WORLD BANK HISTORY PROJECT
Brookings Institution
Transcript of interview with
ROBERT NATHAN
July 3, 1991
By: Richard Webb, Devesh Kapur
1
FOREWORD
The following is a transcript of an oral interview conducted by the authors of the World
Bank’s fiftieth anniversary history: John P. Lewis, Richard Webb and Devesh Kapur,
The World Bank: Its First Half Century, Washington, DC: Brookings Institution Press,
1997. It is not a formal oral history, and it is not a systematic overview of the work of the
person interviewed. At times the authors discussed the planned publication itself and the
sources that should be consulted; at other times they talked about persons and
publications extraneous to the Bank. Some interview tapes and transcripts begin and end
abruptly. Nevertheless, the World Bank Group Archives believes that this transcript may
be of interest to researchers and makes it available for public use.
Robert Nathan
July 3, 1991 - Verbatim
2
[Begin Tape 1, Side A] 1
NATHAN: . . came out of graduate school, the Wharton School, in ‘33, came to
Washington and happened to run into my professor from Penn [University of
Pennsylvania] , Simon Kuznets, and I had taken courses with him. And Simon had been
brought down by the Department of Commerce to head up the first official income
statistics ever done in the United States, and that was published at the beginning of ’34 in
a book called National Income in the United States, 1929-32. That's sort of real ancient
history.
WEBB: I have that book.
NATHAN: Oh, you do!
WEBB: Yeah.
NATHAN: I have it right there. It should go up there.
Then I became head of it; I became head of the section. There wasn't anybody else that
knew much about it, and I had worked with Kuznets. Then they made it into a division, I
think in ‘36. And I was chief of that division until I went into the War Mobilization in
1940.
WEBB: George Jaszi wasn't there yet?
NATHAN: Oh, no. George Jaszi, he was . .
WEBB: He was [inaudible]
NATHAN: No, George, I guess—he’s probably now in his early ‘70s, I would say, if
he’d have lived. No, George. Well, as a matter of fact, my successor was Milton Gilbert,
and he was also from the University of Pennsylvania, so sort of Kuznets and myself and
Gilbert. So the Wharton took over in the early stages.
WEBB: By the way, did you ever know a Charles Schwartz?
NATHAN: Charles Schwartz? Not the jeweler?
WEBB: No.
NATHAN: Economist?
1
Original transcript by Brookings Institution World Bank history project; original
insertions are in [ ]. Insertions added by World Bank Group Archives are in italics in [ ].
Robert Nathan
July 3, 1991 - Verbatim
3
WEBB: He worked as an assistant to George Jaszi in the . .
NATHAN: National Income Division.
WEBB: National Income. He was—he taught me national income accounting. That was
my first job. When I returned to Peru he came with a mission.
NATHAN: I must have met him, because I was active for many years in the National
Conference on Wealth and Income which, by the way, celebrated its 50th anniversary a
couple years ago. A book came out on it. I have it here somewhere on the National
Income and Wealth Conference. But I'm sure I met him, but I knew George very well.
So you helped develop the national accounts there?
WEBB: A marvelous education. Yes, I was very lucky.
NATHAN: Well, it's funny you say that. I say I was very lucky myself to happen to
have come into the Department of Commerce. I didn't know Kuznets was there, and
Kuznets didn't know where I was going. I had talked with him in the spring of ‘33, or the
winter of ‘32-‘33, and I told him I was going to leave in June after my master's degree,
and he was annoyed at me. He wanted me to stay and get my doctorate, and I wasn't sort
of theoretically oriented. I was much more action and, of course, we were in a miserable
depression. And so, you know, he was annoyed at me anyhow. But then I walked into the
Bureau—it was called the Division of Economic Research in the Bureau of Foreign and
Domestic Commerce in the Department of Commerce, and there he was in the same
office I was reporting to!
And it was an old professor of mine was head of it then, Fred [J. Frederick] Dewhurst.
And so that afternoon Dewhurst said, “Kuznets would like to have you assigned to him.
Would you like that?”
And I said, “I'd love it.”
You see, and that’s how I got there--I was lucky. But, of course, I found in those days--
it's not true anymore--very few people not only had any idea of how you measure
national income, but they had no idea of what it meant. A lot of people thought it was the
sum of all financial transactions. Other people thought it was retail sales of all, you know,
goods and services. The concept of value added and unduplicated additions by that stage
was pretty vague and not very well understood in those days. But I went through many
years of trying to educate senators and congressmen and government officials as to what
this, you know, what this meant and what it was all about. That was fascinating.
And then I also had an opportunity to apply a lot of what I had been doing in the war
effort, because in World War II we had very serious problems of mobilization because
America had never been fully mobilized like it did in World II. World War I we had just
barely started, and the degree of mobilization was insignificant compared to World War
Robert Nathan
July 3, 1991 - Verbatim
4
II. And the problem was of trying to get some conception of what our capacity was and
how much we should shoot for in terms of ambitious military programs, military
objective. And the military had no idea about that. That didn't make sense. They just said,
“Give us a lot of money, and if we don't produce it in ‘41, we'll produce it in ‘42 or if not
‘42, ‘43.” And they didn't understand the chaos and confusion that would result by
extremely high demands relative to feasible—“ambitious but feasible” was a concept we
introduced and pushed.
