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Since the latter half of the 19th century, the fathers of roughly three-quarters of the College's students have been professional men, managers, or executives.

In 1960 Seymour Harris, Lucius N. Littauer Professor of Political Economy, estimated that the average income of a Harvard student's family was roughly $17,000, compared with an average family income in the U.S. of about $5200.

The gap has probably remained may have grown slightly, although University awarded $1,585,000 in scholarships to about 1300 students this year, and students received another $500,000 from outside scholarship grams.

Scholarship grants in 1959 totalled $1,253,000. The 1953 figure was $675,000, while in 1948 Harvard College scholarships totalled $480,000. Despite this growth scholarships largely kept pace with the rise in tuition, and the income of scholarship holders' families has been rising. Last year it averaged $8000.

The importance of income from students has also declined because of the vast expansion of research at the University since World War II. In terms of cost, most of this expansion occurred in the natural sciences though resident scholars (who do little teaching) are now established Russian Research Center and special centers founded in the last 15 years.

Government grants have financed a good deal of this growth in research. Last year they reached $25,636,606, and at 27.7 per cent of the budget were the University's largest single source of income. By comparison, government money covered only 1.5 per cent of the budget in 1941 and in 1947 still amounted to only 7.6 per cent.

The importance of the government money varies greatly in the University's different departments. Most heavily dependent is the astronomical observatory which receives 80 per cent of its funds from the government. Both the Medical School and the School of Public Health depend on the government for about two-thirds of their income. In the Faculty of Arts and Sciences government funds cover about 29 per cent of expenses. In the Law School the government contribution is less than one per cent.

So far the government chips in nothing to help cover the $2.3 million spent for the Houses and the Yard dormitories, or the $3.1 million budget of the dining halls. However, it will be giving indirect help in these areas when Harvard joins the National Defense Education Act program next year.

Only the Faculty Club, with expenses of $269,205, seems rather permanently free from the hand of government.

Government grants to the University appear as a patch-work of departments because of Harvard's system of budgeting. Under a long-standing rule, expressed by the hallowed phrase "each tub must stand on its own bottom," a separate accounting is kept by each department, and each must balance its budget annually. Departments must absorb deficits to the limit of their own accumulated balances of previous years. When these are used up, deficits may be covered by unrestricted funds from the University's separate endowment.

Other endowment funds cannot be used to meet deficits wherever they occur, but are tied to specific departments. Some are set aside for very narrowly defined special purposes, such as a $156.31 fund established in 1727 from which the President still gets $6.57 annually. The money can be used for nothing else.

Despite the multiplicity of separate funds that make up the University's "general investments," they have all been subject to similar trends. Although total investments at market value have quadrupled since 1940, total expenses have risen by more than 6 1/2 times. Investment income covers a correspondingly lower percentage of total expenses. But until the 1930's investment income covered about half the University's expenses, compared with the roughly one-fifth it covers today.

This drastic relative decline in the importance of endowment has made the University more vulnerable financially. As more and more "soft" money--annual government appropriations and gifts for immediate use--becomes part of the budget, the financial future of the University becomes less certain. For unlike tuition and endowment income which officials call "hard" money, there is no assurance that these funds will continue perpetually.

The "soft money" also places a burden on the future by encouraging the University to add permanent overhead, such as buildings and a staff on tenure, for short-run projects.

Despite their relative decline in importance the amount of Harvard's investments is impressive. The University of Texas, with off on its own land, has surpassed Yale as the second most heavily endowed university in the United States. But both fall short of Harvard by more than $200 million.

Although it has long been the largest university endowment in the nation, Harvard's investments began modestly. In 1777, after 141 years they still totalled only $55,000. Funds were managed by treasurer John Hancock, who like most of his successors (including the present treasurer Paul C. Cabot '21) was a Boston investment banker.

In 1831 the treasurer reported $509,048 in general investments, most of it in notes and mortgages. The University's $15,000 worth of common stocks were primarily in canal and bridge companies. Despite this wealth, the University ran a lottery to finance the construction of Hollis Hall in 1835.

By 1860 general investment had risen to $1,145,647, of which $149,000 was in New England's burgeoning textile mills. During the next two decades the University bought heavily in railroad bonds, and by 1880 these accounted for nearly one-quarter of general investments totaling $2,918,000.

For the last two decades of the 19th century the University invested heavily in Boston and Cambridge real estate. At one point it owned much of Washington Street. By 1900 its total investments had climbed to $10 million, and real estate represented more than one-quarter of them.

During the 20th century the University gradually stopped acquiring new real estate, and, after many troubles with managing in the 1920s, sold most of its property. Last June 30, investment real estate was valued at only $1,411,137. Although University investments have flourished in other areas, liquidating nearly all of its real estate may have been somewhat costly because of Harvard's current difficulties in buying property in Cambridge.

Harvard's endowment increased most steeply during the 1920s, 1940s, and 1950s--all three of which were generally inflationary periods. As it sold its real estate, the University acquired more common-stock, and after 1929 it also reduced its percentage of corporate bonds in favor of stock holdings.

The most radical shift to common stocks occurred in the 1950s when they rose from 46.4 per cent of all investments to 58.2 per cent. As the stock market declined during the past few years, the University has switched back somewhat to corporate and government bonds.

As night beexpected, Harvard's portfolio contains a heavy dose of blue chips. American Telephone and Telegraph Co. is the leading corporate holding with $10.5 million in bonds and $11.3 million in stocks.

The largest single common stock holding, though, is Texaco Oil, which presently is worth $17.2 million at the market. IBMis second with a market value of 14 million. These are followed by AT&T, and three more oil companies: Gulf, worth $11.1 million; Standard Oil of California, worth $10.1 million; and Standard Oil of New Jersey, worth $9.8 million.

The University has also invested heavily in electric utilities in Florida. Its stocks and bonds in two Florida power companies total $13.5 million at the market.

Among moderate vices Harvard owns $2.5 million worth of Reynolds Tobacco and $490,000 worth of stock in Anheuser-Busch, which brews Budweiser Beer.

Compared to Yale, Princeton, and Columbia, Harvard has a somewhat higher percentage of its funds invested in common stock. Its real estate holdings are comparatively smaller as Yale, has extensive holdings in New York City and Chicago, while Columbia owns valuable property in New York, including the land on which Rockefeller Center is built.

In terms of gifts from alumni Harvard compares rather unfavorably with its Ivy League rivals. The Harvard Fund, which collects unrestricted funds for the College, reported that last year it, received $1,338,563 from 35.3 per cent of Harvard's 47,534 alumni. At Yale 55.2 per cent of the alumni gave $2.6 million. And at Dartmouth, which has only 28,042 alumni, 75.9 per cent of them gave $1,215,740. Thus, the Harvard endowment grows meatier principally on heavy special purpose gifts and on bequests. Yet, despite the growing strength of its private backing, Harvard's finances have undergone a major change since World War II. With expenses growing at more than five per cent annually, dependence on government money has increased dramatically. In the next decade this dependence on government will probably become even greater, and may, just possibly, turn the University from a private institution into a quasi-public one.

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