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60 SECRET have been the increase in machinery and the and export prices, which, for Britain, amounts decrease in coal. to the relation between primary commodity Description Percent of Total Exports prices and the prices obtainable for manu- 1938 1947 1948 factured goods. The rise in primary com- Machinery 12.3 15.9 16.0 modity prices during the last decade has out- Vehicles (including locomotives, stripped the rise in prices of manufactured ships, and aircraft) 9.5 14.8 15.4 goods. As prices turn down, the customary Cotton yarns and manufactures 10.6 6.8 8.3 Iron and steel and manufactures lag of prices of manufactured goods behind thereof 8.9 7.4 6.7 primary commodity prices will tend to allevi- Woolen and worsted yarn and ate the "terms of trade" problem. On the manufactures 5.7 5.1 6.0 other hand, competition developing among Miscellaneous articles wholly or British, American, German, and Japanese mainly manufactured 6.1 6.1 5.7 Chemicals, drugs, dyes, and manufactured goods will have a depressing colors 4.7 5.9 5.3 effect on British export prices. Electrical goods and apparatus 2.9 4.3 4.6 The United Kingdom is hoping to narrow Coal 7.9 0.2 2.5 the adverse balance of trade in 1949-50 by Other metals 4.4 6.6 6.1 advancing the year's volume of exports to 155 Other textiles 5.2 7.9 6.2 Other manufactures 7.3 7.1 6.7 percent of 1938 and holding imports to 83 per- All others 14.5 11.9 10.5 cent of 1938. The import program calls for a larger proportion of industrial raw ma- 100.0 100.0 100.0 terials and a smaller proportion of food. Con- Principal markets for some of the important sumer living standards in Britain will be raised export groups above were as follows: only slightly, and then only if warranted by increases in domestic production. The Machinery India, Pakistan, Australia United Kingdom first estimated its ERP needs Passenger cars Australia, United States Iron and steel Union of South Africa, Australia, for the year 1949-50 at $940 million (76 per- Argentina, Iran cent of the 1948-49 allocation) to meet the Cotton textiles British West Africa, Australia dollar deficit still remaining. Woolen textiles Canada, Union of South Africa, United States a. Pattern of Trade. The overseas trade of the United Kingdom There was a marked increase over 1947 in is very widely diversified, extending to vir- exports to the US of machinery, passenger tually every country and quarter of the globe. cars, and textiles. The total value of the Imports in 1938 were fairly evenly divided be- United Kingdom exports and re-exports in tween the Western Hemisphere, accounting 1948 was £1,648 millions as compared with for 32 percent of the total, the sterling area 31 £532 millions in 1938 and £1,198 millions in percent, Western Europe 23 percent and other 1947. Export volume in 1948 was at a rate countries 14 percent. Exports were predomi- of 136 percent of 1938, as compared with a nantly to the sterling area, which received rate of about 109 percent for 1947. about 48 percent of the total. Before the war, The efforts of the British to balance their the United Kingdom normally incurred defi- overseas trade are seen in the ratio of exports cits with the Western Hemisphere and Europe to imports, which has increased from 58 per- which were offset by net foreign exchange cent in 1937 to 79 percent in 1948. Neverthe- earnings with the rest of the world, gained less, the amount of the adverse balance in 1948 by invisibles rather than trade surpluses. Its (£432 million) was not substantially reduced ability to maintain this position depended from the 1937 level (£446 million), because of upon the existence of a general pattern of the larger totals involved, reflecting higher multilateral payments throughout the world. prices. The 1938 pattern of import trade was badly The factor in the trade position which is distorted by World War II, which led to an most difficult to control is that of the terms unhealthy dependence upon imports from the of trade, that is, the relation between import Western Hemisphere. While the proportion SECRET

