On March 20, three uniformed University policemen stood on the steps of 17 Quincy Street, headquarters of the Harvard Corporation, while about 400 students marched around the building chanting and carrying signs urging Harvard to help end the investment of U.S. corporations in South Africa. After calmly watching the students cut across his field of vision for the 20th time, one of the policemen turned to his fellow officers and began the follow officers and began the following conversation:

"Hey, what are these kids protesting anyway?"

"Apartheid, you know, in South Africa."

"Oh yeah, the racial stuff. But what's Harvard got to do with it?"

"Harvard owns stock in a lot of U.S. companies that work in South Africa, pay taxes to the government and like that."

"So what do these kids want Harvard to do?"

"Sell its stock, I think."

"Why? Can't Harvard buy whatever stock it wants to? It's a free country."

"Yeah, but not if the company they buy stock in is doing really bad things, like apartheid."

"Dunno. Well, in any case it's good to see a lot of students protesting again."

"Yeah, especially peacful ones."

Much of the upsurge in campus activism this spring--campus activism, it is true, always increases when the weather turns warm, but usually not as much as it has this year--is tied to the increasing importance of the issue of southern African apartheid in the minds of students, corporate shareholders and the press. At Harvard, the entire complex machinery for making investment decisions has been deeply involved in the controversy over U.S. firms operating in South Africa, and in the related but more immediate issue of Harvard's investments in those firms. When the Harvard Corporation meets today to discuss, and possibly decide, the issue, it will cap a six-month process used to arrive at this year's policy stance. Harvard's overall policy on South African investments, and the present system for formulating such policies, have evolved over the past several years, years that have often witnessed turmoil and turbulence over University investment decisions.

The present process for deciding investment policy at Harvard works like this: Four students, four alumni and four faculty members are selected through various means to serve on the Advisory Committee on Shareholder Responsibility (ACSR), which studies relevant information on upcoming shareholder resolutions for firms in which Harvard owns stock. The ACSR advised the Harvard Corporation on how to vote on the resolutions at the annual meetings of the companies in Harvard's investment portfolio. A subcommittee of the Corporation--the Corporation Subcommittee on Shareholder Responsibility (CSSR)--makes the final decision. The Harvard treasurer, George Putnam '49, tells one of his two assistant treasurers of the decisions, and the assistant treasurer casts the actual proxy vote on Harvard's shares.

Sounds like Tinker-to-Evers-to Chance? It gets even more complicated. The ACSR-CSSR-Treasurer's Office route is only needed for shareholder resolutions, for those investment issues which involve social and ethical questions. On purely financial issues, Harvard turns to the professional money managers to keep the profit margin steady. Once the treasurer managed the Harvard portfolio in his spare time. But as the size of Harvard's holdings grew, and as the University turned towards the more unpredictable forms of investment, like common stocks--instead of bonds, government securities and real estate--a full-time treasurer was necessary. In the '50s and '60s treasurers used their own private investment firms to help manage the portfolio, but when George F. Bennett '33 resigned as treasurer in 1973, citing an impossible workload as the cause, Harvard decided to change the system. Bennett had in effect two full-time jobs, one at Harvard and one as president of his own firm, so Harvard decided its next treasurer would devote himself almost completely to University business. As part of the far-reaching financial reorganization that marked the early years of President Bok's administration, the corporation formed the Harvard Management Company, a 40-person operation located in downtown Boston that exclusively handles Harvard's portfolio. The deputy treasurer of Harvard, Walter M. Cabot '55, heads the company, which handles 90 per cent of the portfolio. The other 10 per cent of the portfolio is farmed out, as it were, to five smaller firms which have almost complete independence to buy and sell their little pieces of stock.

The rationale for letting small firms control some of the portfolio is that no organization, not even Harvard, knows everything, so the portfolio benefits from having several different firms, with presumably different investment strategies, making decions. The independence of the smaller firms can cause problems, however, as when Mackay Shields, a New York investment company, bought $800,000 worth of stock in Citibank and Manufacturers Hanover Trust in 1976. The two banks are among the handful of major U.S. banks that loan money to the South African government and help South African get loans from other countries. Shields sold the bank stock this year in the wake of campus protests over Harvard's holdings in banks giving money to the South African government. Although the official explanation was that the decision was "purely financial", the timing of the transaction caused some to doubt the explanation.