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SMITHSONIAN INSTITUTION  1389

The Institution has again employed Scudder, Stevens and Clark as investment counsel for the present fiscal year. In this connection it may be noted that no change had been made in the fee paid to Scudder, Stevens and Clark since 1927. As its employment runs to September 30 of each year the authorities requested that consideration be given to an increase in its annual fee for supervising our portfolio, in view of the fact that the fee had remained static during all these years and its expenses of operation were considerably higher. The authorities suggested the increase be $2,000, making its fee $12,000 per annum which, in view of the size of the portfolio, was less than it would charge any organization for the work performed unless it were for an eleemosynary institution such as the Smithsonian. The work of this organization has been very satisfactory through the years.

As reported at previous meetings the recommendations of Scudder, Stevens and Clark relative to changes in the endowment portfolio of the Institution come to me as Chairman of the Executive and the Permanent Committees. Copies are sent also to the Secretary of the Institution. Under my personal direction and supervision, the recommendations as received are checked against information available in the Trust Department of the Riggs National Bank. My decision is then made as to appropriate action to take on the recommendations. Before action is taken it is approved in writing by members of the Permanent Committee.

Quarterly statements of all our investments are also received from the investment counsel. Copies of these reports are on the table. These statements represent approximately the current picture of our investment holdings.

Mr. D.L. Richardson of the firm of Scudder, Stevens and Clark, who has the immediate supervision of the portfolio of the Smithsonian Institution, met with the Executive Committee on April 22, 1953. In his introductory remarks he pointed out that business was at a high level, and probably would continue so throughout the calendar year 1953. He suggested, however, that some recession in 1954, possibly in the early part of the year, might be expected to take place. There was considerable discussion of the investment portfolio. One concrete decision reached was that part of our holdings in Parke, Davis & Company should be sold. Of our remaining holdings of 10,000 shares of stock, 4,200 shares were sold for $159,833.32, or an average price of $38 per share. Following the sale of these shares the market price dropped and we felt it would be well to hold the remaining shares as it was the belief the market had more than fully discounted the prospects for this security.

It may be of interest to present here a brief history of the two main endowments of the Smithsonian Institution. These are given as follows: