More Portfolio Problems

Jimmy Carter and the Harvard Corporation appear to have something in common these days. At least, Harvard appears to have developed a flair for contradictions, as it demonstrated this week over the issue of purchasing short-term bonds in Manufacturers Hanover Trust Company of New York.

Last May, the Corporation purchased the first in a series of certificates of deposit, totalling $11 million, in Manufacturers Hanover, a bank that publicly supports a policy of making loans to the South African government if the end result is overall economic growth.

In the words of the company's board chairman, loans that benefit all elements of the South African society are ones that lead to real economic growth.

The Corporation, however, stated in its report last April that it agreed with the recommendation of the Advisory Committee on Shareholder Responsibility, which said it is "often too difficult" to evaluate bank loans on the basis of which segments of society they benefit. The report instead recommended the University refrain from holding debt securities in banks making loans to the South African government.

Although Manufacturers Hanover stated in its annual report last spring that making loans to the South African government and its agencies is "currently an inactive front," it has not stated its policy of loan renewal.

Hugh Calkins '45, chairman of the Corporation Committee on Shareholder Responsibility, claims the Corporation report did not mean that renewals could not be made. He added that institutions need only demonstrate a commitment to withdrawal in a "responsible business-like way."

Peter W. Sachs, '79-2, a member of the Southern Africa Solidarity Committee, disagrees. "The Corporation report clearly says Harvard opposes renewal of loans and anybody who can read can figure that out. Manufacturers Hanover has not adopted a policy of 'no new loans and loan renewals'," Sachs said this week.

The controversy over the meaning of the language in the Corporation report has only just begun.

Lawrence F. Stevens '65, administrative assistant in the office of the general counsel and secretary of the ACSR, said this week, "The issue of Manufacturers Hanover is one which is underreviewed." Stevens, it seems, was referring to the inevitable contradictions that will arise between the intent and practical implementation of the Corporation's policy.