The Company has conducted this program of corporate giving during 
each of the past sixteen years. On October 14, 1981, the Chairman sent to 
the shareholders a letter* explaining the program. Portions of that 
letter follow:

          "On September 30, 1981 Berkshire received a tax ruling from 
     the U.S. Treasury Department that, in most years, should produce a 
     significant benefit for charities of your choice.

          "Each Berkshire shareholder - on a basis proportional to the 
     number of shares of Berkshire that he owns - will be able to 
     designate recipients of charitable contributions by our company. 
     You'll name the charity; Berkshire will write the check. The 
     ruling states that there will be no personal tax consequences to 
     our shareholders from making such designations.

          "Thus, our approximately 1500 owners now can exercise a 
     perquisite that, although routinely exercised by the owners in 
     closely-held businesses, is almost exclusively exercised by the 
     managers in more widely-held businesses.

          "In a widely-held corporation the executives ordinarily 
     arrange all charitable donations, with no input at all from 
     shareholders, in two main categories:

            (1) Donations considered to benefit the corporation 
                directly in an amount roughly commensurate with 
                the cost of the donation; and

            (2) Donations considered to benefit the corporation 
                indirectly through hard-to-measure, long-delayed 
                feedback effects of various kinds.

          "I and other Berkshire executives have arranged in the past, 
     as we will arrange in the future, all charitable donations in the 
     first category. However, the aggregate level of giving in such 
     category has been quite low, and very likely will remain quite 
     low, because not many gifts can be shown to produce roughly 
     commensurate direct benefits to Berkshire.

          "In the second category, Berkshire's charitable gifts have 
     been virtually nil, because I am not comfortable with ordinary 
     corporate practice and had no better practice to substitute. What 
     bothers me about ordinary corporate practice is the way gifts tend 
     to be made based more on who does the asking and how corporate 
     peers are responding than on an objective evaluation of the 
     donee's activities. Conventionality often overpowers rationality.

          "A common result is the use of the stockholder's money to 
     implement the charitable inclinations of the corporate manager, 
     who usually is heavily influenced by specific social pressures on 
     him. Frequently there is an added incongruity; many corporate 
     managers deplore governmental allocation of the taxpayer's dollar 
     but embrace enthusiastically their own allocation of the 
     shareholder's dollar.

          "For Berkshire, a different model seems appropriate. Just as I 
     wouldn't want you to implement your personal judgments by writing 
     checks on my bank account for charities of your choice, I feel it 
     inappropriate to write checks on your corporate "bank account" for 
     charities of my choice. Your charitable preferences are as good as 
     mine and, for both you and me, funds available to foster 
     charitable interests in a tax-deductible manner reside largely at 
     the corporate level rather than in our own hands.

          "Under such circumstances, I believe Berkshire should imitate 
     more closely-held companies, not larger public companies. If you 
     and I each own 50% of a corporation, our charitable decision 
     making would be simple. Charities very directly related to the 
     operations of the business would have first claim on our available 
     charitable funds. Any balance available after the "operations-
     related" contributions would be divided among various charitable 
     interests of the two of us, on a basis roughly proportional to our 
     ownership interest. If the manager of our company had some 
     suggestions, we would listen carefully - but the final decision 
     would be ours. Despite our corporate form, in this aspect of the 
     business we probably would behave as if we were a partnership.

          "Wherever feasible, I believe in maintaining such a 
     partnership frame of mind, even though we operate through a large, 
     fairly widely-held corporation. Our Treasury ruling will allow 
     such partnership-like behavior in this area . . .

          "I am pleased that Berkshire donations can become owner-
     directed. It is ironic, but understandable, that a large and 
     growing number of major corporations have charitable policies 
     pursuant to which they will match gifts made by their employees 
     (and - brace yourself for this one - many even match gifts made by 
     directors) but none, to my knowledge, has a plan matching 
     charitable gifts by owners. I say "understandable" because much of 
     the stock of many large corporations is owned on a "revolving 
     door" basis by institutions that have short-term investment 
     horizons, and that lack a long-term owner's perspective . . .

          "Our own shareholders are a different breed. As I mentioned in 
     the 1979 annual report, at the end of each year more than 98% of 
     our shares are owned by people who were shareholders at the 
     beginning of the year. This long-term commitment to the business 
     reflects an owner mentality which, as your manager, I intend to 
     acknowledge in all feasible ways. The designated contributions 
     policy is an example of that intent."

                               *   *   *

     The history of contributions made pursuant to this program since its 
inception follows:

                               Percent of
        Specified Amount    Eligible* Shares      Amount        No. of
Year        per share         Participating     Contributed    Charities
----    ----------------    ----------------    -----------    ---------
1981           $2                 95.6%         $ 1,783,655        675
1982           $1                 95.8%         $   890,948        704
1983           $3                 96.4%         $ 3,066,501      1,353
1984           $3                 97.2%         $ 3,179,049      1,519
1985           $4                 96.8%         $ 4,006,260      1,724
1986           $4                 97.1%         $ 3,996,820      1,934
1987           $5                 97.2%         $ 4,937,574      2,050
1988           $5                 97.4%         $ 4,965,665      2,319
1989           $6                 96.9%         $ 5,867,254      2,550
1990           $6                 97.3%         $ 5,823,672      2,600
1991           $7                 97.7%         $ 6,772,024      2,630
1992           $8                 97.0%         $ 7,634,784      2,810
1993           $10                97.3%         $ 9,448,370      3,110
1994           $11                95.7%         $10,419,497      3,330
1995           $12                96.3%         $11,558,616      3,600
1996           $14                97.2%         $13,309,044      3,910

* Shares registered in street name are not eligible to participate.

     In addition to the shareholder-designated contributions summarized 
above, Berkshire and its subsidiaries have made certain contributions 
pursuant to local level decisions of operating managers of the 

                                *   *   *

     The program may not be conducted in the occasional year, if any, when 
the contributions would produce substandard or no tax deductions. In 
other years Berkshire expects to inform shareholders of the amount per 
share that may be designated, and a reply form will accompany the notice 
allowing shareholders to respond with their designations. If the program 
is conducted in 1997, the notice will be mailed on or about September 15 
to Class A shareholders of record reflected in our Registrar's 
records as of the close of business August 31, 1997, and 
shareholders will be given until November 15 to respond.

     Shareholders should note the fact that Class A shares held
in street name are not eligible to participate in the program. To 
qualify, shares must be registered with our Registrar on August 31
in the owner's individual name(s) or the name of an owning trust, 
corporation, partnership or estate, as applicable. Also, shareholders
should note that Class B shares are not eligible to participate in
the program.

*Copyright 1981 By Warren E. Buffett

All Rights Reserved