Full text of International Transactions of The United States During the War, 1940-45

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N AT I O N AL TR AN SACTI O N S
of the United States
DURI NG TH E W AR

SU R E A U O F E C C ^ O riîC ANÂLYUÎo
Llb>îvÂhiY

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OF

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W . A V E R E L L H A R R IM A N , S e c r e ta r y

O ffic e o f B u s in e s s

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M . J O S E P H M E E H A N , A c tin g D ir e c to r

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T h is volum e is th e la te s t in th e series o f stu d ie s on th e in te rn a tio n a l
tr a n s a c tio n s o f th e U n ite d S ta te s in itia te d by th e D e p a rtm e n t o f
C om m erce in 1922. I t is a n a n aly sis o f th e tra n sa c tio n s o f th e U n ite d
S ta te s w ith th e r e s t o f th e w o rld d u rin g th e re c e n t w a r y e a rs, a p e rio d
d u r in g m o st o f w h ich th e re q u ire m e n ts o f G o v e rn m e n t w ere e qu a l to
v ir tu a lly h a lf th e n a tio n a l o u tp u t o f goods a n d services. T h e e n o r­
m ous d em a n d s m a d e u p o n o u r n a tio n a l econom y b y th e com b ined need s
o f th e c o u n trie s e n g a g e d in th e w a r a g a in st th e A x is p o w ers a re r e ­
flected in th e la rg e item s o f goods a n d services w h ich m ak e u p o u r w a r ­
tim e in te rn a tio n a l accounts. M oreo v er, th e exigencies o f g lo b a l w a r
n e ce ssita ted such a h ig h d egree o f in d u s tria l c onversion f o r th e p ro ­
d u c tio n o f w a r m a te ria ls a n d su ch a b ro a d sy stem o f g o v e rn m e n ta l
c o n tro ls over th e c iv ilia n econom y t h a t v irtu a lly a ll in te rn a tio n a l
tra n s a c tio n s, com m ercial a n d fin a n c ia l, re s u lte d fro m b a sic n a tio n a l
p o licy decisions r a t h e r th a n fro m th e fre e a ctio n o f p r iv a te business.
T h e in te rn a tio n a l acco u n ts o f th e U n ite d S ta te s d u r in g th e w a r
y e ars, th e re fo re , do n o t f a ll in to th e u s u a l p a tte r n . T h e p re p o n d e ra n c e
o f goods a n d services tr a n s f e rr e d in acc orda nce w ith m u tu a l-a id a g re e ­
m en ts a n d in connection w ith th e v a rio u s em e rg en cy -aid o p e ra tio n s
u n d e r ta k e n by g o v e rn m e n ta l agencies a n d in te rn a tio n a l o rg a n iz a tio n s
d u r in g th e p e rio d covered h a v e g iv en so -c alled u n ila te ra l tra n s a c ­
tio n s a n u n p re c e d e n te d significance in o u r b a la n c e o f in te rn a tio n a l
p a ym en ts.
A t th e tim e th e D e p a rtm e n t in itia te d its b a la n c e-o f-p ay m en ts
stu d ie s a f t e r W o r ld W a r I , th e S e c re ta ry o f C om m erce sta te d th a t “no
so u n d conclusion can be m a d e c o n c ern in g th e effect o f fo re ig n -tra d e
m o v em en ts u p o n o u r c re d it s tru c tu re o r u p o n th e a b ility o f fo re ig n
c o u n trie s to p u rc h a se o u r c o m m o d ities o r to p a y th e ir d ebts, o r u p o n
e xch an g e ra te s , o r u p o n th e m o v em en t o f g o ld , o r th e u ltim a te tr e n d
o f p ric e levels c o m p a re d w ith th o se o f o th e r n a tio n s w ith o u t som e com ­
p reh en siv e b a lan ce sh eet in c lu d in g th e in v isib le item s.” A s a conse­
quence o f W o rld W a r I th e U n ite d S ta te s h a d s h if te d fro m a n e t
d e b to r to a n e t c re d ito r p o sitio n . T h e s h if t im p lie d a re o rie n ta tio n o f
n a tio n a l th in k in g w ith resp e c t to th e p lac e th is c o u n try w o u ld h en ce­
f o r th occupy in th e in te rn a tio n a l econom y. T h e a p p ra is a l o f th e
c o u n try ’s in te rn a tio n a l b a la n ce sh ee t p lac ed in b o ld re lie f th e im ­
p o rta n c e o f o u r “in v isib le ” tra d e . T h e a b u n d a n t re s e rv o ir o f d o lla rs
a v a ila b le to fo re ig n e rs th ro u g h o u t th e tw e n tie s, th a n k s to a stea d y
stre a m o f fo re ig n in v estm e n t, so m e w h a t obscu red th e re a l im p lic a ­
tio n s o f th e basic tr e n d s in o u r in te rn a tio n a l tra n sa c tio n s.
T h e significance o f th ese d ev e lo p m e n ts becam e c le a re r as th e w o rld
m oved d eep er a n d d e ep er in to d e p ressio n d u r in g th e e a rly th ir tie s .
I n 1942, w h ile th e w o rld w as a g a in a t w a r, th e D e p a rtm e n t o f C om ­
m erce u n d e rto o k a n o v er-a ll a p p ra is a l o f its in te rn a tio n a l tra n sa c tio n s
d u r in g th e in te rw a r p e rio d a n d , a y e a r la te r, p u b lish e d a c o m p re ­
h e n siv e stu d y e n title d , “ T h e U n ite d S ta te s in th e W o rld E co n o m y .”
T h e conclusion t h a t em erg ed m o st e m p h a tic a lly w as th e fu n d a m e n ta l

im p o rta n c e o f “m a in ta in in g c o n d itio n s c ondu civ e to a m o re sta b le a n d
am p le flow o f d o lla rs in o u r tra n s a c tio n s w ith o th e r c o u n trie s.”
D e v elo p m en ts since 1943 h a v e p ro v id e d f u r th e r c o n firm a tio n o f th e
conclusions e x p resse d in “T h e U n ite d S ta te s in th e W o rld E c o n o m y .’'
F o re ig n p o s tw a r d e m a n d f o r U n ite d S ta te s goods p resse d on th e
econom y a t th e sam e tim e t h a t th e accu m u lated d o m estic d e m a n d m ad e
its e lf fe lt. T h e im p a c t o f a to ta l d e m a n d s u b s ta n tia lly in excess o f
a v a ila b le su p p lie s w hen w a rtim e co n tro ls w ere rem oved h a s re s u lte d in
a s h a rp p ric e rise, le a d in g to a n u n d u e d e p le tio n o f th e d o lla r exch an ge
resources o f fo re ig n c ou n tries. A s a re s u lt o f th e re c e n t w a r th e
b a lan c e o f econom ic p o w e r h a s p a sse d to th e U n ite d S ta te s to a d egree
w h ic h m akes a w o rld p ro g ra m o f m u ltila te ra l tr a d e o f p a ra m o u n t
im p o rta n c e . I t c a rrie s w ith i t a d eg ree o f re sp o n s ib ility f o r w o rld
'¡recovery t h a t p e rm its no in d ifferen ce to th e re s t o f th e w o rld ’s d o lla r
b u y in g pow er.
T h e p re se n t stu d y b rin g s dow n to th e e nd o f 1945, th e la s t w a r y e a r,
th e sta tis tic s o n tlie in te rn a tio n a l tra n sa c tio n s o f th e U n ite d S ta te s.
I t com bines in to a sin g le a n aly sis th e d ev elo p m en ts o f a p e rio d in w h ich
th e w hole w o rld w as im p ressed b y th e p ro d u c tio n p o te n tia litie s o f th e
U n ite d S ta te s. I t s conclusions f o r tif y th o se o f th e e a rlie r re p o rt.
C u rre n t e stim a te s, on a q u a rte rly basis, o f th e in te rn a tio n a l tr a n s ­
a c tio n s o f th e U n ite d S ta te s a p p e a r re g u la rly in th e S u rv e y o f C u rre n t
B usiness.
I n te r n a tio n a l T ra n sa c tio n s o f th e U n ite d S ta te s D u r in g th e W a r,
1940-45 w as p r e p a re d in th e In te r n a tio n a l E conom ics D iv isio n , Office
o f B u siness E conom ics, u n d e r th e d ire c tio n o f R o b e rt L . S am m ons,
C h ie f o f th e D iv isio n . T h e s tu d y w as in itia te d a n d m uch o f th e basic
s ta tis tic a l w o rk p e rfo rm e d u n d e r th e d ire c tio n o f H a l B . L a ry , w ho
w as c h ie f o f th e D iv isio n u n til J u n e 1946.
T h e te x t o f th e stu d y w as th e w o rk o f v a rio u s m em bers o f th e D i­
v isio n ’s staff. W a lth e r L e d e re r p re p a re d th e first d r a f t o f c h a p te rs I
a n d Y a n d R a n e y F . C u lb e rtso n , th e o v er-a ll b a lan c e-o f-p a y m e n ts.
Amos E . Tayl or,
D irec to r , Office o f B usiness E conom ics.

►

\

iv

(C o n te n tó
P age

F o r e w o rd _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _
C h a p te r I. R e v ie w of t h e w a r p e r io d _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
F ro m n e u tr a lit y to b e llig e re n c y , 1 9 4 0 -4 1 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T h e w a r, J a n u a r y 1 9 4 2 -J u n e 19 45 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T h e b e g in n in g of t h e tr a n s itio n , J u ly - D e c e m b e r , 1945____________
C h a p te r I I . C u r r e n t a c c o u n t tr a n s a c t io n s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
M e r c h a n d ise t r a d e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T h e tr a n s p o r ta ti o n a c c o u n t_ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
T r a v e l_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
In c o m e o n in v e s tm e n ts _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
P r i v a te m isc e lla n e o u s s e r v ic e s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
G o v e rn m e n t m isc e lla n e o u s s e rv ic e s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
U n ila te ra l tr a n s f e r s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C h a p te r I I I . C a p ita l m o v e m e n ts a n d g o ld _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
M o v e m e n ts of lo n g -te rm c a p i t a l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
S h o r t- te r m c a p ita l a n d g o ld _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
I n te r n a t io n a l in v e s tm e n t p o s itio n _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C h a p te r IV . T r a n s a c tio n s b y a r e a s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
I n tr o d u c ti o n _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ■
_______________________
T ra n s a c tio n s w ith t h e s te rlin g a r e a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T ra n s a c tio n s w ith C a n a d a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T ra n s a c tio n s w ith t h e A m e ric a n R e p u b lic s __________ ^ __________
T ra n s a c tio n s w ith a ll o th e r c o u n trie s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T r a n s a c tio n s w ith in te r n a tio n a l in s titu tio n s _____________________
C h a p te r V. I m p lic a tio n s fo r th e f u t u r e _ __ __ __ __ __ __ __ __ __ __ __ __ __ _
In c re a s e d G o v e rn m e n t c o n tr o ls _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T h e s h o rta g e of d o lla r e x c h a n g e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ : ______________
T h e p ro b le m of r e p a y m e n t_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

III

1

2

6
8

13
13
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58
67
84
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92
92
103
109
111
111
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122
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144
152
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158

TABLES
1. I n te r n a t io n a l tr a n s a c tio n s of th e U n ite d S ta te s , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _
2. E x p o r ta b le go od s, p ro d u c tio n a n d p r o p o r tio n e x p o r te d , 1939, 1941,
a n d 1 9 4 3 -4 5 _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _
3. T o ta l a n d c a sh b a la n c e o n U n ite d S ta te s in te r n a tio n a l m e rc h a n d is e
tr a n s a c tio n s , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
4. I n te r n a t io n a l m e r c h a n d is e tr a n s a c tio n s of t h e U n ite d S ta te s, 1 9 4 0 -4 5 .
5. L e n d -le a se g o od s f u r n is h e d , b y m a jo r c o u n trie s a n d ty p e s of go od s,
M a r. 11, 1941, th r o u g h S e p t. 1, 19 45 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
6. U n ite d S ta te s G o v e r n m e n t p a y m e n ts a b r o a d fo r n o n m ilita r y p u r ­
c hases, b y m a jo r c o m m o d itie s a n d a re a s , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _
7. R e v e rs e le n d -le a se go od s re c e ive d , b y m a jo r c o u n trie s a n d ty p e s of
go od s, M a r . 11, 1941, th r o u g h S e p t. 1, 19 45 ---------------------------8. M e r c h a n t to n n a g e of p rin c ip a l m a ritim e c o u n trie s, 1939 a n d 1945___
9. A v e ra g e a n n u a l to n n a g e , v a lu e , a n d v a lu e p e r to n of U n ite d S ta te s
o c e a n -b o rn e e x p o r ts, 1 9 36 -3 9 a n d 1 9 4 2 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
10. A v e ra g e a n n u a l to n n a g e , v a lu e , a n d v a lu e p e r to n of U n ite d S ta te s
o c e a n -b o rn e im p o rts , 1 9 3 6 -3 9 a n d 1 9 4 2 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ :----------11. O c e an t r a n s p o r ta tio n re c e ip ts a n d p a y m e n ts , 1944 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
12. I n te r n a t io n a l tr a v e l a c c o u n t of t h e U n ite d S ta te s, 1 9 4 0 -4 5 -------------13. In c o m e on in v e s tm e n ts , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
14. R a tio s of in c o m e a n d n e t e a rn in g s t o A m e r ic a n e q u ity in fo re ig n s u b ­
sid ia rie s a n d b ra n c h e s , b y a r e a s , 1 9 40 -4 5, a n d av erag e for th e p erio d —
15. A m e ric a n in v e s tm e n ts in fo re ig n s u b s id ia rie s : E a rn in g s o n c o m m o n
sto c k , c o m m o n d iv id e n d s , a n d re in v e s te d e a rn in g s, b y a re a s , 1 9 4 0 -4 5 .
16. In c o m e re c e iv e d fro m A m e r ic a n d ire c t in v e s tm e n ts , b y a r e a a n d
in d u s tr y , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
17. I n te r e s t r e c e ip ts fro m A m e ric a n in v e s tm e n ts in fo re ig n d o lla r b o n d s,
1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

vm
4
14
15

22
28
33
50
52
53
56
61
69
70
73
73
78

v

Page

18. A v e ra g e y ie ld o n p a r a n d m a r k e t v a lu e s of A m e r ic a n in v e s tm e n ts in
fo re ig n d o lla r b o n d s, 1 9 4 0 -4 5 ------------------------------------------------19. P r i v a te m isc e lla n e o u s se rv ice s, 1 9 4 0 -4 5 --------------------------------------20. G o v e rn m e n t m isc e lla n e o u s serv ic e s, 1 9 4 0 -4 5 ---------------------------21. L o n g -te rm c a p ita l tr a n s a c tio n s b e tw e e n t h e U n ite d S ta te s a n d fo re ig n
c o u n trie s, 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
22. L o n g -te rm c a p ita l m o v e m e n ts , b y a r e a , 1 9 4 0 -4 5 ---------------------------23. C h a n g e s in fo re ig n g o ld h o ld in g s a n d s h o r t- te r m d o lla r c la im s th r o u g h
tr a n s a c tio n s w ith th e U n ite d S ta te s, b y specified a r e a s , 1 9 4 0 -4 5 —
24. S h o rt-te r m c a p ita l tr a n s a c tio n s b e tw e e n th e U n ite d S ta te s a n d fo re ig n
c o u n trie s, 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
25. G o ld h e ld in th e U n ite d S ta te s fo r fo re ig n a c c o u n t b y spe cifie d c o u n trie s
a n d a re a s a t y e a r-e n d s , 1 9 3 9 -4 5 --------------------------------------------26. G o ld a n d s h o r t- te r m d o lla r a s s e ts of fo re ig n c o u n trie s a t v e a r-e n d s ,
1939 a n d 1945_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
27. I n te r n a t io n a l in v e s tm e n t p o s itio n of t h e U n ite d S ta te s , 1 9 3 9 -4 5 -------28. T ra n s a c tio n s of th e U n ite d S ta te s w ith t h e s te rlin g a r e a , 1 9 4 0 -4 5 ----29. M e r c h a n d is e tr a n s a c tio n s of t h e U n ite d S ta te s w ith t h e s te r lin g a r e a ,
1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
30. “ C a s h ” se rv ic e s tr a n s a c tio n s of t h e U n ite d S ta te s w ith th e ste rlin g
a r e a , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
31. T ra n s a c tio n s of th e U n ite d S ta te s w ith C a n a d a , 1 9 4 0 -4 5 ------------ . . .
32. T ra n s a c tio n s of th e U n ite d S ta te s w ith t h e A m e ric a n R e p u b lic s,
1 9 4 0 -4 5 _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _ - - - 33. R e p o r te d g ro ss g o ld a n d fo re ig n e x c h a n g e h o ld in g s of th e A m e ric a n
R e p u b lic s, 1 9 4 1 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
34. U n ite d S ta te s tr a d e w ith t h e A m e ric a n R e p u b lic s : E x p o r ts , in c lu d in g
re e x p o rts , a n d g e n e ra l im p o rts of m e rc h a n d ise , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _
35. E x p o r t- I m p o r t B a n k : D ire c t a n d g u a r a n te e d lo a n s o n a c c o u n t of th e
A m e ric a n R e p u b lic s, 1 9 3 9 -4 5 (lo a n s o u ts ta n d in g a s of D e c e m b e r 3 1 ) .
36 . T r a n s a c tio n s of th e U n ite d S ta te s w ith “ a ll o th e r c o u n trie s ,” 1 9 4 0 -4 5 -_
37. “ C a s h ” tr a n s a c tio n s of th e U n ite d S ta te s w ith “ a ll o th e r c o u n trie s ,”
1 9 4 0 -4 5 ______________ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . . .
38. U n ite d S t a t e s 't r a d e w ith five n e u tr a l c o u n trie s : E x p o rts , in c lu d in g
re e x p o rts , a n d g e n e ra l im p o rts of m e rc h a n d ise , 1 9 3 6 -3 8 a n d 1 9 4 0 -4 5 39. T o ta l a n d “ c a s h ” e x p o rts , in c lu d in g re e x p o rts , of t h e U n ite d S ta te s to
s e le c te d a llie d c o u n trie s, 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
40. U n ite d S ta te s e x p o r ts u n d e r th e U N R R A p r o g ra m , 19 45 _ _ _ _ _ _ _ _ _ _
41. T ra n s a c tio n s of t h e U n ite d S ta te s w ith in te r n a tio n a l in s titu tio n s ,
1 9 4 0 -4 5 _ __ __ __ __ __ _

79
84
85
93
94
104
105
105
108
110
112

r*

116
118
123
132
134
138
141
144
145
146
148
149
153

A P P E N D IX E S
A. C o n c e p ts a n d d e fin itio n s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
B . M e th o d o lo g y a n d so u rc e s of d a t a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C . S u p p le m e n ta r y in f o r m a tio n _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _
A P P E N D IX T A B L E S
A p p e n d ix B :
I . C o m p o s itio n of f re ig h t a n d s h ip p in g a c c o u n t, 1 9 4 0 -4 5 _ __ __ __
I I . E s tim a te d f re ig h t e a r n in g s b y U n ite d S ta te s a n d fo re ig n vessels
in t h e c a rria g e of U n ite d S ta te s im p o rts a n d e x p o r ts , 1 9 4 0 -4 5 .
I I I . U n ite d S ta te s a n d C a n a d ia n d a t a o n U n ite d S ta te s n e t p u r ­
c h a ses of C a n a d ia n s e c u r itie s _ __ __ __ __ __ __ __ __ __ __ __ __ __
A p p e n d ix C :
IV . C itiz e n a n d a lie n d e p a r tu r e s fro m a n d a r riv a ls in th e U n ite d
S ta te s , b y s e a a n d a ir , v ia s e a p o rts , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _
V . R e s id e n ts of th e U n ite d S ta te s d e p a r tin g fo r o v e rs e a d e s tin a ­
tio n s, b y g e o g r a p h ic a r e a a n d b y class of tr a v e le r , 1 9 4 0 -4 5 __
V I. T o t a l p a ss e n g e r tra ffic (e x c lu d in g cruises) b e tw e e n th e U n ite d
S ta te s a n d o v e rs e a c o u n trie s, b y class of tr a v e le r , 1 9 4 0 - 4 5 ..
V I I . A rriv a ls a n d d e p a r tu r e s of r e s id e n ts of o v e rs e a c o u n trie s a d ­
m itt e d t o th e U n ite d S ta te s a s te m p o r a r y v isito rs, 1 9 4 0 - 4 5 ..
V I I I . E s tim a te d re c e ip ts fro m C a n a d ia n tr a v e le rs t o th e U n ite d
S ta te s , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
I X . E s tim a te d p a y m e n ts b y U n ite d S ta te s tr a v e le rs to C a n a d a ,
1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ _____

vi

164
172
193

176
177
189
193
202
203
204
206
206

>

A p p e n d ix C — C o n tin u e d
1'aee
X . D e p a r tu r e s fro m M ex ico of fo re ig n to u r is ts re sid in g in fo re ig n
c o u n trie s, b y m o n th , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
206
X I . P e rs o n a l r e m itta n c e r e c e ip ts , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
207
X I I . P e rs o n a l r e m itta n c e p a y m e n ts , b y c o u n try , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _
207
X I I I . I n s ti tu t io n a l c o n tr ib u tio n s to fo re ig n c o u n trie s, b y class of in ­
s t i tu t io n a n d b y g e o g ra p h ic a r e a , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
208
209
X IV . In c o m e o n in v e s tm e n ts , b y a r e a a n d ty p e , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _
X V . In c o m e re c e iv e d fro m A m e r ic a n d ire c t in v e s tm e n ts in s e le c te d
c o u n trie s, 1 9 4 0 -4 4 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
210
X V I. In c o m e re c e iv e d fro m A m e ric a n d ir e c t in v e s tm e n ts : V a lu e of
in v e s tm e n ts a n d y ie ld in 1943, b y a r e a a n d s e le c te d c o u n trie s —
210
X V I I . A v e ra g e y ie ld o n A m e ric a n d ire c t in v e s tm e n ts a b r o a d , b y in ­
211
d u s tr y a n d a r e a , 1943_ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
X V I I I . In c o m e re c e iv e d fro m A m e ric a n d ir e c t in v e s tm e n ts , b y a r e a ,
in d u s tr y , a n d t y p e of in c o m e , 19 44_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
212
X I X . In c o m e p a id o n fo re ig n in v e s tm e n ts in th e U n ite d S ta te s , b y
c o u n try , 1 9 4 2 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
213
X X . U n ite d S ta te s p u rc h a s e s of fo re ig n c a p ita l issu es o ffe re d in th e
U n ite d S ta te s , 1 9 4 0 -4 5 _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _
214
X X I . M a r k e t v a lu e of A m e ric a n in v e s tm e n ts in fo re ig n d o lla r b o n d s,
1 9 40 -4 5, a n d p a r v a lu e , 1945_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
215
X X I I . R e c o n c ilia tio n of e s tim a te s of U n ite d S ta te s lo n g -te rm in v e s t­
216
m e n ts a b r o a d , 1 9 4 0 -4 5 _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _
X X I I I . R e c o n c ilia tio n of e s tim a te s o f fo re ig n lo n g -te rm in v e s tm e n ts in
th e U n ite d S ta te s , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
217
X X I V . G ifts a n d o th e r u n ila te ra l tr a n s f e rs , 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
218
X X V . I n te r n a t io n a l tr a n s a c tio n s of th e U n ite d S ta te s , p r iv a te a n d
G o v e rn m e n t, 1 9 4 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
219
X X V I . I n te r n a t io n a l tr a n s a c tio n s of t h e U n ite d S ta te s , 1 9 1 9 -3 9 ____
221
CHARTS
1. C u m u la tiv e n e t in flow of c a p ita l a n d go ld , a n d c u m u la tiv e m e r c h a n d is e
e x p o r t s u rp lu s (e x c lu d in g le n d -le a se a n d U N R R A e x p o rts ), b y
q u a r te r s , 1 9 3 5 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2. C a sh a n d le n d -le a se e x p o rts , m ilita r y , n o n m ilita r y , a n d U N R R A -----3. E x p o r t s u rp lu s of g o od s a n d se rv ic es in p e r c e n t of th e g ro ss n a tio n a l
p r o d u c t n o t u s e d fo r c u r r e n t c o n s u m p tio n , 1 9 3 7 -4 5 _____________
4. U n ite d S ta te s t o t a l e x p o rts , n o n -le n d -le a se e x p o r ts , a n d g e n e ra l im p o rts ,
b y m o n th s , 1 9 3 9 -4 5 (a n n u a l r a t e s ) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
5. U n ite d S ta te s su p p lie s of r u b b e r (e x c e p t re c la im e d ), 1 9 3 9 -4 5 ----------6. U n ite d S ta te s im p o rts of tin , b y so u rc e , a n d b y c la s sific a tio n a s re fin e d
o r o re s a n d c o n c e n tra te s , 1 9 3 9 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
7. U n ite d S ta te s im p o rts fo r c o n s u m p tio n , b y e co n o m ic classes, in 1939
p ric e s, r e la te d to n a tio n a l in c o m e in 1939 d o lla rs _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
8. U n ite d S ta te s e x p o rts b y g e o g r a p h ic a r e a s , 1 9 3 8 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
9. U n ite d S ta te s e x p o rts of d o m e s tic m e rc h a n d ise , b y m a jo r e co n o m ic
classes, in s e le c te d y e a rs , 1 9 0 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
10. M o n th ly in d e x e s of U n ite d S ta te s w h o le sa le p ric e s a n d u n it v a lu e s of
U n ite d S ta te s e x p o r ts a n d im p o rts , 1 9 3 9 -4 5 -----------------------------11. U n ite d S ta te s g e n e r a l im p o rts b y g e o g r a p h ic a re a s , 1 9 3 8 - 4 5 - ........ ..
12. U n ite d S ta te s im p o rts fo r c o n s u m p tio n , b y m a jo r e co n o m ic classes, in
s e le c te d y e a rs, 1 9 0 0 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
13. T r a n s p o r ta tio n a c c o u n t: t o t a l a n d c a s h tr a n s a c tio n s , 1 9 4 0 -4 5 ----------14. P r o p o r tio n o f o c e a n -b o r n e im p o rts a n d e x p o r ts c a rrie d in U n ite d S ta te s
vessels, 1 9 3 6 -4 5 ( d ry c a rg o , ta n k e r , a n d t o t a l ) _________________
15. I n te r n a t io n a l tr a v e l e x p e n d itu re s , 1 9 3 7 -4 5 ---------------------------------16. R e la tio n s h ip b e tw e e n U n ite d S ta te s tr a v e l p a y m e n ts to r e m o te a re a s
a n d n a tio n a l in c o m e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
17. R e la tio n s h ip b e tw e e n U n ite d S ta te s tr a v e l p a y m e n ts to n e a r b y a re a s
a n d n a tio n a l in c o m e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
18. C o m p o sitio n of U n ite d S ta te s in c o m e re c e ip ts a n d p a y m e n ts , 1 9 2 8 -4 5 19. C o m p a ra tiv e in c o m e o n A m e r ic a n d ire c t in v e s tm e n ts a b r o a d , fo re ig n
in v e s tm e n ts in th e U n ite d S ta te s , a n d in v e s tm e n ts in d o m e s tic c o r­
p o ra tio n s , b y class of in v e s tm e n ts , 1 9 4 0 -4 5 - ------------------- - -------20. A m e ric a n d ire c t in v e s tm e n ts in C a n a d a ; d iv id e n d s a n d e a rn in g s o n
c o m m o n s to c k , 1 9 3 8 -4 5 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
21. P r i v a te r e m itta n c e s t o fo re ig n c o u n trie s, 1 9 4 0 -4 5 --------------------------

2
10
12
13
30
31
37
40
41
42
43
44
51
54
60
65
66
68
71
75
88

vn

v iii

Tabl e 1 .— I n te r n a tio n a l tr a n sa c tio n s

o f th e U n ited S ta te s , 19^0-1^5

[In m illions of dollars]
1945
I te m

1940

1942

1941

1943

1944

I , R e c e ip ts , to ta l___ ______ _____ ____ _______ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
A . G oo ds a n d se rv ic es, t o t a l ___ _ _ _ _ _ ________ ______ __________
1. G o o d s - - ___ _ __ __ __ __ __ __ __ __ __ __ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2. In c o m e on in v e s tm e n ts ______________ _ __ __ __ __ _ __ __ __ __
3. O th e r se rv ic e s _ __ __ __ __ __ __ __ __ __ __ __ __ __ _ ____ ________
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____
C . L o n g -te rm c a p ita l, to t a l _ _ _ _ _ _ _
1. M o v e m e n ts o f U n ite d S ta te s c a p ita l in v e s te d a b r o a d .......... ......
2. M o v e m e n ts o f fo re ig n c a p ita l in v e s te d in U n ite d S ta te s ............
I I . P a y m e n ts , t o t a l ---------------- ----------- ----------- ------- ------- ------------ A . G oo ds a n d se rv ic e s, t o t a l __________________ _ _ __ _ __ _ __ _ __ _
1. G o o d s ________________ _____ ___ ________ _____________
2. In c o m e on in v e s tm e n ts ............................. ............ ........ ......... .
3. O th e r se rv ic e s ...... ................ ........... ............................. ...... ..........
C . L o n g -te rm c a p ita l, to t a l ________ ________ _ _ __ _ _ _ __ __ ______ _
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in v e s te d a b r o a d ............. .
2. M o v e m e n ts o f fo re ig n c a p ita l in v e s te d in U n ite d S ta te s . ...........
I I I . E x c ess of re c e ip ts (+ ) o r p a y m e n ts (—), t o t a l ................. ......... ...........
A . G oods a n d se rv ic e s_ __ __ __ __ __ _ _________ _________________

I"—
N e t g oo ds a n d s e rv ic e s a n d u n ila te ra l tr a n s f e r s ___ ____ ________
C. L o n g -te rm c a p ita l________ _ _ _ _ _ _ _ _ _ ________________ _____
V. N e t in flo w (+ ) o r o u tf lo w (—) o f f u n d s on g o ld a n d s h o r t- te r m c a p ita l
a c c o u n t, to t a l ______ _________________ _ _ _ _ _ _ _ _ _ ____ _ _ _ _ _ _ _ _ _

A . N e t in c rea se (—) o r d e c re a se (+) in U n ite d S ta te s gold s to c k ____
B . N e t m o v e m e n t o f U n ite d S ta te s s h o rt- te rm c a p ita l a b r o a d ............
C . N e t m o v e m e n t of fo re ig n s h o r t- te r m c a p ita l in U n ite d S ta te s .........

i

T

5,780

13,077

7, 210

S e c on d
q u a r te r

24,485

19, 249

5, 517

6,235

4,030

3,467

4,382
3,455
129
798
1,039
96
96

4,997
3, 906
147
944
995
243
213
30

3,450
2, 543
129
778
493
87
87

3,244
2,318
150
776
64
159
159

6,110

6, 813

4, 539

3,547

2,689
1,519
35
1,135
3,137
284
190
94

2, 925
1,681
39
1,205
3, 617
271
265
6

2,082
1,414
39
629
1,746
711
679
32

1,728
1, 215
55
458
1,128
691
669
22

43
271
193
78

11,769
9,187
514
X 068
1,002
306
219
87

19,134
15,115
508
3, 511
2,137
445
402
43

21,438
16,969
572
3,897
2,407
640
406
234-

16,073
12,222
555
3, 296
2,591
585
555
30

6,578

13,159

23,732

26,154

21,009

5,355
4,124
564

6,896
5,343
544

59
366
209
157
4,344

657“ .... lTTO"1

4.486
3,636
2,713
3.486
210
187
7UT - ' W “ —
1,179
269
439
913
192
508
405
247
+ 1 ,4 3 6

21,716

+ 6 32

5,356
8, 096
3,965
5, 427
155
159
T ,~ 23 r ' T M T
7,338
15,044
465
592
294
486
171
106
-8 2

8,986
9,424
5,829
5, 589
161
168
" 37236“ “... 3 ,4 2 7 ''
9,628
16, 549
619
1,957
560
1,803
154
59

T h ird
q u a r te r

F o u rth
q u a r te r

F irs t
q u a r te r

T o ta l

- 2 ,0 1 6

- 1 ,6 6 9

- 1 ,7 6 0

-5 9 3

-5 7 8

-5 0 9

-8 0

+ 6 ,6 4 9
- 7 ,0 3 7
-3 8 8
- 1 ,3 7 2

+ 1 ,6 9 3
—2,098
-4 0 5
-1 8 8

+ 2 ,0 7 2
- 2 ,6 2 2
-5 5 0
-2 8

+ 1 ,3 6 8
- 1 , 253
+ 115
-6 2 4

+ 1 , 516
- 1 ,0 6 4
+452
-5 3 2

+ 1 ,7 1 9
-2 1 0
+ 1 ,5 0 9
-7 3

+ 2 ,4 1 0
- 1 ,1 3 6
+ 1 ,2 7 4
-6 4 2

+ 6 ,4 1 3
- 6 ,3 3 6
+77
-1 5 9

+ 1 1,0 3 8
-1 2 ,9 0 7
- 1 , 869
-1 4 7

+ 1 2,4 5 2
-1 4 ,1 4 2
- 1 ,6 9 0
+Sl

- 2 ,7 1 3

- 1 ,1 0 8

+90

+ 1 ,9 8 2

+ 1 ,7 0 6

+ 1 ,8 8 8

+ 620

+ 631

+582

+55

+ 1 ,3 5 0
-1 5 3
+ 509

+ 548
-3 1 3
+ 1 ,6 5 3

+ 180
-9
+ 4 49

+ 157
-1 2 0
+ 594

+ 2 01
+21
+360

+10
-2 0 5
+250

-3 7

-1 2 8

-2 7

-5 3

-7 3

+25

- 4 , 243
+ 1 77
+ 1 ,3 5 3

-7 1 9
+11
-4 0 0

+23
-1 1 5
+ 182

+ 1 , 277

+ 476

-8

+ 757
+3
+ 1 ,2 2 2
+34'

C h a p te r I

R e v ie w o f th e W a r P e r io d

.
\

m

T h e in te rn a tio n a l tr a n s a c tio n s o f th e U n ite d S ta te s d u rin g th e w a r
lik e th o se o f o th e r c o u n trie s, w e re c o n d u c te d a lm o st e n tire ly u n d e r
G o v e rn m en t d ire c tio n o r c o n tro l. T h e p r im a r y o bjective o f th ese
c o n tro ls w as th e w in n in g o f th e w a r w ith a m in im u m o f d istu rb a n c e
to th e e x istin g social s tru c tu re .
T h e a cc ou n t th a t fo llo w s is m o re n a rra tiv e , th a n a n a ly tic a l in c h a r­
a cte r, ex ce pt f o r a c o n c lu d in g c h a p te r on im p lic a tio n s fo r th e fu tu re ,
w h e re in a n a tte m p t is m a d e to foresee possib le so lu tio n s to som e o f
th e econom ic p rob lem s f a c in g th e w o rld as a re s u lt o f 6 y e a rs o f g lob a l
conflict.
T h e e n tire 6 -year p e rio d , 1940-45, fro m th e p o in t o f view o f o u r
in te rn a tio n a l tra n s a c tio n s, m ay be d iv id e d in to th re e p a rts . T h e
first, c o m p risin g ro u g h ly th e y e ars 1940 a n d 1941, w as c h a ra c te riz e d
b y th e tr a n s itio n fro m “cash a n d c a r r y ” n e u tr a lity to th e first stag e
o f th e d e ve lo p m e nt o f th is c o u n try as th e “A rse n a l o f D e m o c rac y .”
T h e L e n d -L e ase A c t w as p a sse d in M a rc h 1941, b u t i t w as n o t u n til
th e second h a lf o f t h a t y e a r t h a t len d -le ase tr a n s f e rs assum ed a la rg e
volum e. U n til t h a t tim e , d o lla rs n eed ed to p a y fo r ra p id ly ris in g
e x p o rts, a n d fo r ad v a n c e p a y m e n ts on o rd e rs a n d o th e r fin a n c ia l as­
sistan ce to A m eric an m a n u fa c tu re rs o f m u n itio n s b y A llie d c o u n tries,
h a d to be o b ta in e d th ro u g h (1) th e liq u id a tio n o f fo re ig n assets in
th is c o u n try , (2) sales o f g o ld, a n d (3) som e ad v an ce p a y m e n ts a n d
lo an s by th e U n ite d S ta te s G o v ernm en t.
T h e second p a r t o f th e p e rio d covers a c tu a l U n ite d S ta te s p a r tic ip a ­
tio n in th e w a r. F o r rea so n s o f s ta tis tic a l convenience, i t w as ta k e n
to c om p rise th e y e ars 1942 th ro u g h 1944 a n d th e first 6 m o n th s o f 1945.
I t w as c h a ra c te riz e d by sh a rp ly ris in g e x p o rts a n d still g re a te r in ­
creases o f lend-lease assistance. E x p o rts o f goods a n d services fo r
w h ich w e received p a y m e n t d eclin ed a n d w e re a c tu a lly sm a lle r th a n
o u r o b lig a tio n s f o r im p o rts. C o n seq u en tly , d u r in g th is tim e fo re ig n
c o u n trie s as a g ro u p e ith e r in c rea se d th e ir d o lla r b alan ces o r b o u g h t
g o ld in th e U n ite d S tate s.
T h e th ird p a r t o f th e p e rio d covers th e second h a lf o f th e y e a r 1945,
a n d th e re fo re th e tr a n s itio n fro m w a r to th e p o s tw a r era . D u rin g
t h a t h a lf y e a r b o th e x p o rts a n d im p o rts declined— th e la tte r o n ly
slig h tly — a n d len d -lease as a m eans o f fin a n c in g e x p o rts w as p a r tly
re p la c e d b y c o n trib u tio n s th ro u g h U N 1 ÍR A a n d by lo an s. B ecause
o f c o n tin u e d lim ita tio n s on o u r dom estic p ro d u c tio n a n d e x p o rts o f
c iv ilia n goods, c e rta in fo re ig n c o u n trie s c o n tin u ed to a ccu m u late d o lla r
ba la nc es a n d to b u y g o ld , b u t in d im in ish in g q u a n titie s , as th e y e a r
ended.
I

F ro m

N e u t r a l i t y t o B e l l i g e r e n c y , 1 9 4 0 —4 1

T h e c lo sin g y e a rs o f th e th ir tie s fo u n d th e U n ite d S ta te s in a
so -called s tro n g b a la n c e-o f-p a y m e n ts p o sitio n . B u siness recession in
1938 h a d g re a tly red u ced o u r d e m a n d fo r fo re ig n goods a n d services,
w h ile re la tiv e ly less d e presse d c o n d itio n s a b ro a d c ou p led w ith in ­
c re ased p r e p a r a tio n f o r w a r in E u ro p e serv ed to keep o u r e x p o rts
h ig h .1 T h e p o sitiv e tr a d e b alan ce (ba sed on “re c o rd e d ” fig u re s),
w h ich h a d re a c h e d a low p o in t o f $33 m illio n in 1936, rose to $1,134
m illio n in 1938 a n d receded to $859 m illio n in 1939. T h e re s u ltin g
p re ssu re on fo re ig n e xch an g e reserves w as in ten sified b y n e t in w a rd
c a p ita l m ovem ents— p r a c tic a lly a ll g o in g in to d e po sits a n d o th e r
liq u id b alan ces— of a p p ro x im a te ly $2 b illio n d u r in g th e 18 m o n th s
e n d e d w ith th e close o f 1939. B o th th e e x p o r t su rp lu s 12 a n d th e inflow
o f c a p ita l w ere m a d e possible th ro u g h g o ld im p o rts w h ic h a m o u n ted
to $4.5 b illio n in th e sam e p e rio d (see c h a r t 1 ).
C h a rt

1

BI LLI ONS OF D O LLA RS

N o te » — T h e s e r i e s u s e d i n t h i s c h a r t a r e u n a d j u s t e d a n d d o n o t c o r r e s p o n d
to th o s e e m p lo y e d in th e b a la n c e -o f-p a y m e n ts ta b le s .
G o ld m o v e m e n ts in c lu d e
e x p o r ts , im p o rts , a n d e a r m a r k in g o n ly ; c a p ita l m o v e m e n ts a r e u n a d ju s te d
T r e a s u r y D e p a r t m e n t f i g u r e s ; a n d t h e m e r c h a n d is e e x p o r t s u r p lu s is b a s e d
o n r e c o r d e d tr a d e d a ta , e x c lu d in g ie n d -le a s e a n d U N R R A e x p o r ts .
1 I n g e n e r a l , t h e w o r d s e x p o r t s a n d i m p o r t s i n t h i s v o l u m e r e f e r t o t h e o ff ic ia l t r a d e
fig u re s re le a s e d b y t h e B u r e a u o f th e C e n su s . T h e te r m s “ t o t a l e x p o r ts ,” “ t o t a l tr a n s f e r s ,”
“ e x p o r ts o f g o o d s a n d s e rv ic e s ,” a n d s im ila r e x p r e s s io n s a r e u s e d w h e n a m o re c o m p re h e n ­
s i v e c a t e g o r y is im p li e d .
2 A s u se d in th is s tu d y , th e te rm “ e x p o r t s u r p lu s ” r e f e r s to th e ex c e ss o f tr a n s f e r s o f
g o o d s o r g o o d s a n d s e rv ic e s to f o re ig n c o u n tr ie s ( e x p o r ts ) o v e r g o o d s o r g o o d s a n d s e rv ic e s
re c e iv e d fr o m th e m ( i m p o r t s ) .

2

T h e S e a rc h f o r D o lla rs
O u tw a r d ly th e s tru c tu re o f th e U n ite d S ta te s b a la n c e o f p a y m e n ts
w as n o t g r e a tly a lte re d in 1940 a n d th e first p a r t o f 1941, ex cep t by
an in crea se in th e m a g n itu d e s in v o lv ed . A la rg e e x p o rt s u rp lu s a n d
flow o f fo re ig n c a p ita l to th e U n ite d S ta te s c o n tin u e d to be offset by
u n p re c e d e n te d g o ld im p o rts. H o w e v e r, th e g o ld a n d c a p ita l inflow ,
in p a r t, w as m ere ly in a n tic ip a tio n o f la te r d isb u rse m e n ts fo r w a r
p u rch a se s.
A s a m a tte r o f fa c t, i t w as n o t u n til th e o c cu p a tio n ox w e stern
E u ro p e b y th e G e rm an a rm ies t h a t a n y fu n d a m e n ta l ch an g e s in th e
U n ite d S ta te s b a la n c e o f p a y m e n ts o c cu rred . E x p o rts rose slow ly
fro m a n a n n u a l ra te o f $2.8 b illio n in th e first q u a rte r o f 1939 to a b o u t
$4.3 b illio n a y e a r la te r, w ith a b o u t $600 m illio n o f th e in crea se a c­
c o un te d f o r by sh ip m e n ts to F ra n c e a n d th e U n ite d K in g d o m .
I n th e m ea n tim e , how ever, th o se c o u n trie s w ere p la c in g la rg e o rd e rs
in th e U n ite d S ta te s w h ich b e g a n to b e a r f r u i t in m o re r a p id in ­
creases in e x p o rts b y th e la tte r p a r t o f 1940. M ost o f th e F re n c h
c o n tra c ts w ere ta k e n over by th e B ritis h a f te r th e fa ll o f F ra n c e ,
e x p o rts to th e U n ite d K in g d o m ris in g fro m $50 m illio n in M ay to
$126 m illio n in A u g u s t 1940. B ecause o f th e d eclin e in e x p o rts to
G erm a n -o cc u p ied E u ro p e , to ta l e x p o rts d id n o t show a c o rre sp o n d in g
rise. I n fa c t, e x p o rts fe ll so m e w h a t a f te r th e first q u a r te r o f 1940
a n d d id n o t r e tu r n to th e level a tta in e d in t h a t q u a rte r u n til th e second
q u a r te r o f 1941.
A p rin c ip a l rea so n fo r th e re la tiv e ly slow rise in e x p o rts in fac e o f
th e a lm o st u n lim ite d d e m a n d o f G re a t B r ita in fo r A m e ric a n goods
w as th e in a b ility o f th e A m e ric a n econom y to su p p ly p r o m p tly th e
p ro d u c ts w a n ted . A s la te as th e m id d le o f 1941, w ith th e U n ite d S ta te s
defense p ro g ra m a y e a r old, m u n itio n s p ro d u c tio n w as a t a n a n n u a l
r a te o f o n ly $7.4 b illio n — a b o u t 13 p e rc e n t o f th e o u tp u t ach iev ed
d u rin g 1943. E v e n th is level h a d been re ac h ed o n ly w ith a id to
U n ite d S ta te s p ro d u c e rs b y th e B r itis h G o v e rn m en t, in th e fo rm o f
a d v a n c e p a y m e n ts a n d c a p ita l a ssista n c e ; a t th e end o f 1940 su ch p a y ­
m en ts o u ts ta n d in g a m o u n te d to $762 m illio n — a v e ry s u b s ta n tia l f u r ­
th e r d r a in on th e a v a ila b le g o ld a n d d o lla r reso u rces o f th e U n ite d
K in g d o m .
I n a d d itio n to in crea se d e x p o rts a n d ad v a n c e p a y m en ts as sources of
s tra in on d o lla r e xch an g e reserves o f fo re ig n c ou n tries, th e inflow o f
“flig h t” c a p ita l so no ticea ble in th e la te th ir tie s w as c o n tin u ed a n d f o r
a tim e in ten sifie d in th e e a rly stag e s o f th e w a r. T h e se fu n d s cam e
la rg e ly fro m c o n tin e n ta l E u ro p e a n c ou n tries, a lth o u g h , as discussed
elsew here (eh. I V ) , som e c a p ita l w ith d ra w a ls fro m th e U n ite d K in g ­
dom o c cu rred even a f te r th e in a u g u ra tio n o f e xch an g e c ontrols.
M e e tin g F o re ig n D o lla r R e q u ir e m e n ts
A lth o u g h im p o rts also in crea se d in 1940 a n d 1941, u n d e r th e stim u lu s
o f a h ig h e r r a te o f in d u s tria l a c tiv ity in th e U n ite d S ta te s, th e rise
w as n o t as r a p id as th e e x p a n sio n in e x p o rts. W ith a c o rre sp o n d in g
s h if t in o u r fa v o r on c e r ta in m a jo r in v isib le item s, th e b a la n c e d u e
to u s on goods a n d services rose fro m $1,055 m illio n in 1939 to $1,719
m illio n in 1940 a n d $2,410 m illio n in 1941.
T o th e to ta l a m o u n t o f a b o u t $4.1 b illio n due to th e U n ite d S ta te s
in th e tw o l a tte r y e a rs m u st be a d d e d $609 m illio n o f U n ite d K in g d o m
fin a n c ia l a id to U n ite d S ta te s m a n u fa c tu re rs, s till o u tsta n d in g a t th e
3

e n d o f 1941. O f th e re s u ltin g to ta l o f $4.7 b illio n , th e sum o f $1.3 b il­
lio n w as p ro v id e d b y th is c o u n try th ro u g h p r iv a te re m itta n c e s, le n d lease, a n d o th e r u n ila te ra l tra n s fe rs . T h is le f t $3.4 b illio n to be
financed th ro u g h lo a n s fro m th is c o u n try o r b y d r a w in g u p o n g o ld a n d
a c c u m u la te d d o lla r assets.
T h e n e t outflow o f A m e ric a n c a p ita l, lo ng- a n d slio rt-te rm , a c­
co u n ted f o r $110 m illio n in th e 2 y e ars. L iq u id a tio n o f fo re ig n se c u ri­
tie s a n d o th e r lo n g -te rm in v estm e n ts in th e U n ite d S ta te s p ro v id e d ,
n e t, a n a d d itio n a l $580 m illio n , n o t d e d u c tin g th e inflow re p re se n te d
b y th e c a p ita l a ssistan c e m e n tio n ed above.
A f te r s u b tr a c tin g th e $690 m illio n m ad e a v a ila b le th ro u g h lo a n s a n d
liq u id a tio n s o f fo re ig n -h e ld lo n g -te rm assets fro m th e to ta l o f $3.4
b illio n re q u ire d b y fo re ig n c o u n trie s to m eet th e ir o b lig a tio n s on
tr a d e , services, a n d c a p ita l a ssistan ce, a b o u t $2.7 b illio n re m a in e d to
be p ro v id e d b y sh ip m en ts o f g o ld o r by d r a w in g u p o n a cc u m u lated
d o lla r balances.
S ales o f g o ld to th e T re a s u ry d u r in g th e 2 y e ars 1940 a n d 1941
a m o u n ted to a b o u t $5 b illio n , th u s ex ceed in g th e a m o u n t needed fo r
th e se ttle m e n t o f c u r re n t o b lig a tio n s (in c lu d in g th e c a p ita l assistance
above m en tio n ed ) b y a b o u t $2.3 b illio n . K n o w n increases in fo r e ig n
d o lla r ba la nc es a m o u n te d to a b o u t $500 m illio n . T h e re m a in d e r,
$1.8 b illio n , re p re se n ts th e e rro rs a n d om issions ite m in th e balanceo f-p a y m e n ts s ta te m e n t a n d p re su m a b ly consists o f u n re c o rd e d im ­
p o rts o f fo re ig n c a p ita l.
in c r e a s e d E x p o r ts E x p a n d U n ite d S ta te s P r o d u c tio n

B ecau se o f th e la rg e in crea se in d o m estic business a c tiv ity stim u la te d
b y th e a rm a m e n t p ro g ra m a n d th e in c rea se d incom e d e riv e d fro m it,
e x p o rts u p to th e en d o f 1941, in c lu d in g len d -lease e x p o rts o f $780
m illio n , d id n o t rise a t a m u ch f a s te r ra te th a n d id to ta l p r o d u c tio n
o f m ovable goods. E x p o rts fro m th e U n ite d S ta te s in 1941 c om p rise d
7.8 p e rc e n t o f th e o u tp u t o f m ov ab le goods, as a g a in st 7.4 p e rc e n t
in 1939 (see ta b le 2 ). N e verth eless, fo re ig n tr a d e d u r in g 1940 a n d
1941 h a d a n im p o rta n t effect u p o n th e econom ic a n d m ilita ry p o s itio n
o f th e U n ite d S ta te s. T h e in c rea se d e x p o rts o f goods a n d services
h e lp e d c o n sid erab ly in th e re d u c tio n o f u n e m p lo y m e n t fro m 8 o r 9
m illio n in 1939 to a n a v erag e o f 5 m illio n in 1941. F o re ig n o rd ers,
p a r tic u la r ly f o r m u n itio n s, also se rv ed to b u ild u p n e w p ro d u c tio n
fa c ilitie s a n d to s tra ig h te n o u t th e first k in k s in th e m u n itio n s p r o ­
d u c tio n process. I t is q u ite lik e ly th a t p ro d u c tio n f o r fo re ig n d e­
m a n d in 1940 a n d 1941 a d v a n c ed us sev eral m o n th s in th e a rm a m e n t
p ro g ra m .

Tabl e 2.—E x p o r ta b le g o od s: P ro d u c tio n

a n d p ro p o rtio n exp o rte d , 1939,1941, an d
191t3-J,5

[In m illio n s o f dollars]

Y ear

1939................. .
1941____ ______
1943.... ..................
1944..... ................
1945_____ _ _ _ _ _ _

A g ric u l­
tu r a l
p ro d u c ts
9,121
12,556
21,350
22, 268
22, 760

M a n u fa c ­
tu r e s
24,683
40,500
77, 500
78,000
66,000

M in in g

3,222
4, 500
5,300
5,600
5,300

F r e ig h t
re c e ip ts
4,900
6,600
9,000
9,300
9,300

T o ta l

41,926
64,156
113,150
115.168
103,360

E x p o rts ,
U .S . m e r ­
c h a n d is e

P e r c e n t of
to ta l

3,123
5,020
12,841
14,163
9, 589

S o u rc e : S ta tis tic a l A b s tr a c t of th e U n ite d S ta te s 1946, p . 838, U . S. D e p a r tm e n t of C o m m e rce .

