increases in both principle and rate of return.

Although declining steadily percentage wise during the past 34 years, they are still responsible for over one-fourth of the school's funds. And even the briefest study of the history and current contribution of investments to the University proves that Harvard is not a Kremlin-on-the-Charles but rather a house that capitalism built and a house whose future is tied inextricably with that of its builder