The World Bank was created at the 1944 Bretton Woods Conference, along with three other institutions, including the International Monetary Fund (IMF). The World Bank and the IMF are both based in Washington DC, and work closely with each other.
Although many countries were represented at the Bretton Woods Conference, the United States and United Kingdom were the most powerful in attendance and dominated the negotiations.[7]:52-54
Traditionally, the World Bank has been headed by a citizen of the United States, while the IMF has been led by a European citizen.
1944–1968
Before 1968, the reconstruction and development loans provided by the World Bank were relatively small. The Bank's staff was aware of the need to instill confidence in the bank. Fiscal conservatism ruled, and loan applications had to meet strict criteria.[7]:56-60
The first country to receive a World Bank loan was France. The Bank's president at the time, John McCloy, chose France over two other applicans, Poland and Chile. The loan was for US$250 million, half the amount requested, and it came with strict conditions. France had to agree to produce a balanced budget and give priority of debt repayment to the World Bank over other governments. World Bank staff closely monitored the use of the funds to ensure that the French government met the conditions. In addition, before the loan was approved, the United States State Department told the French government that its members associated with the Communist Party would first have to be removed. The French government complied with this diktat and removed the Communist coalition government. Within hours, the loan to France was approved.[8]:288, 290-291
When the Marshall Plan went into effect in 1947, many European countries began receiving aid from other sources. Faced with this competition, the World Bank shifted its focus to non-European countries. Until