The following text is the conclusion to Wednesday's Faculty meeting. The Crimson thanks WHRB-FM for the tapes of the meeting.

A. MICHAEL SPENCE

President Bok, Dean Rosovsky. I, in this building, am usually referred to as Ann Spence's husband, though I somewhat more recently have been referred to in considerably less flattering terms.

I have served on the ACSR for two years, almost, this year as its chairperson, and my colleagues occasionally emit sympathetic sounds when I tell them this. I in fact regard this as a privilege rather than a burden, and I'm pleased to be here today to have a chance to talk about it.

Like some other lapsed academics who have gone into politics, however, I am considering returning to academic life next year. I would like to address my remarks on the South Africa issue not directly to what has been said today, at least initially, but rather by way of posing what seemed to me, having spent some time thinking about it, are the central questions that one inevitably confronts in worrying about this issue.

The first question, and one that one cannot escape, is should companies withdraw from South Africa? By companies I mean U.S. companies with South African operations. The answer to this question should, I think, be yes, unless the following two conditions are met:

First, that they decline to sell products or services to the government, the military, or the police that materially support the continuing implementation of the apartheid system;

Second, and equally important, that they adopt employment policies that are designed to train and promote non-white South Africans as rapidly as possible, and that in the interim they treat them equally with respect to wages, benefits, facilities, union negotiations and in every other dimension of the employment contract, and;

Third, that they report the results of these efforts annually or semi-annually for an extended period of time, and in sufficient detail so that shareholders like Harvard and others who are interested can make reasoned judgements about the extent to which they are or are not contributing to the well-being of black South Africans.

That these conditions should hold notwithstanding the present and potential future legal impediments to their implementation.

In thinking about thus issue, which has for me, and I think for a number of other people been the most difficult issue to deal with, there are many facts and observations that one makes and then cogitates about. I would like simply to draw your attention to a few of them that seemed to me particularly relevant.

First, if a United States manufacturing operation were to be withdrawn from by a United States corporation, that management would be replaced, perhaps by another multinational, perhaps by South African companies, and in the worst case, by a state-owned corporation, with the obvious implications for how it might be run.

Second, and I think in my mind overwhelmingly important, is that there is a drastic shortage of educational resources in the South African economy and polity. This is documented by educators, the Committee on Race Relations, and is the legacy of a history of devoting virtually no resources to the education of roughly 80 per cent of the population of that beleagured country. I therefore place particular importance on the remark I made earlier on the importance of training and the development of skills which will make admittedly minor contributions to a very sad situation; but it seems to me and has seemed to others to be at least some movement in the right direction.

On the other hand, and it would be dishonest of me not to state this, the fact that companies are there is in implicit support of the status quo and explicit by virtue of the fact that they pay taxes. They contribute to the stability, at least in the short run, of the economy, and they contribute to the stability, at least in the short run, of the economy, and they contribute to the prestige of the existing administration by virtue of the fact that U.S. corporations are there. There are examples of companies that have modified their policies in South Africa or withdrawn under particular circumstances. Polaroid withdrew its manufacturing operation and instructed its distributor not to distribute its products to the government for use in the infamous passbook system. That distributor did not obey those instructions. Polaroid found out about it and severed its connection completely with South Africa, and I think appropriately. Several American banks which in the past have made loans to the South African government have ceased to make those loans and so announced it publically; a number of others have not made such public announcements but in fact have stopped making those loans. Those loans are, in the view of the Harvard Corporation and the ACSR, direct support--or direct enough support--of the apartheid system to be stopped, for us to want to stop them.

Finally, a very recent example, the Burroughs Corporation, which had in the past been selling computers to the government, was asked in the form of a shareholder resolution from a number of church groups to stop selling anything to the government, and they responded by saying they would not invest further in South Africa at all, and they would not knowingly sell either products or sales and service to any organization that was involved in oppressive work.

I must say, just as an aside, that that example, and a number of others that have occurred this spring, has caused me to modify to some extent my assessment of the power of the responsibly generated shareholder resolution. One can find a number of examples of these in the IRRC documents that are available to everybody in Lamont Library, at least I hope they are--someone claimed at the CHUL meeting yesterday that they weren't.

I would also like to say with respect to this issue that these judgements are subject to change, they require continued monitoring and vigilance from us, and from other interested parties.

Reverend Leon Sullivan is expanding his operation so that he will have an on-site monitoring capability, and we hope that he is including in his plans, or has an intent ion of, distributing his efforts on a company-by-company basis to interested shareholders like Harvard. He has not done that thus far and has forced the University in the form of the ACSR to sort of duplicate a great deal of what has gone on, and I will describe that briefly now.

I would like to say that the Rev. Sullivan, whom I had a chance to hear speak for the first time in New York at a Ford Foundation conference of university trustees last week, expressed precisely the same anguish that I have felt in trying to make a judgement about the question of withdrawal, or not withdrawal but staying and attempting to accomplish something good, however minimal. I was heartened by that; it's the thing that has caused me the most sleepless nights.

