J.P. Morgan Attacks Yale Divestment

Response Was 'Neutral' to Similar Harvard Action

J.P. Morgan & Co. last week criticized Yale University's recent decision to sell its Morgan holdings because of the company's policy of making loans to the South African government.

Yale had owned more than 33,000 shares of Morgan common stock worth about $1.6 million.

"We think that we can have more influence against apartheid by keeping open the channels of economic contact with South Africa" and by making decisions to lend money on a case-by-case basis, the company said in a statement responding to Yale's decision.

"We believe our opposition to apartheid is as strong and as sincere as that of anyone at Yale or anywhere else," the statement read.

Yale had called on Morgan and its main subsidiary. Morgan Guaranty Trust Co., to refrain from making any loans to the South African government.


"Yale wanted to draw the line on all loans to South Africa, but Morgan said the line should be drawn on a particular loan." John M. Morris, a Morgan vice president, said yesterday.

Selective Help

Morris said his company believes a selective loan policy can be socially beneficial to South African blacks. He cited as an example Morgan's recent $11 million loan to finance home purchases by black South Africans.

David K. Storrs. Yale's director of investments, was unavailable for comment yesterday.

Harvard's decision last fall to sell short-term certificates of deposit in Morgan elicited no public reaction at all from the company.

Sell Out

The Corporation decided to sell the certificates in order to comply with its policy of not investing in banks that make loans to the South African government, Walter M. Cabot '55, president of the Harvard Management Company, said yesterday.

Morgan reacted more strongly to Yale's decision because Yale made a public announcement of its intentions, Morris said.

When Harvard sold its Morgan holdings, a "very senior" University official explained the Corporation's decision to a "very senior" Morgan & Co. executive over the phone without announcing the sale to the press, Cabot said.

Morgan's response was "neutral," Cabot said, adding that the company said it simply disagreed with Harvard's actions and felt whatever the University did was "its own affair."

Cabot said Morgan may have reacted more strongly to Yale's decision because "having been twice burned, they were annoyed.