The Resolution was adopted on 25 March, and the ILO Governing Body was invited to contact the IBRD (ILO, 1949c). This it did one month after Eugene Black took over the presidency of the IBRD.<sup>2</sup> The matter was thus immediately passed to the Bank’s Economic Department for preliminary examination. The Economic Department, under the direction of Leonard Rist, discussed two separate matters: first, whether housing could be considered a sufficiently “productive” project, as required by Article I(i) of the Bank’s Articles of Agreement; and, second, whether there was any rationale for the Bank to contribute with loans in U.S. currency to projects whose outlays would principally be in local currency.<sup>3</sup> As for the first issue, the answer was quite clear: the Bank’s “productivity” requirement would certainly not be met in every country, “but no doubt, there were areas where the housing shortage seriously hampered the development of new resources and industries, so that financing of new houses would in those areas be directly productive even within a narrow understanding of that term.” As for the second point, the analysis was more complicated, not least because it was impossible to understand, at that very preliminary stage, what possibilities were being considered by the ILO. The Bank focused on three.

The possibility considered most likely by the Economic Department was that a new Institute for Building Loans would sell bonds in the private markets of capitalexporting countries, under guarantees by the IBRD. In this case, the problem would arise that the proceeds were mostly in U.S. currency, while the housing projects would mostly require local currency. The Economic Department assumed that this extra U.S. currency would be added to the general foreign currency resources of the borrowing country as a supplement “necessary to absorb the inflationary pressure created by increased construction activity.” A second possibility was that the Bank would guarantee not the bonds themselves, but the monetary policy of the government hosting the building investment. The Bank would intervene to persuade potential _local_ investors to buy the proposed Institute’s bonds in the local market, offering a guarantee by the IBRD against losses due to devaluations of the local currency. The underlying idea was that the Bank’s direct involvement—that is, its authority and control—would “keep the local government in line.” A less likely third possibility was that the Bank would participate merely by lending its prestige and experience, without any formal guarantees on the Institute’s bonds.

Although these three scenarios—and principally the first of them—were at odds with the Bank’s previous loan policy (which had principally consisted of directly providing foreign currency for reconstruction programs), the Articles of Agreement envisaged the possibility that, “if the project gives rise indirectly to an increased need for foreign exchange by the member in whose territory the project is located,” the proposal or abstained, while those representing Catholic or otherwise “Atlantic seaboard” trade unions—as the Belgian Workers’ delegate put it (ILO, 1949a, p. 6)—were in favor (ILO, 1949b).

> 2 David A. Morse to Eugene R. Black, 12 August 1949, Housing and Urban Development, Vol. 1, Central Files, Fonds 2, World Bank Group Archives (henceforth _Housing 1_ ).

> 3 These remarks, and those of the next several paragraphs, draw on an internal Economic Department memorandum: Svend Andersen, Economic Department, General Studies, “An International Institute for Building Loans,” 26 August 1949, _Housing 1_ .

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