Of mutual benefit: The World Bank and Australia in the 1950s and 1960s

Eighty years ago, the representatives of 44 nations that were still fighting the German and Japanese armies met to organise the post-war international economic order. At the scenic Mount Washington Hotel in Bretton Woods, New Hampshire, two institutions were established that continue to shape global economic affairs.

The International Monetary Fund was created to prevent the self-interested financial behaviour that marked the 1930s, while the International Bank for Reconstruction and Development (more commonly known as the World Bank) was established to provide muc- needed funds in the post-war period.

At Bretton Woods, British plans – authored by famed economist John Maynard Keynes – competed with American ideas for rebuilding the post-war world.

While compromises were made, American economic dominance triumphed, setting the scene for a global economy that]s still ruled by the US dollar.

Australia was one of the active participants at Bretton Woods, and, after intense debate within the Chifley Labor government, joined the IMF and IBRD in 1947.

This was no foregone decision, as shown by the attitude of Labor’s then transport and external territories minister Eddie Ward, who, in 1946, exclaimed that the Bretton Woods system (by which he mostly referred to the IMF) would “enthrone a world dictatorship of private finance more complete and terrible than any Hitlerite dream”.

Australia’s economic boom

Despite these dramatic warnings, Australia quickly benefited from its membership in the Bretton Woods organisations. In 1950, it received the first of its seven loans from the World Bank. Between 1950 and 1962, Australia received more than $417 million (the equivalent of almost $5.5 billion in 2024) from the World Bank.

These loans were used to fund Australian development projects, ranging from agricultural machinery to the first Qantas jets to the Snowy Mountains Scheme.

The economic boom that Australia enjoyed in the 1950s and 1960s was partly facilitated by the World Bank.

We know of the 1950s and 1960s as a kind of golden age in Australian history. The long post-war boom enabled many Australians to gain access to the “Australian dream” of a quarter-acre block and a car to drive through the sprawling suburbs.

This boom relied upon an influx of US dollars, which was used to buy much-needed equipment to build the infrastructure to support a rapidly growing population. Even the factories built to manufacture the iconic Holden car were partly financed by World Bank loans.

Australian agriculture also benefited from World Bank assistance. Large numbers of tractors, purchased from the United States, enabled the increased mechanisation of Australia’s farms. When combined with World Bank-assisted purchases of new locomotives, the ability for farmers to get their products from the country to markets (both domestic and overseas) was considerably enhanced.

Funding the Snowy Mountains Scheme

Another major dimension of Australia’s post-war development program was ensuring consistent supply of electricity to all Australians.

The Snowy Mountains Scheme was a big part of this effort, and benefited to the amount of $100 million (just over $1 billion today) in 1962.

Whereas it was once a regular occurrence for blackouts to disrupt Australians’ lives, projects like the Snowy helped to make them a thing of the past.

Looking back from 2024, Australia seems like an odd recipient of World Bank loans. We’re more used to seeing poorer countries in Africa and Asia depending on international developmental assistance.

However, the World Bank was a very different organisation in 1950, and it depended on “sound” recipients such as Australia to establish itself as a player in the field of international development.

It was no coincidence that as Australia “graduated” from needing World Bank loans in the 1960s that the bank expanded rapidly into what we know today as the global south.

Indeed, in the same year Australia received its final loan from the World Bank, a United Nations mission to the Australian colony of Papua New Guinea suggested the Bank should conduct a survey of that territory’s economy.

The report of this survey, published in 1964, helped guide Australian colonial officials and emerging Papua New Guinean leaders as to the best way to promote development as PNG approached its independence.

A focus on the global south

These development challenges continue to shape the relationship between Australia and its former colony.

Nevertheless, the shift in World Bank attention from Australia to PNG is revealing of the broader shift that took place in the bank from the 1960s. Wealthy but “developing” countries such as Australia no longer needed the bank’s cheap finance, so the bank turned to the newly-decolonising countries of the global south.

This has been the World Bank’s key business over the past 60 years, with no sign of a decline in the global need for development finance.

In 2024, the World Bank is one of the pre-eminent international organisations. Its officials have privileged access to the corridors of power throughout the world. This was not always the case.

In the years immediately following its establishment, the World Bank needed customers for its loans, and what we know today as the global south was largely still part of European empires.

In this context, a country like Australia that could make productive use of World Bank funds was a prime customer.

Similarly, the World Bank was able to provide Australia with much-needed dollars to assist with its post-war development program.

This was a classic case of a mutually beneficial relationship.