And, of course, the problem was that the military wasn't coordinated. The Army didn't
care about the Navy, and the Navy couldn't care less about the Army, and within the
Army the Quartermaster Corps went his way, and the Ordinance Department went
another way, and the Air Corps went a third way, and the maritime—and it was really
quite a problem. We had a hell of a lot of very serious battles during the war on this
whole problem of feasibility and ambitious goals, and fortunately I had had all this
national income work so that I was named chairman of the Planning Committee in the
War Production Board. So I was right in the middle of it, and we had some pretty rough
times, but it was a tremendous success, of course.
WEBB: Were the first inklings of input/output analysis . .
NATHAN: Some inklings of it. I'll tell you what's the first thing we did--I think it was
the first time it was ever done, in 1940 when I went to the Defense Advisory
Commission. That was the first defense agency. We—there’d never been a full
employment concept of national income. We had--after all, you developed estimates in
the trough of the depression, ‘29-‘32 and ‘32-‘33--you can argue whichever--but there
was a trough of the depression, and we had had a fair recovery until ‘37, and then we had
another dip, and by ‘39-‘40 we were still with tremendous numbers unemployed.
So the first thing we tried to do--and did--in 1940 in the Defense Commission was to try
to come up with some estimates of what a fully employed economy could produce in the
aggregate, in other words, how much increase in GNP could we get out of reducing, say,
unemployment, which was then around 15 percent yet, to, say, 2 percent or 3, full
employment. Then how much more would the military with all the tightness and so forth
have on the economy, so that early in the defense effort we had a fair idea of what our
magnitude was. And then we were able to translate that in rough terms in the critical
limitation materials for the military, namely aluminum: how much aluminum we had,
how much you would need. Aluminum was critical for air, for the aircraft. Then we also
had copper as our critical item for ammunition, but we used steel as the sort of more
broadly-based industrial limiting factor in the mobilization. But the GNP at full
employment gave us a hell of a good idea of what the mobilization we . . .
You see, even at that time we had indications from some studies in World War I and
some of what was going on in Europe then, in England, even some information from
Germany, that you could probably reach about 40, 45 percent of GNP as your peak in
military purposes, because you had to run the economy, people had to have clothing and
food and transportation to go to work and so forth, so that we had pretty much the goals
Robert Nathan
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5
for a framework of a mobilization program, but national income played a very important
role in that.
I recently gave a talk about this to the History of Economics Institute. It's made up mainly
of professors of history of economic thought. And so I went through the sort of early
GNP analyses and studies of income and then how we used it in World War II. It was an
extemporaneous talk, but they taped it. I'll get it, and I'll try to edit it and put it into an
article form because that's—it’s a very interesting period.
WEBB: Yes. Good preparation for working on international development.
NATHAN: Oh, yes. No question. Well, we worked in a lot of countries in the
developing world that we've worked in. We've tried to develop national accounts. It isn't
easy, you know, but on the other hand I'd rather have reasonably rough, but some sense
of reason, of approximations than nothing, to get an idea of growth and patterns of
growth and shifting emphasis of resources and the like.
What would you like to do? Would you like to ask questions because I'm not sure what
the scope of what you'd like to do. You go ahead and tell me what . . .
WEBB: Maybe a combination, because very few people have been seeing the World
Bank for so long but also not just seeing but, as it were, in the same business as yourself.
We thought it would be particularly interesting just to know some of the more general
ideas you might have on the way the Bank has evolved and what some of the main stories
might be in the history. And then I'm sure that will lead us into a lot of questions.
NATHAN: All right. Well, let me say this: our company was formed in January of ‘46
with just myself, and so we're 46 years old. But in January 1946 it was formed just with
myself and a vice president and a research person. That was it.
We grew slowly and steadily, but our first meaningful overseas work was in 1950 when
the predecessor to AID [U.S. Agency for International Development] , those agencies then
had worked out some idea of helping Burma, which was very underdeveloped, not
insignificant in terms of resources but very limited development. And I went out myself
in the summer of 1950 and spent some time. And we got along well and the government
people seemed to like me and the man I took with me, and so we became advisors to the
government of Burma. We were there for seven and a half years, from 1950 to ‘58.
Unfortunately, a dictator took over, and that was the end of development and almost the
end of Burma. It just sat. A real SOB by the name of General Ne Win who's still--I mean,
he's an old bastard, but behind the scenes he still maneuvers and manipulates. And it's a
cruel, vicious regime, what they've done to that country, because the people of Burma are
among the most delightful and honest, decent people I've ever worked with in any
country, and what he's done there is just sad. U Nu, who was prime minister when we got
there in ’50, is now under house arrest, as a lot of others are. It's sad.
Robert Nathan
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6
But I went there twelve times myself in the seven and a half years we were advisors to
that country. But it was our start, and then we moved fairly rapidly.