7 .4
7 .8
11.3
12.3
9 .3

G o v e r n m e n t P a r tic ip a tio n I n c r e a s e s

T h e w a r in E u ro p e a n d th e in c re a sin g in v o lv em en t o f th e U n ite d
S ta te s n o t o n ly c h a n g e d th e volum e, co m p o sitio n , a n d d ire c tio n o f
fo r e ig n tr a d e a n d o th e r in te rn a tio n a l tra n sa c tio n s, b u t also th e ir o r ­
g a n iz a tio n a n d c o n tro l, b y in c re a s in g th e ro le o f g o v ernm en ts. E a r ly
in th e w a r, th e B ritis h a n d F re n c h G o v e rn m en ts c h an n eled th e ir p u r ­
chases in th is c o u n try th ro u g h official p u rc h a sin g m issions, a n d such
m issions w ere la te r e sta b lish e d b y m a n y o th e r c ou n tries. T h is c o u n try ,
to o, e sta b lish e d in 1940 a n d 1941 v a rio u s G o v e rn m en t c o rp o ra tio n s to
develop new fo re ig n sources o f s u p p ly f o r u r g e n tly need ed ra w m a te ­
ria ls a n d to in crea se im p o rts o f such m a te ria ls fro m e x istin g sources.
B o th o p e ra tio n s (d ev elo p e m e n t a n d a c tu a l p ro c u re m e n t) h a d to be
done by th e G o v e rn m en t r a t h e r th a n b y p r iv a te business, in o rd e r to
fa c ilita te p ro c u re m e n t a n d to p re serv e as n e a rly as possib le th e e x is t­
in g p ric e stru c tu re . I n t h a t re sp e ct th e fo re ig n o p e ra tio n s o f th e G o v ­
e rn m e n t w ere s im ila r in n a tu r e a n d co n d u ct to , f o r in sta n c e, th e con­
stru c tio n o f m u n itio n s p la n ts w ith G o v e rn m en t fu nd s.
T o ta l c om m o d ity p u rc h a se s b y th e G o v e rn m en t o f th e U n ite d S ta te s
in fo re ig n c o u n trie s in 1941 a m o u n te d to a b o u t $490 m illio n , o r a b o u t
14 p e rc e n t o f th e to ta l v a lu e o f a ll goods b o u g h t b y th e U n ite d S ta te s in
fo re ig n c o u n trie s. I n th e sam e y e a r, th e s h a re o f a ll F e d e ra l G o v e rn ­
m e n t e x p e n d itu re s in th e g ro ss n a tio n a l p ro d u c t w a s 16.3 p e rc e n t, a n d
th e sh a re o f w a r e x p e n d itu re s w as 11 p e rce n t. T h u s G o v e rn m en t p a r ­
tic ip a tio n in in te rn a tio n a l tra n sa c tio n s w as n o t m o re ex ten siv e th a n
in th e econom y as a w hole.
O n th e e x p o rt side, G o v e rn m en t c o n tro ls w ere first f e lt in th e a p ­
p lic a tio n o f th e N e u tra lity A c t, w h ic h p u t tr a d e w ith b e llig e re n ts on a
cash a n d c a rry basis. W h e n o u r a rm a m e n t p ro g ra m b e g a n in th e m id ­
d le o f 1940, a n e x p o rt-c o n tro l sy stem w as e sta b lish e d to p re v e n t ex ­
cessive e x p o rta tio n o f com m odities in s h o rt su p p ly a n d v ita l to th e
d efen se p ro g ra m . W ith th e b e g in n in g o f len d -le ase in 1941, th e G o v ­
e rn m e n t to o k a d ire c t h a n d in th e p ro c u re m e n t a n d e x p o rta tio n o f
m e rc h an d ise a n d services. I n t h a t y e a r, m erch a n d ise v a lu e d a t $784
m illio n , 15 p e rc e n t o f o u r to ta l e x p o rts, w as sh ip p e d b y th e G o v e rn ­
m en t— a lm o st a ll u n d e r th e len d -lease p ro g ra m . R eq u isitio n s f o r
th ese len d -lease goods w ere tr a n s m itte d by fo re ig n c o u n trie s to th e
U n ite d S ta te s G o v e rn m en t a n d p ro c u re m e n t w as effected b y F e d e ra l
agencies a lo n g w ith th e p ro c u re m e n t o f o th e r m a te ria ls n eed ed in th e
a rm a m e n t p ro g ra m .
T h e re w as also a c o n sid e ra b le in crea se o f G o v e rn m en t a c tiv ity in
th e field o f fo re ig n le n d in g , p rin c ip a lly th ro u g h th e R e c o n stru c tio n
F in a n c e C o rp o ra tio n lo a n o f $425 m illio n to th e U n ite d K in g d o m ,
$350 m illio n o f w h ich w ere d isb u rsed in 1941. N o t since th e y e ars im ­
m e d ia te ly fo llo w in g W o rld W a r I h a d G o v e rn m e n t lo a n s ris e n to
t h a t level. F o re ig n g o v e rn m e n ts p a r tic ip a te d to a g re a te r e x te n t
th a n d id th e U n ite d S ta te s in d ire c tly c o n tro llin g c a p ita l m ovem ents.
F i r s t o f a ll, p r a c tic a lly a ll fo re ig n g o v ern m en ts a tte m p te d , as soon as
th e w a r b rok e o u t, to c o n tro l in te rn a tio n a l c a p ita l tra n s fe rs , p a r tic u ­
la r ly th o se in a n o u tw a rd d ire c tio n , in o r d e r to conserve fo re ig n ex­
c h a n g e f o r e sse n tial p u rc h a se s a b ro a d a n d to p re v e n t th e a v ailab le
su p p ly fro m b e in g e x h a u ste d by flig h t c a p ita l.
T h e in crea se o f fo re ig n b a n k in g b alan c es fro m th e m id d le o f 1939 to
th e e n d o f 1941, in s o fa r as is k n o w n , w as e n tire ly in fu n d s b elo n g in g
to fo re ig n g o v ern m en ts o r th e ir agencies. I n fa c t, d u rin g th e sam e
5

tim e th e re w as a d eclin e in d o lla r ba la nc es ow ned by p riv a te p e rso n s
a n d e n te rp rise s. T h e re w as, how ever, a la rg e in flux o f fo re ig n c a p i­
ta l, p a r tic u la r ly in 1940, w h ich escaped official re c o rd in g , m o st o f
w h ich p re su m a b ly consisted o f p r iv a te fu n d s . F o re ig n g o v ern m en ts
n o t o nly tr ie d to p re v e n t such c a p ita l m ovem ents o u t o f th e ir c o u n trie s
b u t m a d e c o n sid e ra b le a tte m p ts to acq u ire th e fo r e ig n assets o f th e ir
re s id e n ts in o r d e r to g e t fo re ig n e xch an ge th ro u g h th e sale o f such
assets. T h e la rg e s t p a r t o f th e re d u c tio n o f fo re ig n lo n g -te rm assets
in th is c o u n try w as a cco m p lish ed b y tra n sa c tio n s o f fo r e ig n g o v ern ­
m en ts them selves, r a th e r th a n th e ir citizens.
T h u s, th e in c re a sin g c o n c e n tra tio n o f resou rce s a n d e nergies on
th e w a r fu n n e le d econom ic a c tiv ity in th e in te rn a tio n a l as w ell as in
th e dom estic field th ro u g h g o v e rn m e n t ch an n e ls o r a t le a st b ro u g h t
i t u n d e r g o v e rn m e n t d ire c tio n a n d c o n tro l. B y th e e n d o f 1941, go v ­
e rn m e n t o rg a n iz a tio n in fo re ig n c o u n trie s, p a r tic u la r ly th e U n ite d
K in g d o m , w as w ell se t u p a n d in o p e ra tio n . I n th e U n ite d S ta tes,
w h ich a t t h a t tim e h a d ju s t becom e a n a ctiv e b e llig e re n t, m o st o f
th e G o v e rn m e n t o r g a n iz a tio n s to c o n v e rt th e econom y to th e w a r
effo rt h a d been se t u p , b u t th e volum e o f w a r p ro d u c tio n a n d th e
a m o u n t a n d effectiveness o f th e c o n tro ls o v er p ro d u c tio n , d is tr ib u tio n ,
a n d fo re ig n tr a n s a c tio n s w ere still m o d e ra te.
T h e W a r, J a n u a ry

1 9 4 2 —J u n e

1945

T h e b e g in n in g o f th e p e rio d o f p a r tic ip a tio n as a n a ctiv e b e llig e re n t
fo u n d th e U n ite d S ta te s w ith its p rin c ip a l fin a n cia l m ech an ism fo r
jo in t o p e ra tio n s a lre a d y fu n c tio n in g . L e n d -le ase a n d its c o u n te rp a rt,
re c ip ro c a l a id , to o k th e fin a n c in g p ro b lem o u t of o u r in te rn a tio n a l
tra n sa c tio n s, le a v in g o n ly th e esse n tially p h y sic a l p ro b le m o f w o rk ­
in g o u t th e m ost efficient d iv isio n o f 1a b o r a m o n g th e A llies. A m e ric a n
m ass-p ro d u c tio n m eth o d s w ere a p p lie d to th e m a n u fa c tu re o f tru c k s,
ta n k s, sh ip s, p lan e s, m ac h in e to ols, a n d m a n y o th e r p ro d u c ts d ire c tly
o r in d ire c tly e sse n tial to w a g in g w a r. O u r p rin c ip a l A llie s, B r ita in
a n d R u ssia , w ere th u s e n ab led to p u t f a r m o re m en in th e fig h tin g
lin e s th a n i f th e y h a d h a d to p ro d u ce a ll th e ir e q u ip m e n t th em selves
o r b u y i t w ith th e ir ow n fin a n c ia l resou rce s (w h ic h w o u ld h a v e been
co m p letely in a d e q u a te ). T h e to ta l o f goods a n d services d eliv ered
u n d e r len d -lease a m o u n te d to a b o u t $50 b illio n b y th e m id d le o f 1945.
N o t a ll o u r tra n sa c tio n s "were fin an ced on a u n ila te ra l b asis, how ever.
T ra n sa c tio n s w ith C a n a d a a n d L a tin A m e r ic a 3 w ere, g e n e ra lly sp eak in g , o n a p a y m e n ts b asis, e xce pt f o r a re la tiv e ly sm all a m o u n t o f lendlease to th e l a tte r a re a. P ro c u re m e n t o f g o o ds in th e B ritis h E m p ir e
elsew here th a n in C a n a d a f o r a c tu a l im p o rt in to th e U n ite d S ta te s
w as also on a cash b a sis u n til la te 1943, w hen m o st o f su ch im p o rts
w ere p la c ed u n d e r re c ip ro c a l a id . A lso , th e p e rso n a l e x p e n d itu re s o f
o u r tr o o p s a b ro a d , a s d istin g u is h e d fro m p u rc h a se s b y th e a rm ed
fo rce s as su ch, w e re m a d e e ith e r in d o lla rs or, u su a lly , in local c u r ­
ren cies p u rc h a se d w ith d o lla rs. T h e c ash p o rtio n o f o u r b a la n c e o f
p a y m e n ts w a s n e g a tiv e a lm o st th ro u g h o u t th is w hole p e rio d , le a d in g
to an in crea se o f $2.9 b illio n in fo reig n -o w n e d d o lla r ba la nc es a n d n e t
g o ld sales b y th e U n ite d S ta te s o f a b o u t $2.5 b illio n .
3
I n th is re p o rt,
in te rc h a n g e a b ly .

6

th e

te rm s

“ L a tin

A m e r i c a ’’ a n d

“ A m e ric a n

R e p u b lic s ”

are

u sed

r
*
%

E x p o r ts E x p a n d R a p id ly

T o ta l e x p o rts o f goods a n d services, as in d ic a te d in ta b le 1, rose
fro m $6.9 b illio n in 1941 to $21.4 b illio n in 1944. R e c o rd ed m e r­
c h an d ise e x p o rts re ac h ed a p e a k a n n u a l r a te o f $17.5 b illio n in M ay
1944, ju s t b e fo re th e in v a sio n o f E u ro p e . M ore th a n 80 p e rc e n t o f
th e to ta l m e rc h an d ise tr a n s f e rs fo r th e w hole 3 % -y e a r p e rio d r e p r e ­
se n te d len d -le ase tr a n s fe rs . A s u b s ta n tia l p o rtio n o f cash e x p o rts
w as e sse n tial w a r m a te ria ls — la rg e ly to C a n a d a o r to E n g la n d as
d e liv e rie s on p re -len d -le a se c o n tra c ts. E x p o r t c o n tro ls re s tric te d
sh ip m e n ts o f p r a c tic a lly a ll com m o d ities to th e b a re esse ntials neces­
sa ry to m a in ta in th e econom ies o f frie n d ly fo r e ig n c ou n tries.
Im p o rts L o w er

A lth o u g h d u r in g th e w a r we e x p a n d e d o u r p u rc h a ses o f m a n y ra w
m a te r ia ls in th e W e s te rn H e m isp h e re a n d elsew here, such as c o p p e r
fro m C hile, b a u x ite fro m S u rin a m , a lu m in u m fro m C a n a d a , a n d
ch rom e a n d m an g an e se fro m A fric a , to ta l im p o rts in q u a n tity te rm s
d id n o t a g a in re a c h th e h ig h level o f 1941. D u r in g th e fir st 6 m o n th s
o f 1945, im p o rts a d ju s te d fo r p ric e ch an g es w ere 95 p e rc e n t o f th e
1941 ra te .
E n e m y o c cu p a tio n o f th e F a r E a s t c u t off su p p lie s o f som e o f o u r
p r in c ip a l im p o rts , n o ta b ly ru b b e r, tin , c o p ra, hem p , tu n g oil, silk,
q u in in e, a n d spices. A lth o u g h a lte rn a tiv e sources f o r som e o f th ese
p ro d u c ts w e re developed, fre q u e n tly w ith th e a id o f U n ite d S ta te s
G o v e rn m en t c a p ita l, in o th e r fo re ig n a re as, d o m estic sy n th e tic s a n d
su b s titu te s w ere th e p r in c ip a l m eans o f f illin g th e g ap .
T o ta l re c e ip ts o f g oods fro m fo re ig n c o u n trie s, how ever, w ere m u ch
h ig h e r th a n re co rd e d im p o rts, a n d re g iste re d a c o n tin u ed e x p a n sio n
th ro u g h o u t th e w a r. M o st o f th ese o th e r goods w ere received a n d
consum ed by th e a rm e d forces a b ro a d , e ith e r by p u rc h a se o r, m ore
com m only, as rev erse lend-lease. Som e com m odities w ere also p r o ­
c u red a b ro a d , p rin c ip a lly in C a n a d a a n d th e C a rib b ea n , f o r d ire c t
sh ip m e n t to th e w a r th e a te rs , e ith e r as len d -le ase o r f o r th e use o f th e
U n ite d S ta te s a rm e d forces.
S e r v ic e s A ls o L a r g e

W ith incom e on in v e stm e n ts r u n n in g a b o u t th e sam e as in la te p r e ­
w a r y e ars, p rin c ip a l c han g e s in in v isib le e x p o rts a n d im p o rts , in c lu d ­
in g th e sh a rp re d u c tio n o f to u r is t e x p e n d itu res, w ere d ire c tly re la te d
to th e w a r effort. V a s tly in crea se d sh ip p in g services fu rn is h e d to
fo re ig n e rs w e re chiefly p ro v id e d u n d e r lend-lease, w h ile m o st o f th e
services fu r n is h e d to th e a rm ed forces w e re o b ta in e d as rec ip ro c a l aid.
T h e o th e r p rin c ip a l item in th e in v isib le g ro u p w as th e p e rso n a l ex­
p e n d itu r e s o f th e tro o p s them selves. T h e se in g e n e ra l w ere on a cash
b asis, a n d sufficiently la rg e to m a k e th e a c tu a l b a la n c e o f p a y m e n ts
f o r services n e g a tiv e f o r th e w a r p e rio d .
F in a n c in g th e B a la n c e

A s a lre a d y in d ic a te d , w e m o re th a n offset o u r e x p o r t su rp lu s d u r in g
th e w a r b y len d -le ase a n d o th e r u n ila te ra l tra n sa c tio n s. A lto g e th e r
w e h a d a n e g a tiv e b a lan ce o f a c tu a l p a y m e n ts f o r goods a n d services
o f $4.4 b illio n d u r in g th e 3y2 y e a rs h e re u n d e r discussion. M ovem ents
o f lo n g -te rm c a p ita l a n d A m eric an sh o rt- te rm fu n d s w ere re la tiv e ly
u n im p o rta n t, b u t re s u lte d in n e t outflow s f o r th e p e rio d as a w hole
7

o f a b o u t $500 m illio n a n d $400 m illio n , resp ec tiv e ly . A d d e d to th e
b a la n ce on goods a n d services a n d u n ila te ra l tr a n s fe rs , th e se c a p ita l
outflow s b r o u g h t to ta l n e t p a y m e n ts to fo re ig n c o u n trie s to $5.3 b il­
lio n . R ec o rd e d d a ta in d ic a te t h a t a b o u t $5.4 b illio n (n e t) accrued to
fo re ig n c o u n trie s d u rin g t h a t p e rio d in th e fo rm o f n e t g o ld p u rc h a ses
a n d in creases in sh o rt- te rm d o lla r balances. T h e differen ce o f $100
m illio n re p re se n ts “e rro rs a n d om ission s,” o r th e re s id u a l item s in th e
sta te m e n t, ta b le 1.
D o m e s tic Im p a c t H a r d T o G a g e

D u rin g th e w a r v e ry s tro n g in fla tio n a ry p re ssu re s w ere e x erte d by
th e req u irem e n ts o f o u r w a r effort. I n fa c t, in 1944, w a r e x p e n d itu re s
b y th e U n ite d S ta te s G o v e rn m e n t, e x c lu d in g n e t e x p e n d itu re s on le n d lease, a m o u n te d to $70 b illio n . T o t h a t e x te n t incom e w as receiv ed b y
th e c iv ilia n p o p u la tio n w h ic h c ou ld n o t be sp e n t on g oo ds a n d services.
L e n d -le ase tr a n s f e rs — less len d -le ase in rev erse— a d d e d to th is a m o u n t
a b o u t $13 b illio n , o r ro u g h ly 18.5 p e rc e n t. T h a t does n o t m ean , h o w ­
ever, t h a t w ith o u t len d -le ase e x p e n d itu re s or, m o re c o rre c tly , w ith o u t
th e e x p o rt s u rp lu s o f $12.5 b illio n , com m odities a n d services f o r th e
c iv ilia n p o p u la tio n could h a v e been in crea se d by a n e q u iv a le n t a m o u n t,
a n d th e in fla tio n a ry p re ssu re s c o rre sp o n d in g ly red u ced .
T h e n e t in fla tio n a ry im p a c t o f len d -lease in itse lf c a n n o t b e m ea s­
u r e d a p a r t fro m th e to ta l effect o f a ll w a r e x p e n d itu re s. I t is im p o s­
sible to te ll w h a t w ould h a v e been n ecessary in th e w a y o f a d d itio n a l
m o b iliz a tio n of, a n d p r o d u c tio n fo r, o u r ow n a rm ed forces i f we h a d
n o t a ssisted th e A llie s in m a in ta in in g th e ir resp ec tiv e w a r efforts.
B u t i t is a t le a st possib le t h a t w ith o u t len d -le ase i t m ig h t h av e been
necessary to devote a la rg e r sh a re o f o u r n a tio n a l o u tp u t to w a r p u r ­
poses th a n we a c tu a lly d id .
T h e B e g in n in g o f th e T r a n s itio n , J u ly -D e c e m b e r , 1 9 4 5

T h e en d o f th e w a r in th e su m m er o f 1945 4 effected no fu n d a m e n ta l
c h an g e in th e m a jo r p ro b lem in o u r b a la n ce o f p a y m e n ts, t h a t o f
fin a n c in g a n e x p o rt s u rp lu s w h ic h, if le f t to n o rm a l m ech an ism s o f
a d ju s tm e n t, w o u ld h a v e been o f u n m an a g e a b le p ro p o rtio n s , even
th o u g h th e m a g n itu d e w as sm alle r th a n d u rin g th e w a r. T ra n s fe rs o f
g oo ds d e clin e d to $4,861 m illio n in th e la s t h a lf o f th e y e a r fro m
$7,361 m illio n in th e first h a lf, a n d th e n e t e x p o rt s u rp lu s fe ll fro m
$4,161 m illio n to $2,232 m illio n . T o a la rg e e x te n t th e c h a ra c te r o f
fo re ig n d e m a n d f o r o u r goods s h ifte d fro m Avar m a te r ia ls to goods fo r
c iv ilia n use, a lth o u g h i t m u st be rem em b e red t h a t a b o u t 40 p e rc e n t o f
th e g o o ds w e f u rn is h e d u n d e r len d -lease d u rin g th e e n tire w a r p e rio d
w ere n o t f o r d ire c t m ilita ry use. B u t th e c h an g e t h a t d id occur,
a d u m b ra tin g th e p a tte r n w h ich w as to becom e even m o re p ro n o u n c ed
in 1946, w as in th e m e th o d o f financing .
T h e w a rtim e len d -lease m ech an ism w as succeeded b y a com b ined lo a n
a n d g i f t p ro g ra m w h ich , w h ile m u ch sm a lle r th a n len d -lease, f a r e x­
ceeded in m a g n itu d e a n y c o m p a ra b le p ro g ra m e v er u n d e r ta k e n b y a n y
n a tio n in p eacetim e. B y th e e n d o f 1945, th e U n ite d S ta te s G o v e rn ­
m e n t h a d p ro v id e d f o r a lm o st $13.2 b illio n o f p o s tw a r a id th ro u g h
4
U n le s s o th e rw is e c le a rly in d ic a te d , fig u re s c ite d in t h i s s e c tio n r e f e r to t h e l a s t 6 m o n th s
of 1945.
S ee ta b le 1 f o r q u a r te r ly e s tim a te s o f th e b a la n c e o f p a y m e n ts in t h a t y e a r.

lo an s a n d I’e lie f tr a n s fe rs , in c lu d in g o u r su b sc rip tio n to th e I n t e r ­
n a tio n a l B a n k a n d M o n e ta ry F u n d , a n d w as in th e process o f e x te n d in g
a n a d d itio n a l $4.4 b illio n th ro u g h th e B ritis h lo a n a n d th e P h ilip p in e
R e h a b ilita tio n A ct.
U N R R A P a r tia lly R e p la c e s L e n d -L e a se

E a r l y in th e w a r i t w as e v id e n t t h a t th e en d o f th e conflict w o u ld
fin d m a n y c o u n trie s in n eed o f v a s t im p o rts o f fo o d a n d o th e r a rtic le s
f o r w h ich th e y w ould n o t be able to p a y fro m th e ir ow n fin an cial
resources. T o m eet th e p ro sp ec tiv e re lie f need , th e U n ite d N a tio n s
R e lie f a n d R e h a b ilita tio n A d m in is tr a tio n w a s o rg a n iz e d on N ovem ber
9 ,1 9 4 3 , a n d a n o rig in a l assessm ent o f 1 p e rc e n t o f its n a tio n a l incom e
f o r th e y e a r e n d in g J u n e 30,1943, w as le vied o n each u n in v a d e d m em ­
b e r. T h is assessm ent w a s dou b led b e fo re th e en d o f 1945, p a r tly b e ­
cause o f b a d h a rv e sts in E u ro p e a n d p a r tly because th e m a g n itu d e o f
th e o rig in a l ta s k h a d been u n d ere stim a te d .
T h e p ro g ra m g o t u n d e r w a y r a th e r slow ly, how ever, a n d tra n s fe rs
fro m th e o r ig in a l U n ite d S ta te s su b sc rip tio n o f $1,350 m illio n w ere
n e g lig ib le in 1944. T r a n s f e r s o f goods a n d services u n d e r th e p r o g ra m
rose fro m $55 m illio n in th e first h a lf o f 1945 to $413 m illio n in th e
fo llo w in g 6 m o n th s b u t d id n o t c om p ensate, b y a w id e m a rg in , f o r
th e v ir tu a l c essatio n o f “s t r a ig h t” len d -lease a f t e r Y J - d a y . N e t u n i­
la te ra l tr a n s f e rs d ro p p e d $2.4 b illio n fro m th e firs t h a lf o f th e y e a r to
th e second, a d eclin e w h ich w a s a lm o st e qu a l to th e d ro p in tr a n s f e rs
o f m e rch a n d ise to fo re ig n c o u n tries.
H o w e v e r, som e c o u n trie s, chiefly th e A llie d N a tio n s o f w e stern
E u ro p e , d id n o t p a r tic ip a te in th e Ü N R R A p ro g ra m as re c ip ie n ts, a n d
a sy stem o f lo a n s a n d c re d its w as evolved to m ee t th e ir u rg e n t needs
f o r fo re ig n c a p ita l to finance re c o n stru c tio n deficits o f g r e a t m a g n i­
tu d es.
L o a n P r o g r a m D e v e lo p s

L e nd -lease e x p o rts o f m ilita ry goods b e ga n d e c lin in g in th e th ir d
q u a rte r o f 1944 a n d a t th e tim e o f V E -d a y w ere ru n n in g a t less th a n
o n e -h a lf o f th e p e ak ra te re a c h e d a b o u t a y e a r e a rlie r. C iv ilia n -ty p e
len d -lease goods, how ever, w h ich w ere n e ed ed to m a in ta in th e d om estic
econom ies o f o u r A llies, c o n tin u ed th ro u g h th e first h a lf o f 1945 a t a
r a te n o t f a r below th e p e a k re ac h ed in th e m id d le o f 1944 (see c h a r t 2 ).
T h e c o u n trie s rec eiv in g su ch a id h a d been able, as a re s u lt o f th ese
im p o rts , to d iv e rt th e ir ow n p ro d u c tiv e c a p a c ity to th e p ro d u c tio n of
m a te ria ls a n d services n eed ed in th e w a r effort. I t w a s n o t to be ex ­
p e cted t h a t th e y w o u ld be able to rec o n v e rt o r re b u ild th e ir in d u strie s
su d d e n ly in o r d e r to c o m p en sate f o r th e c essation o f th e n o n m ilita ry
lend-lease aid.
V a rio u s a g ree m e n ts w ere th e re fo re concluded, in acc orda nce w ith
th e L e n d -L e ase A c t, p e r m ittin g d e liv e ry o f th o se g o o ds fo r w h ich
c o n tra c ts h a d been p laced b e fo re V J - d a y a n d w h ich th e rec e iv in g c o u n ­
tr ie s w a n te d d e liv e re d , a n d p r o v id in g f o r p a y m e n t o v er a p e rio d o f
y e ars. T h e se c re d its to finance th e d e liv ery o f th e so-called lend-lease
p ip e lin e ,5 to g e th e r w ith th e c re d it to finance th e B ritis h lend-lease
in v e n to ry , p ro v id e d th e b u lk o f lo n g -te rm c a p ita l e x p o rts d u r in g th e
5
T h e t e r m “ p ip e l i n e ’’ c a m e t o
d e li v e r e d a s o f S e p te m b e r 2, 1 9 4 5 .
7 6 9 1 5 5 — 48-

-2

be u se d to

c o v e r le n d - l e a s e g o o d s o n

o rd e r b u t n o t

9

second h a lf o f 1945. M o re th a n h a lf o f th e to ta l tr a n s f e rs o f goods
a n d services u n d e r lend-lease c re d its, a m o u n tin g a t th e e n d o f 1945
to $763 m illio n , w e n t to th e U n ite d K in g d o m , a b o u t $82 m illio n to
th e U . S. S. R ., a n d $151 m illio n to F ra n c e .
C h a rt

2

CASH AND LEND-LEASE EXPORTS
Military, Nonm ilitary, and U N R R A
( Ann ua l Rat es)
B IL L IO N S

18

OF

D O LLA R S

i

i

r

TO TAL

U. S .

n

1940

1 941

1942

B IL L IO N S

r

OF

D O LLA R S

18

L E N D -L E A S E

EXPORTS

1939

i

S H IP M E N T S

1943

1944

1945

19 41

1942

1943

1944

1945

; Of OflTft-. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS____________________

A second, a n d m u ch la rg e r, elem ent in th e u n fo ld in g p a tte r n o f
fo re ig n le n d in g w a s th e e n ac tm e n t, on J u ly 31, 1945, o f th e E x p o rtI m p o r t B a n k A c t o f 1945. I n a d d itio n to re o rg a n iz in g th e B a n k a n d
p ro v id in g i t w ith a n in d e p en d en t, b ip a rtis a n b o a rd o f d ire cto rs, th e
a ct in crea se d th e B a n k ’s le n d n ig p o w e r fro m $700 m illio n to $3.5
b illio n . T h is e x p a nsion w as ju stifie d p rim a rily on th e basis o f th e
needs o f w a r- d e v a sta te d c o u n trie s fo r fo re ig n c a p ita l to speed rec o n ­
stru c tio n , p e n d in g th e in a u g u ra tio n o f th e In te r n a tio n a l B a n k f o r
R ec o n stru c tio n a n d D evelopm ent.
L e n d -le ase fu n d s could n o t be u sed to finance th e fo re ig n p u rch a se s
o f goods n o t a lre a d y in len d -lease p ro c u re m e n t c h an n e ls b y S ep tem b e r
2, 1945. S pe cial lo an s w ere th e r e f o re a rra n g e d th ro u g h th e E x p o rtI m p o r t B a n k f o r goods re q u isitio n s f o r w h ic h h a d been a p p ro v e d fo r
lend-lease d e liv e ry b u t w h ich h a d n o t been o rd e re d as o f t h a t d a te .
T h e se lo an s a g g re g a te d $655 m illio n , o f w h ich $550 m illio n w e n t to
F ra n c e a n d th e re s t to B elg iu m a n d th e N e th e rla n d s. O n ly $30
m illio n o f th ese c re d its h a d a c tu a lly been d isb u rse d b y th e e n d o f
D ecem ber 1945.
A u th o r ity to g iv e sp ec ia l c re d its f o r th e a c q u isitio n o f su rp lu s p r o p ­
e rty lo c ate d a b ro a d w as g ra n te d in th e S u rp lu s P r o p e r ty A c t o f 1944.
S u c h c re d its could b e a rra n g e d f o r in d iv id u a l sales o r f o r sales in
b u lk c o ve rin g a ll su rp lu s sto ck in a g iven a re a as o f a c e r ta in d ate.
T h e la tt e r ty p e o f c o n tr a c t w as u su a lly c on clu d ed in co n n ectio n w ith
a g e n e ra l fin a n cia l se ttle m e n t o f len d -lease a n d o th e r w a r claim s. U p
to th e e n d o f 1945 th e o n ly se ttle m e n t o f t h a t k in d w as th e one w ith
10

th e U n ite d K in g d o m , c o ve rin g th e tr a n s f e r o f s u rp lu s p ro p e rty lo cated
in t h a t c o u n try a n d in th e colonies th ro u g h a c re d it o f $60 m illio n . I n ­
d iv id u a l sales a g a in st c re d it u p to th e e n d o f 1945 w ere re la tiv e ly
sm all.
T h e A n g lo -A m e ric a n fin a n c ia l a g ree m e n t, sig n e d D ecem b er 6,1945,
c o n stitu te d a n o th e r m a jo r p a r t o f o u r p o s tw a r fo re ig n lo a n a n d a id
p ro g ra m . I n a d d itio n to th e $3,750-m illion lo a n a p p ro v e d by C o n g ress
on J u ly 15,1946, th e a g ree m e n t p ro v id e d f o r c re d its o f a p p ro x im a te ly
$650 m illio n , c o v e rin g p o s t- V J -d a y len d -lease d eliveries, th e len d -lease
in v e n to ry , su rp lu s p ro p e rty , a n d o th e r w a r cla im s ( n e t ) .
F in a lly , th e y e a r w itne sse d th e ra tific a tio n o f th e B re tto n W o o d s
a g ree m e n ts b y 35 n a tio n s, a n d th e I n te r n a tio n a l M o n e ta ry F u n d a n d
th e In te r n a tio n a l B a n k f o r R e c o n stru c tio n a n d D ev elo p m en t fo r m a lly
cam e in to being . T o ta l su b scrip tio n s to th e B an k , w h ich also eq u aled
its to ta l le n d in g p o w er, w ere $7.6 b illio n , a la rg e p a r t o f w h ich m ig h t
be expected u ltim a te ly to be o b tain e d fro m p r iv a te in v esto rs in th e
U n ite d S ta te s. O u r su b sc rip tio n to th e B a n k w as $3,175 m illio n a n d
to th e F u n d a m o u n te d $2,750 m illion.
T h u s, d u r in g th e second h a lf o f 1945 th e g ro u n d w oi’k w a s la id f o r
a to ta l c a p ita l outflow o f $13 b illio n b y th e U n ite d S ta te s G o v e rn m en t
a n d p o ssib ly $5 b illio n b y p r iv a te in v esto rs th ro u g h th e In te r n a tio n a l
B an k .
B a la n c e o f P a y m e n ts T u r n s P o s itiv e

D u rin g th e la s t h a lf o f 1945, d e sp ite a $2.7-billion d ro p in e x p o rts o f
g oo ds a n d services fro m th e first h a lf o f th e y e a r, th e n e t “cash o r
c re d it” b a la n ce becam e p o sitiv e f o r th e first tim e since 1942. T h e
d eclin e in to ta l e x p o rts w as m o re th a n offset b y th e d ro p in u n ila te ra l
tr a n s f e rs occasioned by th e c essatio n o f s tr a ig h t lend-lease. P r iv a te
com m ercial e x p o rts rose fro m $1.5 b illio n to $1.9 b illio n a n d G o v e rn ­
m e n t e x p o rts w ere financed la rg e ly on c re d it te rm s r a th e r th a n on a
u n ila te ra l basis.
R e c o n v e r s io n S lo w s E x p o r t s

I n g e n e ra l, o u r in te rn a tio n a l tr a n s a c tio n s in th e e a rly rec on v ersio n
p e rio d p a ra lle le d dom estic dev elo p m en ts. A t ho m e a n d a b ro a d th e re
w as a n enorm o us p o te n tia l d e m a n d f o r th e o u tp u t o f A m e ric a n fa rm s
a n d fa c to rie s. T h e d e m a n d w as su p p o rte d in b o th cases b y w a r-a c ­
c u m u late d reserves w ith w h ich to b u y th e goods, a u g m en ted in th e
e x p o rt sp h e re by th e p o stw a r re lie f a n d r e h a b ilita tio n po licies o f th e
U n ite d S ta te s G o v e rn m en t. B ecau se o f th e difficulty o f re c o n v e rtin g
to th e p ro d u c tio n o f p e ac etim e goods, b o th fo re ig n a n d d o m estic r e ­
q u ire m e n ts w ere to a la rg e d e g ree u n satisfie d a t th e e n d o f th e y e ar.
A t hom e, liq u id ba la nc es o f businesses a n d in d iv id u a ls c o n tin u ed to
in crease, b u t a t a m u ch slow er ra te , w h ile f o re ig n c o u n tries, as a g ro u p ,
w ere able to c o n tin u e to in c rea se th e ir g o ld a n d d o lla r h o ld in g s. T h a t
th is c ou ld h a p p e n , in sp ite o f o u r o v e r-a ll p o sitiv e b a la n ce o f p a y m en ts,
w as d u e to th e f a c t t h a t we w ere fin a n c ing o u r e x p o rt su rp lu se s, especi­
a lly to E u ro p e , on lo n g -te rm c re d it w h ile s till p a y in g cash f o r o u r
im p o rt su rp lu ses fro m o th e r a re as, n o ta b ly L a tin A m erica.
R ec on v ersio n difficulties in e x p o rt tr a d e a re illu s tr a te d b y c h a r t 2,
w h ich show s th e tre m e n d o u s s h if t fro m m ilita ry ty p e to c iv ilia n -ty p e
e x p o rts in th e la tte r p a r t o f 1945. A s c le a rly d e m o n stra te d by su b ­
seq u en t even ts, th e re la tiv e ly low level o f e x p o rts a t th e close o f 1945
II

w as n o t due to a n y la c k o f fo re ig n a b ility o r w illin g n e ss to p u rc h a se
A m e ric a n goods, b u t alm o st e n tire ly to o u r in a b ility to p ro d u c e a n d
e x p o r t th e m fo rth w ith .
Im p a c t o n th e D o m e s tic E c o n o m y

B y a n y o f th e m easu res c u sto m a rily used, fo re ig n tra n s a c tio n s
fo rm e d a g re a tly d im in ish e d p a r t o f o u r t o ta l econom ic a c tiv ity in th e
la s t h a lf o f 1945 as c o m p ared w ith th e w a r p erio d . T h e r a tio o f m e r­
c h a n d ise e x p o rts to e x p o rta b le goods p ro d u c e d d eclin e d fro m 12.3
p e rc e n t in 1944 to 9.3 p e rc e n t in 1945. A lth o u g h th ese d a ta a re n o t
a v a ila b le b y q u a rte rs, i t seem s c le ar t h a t m o st o f th e d eclin e o c cu rred
in th e la tte r p a r t o f th e y e ar.
T h e excess o f e x p o rts o f goods a n d services d eclin e d fro m $3.8 b il­
lio n in th e first h a lf o f th e y e a r to $2.9 b illio n in th e second. T h is
b a la n c e re p re se n ts th e n e t v a lu e o f goods a n d services p ro d u c e d in
th is c o u n try a n d consu m ed a b ro a d o v er th e v a lu e o f fo re ig n p ro d u c ­
tio n consum ed in th e U n ite d S ta te s a n d m ay be c o m p a re d w ith th e
v a lu e o f d o m e stic p r o d u c tio n n o t u sed f o r c u r re n t c o nsu m p tio n .6
F ro m th e a cc o m p a n y in g c h a rt, i t w ill be seen th a t, o f dom estic o u t­
p u t n o t u sed f o r c u r re n t c o n su m p tio n ,7 th e sh a re tr a n s f e r r e d to f o r ­
e ign c o u n trie s co m p rise d a g re a tly d im in ish in g p a r t d u rin g th e second
h a lf o f 1945 as c o m p a re d w ith th e w a r p e rio d . D o m estic gross c a p ita l
fo rm a tio n , in c lu d in g in v e n to ry a cc u m u latio n , w as ta k in g a ra p id ly
in c re a s in g sh a re o f th e n o n co n su m ed p o rtio n o f o u r to ta l o u tp u t. T h is
w o u ld in d ic a te th a t, d e sp ite th e c o n sid e ra b le a id e x te n d e d to fo re ig n
c o u n trie s d u r in g th e la tte r h a lf o f 1945, th e re la tiv e c o n trib u tio n o f
fo re ig n tr a d e to th e in fla tio n a ry p re ssu re s in th is c o u n try w as sm a lle r
th a n d u rin g th e w a r p e rio d .
C h a rt

3

“ T h e n e t fo re ig n b a la n c e o r d in a r ily s h o w n a s p a r t o f p r iv a te g ro s s c a p ita l f o r m a tio n
d o e s n o t i n c l u d e e x p o r t s t r a n s f e r r e d u n i l a t e r a l l y , s u c h a s le n d - l e a s e a n d U N R R A .
I n th e
p a r a g r a p h ab o v e , h o w e v e r, n e t e x p o r ts in th e r e a l s e n se a r e c o m p a re d w ith g ro s s c a p ita l
fo rm a tio n , a d ju s te d to in c lu d e s u c h n e t e x p o rts .
7 D e f in e d a s c a p i t a l f o r m a t i o n p l u s w a r e x p e n d i t u r e s .

12

C h a p ter II

C u r r e n t A c c o u n t T r a n s a c tio n s
M e r c h a n d is e T r a d e 1

T h e w a rtim e in te rn a tio n a l m e rc h an d ise tr a n s a c tio n s o f th e U n ite d
S ta te s reflected p r im a r ily th e su b o rd in a tio n o f co m m ercial tr a d e to
A llie d w a r p r o d u c tio n a n d c o m b at req u ire m e n ts. B y v irtu e o f lo ca­
tio n o u tsid e th e c om b at a re a a n d re la tiv e s tre n g th in m a te ria ls, m a n ­
p o w e r, a n d te ch n ic a l p ro d u c tiv e fa c ilitie s , th e U n ite d S ta te s th ro u g h ­
o u t th e w a r p e rio d w as c alled u p o n to m eet a la rg e seg m en t o f th e
m o u n tin g m ilita ry a n d c iv ilia n re q u ire m e n ts o f o th e r c o u n trie s e n ­
g a g e d in th e com m on s tru g g le a g a in st th e A x is. I n a d d itio n , th is
c o u n try w as fac e d w ith th e job o f e q u ip p in g its ow n v a st fig h tin g forces
a n d m a in ta in in g th e m in d is ta n t a n d w id ely sc a tte re d c o m b at th e a te rs.
A t th e sam e tim e , th e A x is in v asio n s in E u ro p e a n d , p a rtic u la rly ,
in th e F a r E a s t closed le a d in g sources f o r n u m ero u s su p p lie s a n d
m a te r ia ls n ecessary fo r w a r p r o d u c tio n a n d c iv ilia n co n su m p tio n .
E v e n w ith in th e te r r ito r y re m a in in g o pen to A llie d tra d e , th e la c k
o f im p o rte d m a te ria ls a n d th e d iv ersio n o f m a n p o w e r to m eet m o re
u rg e n t w a rtim e req u irem e n ts caused red u ctio n s in th e volum e o f som e
e sse n tial goods a v ailab le f o r e x p o rt to th e U n ite d S ta te s.
C h a rt
B IL L IO N S

OF

4

D O LLA R S

T o m eet o u r ow n g re a tly sw ollen needs a n d th o se o f o u r A llie s in
th e m o st efficient m a n n e r, th e G o v e rn m e n t fo u n d i t n ecessary to a s­
sum e v irtu a lly com p lete c o n tro l over a ll U n ite d S ta te s fo re ig n tra d e .
M oreov er, th e b u lk o f o u r e x p o rt tr a d e a n d a la rg e seg m en t o f o u r
im p o rt tr a d e w ere a c tu a lly c o n d u cted b y th e G o v e rn m en t. S u c h m ea ­
su re s w ere n o t confined to th is c o u n try ; g o v e rn m e n ts ev ery w h ere
1 T h is s e c tio n w a s p r e p a r e d b y M a rie T . B ra d s h a w .

13

in s titu te d s tric t c o n tro l over in te rn a tio n a l tr a d e , h a n d lin g a m a jo r
p a r t d ire c tly th ro u g h th e ir respec tive g o v e rn m e n ta l p u rc h a sin g
agencies.
I n tim a te ly asso c ia te d w ith th e a ctiv e p a r tic ip a tio n o f th e A llie d
G o v e rn m en ts in w a rtim e tr a d e w as th e in tr o d u c tio n o f a re a listic a n d
u n p re c e d e n te d a p p ro a c h to' th e p ro b lem o f fin a n c in g th e h u g e in te r A llie d flow o f m a te r ia ls f o r w a r a n d c iv ilia n use. I n re c o g n itio n o f
th e fa c t t h a t th e A llie s w ere u n ite d in a com m on stru g g le a g a in st th e
A x is, th e g oo ds w h ich each w as in a p o s itio n to su p p ly th e o th e r w ere
in la rg e m e asu re view ed as c o n trib u tio n s necessary to th e final w in n in g
o f th e w a r a n d h ence in v o lv ed o n ly n e g lig ib le in te rn a tio n a l p a ym en ts.
T h e c u sto m a ry finan cial c o n sid eratio n s g o v e rn in g in te rn a tio n a l tr a d e
wTere th u s re p la c e d to a m a jo r e x te n t by th e u rg e n c y fo r su p p ly in g , r e ­
g a rd le ss o f th e n eed fo r co m p en satio n , m ax im u m a m o u n ts o f goods
w h e re v e r a n d w h en ev er th e y could be u sed in th e com m on w a r effort.
W ith in th is fra m e w o rk th e fo llo w in g m a jo r dev elo p m en ts o c cu rred
in U n ite d S ta te s in te rn a tio n a l t r a d e :
1.
T h e flow o f goods fro m th e U n ite d S ta te s to o th e r c o u n trie s
re ac h ed u n p re c ed e n te d levels. T h e $63 b illio n o f m erch a n d ise w h ich
th is c o u n try s u p p lie d d u r in g th e 6 -year p e rio d fro m 1940 th ro u g h 1945
exceeded o u r c u m u lativ e e x p o rts f o r th e e n tire 17-year p e rio d im ­
m e d ia te ly p re ce d in g 1940. P e a k tr a n s f e rs o f $17 b illio n in 1944 com ­
p a re w ith a p re w a r h ig h o f $8.5 b illio n in 1920.

Tabl e 3.— T o ta l

a n d ca sh b a la n ce on U n ited S ta te s in te r n a tio n a l m e rch a n d ise
tr a n s a c tio n s , 1940-45
[In m illio n s of dollars]
1945

I te m

1940

1941

1942

1943

1944
T o ta l

R e c e ip ts (e x p o rts)_______
4,123.8 5, 342. 5 9,186. 9
P a y m e n ts ( im p o r ts ) __ _
2. 713.1 3, 486.1 3, 9C4. 9
E x c e ss of re c e ip ts ( + ) ____ + 1 ,4 1 0 .7 + 1 ,8 5 6 .4 + 5 , 222.0
D e d u c t: N e t u n ila te r a l offs e ts on m e r c h a n d is e ac810.4 4,844. 7
E x c e ss of re c e ip ts (-]-) or
p a y m e n ts ( —) o n ca sh
a n d c r e d it tr a n s a c tio n s . . . + 1 ,4 1 0 .7 + 1 ,0 4 6 .0
+ 3 77 .3

F ir s t
h a lf

S ec ond
h a lf

15,115.3
16, 969.5 12, 221.7 7,361.6 4,860.1
5, 426. 6
5, 589.1
5,829. 5 3, 200.0 2,629. 5
+ 9 ,68 8 . 7 + 1 1 ,3 80 .4 + 6 ,39 2 . 2 + 4 ,1 6 1 .6 + 2 ,23 0 . 6
11, 039. 9
- 1 ,3 5 1 .2

-7 7 0. 7

5, 535.3

4,197.1

1,338.2

+ 856. 9

-3 5 .5

+ 892. 4

2. _T h e re w as a ste a d y in crease in th e a m o u n t o f goods received fro m
fo reig n ers. T h e rec o rd level o f $5.8 b illio n re a c h e d in 1945 su rp a sse d
th e p re v io u s 1920 rec o rd by $400 m illio n . N e verth eless, th e in crease
in th e a m o u n t o f goods received w as re la tiv e ly m u ch sm a lle r th a n th e
c o rre sp o n d in g g ro w th in e x p o rts a n d in dom estic in d u s tria l dem ands.
3. F o r th e 1940-45 p e rio d as a w hole th e v a lu e o f g oods su p p lie d by
th e U n ite d S ta te s ($63 b illio n ) exceeded th e v a lu e o f goods fu r n is h e d
to th e U n ite d S ta te s b y $36 b illio n . B ecause $34.4 b illio n o f th e excess
consisted o f n e t U n ite d S ta te s c o n trib u tio n s, how ever, a c tu a l n e t
re c e ip ts fro m fo re ig n e rs on m e rc h an d ise accoun t a m o u n te d to o n ly $1.6
b illio n (see ta b le 3 ). D u rin g 1943 a n d 1944 U n ite d S ta te s c o n trib u ­
tio n s, o r u n ila te ra l tr a n s fe rs , w e re so la rg e t h a t o u r m erch an d ise
a cc o u n t on goods re q u ir in g p a y m e n t a c tu a lly sh ow ed a n e g a tiv e
balance.
4. A p p ro x im a te ly tw o -th ir d s o f a ll goods m ad e a v a ila b le to fo re ig n ­
ers a n d a b o u t tw o -fifth s o f a ll m e rc h an d ise received fro m fo reig n e rs
14

w ere h a n d le d d ire c t b y G o v e rn m en t agencies. T h e G o v e rn m e n t’s w a r­
tim e fo r e ig n a c tiv itie s in tro d u c e d in to th e m e rc h an d ise accoun t, n o r ­
m ally c o n sistin g o f re co rd e d com m ercial e x p o rts a n d im p o rts a d ju s te d
f o r b a la n c e-o f-p a y m e n ts p u rp o se s, c e rta in o th e r tra n s a c tio n s, su ch as
la rg e-sca le len d -lease sh ip m en ts, goods fu rn is h e d by o th e r c o u n trie s
f o r c o n su m p tio n by o u r a rm e d forces a b ro ad , a n d sales a n d c o n trib u ­
tio n s to fo re ig n e rs fro m A rm y a n d o th e r G o v e rn m e n t stocks lo ca te d
overseas (see ta b le 4 ). D u rin g 1943 a n d 1944 G o v e rn m en t m e rc h a n ­
dise tr a n s a c tio n s acco u n ted fo r 84 p e rc e n t o f a ll goods su p p lie d a n d 56
p e rc e n t o f a ll g oo ds received.

Tabl e 4.—In te r n a tio n a l

m er ch a n d ise tr a n sa c tio n s o f th e U n ited S ta te s , 1940-4-5
[I n m illio n s of dollars]
1945

I te m

1910

1941

1942

1943

1944
T o ta l

F ir s t
h a lf

S ec ond
h a lf

R e c e ip ts (e x p o rts)
T o ta l r e c e ip ts ...... ............. ......
P r iv a te e x p o rts, a d ju s te d - ............... .
R e c o rd e d e x p o r ts ______ ______
A d d itio n s , to ta l ____________
S ilv e r_ _ _ _ _ _ __ _ _ _ _ _ _ ____
G old (n e t d o m e s tic p ro d u c tio n ) 1 ______

4,123.8 5,342. 5 9 ,1 8 6 .9 |1 5 ,115.3 16, 969.5 12, 221. 7 7,361.6 4,860.1
4,101.8 4, 558. 9 3,363.3 2,401.3 2, 776.4 3,411. 7 1,452.1

1, 959. 6

4,021.1 5,147. 2 8, 079. 0 12, 964. 9 14, 258. 7 9, 805. 9 5,830. 6 3,975.3
232.2
295. 8
122.3
152.0
39.3
118.6
76.6
42.0
3 .7
5. 5
2.0
29.3
122.3
88.8
63.5
25.3
148.3

146. 5
80. 2

92.1
201.7

10.0

29.8

13.1

16.7

D e d u c tio n s, to ta l ____________
E x p o r ts to P a n a m a C a n a l
Z o n e . ____ ___________
N o n c o m m e rc ia l e x p o r ts _ __ _
G o v e rn m e n t e x p o r ts ......... .

71.3

820.5 5,0 11 .5 10, 602.9 11,604. 6 6, 512.8 4,455.1

2,057. 7

44.1
5.2
22.0

72.4
13.4
37.4
3.9
3.1
14.9
1.5
36.0
88.8
93.8
144. 9
87.0
7.1
57.9
741.0 4, 938.1 10,510. 2 11, 507. 7 6,353. 0 4,395. 7 1,957.3

G o v e rn m e n t bx-ports1, t o t a l ___

22.0

783.6 5,823.6 12, 714. 0 14,193.1
779.8

M il ita r y c iv ilia n s u p p ly sh ip N o n m il ita r y s a l e s . ......... ............

22.0

3.8

8,810.0 5, 909. 5 2, 900. 5

5,812. 5 12,440. 3 13, 589. 5 6,881. 3 5, 000. 0 1,881.3
45.0
348.0
' 393.0
.6
5.4
5.7

124.1
149.6

185.0
120.0
298. 0

522.0
212.3
130.2

344.0
123.7
91.4
98.0
14.1

5,829.5 3,200.0

2,629. 5

866.0
336.0
221. 6
98.0
14.1

P a y m e n ts (im p o rts)
T o ta l p a y m e n ts ........... .............
P r iv a te im p o rts , a d ju s te d .................
R e c o rd e d im p o r ts ............ ...........
A d d itio n s , t o t a l _ _ _ ______ ____
S i l v e r . . . ................................
G old (n e t d o m e stic con-

2,713.1

2,706. 7 3,118.1

1,492.1

1,626.0

2,625.4 3,345.0 2,744. 9 3, 381.3 3,919.3 4,135. 9 2,121. 8 2,014.1
67.2
83.4
104. 9
155.0
87.8
72.8
103. 9
77.0
14.9
27.6
25.5
10.6
58.2
46.9
39.9
22.7
84.8
44.7

54.2
23.0

30.6
21.7

44.8

423.9 1,084. 4 1,358.6 1,317.5 1,172.8

717.5

455.3

.7
4.1
40.0

.4
10.3
413.2

1.2
.9
1.8
1.6
8 .3
15.5
127.5
44.9
955.3 1,312.5 1,301.1 1,162.7

.9
4.1
712.5

.9
4 .2
450. 2

55.5

492.2 2,200.5 3,320.5

U nd e rv a lu a tio n a d ju s tm e n ts 2.

