INFLATION NIGHTMARES

There seems to be a common superstition among the uninformed that Harvard University is the richest University in the country, and that therefore it can afford to raise wages among its employees without, at the same time, raising the tuition and meal-rates of the students. This false notion should be quickly dispelled. From the $3,154,650.30 available to pay the bills of the service departments of the University in the fiscal year 1935-1936, only $63,883 remained as surplus. If wages at Harvard were raised materially, the point would soon be reached where the tuition and meal-rates of each student would have to be raised also. This is a step that may have to be taken in the very near future, but the fact remains that of and by itself the University is not over-affluent, as its funds are restricted, and it is not so wealthy that it may meet all demands made upon it, without putting pressure upon the students. If the present trend of government inflation continues, this situation will become even more acute, as even more expenditures will be necessary to meet the lowered purchasing power of the dollar.

In 1933-34 the income of the University from actual investments in stocks and bonds was $4,696,512.83. This figure fell in 1934-35 to $4,655,700.69 due to the number of companies that were forced to stop paying dividends, because of government interference. Repressive legislation created a panic in the financial world, and production was severely hampered, so that there were much smaller profits to be distributed. Since Harvard University depends on these profits to a great extent, the income of the University dropped accordingly.

After a certain modification of the government's attitude, business revived, so that the fixed investment income of Harvard rose in 1935-36 to $4,770,578.49. But the actual gain in dollars to the University has been more than offset by the sharp and phenomenal rise in prices during the past year. From the point of view of the educational institutions of this country it is unfortunate that the bond-holding classes are so weak at the polls.

From this sort of sabotage the University can hardly defend itself, and the effectiveness of the great service that all the public and educational institutions of the United States render American citizens, lies at the mercy of the government. Although the powers that be may restrict business activity, inflate the currency, and lower the purchasing power of the dollar, they should consider the effects that such a policy has on all those institutions that depend upon fixed returns from invested capital.