Our next biggest assignment early was for UNKRA, U-N-K-R-A, that's the United
Nations Korean Reconstruction Agency. And we went to Korea in 1952. The war was
still on, although there wasn't, you know, much active fighting; it was pretty much of
stalemate already. But we did the first sort of study of the economic potentials of the
country, and we came out reasonably optimistic but nothing, you know, not full
anticipation of the achievements because to me, looking where it was in ‘50 and looking
where it is today, I would say without hesitation it is the most impressive, most dramatic,
most successful case story of economic development because really in 1950 it was
battered, beaten and destroyed. But also a lot of people who had spent some time in
Korea had a feeling that there was a lot of brawn there but not much brains. You know,
they were sort of uncertain about what would happen or how it could happen. It may not
have ever done what it did if they hadn't gotten rid of Syngman Rhee. I don't want to
waste a lot of time on the details, but sometimes the leadership becomes so important in
whether a country moves or doesn't, but Syngman Rhee was a dead hand, corrupt, and he
thought he was the George Washington of Korea and therefore he could do anything he
wanted. Well, it was a pretty sad picture, and we tried . . .
We had a very good team there, by the way, and John Lewis, who became one of the top
development economists, he was on our team in Korea then.
WEBB: Oh, yeah, he mentioned that.
NATHAN: Yeah, that was his first overseas assignment. And, by the way, in Burma
Everett Hagan was our mission chief for a while. He was from MIT [Massachusetts
Institute of Technology] . Everett Hagan had his first overseas assignment with us.
But anyhow Korea really . .
[Interruption]
NATHAN: Well, anyhow, so it was an impressive performance. We had very little
problem or much to do with Syngman Rhee, but it was obvious that it was very difficult,
but when they got rid of Rhee in ‘60, we were called back in by the new administration,
Park Chung-hee, and we stayed with them until about 1975. We worked on their first
five-year plan and their second five-year plan and third, and it was really a remarkable
thing. It was a military regime, by the way. They didn't have much civil liberties, you
know; it wasn't really a wildly democratic-oriented group, but it wasn't the real dictatorial
either of the worst kind by any means because they made tremendous progress. And I
suspect if one made an intensive study of the distributive patterns of benefits of
development, you would find Korea is one of the most desirable in terms of the spread of
the benefits. It wasn't just in the hands of a few. It really was spread around, and the
standard of living rose phenomenally. But anyhow, that was our start. We've been in
many, many countries since.
Robert Nathan
July 3, 1991 - Verbatim
7
Now, let's go back to the sort of the concept. Now, the World Bank, as with many
entities, started fairly slowly. The first president was Eugene Meyer. Eugene Meyer was
the owner of the Washington Post, which is today one of the great national newspapers.
In those days there was competition. You had the Washington Post, and you had the
Washington News, you had--oh, there were three papers, I think. Anyway, but Eugene
Meyer had been a banker and a very decent, honorable, good-willed guy but rather not a
dramatic one. And I'd say myself that the problem in a sense was finding its niche,
finding its way. What should it do, really? What should it try? And I think really for the
first several years of the Bank--many years, I’d say--it wasn't quite sure whether or how
much it was really a bank and how much it also dealt with humanitarian matters.
And I remember a story. It wasn't told in my presence, but I remember Bob [Robert S.]
McNamara, whom I knew very well and I used to visit a lot.
Bob McNamara at one point was asked about the Bank in certain [inaudible] and
somebody said, “Well, you know, aren't you going a little overboard? This is a bank.”
And Bob said, “If I wanted to be a banker, I would have gone to New York and be a
banker with one of the big banks. I'm interested in development, and I want this bank to
be a development instrument.”
So he really gave it, in my judgment, the biggest thrust toward the LDCs, the less
developed countries, than I think happened--and that was not an insignificant degree of
shift, because I think the Bank played a very important role in lots of big infrastructure
projects and development institutions in countries.
But I think it was really in McNamara's time that things like technical assistance got an
acceleration. I don't mean initiation--they were doing technical assistance earlier--but I
think there was an acceleration of technical assistance focus, the technical assistance
process, that had a significant degree of meaning in orienting the Bank toward
development. The Bank never became, obviously, a sort of a WPA [U.S. Works Progress
Administration] works project or AID of the U.S. and other countries. It always loaned
funds, and it developed its soft side with the local currency. I forget the year that that was
initiated, but it certainly took quite awhile before they set up the soft currency loans,
repayment in local currency, and things of that nature. But they did very well financially
and they grew, but I have not looked at a chart of the growth in the year-to-year loans or
the aggregate loans but I'm sure it's a very accelerating upward curve. And I would be
surprised if the sharpest turn wasn't with McNamara. I can't be sure because I haven't
looked at, you know, the details.
WEBB: It was. Oh, yes.
NATHAN: But I think he was a tremendous force. He had a bright bunch of people
around him, and he did a phenomenal job.