18.8

D e d u c ti o n s, t o t a l .........................
I m p o r ts fro m P a n a m a C a n a l
Z o n e.
________
N o n c o m m e rc ia l im p o r ts ___
G o v e rn m e n t im p o r ts ______
G o v e rn m e n t im p o rts , t o t a l ................
N o n m il ita r y p u r c h a s e s ............ .
M ilita r y p u r c h a s e s ___________

3, 486.1 3,964. 9 5,426. 6 5,589.1

2,657.6 2,993. 9 1,764. 4 2,106.1

40.0
15.5

25.9

422.4
69.8

64.0

22.8
33.0

44.7
37.5

2,882.4 2,711.4 1, 707. 9 1,003.5

540.0 1,147.0 1,230.0 1,354.7 1,069.0
443. 5
979.4 1,335.6 1,106.0
874.0
195.4
466.1
827.9
546.4
482.7
215. C
10.0

285.7
430. 5
287.3

1 F o r d isc u ssio n , see p . 171 of a p p e n d ix A a n d p . 191 of a p p e n d ix B .
2 D a t a in c o m p le te .

15

5.
T h e p re w a r g e o g ra p h ic a n d c om m o d ity s tru c tu re o f U n ite d
S ta te s fo re ig n tr a d e w as g re a tly a lte re d w ith th e c lo sin g o f enem y a n d
enem y-occu pied a re a s a n d th e p rio ritie s g iv en th e flow o f e sse n tia l
m a te r ia ls b etw een th e A llie d c o u n tries. O u r sw ollen e x p o rts, d ire c te d
chiefly to th e U n ite d K in g d o m , th e U . S . S. It., a n d th e o th e r A llie s,
c o m p rised m a in ly m ilita ry e q u ip m e n t a n d o th e r e ssen tial finished
p ro d u c ts. A t th e sam e tim e , th e b u lk o f th e goods a c q u ired fro m
a b ro a d c on sisted o f s tra te g ic a n d c ritic a l m a te r ia ls a n d e sse n tia l fo o d ­
stuffs fu rn is h e d b y c o u n trie s in th e W e s te rn H e m isp h e re a n d su p p lie s
f o r o u r a rm e d fo rce s overseas p ro v id e d b y B r itis h E m p ir e c ou n tries.
G o v e r n m e n ts C o n tr o l T r a d e
O v e r -A ll P ic t u r e

I n a d d itio n to c o n d u c tin g a m a jo r p o rtio n o f o u r w a rtim e in te r ­
n a tio n a l tr a d e , th e U n ite d S ta te s G o v e rn m en t exercised s tr ic t c o n tro l
o v er th o se m e rc h a n d ise tra n sa c tio n s w h ic h c o n tin u e d d u r in g th e w a r
to be h a n d le d th ro u g h p r iv a te ch an n els. I t is im p o rta n t t h a t G o v e rn ­
m e n t tr a d e ( f o r w h ich U . S. G o v e rn m en t agencies h a d com p lete a n d
fin a l fin a n c ial re sp o n s ib ility a t th e tim e t itle to th e goods p a sse d to o r
w as received fro m fo re ig n e rs) be d is tin g u is h e d fro m G o v e rn m en tre g u la te d co m m ercial tr a d e . I n th e la tt e r case, th e goods m oved in
m ost in sta n c es u n d e r G o v e rn m e n t lice n sin g a n d p ric e co n tro ls, b u t th e
p r iv a te fo re ig n tr a d e r m a in ta in e d final fin a n c ia l re sp o n sib ility .
W h e n th is c o u n try e n te re d th e w a r a t th e e n d o f 1941, m o st o f th e
m ac h in e ry f o r th e c o n d u ct o f G o v e rn m e n t tr a d e a n d th e c o n tro l o f
p r iv a te tr a d e w as w ell e sta b lish e d . E x p o r t c o n tro l covered p ra c tic a lly
a ll le a d in g e x p o rt com m odities a n d le n d -le ase goods w e re flo w ing to
o u r A llie s a t a r a p id ly in c re a sin g ra te . O n th e im p o rt side, G o v e rn ­
m e n t c o rp o ra tio n s h a d been o rg a n iz e d to p ro c u re , im p o rt, a n d sto c k ­
p ile s tra te g ic a n d c ritic a l m a te ria ls. B y th e m id d le o f 1942, c o n tro ls
h a d been e x te n d e d to cover p ra c tic a lly a ll im p o rts. I n a d d itio n , b o th
e x p o rts a n d im p o rts becam e su b je ct to G o v e rn m en t p ric e c o n tro ls in
o r d e r t h a t th e effect o f o u tsid e in fla tio n a ry influences m ig h t be m in i­
m ized.
O th e r c o u n trie s also fo u n d i t necessary, n o t o n ly to exercise s tric t
c o n tro l over th e ir w a rtim e fo re ig n tr a d e , b u t also to h a n d le th e m a jo r
p a r t d ire c t th ro u g h th e ir resp ec tiv e g o v ernm en ts. M o st o f th e U n ite d
K in g d o m ’s p u rc h a se s h e re, f o r ex am p le, w ere m ad e d ire c t by th e B r i t ­
ish P u rc h a s in g M ission. W ith th e o u tb re a k o f w a r n u m e ro u s o th e r
c o u n trie s h a n d le d th e ir im p o rts fro m th e U n ite d S ta te s th ro u g h p u r ­
c h asin g m issions w h ich c o n tin u e d o p e ra tin g even a f te r th e close o f th e
w a r. S uc h b u y in g m eth o d s n a tu r a lly in crea se d th e d eg ree to w h ic h
p r iv a te tr a d e c h an n els in th is c o u n try h a d a lre a d y b een d is to rte d b y
o u r ow n dom estic c on trols.
T o c o o rd in a te th e re g u la to ry m echanism s e sta b lish e d b y th e in d i­
v id u a l A llie d G o v e rn m en ts a n d to in su re m a x im u m w a r p r o d u c tio n
w ith in th e lim its o f a v a ila b le w o rld su p p lies, c o n tro l on a n in te r n a ­
tio n a l level w as also e sta b lish e d . T h e C om b in ed R aw M a te ria ls B o a rd ,
c o n sistin g o f re p re s e n ta tiv e s fro m th e U n ite d S ta te s, th e U n ite d K in g ­
dom , a n d C a n a d a , w as e sta b lish e d o n J a n u a r y 26, 1942, to rev iew th e
re q u ire m e n ts o f th e in d iv id u a l A llie s fo r scarce ra w m a te r ia ls a n d to
a llo ca te su p p lie s fro m a ll p ro d u c in g a re a s n o t u n d e r A x is d o m in a tio n .
A lso c re a te d in J a n u a r y o f 1942 w as th e M u n itio n s A ssig n m en ts
16

„

B o a r d ; a n d on J u n e 9 ,1 9 4 2 , th e C om b ined F o o d B o a rd a n d th e C om ­
b in e d P ro d u c tio n a n d R esources B o a r d w ere o rg a n ize d .
I n a d d itio n to a llo c a tin g su p p lies, b o th th e C om b in ed R aw M a te ria ls
B o a rd a n d th e C om b ined F o o d B o a rd u nified p u rc h a se a n d d e velo p ­
m e n t o p eratio n s. F o r in sta n c e, a ll m e a t in A rg e n tin a w a s b o u g h t by
th e B ritis h , w h ile a ll f a ts a n d oils fro m A rg e n tin a w ere b o u g h t by th e
U n ite d S ta te s. A rg e n tin e m e a t su p p lie s a llo c a te d to th e U n ite d S ta te s
w ere tu rn e d over to us by th e B ritis h , w h ile w e tr a n s f e r r e d to th e B r i t ­
ish th e f a ts a n d oils th e y w ere e n title d to receive fro m A rg e n tin a . T h e
a llo ca tio n s a n d u n ified d e ve lo p m e nt a n d p u rc h a se p olicies n o t o n ly
red u ce d costs o f p ro c u re m e n t b u t also p re v e n te d c o m p etitiv e b id d in g
a n d th e r e f o re h in d e re d in fla tio n a ry p ric e rises. T h e a v a ila b ility o f
tr a n s p o r t fa c ilitie s d e te rm in e d fro m w h ic h o f th e a v a ila b le sources
th e re q u ire m e n ts o f each c o u n try sh o u ld be m et.
T h e C om b ined P ro d u c tio n a n d R esources B o a rd d e te rm in e d w h ere
c e rta in sem ifinished c o m m o d ities n eed ed in th e w a r e ffo rt sh o u ld be
d e veloped fro m th e s ta n d p o in t o f sa fe ty fro m enem y a ir ra id s a n d
a v a ila b ility o f ra w m a te r ia ls a n d la b o r, w h ile th e M u n itio n s A ssig n ­
m en ts B o a rd a llo c ate d th e fin ish ed m u n itio n s in acco rdan ce w ith
s tra te g ic n e ed s as d e te rm in e d by th e com b ined C h ie fs o f S taff.
T r a d e C o n tr o ls in t h e U n ite d S ta te s

-

r

T h e first a ctiv e step in e sta b lish in g dom estic c o n tro ls o v er U n ite d
S ta te s w a rtim e tr a d e w as th e s ig n in g o f th e N e u tr a lity A c t on N ovem ­
ber 4 ,1 9 3 9 . U n d e r th e p ro v isio n s o f th is le g isla tio n , A m e ric a n sh ip s
w ere fo rb id d e n to e n te r b e llig e re n t p o r ts in th e c om b at a n d re s tric te d
a rea s, in c lu d in g m a in ly E u ro p e a n p o rts on th e M e d ite rra n e a n , B la ck
Sea, a n d N o rth A tla n tic . H ence, tr a d e w ith th ese a re a s w as lim ite d
to goods w h ich c ou ld be c a r rie d on o th e r n e u tra l a n d b e llig e re n t sh ips.
T h e N e u tr a lity A c t, m o reo v er, p ro h ib ite d th e e x ten sio n o f c re d it to
b e llig e re n t g o v ern m en ts fo r th e p u rc h a se o f a ll ty p e s o f goods. T h e
c re d it re s tric tio n s th u s im p o sed e x p la in in p a r t th e necessity f o r th e
la rg e p re-le n d -le ase cash ad v an ces m ad e by th e U n ite d K in g d o m a n d
F ra n c e a g a in st p u rc h a se s in th e U n ite d S ta te s o f w a r m a te r ia ls a n d
o th e r e sse n tia l goods.
A s th e w a r in E u ro p e p ro g re sse d a n d th e n eed f o r s tre n g th e n in g o u r
ow n n a tio n a l d efen se becam e in c re a sin g ly a p p a re n t, a sy stem o f con­
tr o l w a s e sta b lish e d on J u ly 2, 1940, c o ve rin g e x p o rts o f m ilita ry
e q uip m e n t, m u n itio n s, a n d re la te d m a te r ia ls a n d to ols. T h e Office of
E x p o r t C o n tro l w as d e sig n a te d by th e P r e s id e n t to d ire c t th e issu in g
o f licenses by th e S ta te D e p a rtm e n t o f a n in itia l lis t c o v e rin g som e 40
com m odities. O n S ep te m b e r 15 o f th e fo llo w in g y e a r, th e Office o f
E x p o r t C o n tro l w as tr a n s f e rr e d to th e n e w ly c re a te d E c on o m ic Defen se B o a rd . A d m in is tr a tio n o f th e e x p o rt-c o n tro l p ro g ra m c o n tin ­
u e d th ro u g h o u t th e w a r to be u n d e r th e ju ris d ic tio n o f th e E conom ic
D e fe n se B o a rd a n d its successor agencies—th e B o a rd o f E co n o m ic
W a r f a r e , th e Office o f E conom ic W a r f a r e , a n d th e F o re ig n E co n o m ic
A d m in is tra tio n .
W ith th e a ctiv e p a r tic ip a tio n o f th e U n ite d S ta te s in th e w a r, ex­
p o r t c o n tro l w a s e x te n d e d to cover “a n y a rtic les, te c h n ic a l d a ta , m a te ­
ria ls , o r su p p lie s.” N o t o n ly d id th e c iv ilia n econom y n e ed p ro te c tio n
a g a in st excessive d r a in s o f goods in c u rta ile d p ro d u c tio n fo llo w in g
P e a r l H a rb o r , b u t a v ailab le su p p lie s a n d s h ip p in g fa c ilitie s h a d to be
c a r e fu lly conserved to m eet th e m o st u rg e n t m ilita ry a n d c iv ilia n needs
17

o f o u r A llies. M oreo v er, m a te r ia ls a n d e q u ip m en t w ere re q u ire d by
th e L a tin A m e ric a n c o u n trie s a n d o th e rs in connection w ith th e devel­
o p m e n t a n d p ro d u c tio n o f c ritic a l m a te ria ls f o r o u r w a r p ro d u c tio n .
S tr ic t c o n tro l w as also necessary to p r e v e n t a n y o f o u r e x p o rts fro m
e v en tu a lly re a c h in g th e A x is th ro u g h firm s o r p e rso n s lo ca te d in
n e u tra l a n d frie n d ly c ou n tries.
B y th e end o f 1941, th e com m odities su b je ct to e x p o rt c o n tro l h a d
been e x te n d e d fro m th e o rig in a l 40 to p r a c tic a lly a ll a rtic le s a n d m a ­
te ria ls ex ce pt o u r e x p o rts to C a n ad a . B ecau se U n ite d S ta te s-C a n a d ia n w a r p ro d u c tio n w as co n sidered a u nified w hole, U n ite d S ta te s
e x p o rts to t h a t c o u n try w ere e xem p t fro m th ese c ontrols.
U n ite d S ta te s c o n tro l o f e x p o rts to a ll fo re ig n d e stin a tio n s except
C a n a d a c o n tin u e d in effect th ro u g h o u t th e w a r p e rio d . A c tu a l co n ­
tr o l Avas a d m in iste re d la rg e ly th ro u g h th e issu in g o f in d iv id u a l
licenses, g e n e ra l licenses c o ve rin g specific com m o d ities a n d d e stin a ­
tio n s f o r Avhich in d iv id u a l a u th o riz a tio n s w ere n o t req u ire d , b la n k e t
licenses u sed in p lac e o f m u ltip le in d iv id u a l licenses, a n d p ro je c t
licenses co v e rin g e x p o rts fo r de.A’e l o p in e n t a n d sim ila r e n te rp ris e s in
A llie d a n d f rie n d ly c ou n tries.
A ll licenses Avere issued o n ly a f te r th e fo re ig n re q u ire m e n ts h a d r e ­
ceived th e p re lim in a ry a p p r o v a l o f th e F o re ig n E co n o m ic A d m in is tr a ­
tio n a n d th e final approA^al o f th e req u irem e n ts com m ittees o f th e W a r
P ro d u c tio n B o a rd o r th e W a r F o o d A d m in istra tio n . I n th e case o f
m ilita ry a n d n a v a l eq u ip m e n t, th e M u n itio n s A ssig n m e n ts B o a rd Avas
respo n sib le f o r e x p o rt allo ca tio n s. A lso g o v e rn in g th e issue o f e x p o rt
a u th o riz a tio n s w ere th e in te rn a tio n a l a llo ca tio n s o f th e com b ined
b o ard s a n d th e U n ite d S ta te s a n d B ritis h “b la c k lists,” th e P ro c la im e d
L is ts o f C e r ta in B loc ke d N a tio n a ls, Avhich c o n ta in e d th e n am es o f
p e rso n s a n d firm s o p e ra tin g in n e u tr a l a n d A llie d c o u n trie s b u t k n o w n
to be on th e side o f th e A x is. O bviously, a ll a p p lic a tio n s f o r e x p o rt
licenses co v e rin g th ese la tt e r sh ip m e n ts w ere rejec te d .
G o v e r n m e n t c o n tr o l o f t r a d e w a s e x te n d e d to i m p o r ts a s Avell a s
e x p o rts . S u p p lie s o f so m e o f o u r m o s t e s s e n tia l i m p o r ts Avere c o m ­
p le te ly c u t off o r s e rio u s ly r e d u c e d b y e n e m y a c tio n . NeAV o r groA ving
w a r d e m a n d s m a d e in a d e q u a te t h e s u p p lie s o f o th e r c o m m o d itie s. T h e
p ro b le m w a s o n e o f in c r e a s in g th e flow o f e s s e n tia l m a te r ia ls a t a ll
p o ss ib le c o s ts f r o m th o s e a r e a s w h ic h re m a in e d o p e n to t r a d e . B e c a u se
o f s h ip p in g s c a rc itie s , a ll i m p o r ts n o t s t r i c t l y n e c e s s a ry f o r w a r o r
ciA dlian u se h a d to b e p r o h i b i t e d o r s h a r p ly r e d u c e d to m a k e ro o m f o r
e s s e n tia l g o o d s.

E ffe d d v e J u ly 2, 1942, th e W a r P ro d u c tio n B o a rd assum ed c o n tro l
o v er v irtu a lly a ll im p o rts a n d c o n tin u e d to exercise th is fu n c tio n
th ro u g h o u t th e w a r. A c tu a l c o n tro l Avas m a in ta in e d th ro u g h a system
o f lice n sin g sim ila r to t h a t in effect f o r e x p o rts. I n a d d itio n , ocean­
s h ip p in g p rio ritie s a n d q u o ta s Avere a ssig n e d b y th e E m erg e n c y S h ip ­
p in g P r io r itie s C o m m ittee, c o n sistin g o f re p re s e n ta tiv e s fro m th e
v a rio u s U n ite d S ta te s G o v e rn m e n t agencies resp o n sib le f o r o b ta in in g
a n d a llo c a tin g su p p lie s o f scarce m a te ria ls. F o r a la rg e n u m b e r o f
e ssen tial com m odities, a ll o r m o st licenses to p r iv a te im p o rte rs Avere
p ro h ib ite d in o rd e r to alloAV G o v e rn m en t c o rp o ra tio n s to ta k e over
th e jo b o f p u rc h a s in g a n d im p o rtin g . T h e se a c tiv itie s a re discu ssed
in th e folloAving section , G o v e rn m e n t T ra d e .
I m p o r t lice n sin g w as also u sed as a m ean s o f im p le m e n tin g th e
a llo ca tio n s o f th e C om b in ed R aw M a te ria ls B o a rd a n d th e C om b ined
18

F o o d B o a rd . I n cases w h e re fo re ig n su p p lie s w ere a ssig n e d to o th e r
c o u n trie s, no licenses w ere g r a n te d to U n ite d S ta te s im p o rte rs w ho
w ish e d to m ak e p u rc h a se s fro m such sources.
T h e dom estic d is tr ib u tio n o f m o st im p o rte d m a te r ia ls w as also
su b je c t to s tr ic t G o v ern m en t re g u la tio n . T h is a p p lie d to b o th p r iv a te
a n d G o v e rn m en t im p o rts. E ith e r th e W a r P ro d u c tio n B o a rd o r th e
W a r F o o d A d m in is tr a tio n w as u s u a lly respo n sib le f o r d e te rm in in g th e
m o st efficient m a n n e r in w h ich su p p lie s w ere to be u sed a f t e r re a c h in g
th e U n ite d S tate s.
I n a d d itio n to p la c in g d ire c t re s tric tio n s on th e m o vem ent o f goods
to a n d fro m th e c o u n try , th e G o v e rn m e n t also im p o sed p ric e c o n tro ls
on b o th im p o rts a n d ex p o rts. I n th e case o f e x p o rts, th e objective
w as to set a p ric e n e u tr a l in its effect u p o n th e d is tr ib u tio n o f sales
betw een dom estic a n d fo re ig n m ark e ts. T h e M ax im u m E x p o r t P ric e
R e g u la tio n , effective A p r il 30, 1942, p la c e d th e e x p o rt p ric e o f an y
c om m odity a t th e cost o f a cq u isitio n b y th e e x p o rte r, p lu s th e a v era g e
p re w a r p re m iu m c h a rg e d in th e e x p o rt tr a d e a n d o th e r expenses, such
as in su ra n c e a n d sh ip p in g ch arges. P ric e s p a id in fo re ig n c o u n trie s
fo r im p o rts w ere d e te rm in e d by dom estic p ric e c eiling s. A c om b in a ­
tio n o f h ig h fo re ig n p rices, d u ties, a n d s h ip p in g c h a rg e s f o r som e com ­
m o d itie s m ad e im possib le th e ir p r iv a te im p o rta tio n a n d re sale a t
dom estic ceiling s. I n m an y such cases i t w as n ecessary fo r th e G o v e rn ­
m en t to im p o rt th e co m m o d ities a n d resell a t a loss a t th e e sta b lish e d
m ax im u m p rices.
S h o rtly a f te r th e close o f th e w a r, q u a n tita tiv e re g u la tio n s co v e rin g
b o th e x p o rts a n d im p o rts w ere g re a tly rela xe d . N ev erth eless, o n ly a
v ery g r a d u a l rem o v a l o f c o n tro ls w a s possible f o r som e com m odities
w hich c o n tin u ed to be scarce a s w a rtim e re q u ire m e n ts w ere re p lac e d by
th e d e m a n d s a cc o m p a n y in g U n ite d S ta te s rec o n v ersio n a n d fo re ig n
re lie f a n d re h a b ilita tio n . M oreov er, a n e x trem e ly la rg e d e m a n d fo r
U n ite d S ta te s e x p o rts h a d a cc u m u la te d in c e r ta in fo r e ig n c o u n tries,
p a r tic u la r ly th e A m e ric a n R ep u b lics, w hose d o lla r a n d g o ld resources
w ere in crea se d g re a tly d u rin g th e w a r. W ith re fe ren c e to im p o rts ,
m o st re m a in in g c o n tro ls w e re m ad e n ecessary b y sc arc ities, som e o f
w h ich becam e even m ore a cu te as lib e ra te d a re a s b e g a n to com pete
f o r a v a ila b le w o rld su p p lies. I n m o st o f th ese cases a n d in o th e rs
w here c. i. f. p ric es w ere in excess o f d o m estic c eiling s, G o v e rn m en t
fo re ig n -p u rc h a se p ro g ra m s re m a in e d in effect.
G o v e rn m e n t T ra d e

F a r-re a c h in g in th e ir effects u p o n th e volum e, c om p osition , a n d d i­
re c tio n o f U n ite d S ta te s w a rtim e in te rn a tio n a l tr a d e w ere th e la rg e scale m e rc h an d ise tra n sa c tio n s c o nd u cted d ire c t by th e G ov ernm en t.
F o r th e 1940-45 p e rio d a s a w hole, a b o u t tw o -th ir d s o f th e $ 63 -billion
to ta l o f g oods m a d e a v aila b le to o th e r c o u n trie s w a s tr a n s f e r r e d d ire c t
by G o v e rn m en t agencies. A t th e sam e tim e , a p p ro x im a te ly tw o -fifth s
o f th e $27 -billion w o rth o f m erch a n d ise m a d e a v a ila b le to u s by
fo re ig n e rs w as fu rn is h e d d ire c t to G o v e rn m en t agencies.
T h e $39.5 b illio n o f m e rch a n d ise tr a n s f e r r e d by U n ite d S ta te s a g e n ­
cies u n d e r th e len d -le ase p ro g ra m th ro u g h th e end o f 1945 d o m in a ted
th e e n tire fo re ig n -tr a d e p ic tu re , as w ell as a ll o th e r G o v ern m en t in te r ­
n a tio n a l s u p p ly tra n sa c tio n s . P e a k len d -le ase tr a n s f e rs o f $12.4 b il­
lio n in 1943 a n d $13.6 b illio n in 1944 m ay be c o m p ared w ith to ta l
19

m e rc h an d ise tr a n s f e r s to fo re ig n e rs d u r in g th o se y e ars, b o th G o v e rn ­
m en t a n d p riv a te , o f $15.1 a n d $17 b illio n , respectively .
G oods f u rn is h e d a b ro a d b y G o v e rn m en t agencies d u rin g th e p e rio d
1940-45 ($42.3 b illio n ) in clu d e d , in a d d itio n to le n d -le ase tr a n s fe rs ,
n e a rly $1,450 m illio n o f re lie f su p p lie s fu rn is h e d b y th e a rm e d forces
a n d a s th e U n ite d S ta te s c o n trib u tio n to th e U n ite d N a tio n s R e lie f a n d
R e h a b ilita tio n A d m in is tr a tio n , a p p ro x im a te ly $600 m illio n o f fo o d ­
stuffs a n d o th e r com m odities so ld by G o v e rn m en t c o rp o ra tio n s, $675
m illio n o f m ilita ry su p p lie s a n d e q u ip m en t so ld a b ro a d b y th e a rm ed
forces, a n d n e a rly $100 m illio n o f o versea su rp lu s so ld b y th e Office o f
th e F o re ig n L iq u id a tio n C om m issioner.
T h e $11.7 b illio n o f m e rc h an d ise su p p lie d to th e G o v e rn m e n t b y
o th e r c o u n trie s c on sisted m a in ly o f $4,750 m illio n o f su p p lie s and.
m a te ria ls p u rc h a se d by G o v e rn m en t c o rp o ra tio n s , m o st o f w h ich w as
im p o rte d in to th e U n ite d S ta te s a n d re so ld to p r iv a te in d u s try f o r use
in th e w a r-p ro d u c tio n p r o g r a m ; $2,400 m illio n p u rc h a se d b y th e a rm ed
forces, chiefly f o r th e ir ow n use a b ro a d ; a n d $4,270 m illio n o f rev erse
len d -lease, th e b u lk o f w h ic h w as also consum ed abi’o a d b y o u r a rm ed
forces.
G o o d s S u p p lie d b y U . S . G o v e r n m e n t

L en d-lease .— F ro m M a rc h 11, 1941, w h e n th e L e n d -L ea se A c t w as
pa sse d, th ro u g h D ecem b er 31, 1945, th e U n ite d S ta te s tr a n s f e r r e d
$39.5 b illio n o f goods a n d $8.5 b illio n o f services th ro u g h lend-lease
ch an n els. S u c h tra n s fe rs , a cc o u n tin g a t th e ir p e a k in 1944 f o r o ver 80
p e rc e n t o f a ll m e rc h a n d ise a n d o v er 60 p e rc e n t o f a ll services fu rn is h e d
to fo re ig n c o u n tries, e n ta ile d in g e n e ra l no fin a n c ia l se ttle m e n t betw een
th e U n ite d S ta te s a n d th e fo re ig n rec ip ie n ts. A ll s tra ig h t, o r n o n re ­
im b u rsa b le , lend-lease tr a n s f e rs so in c lu d e d in th e G o v e rn m e n t acco u n t
(lik e re lie f sh ip m e n ts a n d o th e r o u tr ig h t c o n trib u tio n s ) h a v e been
offset b y c o rre sp o n d in g u n ila te ra l e n trie s in th e b a la n c e-o f-p ay m e n ts
statem en ts.
I t w ill be re c a lle d t h a t p r io r to th e p a ssag e o f th e L e n d -L ea se A ct,
th e U n ite d K in g d o m h a d d ra w n h e a v ily on its d o lla r resources, n o t
o n ly f o r c u r re n t p u rch a se s, b u t also to m ak e la rg e a d v a n c es a n d to
p ro v id e c a p ita l assistan ce to A m e ric a n m a n u fa c tu re rs. I t th u s becam e
a p p a re n t t h a t som e o th e r m ean s o f fin a n c in g o u r e x p o rts to th e U n ite d
K in g d o m a n d o th e r frie n d ly b e llig e re n ts m u st be fo un d . R e p e a l of
th e N e u tr a lity A c t in o r d e r to p e rm it c re d it sh ip m e n ts w as a possible
te m p o ra ry m easure. T h e u n fo rtu n a te W o rld W a r I d e b t experience,
how ever, a n d th e lik e lih o o d t h a t such a id w ou ld be n eed ed over a lo n g
p e rio d o f tim e , in d ic a te d th e n ecessity f o r a n a lte rn a tiv e so lution.
T h e a lte rn a tiv e so lu tio n w a s th e p assage, on M a rc h 11,1941, o f “A n
A c t to p ro m o te th e d efen se o f th e U n ite d S ta te s,” m o re com m only
k n o w n as th e L e n d -L e ase A c t. U n d e r th e p ro v isio n s o f th is le g isla ­
tio n , th e P r e s id e n t, “ w hen h e deem s i t in th e in te re sts o f n a tio n a l
d e fen se,” w as a u th o riz e d to p e rm it th e h e a d o f a n y G o v e rn m en t
d e p a rtm e n t o r a gen cy to m a n u fa c tu re a n y defense a rtic le a n d “to sell,
tr a n s f e r title to , exch an ge, lease, le n d o r o th e rw ise dispose of, to a n y
su ch g o v ern m e n t, a n y d efen se a rtic le .” T h e te rm s a n d c o nd itio n s
u n d e r w h ich a id w as to be f u rn is h e d w ere a lso le f t to th e d isc re tio n o f
th e P re sid e n t.
I n o rd e r to in te r p r e t th e b a sic p ro v isio n s o f th e act, i. e., to define th e
specific ty p e s o f a id a n d th e c o n d itio n s u n d e r w h ich i t w as to be fu r20

n ish e d , th e U n ite d S ta te s e n te re d in to so-called m a ste r a g ree m e n ts
w ith th e U n ite d K in g d o m , C h in a , th e U . S. S. It., a n d a n u m b e r o f
o th e r c ou n tries. I n c o rp o ra te d in each o f th e a g ree m e n ts w as th e p r o ­
v isio n t h a t se ttle m e n t f o r len d -lease sh o u ld be d e fe rre d “u n til th e
e x te n t o f such d e fen se a id is k n o w n a n d u n til th e p ro g re ss o f ev en ts
m ak es c le a re r th e final te rm s a n d c o n d itio n s a n d benefits w h ich w ill
be in th e m u tu a l in te re sts o f th e U n ite d S ta te s a n d (th e o th e r c o u n try )
a n d w ill p ro m o te th e e sta b lish m e n t a n d m a in te n a n c e o f w o rld p eace.’’
T h a t in te rn a tio n a l p a y m e n ts o r d e bts in p r o p o rtio n to th e v a lu e o f a id
re n d e re d w o u ld n o t be c alled f o r in th e fin a l se ttle m e n ts w a s in d ic a te d
b y th is a n d a f u r th e r sta te m e n t t h a t such se ttlem e n ts sh o u ld n o t b u rd e n
f u tu r e com m ercial re la tio n s h ip s b etw een th e U n ite d S ta te s a n d th e
re c ip ie n t fo re ig n co u n tries.
T h e m a jo r e xce ptio n s to th e g e n e ra l p ro c ed u re o f f u rn is h in g a id
w ith o u t p re e sta b lish e d p ro v isio n s f o r re p a y m e n t ( in o th e r w o rds, th e
“ s tr a ig h t” tr a n s f e rs offset in th e b a la n c e o f p a y m e n ts b y u n ila te ra l
p a y m e n ts) in v o lv ed tr a n s f e r s th ro u g h len d -lease c h an n e ls to C a n a d a ,
th e A m e ric a n R ep u b lics, a n d th e F re n c h C o m m ittee o f N a tio n a l L ib ­
e ra tio n , a n d lend-lease silv e r lo a n s f o r w h ic h th e U n ite d S ta te s w as
to be r e p a id on a n o u n ce-fo r-oun ce basis.
A sp ec ia l a g ree m e n t betw een th e U n ite d S ta te s a n d C a n a d a p r o ­
v id ed t h a t each w o u ld p a y cash f o r su p p lie s a n d m u n itio n s p u rc h a se d
fro m th e o th e r, even th o u g h som e C a n a d ia n o rd e rs f o r U n ite d S ta te s
goods w ere to be filled th ro u g h len d -le ase p ro c u re m e n t c h an n e ls, a n d
t h a t U n ite d S ta te s G o v e rn m en t o rd e rs f o r C a n a d ia n p r o d u c ts w ere
in g e n e ra l to be p la c ed w ith W a r S u p p lie s L td ., a c o rp o ra tio n o f th e
C a n a d ia n G o v e rn m en t. S u p p le m e n tin g th e a g ree m e n t w a s th e H y d e
P a r k D e c la ra tio n b y th e P re s id e n t o f th e U n ite d S ta te s a n d th e C a n a ­
d ia n P rim e M in iste r, w h e reb y th e U n ite d S ta te s a g re e d to p u rc h a se
e no u g h C a n a d ia n p ro d u c ts so th a t C a n a d a m ig h t h a v e th e e x ch an g e
necessary to cover its e ssen tia l p u rc h a se s in th e U n ite d S ta te s.
I n th e case o f 18 o f th e A m eric an R ep u b lics, sp ecial a g re e m e n ts r e ­
q u ire d cash p a y m e n ts a c c o rd in g to e sta b lish e d schedules f o r specific
p e rc e n ta g e s o f th e v a lu e o f th e a id received. W ith re fe re n c e to th e
F re n c h C om m ittee o f N a tio n a l L ib e ra tio n , a n in te rim a rra n g e m e n t
(S e p te m b e r 1943) specified t h a t a ll m ilita ry lend-lease su p p lie d to
F re n c h N o rth a n d W e s t A f ric a w o u ld be on a s tr a ig h t basis, b u t th a t
a ll c iv ilia n len d -le ase w o u ld re q u ire cash p a y m e n ts b y th e C om m ittee.
T o p ro v id e a m ec ha nism f o r h a n d lin g lend-lease, th e D iv isio n o f
D efen se A id R e p o rts w as e sta b lish e d on M ay 2, 1941, in th e Office o f
E m erg e n c y M an a g e m e n t. T h is su b se q u e n tly becam e th e Office o f
L e n d -L ea se A d m in is tr a tio n (O cto b er 2 8 ,1 9 4 1 ) a n d la te r a p a r t o f th e
F o re ig n E co n o m ic A d m in is tr a tio n (S e p te m b e r 25, 1943). F o r p u r ­
poses o f sim p lificatio n , th e te rm L e n d -L ea se A d m in is tr a tio n is u sed
h e re to d e no te th e e ssen tia lly sim ila r fu n c tio n s o f a ll th re e agencies.
O rig in a lly , a ll req u ests f o r len d -lease a id w e re filed b y th e fo re ig n
g o v e rn m e n ts w ith th e L e n d -L ea se A d m in istra tio n . I f a p p ro v e d , th e y
w ere tr a n s f e r r e d to e ith e r th e W a r, N a v y , T re a s u ry , o r A g ric u ltu re
D e p a rtm e n ts , th e U n ite d S ta te s M a ritim e C om m ission, o r o th e r G ov­
e rn m e n t agencies resp o n sib le f o r p ro c u rin g th e su p p lie s, m a in ly fro m
U n ite d S ta te s p r iv a te in d u stry , a n d tr a n s f e r r in g th e m to th e fo re ig n
g o v ernm en ts.
A f te r th e U n ite d S ta te s becam e a n a ctiv e p a r tn e r in th e w a r, h o w ­
ever, a m ore flexible m ean s w as a d o p te d to allo ca te A m e ric a n m u n i21

tio n s p ro d u c tio n betw een o u r ow n fo rce s a n d th o se o f o u r A llies. T h e
W a r a n d N a v y D e p a rtm e n ts w ere a u th o riz e d to tr a n s f e r as lend-lease,
w ith in s ta te d lim its, m ilita ry a rtic le s a n d services p r o c u re d fro m th e ir
ow n a p p ro p ria tio n s. D ecision s a s to th e k in d s a n d a m o u n ts o f a rtic le s
to be tr a n f e r r e d w ere m ade b y th e M u n itio n s A ssig n m en ts B o a rd in
acc orda nce w ith ra p id ly c h a n g in g stra te g ic needs. F o r o th e r com ­
m o d itie s a n d services, th e o rig in a l p ro c ed u re re m a in e d v irtu a lly u n ­
c h a n g e d , e x ce p t t h a t a ll su ch tr a n s f e rs becam e su b ject to a n y decisions
m ad e by th e a p p ro p ria te com b ined b o a rd s.
T h e official accoun ts o f th e L en d -L ea se A d m in istra tio n w ere com ­
p ile d on th e b a sis o f re p o rts by th o se agencies resp o n sib le f o r a c tu a l
p ro c u re m e n t a n d tr a n s f e r to th e fo re ig n g o v ern m en ts. F ig u re s in c o r­
p o ra te d in th e b a la n c e o f p a y m e n ts c o v e rin g b o th goods a n d services
tr a n s f e r r e d u n d e r len d -le ase a re th e sam e as th o se reflected in th ese
official accounts.
A ll except $700 m illio n o f th e to ta l $39.5 b illio n o f len d -le ase goodssu p p lie d th ro u g h th e en d o f 1945 re p re se n te d p re -V J -d a y tr a n s fe rs ,
m o re th a n 90 p e rc e n t o f w h ich w e n t to th e B ritis h E m p ir e ($25.3
b illio n ) a n d R u ssia ($9.7 b illio n ). T h e re m a in in g $3.8 b illio n w e n t
chiefly to F ra n c e , C h in a , th e N e th e rla n d s , B elg iu m , a n d th e A m e ri­
c an R ep u b lics (see ta b le 5 ). W h ile a ir c r a ft, ta n k s a n d vehicles, o r d ­
nan ce, a n d o th e r d ire c t m ilita ry e q u ip m en t a cco u n ted f o r th e b u lk of
goods tr a n s f e r r e d th ro u g h len d -lease ch an n e ls, a g r ic u ltu ra l a n d in ­
d u s tr ia l com m o d ities n ecessary f o r w a r p r o d u c tio n a n d f o r m a in te ­
n a n c e o f c iv ilia n s w ere also su p p lie d in h e av y volum es (see ta b le 5 ).
T h e $8.5 b illio n o f services p ro v id e d u n d e r len d -lease a re discussed
elsew here in th is c h a p te r.

Tabl e 5.— L en d -lea se

goods fu rn is h e d , b y m a jo r c o u n trie s a n d ty p e s o f goods,
M ar. 1 1 , 19 4 I , th ro u g h S e p t. 1, 19J/5
[In m illio n s of d ollars]

C o u n tr y

T o ta l

O rd n a n c e A ir c ra ft
and
and
a e ro ­
o rd n a n c e n a u tic a l
sto res
m a t e r ia l

T anks
and
o th e r
veh icles

M isc e lla ­
neo us
m ilita r y
e q u ip ­
m ent

A g ric u l­
tu r a l
in d u s tr ia l
a n d o th e r
c o m m o d i­
tie s

O th e r
goods

T o ta l ...........................

38,803

4,320

8,549

6,178

3,809

14,516

1,431

B r itis h E m p i r e .......................
U . S. S. R ...... ........................
F r e n c h E m p ir e ................. .
C h in a ___________ ____
N e th e r la n d s .......................... .
B e lg iu m __ ............ . ..............
A m e ric a n R e p u b li c s ----------O th e r _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

25,345
9, 729
2.460
476
172
85
345
191

3,066
790
230
147
11
1
51
24

6,334
1,571
282
130
83
1
141
7

3,795
1,768
412
99
8
13
69
14

2,144
778
755
44.
8
17
50
13

9,312
4,193
743
46
58
53
18
93

694
629
38
10
4
«

16
40

1 L e ss th a n $500,000.
S ourc e: D e p a r tm e n t of th e T r e a s u r y , L e n d -L e a se F is c a l O p e r a tio n s, B u r e a u of A c c o u n ts, R e p o r t on
L e n d -L e a se F is c a l O p e r a tio n s, C u m u la tiv e th r o u g h S e p t. 30,1946.
(F ig u re s a d ju s te d in th is ta b le to ex clud e e s ti m a te d se rv ic e s a n d ite m s n o t tr a n sf e re d to fo re ig n g o v e rn ­
m e n ts ).

N in e ty -th re e p e rc e n t o f th e $38.8 b illio n o f goods m ad e a v ailab le
p r io r to V J - d a y w as tr a n s f e r r e d u n d e r a g ree m e n ts w h e reb y final
se ttle m e n t w a s d e fe r re d u n til a f te r th e w a r. S ince, in th e fin a l lendlease se ttle m e n ts concluded since t h a t tim e (see p . 2 4 ), a ll lend-lease
goods consum ed d u r in g th e w a r w ere w r itte n off as p a r t o f th e U n ite d
22

S ta te s cost o f d e fe a tin g th e A x is, th e y h a v e been tr e a te d in th e b a la n c e
o f p a y m e n ts as u n ila te ra l tra n sa c tio n s.
W ith o u t th e use o f len d -lease o r a sim ila r m ech an ism d u rin g th e
w a r, o u r A llie s could n o t p o ssib ly h a v e o b ta in e d th e v a st a m o u n t of
U n ite d S ta te s goods w h ic h th e y so u r g e n tly needed. M o st o f th e
d o lla rs th e y w ere c u rre n tly able to acq u ire w ere n eed ed to cover th e ir
re la tiv e ly sm all p u rc h a se s o f e ssen tial A m e ric a n goods a n d services
w h ic h w ere n o t elig ible f o r lend-lease. H a d we lim ite d o u r a id to
c ash sales o f g o o ds a n d services, th e consequences w o u ld in a ll p r o b ­
a b ility h a v e b een as serio u s f o r u s as f o r o u r A llie s. T h e a lte r n a ­
tiv e o f tr a n s f e r r in g th e necessary goods a n d services on c re d it te rm s,
p re v io u sly discussed, w ould m erely h a v e c re a te d a n im possib le tr a n s f e r
p ro b le m a t th e tim e o f re p a y m e n t. O n th e o th e r h a n d , th e use o f th e
len d -le ase m ec ha nism e n ab le d us to f u r n is h th e m ax im u m a m o u n t of
a id w h ic h we w ere in a p o s itio n to s u p p ly w ith o u t refe re n c e to fin a n c ia l
co n sid e ra tio n s. T h e v alu e, c om p osition , a n d d e stin a tio n o f lend-lease
e x p o rts w ere d e te rm in e d so lely by s tra te g ic c o n sid eratio n s a n d o u r
a b ility to p ro d u c e th e necessary goods.
F o llo w in g th e J a p a n e s e s u rre n d e r, th e U n ite d S ta te s g av e n o tice
th a t, w ith c e r ta in ex cep tio n s to be n o te d la te r, len d -le ase a id on a
s tr a ig h t o r n o n reim b u rsa b le basis w as to be d isco n tin u e d im m e d iately .
B ecause th e w a r h a d e n d e d so oner th a n w as g e n e ra lly a n tic ip a te d ,
fo re ig n c o u n trie s w h ich h a d b een d e p e n d in g u p o n len d -lease goods
to m eet la rg e segm en ts o f th e ir c iv ilia n re q u irem e n ts w o u ld h av e ex ­
p e rie n c e d c o n sid e ra b le h a rd s h ip i f som e a rra n g e m e n t h a d n o t been
m a d e to sh ip th e a p p ro x im a te ly $1.2 b illio n o f c iv ilia n -ty p e goods on
o r d e r a s o f V J -d a y . I n th e U n ite d S ta te s, also, a su d d e n sto p p a g e
w o u ld h a v e caused serio u s difficulties to th o se e n g a g e d in p r o d u c in g
a n d s h ip p in g len d -lease goods. M oreo v er, fo r a la rg e p o rtio n o f th e
g oo ds b u ilt to sp ecification o r to m eet u n iq u e ly fo re ig n re q u ire m e n ts,
th e re w as little o r no d om estic m a rk e t.
R e c ip ie n t fo re ig n g o v e rn m e n ts w ere th e r e f o re g iv en th e o p p o r­
tu n ity to p u rc h a se f o r cash o r on c re d it te rm s a ll such c iv ilia n -ty p e
“p ip e lin e ” goods. S u c h te rm s in c lu d e d in g e n e ra l low in te re s t ra te s
(2 % p e rc e n t) a n d re p a y m e n t o v er a 30-year p e rio d , a lth o u g h p ip e ­
lin e c re d its to th e U n ite d K in g d o m a n d F ra n c e w ere m a d e a v ailab le
a t 2 p e rc e n t over a lo n g e r p e rio d u n d e r th e p ro v isio n s o f th e o v e r-a ll
w a r-a cc o u n ts se ttle m e n ts m ad e w ith th ese c ou n tries.
T h e m a jo r exceptions to th e g e n e ra l ru le o f d is c o n tin u in g s tr a ig h t
len d -le ase a f te r V J - d a y w ere f o r C h in a , B elg iu m , a n d I ta ly . I n th e
case o f C h in a , th e effects o f y e a rs o f Ja p a n e s e o c c u p a tio n a n d th e p re s­
ence o f a la rg e p a r t o f th e J a p a n e s e a rm y m a d e necessary c o n tin u e d
m ilita r y o p eratio n s. C o n tin u a n ce o f s tr a ig h t m ilita ry lend-lease,
c o n sistin g m a in ly o f services, w as th e re fo re a u th o riz e d b y th e P r e s i­
d e n t. F o r B e lg iu m , also, s tr a ig h t len d -le ase w as fu rn is h e d a f te r V J d a y in rec o g n itio n o f th e f a c t t h a t w a rtim e rev erse len d -le ase su p p lies
a n d services f u rn is h e d b y B e lg iu m exceeded b y $100 m illio n th e
a m o u n t o f U n ite d S ta te s len d -le ase a id to t h a t c o u n try . W ith r e f e r ­
ence to I ta ly , th e W a r D e p a rtm e n t’s c iv ilia n -su p p ly p ro g ra m w as su p ­
p lem e n te d by $100 m illio n o f a d d itio n a l su p p lie s fro m len d -le ase a p ­
p ro p ria tio n s . T h e o n ly o th e r excep tio n to th e p o s t- V J- d a y sto p p a g e
o f re g u la r len d -le ase in v o lv ed ocean f r e ig h t services f o r lend-lease
p ip e -lin e goods. S u c h services, i t w as a g ree d , w o u ld be f u rn is h e d on
a n o n re im b u rsa b le b a sis f o r 60 d a y s fo llo w in g th e e n d o f th e w ar.
23

I n acc orda nce w ith th e a rra n g e m e n ts su m m ariz ed above, lend-lease
tr a n s f e rs o f b o th m e rc h a n d ise a n d services f o r th e p e rio d S e p te m b e r 2,
1945, th ro u g h D ecem b er 31, 1945 (a p p ro x im a te ly $700 m illio n in
g o o d s ), h a v e been offset in th e b a la n c e o f p a y m e n ts b y a p p r o p r ia te e n ­
tr ie s in th e c a p ita l a n d u n ila te ra l accounts. A lso g o v e rn in g th e t r e a t ­
m e n t o f p o st- V J - d a y len d -le ase tr a n s a c tio n s w ere a p p lic a b le p ro v isio n s
o f th e se ttle m e n t a g ree m e n ts b etw een th e U n ite d S ta te s a n d th e re ­
c ip ie n t fo re ig n g o v ernm en ts. T h ro u g h th e e n d o f 1945, tw o such
se ttle m e n ts h a d been c oncluded— a n in te rim a g ree m e n t w ith B elg iu m
(O cto b er 20,1945) a n d a fin al w a r-acc o u n ts se ttle m e n t w ith th e U n ite d
K in g d o m (D ec em b e r 6, 194 5). T h e tr a n s f e r o f p ip e -lin e goods as
s tr a ig h t len d -le ase to B e lg iu m , as p ro v id e d f o r in th e a g ree m e n t w ith
t h a t c o u n try , h a s been discu ssed above.
A c c o rd in g to th e se ttle m e n t m a d e w ith th e U n ite d K in g d o m , th e
len d -le ase p ip e lin e w as m a d e a v ailab le on b o th o ffse ttin g a n d c re d it
a rra n g e m e n ts. M ore specifically, a g a in s t th e e s tim a te d $301 m illio n
fo r w a r d len d -le ase p ip e lin e w as offset th e e stim a ted $130 m illio n r e ­
v e rse len d -le ase p ip e lin e to be p ro v id e d th e U n ite d S ta te s a n d n e t
claim s o f $53 m illio n in f a v o r o f th e U n ite d K in g d o m . T h e d iffe r­
ence, $118 m illio n , re p re se n te d th e e stim a te d e v en tu a l p ip e -lin e c re d it
to be e x te n d e d to th e U n ite d K in g d o m . I t w as f u r th e r a g re e d t h a t
th e U n ite d K in g d o m w o u ld assum e a n o b lig a tio n o f $472 m illio n as
se ttle m e n t f o r th e in v e n to ry o f u n co n su m ed len d -le ase goods in th e
U n ite d K in g d o m as o f V J -d a y . T e rm s f o r b o th th e $118-m illion
p ip e -lin e c re d it a n d th e $ 47 2-m illion in v e n to ry se ttle m e n t c re d it w ere
id e n tic a l w ith th o se e sta b lish e d f o r th e B ritis h loan.
In fin ite ly m ore im p o rta n t th a n th e p ro v isio n s re la tin g to th e tr a n s ­
f e r o f len d -lease p ip e -lin e a n d in v e n to ry goods, how ever, w as th e
w r itin g off o f th e g r e a t b u lk o f w a rtim e len d -le ase a n d rev erse lendlease tra n s a c tio n s betw een th e U n ite d S ta te s a n d th e U n ite d K in g d o m
as m u tu a l c o n trib u tio n s to th e w in n in g o f th e w a r. A s im ila r t r e a t ­
m e n t o f len d -le ase a n d rev erse lend-lease a id betw een th e U n ite d S ta te s
a n d o th e r fo re ig n g o v ern m en ts w as a rra n g e d f o r in th e o th e r m a jo r
w a r-ac c o u n ts se ttle m e n ts c o n su m m ated since th e en d o f 1945.
C ivilia n su p p lies .— N e x t in im p o rta n c e to th e goods tr a n s f e rr e d
th ro u g h len d -le ase c h an n e ls w as th e $1,445 -m illion w o rth o f su p p lies
f u rn is h e d to c iv ilia n p o p u la tio n s in lib e ra te d a n d o ccu p ied a reas.
N e a r ly th re e -fo u rth s o f th e to ta l w a s p ro v id e d by th e a rm ed forces
to p re v e n t disease a n d u n re s t im m e d ia te ly fo llo w in g m ilita ry o p e ra ­
tio n s. T h e re m a in d e r w as m a d e a v a ila b le as th e U n ite d S ta te s con­
tr ib u tio n to th e U n ite d N a tio n s R e lie f a n d R e h a b ilita tio n A d m in is tr a ­
tio n , a n in te rn a tio n a l o rg a n iz a tio n e sta b lish e d in N ovem ber o f 1943
to ta k e o v er th e re s p o n sib ility fro m th e a rm e d forces. S in ce few o r
no p a y m e n ts a re a n tic ip a te d b y th e U n ite d S ta te s f o r su p p lie s f u r ­
n ish e d e ith e r b y th e a rm e d services o r th ro u g h U N R R A , th e e n tire
a m o u n t h a s been offset in th e u n ila te ra l p a y m e n ts a cc o u n t o f th e b ala n c e-o f-p ay m e n ts sta tem en t.
P ro v is io n o f re lie f su p p lie s b y th e a rm ed fo rce s w as c o n sid e re d an
in te g ra l p a r t o f m ilita ry o p eratio n s. S u ch su p p lies, fu rn is h e d e ith e r
d ire c tly b y th e U n ite d S ta te s forces o r jo in tly w ith th e U n ite d K in g ­
dom a n d C a n a d a th ro u g h c om bined pools u n d e r th e th e a te r co m m an d ­
ers, w ere d e sig n e d to m eet th e m in im u m e ssen tia l re q u ire m e n ts o f th e
c iv ilia n p o p u la tio n s d u r in g th e m ilita ry p h a se s o f o ccu p a tio n . A s

