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SMITHSONIAN INSTITUTION   1282

in case there is necessity for the cash for any reason.

The competent services of Scudder, Stevens and Clark as investment counsel have been continued as in previous years, and regular recommendations have been received from this firm relative to the endowment portfolio. These recommendations, which come to the Chairman with copies to the Secretary of the Institution, are checked against information available in the Trust Department of the Riggs National Bank under the Chairman's direction, and action is taken after the usual consideration of the Executive Committee. The lists of Smithsonian holdings, on the table, represent the current status of the portfolio as of December 31, 1948.

Meetings have been held with Mr. Richardson, and with Mr. Smith, of Scudder, Stevens and Clark, the last at a session of the Executive Committee held on December 29, 1948. These conferences have been most helpful in promoting mutual understanding of the current investment situation in relation to the Smithsonian endowment, and also in indicating to Scudder, Stevens and Clark our operating needs as regards income, in addition to the necessities of a long range view for the preservation of capital involved. The policy of retaining approximately 40% of the total endowment in common stocks has continued throughout the year and is still in force, though careful watch is kept on the current financial situation in order to be in readiness to act in case of any necessity. The current view is that there is no immediate necessity to fear a business depression that would affect values of common stocks seriously, particularly since it seems certain that governmental commitments relative to maintenance of a strong military service, and to the necessity for aid abroad, must continue. This should insure reasonable business prospects for the coming year. Should any necessity at present not anticipated arise, equities that are considered questionable will be transferred to cash or to treasury

A.W.