Robert Nathan
July 3, 1991 - Verbatim
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On the whole I believe that the Bank is by far the most important single international
instrument in the whole changing of the world from the neglect of colonialism and self-
interest to sort of the concept of one's brother's keeper. You know, even from a selfish
point of view, I think, a lot of the developed countries realize now that in the longer run
you have greater opportunities for development by helping build the capabilities of the
raw material countries and build up their production capacity and their standard of living
and their education and everything else. It's a better world economically, not just
humanitarian. So I myself think that, while I respect highly what the [International]
Monetary Fund has done in a sort of more limited technical area, but not insignificant, to
me the World Bank has been the major, major broad international institution.
I don't think that the regional banks have had the same degree of impact historically,
although I think the Asian Development Bank has in the last decade or so done a great
deal more. Inter-American Development Bank, I think, has had a considerable impact too
in a very important way. The African Development Bank is still—though they had a sort
of earlier stage and a lesser degree of contribution to development.
But I think the World Bank has done a lot more than just lend money. I think it's had very
good staff work. I don't mean that there isn't inner fighting, and, you know, each national
group would like to have more of its people in the Bank in high levels, and there have
been, you know, people in some of the regional banks, if not the international, that aren't
necessarily at the top level, but given the whole picture and thrust of the United Nations,
the quality of Bank and the Fund staff just stand out terrific.
I hate to say this because I'm an ardent supporter of the United Nations and certainly the
concept, but if the United Nations economic programs disappeared, I'm not sure the
world would notice it much. I don't think the UNDP [United Nations Development
Program] has been a major force. Sure, they help with this, but I don't think their
policies, I don't think their criteria come anywhere near the constructive impact of the
Bank.
And I think that on the whole the Bank has been very fortunate with the leaders it has, but
you can always find some degree of fault going back. One person was not--you know,
they say that Barber Conable was not a good administrator. He was a Congressman, a
Republican, reasonably conservative, but nonetheless a good man, good instincts, and he
probably has had real trouble administratively. And a lot of people pushed him to
administrative changes that perhaps would have been better not made. I think Ernie
[Ernest] Stern at the Bank is one of the great forces, a very competent person. He was
really the top program guy, and they moved him over into finance three, four, five years
ago now. I think that was a real loss. But nonetheless you can look at the failures, the
weaknesses, the shortsightedness on certain points, shifting around, but on the whole I
think the Bank has been an extremely major element. That doesn't mean it hasn't got
problems, because the political environment with changes that go on pose very serious
difficulties for the World Bank--and I give you an illustration is Afghanistan.
Robert Nathan
July 3, 1991 - Verbatim
9
Afghanistan is a very underdeveloped country. We got a contract, this company, from
AID in 1960. We went out to Afghanistan, and I met with a lot of their leaders and they
liked us, and so we had a contract. We had teams there resident in the Ministry of
Planning for ten and a half years, ‘61 to ‘72. We were in agriculture. We were in
development institutions. We got into modest industrial development. We got into
irrigation. We got into transportation--almost the whole thing. They had never had any
budgeting even. It was really a pretty tough situation. But once the communist element
there, backed by the Russians, took over, the Russians then invaded and then the U.S. just
walked out.
Now, the World Bank had a real problem: “What do we do?” They didn't like the idea of
a conquered leadership taken, so the Bank just walked away from it. But I’ve been sort of
talking to them about trying to at least get ready if the thing becomes free again. Well,
they are interested, but they--I don't think they’ve had a mission go to Afghanistan for the
last five or six years. The IMF did have one or two in the last years, but on the other hand
the World Bank isn't going to put any money into there as long as it's a puppet regime,
and it still is.
The puppet that the Russians put into power is still running the thing, and it's terrible, the
killing and the division. It’s a lot--there are a lot of tribes in Afghanistan, a lot of
provinces, but they always lived reasonably peacefully. I often say that I traveled all over
Afghanistan, never had a military escort, never. Never had any sense of insecurity. And
there was no fighting among the tribes like there was in Burma to an extent. The Karens
and the Kachins and the Shans, they were--not major warfare, but there was some
insecurity. But not in Afghanistan.
And the sad part of it is, you know, the Russians just about destroyed that country. It has
resources. It has minerals, it has coal, it has obviously natural gas. There are indications
of some oil. But they have no railroad. They had very little road system. You know, you
have one road, the Russians built going up from Kabul through the Salang Pass in the
upper Hindu Kush mountains to the border of Russia. We built . .
[End Tape 1, Side A]
[Begin Tape 1, Side B]
NATHAN: . . what you do with that country--and I'm not saying that the World Bank
shouldn't be trying to get in. Now, the UN is in, the UNDP, but they don't do a hell of a
lot. They have some technical people, not much. The Asian Development Bank have
almost nothing going on there in a significant degree, and the U.S. has nothing except a
humanitarian program providing some grains and some teachers and some books and
trying to help. See, it's a strange situation, because about 85 percent of the country land-
wise is free of the domination of the regime, but the 15 percent that the communist
regime holds is all the cities. And so there is a problem as to what the World Bank would
do. I would like to see them be a little more aggressive in terms of just studying and
watching and looking and seeing so that when the day comes that it's an independent
country again . . .