24

soon as m ilita ry c o n sid e ra tio n s w o u ld p e rm it, how ever, th e re s p o n sib il­
ity w as tr a n s f e r r e d to U N R R A o r som e o th e r c iv ilia n o rg a n iz a tio n .
O rig in a lly , th e m ilita ry c iv ilia n -s u p p ly p ro g ra m in lib e ra te d co u n ­
trie s (also k n o w n as P la n A ) c a lle d f o r e v en tu a l re p a y m e n t by th e re' c ip ie n t c o u n tries. T h e U n ite d S ta te s, th e U n ite d K in g d o m , a n d C a n ­
a d a w e re each to b e a llo c a te d a sh a r e o f su ch re p a y m e n ts, d e p e n d ­
in g u p o n th e ir re sp e ctiv e c o n trib u tio n s. I n m o st o f th e fin a l w a ra cco u n ts se ttle m e n ts, how ever, th e m a jo r p a r t o f su ch su p p lie s w as
tr e a te d on th e sam e b a sis as consu m ed len d -le ase g oo ds o r c on sidered as
offsets to claim s a g a in st th e U n ite d S ta te s, a n d w ere a cc o rd in g ly w r it­
te n off th e books. R e p a y m e n t f o r th ese goods, lik e th o se p ro v id e d
u n d e r lend-lease, w o u ld h a v e p la c ed a n im p o ssib le b u rd e n u p o n th e
lib e ra te d c o u n trie s, w hose fin a n cia l reso u rces w ere in ad e q u a te to m eet
even th e ir m ost e sse n tial p o s tw a r p u rc h a se s a b ro a d .
T h e in itia l c iv ilia n -s u p p ly a c tiv itie s o f th e a rm e d fo rce s coincid ed
w ith th e A llie d m ilita ry offensive in E u ro p e d u r in g 1944. B y th e e nd
o f t h a t y e a i\ su p p lie s v a lu e d a t $185 m illio n h a d been fu rn is h e d , m ain ly
to I ta ly . W ith th e r a p id m o v em en t o f th e A llie d forces b o th in
E u ro p e a n d in th e P ac ific d u r in g th e fo llo w in g y e a r, th e p ro b le m o f
a id in g c iv ilia n s w as g re a tly in ten sified . C om b ined re lie f sh ip m en ts
by th e A rm y a n d N a v y m o u n te d to $866 m illio n in 1945, a b o u t $500
m illio n o f w h ic h w e n t to th e E u ro p e a n th e a te r, $300 m illio n to M e d i­
te rra n e a n c o u n trie s, a n d $60 m illio n to S o u th w e st P ac ific a reas. A l­
m o st th re e -fo u rth s o f a ll su p p lie s sh ip p e d th ro u g h th e e n d o f 1945
c on sisted o f w h e at, flour, a n d o th e r foo d stu ffs, w h ile th e re m a in d e r
w as la rg e ly c lo th in g a n d shoes, fu e l, a n d m edical supplies.
I n a d d itio n , n e a rly $400 m illio n o f re lie f su p p lies w ere c o n trib u te d
as p a r t o f th e U n ite d S ta te s sh a r e in th e o p e ra tio n s o f U N R R A , th e
m a jo r fu n c tio n o f w h ich w as to p ro v id e , in lib e ra te d a re as, fo o d , c lo th ­
in g , sh e lte r, m e d ic al care, a n d su p p lie s a n d services re q u ire d to re s to re
a g r ic u ltu ra l a n d in d u s tria l p ro d u c tio n . A c tiv itie s o f th e o rg a n iz a ­
tio n w ere lim ite d to re lie f a n d r e h a b ilita tio n p u rp o se s, as d is ­
tin g u is h e d fro m lo n g e r-ra n g e rec o n stru c tio n . T h e o rig in a l assess­
m e n t fo r e ach o f th e u n in v a d e d m em ber c o u n trie s w as p la c ed a t 1 p e r ­
cen t o f its n a tio n a l incom e f o r th e y e a r e nded J u n e 30, 1943. O f th e
$1,862 -m illion to ta l f o r a ll c o u n trie s, th e U n ite d S ta te s sh a re a m o u n te d
to $1,350 m illio n . I n A u g u st 1945, th e U N R R A c o u n cil v o ted to
d ou ble th e assessm ent on each m e m b e r; th e U n ite d S ta te s sh are w as
c on seq u en tly bo o sted to $2,700 m illio n . B y th e en d o f 1945, th e e n tire
a m o u n t h a d been a u th o riz e d by C ongress, a n d th e p e rio d o f U n ite d
S ta te s p a rtic ip a tio n h a d been e x te n d e d a y e a r beyon d th e o rig in a l
d a te o f J u n e 30, 1946.
A t le a st 10 p e rc e n t o f th e c o n trib u tio n o f each m em b er w as to be in
th e fo rm o f c u rre n c y fre e ly c o n v e rtib le f o r p u rc h a se s in an y c o u n tr y ;
th e re m a in d e r w as to be m ad e a v a ila b le in th e fo rm o f dom estic goods
a n d services.
R e s p o n sib ility f o r p ro v id in g goods a n d services a u th o riz e d by
C ongress w as d e leg a te d to th e F o re ig n E co n o m ic A d m in is tr a tio n a n d
la te r (S e p te m b e r 27, 1945) to th e D e p a rtm e n t o f S ta te . F ro m th is
source, th e fu n d s w ere m a d e a v aila b le to th e p ro c u rin g agencies, p a r ­
tic u la rly th e A g ric u ltu re a n d T re a s u ry D e p a rtm e n ts , w h ich m ad e th e
a c tu a l p u rch a se s. I n a d d itio n to th e $351-m illion w o rth o f goods
p u rc h a se d a n d sh ip p e d fro m th e U n ite d S ta te s th ro u g h th ese ch an n e ls

7 6 9 1 5 5 — 4S-

3

25

th ro u g h th e e n d o f 1945, th e $394-m illion to ta l in c lu d e s $43 m illio n
o f A rm y s u rp lu s su p p lie s o verseas w h ic h h a d been fu rn is h e d as p a r t
o f th e U n ite d S ta te s c o n trib u tio n .
A s in th e case o f th e c iv ilia n su p p lie s fu rn is h e d b y th e a rm e d se rv ­
ices, th e b u lk o f U N R R A sh ip m e n ts c on sisted o f su bsistence item s—
foo d stu ffs ( tw o - th ir d s ) , c lo th in g a n d shoes ( n e a r ly o n e -fo u rth ), a n d
m ed ica l su p p lies. I n a d d itio n , a b o u t $40 m illio n o f c om m u n ica tion ,
tr a n s p o rta tio n , a n d a g r ic u ltu ra l e q u ip m en t h a d b een fu rn is h e d .
M a jo r d e stin a tio n s o f th e U N R R A sh ip m e n ts w ere G reece, Y u g o sla v ia ,
P o la n d , a n d C zechoslovakia— c o u n trie s la c k in g b o th reserves o f f o r ­
e ign e x ch an g e a n d th e c a p a c ity to e a rn a m o u n ts sufficient to cover p u r ­
chases fro m ab road .
T h e fo re ig n c iv ilia n -su p p ly a c tiv itie s o f th e U n ite d S ta te s G o v ­
e rn m e n t, b o th th ro u g h th e a rm e d forces a n d th ro u g h U N R R A , r e p re ­
se nted , lik e len d -lease a n d rev erse len d -lease, u n p re c e d e n te d d e p a rtu re s
fro m n o rm a l m e th o d s o f fin a n c in g in te rn a tio n a l tr a d e , n o t o n ly b e ­
cause th e y w ere c a r rie d o u t o n such a la r g e scale a n d on a n in te r n a ­
tio n a l level, b u t also because th e y in c o rp o ra te d a re c o g n itio n t h a t th e
m a te ria l cost o f w in n in g a Avar m u st n o t be allo w ed to r e s u lt in h e av y
m o rtg a g e s u p o n f u tu r e w o rld tr a d e .
C o m m o d ity sales b y n o n m ilita ry U n ite d S ta te s G overn m en t agen­
cies.— S ales o f tobacco a n d foo d stu ffs b y th e C o m m o d ity C re d it C o r­
p o ra tio n a cc ou n ted f o r th e b u lk o f th e $608 m illio n o f m iscellaneous
sales m ad e d ire c tly b y n o n m ilita ry U n ite d S ta te s G o v e rn m en t agencies.
W ell o v e r h a lf th e sales o c cu rre d d u r in g 1945; m ost o f th e re m a in d e r
w ere rec o rd e d in 1943 a n d 1944. M a jo r p u rc h a ses Avere m ad e b y th e
U n ite d K in g d o m (m a in ly tobacco a n d a su b s ta n tia l a m o u n t o f fo o d ­
stuffs) , F ra n c e a n d B elg iu m (A vheat), a n d I t a l y (m a in ly c o tto n ) . I n
m o st cases th e fo r e ig n g o v ern m en ts m a d e cash ad v an ces to th e C om ­
m o d ity C re d it C o rp o ra tio n o r o th e r a p p r o p r ia te U n ite d S ta te s agency.
B y u sin g U n ite d S ta te s G o v e rn m e n t p ro c u re m e n t fa c ilitie s , th e fo re ig n
c o u n trie s Avere a ssu re d t h a t th e g oods w ere p u rc h a se d h e re in th e m ost
o r d e rly a n d econom ical m a n n e r possible. F o re ig n p u rc h a se s h e re
th ro u g h o th e r U n ite d S ta te s G o v e rn m e n t c h an n els Avere co n sid e ra b ly
a cc ele ra ted fo llo w in g th e end o f th e w a r a n d th e d isco n tin u a n c e o f
lend-lease ex ce pt f o r p ip e -lin e goods.
M iscellaneous sales b y th e U. S . W a r a nd N a v y D e p a rtm en ts. — M ili­
ta r y sales ($679 m illio n ), lik e th e c om m o d ity sales described above,
Avere c o n c e n tra te d in th e y e a rs 1943-45. T h e y in c lu d e a v a rie ty o f
item s tr a n s f e r r e d by th e a rm e d forces in th e course o f th e ir o p e ra tio n s
a b ro a d . S u c h tr a n s f e rs a re n o t in c lu d e d in th e official U n ite d S ta te s
e x p o r t sta tistic s, since th e y Avere m a d e d ire c tly fro m oversea W a r a n d
N a v y D e p a rtm e n t stocks. T y p ic a l a m o n g th e n u m e ro u s goods sold
w ere o rd n a n c e m a te ria l, tru c k s , h orses, office f u r n itu r e , ice, gas, a n d
he liu m ,_m ap s, w a ste p a p e r, film s, refu se, a n d g a rb a g e . T h e fo re ig n
b u y ers in g e n e ra l Avere lo ca ted in a re a s w h ere la rg e n u m b e rs o f A m e r­
ic an tro o p s w ere sta tio n e d — th e U n ite d K in g d o m , F ra n c e , I ta ly , B e l­
g iu m , A u s tra lia , a n d th e P ac ific Isla n d s . Som e re la tiv e ly la rg e sales,
how ever, w ere also m a d e in I r a n , C a n ad a , a n d th e A m e ric a n R epu blics.
W h ile m o st o f th e g oo ds w ere so ld f o r cash d o lla rs , a p p ro x im a te ly
$120-m illion w o rth Avas so ld (m a in ly in F ra n c e a n d I ta ly ) a g a in st
sp e cia l m ilita ry currencies.
S u r p lu s p ro p e rty sales .— A final c a te g o ry o f G o v e rn m en t m e rc h a n ­
dise “e x p o rts ” c o m p rised th e d isp o sal o f s u rp lu s w a r p ro p e rty lo cated
26

*

.\

overseas. O f th e $98-m illion to ta l received fro m th is source, $60 m il­
lio n re p re s e n te d a c re d it sale to th e G o v e rn m en t o f th e U n ite d K in g ­
dom . T h is first la rg e b u lk sale w as p ro v id e d fo r in th e D ecem ber 6,
1945, w a r-a cc o u n ts se ttle m e n t. T e rm s f o r th e $60 m illio n c re d it w ere
th e sam e as th o se a p p lic a b le to th e B ritis h lo an , n a m e ly , p rin c ip a l p a y ­
m e n ts e x te n d in g o v er 50 y e a rs b e g in n in g in 1951 w ith in te re s t p a y a b le
a t 2 p e rc e n t, also b e g in n in g in 1951. T h e re m a in in g $38 m illio n co n ­
siste d o f m ix e d cash a n d c re d it sales, m a in ly to th e I r a n i a n a n d B e lg ia n
G o v e rn m en ts. E x c lu d e d fro m th e $ 98 -m illion to ta l a re su rp lu s goods
tr a n s f e rr e d to U N R R A a t a “ f a i r v a lu e ” o f $43 m illio n as p a r t o f th e
U n ite d S ta te s c o n trib u tio n to t h a t o rg a n iz a tio n .
T h e $98 m illio n o f su rp lu s sales co n su m m ated p r io r to th e e n d o f 1945
re p re se n te d o n ly th e b e g in n in g o f th e G o v e rn m e n t’s fo re ig n su rp lu sd isp o sal p ro g ra m c o ve rin g a n e stim a te d $11.5 b illio n o f p ro p e rty on
th e b a sis o f o rig in a l cost. S ince th e b u lk o f th e su rp lu s w as lo c a te d in
o r n e a r a re a s w h e re d o lla r sc a rc ities w ere m o st a cu te b u t w h e re n e v e r­
th eless th e n eed f o r su ch g o o ds w as m o st u rg e n t, a p re p o n d e ra n c e o f
c re d it sales w as in d ica ted .
I t w as decided t h a t th e F o re ig n L iq u id a tio n C om m issio ner m ig h t
e x te n d c re d its to finance th e sale o f s u rp lu s w h ere such sales could n o t
be m ad e f o r cash. C re d its so e x te n d e d in g e n e ra l w ere to be re p a y a b le
in n o t m ore th a n 30 y e a rs a n d w ere to c a rry a m in im u m o f 2 % p e rc e n t
in te re st. T h e te rm s a d o p te d in som e cases in v o lv ed th e p o stp o n em en t
o f p rin c ip a l re p a y m e n ts f o r th e first 5 y e a rs a n d th e accep tan ce o f
lo cal c u rre n c ie s to m eet U n ite d S ta te s G o v e rn m en t expenses in th e
p u rc h a sin g c o u n tries.
A lso f a c ilita tin g f u tu r e d isp o sal o p e ra tio n s w as th e S ta te D e p a r t­
m e n t’s re g u la tio n (M a rc h 15, 1946) p ro v id in g f o r th e tr a n s f e r o f
fo re ig n su rp lu ses as se ttle m e n t o f claim s u p o n th e U n ite d S ta te s, a n d
th e e xch an ge o f su rp lu s f o r o th e r p ro p e rty (m a in ly re a l e sta te ) a n d
p ro p e rty rig h ts.
G o o d s A c q u ir e d b y U . § . G o v e rn m e n t

G overn m en t n o n m ilita ry p urch ases .— A s e a rly as J u n e 1939, th e
P ro c u re m e n t D iv isio n o f th e T re a s u ry w a s a u th o riz e d u n d e r th e S tr a ­
te g ic M a te ria ls A c t to p u rc h a se fro m fo re ig n sources a n d stock p ile
over a 4 -y ea r p e rio d m a te ria ls a g g re g a tin g $100 m illio n . L a te r in th e
sam e y e a r, a n a g ree m e n t w a s m a d e by th e U n ite d S ta te s a n d th e U n ite d
K in g d o m w hereby th e C o m m o d ity C re d it C o rp o ra tio n o f t h e D e p a r t­
m en t o f A g r ic u ltu re b a rte re d 600,000 b ales o f A m e ric a n c o tto n f o r a n
e q u a lly v a lu e d a m o u n t o f ru b b e r fro m B r itis h M ala y a . T h e se a c tiv i­
tie s m a rk e d th e b e g in n in g o f a la rg e-sca le im p o rt tr a d e c o nd u cted
d ire c tly by th e G o v e rn m en t. T h e th re a te n in g w o rld situ a tio n a n d
th e consequent a d v isa b ility o f a c c u m u la tin g reserv e stocks o f stra te g ic
m a te ria ls f o r n a tio n a l d efen se w ere chiefly resp o n sib le fo r th e G o v ­
e rn m e n t’s e n try in to th e im p o rt b u sin ess a t th is tim e.
T h re e c o rp o ra tio n s— R u b b e r R eserve C o rp o ra tio n , M e ta ls R eserve
C o m p an y , a n d D e fe n se S u p p lie s C o rp o ra tio n — o rg a n iz e d a s su b ­
sid ia rie s o f th e R ec o n stru c tio n F in a n c e C o rp o ra tio n in th e su m m er o f
1940, w e re also g iv en th e n ecessary a u th o rity to p ro c u re a n d stock p ile
s tra te g ic m a te ria ls fro m fo re ig n sources. P u r c h a s e s (in c lu d in g th e
C C C e x ch an g e o f c o tto n f o r ru b b e r) c o n tin u e d d u r in g 1940 to be
re la tiv e ly sm all ($40 m illio n ) in c o m p ariso n w ith to ta l U n ite d S ta te s
p a y m e n ts f o r m e rch an d ise . I n 1941, how ever, such G o v e rn m en t p ro 27

e u re m e n t a b ro a d in crea se d to $422 m illio n , o r 12 p e rc e n t o f th e to ta l.
T h e m a jo r p a r t o f th e G o v e rn m e n t’s p u rc h a sin g d u rin g th is p e rio d w as
c o n c e n tra te d on ru b b e r a n d tin fro m th e F a r E a s t.
T h e s w ift Ja p a n e s e in v asio n o f th e F a r E a s t c u t off p r a c tic a lly a ll
o f o u r ru b b e r a n d q u in in e su p p lie s a n d n e a rly tw o -th ir d s o f th e su p p ly
o f h a r d fibers a n d tin . A t th e sam e tim e , w a r p ro d u c tio n a n d c om b at
o p e ra tio n s re s u lte d in m o u n tin g d e m a n d s f o r th ese com m odities.
O th e r m a te ria ls, su ch as c o pp e r, lea d , a n d zinc, f o r w h ic h dom estic
s u p p ly sources h a d been a d eq u a te to m ee t n o rm a l p re w a r d em a n d s, also
.becam e scarce.
S u p p ly deficiencies o bv iously h a d to be m et fro m one, o r a c o m b in a ­
tio n , o f th re e p o ssib le sources— use o f su b stitu te s, in crea sed dom estic
p ro d u c tio n , a n d in crea se d im p o rts. T h e la s t o fte n m e a n t fin d in g a n d
d e v e lo p in g new a n d h ig h -c o st fo r e ig n sources. T o stim u la te th e p r o ­
d u c tio n o f L a tin -A m e ric a n ru b b e r, f o r ex am p le, te c h n ic a l e x p e rts,
m a c h in e ry , a n d to ols, as w ell as su b s ta n tia l p ric e in cen tives, w ere
needed. S ince p r iv a te in d u s try n a tu r a lly w as u n ab le to finance such
o p e ra tio n s, th e G o v e rn m en t fo u n d i t necessary to e x p a n d its fo re ig n p u rc h a se p ro g ra m to in c lu d e th e job o f e x p lo ra tio n a n d developm ent.
A lso a c c o u n tin g f o r th e G o v e rn m e n t’s g re a tly in c re a sin g sh a re o f
to ta l im p o rts fo llo w in g o u r e n tr y in to th e w a r w as th e n eed f o r cen­
tr a liz in g in d iv id u a l b u y in g p ro g ra m s in o rd e r to (1) a v o id p ric e in ­
creases a ris in g fro m c o m p etitiv e b u y in g by p riv a te im p o rte rs, (2)
secu re m a te ria ls cap a b le o f m ee tin g u n ifo rm a n d r ig id specifications,
a n d (3) a lle v ia te sh ip p in g a n d o th e r tr a n s p o rta tio n difficulties.
I n o th e r cases, la rg e-sca le p reclu siv e b u y in g o p e ratio n s by th e G o v ­
e rn m e n t w ere necessary. T h e se in v o lv ed p u rc h a ses in n e u tr a l c o u n ­
tr ie s ( p a rtic u la rly S w ed en , S p a in , P o r tu g a l, S w itz e rla n d , a n d
T u rk e y ) to p r e v e n t su p p lie s fro m re a c h in g th e A x is. P re c lu siv e
o p e ra tio n s, in m o st in sta n c es c a rrie d o u t jo in tly b y th e U . S. C om ­
m e rc ia l C o m p an y (c re a te d w ith in th e R ec o n stru c tio n F in a n c e C o r­
p o ra tio n e xp ressly f o r th is p u rp o se ) a n d th e U n ite d K in g d o m C om ­
m e rc ia l C o rp o ra tio n , w ere im p le m e n te d by th e W a r T ra d e A g re em e n ts,
w h e reb y th e n e u tra ls p ro h ib ite d o r re d u ce d th e ir e x p o rts to A x is co u n ­
trie s in r e tu r n f o r p e rm issio n to im p o rt e sse n tial su p p lie s th ro u g h th e
A llie d blockade.
T h e e sta b lish m e n t in 194-2 o f s tr ic t G o v e rn m e n t c o n tro l over
v irtu a lly a ll im p o rts a n d o f a sy stem o f in te rn a tio n a l a llo ca tio n s by
th e com bined b o a rd s o f scarce ra w m a te r ia ls a n d foodstuffs h e lp e d
p ro v id e th e n ecessary o p e ra tin g b a c k g ro u n d fo r large-scale p u rch a se s

Tabl e 6.— United, S ta te s

G o ve rn m en t p a y m e n ts a b ro a d fo r n o n m ilita r y p u rch a ses,
by m a jo r c o m m o d itie s a n d area s,
[In m illio n s of dollars]

C o m m o d ity
T o t a l ____

A m ount

M a jo r c o u n trie s

C o m m o d ity

C h ile .
B r itis h M a la y a , N e t h ­
e r la n d s I n d ie s .
B o liv ia , B elg ia n Congo.
A u s tr a lia ,
A m e ric a n
R e p u b lic s.
C an ad a.

S u g a r ........ .........
W h e a t___ ____
F a t s a n d o ils ___
L e a d _________
M o la s s e s ._ ___
B u r la p _ _ _ _ _ _ _ _
Z i n c . . .......... ......
T u n g s te n _ _ _ _ _ _
O th e r _ _ _ _ _ _ _ _ _

4,757

C o p p e r ..........
R u b b e r .......... .

781
460

T i n .....................
F i b e r s _______

298
285

A lu m in u m __ _

256

A m ount
226
216
188
183
152
148
146
137
1,275

M a jo r c o u n trie s
C uba.
C an ad a.
A r g e n tin a .
M e x ic o.
C uba.
In d ia .
M e xico .
S p a in , C h in a .

S o u rc e : U . S . D e p a r tm e n t o f C o m m e rc e , C le a rin g O ffice for F o re ig n T ra n s a c tio n s .

28

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by th e G o v e rn m en t c o rp o ra tio n s. S u c h p u rc h a ses g rew d u rin g 1942
to $979 m illio n a n d re a c h e d a p e a k a n n u a l r a te in 1943 o f $1,336
m illio n . N o m a rk e d decline o c cu rred u n til 1945, w h e n th e im p ro v e ­
m e n t in th e g e n e ra l su p p ly situ a tio n a n d th e te rm in a tio n o f E u ro p e a n
h o s tilitie s re s u lte d in a c o n sid erab ly re d u ce d volum e o f G o v e rn m e n t
p u rc h a se s ($874 m illio n ) .
T h e a c tu a l p u rc h ase a n d d e velo p m en t o p e ra tio n s o f th e c o rp o ra tio n s
w ere d ire c te d b y o th e r G o v e rn m e n t agencies. A u th o r ity to d ire c t th e
p u rc h a se o f in d u s tria l ra w m a te r ia ls w as d e le g ate d m a in ly to th e
W a r P ro d u c tio n B o a r d a n d , to a lesser e x te n t, to th e A rm y a n d N a v y
M u n itio n s B o a rd , w h ile re s p o n sib ility f o r su p e rv isin g fo re ig n fo o d
p u rc h a se s w as a ssig n e d to th e W a r F o o d A d m in istra tio n . T h e p u rchase a u th o riz a tio n s w ere tr a n s m itte d to th e B o a r d o f E co n o m ic W a r ­
fa re ( la te r th e Office o f E co n o m ic W a r f a r e a n d th e F o re ig n E c on o m ic
A d m in is tr a tio n ) . A f te r final rev iew b y th e B o a rd o f E conom ic W a rfa re , th e d ire ctiv e s w ere tra n s m itte d to th e p ro c u rin g c o rp o ra tio n s.
T h e m a jo r e x cep tio n to' th is p ro c ed u re w as th e p rec lu siv e -b u y in g p r o ­
g ra m , f o r w h ich th e d ire ctiv e s o rig in a te d in a n d w ere th e sole re s p o n ­
sib ility o f th e B o a r d o f E co n o m ic W a rfa re .
P u rc h a se s in th e L a tin -A m e ric a n c o u n trie s, p a r tic u la r ly C h ile,
M exico, B ra z il, C uba, a n d B o liv ia , accoun ted f o r a b o u t h a lf th e $4.8b illio n to ta l. M ore sig n ifica n t, such G o v e rn m en t p u rc h a ses a cc ou n ted
fo r a p p ro x im a te ly o n e -th ird o f to ta l U n ite d S ta te s m e rc h an d ise p a y ­
m e n ts to t h a t a re a d u r in g th e y e ars 1940-45. -L argely u n d e r th e
stim u lu s o f th e G o v e rn m e n t’s b u y in g p r o g ra m , o u r im p o rts fro m th e
20 L a tin A m e ric a n R ep u b lics in crea se d fro m a n a n n u a l a v era g e o f
$543 m illio n d u rin g 1936-38 to $1,317 m illio n in 1943 a n d $1,594 m illio n
in 1944.
O th e r m a jo r G o v e rn m e n t p u rc h a se s w ere m a d e in B ritis h E m p ir e
c o u n tries, p a r tic u la r ly C a n a d a , I n d ia , C eylon, a n d A u s tr a lia , C h in a ,
a n d th e B elg ia n C ongo. G o v e rn m en t b u y in g a cc o u n ted f o r a b o u t oneh a lf th e to ta l U n ite d S ta te s m e rc h an d ise p a y m e n ts to th e B e lg ia n
C ongo a n d I n d ia . F o r th e o th e r c o u n trie s, how ever, p a y m e n ts f o r
G o v e rn m e n t p u rc h a se s re p re s e n te d a m u ch sm a lle r p o rtio n o f to ta l
U n ite d S ta te s im p o rts.
T h e acc om p lish m en ts o f th e G o v e rn m e n t’s fo re ig n -p u rc h a se a c tiv i­
tie s a re p e rh a p s m o re a p p a re n t in te rm s o f specific c om m odity p r o ­
g ram s. A m o n g th e m a jo r com m odities p ro c u re d w ere v a rio u s m e ta ls
a n d m in e ra ls, p rin c ip a lly co p p e r, a lu m in u m , tin , le ad , zinc, m a n g a n e se,
m ica, a n d q u a rtz c ry sta ls ; foo d stu ffs, su ch a s su g a r a n d te a ; a n d
ru b b e r, cin c h o n a b a rk , b u rla p , a n d n itr a te s . D iscu ssion o f each o f
th ese in d iv id u a l p r o g ra m s w o u ld b e st illu s tr a te th e v a rie ty o f te c h ­
n iqu e s em ployed by th e G o v e rn m e n t to p ro v id e m ax im u m im p o rts .
T h e foreig n -p ro C u rem en t p ro g ra m s w ith resp ec t to ru b b e r a n d tin ,
how ever, a re e x cellen t exam ples n o t o n ly o f th e tec h n iq u es used b u t also
o f th e possible p o s tw a r im p lic a tio n s o f th e G o v e rn m e n t’s w a rtim e p r o ­
c u rem en t o p e ratio n s.
B e fo re th e w a r, th e U n ite d S ta te s w as a lm o st e n tire ly d e p e n d e n t
u p o n n a tu r a l ru b b e r su p p lie s, 97 p e rc e n t o f w h ich w ere im p o rte d fro m
th e F a r E a s t. W ith th e o u tb re a k o f w a r a n d th e g r o w in g p o ssib ility
t h a t th ese su p p lie s m ig h t b e c u t off, th e G o v e rn m e n t a ssu m ed th e
job o f a c q u irin g a reserve stock p ile o f ru b b e r. T h e R u b b e r R eserve
C o m p an y , c re a te d f o r th is p u rp o se in J u n e 1940, e n te re d in to a n
a g ree m e n t w ith th e I n te r n a tio n a l R u b b e r R e g u la tio n C o m m ittee p r o ­
29

v id in g f o r th e a cc ele ra tio n o f ru b b e r e x p o rts to th e U n ite d S ta te s.
I n J u n e 1941, th e C o m p an y becam e th e sole U n ite d S ta te s b u y e r o f
F a r E a s te r n ru b b e r. A s a re s u lt o f th ese a ctiv itie s, o u r im p o rts o f
ru b b e r fro m B ritis h M a lay a , th e N e th e rla n d s E a s t In d ie s, a n d F re n c h
In d o -C h in a in crea se d fro m 478,000 lo n g to n s in 1939 to' 738,000 in 1940
a n d 943,000 in 1941 (see c h a r t 5 ).
C h a rt

5

UNITED STATES S U P P L IE S OF R U B B E R
(E X C E P T R ECLA IM ED ), 1 9 3 9 - 4 5
THOUSANDS OF LONG TONS

S O U R C E O F D A T A : I M P O R T S , D E P A R T M E N T O F C O M M E R C E , B U R E A U O F T H E C E N S U S ; D O M E S T IC
S Y N T H E T I C P R O D U C T IO N , C I V I L I A N P R O D U C T IO N A D M I N I S T R A T I O N .

I n a d d itio n to a rr a n g in g f o r a stock p ile o f F a r E a s te r n ru b b e r,
th e G o v e rn m en t m a d e a g ree m e n ts w ith th e L a tin -A m e ric a n c o u n trie s
a n d w ith p r iv a te in te re sts in L ib e ria f o r th e p u rp o se o f s tim u la tin g
ru b b e r p r o d u c tio n in th ese a reas. T h e L a tin -A m e r ic a n c o u n trie s h a d
p ra c tic a lly a b an d o n e d th e ru b b e r in d u s try a f te r W o rld W a r I b e­
cau se o f th e ir in a b ility to com p ete w ith F a r E a s te r n p la n ta tio n ru b b e r.
B y s u p p ly in g th e n ecessary te c h n ic a l a id a n d e q uip m e n t, b y g u a r a n ­
te e in g a U n ite d S ta te s m a rk e t th ro u g h lo n g -te rm c o n tra c ts, a n d by
c o n tro llin g c o n su m p tio n in th ese c o u n trie s, th e R u b b e r D e v elo p m en t
C o rp o ra tio n (w h ic h to o k o v er th e fo re ig n p ro c u re m e n t a c tiv itie s o f
R u b b e r R eserve C o m p an y as o f F e b ru a r y 23, 1943) succeeded in
in c re a sin g U n ite d S ta te s im p o rts o f L a tin -A m e r ic a n w ild ru b b e r fro m
8,000 lo n g to n s in 1939 to 38,000 lo n g to n s in 1945. T h e se im p o rts,
how ever, c om p en sated f o r o n ly a sm a ll p o rtio n o f th e loss in c u rre d
th ro u g h th e Ja p a n e s e in v a sio n o f th e F a r E a s t. T h e m o u n tin g g a p
b etw een d e c re asin g im p o rts o f n a tu r a l ru b b e r a n d in c re a sin g m ili­
t a r y re q u ire m e n ts w'as filled by th e p ro d u c tio n o f sy n th e tic a n d b y th e
use o f rec laim e d ru b b e r.
30

C h a rt

6

UNITED STATES IM PORTS OF T IN , BY SOURCE,
AND BY CLASSIFICATION A S REFINED OR
ORES AND CO NCENTRATES, 1 9 3 9 - 4 5
M IL L IO N S

O F P O U N D S -T IN

CO NTENT

4001

1939

1939

1940

1941

1942

1943

1944

1945

1940

1941

1942

1943

1944

1945

SOURCE OF DATA: D EPART M ENT OF COM MERCE, BUREAU OF THE CENSUS

31

T h e sy n th e tic ru b b e r in d u s try , p ra c tic a lly n o n e x iste n t in th e U n ite d
S ta te s b e fo re th e w a r, w as also th e re s u lt o f G o v e rn m en t p la n n in g
a n d fin a n c ia l b a ck in g . P ro d u c tio n in 1945 re a c h e d 820,000 to n s (see
c h a r t 5 ) — a n a m o u n t 200,000 to n s in excess o f m ax im u m p re w a r n a t ­
u ra l ru b b e r c o n su m p tio n in th e U n ite d S tate s.
F o llo w in g th e en d o f th e w a r, th e re w as a g ra d u a l re d u c tio n in o u r
L a tin -A m e ric a n ru b b e r-p ro c u re m e n t p ro g ra m . A t th e sam e tim e,
th is c o u n try in c rea sed its p u rc h a se s o f o th e r L a tin -A m e r ic a n goods,
th e p ro d u c tio n o r m o vem ent o f w h ich h a d been re s tr ic te d o r p r o ­
h ib ite d d u r in g th e w a r p e rio d . T h e a d v e rse effects o f o u r sh a rp ly
re d u ce d p u rc h a se s o f ru b b e r fro m th is source w ere th u s m inim ized .
I t is q u ite e v id e n t th a t, f o r rea so n s o f n a tio n a l se cu rity , a t le a st a
n u c le u s o f th e dom estic sy n th e tic ru b b e r in d u s try w ill be m a in ta in e d .
I t is a n tic ip a te d , how ever, t h a t because o f e x p a n d e d uses o f ru b b e r
p ro d u c ts th e U n ite d S ta te s w ill c o n tin u e to p ro v id e a m a jo r m a rk e t
f o r F a r E a s te rn p la n ta tio n ru b b e r.
T h e p ro b le m o f m ee tin g w a rtim e ti n req u irem e n ts w as sim ila r to
t h a t o f ru b b e r. O u r e n tire req u irem e n ts w ere m e t b y im p o rts o f re ­
fined tin , th re e -fo u rth s o f w h ic h cam e fro m th e F a r E a s t. T h e U n ite d
K in g d o m su p p lie d m o st o f th e re m a in d e r. A s in th e case o f ru b b e r,
th e in itia l a im o f th e G o v e rn m en t’s tin -b u y in g p ro g ra m w as to a c­
c u m u la te a sto ck p ile th ro u g h in crea se d im p o rts fro m th e F a r E a st.
L a rg e ly as a re s u lt o f p u rc h a se s b y th e M etals R eserve C o m p an y , such
im p o rts clim bed fro m 157 m illio n p o u n d s in 1939 to 287 m illio n in
1940 a n d 380 m illio n in 1941 (see c h a r t 6 ). F o llo w in g th e Ja p a n e s e
in v asio n o f th is a rea , th e B e lg ia n C ongo, B o liv ia , a n d C h in a re m a in e d
th e o nly p rim a ry sources o f ti n a v ailab le to th e A llies. F u rth e rm o re ,
th e G e rm a n conqu est o f B elg iu m in 1940 c u t off th e fa c ilitie s w h ere
m o st o f th e B e lg ia n C ongo tin h a d n o rm a lly been sh ip p e d fo r sm eltin g .
A t th e sam e tim e , th e U n ite d K in g d o m ’s c a p a c ity f o r re fin in g B o liv ia n
ores w as also th re a te n e d b y G e rm a n in v asio n .
T h e U n ite d S ta te s, co m p le te ly la c k in g in tin -re fin in g fac ilitie s,
w as c on seq u en tly in a p a r tic u la r ly v u ln e ra b le p o sitio n . F o r th is
rea son , th e U n ite d S ta te s G o v e rn m en t, th ro u g h th e D efense P la n t
C o rp o ra tio n , b u ilt a ti n sm e lte r, w h ich b e g a n o p e ra tio n s in th e m id d le
o f 1942. O u r im p o rts o f ti n ore, p u rc h a se d b y th e G o v e rn m e n t u n d e r
a llo ca tio n s b y th e C om b in ed R a w M a te ria ls B o a rd , re a c h e d a p e a k
o f 82 m illio n p o u n d s (on a tin -c o n te n t b a sis) in 1944. A s in th e case
o f ru b b e r, in c re a s in g im p o rts fro m o th e r th a n p re w a r sources fa ile d
to offset th e loss o f F a r E a s te r n su p p lies. T h e n eed f o r su b stitu te s to
fill a la rg e se gm en t o f b o th c iv ilia n a n d m ilita ry re q u ire m e n ts la rg ely
acco u n ts f o r th e w a rtim e d e v e lo p m e n t o f th e U n ite d S ta te s p la stic
in d u stry .
R everse lend-lease .—F ro m S e p te m b e r 3, 1942, w h en th e in itia l
re c ip ro c a l-a id a g re e m e n t wTas sig n e d w ith th e U n ite d K in g d o m ,
th ro u g h D ecem ber 31,1945, th e U n ite d S ta te s received $4,272 m illio n o f
goods a n d n e a rly $3 b illio n o f services th ro u g h rev erse len d -lease c h a n ­
nels. T h e e n tire a m o u n t (ex ce p t f o r re la tiv e ly sm all re ce ip ts fro m th e
U n ite d K in g d o m a f te r V J - d a y , see below ) w as fu rn is h e d b y o u r A l­
lies as a c o n trib u tio n to th e com m on a im o f w in n in g th e w a r, a n d hence
re q u ire d no p a y m e n t b y th e U n ite d S ta te s. A ll su ch s tr a ig h t r e ­
verse lend-lease h a s th e re fo re been offset by c o rre sp o n d in g c re d its in
th e u n ila te ra l accoun t.
R ev erse len d -le ase a id w as fu rn is h e d a cc o rd in g to th e te rm s o f in ­
32

d iv id u a l re c ip ro c a l-a id a g ree m e n ts b etw een th e U n ite d S ta te s a n d
th e A llies. T h e se a g ree m e n ts, by d e s ig n a tin g th e specific k in d s o f
goods a n d services to be p ro v id e d to th e U n ite d S ta te s as rev erse len d lease, su p p le m e n ta l section I I o f th e len d -lease m a ste r a g re e m e n ts:
“ T h e G o v e rn m e n t o f (th e o th e r sig n a to ry ) w ill c o n tin u e to c o n trib u te
to th e d efen se o f th e U n ite d S ta te s o f A m eric a a n d th e s tre n g th e n in g
th e re o f a n d w ill p ro v id e such a rtic le s, services, fa c ilitie s, o r in fo rm a ­
tio n as i t m a y be in a p o sitio n to su p p ly .”
T h e o rig in a l re c ip ro c a l-a id a g ree m e n ts covered chiefly a id ( in ­
c lu d in g s h ip p in g a n d tr a n s p o r t services) to th e U n ite d S ta te s a rm ed
forces overseas, a n d specifically ex clud ed p a y to U n ite d S ta te s tro o p s
a n d ra w m a te r ia ls f o r e x p o rt to th e U n ite d S ta te s. I n N ovem ber
1943, how ever, th e U n ite d K in g d o m a g ree d to e x te n d rev erse le n d lease to in c lu d e ra w m a te ria ls, com m odities, a n d fo o d stu ffs p u rc h a se d
fo r e x p o rt in th e U n ite d K in g d o m a n d th e B ritis h colonies b y o r on
b e h a lf o f U n ite d S ta te s G o v e rn m en t agencies. A t th e sam e tim e ,
B ritis h s h ip p in g f o r th ese e x p o rts w as a lso m a d e a v a ila b le . S h ip p in g
a n d o th e r services received as rev erse len d -le ase a re discussed else­
w here.

Tabl e 7.— R e v e r s e

len d -lea se go od s received , t>y m a jo r co u n tries a n d ty p e s o f
goods, M ar. 11,191/1, th ro u g h S e p t, t, 191/5
[ I n m illio n s of dollars]

C o u n tr y

T o ta l

O rd n a n c e A ir c ra ft
and
a n d ae ro ­
o rd n a n c e n a u tic a l
m a t e r ia l
stores

T anks
and
o th e r
veh icles

M isc e l­
la n e o u s
m ilita r y
e q u ip ­
m ent

A gric u l­
tu r a l, in ­
d u s tr ia l
a n d o th e r
c o m m o d i­
tie s

O th e r
goods

T o t a l . ____ _ _ _ _ _ _ _ _ _

4,233

117

434

104

1, 350

1,879

349

B r itis h E m p i r e ___________
U n ite d K in g d o m a n d
c o lo n ies----- ------------A u s tr a li a ...... .............. .

3,913

113

430

93

1,259

1,723

295

2,792
591
340
189
257
58
4

98
5

381
30
14
5

60
27

600
394
108
156
72
20

1,444
93
181
5
137
18

209
42
37
7
48
6

N e w Z e a la n d ....... ..........

10
4

6
10

4

Source: D e p a r tm e n t of th e T r e a s u r y , L e n d -L e a se F isc a l O p e ra tio n s, B u r e a u of A cc o u n ts. K c p o rt o n
L e n d -L e a se F isc a l O p e ra tio n s, C u m u la tiv e th ro u g h A ug . 31, 1946. F ig u re s a d ju s te d in t h is ta b le to ex­
c lu d e e s tim a te d servic es.
N o t e .— D e ta il w ill n o t n e c e ssarily a d d to to ta ls , b e c a u se of r o u n d in g .

O f th e to ta l $4,272 m illio n o f goods received as rev erse lend-lease,
a n a m o u n t in excess o f $4,100 m illio n w as consum ed a b ro a d b y o u r
a rm ed force s, m a in ly in th e U n ite d K in g d o m a n d its colonies ($2,700
m illio n ), A u s tr a lia ($591 m illio n ), I n d ia ($200 m illio n ), F re n c h E m ­
p ire ($257 m illio n ) , N ew Z e ala n d ($189 m illio n ) , a n d B elg iu m ($58
m illio n ) . N e a rly o n e -h a lf co n sisted o f o rd n a n c e, a ir c r a ft, ta n k s, p r o ­
vision s, a n d o th e r m ilita ry su p p lie s ; th e re m a in d e r w as a cc ou n ted
f o r chiefly b y g aso lin e, p e tro le u m , foo d stu ffs, a n d o th e r com m odities
(see ta b le 7 ). T h e a p p ro x im a te ly $150 m illio n o f ru b b e r, te a , a n d
o th e r goods im p o rte d in to th e U n ite d S ta te s cam e e n tire ly fro m
B ritis h E m p ir e c o u n tries, p rin c ip a lly C eylon a n d I n d ia .
T h e flow o f goods th ro u g h rev erse len d -lease c h an n e ls re ac h ed $540
m illio n b y th e end o f 1942. D u r in g each o f th e fo llo w in g 3 y e ars,
goods tr a n s f e rr e d to th e U n ite d S ta te s o n th is b a sis a m o u n te d to $1.1
C5

33

b illio n , $1.2 b illio n , a n d $1.4 b illio n , respec tiv e ly . I n te rm s o f th e
to ta l a m o u n t o f a ll m e rch a n d ise receiv ed fro m fo re ig n e rs, rev erse
len d -le ase m o u n te d fro m 14 p e rc e n t in 1942 to 22 p e rc e n t in 1944 a n d
33 p e rc e n t d u r in g th e first h a lf o f 1945.
Im m e d ia te ly fo llo w in g th e en d o f th e w a r, rev erse lend-lease on a
s tra ig h t, o r n o n re im b u rsa b le , b a sis Avas officially te rm in a te d . U n d e r
th e p ro v isio n s o f th e D ecem b er 6, 1945, w a r-a cc o u n ts se ttle m e n t
b etw een th e U n ite d S ta te s a n d th e U n ite d K in g d o m , h o w ev er, th e
U n ite d S ta te s c o n tin u e d to receive a n e stim a te d $130 m illio n o f goods
a n d services in th e U n ite d K in g d o m rev erse lend-lease p ip e lin e as an
offset a g a in s t th e $301 m illio n o f len d -lease p ip e -lin e tra n s fe rs to be
p ro v id e d to th e U n ite d K in g d o m (see p . 2 4 ).
M ilita ry purchases .— I n a d d itio n to th e goods a c q u ired fro m f o r ­
e ign e rs b y G o v e rn m en t c o rp o ra tio n s a n d th ro u g h rev erse lend-lease
c h an n e ls, G o v e rn m e n t m e rc h a n d ise p a y m e n ts f o r th e 6 -y e ar p e rio d
1940-45 in c lu d e $2,408 m illio n o f p u rc h a se s m ad e d ire c t b y th e A rm y
a n d N avy. A lm o st o n e -h a lf th e $2,408 -m illio n to ta l rep re se n te d
m u n itio n s p u rc h a se s in C a n a d a , a b o u t 70 p e rc e n t o f w h ich Avere im ­
p o rte d in to th e U n ite d S ta te s. T h e re m a in d e r c on sisted o f m u n i­
tio n s, p ro v isio n s, fu e l, a n d o th e r su p p lie s a n d m a te ria ls, m o st o f w h ich
Avere p u rc h a se d f o r c o n su m p tio n a b ro a d b y th e a rm e d forces. GroAvth
in th e r a te o f d ire c t m ilita ry p u rc h a se s fro m $16 m illio n in 1940 to a
p e a k o f $828 m illio n in 1943 obviously p a ra lle le d o u r in c re a sin g m u n i­
tio n s re q u ire m e n ts a n d th e m o v em en t o f U n ite d S ta te s tr o o p s a b road .
W ith th e e x cep tio n o f a p p ro x im a te ly $65 -m illio n Avorth f o r Avhicli
p a y m e n ts Avere m ad e in special m ilita ry c urre nc ie s, a ll p u rc h a ses w ere
m a d e d ire c tly o r in d ir e c tly in U n ite d S ta te s d o lla rs. O u tsid e o f
C a n ad a , w h ich received a b o u t o n e -h a lf o f a ll su ch d o lla r p a y m en ts,
th e A m e ric a n R ep u b lics, th e U n ite d K in g d o m , A u s tr a lia , a n d C h in a
w ere m a jo r re c ip ie n ts. T h a t th e to ta l e x p e n d itu re s in c o u n trie s o th e r
th a n C a n a d a w ere Ioav in re la tio n to th e h e av y c o n c e n tra tio n o f o u r
tr o o p s overseas is e x p la in e d la rg e ly b y th e re c e ip t o f $4.3 b illio n o f
m a te ria ls th ro u g h rev erse len d -le ase chan nels.
T h e $65-m illio n w o rth o f p a y m e n ts in sp ec ia l m ilita r y cu rre n c ie s
w e n t m a in ly to I ta ly , th e N e th e rla n d s, a n d F ra n c e . S ince e x istin g
a g re e m e n ts in g e n e ra l lim ite d th e U n ite d S ta te s lia b ility fo r sp ecial
c u rre n c y e x p e n d itu re s in th o se c o u n trie s to th e n e t a m o u n t u sed fo r
tro o p p a y , such p u rc h a se s o f goods, lik e o th e r m iscellaneous d isb u rse ­
m e n ts in sp ecial cu rre nc ie s, h a v e b een offset b y c o rre sp o n d in g c re d its
in th e u n ila te ra l account.
T h e discu ssion th u s f a r h a s been lim ite d to a b r ie f su m m ary o f th e
m a jo r w a rtim e d e velo p m en ts in o u r in te rn a tio n a l m erch a n d ise acco u n t
a n d o f th e G o v e rn m e n t’s role in re g u la tin g a n d c o n d u c tin g o u r Avartim e m e rc h a n d ise tra n sa c tio n s. A m o re c o m p reh en sive a n aly sis cov­
e rin g th e m ovem ent o f goods o n b o th G o v e rn m en t a n d p r iv a te accoun t
is p re se n te d in th e folloAving section.
T h e T r a n s i t i o n P e r i o d , 1 9 4 0 —4 1

S tim u la te d by d em a n d s a ris in g fro m th e w a r in E u ro p e , th e v a lu e o f
goods fu rn is h e d b y th e U n ite d S ta te s to fo re ig n e rs in cre a se d fro m $3.3
b illio n in 1939 to $4.1 b illio n in 1940 a n d $5.3 b illio n in 1941. A t th e
sam e tim e th e v a lu e o f goods su p p lie d to th e U n ite d S ta te s b y o th e r
c o u n trie s shoAved a ste ad y , th o u g h less p ro n o u n c ed , in crease. I m p o rts
34

o f $2.7 b ilio n in 1940 a n d $3.5 b illio n in 1941 c o m p ared w ith $2.4 b illio n
d u r in g 1939.
B ecause th e rise in im p o rts w h ich o c cu rred d u r in g th ese y e a rs d id
n o t keep p ace w ith th e rise in e x p o rts, n e t re c e ip ts due on m e rch a n d ise
a cc ou n t m o u n ted in 1940 to $1.4 b illio n — th e h ig h e st b a la n ce re co rd e d
since 1921. D u r in g 1941 th e excess o f goods su p p lie d in c rea sed over
1940 by $450 m illio n . T h is in crease, how ever, w as m o re th a n offset by
th e fa c t t h a t $810 m illio n o f o u r e x p o rts c on sisted o f len d -le ase a n d
o th e r goods re q u ir in g no fin a n cia l se ttle m e n t b etw een th e U n ite d S ta te s
a n d th e fo r e ig n c o u n trie s rec e iv in g th e goods. N e t e x p o rts a g a in st
cash a n d c re d it th u s d eclin e d to a p p ro x im a te ly $1 b illio n in 1941 (see
ta b le 3 ).
E x p o rts R e s p o n d to W a r D e m a n d s
D e sp ite th e re stric tio n s im posed b y th e N e u tra lity A c t o f N ovem ber
1939, e x p o rts d u rin g th e o p e n in g q u a r te r o f 1940 re ac h ed a n a n n u a l
r a te o f $4.3 b illio n , c o m p a re d w ith $2.8 b illio n d u r in g th e fir st q u a rte r
o f 1939. M o st o f th e in crease w e n t to th e U n ite d K in g d o m , F ra n c e ,
a n d C a n a d a , w h ich w ere a lre a d y m a k in g p u rc h a se s o f w a r m a te r ia ls
here. T h e G e rm an in v asio n o f w e ste rn a n d n o r th e r n E u ro p e in th e
s p rin g o f 1940 a n d th e e sta b lish m e n t o f U n ite d S ta te s e x p o r t c o n tro l
a few m o n th s la te r w ere la rg e ly resp o n sib le f o r a so m e w h a t red u ce d
volum e o f e x p o rts d u rin g th e re m a in d e r o f 1940 a n d th e first q u a rte r
o f 1941. A t th e sam e tim e , how ever, th e U n ite d K in g d o m in crea sed
its im p o rts fro m u s as ra p id ly as its fin a n c ia l resources a n d o u r a b ility
to su p p ly th e necessary goods w o u ld p e rm it. B y th e final q u a rte r o f
1940, o u r e x p o rts to tíre U n ite d K in g d o m w ere m o v in g a t a n a n n u a l
r a te o f $1.2 b illio n as c o m p a re d w ith $710 m illio n d u r in g th e first
q u a rte r. In c re a s in g C a n a d ia n p u rc h a se s h e re also c o n tin u e d to
a cc ou n t f o r a r a p id ly ris in g sh a re o f o u r to ta l expoi’t tra d e .
W ith th e p a ssag e o f th e L e n d -L e ase A c t on M a rc h 11, 1941, th e
U n ite d S ta te s o p e n ly a llie d its w e lfa re w ith t h a t o f th e U n ite d K in g ­
dom a n d o th e r c o u n trie s fig h tin g th e A x is. T h e lend-lease m ech an ism
p ro v id e d th e m ean s b y w h ich v a st q u a n titie s o f goods could be p ro d u ce d
a n d m ad e a v ailab le to h e lp th ese c o u n trie s— in m o st cases w ith o u t th e
n ecessity f o r c o rre sp o n d in g fin a n c ia l se ttle m e n t. I n th e fin a l q u a rte r
o f 1941, a b o u t o n e -q u a rte r o f o u r to ta l e x p o rts consisted o f len d -lease
goods.
T h e e x p a n sio n in th e fo re ig n d e m a n d f o r A m e ric a n goods w h ic h
b e g a n in 1939 w as la rg e ly c o n c e n tra te d on m ilita r y e q u ip m e n t a n d
o th e r finished m a n u fa c tu re s . T h e sh o rta g e o f m a n p o w e r a n d p r o ­
d u c tiv e fa c ilitie s in th e U n ite d K in g d o m a n d o th e r c o u n trie s a ctiv e ly
a t w a r n a tu r a lly m ad e i t a d v isab le t h a t m a x im u m q u a n titie s o f
fin ish ed goods be o b ta in e d fro m o u tsid e sources, esp e cially th e U n ite d
S ta te s, w h ic h w as m u ch b e tte r e q u ip p ed to m ee t su ch d em an d s.
E x p o rts o f fin ish e d m a n u fa c tu re s , th e re fo re , rose s h a rp ly b o th on
a n a bso lute b a sis a n d in re la tio n to o th e r m a jo r classes o f goods
e x p o rte d .
F in is h e d goods, in c lu d in g m a in ly m ilita ry e q uip m e n t, acco u n ted
f o r tw o -th ir d s o f th e goods su p p lie d to o th e r c o u n trie s in 1941, com ­
p a re d w ith o n e -h a lf in 1939. S im ila rly , o u r e x p o rts o f m a n u fa c ­
tu re d fo o d stu ffs b e g a n in 1941 to show la rg e g a in s as th e b e llig e re n t
c o u n trie s becam e in c re a sin g ly d e p e n d e n t u p o n u s f o r m ea ts, d a iry
p r o d u c ts, d rie d eggs, a n d o th e r processed foods. T h e o th e r m a jo r
35

-change in th e n o rm a l co m m o d ity s tru c tu re o f U n ite d S ta te s e x p o r t
tr a d e w as th e s h a rp d ro p b e g in n in g in 1939 in e x p o rts o f c ru d e
m a te ria ls, p a r tic u la r ly tobacco a n d co tto n , refle c tin g th e h u s b a n d in g
o f fo re ig n fin a n cia l reso u rces f o r even m o re e ssen tial p u rc h a ses h e re,
a n d th e o c cu p a tio n b y th e A x is o f o u r fo rm e r E u ro p e a n m a r k e ts fo r
th ese p ro d u cts.
I n a d d itio n to in c re a sin g o u r e x p o rts to th e U n ite d K in g d o m ,
C a n a d a , a n d o th e r c o u n trie s a t w a r w ith th e A x is, we fu rn is h e d ,
b e g in n in g in 1939, a g ro w in g volum e o f goods to S o u th A m erica.
T h is a rea , w h ich b e fo re th e w a r h a d been d e p e n d e n t o n E u ro p e fo r
a la rg e p o rtio n o f its im p o r t re q u ire m e n ts, tu rn e d to th is c o u n try
w h e n im p o rts a v ailab le fro m th e fo rm e r so urces w ere serio u sly r e ­
d u c ed because o f th e w a r. D u r in g each o f th e 2 y e a rs 1939-40 th e
v a lu e o f goods w h ich th e U n ite d S ta te s su p p lie d to S o u th A m eric a
w as a c tu a lly in excess o f th e v a lu e o f o u r im p o rts fro m t h a t area.
T h is w as a com p lete re v e rsa l o f o u r p r e w a r tr a d in g p o sitio n w ith
S o u th A m eric a, w hich h a d c o n siste n tly p ro v id e d u s w ith m o re goods
th a n w e su p p lie d , u s in g th e d o lla rs th u s e a rn e d to p a y f o r U n ite d
S ta te s services a n d o th e r in v isibles a n d also to m ak e p u rc h a se s in
o th e r co u n tries.
O th e r n o te w o rth y c han g e s in th e d ire c tio n o f o u r e x p o rt tr a d e
d u r in g th is p e rio d in c lu d e d th e c o m p lete cessatio n o f th e s u b s ta n tia l
p r e w a r sh ip m e n ts to G e rm an y , th e s h a rp d ro p in e x p o rts to o th e r
E u ro p e a n c o u n trie s as a re s u lt o f th e G e rm an in v asio n a n d th e A llie d
block ad e, a n d a d ra stic re d u c tio n in e x p o rts to J a p a n fo llo w in g th e
official fre e z in g in J u l y 1941 o f a ll U n ite d S ta te s com m ercial tr a n s ­
a c tio n s w ith t h a t c o u n try , except b y sp ecial license.
I m p o r ts S h o w M o d e r a te R is e

S tim u la te d by th e m a rk e d in c rea se in d o m estic in d u s tria l p ro d u c ­
tio n fo llo w in g th e o u tb re a k o f w a r in E u ro p e , o u r im p o rts rose fro m
a n a n n u a l r a te o f $2.1 b illio n in th e t h ir d q u a r te r o f 1939 to a n a n n u a l
r a te o f $2.8 b illio n d u r in g th e fo llo w in g 3 m o n th s. T h e fa c t t h a t
im p o rts fell fro m th is level to $2.6 b illio n d u r in g 1940 m ay be a t ­
tr ib u te d b o th to th e m o d e ra te d eclin e in d o m estic m a n u fa c tu rin g
a c tiv ity w h ich o c cu rre d d u r in g th e first 4 m o n th s o f th e y e a r a n d
to th e clo sin g o f s u p p ly sources in c o n tin e n ta l E u ro p e .
A s o u r n a tio n a l d efen se p ro g ra m g a in e d m o m e ntum fo llo w in g th e
G e rm a n in v a sio n o f F ra n c e a n d th e L o w C o u n trie s, th e p ro n o u n c ed
re d u c tio n in o u r p u rc h a se s fro m c o n tin e n ta l E u ro p e becam e in c re a s­
in g ly offset b y o u r g r o w in g im p o rts fro m o th e r a re as, e sp ecially
C a n a d a . L a tin A m e ric a, a n d th e F a r E a s t, a ll o f w h ich looked in ­
c re a sin g ly to th e U n ite d S ta te s f o r m a rk e ts in p lac e o f th o se lo st
in E u ro p e . D u rin g th e o p e n in g q u a r te r o f 1941, in fa c t, im p o rts
w ere a t h ig h e r levels th a n in th e f o u r th q u a rte r o f 1939; a n d in th e
fin al 3 m o n th s o f 1941 th e y re ac h ed an a n n u a l r a te o f $3.7 b illio n .
I m p o r t s L a g in R e la t io n to N a tio n a l I n c o m e

T h e a g g re g a te v a lu e o f o u r im p o rts d u r in g 1939-41, how ever, w as
c o n sid e ra b ly below t h a t w h ich w ould n o rm a lly h av e been a n tic ip a te d
on th e b a sis o f th e level o f n a tio n a l incom e d u r in g th e sam e p erio d .
T h e re g re ssio n lin e s in c h a r t 7 in d ic a te in te rm s o f 1939 p ric es th e
re la tio n s h ip s betw een each o f th e five m a jo r econom ic classes o f im ­
p o r ts a n d th e n a tio n a l incom e d u r in g th e y e a rs 1921-38. O n th e b asis
36

o f th ese p re -w a r re la tio n sh ip s, i t w ill he n o te d t h a t ch an g es in n a tio n a l
incom e h a v e been m o re stro n g ly a sso ciated w ith o u r p u rc h a ses a b ro a d
o f c ru d e m a te r ia ls a n d sem i-finish ed a n d finished m a n u fa c tu re s th a n
w ith o u r p u rc h a se s o f foo d stu ffs. I m p o rts o f foo d stu ffs a re re la tiv e ly
in e la stic w ith re sp e ct to n a tio n a l incom e a n d d e p e n d , to a la rg e e x te n t,
o n c ro p c o n d itio n s h e re a n d a b ro a d .
C h a r t 7 a lso show s in te rm s o f 1939 p ric es im p o rts o f th e sam e m a jo r
g ro u p s a n d n a tio n a l incom e d u r in g each o f th e 6 y e a rs 1939-45. D u r ­
in g 1939, im p o rts o f a ll classes o f goods ex ce pt foodstuffs w e re below
C h a rt

7

U N IT E D S T A T E S IM P O R T S F O R C O N S U M P T IO N S
IN

E C O N O M IC C L A S S E S ,

1 9 3 9 P R IC E S , R E L A T E D T O N A T IO N A L IN C O M E

IN

1939 D O LLA R S

SOURCE OF IMPORT DATA: DEPARTMENT OF COMMERCE,BUREAU OF THE CENSUS
NOTE: REGRESSION LINES WERE FITTED TO OATA FOR 1921-58.

