Nelson Rockefeller: governor of New York, vice president of the United States, and grandson of the world’s richest man. A powerful, hard-chiseled man, he was “Rocky” – long before Sylvester Stallone.
And here’s the interesting part: IFC might not be here without him.
The world’s richest man?
Today it is Bill Gates. But a century ago it was John D. Rockefeller Sr., the pioneering U.S. oil industry tycoon whose many creations include ExxonMobil, the Rockefeller Foundation, the University of Chicago, and others. New York’s Rockefeller Center is just one sign of his family’s vast influence in the United States.
One of his grandsons, David, climbed to the pinnacle of the world of high finance, becoming chairman and CEO of Chase Manhattan Bank. David’s brother Nelson dwelled in the world of Republican politics. He never quite reached the pinnacle, failing three times in bids to become President of the United States. However, in his time, Nelson Rockefeller was one of his party’s most powerful figures, ending his career as vice president under Gerald Ford from 1974 to 1977, after earlier serving as New York’s governor for 14 years.
Although it has never been widely acknowledged, Nelson Rockefeller played a pivotal role in the creation of IFC. Indeed, without his intervention in 1951, we might not be here today.
Rockefeller was born into a family of billionaires with a longstanding interest in Latin America as well as a front-row seat in the U.S. business and financial worlds. As a young man he served in Washington as President Franklin D. Roosevelt’s Coordinator of Inter-American Affairs during World War II, then became Assistant Secretary of State. This international background left him in a good position to think through the new challenges of development finance that would arise in the postwar era.
In 1949, three years after the creation of the World Bank and in a growing Cold War atmosphere, President Harry Truman proposed launching an ambitious new bilateral U.S. foreign assistance program known as Point Four. To implement his vision, Truman turned to Rockefeller, asking him to chair an International Development Advisory Board that would consider all aspects of the Point Four program “with maximum dispatch.” The prevailing consensus at the time was that most of the new aid money would flow through government-to-government channels.
Meanwhile, inside the World Bank there was a vice president with a business background named Robert L. Garner. He had another idea: stimulating new private investment in developing countries.
“It was my firm conviction,” Garner wrote, “that the most promising future for the developing countries was the establishment of good private industry. I soon realized that the Bank could do very little in this respect aside from one or two loans to private- owned power companies … I therefore came to the conclusion that we would have to develop some new approach if were to be influential in the spread of private industry in the less developed countries.”
This is way Garner describes his original concept for IFC in his self-published 1972 memoir, This is the Way it Was. Moving past the brainstorming stage, he had his assistant Richard Demuth craft a proposal for a separate institution within the World Bank Group to execute this vision. Then Garner took it directly to Nelson Rockefeller, finding him to be supportive of the idea.
Rockefeller, former World Bank President Eugene Black later wrote, “was glad to take it up.”
In March of 1951, Rockefeller’s panel submitted its report to Truman, including a recommendation for the creation of “an International Finance Corporation.” The idea was that this new entity would support development by making loans to private enterprises in developing countries, but only on the condition that it take no government guarantees, always work alongside other private investors, and never manage its investee companies.
At the time the U.S. was the world’s only major capital exporting country, and its foreign investment in developing countries was only $700 million a year. The Rockefeller report said it was of “primary importance” that this be increased:
An increase, joined with a smaller public investment through national and international agencies and the more effective mobilization of local capital, could give a revolutionary lift to the economies of underdeveloped areas. The present pattern of near-stagnation and relatively feeble development could be quickly transformed into a progressively expanded one.
Rockefeller the revolutionary?
Given the subsequent course of international economic history, he certainly seems so. For although it would take five more years for the concept to gather enough international support for IFC to come into being, his early endorsement was an essential piece of political backing, standing as he did as the scion of one of America’s most influential families. Without it, there might not be an IFC.
If you have an idea for a “postcard from the past,” please email Celeste Diaz Ferraro at cdiazferraro@ifc.org.
