Development and Resources Corporation

The Development and Resources Corporation (D&R), founded and directed by David E. Lilienthal, operated from 1955 to 1979 and was based in New York City. D&R provided regional economic development services to governments throughout the world, often with a focus on the development of water resources and the construction of dams. Its main project was the development of the Khuzestan region of Iran. D&R also worked frequently in Latin America, Africa, and the United States, as well as in the Middle East, Southeast Asia, and Europe, and lead a project in Vietnam during the 1960s.

D&R was formed in 1955 by David E. Lilienthal, Gordon R. Clapp, and Lazard Freres, a New York investment banking firm. Lilienthal, who had previously served as a founding director of the Tennessee Valley Authority (TVA) and as the first chairman of the Atomic Energy Commission (AEC), served as the first and only chairman of the organization. Clapp, Lilienthal's successor as TVA chairman, was the first president. They founded D&R as a private company that would provide regional development services, like TVA, to stimulate economic development around the globe. Other private enterprises such as D&R existed at the time but generally specialized in one or two aspects of development. D&R was different in that it approached development on the regional level, creating an integrated plan for all aspects of development. D&R also assumed responsibility for implementing the plan for its projects, serving as the primary contractor for the economic development from the surveys and plans through the construction.

D&R's first project was in Colombia. Lilienthal was invited to Colombia in 1954 to serve as a consultant for developing the Cauca River Valley, following the model of TVA. The Cauca Valley Corporation (CVC) was established in 1955 to manage the development of the region with an emphasis on farm irrigation, flood control, and hydroelectric power, with the center of the plan being a hydroelectric project at Calima. Lilienthal and Clapp continued to advise the CVC until 1957 when Colombia's military dictator, Gustavo Rojas Pinilla, withdrew support from the Calima project which jeopardized the entire development plan. However, Pinilla was overthrown that same year and the CVC was re-established. By 1964, the CVC was operated entirely by Colombians and managing its own projects.

In 1956, D&R was commissioned by Iran's national development planning agency, Plan Organization, to survey the Khuzestan region and design an integrated regional development plan for agriculture and industry. This marked the beginning of a project that would last for the duration of D&R's operation and provide its main source of income. In December, its role was expanded to oversee the implementation of the plan, as well as the completion of existing projects in the region. To achieve this, D&R established the Khuzestan Development Service (KDS) to serve as D&R's agent in Iran. In addition to the organization and construction of the development projects, KDS was responsible for recruiting and training Iranians to assume control of the management of the project.

Plan Organization approved the recommendations of D&R for the development program in 1957. The plan included an irrigation program, regional power distribution projects, a sugar cane plantation, agricultural improvements, petrochemical works including fertilizer and polyvinyl chloride (PVC) plants, and a public health program. Central to the plan was the construction of a system of dams along the region's rivers to provide irrigation, flood control, and generate electricity, with the main dam located along the Dez River. However, the World Bank did not approve funding for D&R's plan and Iran was unable to provide the level of funding anticipated. D&R then modified the plan, reducing the irrigation program to a pilot project, eliminating the PVC project, and scaling back several rural development and public health programs. In 1960, the World Bank approved a $42 million loan and the construction work could begin. That same year, the Iranian government established the Khuzestan Water and Power Authority (KWPA) to assume responsibility from KDS for the development projects in the region. In D&R's second Khuzestan contract, finalized in 1962, the company relinquished much of its authority to Iranian agencies. By June 1963, KWPA had complete control of the projects, with KDS serving in an advisory capacity for the operation of current projects and the planning and execution of future ones.

In addition to its work in Iran, D&R became increasingly involved in development projects in other countries during the 1960s, especially in Latin America, including Puerto Rico, Nicaragua, Haiti, the Dominican Republic, and Peru. Its other projects were located throughout the world, including Italy, the Ivory Coast, Nigeria, Malaysia, and Australia. Most of the projects focused on rural water and land development. D&R also experienced significant organizational changes during the 1960s. The president, Gordon Clapp, died in 1963 and was succeeded by John Oliver in 1964. The company also established an office in California, largely because it was difficult to attract agricultural specialists to the New York City area.

In 1966, Lilienthal was asked by President Johnson to lead a postwar development effort in Vietnam. The project began in earnest in 1967, with Lilienthal serving as the official spokesman for the Joint Development Group, a nongovernmental group composed of Americans and Vietnamese. The planning was financed by a three-year contract with the United States Agency for International Development. D&R focused on the Mekong River Delta and envisioned development that included irrigation, flood control, the improvement of agricultural techniques, and pest control. However, the Tet offensive in 1968 removed all possibility of cooperation from North Vietnam and caused the Delta economy to stagnate. Johnson's decision not to run again for President in March 1968 also weakened support for D&R. As planning continued, D&R sought to become involved in the implementation stage, especially in the Mekong Delta region, but was unable to secure any new contracts. D&R left Vietnam at the end of the original contract in April 1970.

D&R continued to receive contracts from the KWPA in Iran, but each year experienced difficulties with contract negotiations, working with officials, and payment delays. In 1969, D&R suffered its first loss in fifteen years. In February 1970, faced with financial difficulties, low profitability potential of existing projects, and difficulty generating new contracts, John Oliver resigned as president and Lilienthal assumed his place. In 1970, Lazard Freres indicated it would no longer be investing in D&R and Lilienthal began looking for a new financial partner. He met with Rodman Rockefeller, president of the International Basic Economy Corporation (IBEC), for the first time in April 1970. D&R required financial backing and IBEC was trying to settle a dispute with Iran over a failed housing project. In October 1970, IBEC agreed to buy D&R's common stock. Lilienthal continued as D&R president and became a member of the IBEC board, and Andrea Pampanini of IBEC became executive vice-president of D&R.

During the 1970s, D&R attempted to obtain contracts in the United States involving energy studies. It embarked on several small hydroelectric projects, as well as a few studies on coal. In the mid-1970s, it appeared that these contracts might provide a balance against the uncertain payments from its work in developing countries, but interest in the projects waned and D&R was unable to compete with established universities and engineering firms that were already working in this area. Contracts in Brazil for the development of the Sao Francisco River Valley during the early 1970s also failed to become a long-term project after the administration of the country changed.

D&R experienced renewed success in Iran in the early 1970s, signing contracts outside of the Khuzestan region and obtaining additional funds for the ongoing Khuzestan development program. The new projects included the establishment of agricultural research centers, the development of a multi-year national water plan, and a Public Sector Management Program (PSM) to study ways to improve government efficiency. But D&R was also faced with increasing opposition from KWPA and Plan Organization and continued to experience difficulties during contract negotiations and delayed payments every year. After 1975, its troubles in Iran escalated. The political situation in the country became increasingly unstable, the KWPA suffered from a shortage of funds, and D&R's agribusiness initiative failed. In December of 1978, Iran canceled the PSM contracts and defaulted on all outstanding payments, and in January 1979 the Khuzestan project was finished. There was a special D&R board meeting on February 7, 1979 to determine the fate of the company, since Iran had been the main source of the company's income and the other projects operating at the time could be expected to provide little money. Lilienthal and John W. Macy, who had become president of D&R in 1975, chose to resign and recommended that D&R be dissolved.

From the guide to the Development and Resources Corporation Records, 1936-1980, 1954-1970, (Princeton University. Library. Dept. of Rare Books and Special Collections)