37

w h a t one w o u ld ex p e ct on th e b a sis o f th e 1921-38 re la tio n s h ip b etw een
im p o rts a n d incom e. I n th e c ourse o f th e fo llo w in g 2 y e a rs, o u r p u r ­
chases a b ro a d , e x ce p t f o r c ru d e m a te ria ls a n d c ru d e foodstuffs, fe ll
even f u r th e r below th e “n o rm a ls” c a lc u la te d on th is basis. I m p o rts o f
c ru d e m a te ria ls, how ever, rose in 1940 to a level a lm o st c o n siste n t w ith
o u r in c re a s in g incom e, a n d in 1941 to a p o in t c o n sid erab ly above t h a t
level.
T h e decline in im p o rts o f fin ish ed a n d sem i-finished m a n u fa c tu re s
d u r in g 1940-41 w as acco u n ted f o r m a in ly by th e d ra stic c u rta ilm e n t o f
sh ip m e n ts fro m c o n tin e n ta l E u ro p e , w h ich d u rin g th e p re w a r p e rio d
h a d been a m a jo r source o f such im p o rts. O n th e o th e r h a n d , th e
r a p id ly ris in g im p o rts o f cru d e m a te ria ls, e sp ecially ru b b e r, tin , cop: p e r, w ool, h id es a n d sk ins, a n d fu rs , cam e m a in ly fro m L a tin A m eric a
a n d A sia. I n a d d itio n to m e e tin g c u rre n tly ris in g U n ite d S ta te s com ­
m e rc ia l needs, th ese a re as, p a r tic u la r ly th e F a r E a s t, su p p lie d , b e g in ­
n in g in 1940, la rg e q u a n titie s o f stra te g ic m a te r ia ls su ch as ru b b e r a n d
tiir to G o v e rn m en t c o rp o ra tio n s e n g a g ed in a cc u m u la tin g re serv e stock
p iles f o r n a tio n a l defense. F o r th e se reason s, im p o rts o f c ru d e m a te ­
r ia ls rose n o t o n ly on a n a b so lu te b a sis b u t also in re la tio n to o th e r
fo re ig n p u rch a se s, a c c o u n tin g in 1941 f o r 43 p e rc e n t o f to ta l im p o rts
f o r c o n su m p tio n , c o m p are d w ith 31 p e rc e n t d u rin g th e y e a rs 1936-38.
M ea su red b y th e D e p a rtm e n t o f C om m erce u n it-v a lu e in d ex , D ecem ­
b e r 1941 im p o rt p ric es w ere 22 p e rc e n t above th o se f o r th e p e rio d 193638 (see c h a r t 10, p . 4 2 ), re fle ctin g th e g ro w in g sc a rc ity o f fo re ig n su p ­
p lies in re la tio n to th e m o u n tin g d em a n d s o f w a r in d u s trie s a n d con­
su m ers w ith w a r-in fla te d incom es.
U n i t e d S t a t e s i n t h e W a r , J a n u a r y 1 9 4 2 —J u n e 1 9 4 5

T h e $48.6 b illio n o f g oods w h ich w e su p p lie d to o th e r co u n tries d u r ­
in g th e p e rio d J a n u a r y 1942 to J u n e 1945 reflected th e g ro w th o f a
v a st w a r p ro d u c tio n p ro g ra m in th is c o u n try a n d th e e x te n t to w h ich
w e w ere able to p ro v id e o u r A llie s w ith w a r m a te ria ls a n d o th e r goods
n eed ed in th e fig h t a g a in s t th e A xis. O n th e o th e r h a n d , th e g re a tly
in crea se d a m o u n t o f g oods—$18.2 b illio n — w h ich o u r A llie s a n d o th e r
f rie n d ly c o u n trie s fu rn is h e d to u s over th e sam e p e rio d w as in d ic a tiv e
o f th e ir re c ip ro c a l efforts to su p p ly e ssen tia l m a te ria ls f o r im p o rt in to
th e U n ite d S ta te s a n d f o r c o n su m p tio n by o u r a r m e d fo rce s a b ro a d .
T h e fa c t t h a t th e U n ite d S ta te s su p p lie d $30.4 b illio n o f goods in excess
o f th e a m o u n t received c an be a ttr ib u te d to tw o m a jo r fa c to rs. F ir s t,
fro m th e s ta n d p o in t o f resources, e q uip m e n t, a n d d ista n ce fro m th e
c om b at a re as, o u r a b ility to p ro d u c e w as f a r su p e rio r to t h a t o f o u r
A llie s ; second, b y e sta b lish in g th e len d -lease m echanism , we su b o rd i­
n a te d fin a n cia l c o n sid e ra tio n s to th e n e ed f o r m a k in g a v ailab le th e
g o o ds w h ich o u r m o re a d v a n ta g e o u s p o sitio n e nab le d us to p rodu ce.
T h e $30.4-billion excess o f e x p o rts d id n o t m e asu re th e c h an g e s in
o u r fin a n c ia l p o sitio n on a cc ou n t o f m e rc h a n d ise tra n sa c tio n s. F o r
th ese 3 1/ 2 y e a rs o u r e x p o rts r e q u ir in g d o lla r p a y m e n ts w e re a c tu a lly
$1.8 b illio n below o u r c o rre sp o n d in g cash p u rch a se s a b ro a d (see ta b le
3 ). T h is is e x p la in e d b y th e fa c t t h a t o u r g ro w in g excess o f im p o rts
fro m W e s te rn H e m isp h e re c o u n trie s c o n tin u ed d u r in g th e w a r to be
fin an ced on a cash basis, w h ile th e tre m e n d o u s excess o f e x p o rts to
E u ro p e co n sisted o f len d -lease a n d o th e r goods fu rn is h e d on a
u n ila te ra l basis.
38

E x p o r t s a t R e c o r d L e v e ls

A lth o u g h , d u rin g th e first few m o n th s o f o u r p a rtic ip a tio n in th e
w a r, e x p o rts d eclin ed so m e w h a t fro m th e level re a c h e d in th e la s t
q u a r te r o f 1941, th e y soon resum ed th e ir sh a rp a n d ste a d y rise as a re ­
s u lt o f c o n s ta n tly in c re a s in g len d -lease sh ip m e n ts. A p e a k a n n u a l
r a te o f $15.9 b illio n w a s re a c h e d in th e second q u a rte r o f 1944, w hen
final p r e p a ra tio n s w ere b e in g m a d e f o r th e A llie d in v a sio n o f c o n ti­
n e n ta l E u ro p e . T h e slow b u t ste a d y d eclin e w h ich follow ed a n d con­
tin u e d th ro u g h th e first q u a r te r o f 1945 can be a ttr ib u te d e n tire ly to
th e g r a d u a l re d u c tio n in o u r lend-lease sh ip m e n ts as th e d e m a n d s o f
o u r A llie s f o r d u ra b le m ilita ry e q u ip m en t b e g a n to level off a n d th e
tid e o f w a r s h if te d in o u r fav o r.
T h e im p o rta n c e o f th e le nd-lease su p p ly m ech an ism over th e p e rio d
d u rin g w h ic h th e U n ite d S ta te s w as a ctiv e ly a t w a r is in d ic a te d b y th e
fa c t t h a t m o re th a n fo u r-fifth s o f o u r p e a k e x p o rts d u rin g th e second
q u a r te r o f 1944 c on sisted o f lend-lease sh ip m en ts. O v e r th e sam e
p e rio d th e a m o u n t o f goods su p p lie d th ro u g h n o rm a l com m ercial c h a n ­
nels, lim ite d b y sca rc ities o f m a te r ia ls a n d s h ip p in g fa c ilitie s a n d b y
o th e r w a rtim e re s tric tio n s, w as d ra s tic a lly red u ce d. D u r in g each o f
th e y e ars 1943 a n d 1944 such c om m ercial sh ip m en ts acc ou n ted f o r only
16 p e rc e n t o f th e to ta l goods su p p lie d to o th e r c ou n tries.
I n a d d itio n to rec o rd e d e x p o rts, goods m ad e a v aila b le to fo re ig n e rs
d u r in g th e 3% y e a rs ended J u n e 30,1945, in c lu d e d $700 m illio n o f fo o d
a n d o th e r c iv ilia n su p p lie s sh ip p e d by th e a rm e d services to lib e ra te d
a n d occu pied a re a s b e g in n in g in th e su m m er o f 1944; $580 m illio n o f
m a te r ia ls so ld fro m m ilita ry stocks o v e rse a s; a n d a s u b s ta n tia l a m o u n t
o f o th e r goods m ad e a v a ila b le th ro u g h lend-lease a n d G o v e rn m en t
c h an n els fro m o th e r oversea sources. T h e se tra n s fe rs b y G o v e rn m en t
agencies, to g e th e r w ith th e v a st a m o u n t o f o th e r G o v e rn m e n t s h ip ­
m e n ts in c lu d e d in th e official e x p o rt sta tis tic s (m a in ly lend-lease a n d
sales o f com m odities b y G o v e rn m e n t c o rp o ra tio n s ), h a v e b een d is­
cussed in d e ta il in a p rev io u s section. S u c h G o v e rn m en t “ e x p o rts ”
to ta le d $38.6 b illio n , o r 80 p e rc e n t o f a ll goods su p p lie d to fo re ig n e rs
d u r in g th is 3 % -y e a r p e rio d .
B ecause th e flow o f goods th ro u g h b o th G o v e rn m en t a n d p riv a te
c h an n e ls w as d ic ta te d b y m ilita ry necessity, th e g e o g ra p h ic a l p a tte r n
o f o u r e x p o rt tr a d e becam e ra d ic a lly d is to rte d . O bviously, th e m o st
p re ss in g d e m a n d s f o r a id cam e fro m o u r tw o m a jo r A llie s, th e U n ite d
K in g d o m a n d R u ssia. R e co rd e d e x p o rts to th e U n ite d K in g d o m ,
w h ic h in 1941 w ere a lre a d y m ore th a n th re e tim e s th e a v era g e fo r th e
3 y e a rs 1936-38, rose to a h ig h in 1944 o f $5.2 b illio n — a n a m o u n t over
th re e tim e s th e 1941 level. E x p o rts to R u ssia show ed a n even g re a te r
p ro p o rtio n a te in crease, h a v in g rise n fro m a n a v erag e a n n u a l r a te o f
$49 m illio n d u r in g 1936-38 to a p e a k o f $3.5 b illio n in 1944. N o te ­
w o rth y in crea se s also o c cu rred in sh ip m e n ts to o u r o th e r A llie s, p a r ­
tic u la r ly C a n ad a , A u s tr a lia , a n d I n d ia . I t w ill be re c a lle d t h a t th e
b u lk o f w a rtim e e x p o rts to th e U n ite d K in g d o m , R u ssia , A u s tr a lia ,
a n d I n d ia w ere m a d e a v aila b le as s tra ig h t, o r n o n re im b u rse a b le , lendlease, w h ile e x p o rts to C a n a d a c o n tin u ed to be financed o n a cash basis,
even th o u g h som e w ere sh ip p e d th ro u g h lend-lease chan nels.
A t th e sam e tim e t h a t e x p o rts to E u ro p e , C a n a d a , A sia , a n d O cean ia
m oved in ra p id ly g ro w in g a m o u n ts, o u r sh ip m e n ts to L a tin A m eric a
fa ile d to show a c o rre sp o n d in g in crease. T h e d e m a n d s o f th is a re a
w ere m a in ly f o r o u r d u ra b le c iv ilia n goods, th e p ro d u c tio n a n d e x p o rt
39

o f w h ich w ere serio u sly r e s tric te d b y sh o rta g e s o f m an p o w er, te c h n ic a l
p ro d u c tiv e fa c ilitie s , ra w m a te ria ls, a n d sh ip p in g fa c ilitie s . T h u s
L a tin A m e ric a becam e th e o n ly m a jo r a re a w h ich d u r in g th e w a r s u p ­
p lie d us w ith a n excess o f im p o rts.
C h a rt

8

W ith referen c e to th e co m m o d ity co m p o sitio n o f o u r e x p o rt tr a d e ,
sh ip m e n ts o f finished m a n u fa c tu re s c o n tin u e d , as in th e e a rlie r p h a se
o f th e E u ro p e a n w a r, to show th e m a jo r in crease. I n 1943 a n d 1944
such goods a cc ou n ted f o r a b o u t th re e -fo u rth s o f to ta l e x p o rts, com ­
p a re d w ith a b o u t o n e -h a lf in th e y e a rs 1936-38. E x p o rts o f d ire c t m ili­
ta r y e q u ip m e n t— in c lu d in g m a in ly a ir c r a f t, ta n k s , vessels, a n d
a m m u n itio n , c o m p a ra tiv e ly n e g lig ib le in p re w a r y ears— clim bed in
1942 to n e a rly $3 b illio n a n d a v e ra g e d $5.6 b illio n in 1943 a n d 1944.
O th e r e sse n tial finished g oods w h ich th e U n ite d S ta te s fu rn is h e d its
A llie s in g re a tly in c rea se d volum es in c lu d e d a ll ty p e s o f in d u s tria l
m a c h in e ry , ir o n a n d steel m a n u fa c tu re s, te x tile s, a n d p e tro le u m p r o d ­
ucts. A s o th e r c o u n trie s, p a r tic u la r ly th e U n ite d K in g d o m , becom e
m ore d e p e n d e n t on us f o r e sse n tial c iv ilia n goods as w ell as w a r
m a te ria ls, we c o n tin u e d to in crea se o u r e x p o rts o f processed fo o d ­
stuffs, esp e cially m ea ts, ed ib le fa ts , d a ir y p ro d u cts, d rie d eggs, a n d
d rie d a n d c an n ed f r u its a n d vegetables. E x p o rts o f ra w co tto n , to ­
bacco, a n d o th e r m a jo r c ru d e m a te ria ls likew ise show ed s u b s ta n tia l
in creases a f te r we e n te re d th e w a r, a lth o u g h , w ith th e ex ce p tio n o f
coal, th e y d id n o t rise to p r e w a r levels. S h ip m e n ts o f coal, how ever,
s tim u la te d b y C a n a d a ’s h e a v y w a r-p ro d u c tio n re q u ire m e n ts, c o n tin u ed
to rise f a r above th o se d u r in g th e p re w a r p e rio d .
I m p o r ts R e c o v e r A fte r I n it ia l S lu m p

O u r im p o rts fe ll fro m a n a n n u a l ra te o f $3.7 b illio n in th e la s t q u a r­
te r o f 1941 to a n a n n u a l ra te o f a p p ro x im a te ly $3.1 b illio n d u rin g th e
first 3 m o n th s o f 1942. T h is decline, w h ich c o n tin u e d u n til th e final
q u a r te r o f 1942, w as n o t th e r e s u lt o f a n y re d u c tio n in o u r d e m a n d fo r
goods p ro d u ce d a b r o a d ; o u r needs, especially th o se f o r ra w m a te ria ls
to be used f o r w a r p ro d u c tio n , w ere m an y tim e s g r e a te r th a n in a ny
40

C hart 9
U N I T E D S T A T E S E X P O R T S O F D O M E S T IC M E R C H A N D I S E , B Y
E C O N O M IC C L A S S E S , IN S E L E C T E D Y E A R S , 1 9 0 0 - 4 5
B IL L I O N S

OF

M A JO R

DO LLARS

12 ----------------- ------------------------------------------------- —---- ——-----------

1900

19 10

1920

19 30

1940

1941

19 42

1943

1944

1945

SOURCE OF DATA DEPARTMENT OF COMMERCE. BUpEftU OF THE CENSUS.

p rev io u s p e rio d . R a th e r, th e re d u c tio n in im p o rts w as cau sed m a in ly
b y th e clo sing o f th e N e th e rla n d s In d ie s, B ritis h M a la y a, F r e n c h In d o C h in a , a n d o th e r o f o u r m a jo r su p p ly sources in th e F a r E a s t a n d by
th e c u rta ilm e n t o f sh ip m en ts fro m o th e r a re a s as fa c ilitie s fo rm e rly
used th e re fo r th e p ro d u c tio n o f e x p o rt goods w ere d iv e rte d to m ore
e sse n tial pu rpo ses. O th e r lim itin g fa c to rs w ere th e sc a rc ity o f s h ip ­
p in g fa c ilitie s a n d th e effects o f enem y su b m a rin e w a rfa re .
L a rg e ly u n d e r th e stim u lu s o f th e G o v e rn m e n t’s fo r e ig n p ro c u r e ­
m e n t a n d d ev e lo p m e n t p ro g ra m , how ever, th e p ro d u c tio n o f m a te r ia ls
soon b e g a n to e x p a n d w ith in th e a re a re m a in in g open to A llie d tra d e .
R ec orde d im p o rts in th e clo sing m o n th s o f 1942 th u s h a d s ta r te d a
stea d y u p w a rd clim b, a n d by th e first q u a r te r o f 1945 th e y w ere flow ing
in a t a f a ir ly c o n s ta n t a n n u a l ra te o f $4.1 b illion .
T h e v a lu e o f im p o rts d u rin g th is p e rio d c a n n o t be discussed w ith ­
o u t re fe ren c e to rises in th e p ric e s o f im p o rte d goods. A c co rd in g
to th e D e p a rtm e n t o f C om m erce u n it-v a lu e in d ex , im p o rt p ric e s rose
s h a rp ly in 1942 a n d 1943 a n d c o n tin u e d to m ove u p w a rd , th o u g h less
ra p id ly , th ro u g h 1945. B y J u n e o f 1945, im p o rt p ric es as m e asu re d
b y th is in d ex w ere 30 p e rc e n t above levels p re v a ilin g in D ecem b er 1911
(see c h a r t 1 0 ). T o o b ta in e sse n tial m a te ria ls, th e U n ite d S ta te s w as
o fte n com p elled to p u rc h a se fro m e x trem ely h ig h -c o st fo re ig n p r o ­
ducers. B ecau se o f th e existen ce o f p ric e c eilin g s in th e U n ite d S ta te s,
p r iv a te im p o rte rs in m an y cases c ou ld n o t affo rd to p a y th e necessary
h ig h p ric es p re v a ilin g fo r ru b b e r, tin , q u a rtz , a n d a n u m b e r o f o th e r
com m odities. I n such cases, i t w ill be rec alle d , G o v e rn m en t c o r p o ra ­
tio n s p u rc h a se d a n d im p o rte d th e goods, a n d reso ld th em a t a loss a t
d o m estic p r ic e ceiling s.
I n a d d itio n to officially rec o rd e d im p o rts, th e U n ite d S ta te s received
fro m a b ro a d d u r in g th ese 3 y2 y e ars a la rg e v olum e o f o th e r goods,
in c lu d in g $4.0 b illio n su p p lie d as c o n trib u tio n s u n d e r rev erse len d lease to U n ite d S ta te s a rm e d forces overseas, n e a rly $1.3 b illio n p u r ­
ch ased a n d consum ed b y o u r a rm ed forces a b ro ad , a n d a su b s ta n tia l
a m o u n t o f o th e r g o o ds p u rc h a se d a b ro a d by G o v e rn m en t agencies b u t

769155 — 48 -

-4

41

C h a rt

1939
NOTE :

1940

1941

10

19 42

19 43

19 44

19 45

EXPORT UNIT VALUE INDEXEXCLUDES LEND-LEASEEXPORTS FOLLOWING 1941; FIGURES AVAILABLE
ON AN ANNUAL BASIS ONLY.

S O U R C E O F D A T A : E X P O R T A N O IM P O R T U N IT V A L U E IN D E X E S , D E P A R T M E N T O F C O M M E R C E , O F F I C E O F IN T E R N A T IO N A L
_ _ _ _ _ _ _ _ _ _ T R A D E ; U. S - W H O L E S A L E P R IC E IN O E X , D E P A R T M E N T O F L A B O R , B U R E A U O F L A B O R S T A T IS T IC S ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4 7 - 3 0 1

n o t im p o rte d in to th e U n ite d S ta te s o r, fo r som e o th e r reaso n , n o t
re p o rte d in th e official im p o rt sta tistic s. T h e se a d d itio n a l goods, to ­
g e th e r w ith th o se p h y sic a lly im p o rte d b y th e G o v e rn m en t (m a in ly
co m m o d ity p u rch a se s by G o v e rn m en t c o rp o ra tio n s a n d W a r D e p a r t­
m e n t a n d N a v y D e p a rtm e n t p u rc h a se s in C a n a d a ) , b ro u g h t th e to ta l
o f goods a c q u ired d ire c t th ro u g h G o v e rn m e n t c h an n e ls to $10.1 b il­
lio n , o r 55 p e rc e n t o f th e $18.2-billion to ta l. D u rin g 1943, w hen G o v ­
e rn m e n t e x p e n d itu re s a b ro a d f o r com m o d ities a n d f o r su p p lie s to
m a in ta in o u r oversea fo rce s re ac h ed p e a k ra te s , goods a cq u ired by
th e G o v e rn m en t a cc ou n ted f o r m o re th a n 60 p e rc e n t o f a ll m erch a n d ise
received fro m o th e r c o u n tries.
T h e loss o f E u ro p e a n su p p ly sources in 1940, a n d o f F a r E a s te r n a n d
P h ilip p in e su p p ly sources in 1942, n a tu r a lly caused th e U n ite d S ta te s
to look in c re a sin g ly to o th e r a re a s to su p p ly o u r g ro w in g in d u s tria l
d em an d s. M a in ly as a re s u lt o f th e G o v e rn m e n t’s d e v e lo p m e n t a n d
p u rc h a se o p e ra tio n s th e re , L a tin A m eric a c o n tin u ed to p ro v id e a
c o n s ta n tly in c re a sin g a m o u n t o f goods f o r e x p o rt to th e U n ite d S ta te s.
O u r im p o rts fro m th e 20 L a tin A m e ric a n R ep u b lics d u r in g th e first
h a lf o f 1945 w ere a t a n a n n u a l r a te o f $1.6 b illio n — o v er th re e tim e s
th e p re w a r figure.
A n even m o re su b s ta n tia l in crea se w as re co rd e d f o r o u r im p o rts fro m
C a n a d a , w h ich rose fro m $340 m illio n in 1939 to n e a rly $1.3 b illio n
in 1944. T h e d ra s tic rise in th e flow o f goods b etw een th e U n ite d
S ta te s a n d C a n a d a p ro v id e s a n excellen t in d ic a tio n o f th e e x te n t to
w h ich b o th c o u n trie s c o o p e ra ted in th e com m on w a r effort. O th e r
B ritis h E m p ir e c o u n trie s also p ro v id e d us w ith g re a tly in crea sed
am o u n ts o f goods. T h e d eclin e in o u r rec o rd e d im p o rts fro m th e
U n ite d K in g d o m w as offset m a n y tim e s by th e $2.8 b illio n o f rev erse
len d -le ase g oo ds c o n trib u te d th ro u g h S ep tem b e r 1, 1945, to o u r a rm ed
forces sta tio n e d th ere. A t th e sam e tim e , I n d ia , A u s tr a lia , a n d N ew
Z e a la n d n o t o n ly in c rea se d th e ir sh ip m e n ts o f e sse n tial m a te ria ls to
th e U n ite d S ta te s b u t also su p p lie d o u r tro o p s w ith la rg e a m o u n ts o f
rev erse len d -lease goods.
42

C hart 11

im p o r ts C o n tin u e to D e c lin e in R e la tio n to N a tio n a l I n c o m e

O u r rec o rd e d im p o rts in th e p e rio d d u rin g w h ich th e U n ite d S ta te s
w as a c tiv ely a t w a r, lim ite d to goods w h ic h c ou ld be p ro d u c e d w ith in
th e a re a s n o t u n d e r A x is d o m in a tio n a n d w h ich c o u ld be tr a n s p o rte d
b y scarce s h ip p in g fa c ilitie s, d eclin ed even f u r th e r in re la tio n to th e
size o f o u r n a tio n a l incom e th a n d u r in g 1940 a n d 1941 (see c h a r t 7 ).
I n 1942 th e decline in c lu d e d a ll five m a jo r econom ic classes. A lth o u g h
im p o rts o f finished m a n u fa c tu re s a n d o f m a n u fa c tu re d foo d stu ffs r e ­
covered so m e w h a t a f te r 1942, th e y w ere, in 1945, s till f a r below
n o rm a l levels c alc u la te d o n th e b a sis o f th e p re w a r re la tio n s h ip
b etw een im p o rts a n d incom e in th is c o u n try . U n d o u b te d ly , o u r im ­
p o rts o f fin ish e d m a n u fa c tu re s w ill c o n tin u e to re m a in below n o rm a l
u n til E u ro p e a n s u p p ly sources c an be re c o n s tru c te d a n d /o r o th e r
a re a s becom e sufficiently in d u s tria liz e d to m ee t o u r d e m a n d f o r th is
ty p e o f goods. A lth o u g h in 1944 im p o rts o f c ru d e foo d stu ffs rose to
c alc u la te d levels, th e y fe ll a g a in in 1945 to a p o in t below th e lin e o f
reg re ssio n .
C ru d e m a te ria ls, w h ich in 1941 w ere im p o rte d a t a r a te c on sid e ra b ly
h ig h e r th a n w as c o n siste n t w ith th e level o f n a tio n a l incom e d u rin g
t h a t y e a r , show ed th e sh a r p e st re la tiv e d ro p , refle ctin g th e Ja p a n e se
in v asio n o f im p o r ta n t su p p ly in g a re a s in th e F a r E a s t.
I m p o rts o f b o th c ru d e m a te ria ls a n d sem im a n u fa c tu re s c o n tin u ed to
decline in re la tio n to n a tio n a l incom e th ro u g h 1944. A lth o u g h , in
1945, th e re w as a s lig h t re co v e ry in im p o rts o f c ru d e m a te ria ls a n d a
so m e w h a t la r g e r re v iv a l o f im p o rts o f se m im a n u fa ctu re s, b o th classes
c o n tin u e d to re m a in f a r below w h a t m ig h t h a v e b een a n tic ip a te d on
th e b a sis o f th e c o rre sp o n d in g level o f o u r n a tio n a l incom e.
I m p o rts o f c ru d e m a te r ia ls — by f a r th e m o st im p o r ta n t g ro u p of
com m o d ities f o r w h ich th e U n ite d S ta te s is d e p e n d e n t u p o n fo re ig n
su p p ly sources— w ere, th ro u g h o u t 1942-45, f a r below 1941 levels on
a n a b so lu te b asis, as w ell as in re la tio n to n a tio n a l incom e. P a r ti c ­
u la r ly n o te w o rth y w as th e v irtu a lly com p lete c essation o f silk im ­
p o r ts a n d th e d ra s tic re d u c tio n in im p o rts o f cru d e ru b b e r. T h e $33
m illio n o f ru b b e r im p o rte d in 1943 m a y be c o m p are d w ith $418 m illio n
in 1941, w h e n th e G o v e rn m en t m ad e h e a v y sto c k -p ilin g p u rc h a ses
b e fo re th e loss of B ritis h M ala y a , th e N e th e rla n d s In d ie s, a n d F re n c h
In d o c h in a . A t th e sam e tim e t h a t im p o rts o f ru b b e r a n d ra w silk
d eclin e d so a b ru p tly , how ever, im p o rts o f som e o th e r c ru d e m a te r ia ls
43

w ere g re a tly accelerated . T h e se in c lu d e d m a in ly w ool, n o n fe rro u s
ores a n d c o n c en tra tes, a n d in d u s tria l d iam o n d s, a ll o f w h ich w ere
e ssen tial f o r p ro d u c in g e q u ip m e n t f o r o u r ow n a rm e d forces a n d th o se
o f o u r A llies.
M a jo r c han g e s in th e c om m o d ity co m p o sitio n o f im p o rts n o t c las­
sified as c ru d e m a te r ia ls w ere h e av y in crea se s in im p o rts o f coffee,
w h e at, co p p e r, a lu m in u m , lead , nick e l, lu m b e r, a n d m ilita ry e q u ip ­
m e n t a n d p ro n o u n c ed red u ctio n s in im p o rts o f tin , c o tto n a n d w oolen
m a n u fa c tu re s , a n d b a n a n a s. T h e f a c t t h a t m a jo r in creases w ere con­
fined to th o se c o m m o d ities im p o r ta n t f o r w a r p ro d u c tio n o r c iv ilia n
use reflects th e effectiveness o f m easu res a d o p te d b y th e G o v e rn m en t
to e x pe d ite th e inflow o f e ssen tial m a te r ia ls a n d foo d stu ffs a t th e
expense o f re d u c in g n o n essen tia l im p o rts, such as b a n a n as.
C h a rt

T r a n s itio n F r o m

12

W a r t o P e a c e , J u l y 1 9 4 5 —D e c e m b e r 1 9 4 5

T h e su rre n d e r o f G e rm a n y in M ay 1945, a n d o f J a p a n o n ly a fewT
m o n th s la te r, h a d a n im m e d iate a n d d ra stic effect u p o n o u r in te r n a ­
tio n a l m e rc h a n d ise tra n sa c tio n s. A f te r th e end o f th e E u r o p e a n
w a r, sh ip m e n ts to o u r A llie s w ere red u ce d sh a rp ly a n d we d iv e rte d
o u r m a jo r e n erg ies to th e jo b o f w in n in g v ic to ry in th e P acific. W h e n
th is w as a ccom plished i t obv iously w as no lo n g er necessary f o r th e
U n ite d S ta te s to c o n tin u e su p p ly in g its A llie s w ith th e m ean s o f
w a g in g w a r. L e nd -lease a id , ex ce p t f o r goods a lre a d y in th e p ip e
lin e , w as officially te rm in a te d as o f Y J -d a y . T h e re a fte r, fo re ig n
c o u n trie s w ere re q u ire d to p a y in cash, e ith e r im m e d ia te ly o r onT a
d e fe rre d basis, f o r len d -lease p ip e -lin e goods, a n d f o r a ll o th e r U n ite d
S ta te s goods ex cep t th o se d ire c te d to th e re lie f a n d r e h a b ilita tio n o f
lib e ra te d a n d occu pied a reas. T h e G o v e rn m e n t’s p o s tw a r fo re ig n le n d in g p ro g ra m , w h ich h e lp e d fo re ig n c o u n trie s to o b ta in th e d o l­
la rs necessary f o r e sse n tial p u rc h a se s h e re d u rin g th e tr a n s itio n p e rio d ,
is discussed elsew here.
W ith in th is ra d ic a lly a lte re d fra m e w o rk , th e v a lu e o f g oo ds su p ­
p lie d to fo re ig n e rs fe ll fro m $7.4 b illio n in th e first 6 m o n th s o f 1945 to
44

$4.9 b illio n d u rin g th e la s t h a lf o f th e y e ar. A t th e sam e tim e, th e ces­
sa tio n o f rev erse len d -lease caused a $600-m illion decline in th e v a lu e
o f goods a c q u ired fro m fo re ig n sources. E v e n th o u g h o u r n e t b a l­
ance on m e rc h an d ise a cc ou n t d r o p p e d fro m $4.2 b illio n in th e first
h a lf o f th e y e a r to $2.2 b illio n , th e re w as a s h if t fro m a n e g a tiv e cash
tr a d e b a la n c e o f $36 m illio n to a p o sitiv e cash b a la n c e o f $892 m il­
lio n (see ta b le 3 ).
E x p o r ts D e c lin e A b r u p tly

-

'

S

T h e f a ll in o u r e x p o rts fro m a n a v era g e m o n th ly ra te o f $1,070
m illio n in A p r il a n d M ay o f 1945 to a n a v erag e o f $880 m illio n d u r ­
in g J u n e a n d J u ly re s u lte d a lm o st e n tire ly fro m a re d u c tio n in sh ip m ents on lend-lease accoun t. I n A u g u st, th e re w as a co n sid e ra b le d e ­
clin e in com m ercial as w ell as len d -le ase sh ip m e n ts. T h e sh a rp e st
d ro p , how ever, o c cu rred im m e d ia te ly fo llo w in g Y J-c la y a n d th e v i r ­
tu a lly com p lete te rm in a tio n o f s tr a ig h t lend-lease. O u r e x p o rts d u rin g O c to b e r ($455 m illio n ) w ere lo w er th a n in a n y p re v io u s m o n th
since S e p te m b e r 1941.
U n d e r th e stim u lu s o f h e av y re lie f a n d re c o n stru c tio n d e m a n d s in
E u ro p e , e x p o rts show ed a p ro n o u n c e d reco v ery in th e la s t 2 m o n th s
o f 1945. I n a d d itio n to th e fa s t-g r o w in g a m o u n t o f goods m o v in g
th ro u g h n o rm a l com m ercial ch an n els, th e re w ere th e m o u n tin g tr a n s ­
fe rs o f foo d a n d o th e r c iv ilia n su p p lies re p re s e n tin g c o n trib u tio n s to
th e U n ite d N a tio n s R e lie f a n d R e h a b ilita tio n A d m in istra tio n . S uc h
U N R R A sh ip m en ts— re la tiv e ly n e g lig ib le in th e e a rly m o n th s o f
1945— a m o u n te d to m o re th a n $90 m illio n in D ecem ber. A m o d e ra te
recovery in lend-lease sh ip m en ts also a cc ou n ted f o r p a r t o f th e m a rk e d
rise in re co rd e d e x p o rts d u rin g N ovem ber a n d D ecem ber. T h e se s h ip ­
m en ts c onsisted a lm o st e n tire ly o f p ip e -lin e c iv ilia n -ty p e goods w h ich ,
f o r th e m o st p a r t, w ere b e in g m ad e a v a ila b le on c re d it te rm s
(see p. 2 3 ).
T h o u g h m a n y G o v e rn m en t w a rtim e e x p o rt c o n tro ls w e re re la x e d
fo llo w in g V J -d a y , i t w as s till n o t possib le f o r o th e r c o u n trie s to o b ta in
a ll th e A m e ric a n goods th e y d e sire d , even i f th e y h a d possessed am p le
fin a n c ia l resources. M an y goods c o n tin u ed to be scarce. R ec o n v er­
sion o f U n ite d S ta te s in d u s try c ou ld n o t be a cco m p lish ed o v e rn ig h t,
a n d a tre m e n d o u s dom estic a n d fo re ig n d e m a n d h a d a cc u m u la te d fo r
goods w hose p ro d u c tio n h a d been sto p p e d o r c u rta ile d d u r in g th e w a r.
T o m ee t th e m o st u r g e n t d em a n d s h e re a n d a b ro a d , i t w as n ecessary
f o r th e G o v e rn m en t to m a in ta in a c o n sid e ra b le n u m b e r o f e x p o rt con­
tr o ls th ro u g h th e end o f 1945. A n in crea se in e x p o rts on p r iv a te ac­
c o u n t o f $500 m illio n d u r in g th e second h a lf o f 1945, how ever, in d ic ate d t h a t th e tr a n s itio n fro m w a rtim e to p eacetim e tr a d in g r e la tio n ­
sh ip s w as a lr e a d y w ell u n d e r w a y b y th e e n d o f 1945.
D e sp ite th e d ra stic re d u c tio n in th e G o v e rn m en t m e rc h an d ise a c ­
c o u n t fo llo w in g th e te rm in a tio n o f s tr a ig h t lend-lease, th e m a g n itu d e
o f o th e r G o v e rn m en t fo r e ig n p ro g ra m s in d ic a te d t h a t G o v e rn m en t
tr a n s a c tio n s w ould c o n tin u e to a cc ou n t f o r a la rg e p o rtio n o f th e to ta l
a m o u n t o f g oods su p p lie d to o th e r c ou n tries. I n a d d itio n to sh ip p in g
a r a p id ly g ro w in g volum e o f re lie f su p p lies a b ro a d f o r d is tr ib u tio n by
U N R R A , th e G o v e rn m en t c o n tin u ed th ro u g h th e U n ite d S ta te s A rm y
to su p p ly la rg e a m o u n ts o f e sse n tia l c iv ilia n su p p lie s to p r e v e n t disease
a n d u n re s t in lib e ra te d a n d occupied a reas. M oreov er, b y th e e n d o f
1945, th e G o v e rn m en t h a d ju s t b e g u n th e job o f d isp o sin g o f su rp lu s
45

w a r p r o p e r ty lo c a te d a b ro a d h a v in g a n e stim a te d o rig in a l co st of
$10.8 b illio n .
M o st o f th e d eclin e in e x p o rts d u r in g th e second h a lf o f 1945 w as
a cc o u n ted fo r by red u ce d sh ip m e n ts to th e U n ite d K in g d o m a n d
R u ssia , th e tw o la rg e s t w a rtim e re c ip ie n ts o f U n ite d S ta te s goods. A s
a re s u lt o f th e d isc o n tin u an c e o f s tr a ig h t len d -lease, e x p o rts to R u ssia
h i t a low o f $6 m illio n in N ovem ber o f 1945, c o m p a re d w ith $342 m il­
lio n in M ay o f th e sam e y e a r. A lm o st as p re c ip ito u s w as th e d ro p in
re c o rd e d sh ip m e n ts to th e U n ite d K in g d o m — fro m $290 m illio n in
M ay to $34 m illio n in N ovem ber. O th e r re la tiv e ly la rg e red u ctio n s
o c cu rre d in e x p o rts to A u s tra lia a n d to I n d ia , w h ich d u rin g th e w a r
h a d been rec e iv in g s u b s ta n tia l volum es o f len d -le ase goods.
A t th e sam e tim e t h a t o u r sh ip m e n ts to th e m a jo r A llie d c o u n trie s
w e re so d ra s tic a lly red u ce d , th e re w as a slow b u t stea d y in crea se in th e
v a lu e o f goods b e in g sh ip p e d to o th e r a re a s— p a rtic u la rly c o n tin e n ta l
E u ro p e a n d th e A m e ric a n R ep u b lics. A la rg e p o rtio n o f th e in crease
in sh ip m e n ts to c o n tin e n ta l E u ro p e c o n sisted o f re lie f c o n trib u tio n s
(m a in ly fo o d ) th ro u g h U N R R A to C zechoslovakia, P o la n d , Y u g o ­
sla v ia , I ta ly , a n d G reece. ,
N a tu ra lly , th e m o st o u ts ta n d in g c h a n g e in th e c om m odity s tru c tu re
o f o u r e x p o rts d u r in g th e second h a lf o f 1945 w as th e d eclin e in s h ip ­
m e n ts o f d ire c t m ilita ry e q uip m e n t. S u c h sh ip m e n ts d r o p p e d fro m
a n a n n u a l r a te o f $3,250 m illio n in th e first q u a rte r o f 1945 to a n n u a l
ra te s o f $1,200 m illio n d u rin g th e t h ir d q u a rte r a n d $40 m illio n in
th e fin a l 3 m o n th s o f th e y e a r. E x p o rts o f o th e r fin ish e d m a n u fa c ­
tu re s— m a in ly m a c h in e ry , vehicles, ir o n a n d steel p ro d u c ts, a n d p e ­
tro le u m — re g iste re d less sh a rp , th o u g h su b s ta n tia l, declines as d e ­
m a n d s f o r w a r p ro d u c tio n a n d c om b at re ac h ed a m in im u m . F in ish e d
g o o ds (in c lu d in g m ilita ry e q u ip m e n t) acco u n ted f o r o n ly 50 p e rc e n t
o f to ta l re co rd e d e x p o rts in th e la s t q u a r te r o f 1945, c o m p ared w ith 73
p e rc e n t in th e first q u a r te r o f th e y e ar.
O n th e o th e r h a n d , o u r re co rd e d e x p o rts o f foo d stu ffs, stim u la te d
b y th e h e a v y re lie f d e m a n d s a b ro a d , rose m a rk e d ly , h e a v y sh ip m e n ts
o f w h e a t a n d flo u r ($175 m illio n in th e la s t q u a rte r) m ore th a n com ­
p e n sa tin g f o r re d u ce d e x p o rts o f m e a t a n d d a ir y p ro d u c ts. N e v e rth e ­
less, th e in crease in rec o rd e d fo o d e x p o rts d u rin g th e la s t h a lf o f 1945
w as m o re th a n offset b y th e d eclin e in u n re c o rd e d m ilita ry fo o d s h ip ­
m e n ts (fro m a p p ro x im a te ly $400 m illio n in th e first h a lf o f th e y e a r
to a b o u t $250 m illio n d u rin g th e la s t 6 m o n th s ), a s re lie f re s p o n sib ili­
tie s in a ll ex ce pt o ccupied a re a s w ere g r a d u a lly s h ifte d to U N R R A o r
to th e g o v e rn m e n ts o f th e c o u n trie s concerned.
O th e r n o te w o rth y ch an g e s in th e c o m p o sitio n o f o u r e x p o rts in th e
la s t h a lf o f 1945 w ere th e in crea se d sh ip m en ts o f c o tto n a n d coal, also
to fill E u ro p e a n r e h a b ilita tio n needs.
I m p o r ts C o n tin u e N e a r W a r tim e R a te

T h e en d o f h o s tilitie s h a d no im m e d ia te effects u p o n o u r re co rd e d
m erch a n d ise im p o rts. O n a n o v e r-a ll b asis, im p o rts in th e second
h a lf o f 1945 w ere o n ly a b o u t $100 m illio n less th a n in th e first h a lf .
B e g in n in g in S e p te m b e r a n d c o n tin u in g th ro u g h D ecem ber, how ever,
th e re w as a m o d e ra te decline, as som e re q u ire m e n ts o f a s tric tly w a r­
tim e n a tu re w ere te rm in a te d a n d c om m o d ities re q u ire d f o r c iv ilia n use
w ere n o t im m e d ia te ly a v ailab le. O u r im p o rts o f d ire c t m ilita ry e q u ip ­
m en t, fo r ex am p le, m o st o f w h ich h a d been su p p lie d b y C a n a d a , fe ll
46

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fro m $71 m illio n in th e second q u a r te r to o n ly $7 m illio n d u r in g th e
fin a l q u a r te r o f 1945.
I n c o n tr a st w ith th e m o d e ra te d eclin e in re co rd e d im p o rts , th e re
w as a v e ry su b s ta n tia l re d u c tio n in g oo ds a c q u ire d a b ro a d By th e G o v ­
e rn m e n t b u t n o t im p o rte d in to th e U n ite d S ta te s. G oods received as
reA^erse len d -lease d eclin ed b y n e a rly $800 m illio n in th e second h a lf
o f th e y e a r, re fle ctin g th e p o s t- V J -d a y te rm in a tio n o f a ll rev erse lendlease e xcept t h a t received fro m th e B ritis h as a n offset a g a in s t U n ite d
S ta te s len d -le ase p ip e -lin e sh ip m e n ts. A lth o u g h th e declin e in r e ­
c eip ts o f rev erse len d -lease goods w as p a r tly c o m p en sated f o r b y a n
in c re ase in m ilita ry cash p u rc h a se s f o r m a in te n a n c e o f o u r oversea
tro o p s, th e re w as a n o v e r-a ll re d u c tio n o f $700 m illio n in th e a m o u n t
o f goods a cq u ired a b ro a d by th e G o v e rn m e n t a n d a decrease of $600
m illio n in th e to ta l v a lu e o f m e rc h an d ise receiv ed th ro u g h b o th G o v ­
e rn m e n t a n d p r iv a te ch an n els.
F ro m a g e o g ra p h ic sta n d p o in t, th e m a jo r c h a n g e in o u r re co rd e d
im p o rts fo llo w in g th e end o f h o s tilitie s w a s th e re d u c tio n in im p o rts
fro m C a n ad a . I m p o rts fro m t h a t c o u n try b e g a n a slow b u t ste a d y
decline in th e su m m er o f 1945, m a in ly as a re s u lt o f th e s h a rp ly red u ce d
sh ip m en ts o f m ilita ry e q u ip m e n t; b y D ecem b er o u r to ta l im p o rts fro m
C a n a d a a m o u n ted to o n ly $71 m illio n , c o m p a re d w ith $109 m illio n in
A p r il. T h e s u b s ta n tia l re d u c tio n in o u r im p o rts fro m th e 20 L a tin A m e ric a n R ep u b lics (fro m $155 m illio n in A u g u st to $102 m illio n in
D ecem ber o f 1945) w a s la rg e ly a cc ou n ted f o r b y th e decline in sh ip ­
m en ts o f C u b a n s u g a r fo llo w in g a h e a v y m o v e m e n t in th e e a rlie r
p a r t o f th e y e a r a n d in c rea se d allo ca tio n s b y th e C om b in ed F o o d B o a rd
to c o u n trie s o th e r th a n th e U n ite d S ta te s.
P e r h a p s m o re sig n ific a n t th a n th e d eclin e in s h ip m e n ts o f C a n a d ia n
a n d L a tin -A m e r ic a n g oo ds to th e U n ite d S ta te s w as th e in itia l re v iv a l
o f im p o rts fro m lib e ra te d c o u n trie s in th e F a r E a s t (th e P h ilip p in e s,
B r itis h M a la y a , a n d th e N e th e rla n d s In d ie s ) a n d in E u r o p e (B e lg iu m
a n d th e N e th e rla n d s ). S h ip m e n ts fro m th e E u ro p e a n n e u tr a ls , se ri­
o usly c u r ta ile d d u rin g th e Avar, also show ed a m a rk e d re co v e ry d u rin g
th e la s t h a lf o f 1945.
W ith re fe re n c e to th e c o m m o d ity s tru c tu re o f o u r im p o rt tr a d e in
th e m o n th s fo llo w in g th e e n d o f h o s tilitie s, th e s h a rp ly re d u ce d
im p o rts o f m ilita ry e q u ip m en t h a v e a lre a d y been m en tio n ed . T h e
v e ry m o d e ra te rise rec o rd e d f o r im p o rts o f o th e r fin ish ed m a n u fa c ­
tu re s w as acco u n ted f o r b y in crea se d sh ip m e n ts o f a v a rie ty o f goods,
in c lu d in g clocks a n d w a tc h es fro m S w itz e rla n d a n d c o tto n a n d Avoolen
m a n u fa c tu re s fro m th e U n ite d K in g d o m a n d fro m c o n tin e n ta l E u ro p e .
E x c e p t f o r foodstuffs, o th e r m a jo r econom ic classes o f im p o rts shoAved
little c h a n g e d u rin g th e second h a lf o f 1945. M a in ly because o f th e
red u ce d sh ip m en ts o f C u b a n su g a r, im p o rts o f foo d stu ffs Avere a b o u t
$100 m illio n below th o se d u r in g th e first 6 m o n th s o f th e y e ar.
O u tlo o k

