Harvard's Midas

Among proper-Bostonian Lowells and Lodges, the Cabots are known for "customs, not manners," and there is no more bohemian Brahmin than Harvard's stocky, cigar-smoking treasurer, Paul Codman Cabot, 66. Fiercely energetic, shatteringly frank, he can curse like a barge captain, yet guide a big investment like the skipper of a liner. Last week, two months before his mandatory retirement, he achieved a lifetime goal by pushing the market value of Harvard's investments past $1 billion. No other university comes close to such an endowment.

Cabot is equally proud and rueful. "These enormous figures could be very discouraging to the man of small or moderate means who gives only $5 or $10," he says. "But I believe that no college or university is much good if it doesn't have continuing enthusiasm and the willingness to sacrifice."

Daring & Prescient. During the Depression, most of Harvard's funds were prudently invested in bonds rather than common stocks; when Cabot became treasurer 16 years ago, Harvard was worth $217 million. He talked the Harvard Corporation, of which he is an ex-officio member, into hiring an investment management firm to advise it. The corporation responded by choosing the State Street Research & Management Co., of which Cabot is a partner, but uprightly turned over the commission-rich buying and selling chores to some 100 independent brokers.

The most daring departure of the Cabot tenure was to place the university's nest egg in the bull-market incubator, presciently slashing Harvard's holdings in real estate, mortgages and long-term bonds, while increasing the share of common-stock investments from 40% to 55%. Most other university endowment funds have since followed suit--and why not? Harvard's insurance company equities alone have trebled to a current worth of $58 million, and its other interests include $108 million in oil and gas, $160 million in public utilities. Among star performers: $10 million in Du Pont, $12.5 million in General Motors and $26 million in IBM. Surprisingly, there are also educational experts outside Harvard who are not overwhelmed by its wealth. John W. Gardner, president of the Carnegie Corporation of New York and a Stanford man, says that "in terms of the tasks to be accomplished today, Harvard is not as rich as it should be."

"King of the Junkies." For Cabot, the work on his alma mater's portfolio is a labor of love. A descendant of George Cabot (1752-1823), a Federalist leader and one of Massachusetts' first U.S. Senators, Paul Cabot naturally entered Harvard and received an M.B.A. from the business school, before he went into investing. Cabot collected so much scrap metal as salvage director of the War Production Board that his friend Douglas Dillon called him "the king of the junkies."

Cabot will be succeeded by State Street President George Bennett, a longtime friend. He expects to stay active in his private investment practice after retirement. A lifetime of dealing in big sums has scarcely affected Paul Cabot's personal indifference to material things. A group of his financier friends once took up a collection to replace the frayed shirts he wore to board meetings.

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