Robert Nathan
July 3, 1991 - Verbatim
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But, you see, the Bank of course, we must realize, was formed at the time when
colonialism still prevailed very widely. I sometimes can't believe what my own
experience was. When I first went to Asia in 1948, I went down to Indonesia on a
mission. I was in Hong Kong and Singapore. It's hard to realize that in 1948 out there it
was all colonial yet--practically--and before the war, my gosh, the U.S. had the
Philippines, Japan had Korea, the Dutch had Indonesia, the British had Malaysia and
Burma and India and Ceylon and Pakistan. What you had is an independent Thailand and
an independent Afghanistan, and that was about it. And then the French had that whole
Middle East, so that really—and Africa was divided up between two or three colonials. It
was a colonial world, and the World Bank was born in that environment. And I think the
fact that it didn't move tremendously rapidly in the immediate post-war period was in
some degree a consequence of the colonial structures and patterns and how they didn't
change quickly because, you know, even in Indonesia the Dutch didn't go out of there
until late in ‘48. They stayed and stayed. They called it the last police action. But, you
know, industries would say, “Another month, another month,” and they would drain out
as much as they could.
But on the whole I think that the World Bank had not much choices in terms of moving
faster. And we've got to realize that even the United States, which came out of the war
richer than it ever went into it--you know, we had more new industries, more new
machine tools, more new facilities--that our economy was much stronger in 1947 or ‘48
than it was in ’38, ‘39 with all the production and knowledge and know-how and
capability of the workers. But even we didn't get into the development activities until the
Point Four was announced there in ‘48, and then [Harry S] Truman pushed it hard. You
know, our aid program until 1950 or ’51, ‘52 was rather modest, and so the real--you've
got to look at the developing world--was lagging.
But I, on the other hand, I think over the--over the decades the World Bank has been on
an uprise in terms of the whole magnitude of its activities. We've had lots of projects with
the World Bank. Right now we're in Bangladesh on a joint venture, AID and the World
Bank, helping their banking system. And we've done a lot of work with the Bank, and we
like to work with them. But on the whole over the years I think the World Bank has
played a very important role, not just in financial resources, but also in technical
assistance and guidance and bringing people here to spend time at the Bank and chasing
around, learning, sending them to other countries. So on the whole I think it's been a very
constructive force.
WEBB: One of the—I have that same sense, but it's one of the least documented parts of
the Bank, I’ve found. It’s easier to find the numbers and the money. And you find
discussions and so on of the big macro policies debates, but you don't see much
documentation, stories of how, the nitty-gritty. Can you suggest who . . .
NATHAN: Well, if I were looking for one person to really sit down for two or three
days, not for an hour or two, I would take Ernie Stern, you know, because Ernie now has
a longer history, a nearer-the-top history, than any one single person. See, a lot of the
Robert Nathan
July 3, 1991 - Verbatim
11
people that were there in fairly high positions are gone. I was trying to think of who I
would sort of go in and look at. I'd have to go back in the directories, you know, of the
staff in the ‘60s or ‘50s, see who's still alive.
WEBB: Burke Knapp?
NATHAN: Burke Knapp would be very good. Burke Knapp has a wholesome
perspective, a very warm person and very human in a meaningful sense, and I certainly
would include Burke Knapp as very important. I hope you're going to see him.
WEBB: We have already.
NATHAN: Oh, you have? Was it fruitful?
WEBB: Oh, yes, but brief.
NATHAN: Well, Burke is guess is--how old is Burke? He must be around 80, isn't he?
WEBB: Yes, he is.
NATHAN: Is he pretty sharp and alert?
WEBB: Yes.
NATHAN: He was very bright. I liked Burke very much.
But I’m—but Ernie Stern would be my most favored if I were going to. Now, there were
some guys that I think are still around that were at the head of economics planning, U.S.,
and I'm trying to think of some of their names. You know, what I would do is I’d go back
and look through the annual directories of the staff and personnel--even get the damned
phone books!
But you're right, that it--I don't think that there are many people that were ever pushed or
urged to intensely study it. Now, I guess Bob [Robert E.] Asher is your best bet for, you
know, sort of the history, too. Now, Bob Asher would be very good for giving you ideas
of people that would be named, that I think would be examples.
Now, of course the new president of Mexico--was he in the Bank or Fund? I'm not sure.
I think maybe the Fund, but he’s--I think he was in the Monetary Fund.
WEBB: [Carlos] Salinas? I don't think so.
NATHAN: You don't? Maybe the Bank. You think the Bank? He was up here.
WEBB: He was? Salinas?
Robert Nathan
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NATHAN: Yes. Check this. I'll tell you, Bob--have you spent a lot of time with Asher?
WEBB: No, we had one very good long . .
NATHAN: Only one session. It was a good, long one.
WEBB: Yeah, we need to go back.
NATHAN: I think I would go back to Bob, because Bob is very sharp and very, very
savvy on this, and he would be helpful on the numbers.
Now, I think John Lewis--have you thought of talking to him yet, John at Princeton?
WEBB: Well, he’s--we're doing this together with him.
NATHAN: Oh, he is on this! Oh, great! Because John's awfully good, and he has good .
..
WEBB: I'm sorry. I thought that I had mentioned that to you. That’s funny.