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    "ocrText": "60\nSECRET\nhave been the increase in machinery and the\nand export prices, which, for Britain, amounts\ndecrease in coal.\nto the relation between primary commodity\nDescription\nPercent of Total Exports\nprices and the prices obtainable for manu-\n1938\n1947\n1948\nfactured goods. The rise in primary com-\nMachinery\n12.3\n15.9\n16.0\nmodity prices during the last decade has out-\nVehicles (including locomotives,\nstripped the rise in prices of manufactured\nships, and aircraft)\n9.5\n14.8\n15.4\ngoods. As prices turn down, the customary\nCotton yarns and manufactures 10.6\n6.8\n8.3\nIron and steel and manufactures\nlag of prices of manufactured goods behind\nthereof\n8.9\n7.4\n6.7\nprimary commodity prices will tend to allevi-\nWoolen and worsted yarn and\nate the \"terms of trade\" problem. On the\nmanufactures\n5.7\n5.1\n6.0\nother hand, competition developing among\nMiscellaneous articles wholly or\nBritish, American, German, and Japanese\nmainly manufactured\n6.1\n6.1\n5.7\nChemicals, drugs, dyes, and\nmanufactured goods will have a depressing\ncolors\n4.7\n5.9\n5.3\neffect on British export prices.\nElectrical goods and apparatus\n2.9\n4.3\n4.6\nThe United Kingdom is hoping to narrow\nCoal\n7.9\n0.2\n2.5\nthe adverse balance of trade in 1949-50 by\nOther metals\n4.4\n6.6\n6.1\nadvancing the year's volume of exports to 155\nOther textiles\n5.2\n7.9\n6.2\nOther manufactures\n7.3\n7.1\n6.7\npercent of 1938 and holding imports to 83 per-\nAll others\n14.5\n11.9\n10.5\ncent of 1938. The import program calls for\na larger proportion of industrial raw ma-\n100.0\n100.0\n100.0\nterials and a smaller proportion of food. Con-\nPrincipal markets for some of the important\nsumer living standards in Britain will be raised\nexport groups above were as follows:\nonly slightly, and then only if warranted by\nincreases in domestic production. The\nMachinery\nIndia, Pakistan, Australia\nUnited Kingdom first estimated its ERP needs\nPassenger cars\nAustralia, United States\nIron and steel\nUnion of South Africa, Australia,\nfor the year 1949-50 at $940 million (76 per-\nArgentina, Iran\ncent of the 1948-49 allocation) to meet the\nCotton textiles\nBritish West Africa, Australia\ndollar deficit still remaining.\nWoolen textiles\nCanada, Union of South Africa,\nUnited States\na. Pattern of Trade.\nThe overseas trade of the United Kingdom\nThere was a marked increase over 1947 in\nis very widely diversified, extending to vir-\nexports to the US of machinery, passenger\ntually every country and quarter of the globe.\ncars, and textiles. The total value of the\nImports in 1938 were fairly evenly divided be-\nUnited Kingdom exports and re-exports in\ntween the Western Hemisphere, accounting\n1948 was £1,648 millions as compared with\nfor 32 percent of the total, the sterling area 31\n£532 millions in 1938 and £1,198 millions in\npercent, Western Europe 23 percent and other\n1947. Export volume in 1948 was at a rate\ncountries 14 percent. Exports were predomi-\nof 136 percent of 1938, as compared with a\nnantly to the sterling area, which received\nrate of about 109 percent for 1947.\nabout 48 percent of the total. Before the war,\nThe efforts of the British to balance their\nthe United Kingdom normally incurred defi-\noverseas trade are seen in the ratio of exports\ncits with the Western Hemisphere and Europe\nto imports, which has increased from 58 per-\nwhich were offset by net foreign exchange\ncent in 1937 to 79 percent in 1948. Neverthe-\nearnings with the rest of the world, gained\nless, the amount of the adverse balance in 1948\nby invisibles rather than trade surpluses. Its\n(£432 million) was not substantially reduced\nability to maintain this position depended\nfrom the 1937 level (£446 million), because of\nupon the existence of a general pattern of\nthe larger totals involved, reflecting higher\nmultilateral payments throughout the world.\nprices.\nThe 1938 pattern of import trade was badly\nThe factor in the trade position which is\ndistorted by World War II, which led to an\nmost difficult to control is that of the terms\nunhealthy dependence upon imports from the\nof trade, that is, the relation between import\nWestern Hemisphere. While the proportion\nSECRET"
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