Over the Hurdle

"It took a lot of shoe leather and nervous energy," said World Bank President John J. McCloy, "but we're over the hurdle. Now we know we're a real honest-to-goodness bank."

The hurdle was the sale of the first issue of World Bank bonds, $250 million worth. They were quickly oversubscribed, thanks to more than 1,600 securities dealers, the biggest bond-selling network ever formed. Most of the buyers were insurance companies and banks attracted by the 2 1/4% and 3% interest. A few minutes after trading in the bonds began on the New York Stock Exchange, they were bid up from the par value (100) at which they were floated. The 2 1/4s, maturing in 1957, hit a high of 102, the 25-year 3s a high of 103 1/8, then slipped off.

There was nothing surprising about the issue's success. Up to the first $2,540,000,000, the Bank's bonds will, in effect, be guaranteed by the U.S. Treasury. They are, therefore, as safe as U.S. bonds--and they bring more interest. The real test will come when private investors are asked to subscribe beyond this guarantee point. Nonetheless, the success of the first issue was heartening to McCloy, who had found only three months ago that "nobody was interested in our securities. We talked to many an insurance company and bank--and the unanimous answer was 'nuts.' " McCloy attributed the change to a realization on the part of investors that the World Bank intends to lend as cold-bloodedly as any other banker--and only to nations it considers good risks.

As far as world needs went, the first issue was only a penny in the cup, just equal to the Bank's first loan--$250,000,000 to France (TIME, May 19). However, the Bank does not intend to float any more bonds until it sees what Congress does to finance world reconstruction by the "Marshall approach." Only then will the Bank know how much money it needs to finance the "good risks" of the world.

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