From the presentation "How We Got to Where We Are -- the World Bank's First 50 Years" by Chuck Ziegler.

Site of the historic meetings

Bretton Woods Conference, July 1-22, 1944

Representatives of the 44 United and Associated Nations met at the Mount Washington Hotel on July 1.

• World War II was still on; D-Day took place less than one month before.
• International concern over the competing currency devaluations and inflationary tendencies which characterized the interwar years and the fear of a post-war economic depression had been the genesis of the Conference and the Fund proposal.
• The Bank was conceived of primarily as an instrument through which the physical assets of the post-war world might be rebuilt. Development financing would come later.
• It was the Latin American countries which were principally responsible for the emphasis on development.
• Soviet Union represented at Bretton Woods, but did not subsequently ratify the Articles of Agreement of the Bank or Fund.
• World Bank was the first multilateral development bank.

IBRD Articles of Agreement, December 27, 1945

The IBRD Articles of Agreement become effective upon signature, in Washington, by twenty-eight governments, including Bolivia, Egypt, Ethiopia, France, Greece, Honduras, Iraq, United Kingdom, United States.

Inaugural meeting of the Boards of Governors of the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) opened at Savannah, Georgia.

• The roles of the Executive Directors and their alternates were defined, and salaries were set for the primary officials.
• The first meeting of executive directors in May 1946, at which time a President would be chosen. The US Executive Director, representing the country with the largest quota, would serve as acting President in the interim period.
• Bylaws were adopted, and Washington, D.C. was chosen as the site for the two new institutions. See the Report of the Committee on Site.
• The Bank’s prescribed capital stood at $10 billion.

• Eugene Meyer takes office as the first president of the Bank June 18, 1946
• Acquired The Washington Post in 1933; served as Publisher 1933-40; and as Editor and Publisher 1940-46.
• US President Truman asked him, in June 1946, to become the head of the new institution.

  World Bank Formally Begins Operations, June 25, 1946

First Annual Meeting of Governors, September 27, 1946

First Annual Meeting of the Board of Governors convenes in Washington.

President Eugene Meyer Resigns, December 4, 1946

• President Eugene Meyer submits his resignation to the Board of Executive Directors, after serving for six months.

• Vice President Harold D. Smith submitted his resignation, to become effective once the new president takes over.
• Smith had hoped to be President, but realized it wasn’t going to happen. Formerly head of U.S. Bureau of the Budget under President Franklin D. Roosevelt.
• January 23, 1947 - Announcement of the death of the Bank’s first Vice President, Harold D. Smith.
• Mr. Emilio Collado was selected as Temporary Chairman of the Executive Directors to serve in the absence of a President and Vice President of the Bank.

President John J. McCloy and Vice President Robert L. Garner take office, thus ending a three-month period when the World Bank had no President or Vice President.

• McCloy imposed an agreement on the Board whereby all loan proposals had to come from staff, through management, thus blocking the Board from taking operational initiatives.
• Born in Philadelphia, Pennsylvania in 1895.
• Graduated from Amherst and Harvard Law School, the latter being interrupted by service in WWI.
• In private law practice between the wars.
• Assistant Secretary of War during WWII.
  

• Born in on a plantation in Bolton, Mississippi in 1894.
• Graduate of Vanderbilt University, 1916.
• Infantry captain, 77th Division in WWI.
• Later held various positions in business, becoming Treasurer and Vice President of the Guaranty Trust Company.
• Became Financial Vice President and Director of General Foods Corporation.

First IBRD Loan, May 9, 1947

Executive Directors approve the Bank’s first loan, to Credit National of France in the amount of $250 million for reconstruction purposes, one of the largest loans in real terms made by the Bank in its first fifty years.

First IBRD Bond Issue, July 15, 1947

IBRD enters the bond market for the first time with an offering of $250 million.

• Important because Bank was to obtain most of its funds through the private money markets.
• Market confidence in Bank high by mid-1950s, AAA rating achieved 1959.

Post-War Reconstruction Loans, August 1947

Post-war reconstruction loans were made for the Netherlands (Loan 0002), Denmark (Loan 0003), and Luxembourg (Loan 0004).

"It took a bit of stretching for the management to conclude that repayment prospects were reasonable; the economic report on France, for example, laid its stress, not on financial resources or specific export prospects, but on the French "collective will to recover." The Bank’s gamble paid off handsomely, however, for it won the time necessary for the European Recovery Program to be formulated and put into effect (with considerable assistance from the Bank’s staff)."

-- from "A Look Backward" by Richard H. Demuth, International Bank Notes, June 1961.

Bank Policies Established by the First Loans

• Interest rates: They must be related to borrowing costs; the same interest rate applies for all loans granted at any given time, regardless of the borrower’s creditworthiness.
• Supervision: As required by the Articles of Agreement, the Bank made arrangements to ensure that the proceeds of its loans would be used for the purposes for which they were intended.
• Negative Pledge: The borrowing government’s undertaking not to pledge its assets to secure international debt in a way that gives any external lender preference over another.

Project Lending Concept

The World Bank devised a new lending paradigm by welding together the fragmentary concepts of:

• project appraisal (to make sure the schemes it financed would be profitable enough to generate returns to pay for the loan);

• competitive procurement procedures (to ensure the lowest project costs);

• the monitoring of the end-use of funds (to ensure that the money was not diverted);

• loan supervision (to see that the project progressed as envisaged and to make mid-course corrections if necessary);

• and, beginning in the 1970s, evaluation after a project was completed (to see how well it worked and to learn lessons for future lending).

The First Field Offices, 1947

"The first overseas offices [in Paris, The Hague, and Copenhagen] were end-use supervision offices of the Treasurer’s Department, created to ensure that the loan funds from the Bank’s post-war reconstruction loans were properly spent. "

["The First Field Offices", Bank’s World, July 1995, p. 17.]

 

Group Health Program, September 1, 1947

World Bank’s first Group Health Program becomes effective.

Bank’s Health Room Opens, September 8, 1947

The Bank’s Health Room opens, staffed by nurse Bernice Rothstein. Prior to that, arrangements were made with the Federal Power Commission at 1800 Pennsylvania Avenue to for staff to receive treatment in it Emergency Room.

Bank-Fund Staff Federal Credit Union Begins, October 27, 1947

Bank-Fund Staff Federal Credit Union receives its charter.  Five staff members had bought founder shares of $5.00 apiece in order to bring the Credit Union into being.

• The first loan made by the Credit Union was done the next day, in the amount of $100 for "current expenses" since the member had lost his wallet and was without funds.
• In June 1955 the Credit Union loaned its 1,000,000^th dollar. The total number of loans since its inception at that point was 2,555.
• Today the Credit Union has more than 42,000 members, and currently ranks among the top 35 in asset size of over 10,000 federally chartered credit unions.

The Bank put into effect a pension plan for its permanent staff.

Thus, by the end of 1948, the Bank was a functioning institution at last, to the benefit of both its clients and its staff.

"Firsts" in Bank History Affiliates   Buildings

Copyright, 2004, The International Bank for Reconstruction and Development/The World Bank