NATHAN: But that's funny because John had his first job with us.
WEBB: Yes. You mentioned before. And he knows that I was coming to see you. He
would be here today, but he's abroad right now.
NATHAN: Well, John is awfully good. Now he, see, John goes back far enough now on
the development work that he will have a lot of those people.
What about some of the foreign people that were fairly high in the Bank? What was his
name who was in Pakistan, Abdul?
WEBB: Mahbub [ul-Haq] ? Oh, yes.
NATHAN: Have you had a chance to talk with him?
WEBB: We were going to go back and talk to him. He's in New York now at the UN.
NATHAN: Oh, he is? Well, he would be very good to talk with, very good, because
he's, you know, he’s a little bit of a rebel, you know, in the sense that he's an impatient
guy and he's a hard pusher, but he's good. You know, he knows what he's talking about.
You know, if he were more diplomatic he’d probably been head of the Bank or
something. But that's all right. You need people that--I know lawyers that probably would
have been Supreme Court justices if they weren't as dynamic and vigorous and impatient
as they are. But he would be very good.
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13
But there must be a lot of the--I can't believe there aren't a lot of guys still around. You
know, if I had directories from the Bank, I could--but Bob Asher will give you a dozen
names. But John Lewis must have quite a number.
WEBB: Yes. Has your company been very involved in projects as well as in general
technical assistance?
NATHAN: No, we're purely advisors. We're pure economists. We're not engineers. By
the way, I'll tell you who you've got to see is--he was out in Indonesia for years. He was
with the World Bank for years and years.
WEBB: [Bernard R.] Bell?
NATHAN: Bell. Yes. Bell would be excellent. He spent a lot of time in Indonesia, but
Bernie Bell was very important in the Bank before he went to Indonesia, so Bernie would
be excellent. And he's a hell of a nice person, and you will have no problem talking with
him. He lives in the, I think, Watergate.
KAPUR: We've met him once.
WEBB: We've met him once rather briefly.
NATHAN: He's quiet and very relaxed. He’ll listen [inaudible] But Bernie is very, very
bright, and Bernie was in there long enough that he will know who's still alive and who
played important roles.
Now, if you want to get a view of the Bank from the outside, I think that there are some
people that would be very useful, and there aren't too damn many around. One would be
Peter MacPherson, who was head of AID for several years. Peter is now a senior vice
president of the Bank of America, Peter MacPherson.
WEBB: I met him once a long time ago.
NATHAN: He's very good. He's again one of these nice persons. But he--I'll tell you,
given the [Ronald] Reagan Administration, if it hadn't been for Peter, there wouldn't have
been an AID program because Reagan didn't give a damn about AID. I don't think he
gave much about anything. But Peter was in an environment that was hostile to
developmental help and humanitarian things, and I think Peter did a magnificent job at
keeping it at the level he did, although our AID program, the U.S. AID program, has
become too damn military-related. Most of the money goes to security-associated areas
rather than pure humanitarian or pure economic development. But I think that there are
guys like Bernie Bell, especially, and others that would--Peter MacPherson would be
awfully good.
Now, I don’t know whether--I'm afraid this is probably a little late, but one fellow who I
think would be useful for a little earlier history on Latin America would be Teddy
Robert Nathan
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14
[Teodoro] Moscoso in Puerto Rico. Teddy Moscoso was the head of the whole Puerto
Rico Fomento.
WEBB: Bootstrap, yeah.
NATHAN: Bootstrap operation. He's still alive, he's still alert, he's a smart cuss. He
was--he headed up, I think it was under the [John F.] Kennedy period, if I'm not
mistaken, Alliance for Progress or the partnership between the U.S. and Latin America.
WEBB: That's right.
NATHAN: And Teddy would have some interesting views from the outside, you see.
He was on the development—see, I'm thinking that if I were in your shoes, I'd want to get
both people on the outside who've seen the Bank and looked at it and understood it and so
forth and who were in development themselves. That's why I say Peter MacPherson
would be useful. He can't go back terribly far in years, but Peter still, I think, would be a
very valuable person to talk with.
WEBB: He came out of the Peace Corps, didn't he?
NATHAN: Yes, that's correct. But he was a Republican, but a moderate. I don't know
how he got into that Reagan outfit because they don't believe in moderation. They didn’t.
WEBB: I remember, I was in the government of Peru when he was heading AID and I
met him then.
NATHAN: Well, he's a fine person, and he's a public-spirited person, and even though
he's (I'm sure) busy as hell out there in San Francisco at the Bank of America, I'll bet he'd
make himself available. It's worth talking to him. You can check it with John Lewis and
see what--but I think Peter MacPherson would be well worthwhile.
Now every time I start running my mind around, I keep bumping up again and saying,
“Oh, I think he's dead.”
You know, it’s like I'm involved in some legal cases now. I'm an expert witness on the
environmental hazard waste problem back in World War II. And, you know, they're now
fighting to clean up the Love Canal up in Buffalo, and out in California they poured all
this acid into the ground and now it's leaking out and they have to clean it up. There's
nobody around who was in the policy level of World War II, so I've been sort of pulled in
as an expert witness over and over in these cases, too much.
