President's Report

In Defense of Washington


                         ME

Federal Funding (Adjusted by State) to
Academic Institutions with Medical Schools


In Defense of Washington

PETITION

The Trustees of the Howard Hughes Medical Institute are request-
ed to consider and to determine that, for the time being, the Institute
headquarters shall be located in Washington. The Executive Manage-
ment Group offers here its collective defense of this request in the fol-
lowing five arguments, listed in descending order of importance:

Item I.

All the necessary functions of the Institute can be car-
ried out expeditiously in this location;

Item II.

Washington is about as close to the center of gravity of
biomedical research in America (and the world) as
any major urban center can be;

Item III.  The facilities for frequent travel to and from Washing-
     ton are convenient and superior to those in many
    other places - an essential for administration of a
    highly decentralized system operating all over Ameri-
    ca and requiring the services of numerous external
    advisors from this country and abroad;

Item IV  There are facilities and activities in the vicinity of
    Washington that are highly relevant to the Institute's
     functions and status as one of the worlds great scien-
     tific organizations;

Item l?

Finally many of the key personnel are now located in
the Washington area, as will soon be the bulk of oper-
ations, in facilities representing an HHMI investment
of about $28 million, the offices being under lease for
not less than four more years.

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INTRODUCTION

The Trustees have requested an opportunity to determine formal-
ly the location of the Howard Hughes Medical Institute. Management
promised to create such an opportunity no later than this October
meeting. The Institute needs to reach a decision so that its Tmstees
and officers can focus their attention on programmatic issues that
loom large on the immediate horizon.

We offer a defense of our present location, Washington, D.C. In
doing so, we shall attempt to be as objective as possible in light of the
recent establishment in the Washington suburbs of most of the Execu-
tive Management Group (EMG). There are no prepackaged compass-
es or direction finders, no firms of outside experts, no surveys or deter-
minations that can pretend to lead the Trustees to the perfect solution,
Obviously four or five other urban locations could qualify The final
decision will have a strong element of subjective judgment. Hence, we
have not compiled cost-of-living tables, real estate projections, or pre-
cise comparisons of the distances that Trustees, advisors, and admin-
istrators would have to travel to possible sites. The defense rests on
what we have found generally to be the principal virtues of the pres-
ent location of headquarters.

THE DIFFERENT VOICES OF MANAGEMENT

The Institute can be regarded as a blend of four major cultures: in-
vestment, finance, law, and science. These are quite dissimilar instru-
ments that must perform in harmony as a medical research organiza-
tion, a species unique among the philanthropic genera. It shares with
the academic institutions - which it serves and most resembles - the
requirements that it recruit unusual and gifted persons and maintain
the milieu necessary for them to function optimally Among the cadre
assembled at headquarters must be persons from many subcultures:
communicators, builders, laboratory designers, and analysts of sci-
ence, bonds, or reunification of educational institutions.

For most of those who have chosen HHMI as employer, it repre-
sents a force with enormous potential to serve humanity The location
of the center of such a force must certainly be part of its statement of
intent. HHMI merits a setting appropriate to its purpose and
magnitude.

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We proceed to the defense of locating in Washington. Voices pre-
senting the arguments and observations are those of EMG members
who are responsible for the major "cultures" comprising HHMI. All
have recently moved to Washington from other urban centers to be-
come key players in the Institute.

Item I.

All the necessary functions of the Institute can be car-
ried out expeditiously in this location.. . .

INVESTMENT speaks (his views `distilled from over 30 years as
a New York commuter, both to Wall Street and midtown, with a per-
sonal bias toward Boston, and from visits to every U.S. city over
200,000 population"):

"I believe.. . these opinions may speak more eloquently
than statistics on dollars managed, number of ac-
counts, number of CFAs per square mile. . . .

"In the 1940s and early `5Os, New York, Chicago, and
Boston had the overwhelming bulk of both bond and
stock accounts . . . a few Philadelphia and Hartford ad-
dresses were acceptable.. . .

"The transformation of the entire investment world
since the mid-1950s has not equalled that of the scien-
tific community but would be almost equally unrecog-
nizable.. . . Into the 1990s I believe investment banking
will experience more concentration of capital, perhaps
with a few global outposts to follow the sun. Invest-
ment management, however, need not follow the same
path, and "life style" quality can draw top-grade port-
folio managers whose PC screens will see identical
data base information the instant it is known on Wall
Street.