T h e p ro b a b le effects o f W o rld W a r I I u p o n th e f u tu r e b alance-ofp a y m e n ts p o sitio n o f th e U n ite d S ta te s h a v e been discu ssed a t som e
le n g th in c h a p te r Y . S in c e th e o v erw h e lm in g p o rtio n o f p a y m e n ts
b etw een th e U n ite d S ta te s a n d o th e r c o u n trie s stem s fro m m e rc h a n ­
dise tra n s a c tio n s, th e d iscu ssion in c h a p te r V a p p lie s p a r tic u la r ly to
f u tu r e U n ite d S ta te s in te rn a tio n a l tr a d in g re la tio n sh ip s.
47

E x p e rie n c e d u r in g 1946 a n d th e first p a r t o f 1947 h a s in d ic a te d th e
g r e a t e x te n t to w h ic h th e re s t o f th e w o rld , e sp ecially E u ro p e , h a s
been, a n d c o n tin u e s to be, d e p e n d e n t on A m e ric a n f a r m p ro d u c ts, ra w
m a te ria ls , a n d in d u s tria l eq u ip m e nt.
I n M ay 1947, rec o rd e d U n ite d
S ta te s e x p o rts m oved a t a n a n n u a l r a te o f $17.4 b illio n , o r only v e ry
slig h tly below th e p e a k w a rtim e r a te o f $17.5 b illio n re co rd e d in M ay
1944. O n th e o th e r h a n d , fo r e ig n sh o rta g e s caused b y w a rtim e d e v a s­
ta tio n a n d th e m a x im u m use o f a v a ila b le su p p lie s f o r re lie f a n d rec o n ­
stru c tio n h a v e serio u sly re s tr ic te d th e volum e o f goods a v ailab le fo r
e x p o rt to th e U n ite d S ta te s. O u r rec o rd e d im p o rts d u r in g M a rc h 1947
w ere, on a n a n n u a l b asis, a b o u t $10.5 b illio n below o u r rec o rd e d
e x p o rts. F o r th e m o st p a r t, th e h u g e e x p o rt su rp lu s w as b ein g
financed b y G o v e rn m e n t lo n g -te rm c re d its a n d b y sp ec ia l C ongressio n a l g ra n ts . P re s e n t in d ic a tio n s a re t h a t a id w ill be re q u ire d f o r
som e tim e to com e i f o th e r c o u n trie s a re to o b ta in even th e m in im u m
a m o u n t o f U n ite d S ta te s goods re q u ire d to fee d th e ir p e op le a n d
re s to re th e ir p ro d u c tiv e c ap acities.
I n th e lo n g ru n , o f course, U n ite d S ta te s im p o rts m u st be in crea se d
c o n sid e ra b ly in o r d e r t h a t o th e r c o u n trie s m a y e a rn th e d o lla rs neces­
sa ry to m ee t th e ir h e av y d e b t o b lig a tio n s to us a n d a t th e sam e tim e
c o n tin u e to b u y th e p ro d u c ts th e y n eed f o r c u rre n t use. I f incom es
in th is c o u n try c o n tin u e to be m a in ta in e d a t h ig h levels, som e in crease
in im p o rts is c e rta in . A s dom estic m a te ria ls, la b o r, a n d p ro d u c tiv e
fa c ilitie s becom e d iv e rte d to th e p r o d u c tio n o f goods w h ich m ake p o s­
sible a h ig h e r s ta n d a rd o f liv in g (as au to m o b iles in th e 1920’s ) , o th e r
c o u n trie s p re su m a b ly w ill be c alled u p o n to su p p ly th e d e m a n d fo r
m o re b a sic ty p e s o f goods, su ch as ra w m a te r ia ls a n d foodstuffs.
T h is d e v e lo p m e n t w o u ld be c o n sisten t w ith th e lo n g -ru n tr e n d in
U n ite d S ta te s im p o rts w h e reb y c ru d e m a te r ia ls a n d se m im a n u fa c ­
tu re s h a v e c o n stitu te d a g ro w in g p o rtio n , a n d fin ish ed m a n u fa c tu re s
a d e c lin in g sh a re , o f o u r fo re ig n p u rc h a se s. T h e d e p le tio n o f o u r
n a tu r a l resources— esp ecially p e tro le u m , co p p e r, h ig h -g ra d e ir o n ore,
lea d , a n d zinc—w a s g re a tly a cc elerated d u rin g th e w a r y e ars. T h is
fa c t f u r th e r p o in ts to o u r in c re a sin g depen d en ce u p o n fo r e ig n sources
o f ra w m a te ria ls. U ltim a te ly , th e in crea se in su ch im p o rts m a y m oi’e
th a n com p ensate f o r th e red u ce d im p o rts o f th o se p ro d u c ts f o r w h ich
su b stitu te s w ere developed d u rin g th e w a r.
W h e th e r o r n o t o u r f u tu r e im p o rts o f foo d stu ffs w ill show a n y su b ­
s ta n tia l in crea se is la rg e ly d e p e n d e n t on th e e x te n t to w h ic h h ig h
in d u s tria l w ages w ill red u ce o u r su p p ly o f a g r ic u ltu ra l la b o r, a n d
also u p o n a n y s h if ts w h ich m ay occur in o u r n a tio n a l fo o d -co n su m p ­
tio n p a tte r n . S in ce th e b e g in n in g o f th e w a r, f o r ex am p le, th e re h a s
been a n o ticea b le in crease in coffee c o n su m p tio n ; th e re m ay be o th e r
d e ve lo p m e nts w h ic h m a y cause a n in crea se in im p o rts o f som e foo d
p ro d u cts.
A lth o u g h over a lo n g p e rio d o f tim e , fin ish e d m a n u fa c tu re s h a v e
c o n stitu te d a d e c lin in g p o rtio n o f o u r a g g re g a te fo r e ig n p u rch a se s,
th is does n o t p re c lu d e a s u b s ta n tia l in crea se in o u r im p o rts o f th is
ty p e o f goods. T h e w a r a n d p o s tw a r re c o n stru c tio n h a v e led to a m o d ­
e rn iz a tio n o f in d u strie s in m a n y c o u n tries. I n th e n o t-to o -d ista n t f u ­
tu re , th ese c o u n trie s m a y becom e re la tiv e ly b e tte r e q u ip p ed to s u p p ly
c e r ta in U n ite d S ta te s d e m a n d s f o r fin ish ed p ro d u cts. M oreover, h ig h
dom estic incom es a re a ssociated w ith h e av y d e m a n d s f o r im p o rte d
sp e c ia lty a n d lu x u ry -ty p e goods, such as te x tile s, p e rfu m e s, je w e lry ,
48

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K

a n d c h in a w a re . T h is w o u ld allo w fo r a. s u b s ta n tia l in crea se in o u r
im p o rts fro m E u ro p e , w h ich in th e p a s t h a s been th e m a jo r su p p ly
source f o r such item s, a n d also fro m o th e r c o u n trie s w h e re th e su p p ly
o f sk ille d la b o r is a b u n d a n t in re la tio n to th e su p p ly o f ra w m a te r ia ls
a n d c a p ita l equip m ent.
T h e a m o u n t o f d o lla rs m ad e a v a ila b le to o th e r c o u n trie s th ro u g h
o u r m e rc h a n d ise im p o rts w ill also be d e te rm in ed , as in th e p a s t, by a
n u m b e r o f o th e r c o n sid eratio n s. P a r a m o u n t a m o n g th ese a re th e
in te rn a tio n a l p o litic a l outloo k, o u r ta rif f policies, th e effectiveness o f
e x ch an g e re s tric tio n s a n d o th e r tr a d e co n tro ls, th e d e g ree to w h ich
exch an ge ra te s re p re se n t th e a c tu a l re la tiv e v alu es o f th e v a rio u s m one­
ta r y u n its, th e s ta b ility o f exch an ge ra te s, a n d th e e x te n t to w h ich th e
p r o d u c tiv ity o f th e re s t o f th e w o rld c an be re s to re d a n d in creased .
S h o u ld th e U n ite d S ta te s fa il to m ake a v ailab le a n in c re a sin g v o l­
um e o f d o lla rs th ro u g h its p u rc h a se s a b ro ad , o th e r c o u n trie s w ill h av e
no a lte rn a tiv e b u t to re in fo rc e th e re s tric tio n s w h ich a lre a d y h a m p e r
th e fre e flow o f w o rld tra d e . A m o n g th e fo rem o st objectives o f th e
B re tto n W o o d s in s titu tio n s , th e A n g lo -A m e ric a n F in a n c ia l A g re e ­
m en t, a n d th e p rop o se d I n te r n a tio n a l T ra d e O rg a n iz a tio n , how ever, is
th e p ro m o tio n o f a h ig h level o f w o rld tr a d e on a m u ltila te ra l basis
by co o p e rativ e in te rn a tio n a l a c tio n d e sig n e d to m inim ize th e forces
w h ich in th e p a s t h av e te n d e d to p re v e n t ach iev em en t o f th is objective.
M oreover, th e n e g o tia tio n o f rev ise d U n ite d S ta te s re c ip ro c a l tr a d e
a g ree m e n ts w h ich w ere discu ssed a t G eneva d u r in g th e su m m er o f
1947 w ill be a n o th e r ste p in f a c ilita tin g th e e xch an ge o f g oods betw een
th e U n ite d S ta te s a n d o th e r c ou n tries.
T h e

T r a n s p o r ta tio n

A c c o u n t

2

T o m eet th e g r e a t w a rtim e d e m a n d f o r s h ip p in g len d -le ase a n d
com m ercial goods overseas, a n d to fill th e g a p caused by A llie d s h ip ­
p in g losses, th e A m e ric a n m e rc h a n t m a r in e w as e x p a n d e d by 1945 to
m o re th a n fo u r tim e s its 1939 size. T h e c a r ria g e o f a h ig h p ro p o rtio n
o f m ilita ry e q u ip m en t a n d o th e r fin ish ed m a n u fa c tu re s (re q u irin g
m o re sp ace p e r to n th a n lo w -v alu e g oo ds) in a d d itio n to o th e r w a rtim e
services ta x e s th e c a p a c ity o f th e m e r c h a n t fleet, p a r tic u la r ly a f te r
1942. _
R is in g ra te s re s u lte d in h ig h f r e ig h t revenues. F r e ig h t e a rn e d by
A m e ric a n o p e ra to rs on len d -lease goods, th o u g h p a id b y th e U n ite d
S ta te s G o v e rn m en t r a th e r th a n b y th e fo re ig n rec ip ie n ts, w as n e v e r­
th eless tr e a te d as a re c e ip t in th e tr a n s p o rta tio n a cc ou n t o f th e balance
o f p a y m e n ts b u t w as e q u a lly offset in th e u n ila te ra l account. C alc u ­
la te d e a rn in g s on lend-lease c arg o th u s sw elled th e to ta l tr a n s p o rta tio n
re ce ip ts, w h ich rose s h a rp ly fro m $403 m illio n in 1940 to $689 m illio n
in 1942, a n d $1,309 m illio n in 1945.
T o ta l tr a n s p o rta tio n p a y m e n ts to fo r e ig n c o u n trie s fe ll fro m $334
m illio n in 1940 to $263 m illio n in 1942, a n d rose to $420 m illio n in 1945.
T h e decline in th e e a r lie r y e a rs w as d u e m a in ly to th e d ecrease in oceanf r e ig h t p a y m e n ts w h ich a cco m p an ied th e s h a rp d ro p in th e to n n a g e
o f ocean-borne im p o rts c a r rie d b y fo re ig n vessels. T h e in crease in th e
1942-45 p e rio d w as th e re s u lt p r im a r ily o f ra p id ly ris in g p o r t ex p en d i2
T h e tr a n s p o r ta tio n a c c o u n t w a s th e re s p o n s ib ility o f J o h n S. S m ith
s u c c e e d e d i n S e p t e m b e r 1 9 4 6 b y R o c k w o o d Q. P . C h i n ; A r n o l d B . P a y n e
p r e p a r in g th e e s tim a te s .

u n til h e w as
a s s i s t e d in

49

lu re s o f A m e ric a n sh ip s in fo re ig n p o rts (in c lu d in g rev erse len d -lease
p o r t e x p e n d itu re s ).
E x c lu d in g tra n s a c tio n s f o r w h ich no p a y m e n ts w ere m ad e, cash r e ­
c e ip ts rose m o d e ra te ly fro m $403 m illio n in 1940 to $670 m illio n in 1945,
w h ile c ash p a y m e n ts o v er th e sam e p e rio d d r o p p e d fro m $334 m illio n
to $285%nilIion. N e t cash re c e ip ts th u s rose fro m $69 m illio n in 1940
to $385 m illio n in 1945. T h e se n e t re c e ip ts re p re s e n te d a re v e rs a l fro m
th e p re w a r tr e n d o f n e t p a y m e n ts, w h ich a v e ra g e d $85 m illio n in th e
1936-38 p e rio d .
C o m p o s itio n o f th e T r a n s p o r ta tio n A c co u n t
I n te r n a tio n a l tra n s p o rta tio n service item s in th e U n ite d S ta te s
b a la n c e o f p a y m e n ts c o n sist o f re c e ip ts a n d p a y m e n ts on th e ocean,
G re a t L ak es, a ir, a n d ra il accoun ts (see a p p e n d ix B , ta b le I ) . R ec eip ts
in c lu d e e a rn in g s b y U n ite d S ta te s c a rrie rs on f r e ig h t e x p o rte d to o r
c a rrie d b etw een fo re ig n c o u n trie s, e x p e n d itu re s o f fo re ig n c a rrie rs in
U n ite d S ta te s te r r ito r y , fa re s p a id b y fo re ig n p a ssen g ers on A m e ric an
sh ip s o r a ir lines, a n d c e r ta in e a rn in g s th ro u g h r a il o p eratio n s. P a y ­
m e n ts in c lu d e f r e ig h t e a rn in g s b y fo re ig n c a rrie rs on goods im p o rte d
by th e U n ite d S ta te s, e x p e n d itu re s o f U n ite d S ta te s c a rrie rs a b ro a d ,
fa r e s p a id b y A m eric a n s tr a v e lin g on fo re ig n sh ip s o r a ir lin es, a n d
c e rta in r a il p a y m en ts. C h a r t 13 show s th e m a g n itu d e a n d v a ria tio n s
o f th e m a jo r c om p o n e n t p a r ts o f th e tr a n s p o r ta tio n account.
E a rn in g s in th e ocean a cc ou n t a re by f a r th e m o st im p o r ta n t source
o f tr a n s p o rta tio n re c e ip ts a n d p a y m e n ts in th e U n ite d S ta te s b alan ce
o f p a y m en ts. T h e size o f ocean f r e ig h t e a rn in g s is d e te rm in e d by
th re e p r in c ip a l fa c to rs— th e to n n a g e a n d co m m o d ity co m p o sitio n o f
e x p o rts a n d im p o rts , th e p ro p o rtio n o f tr a d e c a rrie d in U n ite d S ta te s
vessels, a n d th e level o f f r e ig h t ra te s.
*
W a r tim e E x p a n s io n o f th e U n ite d S ta te s M e rc h a n t M a rin e
D u r in g th e decade 1930-39 th e A m e ric a n fleet a cc ou n ted fo r, on th e
a verag e, 15.2 p e rc e n t o f th e w o rld ’s g ro ss to n n a g e o f ocean g o in g
sh ip p in g .3 B etw een 1939 a n d 1945, w h ile th e m e r c h a n t fleet to n n a g e
o f th e o th e r p r in c ip a l m a ritim e c o u n trie s g e n e ra lly declined, th e
U n ite d S ta te s to n n a g e e x p a n d e d fro m 8.7 m illio n g ross to n s to 36.2
m illio n . T h e se to n n a g e s re p re se n te d 14.4 p e rc e n t a n d 52.2 p e rc e n t
o f th e w o rld to ta ls, as seen in ta b le 8.

Ta bl e 8.—M e rc h a n t

to n n a g e o f p rin c ip a l m a r itim e co u n trie s, 1939 a n d 19 //51
[I n m illio n s o f gross tons]

C o u n tr y

J u n e 30,
1939
8 .7
18.8

G e r m a n y .................................
N e th e r la n d s ________ _____

4. G
4 .0
3. 2
2 .7

J u n e 30,
1945

C o u n tr y

3G.2
15.8
2.8
1.1
.4
1.6

U n ite d S ta te s p e r c e n t

J u n e 30,
1939

J u n e 30,
1945

2 .7
10. G

1.1
8 .8

60.6

69.3

14.4

52.2

.

1 V essels of 1,000 gross to n s o r o v e r. U n ite d S ta te s -o w n e d to n n a g e u n d e r le nd -le ase is re p o rt e d a s p a r t of
th e to n n a g e of th e c o u n trie s o p e ra tin g it.
S ou rc e: C a rlso n , K . E ., a n d L y tz e n , G ., P o s tw a r S h ip p in g , F o re ig n C o m m e rc e W e e k ly , F e b . 2 3 ,194G,
p . 4 (U . S . D e p a r tm e n t of C o m m e rc e p e rio d ic a l).
3
V e s s e ls o f 1 0 0 g r o s s t o n s o r o v e r .
( A g r o s s t o n i s a c a p a c i t y m e a s u r e m e n t — 1 0 0 c u b ic
f e e t e q u i v a l e n t t o 1 t o n — o f e n c lo s e d s h i p p i n g s p a c e a v a i l a b l e f o r c a r g o , s t o r e s , _ p a s s e n g e r s ,
c re w , p r o p e llin g m a c h in e r y , a n d n a v ig a ti o n s p a c e s .)
S ee L e a g u e o f N a tio n s , W o rld
E c o n o m ic S u r v e y , 1 9 3 9 - 4 1 , G e n e v a , 1 9 4 1 , p . 2 4 5 ; a n d T h e P o s t w a r O u t lo o k f o r A m e r i c a n
S h i p p i n g ( a r e p o r t s u b m i t t e d t o t h e U n i t e d S t a t e s M a r i t i m e C o m m i s s io n b y t h e P o s t w a r
P la n n in g C o m m itte e ) J u n e 1 5 , 1 9 4 6 , p . 1 0 7 , A n n e x C.

50

C hart 1 3

TRANSPO RTATIO N ACCOUNT:
TOTAL AND GASH TRANSACTIONS, 1 9 4 0 - 4 5
TO TAL

T R A N S A C T IO N S

C A S H T R A N S A C T IO N S

MILLIONS OF DOLLARS

MILLIONS OF DOLLARS
6 0 0

4 0 0

200
0
1400

,4 0 0
R E C E IP T S

R E C E IP T S

1,200

1 ,2 0 0
PASSENG ER

FA R ES

1 ,0 0 0

,000
R A IL

R E C E IP T S

8 0 0

8 0 0

eoo

PASSENG ER

4 0 0
iS

200
«4

1940

41

4 2

4 3

4 4

45

1940

41

42

4 3

4 4

45
47-299

N o te .— F r e i g h t a n d p o r t e x p e n d i t u r e ite m s a r e p r e d o m i n a n t l y o n o c e a n a c ­
c o u n t, b u t in c lu d e s m a ll s u m s f o r tr a n s a c tio n s r e s u ltin g f r o m G re a t L a k e s a n d
a ir tr a n s p o rta tio n .
R a il re c e ip ts a n d p a y m e n ts r e f e r to f r e ig h t o n ly .
P assen­
g e r f a r e s in c lu d e o c e a n a n d a ir , b u t n o t G r e a t L a k e s a n d r a il, w h ic h a r e
in c o rp o r a te d in th e tra v e l e s tim a te s .

51

M o re th a n h a lf o f th e A m e ric a n fleet in th e re c e n t w a r w as e ngaged
in tra n s p o rtin g m ilita ry c a rg o f o r th e A rm y a n d N a v y .4 A s th e
volum e o f a ll ty p e s o f sh ip m e n ts e x p a n d e d , sh o rta g e s o f sp ace dev el­
oped, a c c en tu ate d in 1942 a n d 1943 b y A m e ric a n losses a n d losses o f
fo re ig n fleets h ith e rto a ctiv e in c a rry in g U n ite d S ta te s tr a d e .5 T h e
lim ite d a v a ila b ility o f s h ip p in g space w as a m a jo r c o n sid e ra tio n d e te r­
m in in g th e volum e a n d d ire c tio n o f th e flow o f tr a d e . S h ip p in g w as
d iv e rte d to im p o r ta n t w a r a re a s a n d used f o r services e ssen tial to th e
w a r effort. W h e re v e r possible, su p p lie s f o r th e a rm e d forces w ere p u r ­
ch ased fro m n e a rb y fo re ig n sources. E c o n o m iz in g o f s h ip p in g space
w as also e v id e n t in su ch m easures as h e av y lo a d in g , su p p re ssio n o f none sse n tial traffic, re s o rt to d e h y d ra tio n a n d com p ression o f foods, a n d
th e len d -lease e x p o rt o f foo d stu ffs fro m th e U n ite d S ta te s to re p lac e a
p a r t o f th e u s u a l B ritis h p u rc h a se o f foo d stu ffs fro m m o re d is ta n t
c o u n tries, su ch a s A u s tr a lia a n d A rg e n tin a .
T r a d e T o n n a g e a n d C o m m o d ity C o m p o s itio n

T h e ocean-borne c a rg o to n n a g e o f U n ite d S ta te s e x p o rts in th e w a r
y e a rs 1942-45 a v era g e d o n ly 10 p e rc e n t h ig h e r th a n th e correspondingto n n a g e in th e p r e w a r y e a rs 1936-39, d e sp ite th e sp e c ta c u la r in crease
in v a lu e o f e x p o rts d u rin g th e w a r. E x p o r t to n n a g e s a n d v alu es f o r
th e tw o p e rio d s a re show n in ta b le 9.

Tabl e 9.— A verage,

a n n u a l to nn a g e, va lu e, a n d v a lu e p e r to n o f U n ited S ta te s
o ce a n -d o m e e x p o rts , 1936-39 a n d 191/2-45
I te m

Q u a n tit y ____ ____ ____________ .......... ......................... m illio n lo n g to n s ..
V a lu e :
P e r t o n _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ ........................... .............. ........... d o lla r s ..

1936-39
41.1
2,758
67

1942-45
45.1
9,339
207

H ig h e r e x p o rt p ric es in g e n e r a l6 p a r tly e x p la in th is pheno m enon,
b u t o f f a r g re a te r im p o rta n c e w as th e c han g e in th e c om m odity com po­
sitio n o f e x p o rts. T h e w a rtim e s h if t to a g re a te r p ro p o rtio n o f m a n u ­
fa c tu re d goods re s u lte d in in crea se d e x p o rt v alu es w ith o u t c o rre sp o n d ­
in g ch an g e s in o v e rall w e ig h t. I n 1938, fin ish e d m a n u fa c tu re s w ere
o n ly 50 p e rc e n t o f th e v a lu e o f to ta l U n ite d S ta te s e x p o r ts ; in 1940,
60 p e rc e n t; a n d in 1942-45, close to 75 p e rc e n t on th e a verag e. L e n d lease e x p o rts, w h ich acco u n ted f o r a la rg e p o rtio n o f th ese fin ish ed
m a n u fa c tu re s, h a d a m u ch g r e a te r v a lu e p e r to n th a n com m ercial
e x p o rts because th e y co n sisted m a in ly o f m ilita ry e q u ip m en t a n d su p ­
p lies, in d u s tria l e q u ip m e n t a n d com m odities, a n d m u n itio n s.
A lth o u g h th e to ta l w e ig h t o f e x p o rts in 1942-45 w as n o t sig n ifica n tly
la r g e r th a n in 1936-39, a n in crea se in fre ig h t- p a y a b le t o n s 7 accom ­
p a n ie d th e in crea se in th e r a tio o f fin ish ed m a n u fa c tu re r s to to ta l
v a lu e o f e x p o rts.
4 T h e U n ite d S ta te s M e rc h a n t M a rin e a t W a r.
R e p o rt o f th e W a r S h ip p in g A d m in is tr a to r
to th e P re s id e n t, W a s h in g to n , J a n u a r y 15, 1 9 4 6, p p. 1 8 -1 9 .
F r e ig h t o n s h ip m e n ts to th e
a r m e d fo rc e s d o e s n o t e n te r th e b a la n c e o f in te r n a tio n a l p a y m e n ts .
5 B y t h e e n d o f 1 9 4 3 , t h e U n i t e d S t a t e s h a d l o s t 3 .3 m i l l i o n g r o s s t o n s o f s h i p p i n g , a n d
t h e U n i t e d K in g d o m , 1 1 .6 m i l l i o n .
6 A c c o r d in g to t h e D e p a r tm e n t o f C o m m e rc e m o n th ly u n it- v a ln e in d e x f o r e x p o r ts (b y a ll
f o r m s o f t r a n s p o r t a t i o n ) , t h e a v e r a g e m o n t h l y i n d e x i n 1 9 4 2 - 4 5 w a s 1 .5 4 t i m e s t h a t i n
1 9 3 6 -3 9 .
7 F r e i g h t - p a y a b l e t o n n a g e t a k e s i n t o a c c o u n t t h e s p a c e o c c u p ie d b y a c o m m o d i ty , o r i t s
s to w a g e f a c to r .
R a t e s a r e o f t e n q u o t e d ( a ) b y t o n r a t e s w / m — w e i g h t o f , g e n e r a l l y , 2 ,2 4 0
p o u n d s o r m e a s u r e o f 4 0 c u b ic f e e t ; o r ( b ) b y c e n t s p e r c u b ic f o o t o r c e n t s p e r 1 0 0 p o u n d s
(a ls o a w e ig h t o r m e a s u re q u o ta tio n ) .
T h e o p e r a to r h a s th e o p tio n to c h a rg e w h ic h e v e r
r a t e y ie l d s t h e g r e a t e r r e v e n u e .
I n t h e c a s e o f a n a u t o m o b i l e , w h i c h u s u a l l y o c c u p ie s a t
l e a s t 2 5 0 c u b ic f e e t p e r t o n o f w e i g h t , t h e c h a r g e w o u l d b e a b o u t s i x t i m e s t h e r a t e n o r ­
m a l l y c h a r g e d o n s o m e c o m m o d i ty o c c u p y i n g 4 0 c u b ic f e e t p e r t o n o r l e s s .

52

T h e p ra c tic e o f assessm ent o f fre ig h t c h a rg e s a cc o rd in g to space
r a th e r th a n w e ig h t, in th e case o f goods o c cu p y in g m o re th a n 40
cubic fe e t p e r to n , is a m o re im p o r ta n t rea so n th a n in crea sed f re ig h t
ra te s (see below ) fo r th e s h a r p in crease in g ross fre ig h t e a rn in g s
d u r in g th e w a r.
T h e to n n a g e o f ocean -bo rne im p o rts d e clin e d so m e w h a t d u r in g
1942-45, c o m p are d w ith th e y e a rs 1936-39, w h ile th e v a lu e o f th ese
im p o rts rose. I m p o r t to n n a g e s a n d v alu es f o r th e tw o p e rio d s a p ­
p e a r in ta b le 10.

Tabl e 10.—A v e ra g e

a n n u a l to nn a g e, va lu e, a n d v a lu e p e r to n o f U n ited S ta te s
ocea n-bo rne im p o rts , 1936-39 a n d 191/2-45
I te m
....... ............................. m illio n long t o n s . .

V a lu e :
T o ta l
P e r t o n ________ ____ ____

____ _____ __________ _____ d o lla r s ..

1936-39

1942-45
33.7

2,054
61

28.8
2,502
87

T h e in c rea se in v a lu e p e r to n w as f a r less fo r im p o rts th a n f o r
e x p o rts, a n d is a cc ou n ted f o r la rg e ly b y th e in c rea sed p ric es o f im ­
p o r t s 8 r a th e r th a n by a n y m a jo r s h if t in th e ir c om m o d ity com po­
sitio n .
W ith in th e 1940-45 p e rio d , th e flu c tu a tio n s in th e v a lu e p e r to n
o f o cean-borne e x p o rts, o w in g to c h a n g in g c o m m o d ity com p osition ,
w ere in c o n tr a st w ith th e re la tiv e s ta b ility in v a lu e p e r to n o f im p o rts.
E x p o r t v a lu e s p e r to n rose fro m $82 in 1940 to $107 in 1941, re ac h ed
a p e a k o f $257 in 1943, th e n fe ll to $241 in 1944 a n d $156 in 1945;
w h ile im p o rt v a lu e s p e r to n o f $60 a n d $59 in 1940 a n d 1941, resp ec ­
tiv e ly , rose to $84 in 1942 a n d c h a n g ed v e ry little th e re a fte r.
P r o p o r tio n o f S h ip p in g C a rrie d b y A m e ric a n V essels
T h e e x p a n sio n o f th e U n ite d S ta te s m e rc h a n t m a rin e a n d th e co n ­
tr a c tio n o f fo re ig n fleets in th e w a r y e ars w ere reflected in th e in ­
c re a sin g p ro p o rtio n o f c arg o c a rrie d by A m e ric a n vessels. T h is p r o ­
p o rtio n w as h ig h e r th a n a t a n y tim e since th e C ivil W a r, w hen A m e r i­
c an c lip p e r sh ip s lo s t th e ir su p rem ac y . F ro m 1942 th ro u g h 1945
A m e ric a n vessels c a r rie d a y e a r ly a v era g e o f 52 p e rc e n t o f to ta l e x p o rt
to n n a g e a n d 75 p e rc e n t o f to ta l im p o rt to n n a g e. C h a r t 14 show s th e
p e rc en ta g e o f U n ite d S ta te s o cean-borne im p o rts a n d e x p o rts, resp ec ­
tiv e ly , c a r rie d b y A m eric an vessels ( d r y c arg o , ta n k e r, a n d to ta l) in
each y e a r o f th e decade 1936—45.9
I n 1936-39 th e a v era g e y e a rly sh ares o f A m e ric a n vessels in th e to ta l,
20 p e rc e n t o f e x p o rts a n d 34 p e rc e n t o f im p o rts , w ere a b o u t o n e -th ird
lo w er th a n th e c o rre sp o n d in g a v erag e s o f 29 a n d 48 p e rc e n t f o r th e
15-year p e rio d , 1921-35. T h e 1940-41 a v era g e p e rce n ta g es o f 24 a n d
47 f o r e x p o rts a n d im p o rts, resp ec tiv e ly (ex ce p t f o r th e r a p id rise in
th e A m e ric a n sh a re o f d r y c a rg o im p o r ts ) , d id n o t in crease su b s ta n ­
tia lly above th e 1936-39 av erag es, la rg e ly because o f p ro v isio n s in th e
U n ite d S ta te s N e u tra lity A c t o f N ovem ber 1939 w h ich p ro h ib ite d
jo u rn e y s b y A m e ric a n vessels to c om b at a reas.
8 A c c o r d in g t o t h e D e p a r t m e n t o f C o m m e r c e m o n t h ly u n it - v a lu e in d e x o f im p
c o n s u m p tio n (b y a ll fo r m s o f tr a n s p o r t a t io n ) , t h e a v e r a g e m o n th ly in d e x in 1 9 4 2
1 .4 5 t i m e s t h a t i n 1 9 3 6 - 3 9 .
9 S im ila r d a t a f o r W o r ld W a r I a r e la c k in g .
F o r t h e p e r io d J u l y 1 , 1 9 1 5 , t o D
3 1 , 1 9 2 0 , A m e r ic a n v e s s e ls in fo r e ig n tr a d e a c c o u n te d fo r a y e a r ly a v e r a g e o f 4 2
o f t h e t o t a l n e t t o n s o f s h ip p in g e n te r e d w it h c a r g o a t U n ite d S t a t e s s e a p o r ts ,
p e r c e n t o f n e t t o n s c le a r e d .
T h e c o r r e s p o n d in g p e r c e n ta g e s fo r t h e y e a r s 1 9 4 2
1 9 4 5 a v e r a g e d 5 9 in e a c h c a se .

o r ts fo r
-4 5 w a s
ecem ber
percent
and 31
th r o u g h

53

C iia r t 1 4

PROPORTION OF O C E A N - B O R N E I M P O R T S A N D
EXPORTS CARRIED IN U N I T E D S T A T E S
VESSELS, 1936-45 ( D R Y C A R G O , T A N K E R , A N D T O T A L ) .
PERCENT

NO TE.

FOR

D E F IN IT IO N

O F U N IT E D

STATES

S O U R C E O F D A T A : U . S . M A R I T I M E C O M M I S S IO N

VESSELS

S E E

A P P E N D IX

B.

A N D W A R S H I P P I N G A D M I N I S T R A T IO N .

T h e B e h a v io r o f F r e ig h t R a te s
O cean f r e ig h t ra te s rose sh a rp ly a f te r th e o u tb re a k o f w a r, a lth o u g h
th e rise w as lim ite d b y v a rio u s A llie d c o ntro ls, e sp ecially A m e ric a n
a n d B ritis h . T h e d eg ree o f flu c tu a tio n w as n o t u n ifo rm f o r d iffe re n t
com m odities a n d ro u te s, a n d w as g re a te r f o r c h a r te r th a n conference
ra tes. O n c e r ta in e x p o rts fro m U n ite d S ta te s A tla n tic p o rts to th e
U n ite d K in g d o m , su ch as g e n e ra l c arg o , m a c h in e ry , iro n a n d steel,
a n d le a th e r, con feren ce ra te s in N ovem ber 1939 w ere o n ly 50 p e rc e n t
above p re w a r, a n d re m a in e d a t th is level u n til N ovem ber 1940, w hen
54

-K

*

a n o th e r m o d e ra te u p w a rd a d ju s tm e n t w as m ad e. R a te s on a u to ­
m obiles (un b o x ed ) a n d p ro v isio n s, how ever, in c rea sed b y 150 p e rc e n t
betw een J u ly 1939 a n d A p r il 1940; on c o tto n , 200 p e r c e n t; a n d on to ­
bacco (c a se s) , 277 p e rce n t. I n th e sam e p e rio d , th e in crea se s in ra te s
fro m A tla n tic p o rts to A n tw e rp w ere 706 p e rc e n t on a u to m o b iles, 185
p e rc e n t on p ro v isio n s, a n d 329 p e rc e n t on tobacco. B y D ecem ber
1940, a cc o rd in g to a L e a g u e o f N a tio n s stu d y , th e w o rld f r e ig h t level
h a d rise n to a p p ro x im a te ly five tim es th e A u g u s t 1939 level.10
I n g e n e ra l, r a te s re a c h e d a p e a k in 1943, th e n ta p e re d oif s lig h tly
in 1944 a n d 1945. A v a ila b le d a ta in d ic a te t h a t i f th e ra te s p re v a ilin g
in 1943 h a d o b tain e d in 1940 (w h e n ra te s w e re a lre a d y f a r above p r e ­
w a r le v e ls ), th e f r e ig h t b ill in 1940 w o u ld h a v e been m o re th a n 40
p e rc e n t h ig h e r th a n i t a c tu a lly w as. T h e effective r a te on e x p o rts,
o r a v era g e e a rn in g s p e r to n o f w e ig h t, m o re th a n d o u b led fro m 1940
to 1943. A s m e n tio n ed p re v io u sly , a su b s ta n tia l p a r t o f th is rise w as
a ttr ib u ta b le to th e effect o f th e c h an g e in th e n a tu r e o f com m odities
e x p o rte d . O n th e o th e r h a n d , th e in crease o f o n ly a b o u t 45 p e rc e n t in
th e effective r a te on im p o rts d u r in g th e sam e p e rio d re s u lte d fro m
r a te in creases alone, w ith o u t m u ch c h an g e in th e c om m o d ity com po­
sitio n o f im p o rts.
P o r t E x p e n d itu r e s a n d P a s s e n g e r F a r e s

'

j

P o r t e x p e n d itu re s a re a n im p o r ta n t p a r t o f th e ocean tr a n s p o rta tio n
accoun t. T h e y c on sist o f o u tla y s b y fo re ig n vessels in th e U n ite d
S ta te s a n d b y U n ite d S ta te s vessels a b ro a d f o r stev e d o rin g , p ro v isio n ­
in g , m a in te n a n c e a n d re p a ir s , a gen cy com m issions, w h a rfa g e a n d
dockage, a n d o th e r p o r t expenses. T h e y v a ry w ith th e cost o f su ch
services a n d w ith th e c argo to n n a g e m oved. W h ile to ta l e a rn in g s by
fo re ig n vessels e n g a g e d in tr a d e w ith th e U n ite d S ta te s flu c tu a te d
little d u r in g th e 1940-45 p e rio d , p o rt- e x p e n d itu re re c e ip ts b y th e
U n ite d S ta te s re m a in e d f a ir ly sta b le , a v e r a g in g a b o u t $214 m illio n
p e r y e a r. T h e tr e n d o f A m e ric a n vessel e x p e n d itu re s in fo re ig n p o rts ,
on th e o th e r h a n d p a ra lle le d th e in crea se in gross rev en u es e arn ed
b y A m e ric a n vessels, a n d rose fro m $52 m illio n in 1940 to $242 m il­
lio n in 1945.
R ec eip ts a n d p a y m e n ts f o r th e c a rria g e o f ocean p a sse n g ers show ed
a n a tu r a l decline d u r in g th e w a r y e ars, p a r tic u la r ly fro m 1942 th ro u g h
1944, w h e n th e sc a rc ity a n d in se c u rity o f acco m m o d atio n s d ra stic a lly
red u ce d th e n u m b e r o f ocean p a sse ng ers. I n 1945 th e re w as a m a rk e d
reco v ery to $14 m illio n o n th e re c e ip ts side, b u t p a y m e n ts o f $6.4 m il­
lio n to fo re ig n ste a m sh ip lines w ere o n ly s lig h tly m o re th a n o n e -te n th
o f th e p a y m e n ts in 1939.
U n ila te r a l T r a n s f e r s o f S h ip p in g S e rv ic es
T h e ocean tra n s p o rta tio n a cc o u n t rec o rd s a ll sh ip p in g tra n s a c tio n s
b etw een th e U n ite d S ta te s a n d fo r e ig n c o u n trie s, w h e th e r p a id fo r
o r n o t. T h e la r g e r p a r t o f th e f r e ig h t on U n ite d S ta te s e x p o rts in
d om estic-flag vessels d u r in g th e w a r w as fu rn is h e d u n d e r len d -lease
w ith o u t th e n ecessity o f p a y m e n t. F u rth e rm o re , th e vessels o f co u n ­
trie s elig ible f o r len d -le ase a id receiv ed a p a r t o f th e ir p o r t e x p e n d i­
tu re s in th e U n ite d S ta te s u n d e r lend-lease. I n r e tu r n , a p o rtio n o f
10
S e e L e a s e o f N a t io n s , W o r ld E c o n o m ic S u r v e y , 1 9 3 9 - 4 1 , G e n e v a , 1 9 4 1 , p . 2 5 8 ; S a n d e r ­
s o n , A . E ., W a r t im e C o n tr o l o f O c e a n F r e ig h t R a t e s in F o r e ig n T r a d e , W a s h in g t o n , 1 9 4 0 ,
p p . 9 - 1 2 ( U . S . D e p a r t m e n t o f C o m m e r c e , T r a d e P r o m o t i o n S e r i e s N o . 2 1 2 ) ; Z e i s , P . M .,
D o m e s tic T r a n s p o r ta tio n (U . S . D e p a r tm e n t o f C o m m e r c e , I n d u s tr y R e p o r t, W a s h in g to n ,
A p r il- M a y 1 9 4 0 , a n d c o n f e r e n c e r a t e s o n f ile w i t h t h e U n it e d S t a t e s M a r it im e C o m m is s io n .

55

th e e x p e n d itu re s o f A m e ric a n vessels a b ro a d w as p a id f o r b y local
a u th o ritie s u n d e r re c ip ro c a l a id o r rev erse lend-lease. T h e se len d lease item s a re e n te re d in th e tr a n s p o rta tio n acco u n t as i f p a y m e n t
a c tu a lly h a d been m ad e o r received. T h e y a re f u lly offset, how ever,
b y a p p r o p r ia te e n trie s in th e u n ila te ra l accoun t. T h e size a n d sig ­
nificance o f th ese u n ila te ra l tr a n s f e rs in 1944 a re illu s tra te d in ta b le
11.

Tabl e 11.— Ocean

tra n sp o rta tio n : R e c e ip ts a n d p a y m e n ts , 19-i4
[ I n m i l l i o n s o f d o ll a r s ]

I te m
O ce an f r e ig h t- ---------- -----------------------------------------------------------------P o r t e x p e n d itu re s --------------- --------- ----------- ----------------------------- ------

R e c e ip ts

P a y m e n ts

979.4
3 .2
214.3

105.7
3.7
226.5

1,196.9

335.9

686. 5
143.6

130.0

366.8

205.9

O th e r T r a n s p o r ta tio n A c co u n t Ite m s
T h e re w as a g e n e ra l u p w a rd tr e n d o f f re ig h t e a rn in g s on G re a t
L a k es tr a n s p o rta tio n b etw een 1940 a n d 1944. U n ite d S ta te s rec e ip ts
in crea se d p r im a r ily because U n ite d S ta te s vessels c a r rie d a n in c re a sin g
p ro p o rtio n o f th e g ra d u a lly ris in g to ta l to n n a g e o f e x p o rts to C a n a d a
v ia th e G re a t L a k es b u t also because o f la rg e r p o r t e x p e n d itu re s by
C a n a d ia n vessels on th e U n ite d S ta te s side. P a y m e n ts in crea sed b e­
cause p o r t e x p e n d itu re s rose, to o, in th e case o f A m e ric a n vessels in
C a n a d a a n d because th e in crea se in to n n a g e o f im p o rts fro m C a n a d a
m o re th a n c o u n terb a la n c e d th e decrease in th e sh a re c a rrie d b y C a ­
n a d ia n vessels. R ec eip ts a n d p a y m e n ts in 1945 d eclin ed m a in ly b e­
cause o f a decrease in e x p o rt a n d im p o rt to n n a g e c a rrie d . T o ta l
re c e ip ts in th e G re a t L a k es a cc o u n t o f $47 m illio n d u r in g 1940-45
a p p ro x im a te ly b a la n ce d th e $41 m illio n in p a y m en ts.
E x p o rts c o m p rised m a in ly b itu m in o u s coal, ir o n ore, a n d c ru d e
p e tro le u m ; im p o rts c om p rise d m a in ly g ra in s, p u lp w o o d a n d ch ip s,
ir o n o re, a n d c ru sh e d stone. T h e stab le c o m p o sitio n o f b u lk com m od­
ity e x p o rts a n d im p o rts, com b ined w ith a d eq u ate tr a n s p o rta tio n a n d
e xcellen t te rm in a l f a c il iti e s 11 a cc ou n ted f o r th e re la tiv e stea din ess a n d
low level o f fre ig h t r a te s o n th e G re a t L akes.
D u rin g th e w a r, r a il f r e ig h t in creased g e n e ra lly in th e U n ite d S ta te s,
o w ing to th e decline o f coastw ise sh ip p in g a n d h ig h w a y tr a n s p o rta tio n
fac ilitie s. I n th e r a il a cco u n t, th e in crea se d e a rn in g s f o r c a rria g e o f
h e a v ie r in -tra n s it traffic b y r a il to a n d fro m C a n a d a a n d M exico, r e ­
sp ectiv ely, w ere m a in ly respo n sib le f o r th e in crea se on th e re ce ip ts side.
M o u n tin g e x p e n d itu re s b y U n ite d S ta te s r a ilr o a d s o p e ra tin g in C a n ­
a d a a n d e a rn in g s b y C a n a d ia n ra ilr o a d s c a rry in g U n ite d S ta te s goods
in tr a n s i t across C a n a d a acco u n ted f o r th e in crease on th e p a y m en ts
side. F o r th e 1940-45 p e rio d , to ta l re c e ip ts w ere $341 m illio n , a g a in st
to ta l p a y m e n ts o f $196 m illio n . O n b alance, th is a cc ou n t show ed n e t 1
11
G r e a t L a k e s s h ip p in g f a c ilit ie s r e m a in e d in p r iv a te o p e r a tio n s d u r in g t h e w a r , e x c e p t
f o r a n u m b e r o f la r g e U n ite d S t a t e s (a n d C a n a d ia n ) m e r c h a n t v e s s e ls w h ic h w e r e t r a n s ­
fe r r e d fr o m th e G r e a t L a k e s to th e A tla n tic O ce a n .
S e r v ic e b y p a c k a g e f r e ig h t v e s s e ls ,
w h ic h w e r e p u r c h a s e d o r r e q u is itio n e d b y t h e U . S . G o v e r n m e n t, w a s d is c o n tin u e d o n th e
G re a t L a k es.

56

,

v-

re c e ip ts d u r in g th e w a r y e a rs in c o n tr a s t w ith n e t p a y m e n ts each
y e a r fro m 1919 th ro u g h 1939.
A ir tr a n s p o rta tio n d u r in g th e w a r y e a rs p la y e d a sm all b u t in c re a s­
in g ly im p o r ta n t ro le in th e b a la n ce o f p a y m en ts. U n ite d S ta te s a i r ­
c r a f t su p e rio rity a n d w a rtim e flig h t experien ce e x p la in th e g ro w th in
a ir f r e ig h t re c e ip ts fro m a b o u t $2 m illio n in 1940 to $16 m illio n in
1945. U n ite d S ta te s a ir lin e s c a rrie d a p p ro x im a te ly 90 p e rc e n t o f a ir
c a rg o to a n d fro m th e U n ite d S ta te s. H ig h -v a lu e , fra g ile , o r p e ris h ­
able goods c h a ra c te r is tic a lly go by a ir , a n d co m m an d h ig h f r e ig h t
ra te s c o m p a re d w ith th ose f o r su rfa c e tr a n s p o rta tio n . T h e c a rria g e o f
fo re ig n p a ssen g ers b y U n ite d S ta te s a ir lin es re su lte d in in c re a sin g
a n n u a l re c e ip ts fro m a b o u t $3 m illio n in 1940 to $15 m illio n in 1945;
p a y m e n ts by A m eric an s to fo re ig n lin e s w ere n e gligib le. A ir p o r t a n d
fu e l e x p e n d itu re s in fo re ig n c o u n trie s by U n ite d S ta te s a ir lines p a r tly
offset th e re c e ip ts e a rn e d in th ese y e ars.
O u tlo o k f o r T r a n s p o r ta tio n S e rv ic es
I n 1940 U n ite d S ta te s re c e ip ts f o r tra n s p o rta tio n exceeded p a y m en ts
fo r th e first tim e since 1921. T h e re w ere n e t cash re c e ip ts in each of
th e w a r y e ars. T h is d e ve lop m e n t w as th e re s u lt o f in crea sed p a r tic i­
p a tio n b y U n ite d S ta te s vessels in th e tr a n s p o rta tio n o f A m eric an
c argo overseas a n d o f a b n o rm a l w a r c o n d itio n s w h ich p ro d u c e d a
s h if t in th e co m m o d ity c o m p o sitio n o f e x p o rts. I n each o f th e 3
y e ars, 1943-45, th e U n ite d S ta te s c a rrie d a p p ro x im a te ly tw o -th ird s o f
its to ta l tr a d e volum e. T h is la rg e p e rc e n ta g e w as m a in ta in e d in 1946,
b u t sh o u ld decline th e r e a f te r, th o u g h fo r a few y e ars th e A m eric an
sh a re m ay co n tin u e to flu c tu a te a ro u n d 50 p e rc e n t o f th e to ta l to n ­
nage.
R e tu rn o f sh ip s len d -le ase d to G re a t B r ita in a n d o th e r c ou n tries,
p lu s possession o f su p e rio r ty p es, sh o u ld h e lp th e U n ite d S ta te s te m ­
p o ra rily to m a in ta in its le a d in g p o s itio n in ocean tr a n s p o rt. H o w ­
ever, as fo re ig n sh ip p in g rev iv es th ro u g h b u ild in g p ro g ra m s a n d p u r ­
chases o f A m eric an su rp lu s sh ip s, fo re ig n c o m p e titio n in th e c a r ­
ria g e o f U n ite d S ta te s fo re ig n tr a d e m ay in crease, u nless d iv e rte d
to a c tiv ity e lsew here as w o rld tr a d e is re sto re d . G ro w in g c o m p e titio n
w o u ld red u ce th e n e t re c e ip ts e a rn e d b y U n ite d S ta te s vessels. T h e
r a te o f d eclin e w ould also' d e p e n d u p o n A m e ric a n p o lic y w ith resp ec t
to th e size o f m e rc h a n t fleet d e sire d a n d to th e su b sid iz a tio n o f s h ip ­
p in g .
U n d e r th e M e rc h a n t M a rin e A c t o f 1936, A m e ric a n vessels are
a id e d b y c o n stru c tio n a n d o p e ra tin g subsidies. T h e fo rm e r to ta le d
$178.7 m illio n fro m J u ly 1938 th ro u g h J u n e 1945; th e la tte r a m o u n te d
to a b o u t $50 m illio n fro m O ctober 1936 th ro u g h J u n e 1942, w h e n th e y
w ere su sp e n d e d because o f th e w a r.12 I t is e x p ected , how ever, t h a t
a la rg e p o rtio n o f th e o p e ra tin g -su b sid y p a y m e n ts w ill b e re c a p tu re d
b y th e G o v e rn m en t. I n n o rm a l tim es, h ig h e r costs f o r w ages, su b ­
sistence, m a in te n a n ce , re p a ir s , a n d in su ra n c e h a n d ic a p dom estic ves­
sels in c o m p e titio n w ith fo re ig n , b u t since th e w a r th ese costs h av e
been a b so rb e d by th e re la tiv e ly h ig h r a te s tru c tu re re s u ltin g fro m
th e excess o f d e m a n d o ver su p p ly o f s h ip p in g fa c ilities.
12
T h e 1 9 3 6 a c t p r o v id e s a ls o f o r c o u n t e r v a ilin g s u b s id ie s s u ffic ie n t t o o ffs e t a n y b o u n t ie s
p a id b y f o r e ig n g o v e r n m e n t s , b u t t h u s f a r t h is p r o v is io n h a s h o t b e e n in v o k e d .
See T he
P o s t w a r O u tlo o k f o r A m e r ic a n S h ip p in g , p p . 6 0 - 6 1 ; a n d t l . S . M a r it im e C o m m is s io n , R e p o r t
t o C o n g r e s s f o r t h e p e r io d e n d e d J u n e 3 0 , 1 9 4 6 , W a s h in g t o n , 1 9 4 7 , p . 1 4 .

