Although it has long been the largest university endowment in the nation, Harvard's investments began modestly. In 1777, after 141 years they still totalled only $55,000. Funds were managed by treasurer John Hancock, who like most of his successors (including the present treasurer Paul C. Cabot '21) was a Boston investment banker.
In 1831 the treasurer reported $509,048 in general investments, most of it in notes and mortgages. The University's $15,000 worth of common stocks were primarily in canal and bridge companies. Despite this wealth, the University ran a lottery to finance the construction of Hollis Hall in 1835.
By 1860 general investment had risen to $1,145,647, of which $149,000 was in New England's burgeoning textile mills. During the next two decades the University bought heavily in railroad bonds, and by 1880 these accounted for nearly one-quarter of general investments totaling $2,918,000.
For the last two decades of the 19th century the University invested heavily in Boston and Cambridge real estate. At one point it owned much of Washington Street. By 1900 its total investments had climbed to $10 million, and real estate represented more than one-quarter of them.
During the 20th century the University gradually stopped acquiring new real estate, and, after many troubles with managing in the 1920s, sold most of its property. Last June 30, investment real estate was valued at only $1,411,137. Although University investments have flourished in other areas, liquidating nearly all of its real estate may have been somewhat costly because of Harvard's current difficulties in buying property in Cambridge.
Harvard's endowment increased most steeply during the 1920s, 1940s, and 1950s--all three of which were generally inflationary periods. As it sold its real estate, the University acquired more common-stock, and after 1929 it also reduced its percentage of corporate bonds in favor of stock holdings.
The most radical shift to common stocks occurred in the 1950s when they rose from 46.4 per cent of all investments to 58.2 per cent. As the stock market declined during the past few years, the University has switched back somewhat to corporate and government bonds.
As night beexpected, Harvard's portfolio contains a heavy dose of blue chips. American Telephone and Telegraph Co. is the leading corporate holding with $10.5 million in bonds and $11.3 million in stocks.
The largest single common stock holding, though, is Texaco Oil, which presently is worth $17.2 million at the market. IBMis second with a market value of 14 million. These are followed by AT&T, and three more oil companies: Gulf, worth $11.1 million; Standard Oil of California, worth $10.1 million; and Standard Oil of New Jersey, worth $9.8 million.
The University has also invested heavily in electric utilities in Florida. Its stocks and bonds in two Florida power companies total $13.5 million at the market.
Among moderate vices Harvard owns $2.5 million worth of Reynolds Tobacco and $490,000 worth of stock in Anheuser-Busch, which brews Budweiser Beer.
Compared to Yale, Princeton, and Columbia, Harvard has a somewhat higher percentage of its funds invested in common stock. Its real estate holdings are comparatively smaller as Yale, has extensive holdings in New York City and Chicago, while Columbia owns valuable property in New York, including the land on which Rockefeller Center is built.
In terms of gifts from alumni Harvard compares rather unfavorably with its Ivy League rivals. The Harvard Fund, which collects unrestricted funds for the College, reported that last year it, received $1,338,563 from 35.3 per cent of Harvard's 47,534 alumni. At Yale 55.2 per cent of the alumni gave $2.6 million. And at Dartmouth, which has only 28,042 alumni, 75.9 per cent of them gave $1,215,740. Thus, the Harvard endowment grows meatier principally on heavy special purpose gifts and on bequests. Yet, despite the growing strength of its private backing, Harvard's finances have undergone a major change since World War II. With expenses growing at more than five per cent annually, dependence on government money has increased dramatically. In the next decade this dependence on government will probably become even greater, and may, just possibly, turn the University from a private institution into a quasi-public one.