The size and power of Harvard's investment portfolio, like most things at Harvard, is shrouded in mystery. Portfolio managers daily decide the direction of the University's investments, secluded from student demonstrators and outside interference. Like the gnomes of Zurich, they keep their decisions out of the public eye and help to perpetuate the myth behind Harvard's portfolio. They are cautious, conservative investors, seemingly unshaken by the moral and ethical questions students raise.

As of 1972 the University has left the deliberations over whether, for example, the Corporation should invest in companies operating in South Africa to the Advisory Committee on Shareholder Responsibility (ACSR).

Student charges of the committee's ineffectiveness and its near-perfect record of following the Corporation's line, especially as an investor using Harvard's power through shareholder resolutions, has marred the committee's image among students. The Corporation assigned the committee the task of a case-by-case review of corporate practices in South Africa and of recommending possible shifts in the portfolio. The ACSR could have taken on the role of independent critic, but it has rarely dissented from past Corporation policies. Its reports indicated that instead of fighting to alter corporate practices by sponsoring shareholder resolutions, it would stand by and wait for other investors to take the initiative.

Between the ACSR's case-by-case approach and the Corporation's inertia, Harvard's recent investment record has been confusing at best. Although the Corporation espouses a policy of owning voting stock in companies to insure that it can influence corporate practices through shareholder resolutions, it retains $40 million worth of non-voting notes in General Motors Assistance Corporation (GMAC). Lawrence F. Stevens '65, the ACSR secretary, says the investment "may be worth an ACSR review" in the future. However, Hugh Calkins '45, chairman of the Corporation Committee on Harvard Shareholder Responsibility, does not see a conflict between the Corporation's stated policy and its holdings in GMAC.

Over the two-year period of heated debate on the morality and justifications for Harvard's South Africa-related investments, IBM remained Harvard's number two investment, and Ford and Eastman Kodak were dropped from the top ten. Harvard decreased its investments in Ford because of a downturn it predicted in the auto industry and demoted Eastman Kodak to an "average investment" over the two-year period because of the costs of the company's stock. The principal reasons for the movement of the two stocks were not, Walter M. Cabot, deputy University treasurer, says, considerations of the companies South Africa practices or of the social issues raised by their practices.

According to Cabot, however, moral and social questions do filter into the profit-oriented minds of the Harvard Management Company through its ties with the Corporation and the ACSR. Harvard Management is aware, Cabot says, that when corporations face social problems they very often will face related financial problems.

In other words, in Cabot's view, when a company, or the Harvard Management Company for that matter, is oblivious to potentially explosive social or moral issues, it will run into financial difficulties. The Management Company, therefore, keeps tabs on the activities of the ACSR to foresee any social and financial problems that may confront an investment.

While the Harvard Management Company maintains control over the day-to-day operations of the portfolio, the "ultimate decisions are left to the Harvard Corporation," Cabot says. "The Corporation does not dictate to the company what sort of stocks it should buy or not buy."

Like so many relationships in Harvard's administration, that between the Corporation and Harvard Management is ambiguous from the outside. Someone may be taking moral considerations into account in deciding where Harvard invests its money, but it's hard to figure out just who that is.