Harvard Stands To Profit From War

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With nearly half a percent of its endowment invested in 11 of the government’s 15 top defense contractors, the war with Iraq may have already made Harvard as much as $4.5 million.

And with market fluctuations in the 10 days leading up to the war, the University’s holdings within the top 50 defense corporations, ranked by the size of their defense contracts, brought in more than $17 million.

But not everyone sees the windfall as good fortune.

Some Faculty members have already questioned the integrity of Harvard’s ownership of defense equities, and several plan to raise the issue at next Tuesday’s monthly Faculty meeting.

Among those concerned are Lecturer on Religion Brian Palmer, who said at a teach-in on March 16 and at a campus-wide peace rally four days later that he thinks Harvard should donate any profits from these stocks to a charity such as the International Red Cross.

“Any situation where our community’s tremendous collective wealth is contributing to the death and suffering to thousands of people is our urgent business to [examine],” he said.


But others say that Harvard’s holdings are not morally reprehensible—but patriotic.

“Since I firmly support the war, I think Harvard should invest more,” said Winthrop Professor of History Stephen A. Thernstrom.

Thernstrom also said that taking a moral stance on every investment decision would be a “proposterous way to manage a portfolio.”

And international weapons specialist Allen Sessoms said that he doesn’t believe that Harvard’s holdings are problematic.

Sessoms, a fellow at the Kennedy School of Government’s Belfer Center for Science and International Affairs, said that defense stocks are a sound part of any diversified portfolio.

“The defense stocks are safe havens—some of the biggest companies there are,” he said. “It is not vaguely surprising that an investment portfolio as big as Harvard’s would have stocks like this.”

Jack Meyer, Director of Harvard Management Corporation (HMC)—the endowment management arm of the University—declined to comment on Harvard’s immediate investment strategy but said that HMC’s long term goals do not forecast a change in ownership of these stocks. Decisions to acquire or sell a stock are made by HMC with guidance from the Harvard Corporation, he said.

Meyer also said that these defense stocks, which in the past few months have underperformed the market, are not some of Harvard’s biggest money makers.

But experts on wartime spending said it is too early to predict how the defense sector will perform—but that growth is likely.

“In some sense, the defense stocks are safe—they are going to go up,” Sessoms said.