Overseers Create New Committee On University Financial Policy

The Board of Overseers has established a standing committee to review University financial policy.

"We will specifically deal with University investment policy, and with all other aspects of financial policy as well," George Putnam '49, chairman of the special study group that proposed the committee, said yesterday.

The Committee on University Financial Policy is the third standing committee created by the Board of Overseers.

According to Putnam, the Overseers set up the committee after reading several reports on Harvard finances by the University Committee on Governance. In particular, Putnam mentioned "The Organization and Function of the Governing Boards and the President's office," a study prepared by Kenneth R. Andrews, David Professor of Business Administration.

"The fact that the Treasurer, Financial Vice-President. Investment Manager, and Managing Partner of the State Street Investment Corporation are all one person and a member of the Corporation raises not only the familiar problem of overload but doubt about how the rest of the Corporation is to achieve the human distance to monitor his judgment and performance over the full range of his extensive responsibilities," the Andrews report comments.

"Although members of the Corporation and the Board of Overseers have much board experience in overseeing investments, none of the former has the technical experience to equal that of the Treasurer," the report continues, adding that the Overseers, "more skilled in internal financial management than in portfolio management," have no effective mechanism of questioning the Treasurer's decisions.

Putnam described the Visiting Committee on Admin-istration and Accounts, which was the Overseers' only committee on finances, as "the Treasurer's own committee."

The new Committee on University Financial Policy will meet at least four times a year with George F. Bennett '33, Treasurer of Harvard College.

"We have no power to create policy," Putnam said yesterday. "But I know the Treasurer would lean over backward to conform to our wishes."

Action!

"This is scheduled to be a very active committee," Putnam added. "Everything that has to do with income falls within this committee's jurisdiction."

The change in Harvard's accounting system-from the book value method to the unit method-will permit an easier evaluation of investment performance, Putnam said.

Four Overseers constitute the new committee. They are Andrew F. Brimmer, Albert H. Gordon '23, Putnam, and C. Douglas Dillon '31, President of the Board of Overseers, and an ex officio member.

Putnam said that one of the questions the committee will consider is potential conflict of interest in the Treasurer's office.

Besides creating the new committee, the Board of Overseers expanded the powers of an old one-the Executive Committee. From now on, visiting committees will report directly to the Executive Committee.

"That puts a lot more teeth in the visiting committee," Putnam said.