NAC Files, Lot 60 D 137

Statement on Development Lending Presented by the President of the International Bank for Reconstruction and Development (Black) to the National Advisory Council at the Council Meeting, Washington, April 17, 1951


NAC Doc. No. 1125

As I read them, the basic principle underlying both Mr. Bissell’s letter1 and the memorandum of the NAC Staff Committee,2 so far as they affect the International Bank, is that the United States should take the initiative in drawing up development programs in collaboration with the underdeveloped countries and that the resources of the International Bank, like the resources of the Exports–Import Bank and any resources available to ECA should be utilized to finance parts of that program. In my judgment this proposal raises a basic issue of United States policy and goes to the heart of the question of whether there is any real role for the International Bank to play.

There are of course some countries where the United States should and must take the initiative both in formulating development programs and in financing those programs. I have in mind such countries as the Philippines and Formosa, as well as nonmember countries. [Page 1606] Where the United States is operating in this fashion the International Bank should, in my judgment, stay completely out of the picture.

As applied to the vast majority of the underdeveloped countries, the proposal that the United States do the development programming and coordinate its financing makes the International Bank in substance simply an instrument of United States policy and deprives it of any real reason for existence.

I repeat with all sincerity that I think these proposals raise for the United States an issue of basic policy, namely whether the United States is itself to undertake the major development program or whether this job is to be undertaken primarily through international channels.

I think it is significant that most of those who have studied this subject objectively have come to the conclusion that, from the standpoint of the United States itself, it would be better that the task be undertaken internationally rather than nationally. This was the view strongly expressed by the Gordon Gray Committee; and it was also the opinion expressed by the Rockefeller group, The International Development Advisory Board. It is also not without significance that every time the underdeveloped countries themselves have had a chance to voice a preference—in the various United Nations agencies and in the Board of the Bank itself—they have consistently expressed a preference for international administration.

I have tried to state in my memorandum of January 15, 19513 the reasons why, in my judgment, it is far better for the United States to operate through international agencies rather than bilaterally. Briefly summarized, these reasons are:

First. An international agency is in a better position than the United States Government to impose conditions on external assistance. Development can’t be exported. It has to be brought about primarily by domestic action. I am convinced that the International Bank can more effectively induce such domestic action than can any national government.

Second. National administration will inevitably be subject to political influences. I think it is clear that the International Bank is in a better position to resist such political pressures than any national government.

Third. National administration is often proposed primarily on the assumption that by doing the job itself the United States Government will gain political good will that it would not gain through the International Bank. In my judgment this assumption is simply not borne out by experience. I think, to the contrary, that if the United States undertakes to become the major development agency, it is likely to gain considerable ill will because of comparisons of aid given to various countries and because of charges of intervention or exploitation.

[Page 1607]

I know that there has been considerable criticism of the International Bank by those who think that it moves too slowly. I don’t deny that there was some justification for this criticism during the earlier days of the Bank when we were trying to find our way. I think those who are familiar with what the Bank has been doing more recently know that this criticism is no longer justified. Development, in the nature of things, cannot be undertaken at the same kind of pace as reconstruction. We in the Bank have been continuously accelerating the pace of our activities and if the issue we are now discussing once becomes clarified and we are given a definite responsibility we certainly intend so to organize our activities that we can actively and promptly discharge that responsibility.

So that there may be no misinterpretation, I don’t want to give the impression that there is a right and wrong way to undertake the development task which is applicable in every country or that any one agency should have a monopoly.

In most of the underdeveloped countries there will be roles to play for several agencies, national and international, and these roles may vary under different circumstances. But you can’t expect the International Bank to act as an international agency and yet have no real part in formulating the programs to be financed. The basic question which the Council has to decide is whether the United States Government will regard the International Bank as simply a supplementary source for financing to support United States policies or whether it will regard the Bank as the primary agency for development financing. Unless the policy is clarified it is extremely difficult for the Bank to operate.

  1. Dated March 30, p. 1593.
  2. Dated April 12, p. 1596.
  3. Not printed.