"Washington does not have the daily visibility sought
by brokerage analysts, but meets every other test. Ac-
cess by plane or train to the eastern seaboard analysts
in Wilmington, Baltimore, Philadelphia, or New York
and points north is simple and low-cost. The Washing-
ton area investment community is surprisingly active

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and successful at Geico, FNMA, Sally Mae, the World
Bank, and United Mine Workers, who draw on the cor-
porate officers trooping to the Capitol and the central
economic data amassed by federal agencies and trade
associations.

"In summary I see more money managers opting out
of New York and Chicago. , . . The `junk bond creator
Mike Milken left a New York office to set up at Laguna
Beach, and the wisest investor of our era, Warren
Buffett, has never moved his office from the second
floor of a bank in Omaha.. . . In short, it can be done
anywhere. . . .

"[In Washington] our recruiting was slow but I am very
pleased with the quality at this stage."

FINANCE (who has recently borne a great number of administra-
tive responsibilities, holds a few opinions about the supply of assorted
talents in the Washington area):

"Washington is a desirable place to live in terms of its
climate, its entertainment and cultural activities, its
proximity to recreational areas - the seashore, the
mountains.. . . Several candidates said they had been
asked by their present employers to transfer to other
parts of the country but they chose to look for other
work rather than abandon the Washington life style.

"[Here] are large numbers of people who are idealisti-
cally committed to working for nonprofit organiza-
tions. . . .

"Because of . . . government and service industries, the
unemployment rate in Washington remains relatively
low. . . . For this reason, there is less than normal hesi-
tancy . . . about seeking new employment opportuni-
ties. The fear of poverty between jobs is not a signifi-
cant deterrent.

"In addition to the comparative ease with which re-
cruiting objectives can be achieved within the Wash-

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ington area, high-potential candidates from other parts
of the country are attracted to this location by the char-
ismatic qualities of the city In common with the other
great capitals of the world - London, Paris, Rome -
Washington has a dynamism that energizes the entire
community.

`IAn opportunity to live and work full time in Washing-
ton is not the sole determinant of a job change. Other
factors being roughly equivalent, though, it's a strong
plus:'

The voice of LAW:

"Washington. . . is a key city for both private and public
law. According to the 1980 census, over 30,000 of ap-
proximately 500,000 lawyers in the United States were
in the Washington area [and 1,400 of the 33,368 gradu-
ates in 1985 were from Washington law schools]. Two
key factors for the Institute are access to specialized
legal expertise and ease of recruiting lawyers and sup-
port staff. Although it would be hard to argue today
that the legal function is not portable, Washington cer-
tainly serves us well. . . ('

Item II.

Washington is about as close to the center of
gravity . . .

Item III.  The facilities for frequent travel to and from the Wash-
     ington area. . . .

These are parallel arguments. And the defense has called as first
witness an outrageous portrait of the United States (frontispiece).
Each state's geographic area has been adjusted according to the
amount of federal money for support of biomedical research flowing
annually to its academic institutions with medical schools. If the
$500-odd million annually supplied to the laboratories and clinics of
the National Institutes of Health were added to the totals, Maryland
would protrude nearly to the Rio Grande or hang out as a gigantic
eastern peninsula. But the liberties of distortion have been curbed to
the kinds of activities and places in which HHMI is active. (HHMI's
expenditures are not included.)

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The point we make is that an overwhelming preponderance of
HHMI's world of activity lies in the northeastern part of the country
The overhang of Massachusetts, Connecticut, and New York points to
a locus near Washington as a center of gravity of biomedical research.
There is another center in California. If HHMI headquarters were
moved, one could argue that it ought to go all the way to San Francisco
or Los Angeles.

INVESTMENT again:

"None of the cities from Orange County to the Golden
Gate has achieved the status of `investment center' . . .
but of course there is the argument that one can make
do with a PC near the hot tub.. . ."

SCIENCE has his views:

"Since World War II the northeastern United States has
housed a disproportionately large share of biomedical
research, and despite some redistribution in recent
`years, there is every reason to expect this to continue
into the 21st century This is true not only of the people
and institutions that do the science, but of the agencies,
both government and private, that support science.