7 6 9 1 5 5 — 48

57

N e t ocean tr a n s p o rta tio n re c e ip ts o f th e U n ite d S ta te s w ill g ra d u a lly
decline, n o t o n ly because o f a d im in ish in g sh a re in to ta l to n n a g e
c a rrie d b u t also because o f a n e v en tu a l decline in f r e ig h t ra te s . T h e
lev el o f f r e ig h t ra te s sh o u ld be f a ir ly stab le a n d m a y even in crease
slig h tly in th e first few p o s tw a r y e a rs as lo n g as th e d e m a n d f o r to n ­
n a g e c a p a c ity exceeds su p p ly . T h e re a fte r, a s th e su p p ly -d em an d
s itu a tio n is rev erse d, a d e c lin in g r a te tr e n d sh o u ld be in e v itab le . S ince
th e r e tu r n to a h ig h volum e o f p a sse n g e r-fa re p a y m e n ts to fo re ig n
lin e s is a n tic ip a te d (th e y e a rly a v era g e w as $104 m illio n in th e 191939 p e r io d ) , i t m a y n o t b e m a n y y e a rs b e fo re th e n e t b a la n ce on tr a n s ­
p o r ta tio n a cc ou n t becom es n eg a tiv e.
A g r a d u a l r e tu r n to a n o rm a l p re w a r p a tte r n is ex p ected o f th e
G r e a t L a k e s a n d r a i l accounts. T h e fo rm e r is f a ir ly stab le , w ith
sm a ll n e t re c e ip ts o r p a y m en ts. T h e la tte r , as in - tr a n s it e a rn in g s
decline, m a y in tim e show n e t p a y m e n ts as in th e p re w a r p e rio d . I n ­
tr a n s i t e a rn in g s sh o u ld d eclin e w ith th e decrease in in - tr a n s it traffic
th a t m ig h t be expected as s h ip p in g r e tu r n s to n o rm a l.
A ir tr a n s p o r ta tio n ’s re m a rk a b le d e v e lo p m e n t d u r in g th e w a r
sh o u ld a cc elerate w ith te ch n o lo g ic al p ro g re ss a n d sh o u ld be reflected in
e x p a n d in g in te rn a tio n a l a n d dom estic services. R ec eip ts, esp ecially
on p a sse n g e r traffic, m a y be ex p ected to in crease, o w in g to such fa c to rs
as th e a n tic ip a te d increases in n u m b e r o f pa sse ng ers, flig h t freq u en cies,
a n d to n -m ile ag e flo w n ; th e p ro sp ec tiv e e x p a n sio n o f b o th sch ed u led
a n d n o n sc h ed u led a ir-lin e traffic ; a n d th e te c h n ic a l s u p e rio rity o f
A m e ric a n p lan e s in speed a n d cost o f o p e ratio n . H o w e v e r, th e in ­
creases in A m e ric a n e a rn in g s m ay be g r a d u a l, a n d w ill be p a r tly off­
set b y a ir p o r t a n d fu e l e x p e n d itu re s a b ro a d a n d b y im p ro v e d fo re ig n
a ir -lin e business.
In a sm u c h as tr a n s p o rta tio n re c e ip ts a n d p a y m e n ts on th e nonocean
acco u n ts w ill te n d to offset each o th e r m o re o r less, th e n e t tr e n d on
th e to ta l tra n s p o rta tio n a cc ou n t in th e U n ite d S ta te s b a la n ce o f p a y ­
m en ts d e p e n d s u p o n th e b e h a v io r o f th e ocean tra n s p o rta tio n item s.
F o r each o f th e 3 y e ars a f te r th e en d o f W o rld W a r I , th e b alan ce
w a s a su b s ta n tia l n e t rec e ip t, w h ic h w as re v erse d in 1922 in to a n e t
p a y m e n t. T h e n f o r tw o decades th e U n ite d S ta te s w as a n e t p u r ­
c h ase r o f tra n s p o rta tio n services as fo re ig n c o m p e titio n in creased . A
s im ila r d e ve lo p m e n t m a y ta k e p lac e a f te r W o rld W a r I I .
T r a v e l 13

T ra v e l by U n ite d S ta te s re sid e n ts in fo r e ig n c o u n trie s c o n stitu te s
a n im p o r t fro m a b ro a d o f goods a n d services w h ich , in th e closing
y e a rs o f th e 1930’s, a m o u n te d to n e a rly d o u b le o u r im p o rts o f ru b b e r
a n d m ore th a n o u r com b ined im p o rts o f coffee a n d su g a r. I n a d d itio n
to its im p o rta n c e as a m a jo r item o f tra d e , fo re ig n tra v e l is a v a lu a b le
so u rc e o f s u p p ly o f U n ite d S ta te s d o lla rs to fo re ig n co u n tries. I n th e
d e ca d e p re c e d in g 1940, fo re ig n c o u n trie s w ere p ro v id e d w ith n e a rly
3 b illio n tra v e l d o lla rs,14 w h ich h e lp e d to finance o u r p e rsis te n t e x p o rt
su rp lu s. T ra v e l in th e U n ite d S ta te s b y re sid e n ts o f fo re ig n c o u n trie s
re ac h ed less sp e c ta c u la r to ta ls , th e ir e x p e n d itu re s in th e U n ite d S ta te s
d u r in g th e 1930’s b e in g e stim a te d a t o n ly a little m o re th a n $1 b illion .
“ T h is s e c tio n w a s p r e p a r e d b y F r a n c e s P . S a s s c e r .
T h e e s t im a te s o f tr a v e l p a y m e n ts a n d r e c e ip ts s h o w n in t h is s e c tio n e x c lu d e f a r e s p a id
b y t r a v e le r s t o U n it e d S t a t e s a n d f o r e ig n c a r r ie r s .
P a y m e n t s f o r f a r e s m a d e b y U n it e d
S t a t e s r e s id e n ts to fo r e ig n s te a m s h ip a n d a ir lin e s a n d p a y m e n ts b y fo r e ig n e r s to U n ite d
S t a t e s c a r r ie r s a r e in c lu d e d m t h e t r a n s p o r t a t io n a c c o u n t .

58

V

T ra v e l m a y be ro u g h ly d iv id e d in to tw o c ateg o ries— re c re a tio n a l
a n d n o n re c re a tio n a l. T h e n o n re c re a tio n a l c ate g o ry in clu d e s tr ip s by
in d iv id u a ls tr a v e lin g f o r business rea so n s, in e d u c a tio n a l, scientific,
o r p h ila n th ro p ic p u rsu its , a n d on m a tte rs o f u r g e n t p e rso n a l necessity ,
su ch as firs t-h a n d a id to d istre ssed re la tiv e s w h o re sid e in fo r e ig n
c o u n trie s o r th e a d m in is tr a tio n o f in v estm en ts o r p r o p e r ty ow ned
a b ro a d .
D u r in g n o rm a l tim es, such a s th e in te rw a r p e rio d , th e p re p o n d e ra n c e
o f tra v e l is o f th e re c re a tio n a l ty p e . H o w e v e r, d u r in g tim e s o f w a r
th e situ a tio n is rev ersed . I n th e p e rio d fro m 1940 to 1945, re c re a tio n a l
tr a v e l to a ll ex ce pt n e a rb y a re a s w a s d r a stic a lly c u rta ile d . N o n ­
re c re a tio n a l tr a v e l, too, w as re s tr ic te d , b u t to a lesser e x te n t, as a cu te
tra n s p o rta tio n sh o rta g e s developed.
W a r C u ts O v e r s e a

15

T ravel

W ith th e o u tb re a k o f w a r in E u ro p e , tr a v e l b ey o n d th e W e s te rn
H e m isp h e re becam e r e s tr ic te d to p e rso n s o n tr ip s d ire c tly a llie d w ith
th e w a r effort. T ra v e l to E a s te r n H e m isp h e re c o u n trie s w as lim ite d
to G o v e rn m en t officials a n d m em bers o f p r iv a te business concerns su p ­
p ly in g e q u ip m e n t f o r m ilita ry use w ho tra v e le d in th e n a tio n a l in te re s t,
to m em b ers o f th e p ress, a n d to m em bers o f p h ila n th ro p ic o rg a n iz a ­
tio n s, such as th e lie d C ross a n d v a rio u s re lig io u s a n d n o n s e c ta ria n
g ro u p s, w hose m issio n w as to a lle v ia te su ffe rin g in w a r-to rn a rea s.
S in ce a ll tr a v e l o f a re c re a tio n a l n a tu r e to th ese a re a s w as th u s p r o ­
h ib ite d , e x p e n d itu re s f o r tra v e l by U n ite d S ta te s re s id e n ts w ere s h a rp ly
red u ce d fro m $67 m illio n in 1939 to $12 m illio n in 1940 (see c h a r t 1 5 ).
I n 1940, d u r in g th e in itia l p h a se s o f th e B a ttle o f th e A tla n tic ,
tra v e l e x p e n d itu re s in E u ro p e a n d th e M e d ite rra n e a n a re a re ac h ed
th e ir lo w est p o in t since W o rld W a r I , h a v in g d r o p p e d p re c ip ito u sly to
less th a n $6 m illio n . T h is re p re s e n te d a decline o f n e a rly 90 p e rc e n t
fro m e x p e n d itu re s in th e p re c e d in g y e a r, a lth o u g h tra v e l to t h a t
a re a h a d a lre a d y sh ow n c o n sid e ra b le re a c tio n in th e la te 1930’s a s a
re s u lt o f th e p o litic a l d istu rb a n c e s in c e n tra l E u ro p e . T ra v e l to o th e r
oversea a re a s w as likew ise d r a stic a lly affected, a lth o u g h tr a v e l to
L a tin A m e ric a m a in ta in e d a f a ir ly c o n sta n t level u n til 1942, o w in g in
p a r t to a n in crea se in n o n re c re a tio n a l tra v e l by econom ic m issions v is ­
itin g t h a t a re a in a n e n de av o r to o b ta in s tra te g ic m a te ria ls, th e su p p ly
o f w h ich h a d been c u t off by Ja p a n e s e o c cu p a tio n o f M a la y a, B u rm a ,
th e N e th e rla n d s In d ie s, a n d th e P h ilip p in e s . E x p e n d itu re s in S o u th
A m e ric a d id n o t re a c h th e ir lo w est level u n til 1944 (see ta b le 1 2 ),
b y w h ic h tim e th is new lin e o f su p p ly h a d becom e e sta b lish e d , w ith a
r e s u ltin g d ecrease in n o n re c re a tio n a l tr ip s to th e a re a.
T ra v e l to n e a rb y oversea a re a s b e g a n to rec ov e r in 1945, a t w h ich
tim e tra v e l o f a re c re a tio n a l n a tu r e re a p p e a re d because p a s s p o rt a u ­
th o ritie s a g a in p e rm itte d tra v e l to C e n tra l A m eric a a n d th e C a rib b e an
f o r re s t a n d re la x a tio n . F o llo w in g th e en d o f h o s tilitie s in 1945, p a y ­
m e n ts fo r tra v e l in a ll oversea a re a s in crea se d in th e f o u r th q u a rte r to
n e a rly double th o se in th e c o rre sp o n d in g q u a r te r o f 1944. T h e volum e
o f d e p a rtu re s c o n tin u ed to rise r a p id ly d e sp ite acute tra n s p o rta tio n
sh o rta g e s, w h ic h m a in ta in e d a m a jo r re s tric tio n u p o n tra v e l o f th e
re c re a tio n a l ty p e to a ll oversea a re a s e x ce p t n e a rb y C e n tra l A m e ric a n
a n d C a rib b e a n c ou n tries.
15 T l i e

te r m

" o v e r s e a ” in c lu d e s a ll fo r e ig n

c o u n tr ie s e x c e p t C a n a d a a n d

M e x ic o .

59

C h a rt

15

INTERNATIONAL TRAVEL EXPENDITURES
1937— 45
MILLIONS o f d o l l a r s

30or

FOREIGN EXPENDITURES
IN THE UNITED STATES
V 7 /A
□

2 0 0|

----

A L L OTHERS
EURO PE a

M E D IT E R R A N E A N

B B 1

W E S T IN D IE S 8 C E N T R A L A M E R IC A

E m u

M E X IC O
C ANADA

400

UNITED STATES EXPENDITURES
IN FOREIGN COUNTRIES

300

200

1937
60

38

Tabl e 12.— I n te r n a tio n a l tra v e l a cco u n t o f tile

U n ited S ta te s , 191/0-45

[In m illio n s of U n ite d S ta te s d ollars]
A re a

1940

1941

1942

1943

1944

1945

R e c e ip ts
T o t a l ____ _ _ _ _ _ _ _ _ ___________ ____ _____
C a n a d a ________ ____ ______ _ _ __ __ __ __ __ __ __ _
S te rlin g a r e a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_
A m e ric a n R e p u b li c s .................. ...... .............. .
__ __
M e x i c o ... _ _ _ _ _ _ _ _ _ _ _ _
C a r rib b e a n R e p u b li c s .......... ........ ............. ..............
S o u th A m e ric a n R e p u b li c s .. .................. ........... .
A ll o th e r ........................................_•_______ _____ ___

94.8

69.9

82.0

84.2

117.2

157.7

36.4
7.0
38.6
31.0
3 .2
4.4
12.8

16.4
7.4
39.3
32.8
3 .3
3 .2
6 .8

21.8
23.3
33.8
31.4
.6
1.8
3. 1

30.9
17.7
33.1
31.3
.1
1.7
2 .5

51.9
26.9
36.2
33.7
.2
2 .3
2 .2

75.5
26. 0
42.4
37. 5
1.1
3 .8
. 13.8

P a y n e n ts
T o t a l _____________ ___________ *
C a n a d a ........ . ............. .................................... ................
S te rlin g a r e a ____ _ __ _ _________ ________ _
__ __
A m e r ic a n R e p u b li c s ................... . ............. .............. . __
M e x ic o _______________ ._ __________
C a r rib b e a n R e p u b lic s _____ . . . ______
S o u th A m e ric a n R e p u b li c s .. ................................
A ll o th e r _____ _ _ _ _ _ __ _ _ _ _ __ _ _ _ _ _______

190.3

212.4

155. 4

173.2

224.7

308.8

89.1
6 .8
83.8
57.3
16.3
10.2
10.6

97.3
9 .2
98.8
69.1
17.7
12.0
7.1

71.8
7.5
72. 3
60.3
3 .9
8. 1
3 .8

79.1
8 .5
83.7
71.1
2.5
10. 1
1.9

105.9
19.5
88.0
79.2
2 .3
6 .5
11.3

149.5
28.9
105.1
92.0
4 .7
8 .4
25.3

F o r e ig n E x p e n d itu r e s in U n ite d S ta te s D e c lin e

T ra v e l e x p e n d itu re s in th e U n ite d S ta te s b y fo re ig n e rs re s id in g in
a ll o verseas a re a s d r o p p e d sh a rp ly in 1940 a n d su ffered a f u r th e r
severe decline in 1941. A s in th e case o f U n ite d S ta te s tra v e l to f o r ­
eig n c o u n trie s, th is decline w as due fo r th e m ost p a r t to tr a v e l re s tr ic ­
tio n s im p o sed b y fo re ig n c o u n trie s o n tra v e l by th e ir n a tio n a ls a n d by
sh o rta g e s o f tr a n s p o rta tio n fac ilitie s. T ra v e l to th is c o u n try by re s i­
d e n ts o f o th e r overseas c o u n trie s becam e lim ite d to fo re ig n g o v ern m en t
officials, fo re ig n businessm en o r te c h n ic ia n s on p u rs u its d ire c tly con­
n ected w ith th e w a r e fforts o f th e ir re sp e ctiv e c o u n tries, a n d refu g e e s
fro m d e v a sta te d c o u n trie s w ho e n te re d th e U n ite d S ta te s as te m p o ra r y
v is ito rs o r im m ig ra n ts.
A s in th e case o f tr a v e l p a y m en ts, tra v e l re c e ip ts fro m re s id e n ts
o f E u ro p e a n d th e M e d ite rra n e a n c o u n trie s re a c h e d th e ir lo w est p o in t
in 1941, a lth o u g h th e d e c lin e ’w as re la tiv e ly less sh a rp th a n in th e case
o f p a y m en ts, R ec eip ts fro m fo re ig n e rs f o r tr a v e l reco v ered so m e w h a t
in 1942 a n d a t th e en d o f 1945 a p p ro a c h e d th e levels o f th e la te 1930's.
T ra v e l e x p e n d itu re s in th e U n ite d S ta te s by L a tin A m e ric a n re s id e n ts
exceeded p re w a r to ta ls a s e a rly a s 1944, a n d c o n tin u e d to rise d u r in g
1945 to re a c h a new p e a k in t h a t y e ar.
R e c ip r o c a l T r a v e l W ith C a n a d a

B ecause o f th e close econom ic a n d social re la tio n s h ip b etw een th e
U n ite d S ta te s a n d C a n a d a , th e m ovem ent o f p e rso n s across th e b o rd e r
is e x trem e ly heavy. T h e se p e rso n s com p rise a b ro a d v a rie ty o f t r a v ­
elers, r a n g in g fro m to u ris ts a n d business v isito rs to in d iv id u a ls w ho
cross a n d recross th e b o rd e r d a ily in co n n ectio n w ith th e ir o c cu p atio n
o r to m ak e use o f fa c ilitie s lo ca te d on th e o p p o site side. T h e e xcellen t
tr a n s p o rta tio n fa c ilitie s betw een th e U n ite d S ta te s a n d C a n a d a a n d
th e p ro x im ity to th e b o rd e r o f h e a v ily p o p u la te d a re a s com bine to
s tim u la te tr a v e l betw een th ese tw o c o u n tries. A s th e m ean s o f cro ss­
in g th e b o rd e r a re n u m ero u s a n d th e rea so n s fo r c ro ssin g e x trem e ly
61

v a rie d , e x p e n d itu re s by U n ite d S ta te s re sid e n ts in C a n a d a w ere n o t
a s d ra s tic a lly affected b y w a rtim e tr a n s p o rta tio n sh o rta g e s a n d tr a v e l
re s tr ic tio n s as w ere th o se in oversea c ou n tries.
I n 1940 p a y m e n ts to C a n a d a f o r tr a v e l d eclin e d b y a p p ro x im a te ly
40 p e rc e n t fro m th o se in th e p re c e d in g y e a r, c o n tra ste d w ith th e decline
o f n e a rly 90 p e rc e n t su ffered b y p a y m e n ts f o r E u ro p e a n tra v e l in 1940.
T ra v e l p a y m e n ts to C a n a d a rec o v e red slig h tly in 1941, a n d in 1942
slu m p e d a g a in , b u t th e decline w as m u ch less p re c ip ito u s th a n in th e
case o f oversea tra v e l d u r in g th e sam e y e a r. T h e d eclin e in 1940 w as
p a r tly d u e to th e e sta b lish m e n t o f re g u la tio n s a lo n g th e b o rd e r w h ich
re q u ire d U n ite d S ta te s c itize n s re e n te rin g th e U n ite d S ta te s fro m
C a n a d a to e x h ib it p ro o f o f c itiz en sh ip —-a fo rm a lity w h ic h u n d o u b t­
e d ly se rv ed f o r a tim e a s a d e te rre n t to th e freq u e n c y a n d fre e d o m o f
cro ssing .
I n p re w a r y e ars, th e m a jo r p o rtio n o f e x p e n d itu re s o f tra v e le rs to
C a n a d a w a s m a d e b y p e rso n s tr a v e lin g b y a utom obile. T h e declin e
in e x p e n d itu re s in 1942 w as due, f o r th e m o st p a r t, to th e re d u c tio n
in th is ty p e o f tr a v e l as a r e s u lt o f th e sc a rc ity o f g a so lin e a n d tire s.
A re la tiv e ly sm a ll a m o u n t o f su ch traffic— p ro b a b ly chiefly th e n on re c re a tio n a l ty p e — w as d iv e rte d to th e r a ilr o a d s d u r in g 1942. A
p ro n o u n c e d d iv ersio n to o th e r m ea n s o f tr a n s p o rta tio n w a s n o t m a n i­
fe s te d u n til th e fo llo w in g y e a r, w h en n o n au to m o b ile tra v e l to C a n a d a
in cre a se d b y m o re th a n o n e -th ird o v er 1942, a u to m o b ile tra v e l d e ­
c lin in g to its lo w est p o in t.
I n 1943 tr a v e l p a y m e n ts to C a n a d a tu rn e d u p w a rd , th e ris in g tr e n d
b e co m in g m o re m a rk e d in 1944. T h e e n d o f g aso lin e r a tio n in g in
1945 g av e co n sid e ra b le im p e tu s to th e in crea se in a u to m o b ile tra v e l,
w h ic h in t h a t y e a r exceeded a n y o f its w a rtim e levels. E x p e n d itu re s
in C a n a d a in 1945 b y U n ite d S ta te s re sid e n ts tr a v e lin g b y a ll m eans
w ere e stim a te d to to ta l n e a rly $150 m illio n — th e h ig h e s t p e a k in
n e a rly a decade.
T h is g e n e ra l tr e n d in e x p e n d itu re s w as sh ow n also in th e case o f
tra v e l in th e U n ite d S ta te s b y C a n a d ia n s. I n 1940 th e D o m in io n ,
w h ic h fo u n d its e lf fa c e d Avith a serio u s d o lla r sh o rta g e , fo u n d i t
n ecessary to c u r ta il th e u se o f U n ite d S ta te s d o lla rs f o r tra v e l in
th e U n ite d S ta te s. R e s tric tio n s w ere p u t in to effect w h ich re q u ire d
a ll re sid e n ts o f C a n a d a to o b ta in p e rm issio n fro m th e F o re ig n E x ­
c h a n g e C o n tro l B o a rd to d e p a rt fro m C a n a d a a n d to e x p o rt fun d s.
A lth o u g h th e n e ce ssary a m o u n ts o f U n ite d S ta te s d o lla rs w e re su p ­
p lie d f o r t r ip s in v o lv in g business, h e a lth , a n d e d u c atio n , tra v e l w h ich
in v o lv e d th e use o f U n ite d S ta te s d o lla rs so lely f o r re c re a tio n a l p u r ­
poses w as sto p p e d . T h is a c tio n re s u lte d in a severe d eclin e in U n ite d
S ta te s re c e ip ts fro m C a n a d a o n a cc ou n t o f tra v e l to a lo w in 1941
w h ic h h a d n o t b een eq u aled in m o re th a n 20 y ears.
I n th e la te s p rin g o f 1944, ex ch an g e a n d tr a v e l re s tric tio n s w ere
eased so m e w h a t b y th e D o m in io n , C a n a d ia n re s id e n ts b e in g p e r ­
m itte d to o b ta in u p to $150 a y e a r in U n ite d S ta te s c u rre n c y f o r
p le a su re tra v e l in th e U n ite d S ta te s. A s a re s u lt, e x p e n d itu re s b y
C a n a d ia n s f o r tr a v e l in th e U n ite d S ta te s tu rn e d sh a rp ly u p w a rd .
T h e ris in g tr e n d becam e m o re p ro n o u n c e d as e x ch an g e re s tr ic tio n s
w e re f u r th e r re la x e d in 1945 to alloAv C a n a d ia n s “ a n y rea so n ab le
a m o u n t” o f U n ite d S ta te s fu n d s f o r a ll ty p e s o f tra v e l in th e U n ite d
S ta te s . B y th e e n d o f 1945 re c e ip ts b y th e U n ite d S ta te s fro m
C a n a d a on a cc ou n t o f tra v e l a p p ro a c h e d 1929 levels.
62

H e a v y T r a v e l o n M e x ic a n B o r d e r

T h e m o vem ent o f p e rso n s across th e M exican b o rd e r is even h e a v ie r
th a n t h a t in to C a n a d a because o f a n in te rd e p e n d e n c e w h ic h h a s
d e veloped b etw een th e to w n s on b o th sides o f th e in te rn a tio n a l b o u n d ­
a ry line. T h e rea so n s f o r tr a v e l a re even m o re v a rie d , th e re fo re , th a n
in th e case o f C a n ad a . C o m p a re d w ith th e m illio n s o f c ro ssin g s o v er
th e M exican b o rd e r w h ich a re re c o rd e d a n n u a lly , re la tiv e ly few p e rso n s
p e n e tr a te b e y o n d th e b o rd e r zones in e ith e r d ire c tio n . O n th e M exican
side, lim ite d tr a n s p o rta tio n fa c ilitie s u n til th e m id d le 1930’s a c ted as
a check o n tr a v e l to th e in te rio r. I n 1936 th e c o m p le tio n o f th e P a n
A m e ric a n H ig h w a y to M exico C ity te n d e d to en co u rag e in te rio r tr a v e l,
a n d a n in c rea se in services offered b y th e a ir lin e s se rv ed as a n
a d d itio n a l stim u lu s.
I n 1940 U n ite d S ta te s e x p e n d itu re s f o r tra v e l in M exico show ed a
c o n sid e ra b le in c re ase o v e r th o se in th e p re c e d in g y e a r. T h is g ro w th
w as u n q u e stio n a b ly d u e in p a r t to th e d iv ersio n o f tr a v e l fro m co u n ­
trie s a b ro a d , m a n y o f w h ich w ere c u t off fro m th e A m eric an v a c a tio n ist
b y th e o u tb re a k o f th e w a r. T ra v e l to th e in te rio r o f M exico c o n tin u ed
to in c rea se in 1941, b u t d ro p p e d off in 1942 as a re s u lt o f g a so lin e
ra tio n in g . A f te r 1943, how ever, in te rio r tra v e l rose ste a d ily , in sp ite
o f g a so lin e r a tio n in g d u r in g 1944 a n d m o st o f 1945. P a y m e n ts to
M exico f o r tra v e l d u r in g 1945 w ere e stim a te d as a p p ro a c h in g th o se a t
th e b e g in n in g o f th e w a r.
T ra v e l to M ex ican b o rd e r c ities sh ow ed a ste a d y in crea se d u r in g th e
10 y e a rs p re c e d in g 1940. I n th e e a rly y e a rs o f th e w a r, th e ris e becam e
m o re r a p id , o w in g to th e lo c a tio n close to th e M ex ican b o rd e r o f la rg e
m ilita ry cam ps. A rm y p e rso n n e l ta k in g a d v a n ta g e o f th e ir p ro x im ity
to a fo re ig n c o u n try , tra v e le d in n e a rb y M ex ican a re as.
B y f a r th e g re a te r p o rtio n o f re c e ip ts by th e U n ite d S ta te s f o r tra v e l
b y M ex ican re s id e n ts re s u lts fro m e x p e n d itu re s in to w n s close to th e
in te rn a tio n a l b o u n d a ry . T h e se e x p e n d itu re s a re m a d e f o r th e m o st
p a r t b y M exicans w ho cross re g u la rly to sh o p on th e A m e ric a n side, a n d
c on seq u en tly do n o t follow n o r m a l tr a v e l t r e n d s ; th e y v a ry in a c c o rd ­
ance w ith th e p o p u la tio n o f, a n d s ta n d a r d o f liv in g in , a d ja c e n t
M ex ican co m m u n ities. E x p e n d itu re s m a d e in th e U n ite d S ta te s b y
M ex ican re sid e n ts d u r in g th e p e rio d 1940 th ro u g h 1945 sh ow ed only
a n in c o n seq u e n tia l v a r ia tio n fro m th e a v erag e s e sta b lish e d in th e la te
1930’s, a lth o u g h th e tr e n d w as c o n siste n tly u p w a rd . T h e ris e d u rin g
th e p e rio d w as a p p ro x im a te ly 20 p e rc e n t over th e low o f $31 m illio n
e stim a te d f o r M ex ica n tr a v e l in 1940, re c e ip ts to ta lin g a b o u t $37
m illio n in 1945.
O u tlo o k f o r F o r e ig n T r a v e l

S in c e re c re a tio n a l tr a v e l is la rg e ly o f th e lu x u ry ty p e , i t is e x trem e ly
se n sitiv e to flu c tu a tio n s in g e n e ra l econom ic c o n d itio n s. N o n re cre atio n a l tr a v e l, th o u g h less a c u te ly su sce ptib le, also fo llo w s m a jo r eco­
nom ic c h an g e s to a m a rk e d degree, since tr a v e l f o r bu sin ess rea so n s
ob v io u sly is in fluen ced b y g e n e ra l bu sin ess c o n d itio n s. D u r in g th e
2 0 -ye ar p e rio d p re c e d in g W o rld W a r I I , th e tr e n d o f e x p e n d itu re s f o r
fo r e ig n tr a v e l w as fo u n d to b e closely r e la te d to th e b e h a v io r o f
n a tio n a l incom e.
I n th e 1940-45 p e rio d p o w e rfu l fa c to rs, su ch a s tra n s p o rta tio n s h o rt­
ages, la c k o f to u ris t a cc om m od ations, a n d re g u la tio n s p re v e n tin g
re c re a tio n a l tr a v e l to m a n y a rea s, e x erte d a con sp icu o u s r e s tr a in t on
63

tr a v e l, w ith th e n e t re s u lt t h a t p re v io u sly e x istin g re la tio n s h ip s be­
tw e en tra v e l e x p e n d itu re s a n d n a tio n a l incom e w ere in te rr u p te d (see
c h a rts 16 a n d 17). I t is rea so n ab le to ex p ect t h a t w h e n th e re s tr ic ­
tio n s on tra v e l due to tr a n s p o rta tio n sh o rta g e s a n d in a d e q u a te to u ris t
a cco m m o d atio n s in m a n y fo re ig n c o u n trie s h a v e been rem oved, p a y ­
m en ts f o r fo r e ig n tr a v e l w ill once m o re occupy th e sam e re la tio n s h ip
to n a tio n a l incom e as t h a t e x h ib ite d in th e in te rw a r p e rio d .
I n a d d itio n to n a tio n a l incom e, th e re a re n u m ero u s o th e r fa c to rs
w h ic h exercise a p o w e rfu l influence u p o n fo re ig n tra v e l. I m m ig r a ­
tio n , w ith its re s u lta n t in crea se in th e fo re ig n -b o rn p o p u la tio n o f th e
n a tio n , e x erts a p ro fo u n d effect u p o n tr a v e l, w h ich m a y be tra c e d
la rg e ly to th e d e sire by n a tu ra liz e d c itize ns o r a lie n re s id e n ts to v is it
th e c o u n trie s o f th e ir o rig in . D u r in g th e tw e n tie th c e n tu ry , m ore
th a n 19 m illio n im m ig ra n t a lien s, m ost o f w hom w ere b o rn in E u ro p e ,
w ere a d m itte d to th e U n ite d S ta te s f o r p e rm a n e n t residence. T h is
u n q u e stio n a b ly h a d a n im p o r ta n t effect on tr a v e l a n d tra v e l p a tte rn s
d u r in g th e in te rw a r p e rio d . A lth o u g h d u r in g th is p e rio d fo re ig n b o rn re sid e n ts ( th a t is, n a tu ra liz e d c itize n s p lu s alie n re sid e n ts o f th e
U n ite d S ta te s) a cc ou n ted f o r o n ly a b o u t 10 p e rc e n t o f th e to ta l p o p u ­
la tio n , m o re th a n 50 p e rc e n t o f a ll th e A m e ric a n tra v e le rs d e p a rtin g
f o r p a ss p o rt a re a s w ere b o rn in fo re ig n c ou n tries.
A s w o u ld be ex p ected fro m th e o rig in o f im m ig ra tio n d u rin g th e
c e n tu ry , th e m a jo rity o f re sid e n ts d e p a rtin g f o r overseas w ere d e stin e d
f o r E u ro p e a n c o u n trie s, d e p a rtu re s b y re s id e n ts f o r E u ro p e in th e
1920’s a m o u n tin g to 66 p e rc e n t o f to ta l d e p a rtu re s . D e p a rtu re s f o r
E u ro p e b y alie n re s id e n ts alone a cc ou n ted f o r 87 p e rc e n t o f to ta l o v e r­
sea d e p a rtu re s by such resid e n ts. Q u o ta re s tric tio n s p lac ed in 1921
a n d 1924 on im m ig ra tio n fro m a ll c o u n trie s e x ce p t in d e p e n d e n t c oun­
tr ie s in th e W e s te rn H e m isp h e re caused a s h a rp decline in im m ig ra tio n .
T h is d eclin e c o n tin u ed th ro u g h th e 1930’s, th e 1940 census refle ctin g
th e first d e ce n n ial decline in th e fo re ig n -b o rn w h ite p o p u la tio n .
I t is im p o ssib le to p ro p h e sy w h a t o u r im m ig ra tio n policies m ay be
in th e f u tu re . H o w e v e r, i f th e y c o n tin u e u n c h a n g e d fro m th e p resen t,
a m o re r a p id decline in th e n u m b e r o f fo re ig n -b o rn re sid e n ts in th e
U n ite d S ta te s w ill re su lt. T h is decline w ill u n q u e stio n ab ly be reflected
in a n e v e n tu a l decrease in n u m b ers o f fo re ig n -b o rn re sid e n ts tr a v e lin g
a b ro a d , e sp ecially in view o f th e fa c t t h a t ties to th e m o th e r c o u n try
te n d to becom e w eakened as tim e passes.
T ra v e l to p a s s p o rt a re a s by n a tiv e -b o rn citizens, w h ich h a d declined
d u r in g th e d e p ressio n , tu rn e d u p w a rd in 1934, a n d in 1937 exceeded
th e 1929 level. I f th is tr e n d co n tin u e s, a n y decreases in tr a v e l by
fo re ig n -b o rn re sid e n ts m ay be m o re th a n offset by in c rea sed tr a v e l by
n a tiv e -b o rn citizens, in m a n y o f w hom in te re s t in fo re ig n c o u n trie s
h a s been a ro u se d by th e w a r.
A n o th e r im p o r ta n t influence u p o n fo r e ig n tra v e l is th e in crease in
speed a n d c o m fo rt o f tra n s p o rta tio n to d is ta n t a reas. U n d e r th e
w a rtim e necessity fo r s h o rte n in g a n d sp ee d in g u p su p p ly lin es, in te r ­
n a tio n a l tr a n s p o rta tio n m a d e strid e s w h ich co u ld n o t conceivab ly
h a v e been eq u aled d u r in g tim es o f peace.
D u r in g 1929, w h e n com m ercial a ir tra n s p o rta tio n w as in a u g u ra te d
b e tw e en th e U n ite d S ta te s a n d oversea c o u n trie s, 4,000 p a sse n g ers
d e p a rte d by a ir f o r oversea d e stin a tio n s. T h is volum e h a d tre b le d
b y 1935, a n d d u r in g 1940 m o re th a n 40,000 c iv ilia n p a sse n g e rs le f t
th e U n ite d S ta te s by a ir f o r oversea c ou n tries. M a ritim e losses due
64

r

*

C hart 1 6

RELATIONSHIP BETWEEN U. S. TRAVEL
PAYMENTS TO REMOTE AREAS
AND NATIONAL INCOME
500

0

50

100

N A T IO N A L

NOTE:

REM O TE

R E G R E S S IO N

AR EAS

L IN E

W AS

IN C L U D E
F IT T E D

IN C O M E

E U R O P E , A S IA ,
TO

DATA

FO R

-

A F R IC A ,
1 9 2 1 -3 8 .

150

B IL L IO N S

O C E A N IA ,

OF

AND

200

DO LLARS

SOUTH

A M E R IC A ,

._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4 7 - 3 1 4

65

C h art 1 7

R ELATIO NSH IP B E T W E E N U. S . T R A V E L
PAYM ENTS TO N EARBY A R E A S
AND NATIO NAL INCOME

NOTE-

NEARBY AR EAS

R E G R E S S IO N

66

L IN E

W AS

IN C L U D E
F IT T E D

CANADA,
TO

DATA

M E X IC O , W E S T
FO R

1 9 2 1 -3 8 .

IN D IE S ,

AND

CENTRAL

A M E R IC A .
4 7 -3 1 6

-s

*

to su b m a rin e w a rfa re a n d th e co n v ersio n o f th e su rv iv in g sh ip s w ith
p a sse n g e r c a p a c ity to m ilita ry uses d u r in g th e w a r y e a rs com bined
to s tim u la te f u r th e r th e g ro w th o f a ir tr a v e l, so t h a t d u rin g 1945
n e a rly 134,000 c iv ilia n s w ere c a rrie d b y a ir to oversea p o in ts. I n
1940 o u tb o u n d a ir traffic fro m th e U n ite d S ta te s to c o u n trie s o th e r th a n
C a n a d a a n d M exico a cc ou n ted f o r less th a n 20 p e rc e n t o f to ta l o u t­
b o u n d p a ss e n g e rs; h o w ev er, b y 1945, tra v e l b y a ir a cc ou n ted f o r n e a rly
60 p e rc e n t o f to ta l a ir a n d sea d e p a rtu re s .
T h e d e ve lo p m e nt o f a ir tr a n s p o r ta tio n w ill p re se n t new o p p o rtu n i­
tie s f o r fo r e ig n tra v e l to th e in d iv id u a l w hose tim e is lim ite d a n d
w h o h e re to fo re w as r e s tr ic te d to a v a c a tio n sp e n t lo ca lly . T o w h a t
e x te n t th is w ill re p re se n t a d iv e rsio n fro m dom estic to fo r e ig n tra v e l
o r fro m n e a rb y fo r e ig n to m o re d is ta n t c o u n trie s i t is im possib le to
d e term in e.
A d d itio n a l influences te n d in g to in crea se fo r e ig n tr a v e l a re f a v o r­
able e x ch an g e ra te s, th e in crea se in p a id v a ca tio n s a n d le n g th e n in g
o f v a c a tio n p e rio d s, a n d w o rld -w id e im p ro v e d econom ic, social, a n d
p o litic a l co n d itio n s. M an y c o u n trie s a re m a k in g c o n certed e ffo rts
to a ttr a c t a n a b u n d a n t to u r is t tr a d e b y o fferin g in c rea sed fa c ilitie s
a n d e n d e a v o rin g to a ro u se in te re s t in tr a v e l to th e ir c o u n trie s b y
fo re ig n e rs.
W ith th e u p w a rd tr e n d i n p a id v a ca tio n s, th e in crea se in sp eed a n d
c o m fo rt o f tr a n s p o rta tio n , th e aw ak e n e d in te re st in fo re ig n c o u n trie s
d u e to th e w a r, a n d ren ew e d fo re ig n efforts to a ttr a c t to u rists, th e
d y n a m ic re la tio n s h ip o f tra v e l o u tla y s to n a tio n a l incom e e x h ib ite d
d u r in g th e 1920’s m a y a g a in p r e v a il, w ith tra v e l p a y m e n ts ris in g to
u n p re c e d e n te d levels.
In c o m e

A

on

I n v e s t m e n t s 16

A sig n ific a n t m easu re o f th e in te rn a tio n a l c re d ito r o r d e b to r p o si­
tio n o f a c o u n try is th e excess o f re c e ip ts o r p a y m e n ts o f in te rn a tio n a l
p ro p e rty incom e— d iv id e n d s, b ra n c h p rofits, a n d in te re s t.17 (See
ta b le 13 a n d a p p e n d ix C, ta b le X I V ) . B y th is c rite rio n , th e U n ite d
S ta te s c o n tin u ed to m a in ta in a s tro n g c re d ito r p o s itio n th ro u g h o u t
th e w a r, d e sp ite th e fa c t t h a t a c o n tin u ed rise in th e v a lu e o f fo r e ig n
assets in th e U n ite d S ta te s le f t th is c o u n try a n e t d e b to r b y conven­
tio n a l d e fin itio n (see ta b le 2 7 ). N e t a n n u a l re c e ip ts on incom e ac­
c o u n t ra n g e d fro m a b o u t $355 m illio n to $410 m illio n d u r in g th e w a r
p e rio d — w ell above th e 1937-39 a verag e.
L a rg e r n e t re c e ip ts re su lte d solely fro m th e w a rtim e de cline o f in ­
com e p a id to fo re ig n e rs, as g ro ss re c e ip ts also fell, a lth o u g h to a con­
sid era b ly less e x te n t. B o th re c e ip ts a n d p a y m e n ts w ere f a r below th e
volum e o f th e la te 1920’s, w h en th e la rg e a m o u n t o f sh o rt-te rm c a p ita l
o u ts ta n d in g w as a co n sid e ra b le so urce o f in te rn a tio n a l incom e a n d
A m e ric a n h o ld in g s o f fo re ig n d o lla r b o n d s y ield e d $300 m illio n to $400
m illio n a n n u a lly (see c h a r t 18) . R e c eip ts o f in te re s t b y th e U n ite d
S ta te s G o v e rn m en t, a lth o u g h in c re a s in g d u rin g th e w a r, w ere s till
re la tiv e ly u n im p o r ta n t b y 1945.
10 P r e p a r e d b y M i l t o n A b e l s o n , I n v e s t m e n t S e c t i o n , - w i t h t h e a s s i s t a n c e o f S a m u e l P i z e r ,
F r e d e r ic k C u tle r , S a r a E . B ie lo u s s , a n d S e ik o N . W a k a b a y a s h i.
17
F o r a t e c h n ic a l d e s c r ip t io n o f t h e it e m s in c lu d e d u n d e r t h e g e n e r a l te r m “ in c o m e
in v e s t m e n t s ,” s e e a p p e n d ix B .
I n p a r tic u la r i t s h o u ld b e n o te d t h a t u n d is tr ib u te d e a r n in g s
o f s u b s id ia r ie s a r e n o t in c lu d e d .

67

on

C hart 18

V . S . R e c e ip ts F r o m F o r e ig n I n v e s tm e n ts

R ec eip ts o f incom e fro m A m e ric a n in v estm e n ts in fo re ig n c o u n ­
tr ie s re m a in e d re la tiv e ly h ig h th ro u g h o u t th e p e rio d 1940-45. T h e
r e tu r n to A m e ric a n co m p an ies on th e ir e q u ity in d ire c t in v e stm e n ts
a v e ra g e d 5.1 p e rc e n t d u r in g th e w a r ; w h ile t h a t to h o ld e rs o f d o lla r
b o n d s a v e ra g e d 3.5 p e rc e n t o f p a r v a lu e , d e sp ite th e fa c t t h a t close to
30 p e rc e n t o f th e b on ds w ere in d e fa u lt a n d f o r th e m o st p a r t p a id no
in te re s t. In c re a s e d r e tu rn s fro m A m eric a n -c o n tro lle d e n te rp rise s
68

Tabl e 13.—In c o m e

o n in v e s tm e n ts , 19J/0-45

[I n m illio n s of dollars]
1940

It e m

1941

1942

1943

1944

1945

R e c e ip ts
T o t a l. .................... .............. .............. ...............

564

544

514

508

572

555

P r i v a t e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _______ _________ ____
L o n g -te rm __________ _ _ _ _ _ _ _ ____________
D ir e c t in v e s tm e n ts 2- ......... . _ ......... ...............
C o m m o n d iv id e n d s _____ _ __ __ __ __ __ _
P re fe r re d d iv id e n d s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
I n te r e s t....... ................................ — .........
B ra n c h p r o f i t s . ______ _____________
P o rtfo lio in v e s tm e n ts ______________ _ _ _ _ _ _
D o lla r b o n d s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
M is c e lla n e o u s ............. ................... ............
S h o rt -te rm _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _
U . S. G o v e r n m e n t,____ ___ ____ _
_____________

561
555
413
271
7
38
97
142
82
60
6
3

535
530
400
219
9
40
132
130
79
51
5
9

496
492
358
168
10
33
127
134
79
55

497
593
368
215
7
38
108
125
72
53

539
534
392
166
7
35
184
142
77
65
5
16

4

4

18

11

556
552
418
182
6
35
195
134
70
64
4
16

P a y m e n ts
____ _ ______

210

187

159

155

161

168

P r i v a t e . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ __________
L o n g -te rm 3___ _ __ __ __ _ _ _ _ _ ______________
D ir e c t in v e s tm e n ts 2_----- ----------- ----- ----D iv id e n d s __
_____________________
I n te r e s t_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ __ __ __ __ _
B ra n c h p r o f it s . _ __ __ __ __ __ _____ _
P o rtfo lio in v e s tm e n ts _____ _____________
U . S. G o v e r n m e n t. __________________ _______ ..

204
204
65
50
3
12
139
6

181
181

151
151
42
32
1
9
109
8

146
146
41
32
2
7
105
9

149
149

154
154
45
36
1
8
109
14

T o t a l . . . ___

________

c i

m
«

«

5 181
6

44

36
1
7
105
12

N e t re c e ip ts ( + ) o r p a y m e n ts ( —)
T o t a l . ___ _____

________ _______ ______

P riv a te .
___ _______________ - ----- ------------U . S. G o v e r n m e n t . . . ....... ...... ........ .......... ............ .

+ 354

+ 3 57

+ 355

+353

+411

+387

+ 357
-3

+ 3 54

+ 345
+10

+ 351

+ 407
+4

+385

+ 3

+ 2

+ 2

1 A fte r ta x e s. E x c lu d e s p a y m e n ts a n d re c e ip ts of ro y a ltie s , r e n ts , a n d fees for m a n a g e m e n t services
re n d e r e d b y p a r e n t c o m p a n ie s. T h e se a re n o t tr e a te d a s r e tu r n o n in v e s tm e n t b u t a r e in c lu d e d u n d e r m is­
c e llan eo u s se rv ic es.
2 E x c lu d in g re tu r n s to in su ra n c e c o m p a n ie s, w h ic h h a v e b e e n in c lu d e d w ith o th e r in su ra n c e tra n s a c ti o n s
u n d e r m isc e lla n e o us services.
3 P a y m e n ts o n sh o rt- te rm in v e s tm e n ts w e re n il.
4 In c lu d e d w it h p ortfo lio in v e s tm e n ts .
* In c lu d e s d ir e c t-in v e st m e n t p a y m e n ts .

i.
j

e n g a g e d in th e p ro d u c tio n , refin in g , a n d d is tr ib u tio n o f p e tro le u m a n d
in th e p ro d u c tio n o f a g r ic u ltu ra l p ro d u c ts ( p a rtic u la rly su g a r in
C u b a ) p a r tly offset th e declines fro m o th e r d ire c t in v e stm e n ts a n d d o l­
la r bonds.
In co m e re c e ip ts w ere m a in ta in e d a t a h ig h leVel d e sp ite th e loss o f
incom e on b o th d ire c t a n d p o rtf o lio in v estm e n ts fro m A x is-c o n tro lle d
te rrito rie s , w h ich h a d p ro v id e d ro u g h ly $65 m illio n in 1939.18 M oreover, d iv id e n d p a y m en ts to th e U n ite d S ta te s fro m d ire c t in v e s tm e n ts
a b ro a d w ere c o n sid e ra b ly less th a n a c tu a l e a rn in g s, since a la rg e p a r t
o f th e la tt e r w as in v ested in p la n t e x p a n sio n a b ro a d o r w as a p p a re n tly
h e ld a b ro a d , in a t le a st one c o u n try , in e x p e cta tio n o f a m o re fa v o ra b le
e xch an g e ra te a f te r th e w a r. A n o th e r fa c to r a c c o u n tin g fo r lo w e r
d iv id e n d re c e ip ts m a y h a v e been a d e sire on th e p a r t o f A m erican '
p a r e n t com p anies to red u ce th e re c e ip t o f incom e fro m a b ro a d a t a
tim e w hen dom estic p ro fits a n d ta x r a te s w ere h ig h .
18
C e r t a i n o c c u p ie d c o u n t r i e s , n o t a b l y N o r w a y , D e n m a r k , B e l g i u m , a n d F r a n c e , c o n t i n u e d
i n t e r e s t s e r v i c e o n t h e i r d o l l a r b o n d s w i t h f u n d s h e ld i n f o r e i g n c o u n t r i e s .

69

I n c o m e R e c e ip t s o n D ir e c t I n v e s t m e n t s M a in t a in e d

In c o m e o n A m e ric a n d ire c t in v estm e n ts a b ro a d , w h ich in 1944 com ­
p r is e d a lm o st th re e -fo u rth s o f to ta l in v e stm e n t incom e received fro m
a b ro a d , d eclin e d v e ry little b e tw e en 1939 a n d 1945— fro m $400 m illio n
to $392 m illio n , a f te r f a llin g to $358 m illio n in 1942 a n d re a c h in g a
p e a k o f $418 m illio n in 1944. T h e d ro p in 1942 re s u lte d m a in ly fro m
th e e lim in a tio n o f incom e fro m enem y a n d enem y-occupied c ou n tries,
w h ic h h a d a m o u n te d to $53 m illio n in 1940 a n d to $25 m illio n in 1941.
I n su b seq u en t y e a rs th e loss w as olfset la rg e ly b y e n h a n c ed re c e ip ts on
p e tro le u m in v estm e n ts, p a r tic u la r ly fro m L a tin A m erica. B y 1944,
to ta l re c e ip ts fro m p r o p e rtie s n o t u n d e r enem y c o n tro l w ere a p p a re n tly
a t th e h ig h e st level e v er rec o rd e d .
A s in d ic a te d in c h a r t 19 th e n e t e a rn in g s ra tio s o f A m e ric a n comp a n ie s o p e ra tin g a b ro a d w ere h ig h e r d u r in g 1940 a n d 1941 th a n th ose
o b ta in e d b y c o rp o ra tio n s on in v este d c a p ita l in th e U n ite d S ta te s, a l­
th o u g h th e s itu a tio n c h a n g ed ra p id ly d u r in g th e n e x t 2 y e ars as incom e
fro m A m e ric a n e n te rp rise s in A x is-c o n tro lle d a re a s w as c u t off a n d
d o m e stic e n te rp ris e s e a rn e d in c re a sin g ly la r g e r p rofits.
T h e r a te o f p ro fit (n e t e a rn in g s to n e t e q u ity ) o f A m eric an d ire c t
in v e stm e n ts a b ro a d w as h ig h e s t in n e a rly e v ery y e a r on ste rlin g a re a in v estm e n ts, w h ich p ro d u c e d a n a v era g e o f 10.1 p e rc e n t f o r th e
1941-45 p e rio d (see ta b le 1 4 ). T h e r a te o f p ro fit on in v estm en ts in
th e A m e ric a n R ep u b lics f o r th e sam e p e rio d a v era g e d 9.6 p e rc e n t, a n d
in 1944 w as 10.9 p e rce n t. H o w e v e r, th e ra te o f p ro fit fro m U n ite d

Tabl e 14.— R a tio s

o f in co m e a n d n e t e a r n in g s 1 to A m e ric a n e q u ity in fo re ig n
su b sid ia rie s a n d b ra nch es, b y area s, 1940-45, a n d a vera g e fo r th e p e r io d 2
[V a lu e in m illio n s of d olla rs; ra tio s in p e rc e n t]

I te m

1940

1941

1942

1943

1944

1945

A v e r­
age
1 9 4 0 -4 5

ALL A REA S

A m e ric a n e q u ity in d ire c t in v e s tm e n ts a b ro a d .
R a tio of in c o m e to e q u i t y _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
R a tio of n e t e a rn in g s to e q u i t y ....... . ..............
S T E R L IN G

7 ,2 6 8

7 ,4 6 2

7 ,6 8 9

7 ,8 0 2

7 ,8 8 4

8 ,0 3 4

5 .7

5 .4

4 .7

4 .7

5 .3

4 .9

7 ,6 9 0
5 .1

6 .3

7 .8

7 .1

7 .0

7 .5

6 .8

3 7 .1

AREA

A m e r ic a n e q u ity in d irect in v e s tm e n ts a b ro a d .
R a tio of in c o m e to e q u i t y ......... .
....... ........
R a t io of n e t e a rn in g s to e q u i t y ______ _____

746
8 .2

n .s.s.

814

864

900

930

5 .8

6 .2

6 .7

6 .1

5 .6

6 .4

1 0 .5

1 0 .0

857

1 0 .0

9 .9

9 .0

3 1 0 .1

2 ,1 7 5

852

CANADA

A m e r ic a n e q u ity in d ir e c t in v e s tm e n ts a b ro a d .
R a t io of in c o m e to e q u i t y _ _ _ _ _ _ _ _ __ __ __ __
R a t io of n e t e a rn in g s to e q u i t y ...... ............ .

2 ,1 1 4

2 ,3 4 6

2 ,4 1 7

2 ,2 6 9

5 .5

2 ,2 4 8
5 .1

2 ,3 1 6

6 .0

4 .8

4 .3

3 .8

6 .5

8 .0

8 .3

7 .6

6 .4

6 .3

4 .9
7 .2

2 ,7 3 7

A M E R IC A N R E P U B L IC S

A m e ric a n e q u ity in d ir e c t in v e s tm e n ts a b ro a d .
R a tio of in c o m e to e q u i t y . ......... ......... ......
R a tio of n e t e a rn in g s to e q u i t y ______ ____ _

2, 594

2 ,6 4 3

2 ,7 1 9

2, 712

2 ,8 3 5

n .s.s.

