The company staff will probably include a fixed income expert, a short term investments handler, a bonds researcher, an equity trader and assistant, someone experienced in general portfolio management and a few research generalists. Cabot's search for his staff is just as expansive as the search for outside firms. He hopes to begin naming his new employees soon, however.

Just as his emphasis in the performance of outside managers will be a long-term one, Cabot does not expect his staff to shine immediately and fizzle out in their investment dealings. But at the same time, he acknowledges that the need to make changes in both internal staff and outside managers sometimes arises.

"One reason Harvard decided to set up its own company was that it didn't want to get into the tenure business. There is no tenure in the financial world. We'll look at everything over the longest possible term, but if changes must be made, they'll be made. I fully expect that Harvard will fire me if I don't do my job and that's the way it's got to be across the boards."

Cabot has also demonstrated that his company will be more aware of the social behavior of the corporations in which Harvard invests than its predecessors. he will steer the portfolio clear of companies such as Middle South Utilities that end up causing a great deal of trouble for the University and may in the long run cost the University money because they must pay for past misdeeds out of profits.

Although no great changes in investment policy will be noticeable when Cabot and Harvard Management Co. take over the endowment on July 1, the general attitude will probably be more daring and liberal than State Street's. It is likely that Cabot will stick with the present two-thirds, one-third balance presently between stocks and bonds. But the turnover rate amont stocks and securities may increase under Cabot and Harvard may experiment with small investments in emerging and venture capital.

The new guard in Harvard financial affairs still adhere basically to the traditional norms of financial management followed by the great money houses in New York and Boston. But their awareness to such problems as those of conflict-of-interest and corporate responsibility, their willingness to innovate and experiment and even leave traditional bounds, ensure that the new era of management Harvard has entered into will at least be an exciting one