Several of the educational steps just mentioned require funds--whether to bring non-whites to Harvard for study or to help individuals from Harvard who wish to go to South Africa. Accordingly, the University will guarantee a total of up to $1 million, to be spent over the next three years to finance such activities. I will also establish a committee of knowledgable persons at Harvard to consider how these funds can be used to the greatest effect.
By guaranteeing a substantial sum for these purposes, I recognize that I am taking an unusual step. In doing so, I am moved not only by recognition of the fact that the problems of South Africa are serious and represent matters of deep concern to many members of this community. I have also taken this initiative because I consider it so important educationally to emphasize the need to respond to social problems affirmatively instead of simply trying to cut all one's ties with the situation.
I realize full well that the actions we take at Harvard will have but a limited impact. Still, every South African black who receives an educational experience that would not otherwise be available has an opportunity to contribute something of value to his or her people. Every black worker whose working conditions improve through company policies we have helped to change is a human life made better. Every service that Americans can render in South Africa either to defend the victims of apartheid or to prepare students for higher education is a step that helps pave the way for change. Such efforts may not make an immediate visible dent on the apartheid system, but they are still worth doing. Together with similar steps by other concerned organizations, they may help to hasten the day of human dignity and political rights for all people in South Africa.
In contrast with these affirmative measures, merely selling Harvard's stock in all American companies doing business in South Africa would be a misguided response that we would eventually regret. In particular cases, of course, we may disagree so deeply with a firm's behavior that we no longer wish to be associated with it through stock ownership. As previously mentioned, we have recently sold the stock of two firms that have been intransigent in responding to our inquiries about their employment practices. (We sold the shares of another firm earlier this year on similar grounds.) We are also about to respond to a recommendation by Harvard's Advisory Committee on Shareholder Responsibility that may lead to the sale of stock of firms selling substantial quantities of goods used in the administration of apartheid. But selling selected stocks in particular cases is one thing and blanket divestment is quite another.
Total divestment is unwise, first of all, because it is ineffective. The aim of divestment is to force American companies to leave South Africa in the hope that their departure will administer a shock to the economy that will force the Botha regime to leave office or dismantle apartheid. This strategy breaks down for several reasons. To begin with, in the unlikely event that American firms did withdraw as a result of divestment, the result is not likely to cause apartheid to disappear. Instead, the departure of these firms might simply cause black unemployment without forcing the Afrikaner regime to change its policies. More likely, local interests would buy up the American facilities at bargain proces, and life would go on much as before.
A greater weakness in the strategy of divestment, however, is its assumption that selling stock will somehow force companies to leave. In fact, divestment merely transfers shares from one stockholder to another without bringing any effective economic force to bear on management. Thus, it Harvard had sold its stock at any point in the last 10 years, as we were repeatedly asked to do, apartheid would still remain intact. The only difference would be that the University would have lost the influence we currently possess to try to persuade companies to oppose apartheid and improve the lot of their black employees. In the last analysis, companies may leave South Africa because of the instability produced by the protests of blacks in that country. They are not likely to be moved by the transfer of shares out of the hands of institutions that, in any event, hold less than one percent of the total amount of stock outstanding in American corporations.
Selling stock would also be inappropriate for a university on other grounds. Institutions of learning depend on preserving the freedom of their professors and students to teach and learn as they think best. Over the years, we have gradually persuaded outside groups, including corporations, not to try to use financial leverage to impose their views upon our campuses. We cannot expect these organizations to continue exercising such restraint if we insist on resorting to boycotts in an effort to impose our will on them. Once powerful groups in the society feel free to use economic sanctions to force their opinions on others, universities are bound to lose heavily in the process.
Despite these arguments, some will still argue that it is simply immoral for the university to "invest in apartheid" and reap the benefits of such an unjust regime through the dividends received from these companies. In fact, the vast majority of the firms in our portfolio do less than one percent of their total business in South Africa. Any profits that are repatriated from from that country and find their way into company dividends make up only a tiny portion of the funds we receive from our equity holdings. Those who feel that even this amount is enough to condemn these stocks have difficult questions to answer. Do they object to students who take jobs with IBM, Ford, Exxon and other companies who do business in South Africa and take money from these firms in the form of wages rather than dividends? Do they object to buying Coca Cola, Kellogg's Corn Flakes and other products of such companies, thus contributing to profits that may help finance South African operations? Do they object to investing in the 6,000 firms that help South Africa by selling them needed products or buying their exports? What about buying consumer products made in South Africa, or products with components made in South Africa, thus contributing to the apartheid government's economy and its trade balances? Thus far, I have heard no discussion of these questions. Without such discussion, I can only conclude that no coherent moral principle has been advanced, let alone a principle we are willing to apply consistently and obey in our own lives.
My main objection to selling stock, however, is that it is a costly, negative and ineffective way of responding to the sufferings and wrongs of South Africa. I recognize that the massive injustices of the apartheid system create a constant temptation to walk away from South Africa with some angry gesture of defiance. But if there is a moral principle that arises from holding stock in companies doing business in South Africa, it is not that we should wash our hands of the matter by simply selling our shares to someone else. Walking away will not shorten the life of apartheid by a single minute or lessen the burdens of a single black South African. For those who truly care about the injustices of apartheid, the right course is to look for positive steps that a university can take to help black South Africans work toward a better future marked by human dignity and political freedom. I intend to pursue this course in the coming months and to increase Harvard University's efforts in the direction.
*Allis Chalmers ($2 million) and Tokheim ($.8 million). The University sold its shares of Baker International (about $1 million) on the same grounds last February.