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Harvard To Retain Stock Policy

By Joanne L. Kenen

Two members of an ad hoc advisory committee to President Bok yesterday predicted the University will not sub-stantially alter its financial policy in the near future.

Bok this year reconvened the committee, which was originally established in 1973, to re-evaluate Harvard's long-term economic strategy in light of continued inflation and a faltering stock market.

Both of these national trends have reduced the real value of Harvard's portfolio.

Rates of Return

Under Harvard's financial system, each separate branch of the University owns units of the central endowment and receives annual dividends on its shares--currently fixed at about 5 per cent.

The University will continue to distribute at this rate and will reinvest the remainder of the portfolio income, George Putnam Jr. '49. Harvard treasurer and a committee member, said yesterday.

Sources this fall said some members of the Corporation want to curtail distribution of the endowment income, to provide a greater hedge against future inflation.

Tuition hikes are already at "their upper limit." Otto Eckstein, Warburg Professor of Economics and a member of the group, said yesterday.

The advisers made overly optimistic predictions in 1973 about the rate at which the University's expenses would rise, in part because the group met before the Arab oil embargo and the continuing energy crisis began to affect the economy. Eckstein said.

However, administrators apparently decided they must instead try to stabilize the rate of tuition increases. If the University cuts back the dividents, tuition will have to rise to compensate.

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