`An important illustration of the scientific center of
gravity is that a large proportion of scientific meetings
. * . are held in the region, with occasional forays to the
West Coast. It is a fact accepted by granting agencies
that the travel budget for scientists on the West Coast
must be larger to reflect this reality It is important for
an organization such as HHMI, which is widespread
both programmatically and geographically and has a
large number of investigators, advisors, and staff, to be
located near the center of the action. In addition, bio-
medical science is becoming increasingly international,
and almost all visiting scientists flow through either
Washington or New York, frequently both. HHMI,
though not yet employing scientists abroad, already
has significant foreign interactions - e.g., the human
genome mapping project.


"Such considerations suggest two leading candidates,
Washington and New York, and one could argue co-
gently for either. Indeed, if HHMI were already in New
York, the case for moving it to Washington would be
difficult to make. . . . The reverse is also true. With the
Institute already in place in Washington, a case for
moving it to New York, with its attendant costs, is not
persuasive. Besides, factors other than financial tip the
balance to Washington.

"Geography and climate are usually less a factor than
cultural activities in recruiting scientists. Although a
significant number of scientists definitely prefer New
York to any other place, they are balanced by those who
would not wish to be there under any circumstances.
Washington is a viable alternative to either of these
hard-core groups. In addition to its other scientific and
cultural resources, Washington is a bibliographic cen-
ter, like the library at ancient Alexandria. Its biblio-
graphic sweep is extensive. . . . This is a decided plus for
the location of HHMI.

"It would be hard to overestimate the importance to
HHMI of transportation facilities that allow frequent
convenient travel to all parts of the country and abroad.
Management must go out and investigators and advi-
sors must come in with clockwork regularity Only
Washington, New York, Chicago, or possibly Atlanta
could meet this need, and Washington is less likely to
be immobilized by weather than Chicago or New York.
Washington has the definite advantage that many of
our visitors . . . such as university presidents, deans, or
working scientists, can combine a required trip to NIH
or other government agencies with a visit to HHMI."

Among the possible places, no nirvana of transportation exists.
Comparisons may be made, however. The trail from the Newtons
through the Sumner-Callahan Tunnel or the crosstown trek in Man-
hattan toward LaGuardia, the roadway to and from O'Hare from the
south side or the highway from Palo Alto to SF0 have their good and
bad times. So can the routes from suburban Washington to its two

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major airports. After 9:00 a.m. the parkways within a minute of the
new Rockledge headquarters in Bethesda will allow you to run - at
legal speed - to either National or Dulles within a half hour. Metro, to
be sure, will require a lo-minute shuttle ride from Rockledge to the
"Hospital" stop on Wisconsin Avenue. From there the time to Union
Station - stay on the red line - averages about 25 minutes in any kind
of weather.

Most of the MAB members, advisors, and petitioners who come to
HHMI headquarters near Washington shuttle in and out the same
day For many others, including most Trustees, an overnight stay is
necessary for a full day's work on the morrow, but one is usually home
that night. There is no perfect place, but Washington competes well
with the few real alternatives.

Item IV  There are facilities and activities in the vicinity of
    Washington that are highly relevant. . . .

Without the federal government's support of academic science,
there would be no HHMI as the world is coming to know it. We might
have ended as our founder once envisioned - as a lonely tower where
the ills of the people of Harris County Texas, might be studied and al-
leviated. HHMI depends on the prior existence of excellent centers of
education and research where it may make its welcome and influen-
tial investments.

  These institutions live or die as homes for science on the nourish-
ment from annual federal appropriations. The outlays for health R&D
from the three main departments - Health and Human Services, De-
fense, and Veterans - are now about $5 billion. All federal support for
health R&D is between $6 and $7 billion a year.

Around the White House offices in the old and new Executive Of-
fice Buildings, the OMB, the OSTP, and many other acronyms pro-
pose. Around the Capitol the members and staffs of more than 50
committees attempt to dispose. They are besieged by pleaders, ex-
perts, and arguers who try to sway the flow and direction of this vast
patronage. In Washington, too, is the National Research Council, a
powerful organ of the combined National Academy of Sciences,
Academy of Engineering, and Institute of Medicine. The Academy's
Government/University/Industry Round Table offers a central
ground on which these interests attempt to come together.

