Memorandum, "The Problem of the Future Balance of Payments of the United States"

/ IDENTIAL THE PROBLEM OF THE FUTURE BALANCE OF PAYMENTS OF THE UNITED STATES 1. Two economic facts of international significance have emerged during the past-war period which stand out above all others. One is the tremendous increase of production in the United States. The other is the heavy dependence of the rest of the world on this production. At the same time, the obligations due the United States from other countries have increased, their sources of invisible income have diminished; their re- sources of gold and foreign exchange have been reduced, and the pre-war pattern of trade has been greatly altered. We have been able to maintain the flow of our products to meet these foreign needs only in part through the normal economic processes of international trade, public and private investment, gold purchases and the like. About one-third of total foreign requirements has been sustained by huge grants of extraordinary foreign assistance, in amounts surpassing the total of our annual exports before the war. 2. Estimates of our international economic transactions in 1949 are as follows: BILLIONS of Dollars Recorded U. S. exports of goods and services $16.2 Other foreign demands z/ 1.3 for dollars Total requiring payment $17.5 Means of Financing: Recorded U. S. imports of goods and services 9.9 1 This item reflects the fact that recorded exports are undervalued, that recorded imports are overvalued, and that there are certain unrecorded capital movements. Some part of this figure might be included as a negative item under "Means of Financing" but it would not affect the other items, except to reduce the balancing total. DECLASSIFIED STATE DEAT. LTA. 6.12.19 E.O. 10265 By NLI.NC NARS, Date 9-20-79