But there, some of the earlier Bank—but there are people who were, you know, moved
up in the Bank over the years that I'm sure, going through the record, but Bob ought to be
able to give you a lot of interview material.
WEBB: What are some of the main changes that you’ve seen?
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15
NATHAN: Well, the biggest changes, I think, were three- or four-fold. One of them was
going for the soft loans, the local currency repayment, things of that nature. And I think
the second one was really broadening out the technical assistance role quite extensively.
They always sent missions out to a country to review and discuss, you know, the
missions and to come back with reports, which I think is very good because they've had
good people on those missions. But they have more and more over the years financed
technical assistance teams that would deal with not just a capital project but with sectors.
And they've done a lot of work in agriculture, and they've used their imagination to try to
do things that would have a multiplier effect, that would have a proliferation, which I
think is a wonderful thing.
You know, I've always said if you do a project, how much can you handle that’ll be
spreading out and that’ll have secondary and tertiary effects and that waves will move on.
And I think the World Bank has moved in that direction in the technical assistance area,
and I think it's very, very important.
But then I think also the IFC, the International Finance [Corporation] , has. It's not
dramatic, you know; it's not been huge, but nonetheless it has made its impact. I think it
could have been a more dramatic thing, but it never got to the degree of focus that the
soft currency funding did or the straight Bank development. I don't know whether you've
talked to anybody from the IFC.
WEBB: A couple of people, [William S.] Ryrie and the chief economist.
NATHAN: There was a guy whose first name and last name is the same. What the hell
is it? Wait a minute. But he's around. He was there and only left the IFC about a year ago
now or two. I'll have to think of his name. His first name and last name are practically . .
WEBB: I can find out.
NATHAN: You'll get something, but you know, the thing to me is that the World Bank
has been willing to grow. It’s been more willing--it varies with the people, you know. I
think Barber Conable has been valuable. A lot of people are sort of downgrading him for
his lack of administrative, organizational capabilities, and that he didn't fully--I think he
made a mistake by putting Ernie Stern over to the finance side rather than the economic,
but on the other hand there were a lot of--Ernie's a tough person. Ernie is not soft, and
when he thinks something's going wrong, he fights it. And so he's had his enemies inside,
you know, that feel he was too--you know, he damned near ran the thing for quite a while
under certain presidents. I think he was probably by far the most important second man
ever there when the president of the Bank of America was in. And, you know, the nearer
you get to the top, the sharper the targets are that they're shooting at. You know, when
you get up high, they cut your throat if they feel they can move up higher, and it's not
easy. But Ernie has done a great job.
WEBB: Do you have an impression of [Alden W.] Clausen?
Robert Nathan
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16
NATHAN: Clausen? A decent person. He was not a McNamara. There hasn't been a
McNamara since McNamara, and he created waves, too. I shouldn't leave the impression
that McNamara wasn't controversial. A lot of the bureaucrats in the Bank didn't like
McNamara because he often made his own decisions, and, you know, he didn't delegate
everything. He had a little nucleus around him that he worked very well with, but I think
Bob McNamara was one of the best presidents the Bank ever had.
Now, I think Clausen did well. It wasn't dramatic. It wasn't exciting, but it moved, you
know, and it wasn't stagnant. Without any question, it was not a stagnant period.
Nor was it true of Barber Conable.
WEBB: I worked in the Bank in the ‘70s.
NATHAN: In the ‘70s. Who was president then?
WEBB: McNamara, and while I was at a very junior level there was a lot of murmuring.
NATHAN: A lot of bitching went on, sure.
WEBB: And the standard criticism was that McNamara had this exaggerated mania
about numbers and that he was paying no attention to the quality of projects. People
thought the quality of projects was going down.
NATHAN: Well, that's possible, but I don't know. Bob McNamara was sensitive about
numbers, but Bob did get--numbers did impress him because he’s the first Secretary of
Defense in this country, I think, that really outsmarted the generals and admirals. When
you're dealing with the military and when they get in the corner, they always say, “It's a
military secret, and I can't tell you.” That's always the out. But McNamara surrounded
himself with a bunch of young mathematicians and programmers, and they really, they
buffaloed the military because they didn't know all this new technology of computers, all
processing and game-playing and numbers. And Bob really, really, I think, he was
probably the most effective Secretary of Defense this country maybe ever had, the most
influential. He shook up the thing. But I think he was a damned good president of the
Bank. I know a lot of people didn't like him because he didn't give them the authority, the
loose run. He did hold the strings a lot, but nonetheless I think that Bob gave a degree of
energizing and broadening that was very valuable and probably it was better that he left
then because, you know, sometimes you can go in and do a job and stir it up and get a lot
of upset things but then get out of the way and let somebody else smoothly take over. So
I think maybe . . .
I don't know how the new guy's going to be, but I think we've had two not great but two
good presidents now in a row, but not great. I like Barber Conable. I've known him for
many years. We don't agree on economics a lot. We used to be involved in debates, and I
Robert Nathan
July 3, 1991 - Verbatim
17
was on television shows sometimes arguing with him and in little articles, and I have a lot
of respect for him.