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One agency alone, the National Institutes of Health, convenes
over 2,000 academic scientists annually to read its 20,000 grant pro-
posals and pass out an annual budget somewhat larger than HHMI's
endowment.

In all the vast range of purposes and practices in this ocean of bu-
reaucracies, the Institute is the only private organization with suffi-
cient annual budget and freedom of choice to make an exciting differ-
ence. And its .opinion is sought - by the Congress, the executive
branch, the media, and the organizations of various dependencies.

America is entering an important era in which budgeting for sci-
ence by government is headed for reform. Today a space station, a su-
percooled supercollider, or a plasma fusion reactor - committing bil-
lions for single costly investments - has the potential to dry up
support for other fields of endeavor without central review to assess
the comparative scientific or social merits, As new means of decision-
making come about, the worlds largest private research organization
should certainly be involved. The proximity of HHMI headquarters to
the Internal Revenue Service may soon be only a matter of difference
in postal rates, but the climatic effects of changes in the Tax Code or
Treasury Regulations are no stranger to this organism.

The political topography of Washington is a poor resume of the
features that have great value to the Institute. The National Library of
Medicine and the Library of Congress together constitute the world's
richest source of scientific and other literature relevant to our activi-
ties. NLMS Lister Hill Center contains a superb meeting hall and labo-
ratories applying ultramodern communications to new modes of in-
struction in medicine and science as well as electronic editing of
textbooks by distant editors. The meeting room, Great Hall, and 700-
seat auditorium of the National Academy of Sciences are available for
our occasional use. The Kennedy Institute of Ethics at Georgetown
University is one of the nations most active centers engaged in con-
cerns of high relevance to HHMIs advanced scientific activities.

HHMI has formed a partnership with the National Institutes of
Health in the establishment of the HHMI-NIH Scholars Program for
Medical Students. The setting for this important project, which is
bringing instant national recognition to an expanding HHMI, is
unique. A former convent amid 1,000 modem biomedical research
laboratories and the worlds largest hospital devoted exclusively to re-
search represents a most extraordinary conjunction.

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There is no danger that HHMI will ever be confused with its giant
neighbor. While avoiding NIH's inherent problems of programming,
we have adopted the best of its standards for our purposes. We have
thus achieved a singular distinction in the world of academic science.
Yet we could not manage our enterprise in isolation or ignorance of
the movements of this federal mammoth.

SCIENCE speaks:

"One measure of HHMI's independence from NIH is
the occasional criticism we hear (usually from a source
not yet receiving HHMI funds) that we are `not enough
like NIH.' "

Item K

HHMI headquarters are now in the Washington area,
occupying or superintending facilities representing a
$28 million investment. . . .

All of the central administrative activities of the Institute are now
being drawn into the Rockledge quarters, which are proceeding to
completion according to the plans and schedule approved by the
Trustees. The cost of furnishing this virgin space and rental under the
present lease, which extends until 1992, is approximately $18 million.
An option to renew will need to be exercised by March 1991.

In the Cloister project, we shall have invested about $10 million for
renovation and construction of the new residence. Beside the graceful
brick archway to the residence, there should be a brass plaque bearing
the words Hughes House. This would convey more than the mere
name of a person. The only offices in the Cloister will be for manage-
ment of the facility and its student program. Yet its lecture halls and
chapel, to be shared with NIH, offer a rare location for certain Insti-
tute needs, The Cloister and its scholarly purpose strike a symbol of
HHMI imagination and vigor, and the public spirit it represents may
be commensurate with any other investment we shall ever make.

The LEGAL side notes:

"We are experiencing a relatively smooth transition
from Coconut Grove to Bethesda. But, barring a com-
pelling reason to again move our corporate headquar-
ters, we should not plan to suffer another relocation

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with its physical disruptions and its potential harm to
morale, including that of key employees"

Denouement. If the Trustees accede to our petition and resolve
      that national headquarters of the Institute shall,
      for the time being, remain in the Washington area,
      there are several parcels of land in Montgomery
      County and northern Virginia that the owners
     would graciously cede to HHMI - for a stiff
        consideration.

Unidentified voice from the EMG:

"Let another pharaoh build thaf pyramid!"