On the Fiscal Front

A lot happened on the financial front this week. First, almost 300 alumni gathered last weekend under a tent at Eliot House, where they drank to their own success as fundraisers for the Harvard College Fund.

Then, as the grads returned bleary-eyed to their offices Monday morning, Thomas O'Brien walked into his office in Massachusetts Hall to assume permanently the post of financial vice president, a position he has filled on an acting basis since Hale Champion resigned in January.

More important than what happened this week, however, is what will happen in the near future, events that O'Brien will have a hand in shaping.

The Endowment committee--President Bok's ad hoc equivalent to President Carter's Council of Economic Advisers--has reconvened, and its members are reevaluating assumptions they made a few years ago about the national economy and Harvard's own financial policy.

The dismal scientists were, for once, overly optimistic about the national scene, anticipating a 4 per cent rate of inflation over the long run. Harvard's costs are rising at a much more rapid rate. The committee is reconsidering how much of the endowment's income to spend yearly and how much to re-invest for future needs.

Some of the more fiscally conservative Corporation members want to spend even less than the current amount, but administrators, worried about the ever-increasing tuition charges, may fight to preserve at least the present rate of spending.

While the Fellows ponder, the Development Office plans and plots. Although Harvard investments yield more than most charitable institutions' portfolios, the endowment is plummeting in real value. Harvard will probably announce a major capital drive sometime next year, the first such endeavor since the mid-'50s.