But on the whole I think the Bank has done damned well.
I wish the European Bank could begin to do as well. They tell me that's in a mess.
WEBB: Yes, yeah. Ernie Stern was considering going there, but he . .
NATHAN: Yes, I know. He was smart, I think.
Now tell me, have you been able to interview many people who were close inside the
Inter-American Development Bank who give you a perspective of a regional bank
looking at the . .
WEBB: Not yet. We’ve had a talk with [Enrique] Iglesias, but Iglesias is a newcomer.
NATHAN: Yeah. No, but there are some people, aren't there, some older ones around?
There was an American that had a very high job. He left it about four years ago.
WEBB: And he's in Washington.
NATHAN: Yes.
WEBB: I saw a letter that he wrote recently, a column that he wrote. Was it [Jerome]
Levinson?
NATHAN: No, not Levinson. He had a Jewish name, but not Levinson. Look him up
because he was very good.
WEBB: I think he was the counsel.
NATHAN: Yeah, well, he had--but he was an economist.
WEBB: Really?
NATHAN: Yes. Oh, hell! I can picture him; I see his face! You look it up.
WEBB: I know who you mean. That's a good suggestion.
KAPUR: We spoke with Stanley Katz.
NATHAN: Oh, no, Stanley was at the Asian Development Bank. You know Stanley?
He was here last week.
WEBB: Yes, we talked to him last week.
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18
NATHAN: Oh, you did? He's having a hell of a time at the European Bank. Stanley's
awfully good. He must have been helpful about the Bank.
How useful are you finding the [Edward S.] Mason-[Robert E.] Asher book [The World
Bank Since Bretton Woods] ? I guess it must be some value in sort of an early sweep.
WEBB: I think it's a marvelous book.
NATHAN: Well, both of them are very able people.
WEBB: Beautifully written and . . .
NATHAN: Perspective and depth.
WEBB: Insights but in a low-profile way. It's a great model.
NATHAN: Has anybody done that with the IMF to your knowledge? I don't know.
WEBB: Well, they've had an in-house historian who has been writing.
NATHAN: Oh, who's been writing all along.
WEBB: Margaret DeVries, whose husband worked in the Fund.
NATHAN: Has she come out with a full volume?
WEBB: I'm embarrassed, but I haven't read it. She has, in fact, several volumes.
NATHAN: Oh, well, that's good. The Bank never had that.
WEBB: No.
NATHAN: That's a shame because . .
WEBB: They started an oral history program, and now they’ve . .
NATHAN: Oh, you have access to some of these documents? Oh, that’s good.
WEBB: Oh, yes. That's a big help.
NATHAN: How many people are involved in it? John is the sort of senior . . .
WEBB: The three of us, John and Devesh and I.
NATHAN: Where are you from?
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19
KAPUR: I am doing my Ph.D. at Princeton under John at the Woodrow Wilson School,
so that’s how I . . .
NATHAN: Oh, I see. What country are you from?
KAPUR: I'm from India.
NATHAN: From India.
I was in Los Angeles last Friday morning when that damn earthquake hit. And, you
know, it shook. I was up on the tenth floor and it reminded me, oh, it must have been
twenty years ago, when John was head of the AID mission in India. I stayed with him
because I came down to look about a regional job or something we might do, they wanted
us to check. And I was in his house--I stayed in the house there, and I was lying on the
couch reading and John was doing something, and my gosh, the couch started to shake, I
recall! But we had an earthquake. There aren't many in Delhi, but I've been in a worse
one in El Salvador once and one in Afghanistan, so I had a pretty good idea what it was.
But here I was sitting in the bathroom and I was shaving with my electric razor, you see,
and all of a sudden it started going like this! I turned my head and I looked through the
door, and there was the closet with my clothes and, my God, my ties and pants, suit were
going like this! But I always remember the earthquake in Delhi. It was a long time ago.
But you three, this is a marvelous assignment.
WEBB: Beautiful!
NATHAN: What do you have, two or three years, or what?
WEBB: Oh, I guess, two more years.
NATHAN: Two more years. You've had one already?
WEBB: Yes, but we've been working--Devesh has been working full time, but John and
I have been winding up other assignments. Both of us are coming into this just about full
time now.
NATHAN: How old is John now, sixty--he must be. Let me see; I'm trying to think. In
‘52 he was in Korea, ‘53, so that would be 37, 38 years ago. He must be in his mid- or
upper-sixties, probably.
KAPUR: He’s older. He just retired from Princeton in June.
NATHAN: Oh, he did.
KAPUR: And I know at the age of 72 they retire.
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NATHAN: Really? I find that hard to believe. John was so young when I first was
involved with him. Wonderful person. Excellent!
WEBB: Yeah, I really enjoy working with him.
NATHAN: You know, he has such a good vision. He has the depth, but also he has the
charm and warmth and sensitivity that makes him so good. Now, Ernie Stern is not like
John Lewis.
[End Tape 1, Side B]
[End of interview]
Robert Nathan
July 3, 1991 - Verbatim