Good Works & Profits

High in the Austrian Alps, melting snow cascades in a great torrent down the sides of the Reiffeck and Kreuzeck Mountains. Why not, thought the Austrian government, harness this energy for power? Austria could use it in its reconstruction, and the surplus could be sold to northern Italy's heavy industries. There was just one problem: Where would Austria get the money to build a hydroelectric plant? Last week Austrian Ambassador to the U.S. Karl Gruber went to the place that could help supply the funds. He marched into the office of Eugene R. Black, president of the World Bank, and asked for $12 million to help finance the $35 million hydroelectric power plant. The chances for the loan, Black told him, looked excellent. So were the chances for more loans to help pay for other dams to furnish power to Germany and France.

It was a notable milestone for both Austria and the bank. For Austria, it would be its first World Bank loan; for the bank, it would be its first project calling for international cooperation--and just the kind Black hopes will encourage other countries to try. Black is a hard-headed banker who has little patience with the do-gooding type of foreign aid. Says he: "National policy based on real or assumed moral obligation to advance the welfare of others ... is not likely long to endure; over any considerable period, national policy must be based ... on national self-interest."

With one eye on boosting national selfinterest and another on making sound loans. Black's bank has handed out:

P: To India, $7,500,000, to finance the world's biggest fleet of heavy tractors. By plowing under the tough kans grass that has overrun millions of acres, the tractors will bring land back into cultivation. Within two years, India expects to have 1,500,000 more acres of farmland, enough to produce $35 million a year in wheat.

P: To Mexico, $80 million, much of it to raise electric power output by next year to twice what it was in 1945, thus pave the way for hundreds of new industries. In one town of 5,000, the number of industrial users of electricity rose from two to 33 in three years.

P: To Finland, $36 million, to build up agriculture and industry. Finland will soon be back to borrow more--this time 40 million German marks.

To date, the only ones who oppose the World Bank, notably in such countries as Finland, are the Communists.

Just Like the South. To Banker Black, a man of vision without being a visionary, the job the World Bank must do in backward areas is not much different from the transformation he has seen in his native South. Says he: "The Civil War knocked us flat on our backs and left us there . . . Slowly and painfully, we picked ourselves up. We began to be able to save and invest ... A little capital begot more capital; a little expansion begot more expansion . . . The South's story tells how development works."

Born in Atlanta, where his father was a governor on the Federal Reserve Board, Black graduated Phi Beta Kappa from the University of Georgia at 19, served in the Navy during World War I, then went into the banking business. He was a senior vice president of the Chase National Bank in New York City when he was named World Bank president five years ago.

Development of the World Bank has been slow and painful. When Black first came there as a protege of John J. McCloy, then its president, almost everyone had already written it off. Born of the Bretton Woods Conference in 1944, the bank (officially, the International Bank for Reconstruction and Development) had as its main purpose the rebuilding of war-torn countries. It poured some $500 million into Europe, almost exhausting its funds, before it found that its efforts were puny alongside the needs. When the Marshall Plan took over this job, the bank set with a vigor to its more satisfying role of helping nations help themselves.

Record Profits. The World Bank has already made almost $1.9 billion in loans, and not one has been defaulted. From a deficit of almost $1,000,000 in its first year, the bank has since shown a steadily climbing profit, which reached a record $18,485,411 in the year ending last June 30, promises to go still higher in fiscal 1954. The bank's capital (more than $2 billion, 35% of it from the U.S.) came from subscriptions of the 56 member nations, but more recently it has raised more than $500 million by selling bonds. Untrusted at the start, these bonds now rate with those of A.T. & T.

The bank steers clear of such projects as building sewers or putting up homes, hospitals and schools. If the bank thinks that a proposed project does not fit a country's development plans, or if it is aimed at producing export goods that nobody will buy, the bank may suggest changes or refuse the loan. In pursuit of his job, Black spends much of his time traveling, talking to government officials such as Sheik Sir Sulman of Bahrein.

Strange Success Formula. Not all the World Bank's investments need be revenue-producing. Ecuador, for instance, got $8,500,000 this-year to pave eight main highways, now usable only in the dry season, which will bring new farmlands into production. Australia recently received $54 million, mostly for new four-engine planes, trucks, and equipment to make diesel locomotives. The bank lent $20 million to a Chilean company for a pulp mill and newsprint plant, so that Chile can depend less on copper and nitrates for its exports.

With U.S. foreign aid tapering off, the bank sees its mission as more important than ever. But Black has no idea of competing with private investors for this business. He believes the bank should stay in the picture only until private capital is ready to take over, then-step out. Says Black: "To be completely successful, the bank would have to go out of business."

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