So Little Cash

The World Bank last week was beginning to feel like a village moneylender. Its capacity to lend could scarcely make a dent in world needs. Wistfully, President John J. McCloy told of plans to float the bank's first debentures in July--$250 million worth, at around 3% interest. If they are sold, other issues will be floated. The cash from the first issue will just replace the $250 million lent to France. It will leave the bank with only the $727 millions in U.S. currency it now has available for loans. But the world's need, by the Administration's estimate, is $5 to $6 billion a year for three or four years (see NATIONAL AFFAIRS).

Poland, alone, is already seeking $600 million from the bank. To determine its ability to repay it, McCloy last week sent a four-man team to Poland. He conceded that the bank's charter forbids political considerations in making loans. But Soviet-dominated Poland's politics are bound to affect the bank's decision on whether she can repay a loan. Moreover, since the bank will depend almost entirely on American investors for its new capital, it will have to persuade them of the soundness of its risks. At best, the bank in the next twelve months can provide no more than $1 billion for world reconstruction.

Dangerous Gap. Some measure of the world's needs was given by the present gap between American exports and imports. The U.S., which must supply most of the goods needed to put Europe on its feet, is now exporting nearly $12 billion a year more than it is importing. Up to now, the gap has been filled by hoarded dollar balances, gold reserves, loans and credits. But these dollar balances are being used up so fast that in Manhattan last week, Willard L. Thorp, Assistant Secretary of State for Economic Affairs warned: "The level of our foreign trade in the immediate future will be largely determined by the volume of American aid and assistance. At the moment, there remain less than $5 billion of unused governmental commitments, plus the resources of the International Bank and Fund.

"Reviewing all the sources of payments now in sight, it is obvious that they will not support the present level of exports from the U.S. for any considerable period of time." In short, the part which the bank could play in world reconstruction--or in rebuilding world trade--was shockingly small.

So far, Congress has shown no great enthusiasm for the vast loans or grants with which the Administration wants to do the job. But a drop in exports may cause it to change its mind. The drop is not far off. Last week, Brazil and Argentina got ready to cut their U.S. imports. Canada is seeking means to do the same. Britain is surveying all its imports with an eye to slashing them about $800 million a year; any cuts it makes will be deepest on imports from the U.S.

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