The second question that I'd like to address is the question, should companies expand by investing in South Africa? I think the answer to that question should be no. The reason is that while the existing assets will be used, if not by us, then by others, it seems to me no reason to expand the assets and the wealth of the South African economy by investing now in view of the serious risks. Conditions will deteriorate in that country in the very near future, and those assets will be used to the detriment, rather than the benefit, of black South Africans.

The third question, which the ACSR has wrestled with, and which I have wrestled with as well, is, should we sell the stock? I think the answer to that question should be no. And the reasons are, or among the reasons are the following:

First, in my judgement, that act, by itself, has not and will not be effective in influencing the behavior of companies.

Secondly, it removes us from the dialogue and substantially diminishes our ability to support responsible efforts by church groups, the Rev. Sullivan, and others to make the companies change their policies. It produces no noticeably long-run economic effect on the companies so that from the point of view of direct economic leverage, the only leverage is the one that comes back to us. I share, and this is a personal view. I share the reservations about the use of economic leverage that were expressed in President Bok's recent open letter to the Harvard community. It is an act which is costly to Harvard, and while I would be happy to answer questions about the assessment of the costs of this policy, suffice it to say that we are talking about excluding, as a matter of policy, a set of companies which taken in the aggregate constitute roughly 46 per cent of the market value of the Standard & Poor's 500, which is the set of large, well-managed, high capitalization companies in the United States economy.

It may also not, excluding such a body of companies, may not be consistent with the fiduciary responsibilities of the Harvard Corporation, and I suspect that it would be difficult to hold high-quality, creative investment management personnel under those conditions.

Finally, I would like to address some remarks to the question of what has been going on, and what will be going on this spring with respect to the South African issue, assuming that there is no change in the policy of the Corporation. First, in January, the ACSR issued a report on the question of actions that a university should or should not take as a shareholder. I'd like, in view of remarks that have been made about this report, to say several things about it.

First, and most important, it is not the policy, as far as I know, of the Harvard Corporation because it has not been considered by them the way that the report of the ACSR was last spring.

The second thing is that it was a response to a specific question put to the ACSR that was not put only with respect to the South African issue, and that question was, should Harvard, and if so under what circumstances, be in the position of initiating shareholder resolutions? And it was in that context, and I feel that it is important for me to some extent to defend my colleagues on the ACSR, it was in that context that we chose to go back and consult the historical documents and the evolution of the thinking on the University's appropriate role in a number of contexts, but I would ask that that report not be read simply as another set of remarks on Harvard policy with respect to South Africa.

In roughly a week the ACSR will complete and issue a report on the South African operations of the 49 portfolio companies, companies in Harvard's portfolio, that have operations. This report is based on the answers to the Sullivan questionnaire, answers to letters written by Harvard, and answers to the IRRC questionnaire. It's difficult to generalize about the contents of those questionnaires and the contents of the data we collected. I think it would be sufficient for the moment to say, first, that they do not paint a rosy picture of the situation in South Africa, and secondly, there is considerable variance, apparent variance, in the level of efforts the companies are devoting to, particularly, employment policies. There are a number of companies in that set which have chosen not to respond to requests for information, and we are going to recommend that they be requested in forcefully worded requests to provide that information to us; we have also suggested that it may not be inappropriate--well, this is again not Corporation policy--to ask for that information in the form of shareholder resolutions. But I personally would not be averse to voting against management on resolutions that were introduced with respect to these companies concerning their South African operations on the ground that we have no information telling us they're doing anything beneficial in that country, or, to be specific, it is my current view that if requests for information from those companies have not been responded to, a motion for withdrawal is put to the corporation in the form of a shareholder resolution, I would be inclined to support it, and I think there are a number of other people who feel the same way.

Harvard will, I hope, continue to support the efforts of the Rev. Leon Sullivan, whom I think has the best long-run chance of producing substantial changes in companies' operations. He is, I stated earlier, engaged in a monitoring effort which I would very much like to see us support. In the meantime, in the next six weeks we will face 40 resolutions directed at 22 companies. Some of these resolutions are, many of them, in fact, concern the South Africa matter. I have had a number of people express the concern to me that the process of collecting information and digesting it on South African companies is sufficiently lengthy, ongoing, and currently incomplete, that we will not respond at all to these resolutions.

I want to assure the Faculty, and the members of the Harvard community, that both the ACSR and the Corporation will respond on a timely basis to all the relevant shareholder resolutions, and in so responding we will use whatever information, wisdom and judgement that we have available to us at that time. We will also respond to questions from the undergraduate Harvard shareholder responsibility group concerning our procedures, as time permits.

I would be happy to answer questions about these or other matters that affect our policy on South Africa. I do want to convey to you, though it is not always obvious, that there is a group of 12 people who have spent the better part of this year trying, in the name of the long-run objective of altering companies' behavior in South Africa, who have spent this time learning about this behavior, trying to formulate policy on it. I would like to see us give this policy some continued opportunities to succeed. I think, if I had more time, I could cite evidence for you, but it is working in a number of instances.

Thank you