5 .9

6 .8
9 .4

6 .5

6 .6

8 .9

9 .0

8 .9

1 0 .9

7 .8
9 .3

1 ,8 1 4

1 ,8 3 0

1 ,8 6 5

1 ,8 8 5

1 ,9 2 6

1 ,8 5 2

1.1

1 ,8 6 2

1 .4

2 .9

2 .6

' 1.8
« 2 .6

2 ,7 0 7
7 .1

3 9.6

OTHER

A m e ric a n e q u ity in d ir e c t in v e s tm e n ts a b ro a d .
R a tio of in c o m e to e q u i t y ___ ____________
R a tio of n e t e a rn in g s to e q u i t y _ __ __ __ __ __ _

3 .9

n .s.s.

2 .9

0 .8

1.0

4 .0

1 .3

2 .1

1 F(>r p u rp o se s of th is ta b le , in c o m e re fe rs to a c tu a l re c e ip ts b y th e U n ite d S ta te s a s re fle cte d in th e b a la n c e
o f-p a y m e n t, w h ile n e t e a rn in g s in c lu d e , in a d d itio n , u n d is tr ib u te d p ro fits of fo re ig n s u b sid ia rie s .
2 D oe s n o t in c lu d e in v e s tm e n ts in in su ra n c e co m p a n ie s.
31941-45.
n .s .s . N o t sh o w n s e p a r a te ly .

70

•-

C h art 1 9

COMPARATIVE INCOME ON AMERICAN DIRECT
INVESTMENTS ABROAD, FOREIGN INVESTMENTS IN
THE U. S., AND INVESTMENTS IN DOMESTIC
CORPORATIONS, BY CLASS OF INVESTMENT.
PERCENT
R A T IO

3

OF

D IV ID E N D S

TO

M A R KE T VALU E.

-

2 __________ L

1940
N O T E :

FO R

1941
A

D E S C R IP T IO N

7 6 9 1 5 5 — 48-

6

1942
O F

EAC H

S E R IE S

S E E

1943
NO TES

IN

A P P E N D IX

1944
C

1945
A 7 -3 2 6

71

S ta te s in v e stm e n ts in L a tin A m e ric a te n d s to be m o d e ra te in th e a g ­
g re g a te , because o f th e la rg e volum e o f A m e ric a n p u b lic -u tility in ­
v e stm e n ts in t h a t re g io n , on w h ic h th e r a te o f r e tu r n h a s h is to ric a lly
been v e ry low. F o r in sta n ce , in 1943 th e U n ite d S ta te s in v e stm en t
in L a tin A m e ric a n p u b lic u tilitie s w a s v a lu e d a t m o re th a n th re e q u a rte rs o f a b illio n d o lla rs b u t p a id o n ly a b o u t $25 m illio n to U n ite d
S ta te s in v esto rs. T h e y ield to A m eric an s fro m fo re ig n in v e s tm e n ts 19
w as la rg e s t fro m th e A m e ric a n R ep u b lics d u r in g th e w a r p e rio d , b o th
in d o lla r te rm s a n d in re la tio n to v a lu e o f in v e stm e n t. T h e y ie ld s in
re la tio n to v a lu e o f in v e s tm e n t fro m th e s te rlin g a re a a n d C a n a d a
w ere lo w er, in th a t o rd e r. A m e ric a n incom e fro m th e “ O th e r” g ro u p
(see ta b le 14) w as s h a r p ly re d u ce d , since m a n y o f th e A m e ric a n e n te r­
p rise s A vere in a re a s o ccupied by th e enem y.
I n th e 5 -y e ar p e rio d 1941-45, A m e ric a n su b sid ia rie s a b ro a d e arn ed
(in m illio n s o f d o lla rs) 1,839, p a id d iv id e n d s o f 968, a n d rein v e ste d
871 (see ta b le 1 5 ). T h e y ie ld to in v e s to rs on a ll A m e ric a n d ire c t
in v e stm e n t c a p ita l a v e ra g ed 5.1 p e rc e n t d u rin g 1940-45.
A m e ric a n R e p u b lics .— I n te rm s o f d o lla rs th e la rg e s t incom e r e ­
c eip ts w ere fro m L a tin A m eric a, w h e re in ten sified e x p lo ita tio n o f
p e tro le u m resources y ie ld ed $107 m illio n o f to ta l rec e ip ts o f $242 m il­
lion fro m a ll in d u strie s in th e a re a in 1944 (ta b le 1 6 ). T h e in crea sed
p ro d u c tio n o f p e tro le u m , p rin c ip a lly in V enezuela, w as th e m a in f a c ­
to r in in c re a sin g incom e fro m L a tin A m eric a, fro m 37 p e rc e n t o f
U n ite d S ta te s incom e fro m d ire c t in v estm e n ts in 1940 to 56 p e rc e n t
in 1945. P e tro le u m , m in in g , a n d a g ric u ltu re a cc ou n ted f o r a b o u t
tw o -th ir d s to th re e -fo u rth s o f th e incom e received fro m L a tin A m erica.
T h e p ro p o rtio n in c rea se d in th e la tte r p a r t o f th e Avar as U n ite d S ta te s
p u rc h a se s o f th e o u tp u t o f th ese in d u strie s in crea se d a n d th e sh ip p in g
s itu a tio n becam e less c r i tic a l; how ever, d e sp ite a la rg e o u tp u t, rec eip ts
fro m L a tin A m e ric a n m in in g c o m p an ies c o n tro lle d b y A m eric an s
d eclin ed a f te r 1941, o w in g p r im a r ily to ris in g o p e ra tin g costs.
T h e effectiveness o f enem y su b m a rin e s (a n d th e g e n e ra l sh o rta g e
o f s h ip p in g fa c ilitie s ) in p re v e n tin g th e sh ip m e n t o f p ro d u c ts fro m
L a tin A m e ric a to th e U n ite d S ta te s is illu s tr a te d b y c han g e s in r e ­
c eip ts o f p e tro le u m incom e. In c o m e fro m th a t in d u s try in L a tin
A m eric a rose fro m $36.4 m illio n in 1940 to $47.5 m illio n in th e n e x t
y e a r, o n ly to f a ll to $89.8 m illio n in 1942* a t th e h e ig h t o f th e enem y’s
su b m a rin e a c tiv itie s in th is a re a. B y 1944, w hen o u r m ilita ry effo rt
h a d v irtu a lly e lim in a te d th is m enace, incom e rose to $107.2 m illio n .
T h e w o rld -w id e su g a r s h o rta g e b ro u g h t a b o u t by th e absence o f
e x p o rts fro m som e o f th e m a jo r su g a r-p ro d u c in g c o u n trie s (th e R e ­
p u b lic o f th e P h ilip p in e s a n d th e N e th e rla n d s In d ie s) a n d a n in ­
c re ased d e m a n d f o r m ilita ry p u rp o se s boo sted su g a r p ric es a n d r e ­
d o u n d e d to th e benefit o f p ro d u c e rs in th e W e st In d ie s. T h e com ­
b in ed effect o f in creases in p ric e s a n d in C a rib b e a n p ro d u c tio n m ore
th a n tr ip le d A m e ric a n incom e re c e ip ts betAveen 1940 a n d 1945. T h e
a p p ro x im a te rise Avas fro m $5 m illio n to $18 m illio n . H o w e v e r, n o t
a ll a g r ic u ltu ra l in v estm e n ts fa re d as w ell. T h e sh o rta g e o f sh ip p in g
fa c ilitie s k e p t th e incom e fro m b a n a n a p la n ta tio n s a t a re la tiv e ly Ioav
level u n til 1944.
19
Y ie ld ” i n c l u d e s o n l y a c t u a l r e c e i p t s b y A m e r i c a n s , w h i l e “ p r o f i t ” o r “ e a r n i n g s ”
r e p r e s e n ts th e t o t a l A m e ric a n e q u ity in e a r n in g s o f th e fo re ig n e n te r p r is e , w h e th e r r e ta in e d
a s re in v e s te d e a r n in g s o r p a id o u t to A m e ric a n s a s d iv id e n d s o r e a r n in g s .

72

Tabl e 15.—A m e ric a n

in v e s tm e n ts in fo re ig n su b sid ia rie s: E a rn in g s o n co m m o n
sto ck , co m m o n d iv id en d s, a n d re in v e s te d ea rn in g s,1 b y area s,
i

IOJO-J/5

[I n m illio n s of d ollars]
S te rlin g
a re a

I te m

C anada 2

A m eric a n
R e p u b lic s

O th e r

T o ta l

1940
E a rn in g s o n c o m m o n s to c k _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C o m m o n d iv id e n d s . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
R e in v e s te d e a rn in g s .......... ......... ........ ....................

n . s. s.
49.9
n . s. s.

114. 6
104.5
10.1

n . s. s.
69.0
n . s. s.

n . s. s.
47.1
n . s. s.

313.4
270. A
43.0

76.8
38.7
38.1

150.8
97.7
53.1

105.5
35.3
70.2

66.1
46.5
19.5

399.2
218.2
180.9

72.0
39.0
33.1

162.2
90.5
71.7

123. 3
54.4
68.9

14.7
3 .9
10.7

372.2
187. S
184.4

71.0
42.9
28.1

152. 6
86.5
66.1

136. 4
74.0
62.4

30.9
11.3
19.5

390. 9
214.7
176.2

75.5
40.8
34.7

130.3
80.2
50.1

107.0
54.0
53.1

41.6
6 .6
35.0

354.5
181.6
172. 9

69.9
38.5
31.4

129.0
69.4
59.6

96.7
51. 9
44.8

26.7
6.2
20.5

322.3
166. 1
156.3

365.3
200.0
165.3

724.9
424.3
300.6

569.0
269. 6
299.4

180.0
74.6
105.3

1,839.1
968. 5
870.6

1941
E a r n in g s o n c o m m o n s to c k .......... ..................... ......
C o m m o n d iv id e n d s ------------ -------------- --------R e in v e s te d e a rn in g s.................................................
1942
E a r n in g s o n c o m m o n s to c k ....... ....................... ........
C o m m o n d iv id e n d s ----- ------ ------------------ . . .
R e in v e s te d e a rn in g s -------------------- . . . -------1943
E a r n in g s o n c o m m o n s to c k .......... ..................... ......
C o m m o n d iv id e n d s .......... ........... .......................... .
R e in v e s te d e a rn in g s -------------------- -------1944
E a rn in g s o n c o m m o n s to c k ....... ............. ................ .
C o m m o n d iv id e n d s _______ ____ ______ _ _ _ _ _
R e in v e s te d e a rn in g s ----------------------------- -------1945
E a rn in g s o n c o m m o n s to c k ----------------------------C o m m o n d iv id e n d s . ________ . . . -- --------R e in v e s te d e a rn in g s ------------------------------------T o ta l, 1941-45
E a rn in g s o n c o m m o n s to c k -----------------------C o m m o n d iv id e n d s . _ _ _ _ _ _ _ _ _ _ _ _
________
R e in v e s te d e a rn in g s ................... - -------- ------------

1 F o re ig n su b sid ia rie s for th is p u r p o se a re c o m p a n ie s in c o rp o ra te d a b ro a d 25 p e r c e n t or m o re of w ho se
v o tin g sh a re s w ere h e ld in th e U n ite d S ta te s . I n c lu d e d in th is c o m p ila tio n , th e refo re , w ere c o m p a n ie s
t h a t w ere closely h e ld a n d th o se w ho se s h a r e s w ere w id e ly sc a tte re d a m o n g U n ite d S ta te s h o ld e rs. B ra n c h e s
w e re e x c lud e d from th is ta b le .
2 E a rn in g s h a v e b e e n re d u c e d to th e e x te n t of w ith h o ld in g ta x e s p a id o n d iv id e n d s w h ic h ra n g e from
$4 m illio n to $8 m illio n .
n . s. s. N o t s h o w n se p a r a te ly .

N .—D

ot e
e ta il w ill n o t n e c e ssa rily a d d to to ta ls b e c a u se of r o u n d in g .
t h a n fo r o th e r y ea rs.

Tabl e 16.—In c o m e

D a t a for 1940 a re less c o m p le te

rec eive d fr o m A m er ica n d ire ct in v e s tm e n ts , b y area a n d
in d u s tr y , 19JfO-45 1
[In m illio n s of dollars] *

A re a a n d i n d u s tr y

1940

1941

1942

1943

1944

A ll a rea s, to ta l.

412.5

400.4

358.3

367.8

418.0

392.1

M a n u f a c tu r in g ------D is tr i b u ti o n _ _ _ _ _ _ _
A g r ic u ltu r e - ..............
P a p e r a n d p u l p ____
F is h in g _____ _____
M in in g a n d sm e ltin g
P e t r o l e u m . . ......... .
P u b lic u til itie s ------M isce lla n e o u s 3------U n d is tr ib u ta b le ........

112.9
34.6
13.3
8 .0
(2>
86.3
93.7
35.8
22.2
5 .6

105.8
28.5
18.3
7.1
(2>
89.1
90.9
37.5
17.8
5.5

97.5
25.5
22.5
5 .2
p)
79. 6
66.7
40.3
15.3
5 .7

96.5
29.8
18.3
6.3
m
75.4
77.7
42.1
15.5
6 .2

85.4
31.0
28.7
5 .4
(2)
64.8
140.0
42. 6
14.3
5 .8

76.2
30.4
30.6
9 .6
p)
50.9
137.8
38.5
12.3
5 .7

1945

S ee fo o tn o te s a t e n d o f ta b le .

73

Tabl e 16.—In c o m e

rece ive d fr o m A m er ica n d irec t in v e s tm e n ts , b y a rea a n d
in d u s tr y , 1940-45

A re a a n d in d u s tr y

1940

S te rlin g a re a , to t a l ............................. . ..............
D is tr ib u tio n ____ ____ ____ ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
M in in g a n d s m e lt in g ................. ................................ .
P e tr o le u m _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
P u b li c u ti litie s _ __ __ __ __ __ __ __ __ __ ____ ______
U n d is tr ib u ta b le ........... ...... ........... .............................. .
C a n a d a , to ta l___ ________ ________________

1941

1942

1943

1944

1945

61.1

47.3

53.4

58.1

54.5

52.1

26.7
12.2
1.9
2.1
13.7
.1
4.3
.1

23.2
10.5
1.1
10.1
.1
2 .2
.1

22.5
10.1
.2
1.6
14.3
.2
4 .4
.1

24.2
12.0
.2
1.8
15.1
.1
4 .6
.1

21.3
11.3
.2
1.2
17.5
.1
2 .8
.1

20.2
13.0
.3
.7
16.3
.1
1.4
.1

127.6

120.6

114.0

109.5

101.0

93.0

51.8
6 .3
.1
8 .0

50.3
4.1
.1
7.1

44.3
3 .8
.1
6.3
w
25.1
6 .2
16.8
1.2
5 .7

41.1
3 .8
.1
5 .4
«
24.7
4 .7
14.7
1.2
5.3

34.4
4 .0
.1
9 .6
0
20.9
4 .6
13.2
1.0
5 .2

U n d u s tr i b u ta b l e .. _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

31.2
5 .3
16.6
3 .2
5.1

32.0
7.1
14.1
.7
5.1

51.0
4.1
.1
5 .2
«
25.8
6 .2
15.4
1.0
5 .2

A m e ric a n R e p u b lic s, to t a l _____ ____ ________

152.9

179.2

176.6

180.9

241.7

220.1

____

20. 2
9 .8
11.3
53.0
36.4
16.9
4 .9
.4

18.8
9.9
18.1
56.0
47.5
21.8
6 .8
.3

21.5
11.5
22.2
52.2
39.8
24.5
4 .5
.4

21. 9
11.7
18.0
48.5
51.1
24.8
4 .5
.4

21.7
14.9
28.4
38.9
107.2
25.1
5.0
.4

18.0
12.5
30.2
29.3
100.8
25.2
3.7
.4

O th e r, to ta l____ ___ ________ _____ __ _ _ _ _ _ _

70.8

53.3

14.3

19.3

20.8

26.8

14.2
6 .3
38.3
2. 2
9 .8
«

13.5
4.0
26.2
1. 5
8.1

2 .5
- 0 .2
6 .4
.2
5.4

6 .0
2.3
5.3
.4
5.3
«

1.3
1.1
10.5
2 .6
5.3
0

3.6
.9
16.1

D is tr i b u ti o n .____ _____ _ _____________
_____
A g r ic u ltu r e ............... ........... ......... . ............. ...... ...........
P a p e r a n d p u l p ----------------------------------------------F is h in g _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _________ _ _ _ _ _ _ _ _ _ _ _ _ _
P e tr o le u m ......................... ......... ... ............. ........ .......
P u b li c u til itie s — ................. ......... ...... .............. ...........

D is tr i b u ti o n ___ ____________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
A g r ic u ltu r e ......... ........ ......... ............. ........... ... ............. .
M in in g a n d s m e lt in g ....................... ...............................
P e tr o le u m -------------------- -------- ------------- - ------P u b li c u tilitie s .............................. ........ . .............. ..........
U n d u s tr ib u ta b le _ __ __ __ __ __ __ __ _______ _

D i s t r i b u t i o n . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____
P e tr o le u m __________ ________ _ _ _ _ _ _________ _
M isc ellan eo u s 3_ __ __ __ __ __ _ ____ ________ ______

0

0

0

6.2

1 F o r a c ross-se ction v ie w of th e r e la tiv e y ie ld s for t h e v a rio u s in d u s tr ie s in 1943 a n d a d e ta ile d s ta te m e n t
of th e ty p e s of in co m e re ce iv e d from e a c h in d u s tr y in 1944, see a p p e n d ix C , ta b le s X V I , X V I I , a n d X V I I I .
2 L ess t h a n $50,000.
3 In c lu d e s in c o m e fro m a g ric u ltu ra l a n d m in in g a n d sm e ltin g e n te rp r is e s o p e ra tin g in “ O th e r” a rea .
ot e — D e ta il m a y n o t a d d to to ta ls b ec a u se of ro u n d in g .

N .

T h o u g h th e r e tu rn s fro m m a n u fa c tu rin g e n te rp rise s w ere f a irly
stea d y , th e e x p erien ce w ith in th e in d u s try w as n o t u n ifo rm . A u to ­
m o tiv e p ro fits v irtu a lly d isa p p e a re d w h ile p h a rm a c e u tic a l p ro fits in ­
creased c o n sid e ra b ly , o w in g in la rg e m ea su re to th e e lim in a tio n o f
G e rm a n d r u g firm s in L a tin A m eric a th ro u g h th e c o o p e rativ e efforts
o f th e A m e ric a n R ep u b lics. In c re a s e d incom e fro m p u b lic u tilitie s
reflected m a in ly in crea se d in d u s tria l a c tiv ity a n d th e consequent d e­
m a n d f o r electric p o w er, a n d th e in crea se d use o f te le p h o n e s a n d
tr a n s p o rta tio n . A m o n g fa c to rs w h ich c o n trib u te d to m a in ta in th e
flow o f incom e d u r in g th is p e rio d w ere th e in v estm e n t o f n ew c a p ita l
in m a n u fa c tu r in g fa c ilitie s , in c lu d in g ru b b e r p ro d u c ts a n d te x tile s,
a n d a g e n e ra l e asin g o f e xch an g e c o n tro ls a ffectin g re m itta n c e s o f
incom e.
C anada .— U n lik e r e tu rn s fro m L a tin A m eric a, d ire c t-in v e stm e n t
incom e re c e ip ts fro m C a n a d a , d u r in g th e w a r y e ars, fe ll b o th ab so ­
lu te ly a n d p ro p o rtio n a te ly to to ta l d ire c t-in v e stm e n t rec e ip ts, d e ­
s p ite th e f a c t t h a t p ro fits a f te r ta x e s w ere h ig h e r d u r in g 1941-45
th a n in 1939 (see c h a r t 2 0 ). R ec eip ts d eclin ed fro m 31 p e rc e n t ($127.6
m illio n ) o f th e to ta l to 24 p e rc e n t ($93 m illio n ) in th is 6 -y e a r p e rio d ,
a n d y ield e d ju s t u n d e r 5 p e rce n t.
74

C hart 2 0

AM ERICAN DIRECT IN V E S T M E N T S IN
CANADA: D IV ID EN D S AND EA RN ING S
ON COMMON ST O C K , 1 9 3 8 - 4 5
MILLIONS OF DOLLARS
175
REI NVEST ED EARNI NGS

150

D I VI D EN D S

I III IIiIIiI

125

I

100

1938
NOTE-

1939

LI

1940

1941

1942

E A R N IN G S H A V E B E E N R E D U C E D B Y T H E A M O U N T
W IT H H O L D I N G T A X E S P A I D O N D I V I D E N D S .

OF

1943

1944

1945

C A N A D IA N

T h e d eclin e in incom e receiv ed in th e U n ite d S ta te s a f te r 1939 m a y
b e e x p la in e d as fo llo w s :
(1) B e g in n in g w ith th e o u tb re a k o f th e w a r in 1939, C a n a d ia n
e x ch an g e-co n tro l re g u la tio n s p re v e n te d th e re m itta n c e o f p re w a r
p rofits.
(2) T h e d e p re c ia tio n o f th e C a n a d ia n d o lla r m a y also h a v e
affected a d v e rsely th e re m itta n c e o f d iv id e n d s a n d , o f course,
re d u ce d th e ir U n ite d S ta te s d o lla r e q u iv alen t.
(3 ) I n 1941 th e C a n a d ia n w ith h o ld in g ta x r a te on d iv id e n d s
p a id b y C a n a d ia n s to re sid e n ts o f th e U n ite d S ta te s, b y a ll ex cep t
w h o lly ow ned su b sid ia rie s, w as ra ise d to 15 p e rc e n t fro m 5 p e r ­
cent.
(4 ) D u r in g th is 6 -y e ar p e rio d , A m e ric a n d ire c t-in v e stm e n t
com p anies in C a n a d a c o n trib u te d to th e e x p a n sio n o f C a n a d ia n
in d u s tria l c a p a c ity b y re in v e stin g o v e r 35 p e rc e n t o f th e ir n e t
e a rn in g s.
75

(5 ) T h e p ro d u c tio n o f g o ld w as d eem p h a size d as n o t esse ntial
to th e w a r effort, th u s re d u c in g incom e on U n ite d S ta te s in v e s t­
m e n ts in g o ld -m in in g com panies.
(6) D iv id e n d p a y m e n ts w ere p ro b a b ly w ith h e ld d u r in g 1945
in a n tic ip a tio n o f a r e tu r n o f th e C a n a d ia n d o lla r to p a r ity w ith
th e U n ite d S ta te s d o lla r.
T h e m a n u fa c tu rin g in d u s try a cc ou n ted fo r a n a v erag e o f a b o u t 40
p e rc e n t o f to ta l d ire c t-in v e stm e n t re c e ip ts fro m C a n a d a . In co m e
fro m th is in d u stry , 75 p e rc e n t o f w h ich is g e n e ra lly in th e fo rm o f com ­
m o n d iv id e n d s, d e clin e d by o n e -th ird in th e 6 -year p e rio d , a lth o u g h
m a n u fa c tu rin g co m p an ies w ere fu lly e ng ag ed . T h e decrease a p p a r ­
e n tly reflected a g e n e ra l c o rp o ra te p o licy o f fin a n c in g som e p la n t
e x p a n sio n by re in v e stin g e a rn in g s, in asm u c h as 50 p e rc e n t o f n e t e a rn ­
in g s w ere r e ta in e d by A m e ric a n d ire c t-in v e stm e n t co m p an ies e n g a g e d
in m a n u fa c tu rin g in 1942. N ev erth eless, th e incom e p a id o u t b y th e
in d u s try (in c lu d in g p a p e r a n d p u lp ) a m o u n ted to $50.6 m illio n in
1943, o r a r e tu r n o f 5.4 p e rc e n t on A m e ric a n c a p ita l. A b o u t onet h i r d o f th e in v e stm e n t in a ll C a n a d ia n m a n u fa c tu rin g com p anies
w as A m e ric an -o w n ed in 1939.20
R ec eip ts fro m m in in g co m p an ies also d eclin ed b y a th ir d , fro m $31.2
m illio n in 1940 to $20.9 m illio n in 1945. T h e decrease reflected lo w er
e a rn in g s, chiefly by g o ld -m in in g com panies, o w in g la rg e ly to th e ir
in a b ility to o b ta in m uch -n eeded e q u ip m en t a n d to th e ir loss o f sk illed
la b o r to e n te rp rise s m in in g w a r-ne cessary m etals. R ein v e sted e a rn ­
in g s w ere n e g lig ib le in th is in d u stry , a v e ra g in g o n ly a few p e rc e n t of
n e t incom e. R e tu rn s fro m in v estm e n ts in p u b lic u tilitie s declined by
20 p e rc e n t d u r in g th e w a r.
S te rlin g area .— R ec eip ts o f incom e fro m th e U n ite d K in g d o m d e ­
clin ed d u r in g th e w a r a n d , as a re su lt, acco u n ted f o r o n ly 49 p e rce n t
o f th e to ta l fro m th e s te rlin g a re a in 1944, c o m p a re d w ith 59 p e rc en t
in 1940. E a rn in g s o f A m eric an d ire c t-in v e stm e n t co m p an ies in th e
U n ite d K in g d o m a p p a re n tly w ere so m e w h a t la r g e r in 1941 th a n
in 1940 b u t, because th e re w as a s h a rp e r in crease in th e p ro p o rtio n r e ­
in v este d in 1941, incom e receiv ed in th e U n ite d S ta te s d eclin e d fro m
$35.8 m illio n to $26.2 m illio n . (S ee a p p e n d ix C, ta b le X V ) . Inco m e
re c e ip ts in su bsequent y e a rs rose, fo llo w in g th e easin g o f e xch an ge
re s tric tio n s.
T h e d eclin e in incom e fro m S o u th A fric a o ccu rred in m a n u fa c tu r ­
in g , o w in g in p a r t to a n in a b ility to o b ta in subassem blies fro m th e
U n ite d S ta te s. O n th e o th e r h a n d , re ce ip ts fro m p e tro le u m e n te r­
p rises ra ise d s h a rp ly th e re c e ip ts fro m A u s tra lia , E g y p t, a n d I n d ia
a n d a cc o u n ted f o r m o re th a n h a lf o f th e in crease in incom e fro m a ll
e n te rp rise s in th e th re e c o u n trie s d u rin g th e w a r p erio d . W h ile re ­
c o rded incom e re c e ip ts fro m p e tro le u m in v estm e n ts in th e s te rlin g
a re a in crea se d , o u r figures do n o t in c lu d e th e p ro fits o f som e com p anies
in th e M id d le E a s t t h a t follo w ed th e p ra c tic e o f n o t d e c la rin g d iv i­
dends. T h e effect o f w a r d a m a g e in th e ste rlin g a re a on e a rn in g s
a n d d iv id e n d s is believed to h a v e been sm all.
O th er areas .-—T h e incom e fro m e n te rp ris e s in o th e r a re a s d r o p p e d
sh a r p ly , in asm u c h as these a re as in clu d e d th e enem y c o u n trie s a n d th e
p rin c ip a l c o n tro lle d a n d in v a d e d c o u n tries. A f te r 1941, e a rn in g s a n d
incom e fro m th o se c o u n trie s n o t u n d e r enem y d o m in a tio n rose.
2;l R e p o r t o f C o m m i s s io n e r s , C o m b in e s
C a r t e l s , O t t a w a , O c t o b e r 1 0 , 194r>, p . 4 1 .

76

In v e s tig a tio n

A c t,

C anada

and

In te rn a tio n a l

I n te r e s t R e c e ip ts o n D o lla r B o n d s C o n tin u e d to D e c lin e

t

.

4$ .

T h e d eclin e in in te re s t re c e ip ts by A m e ric a n h o ld e rs o f fo re ig n d o l­
la r b o n ds t h a t b egan w ith w id e sp re a d d e fa u lts in 1981 c o n tin u e d d u r ­
in g th e w a r p erio d , a lth o u g h in 1945 rec e ip ts in creased (see ta b le 1 7 ).
A m o n g th e fa c to rs in flu en cin g th e level o f re c e ip ts a f te r 1939 w ere
th e c o n tin u o u s a n d in c re a s in g a m o rtiz a tio n o f o u ts ta n d in g issues by
C anadian-—a n d to a lesser e x te n t L a tin A m eric an — b o rro w ers a n d
d e fa u lts by th e A x is p a r tn e rs a n d o v e rru n areas. S ince th e lim ite d
a m o u n t o f new fo r e ig n b o rro w in g in th is c o u n try w as m a in ly fo r th e
r e fu n d in g o f C a n a d ia n issues ( a t lo w er in te re s t r a te s ) , even th e new
lo a n s served to red u ce in te re s t rec e ip ts. O n th e o th e r h a n d , deb t set­
tlem en ts, p a r tic u la r ly by sev eral L a tin A m eric an b o rro w e rs, a n d th e
re la tiv e ly la rg e volum e o f A m e ric a n p u rc h a ses on A m e ric a n a n d C a ­
n a d ia n se c u rity exch an ges o f C a n a d ia n bo n d s p a y a b le in U n ite d S ta te s
d o lla rs se rv ed to r e ta r d th e r a te o f th e decline in in te re s t re c e ip ts a n d
ra ise d 1945 re c e ip ts a lm o st to th e 1942 to ta l o f $78.6 m illio n .
B etw een 1939 a n d 1942 in te re s t received fro m th e A x is a n d sa te llite
n a tio n s fe ll fro m $10.7 m illio n to zero, w h ile n o n p a y m e n t by c e r ta in
in v a d e d co u n tries lo w ered A m e ric a n rec e ip ts by a b o u t a n o th e r m illio n .
R ec eip ts fro m a ll o th e r c o u n trie s rose a b o u t $4 m illio n d u r in g th e sam e
p e rio d d e sp ite a m o rtiz a tio n s o f $132 m illio n in excess o f new issues o f
bonds. T h e in crea se w as d u e m a in ly to th e p re v io u sly m en tio n ed
A m eric an p u rc h a se s o f C a n a d ia n se c u ritie s fro m C a n a d ia n h o ld e rs
a n d to d e b t-a d ju stm e n t p la n s on th e d e fa u lte d o b lig a tio n s o f B ra z il,
C olom bia, C u b a, a n d th e R ep u b lic o f P a n a m a .
D u r in g 1943 a n d 1944, la rg e A m e ric a n p u rc h a se s o f o u ts ta n d in g
C a n a d ia n se c u ritie s offset o n ly p a r tly th e effect on in te re s t p a y m e n ts
to th e U n ite d S ta te s o f th e re tir e m e n t o f e n tire C a n a d ia n issues o u t­
s ta n d in g in th is c o u n try a n d o f th e re fu n d in g o f o th e r C a n a d ia n issues
a t lo w er in te re st ra te s. I n th is p e rio d tw o im p o rta n t d e b t-se ttle m e n t
p la n s w e n t in to effect. O ne, a ffectin g M exican bon ds, h a d a n in sig ­
n ific a n t effect on b o n d in te re s t, in a sm u c h as th e p rin c ip a l o f th e d e ­
f a u lte d o b lig a tio n s w as scaled d o w n to a b o u t o n e -fifth o f th e o rig in a l
v alue. H o w e v e r, b o n d s t h a t o rig in a lly h a d gone in to d e fa u lt a b o u t
th re e decades e a rlie r w ere p la c e d on a n in te re st-p a y in g basis. T h e
second se ttle m e n t affected th e b o n d s o f B ra z il, th is c o u n try ’s la rg e s t
L a tin A m e ric a n d eb to r, on w h ich o n ly to k e n p a y m en ts h a d been r e ­
ceived since 1934, a n d a d d e d a lm o st 20 p e rc e n t to th e in te re s t received
fro m th a t c o u n try in 1944 as c o m p ared w ith th e p re c e d in g y e ar.
H o ld e rs o f B ra z ilia n b on ds w ere offered tw o se ttle m e n t p la n s. U n ­
d e r p la n A , th e n o m in a l v a lu e o f th e o u ts ta n d in g b o n d s re m a in e d u n ­
ch an g e d , in te re s t ra te s o f 5 to 8 p e rc e n t w ere scaled d o w n to 1% to
3 y2 p e rce n t, a n d m a tu rity d a te s w ere e x te n d e d a n a d d itio n a l 22 to
84 y e ars. P a y m e n ts o f in te re s t a n d p r in c ip a l re m a in e d th e re s p o n ­
sib ility o f th e o r ig in a l issu ers. P la n B , p ro v id e d f o r re d u c tio n s o f
fro m 20 to 50 p e rc e n t in th e n o m in a l va lu e o f each issue, c ash p a y m e n ts
o f fro m $75 to $175 p e r $1,000 b o n d to co m p en sate fo r th e loss in
n o m in a l v alu es, a n d th e issuance o f new b o n d s w ith in te re s t ra te s o f
3% p e rce n t. T h e new se cu ritie s becam e th e d ire c t o b lig a tio n of th e
B ra z ilia n G o v e rn m en t.
I n 1945 to ta l d o lla r-b o n d in te re s t re c e ip ts rose f o r th e first tim e in
15 y e ars as a re s u lt o f a d d itio n a l A m eric an p u rc h a se s o f o u ts ta n d in g
C a n a d ia n o b lig a tio n s, th e re a d ju stm e n t o f th e d e b t o f th e P ro v in c e
o f A lb e rta ( C a n a d a ), a n d th e a c q u isitio n o f new b o n d s of th e S p a n is h
77

T a b l e 17.—I n te r e s t re c e ip ts fr o m A m e ric a n in v e s tm e n ts in fo re ig n d o lla r bonds,
191,0-45
[I n m illio n s of d o llars]
A re a a n d c o u n try

E l S a lv a d o r........................................................
M e x ic o ____________________________ ___

C h i l e . ................ ......... .................. .. ........ . .......... .
E c u a d o r _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _________
P e r u ............................. . ............................ ...................

1940

F r a n c e ...... ................... ....... ................................ .
G e r m a n y . . ............ ................... ................ ............ .
I t a l y ...... .......................... ....... ................. ...........
P o l a n d . . .................... ......... ............... ........
R u m a n ia ._____ _
___________
______________
S p a in 2_ _ _ _ _ _ _ _ _ _ _
___________
____________
U . S. S . R . 3 .................. ...................................... .............
A fric a (L ib e r ia ) .............. . ......................... . ..............................

A u s tr a lia ............... ................. ....................... . .......................

1942

1943

1944

1945

82.3

79.0

78.6

72.2

69.8

77.4

58.8

57.8

61.7

56.5

55.0

61.5

10.7

11.5

10.8

9 .7

9.5

9 .5

1.3
.9
.2
.2
.3
.1

1.4
1.0
.2
.2
1.3
.1

1.4
1.0
.2

1.1
.8
.2
.2
.6

.9
.5
.2
.2
.7

.8
.4
.2
.2
.6

. 1
.1

. 1
1.2

.5

9. i
2.9

8 .8
2 .8

8 .9
3 .0

1
.5
.1
7.9
2 .3

2 .7
2 .3
.6

2 .7
2 .2
.5

2. 5
2.1
.7

2 .5
2 .0
.6

. 2

.6
. l

.

0)

.5
.2
8 .0
2 .2

(0
. 1
8.1
2.1

3 .4
1.4
.7

3 .0
1.6
.7

.6

.6

.6

.5

.5

.5

6 .8

4 .2

3.1

3 .0

2 .3

3 .5

.3

.3

.3

.3

.3

A u s tr ia . . ........... ..... ........... . ........... .................... .........
. B e l g iu m .............................. . ............................ ...............
B u lg a r ia . ......................................................................

E ir e ............................................................................

1941

.4
.1
1.4
0)

.1
. 1

«

1.4
w
. 1
.1
.7

.2

1 .7
.2
.3
.8

1.4
«

(0

1.4
«

.

l

.

1

(0

«

.8

.7

.5

.5

.4

.1

.1

.1

.1

3.3

2.8

.5

2. 7
.6

2.3
.5

.

2 .6

2 .6

2.4

.1
. 5
.1

«

(o
«

«

.

1

.2
.8

. 8

1.4

1.4
(0

.5

.5

1.2

m

5

.1

5

(0
.5

5

.5

.5

2 .4

2 .4

2.4

.

1 L ess th a n $50,000.
2 B o n d s issu ed in 1945.
8 B o n d s re tir e d in 1943.

Not e.—De ta il m a y n o t a d d to to ta ls b e c a u se o f ro u n d in g .
G o v e rn m en t. A S p a n is h issue o f $50 m illio n , ta k e n b y th e I n te r n a ­
tio n a l T e le p h o n e a n d T e le g ra p h C o m p an y in 1945 a s p a r t p a y m e n t
f o r its te le p h o n e sy stem in S p a in so ld to th e S p a n is h G o v e rn m en t,
h e lp e d to in crea se th e re c e ip t o f in te re s t b y $1.2 m illio n .
D u r in g th e p e rio d 1940-45 in te re s t re c e ip ts on th e d o lla r b o n d s o f
C a n a d a rose fro m 71 p e rc e n t o f to ta l re c e ip ts to a lm o st 80 p e rc e n t,
a lth o u g h in th e la s t y e a r th e p a r v a lu e o f C a n a d ia n b o n d s h e ld in th is
c o u n try a g g re g a te d o n ly 57.7 p e rc e n t o f th e p a r v a lu e o f a ll fo re ig n
d o lla r b o n ds in A m eric an h a n d s (see a p p e n d ix C, ta b le X X I I . T h e
78

im p o rta n c e o f re la tiv e ly h ig h ra te s o f r e tu r n on C a n a d ia n d o lla r
b o n d s w as reflected in th e y ie ld on b o th th e p a r a n d m a rk e t v a lu e s
o f a ll d o lla r b o n d s h e ld in th e U n ite d S ta te s d u rin g th e 6 -y e ar p e rio d
u n d e r c o n sid e ra tio n , w h ich ra n g e d fro m 3.4 to 3.7 p e rc e n t on a p a rv a lu e b a sis a n d fro m 4.4 to 5.7 p e rc e n t o n a m a rk e t-v a lu e basis. A s
m ig h t b e e x p ected , th e y ie ld on a p a r-v a lu e b a sis o f m o st L a tin A m e r­
ican , E u ro p e a n , a n d A s ia tic b o n d s w as below 2 p e rc e n t d u r in g m ost
o f th e p e rio d , a lth o u g h m a rk e t p ric es o f m a n y o f th ese se c u ritie s w ere
low e n o u g h to p ro v id e a ttr a c tiv e y ie ld s (see ta b le 1 8 ).

Tabl e 18.— A v e ra g e

y ie ld on p a r a n d m a r k e t va lu es o f A m e ric a n in v e s tm e n ts in
fo r e ig n d o lla r bonds, 191/0-45 1
[I n p e rc e n t; in te re se t re ce iv e d to v a lu e a t e n d o f y e a r]
1941

1940
A re a
Par
A ll c o u n trie s _ _ _ _ _ _
C a n a d a _ _ _ _ _ _ ____ ____
W e s t In d ie s 2__________
C e n tr a l A m e r ic a ..- ___
S o u th A m e ric a ................
E u r o p e _______________
A s ia ...................................
A fric a a n d O c e a n ia _____

3 .5
4 .4
4 .2
.4
1.7
2.5
5.5
5.1

M a r­
ket
5 .7
5.1
7 .5
3 .3
7.3
10.0
9.6
9.0

P ar

M a r­
ket

3.5
5.5
4.5
4 .9
4 .8
7.0
1.7 3 11.2
6.9
1.7
1.7
8 .5
4.9
8.8
5.3
8 .2

1942

P ar
3.6
4.9
4.9
.8
1.8
1.3
.9
4.9

M a r­
ket
5.2
5.1
6 .7
3 4.1
5.4
8 .4
4.2
6.1

1944

1943

P ar
3.4
4 .7
4.6
1.1
1.7
1.3
.9
5 .0

M a r­
ket
4 .6
4.6
5 .2
3 .2
4 .2
8.0
4.0
5 .4

P ar
3.4
4.6
4 .8
1.2
1.9
1.0
.9
5.1

1945

M a r­
ket
4 .4
4 .4
5.2
3 .8
4 .3
5.0
3.9
5 .2

Par

M a r­
ket

3 .7
5.3
5.0
1.2
2 .0
1.3
.9
5 .0

4.7
4 .9
5.3
2.9
4.1
3.5
3.8
4.8

1 A ft e r 1941 b o n d s of th e follow ing c o u n trie s w ere in c lu d e d in t h e a v e ra g e y ie ld s o n a p a r- v a lu e b a sis b u t
w e re e x c lu d e d fro m t h e y ie ld s o n a m a r k e t- v a lu e b asis: A u s tr ia , B u lg a r ia , G e r m a n y , H u n g a r y , I t a ly , R u ­
m a n ia , a n d J a p a n . T h e e xc lusio n of th e s e c o u n trie s w o u ld h a v e ra ise d th e t o ta l y ie ld o n p a r v a lu e fo r 1945
fro m 3.7 to 4.2 p e rc e n t.
2 I n c lu d e s M exico.
* R e fle c ts p a y m e n ts b y t h e R e p u b li c of P a n a m a o n c o u p o n s in a rre a rs .

I n te r e s t R e c e ip ts o n U . S . G o v e r n m e n t L o a n s a n d I n v e s tm e n ts

T h e volum e o f U n ite d S ta te s G o v e rn m en t lo an s o u ts ta n d in g p r io r to
1940 w as n e g lig ib le b y p re se n t s ta n d a rd s (see ta b le 27) a n d th e
a m o u n ts a d v a n ce d d u r in g th e w a r w ere m o d erate , in a sm u c h as th e
m a jo r fin a n c ial assistan c e to th e A llie d c o u n trie s w as p ro v id e d th ro u g h
len d -le ase a id . C o nsequ ently, th e G o v e rn m en t received a re la tiv e ly
sm a ll volum e o f in te re s t d u r in g th e w a r ( ra n g in g fro m $3 m illio n to
$18 m illio n p e r y e a r ) , p r im a r ily on th e lo an s o f th e E x p o r t- I m p o r t
B a n k a n d on th e R e c o n stru c tio n F in a n c e C o rp o ra tio n lo a n o f $425
m illio n to th e U n ite d K in g d o m in J u ly 1941 (see ta b le 1 3 ).
.

" r

I n c o m e R e c e ip ts o n

M is c e lla n e o u s I n v e s tm e n ts I n c r e a s e d

S lig h tly

In c o m e receiv ed b y U n ite d S ta te s re s id e n ts fro m m iscellaneous in ­
v e stm e n ts a b ro a d , t h a t is, in v estm e n ts o th e r th a n d ire c t in v estm en ts,
d o lla r b o n d s, o r G o v e rn m e n t lo an s, is e stim a te d to h a v e ra n g e d fro m
$ 5 1 m illio n to $65 m illio n d u r in g th e w a r y e ars. T h e low p o in t o f $51
m illio n w as rea c h e d in 1941 as re c e ip ts fro m C a n a d a d r o p p e d off, b u t
th e r e w ere in crea se s th e r e a f te r in e v ery y e a r e x ce p t 1943, a n d a h ig h
p o in t o f a b o u t $65 m illio n w as re a c h e d in 1945 (see ta b le 1 3 ). T h e
f a ir ly stea d y in crea se s in re c e ip ts a f te r 1941 w ere la rg e ly th e r e s u lt o f
c o n tin u e d p u rc h a se s b y A m eric an s o f C a n a d ia n c o rp o ra te stock s a n d
in te rn a l b o n d issues.
I n c o m e P a id to F o r e ig n e r s o n I n v e s tm e n ts in th e U n ite d S ta te s

In v e stm e n t incom e p a id to fo re ig n e rs, a f te r d e d u c tio n o f U n ite d
S ta te s ta xe s, d eclin e d b y 26 p e rc e n t, fro m $210 m illio n in 1940 to a b o u t
$159 m illio n in 1942, a n d re m a in e d n e a r th is level th ro u g h th e re m a in 79

in g w a r y e ars. H o w e v e r, th ese d a ta in c lu d e p a y m e n ts b y th e U n ite d
S ta te s G o v e rn m en t on fo re ig n in v estm e n ts in lo ng- a n d sh o rt-te rm
G o v e rn m e n t se c u ritie s a n d d e po sits w ith th e T re a su ry . T hese p a y ­
m en ts in crea se d fro m $6 m illio n in 1940 to $8 m illio n in 1942 a n d to
$14 m illio n in 1945. T h u s , p a y m en ts to fo re ig n e rs on h o ld in g s o f o th e r
th a n U n ite d S ta te s G o v e rn m e n t o b lig a tio n s w e re re d u ce d b y v a rio u s
w a r-in d u c e d fa c to rs to levels c o m p ara b le w ith th o se in th e p e rio d
1924-25 a n d th e d e p ressio n y e a r o f 1935.
T h e tr e n d in incom e p a y m e n ts to fo re ig n e rs fro m 1940 to 1945 w as
closely a sso c ia te d w ith th e ex p e rien ce o f A m e ric a n b usiness as a w hole
in th e p e rio d . A lth o u g h p a y m en ts to fo re ig n e rs d e clin ed sh a rp ly
w h ile A m e ric a n in d u s try e njoy ed in crea se d e a rn in g s a n d w as able to
in crea se dom estic n e t d iv id e n d p a y m e n ts by a b o u t 20 p e rc e n t fro m
1940 to 1945,21 th e d eclin e in p a y m e n ts to fo re ig n e rs w as due to sp ecial
w a rtim e fa c to rs a n d d id n o t reflect th e p ro fita b ility o f fo r e ig n in v e st­
m e n ts here. T h e m o st im p o r ta n t fa c to rs c au sin g red u ce d p a y m en ts
to fo re ig n e rs w ere th e la rg e-sca le liq u id a tio n o f h o ld in g s o f A m eric an
se cu ritie s, th e in crea se in incom e ta x r a te s a p p lic a b le to incom e p a id to
fo reig n ers, a n d a n in crea se d te n d e n c y o n th e p a r t o f A m eric an su b sid i­
a rie s o f fo re ig n c o rp o ra tio n s to r e ta in e a rn in g s in th e U n ite d S ta te s
d u r in g th e w a r, a lth o u g h th e la tte r fa c to r c a n n o t be a c c u ra te ly e sti­
m ated .
T h e la rg e s t declines w ere in d iv id e n d p a y m e n ts on p o rtf o lio h o ld ­
in g s, a b o u t $25 m illio n , a n d in p a y m e n ts on d ire c t in v estm e n ts (m a in ly
d iv id e n d s ), a b o u t $20 m illio n . P a y m e n ts on p o rtfo lio h o ld in g s fe ll
la rg e ly as th e re s u lt o f B ritis h liq u id a tio n s o f la rg e h o ld in g s o f h ig h g ra d e U n ite d S ta te s se c u ritie s to p ro v id e d o lla r exchange.
N e t sales o f U n ite d S ta te s c o rp o ra te sh a re s by fo re ig n e rs fro m th e
end o f 1939 th ro u g h 1945 a m o u n ted to a b o u t $565 m illio n , re d u c in g
fo re ig n in v estm e n ts h e re , a n d , consequently, p a y m e n ts to fo reig n ers.
I n a d d itio n , p a y m e n ts to fo re ig n e rs w ere c a lc u la te d a f te r U n ite d
S ta te s w ith h o ld in g ta x e s; th e a v erag e w ith h o ld in g ta x a p p lie d to th e
incom e p a id to n o n re sid e n t a lien s n o t e n g a g e d in tr a d e o r b usiness in
th e U n ite d S ta te s rose fro m a b o u t 12.3 p e rc e n t in 1940 to ab o u t 26.1
p e rc e n t in 1945.22
I n c o m e P a y m e n ts o n D ir e c t I n v e s tm e n ts

T h e d eclin e in p a y m e n ts to fo r e ig n p a re n ts by d ire c t-in v e stm e n t
e n te rp rise s in th e U n ite d S ta te s w as a ttrib u ta b le to se ve ra l causes.
E a r ly in th e w a r, th e B ritis h d isp o sed o f th e c o n tro llin g in te re st in th e
A m e ric a n V iscose C o rp ., w h ich p a id to ta l d iv id e n d s o f a little over $4
m illio n in 1940, w h ile th e A lie n P r o p e rty C u sto d ia n v ested th e e n te r­
p rise s in th e U n ite d S ta te s c o n tro lle d by th e A x is n a tio n s , w h ich h a d
y ield ed a b o u t $2.5 m illio n in 1937. A f u r th e r e lem en t w as th e deg ree
to w h ic h U n ite d S ta te s su b sid ia rie s o f fo re ig n e n te rp ris e s re in v e sted
th e ir e arn in g s. U n fo rtu n a te ly , little is k n o w n a b o u t such re in v e sted
e a rn in g s d u rin g th e w a r p e rio d , a lth o u g h it w as e stim a te d th a t in 1937
th e y a m o u n te d to 15 p e rc e n t o f n e t e a rn in g s.23 F ig u re s f o r all A m eri21 U . S . D e p a r t m e n t o f C o m m e r c e . N a t i o n a l I n c o m e , S u p p l e m e n t to S u r v e y o f C u r r e n t
B u s i n e s s , J u l y 1 9 4 7 . t a b l e s 11 a n d 2 0 .
22 T h e U n i t e d S t a t e s w i t h h o l d i n g : t a x r a t e a p p l i c a b l e t o m o s t t y p e s o f in c o m e p a y m e n t s
(e x c e p t f o r C a n a d a a n d S w ed en , f o r w h ic h c o u n tr ie s t a x c o n v e n tio n s e s ta b lis h e d s p e c ia l
r a t e s ) w a s 1 0 p e r c e n t a t t h e b e g i n n i n g o f 1 9 4 0 , r o s e t o lOM» p e r c e n t in t h a t y e a r , r e a c h e d
2 7 V 2 p e r c e n t in 1 9 4 1 . a n d f i n a l l y i n c r e a s e d to 3 0 p e r c e n t d u r i n g 1 9 4 2 , a t w h i c h le v e l i t
r e m a in e d t h r o u g h o u t th e r e s t o f th e w a r p e rio d .
23 U . S . D e p a r t m e n t o f C o m m e r c e . F o r e i g n L o n g - T e r m I n v e s t m e n t s i n t h e U n i t e d S t a t e s ,
1 9 3 7 -3 9 .
E c o n o m ic S e r i e s N o . 1 1 , 1 9 4 0 , p . 4 1 .

80

can c o rp o ra tio n s, how ever, in d ic a te t h a t th e p e rc e n ta g e m ay h a v e been
m u ch la r g e r in th e la te w a r y ears.
I n c o m e P a y m e n ts o n P o r tfo lio In v e stm e n ts

I n te r e s t p a y m e n ts on c o rp o ra te bonds, a re la tiv e ly sm all co m p o n en t,
fe ll s h a rp ly , fro m $22 m illio n in 1939 to a b o u t $14 m illio n in 1940
a n d to a b o u t $10 m illio n in 1945. A p r im a r y fa c to r in th is re d u c tio n
w as th e difficulty in v o lv ed in th e p re se n ta tio n o f c ou p o n s fo r p a y m e n t
on b e a re r b o n d s h e ld in c o u n trie s occupied b y th e G e rm a ns, a lth o u g h
p a y m e n ts w ere m ad e on b o n ds h e ld in c u sto d y in th e U n ite d S ta te s.
T h e o p e ra tio n s o f F o re ig n F u n d s C o n tro l in th e U n ite d S ta te s p r e ­
v e n te d p a y m e n t on bonds seized b y th e enem y. A c o n tr ib u tin g fa c to r
in th e decline o f in te re s t p a y m en ts w as th e c o n tin u e d a m o r tiz a tio n o f
fu n d e d deb t by A m e ric a n c o rp o ra tio n s , as w ell as re f u n d in g o p e ra tio n s
w h ich red u ce d th e in te re st r a te s p re v a ilin g on o u tsta n d in g issues.
In co m e p a y m e n ts to v a rio u s fo re ig n c o u n trie s w h ich w ere th e p r in ­
c ip a l re c ip ie n ts fro m th e U n ite d S ta te s a re sh ow n in a p p e n d ix C,
ta b le X I X , f o r th e y e a rs 1942 th ro u g h 1945. S im ila r c o m p ilatio n s
w ere n o t u n d e r ta k e n f o r 1940 a n d 1941. E e la tiv e ly feAv c o u n trie s ac­
c ou n ted f o r m ost o f th e re c e ip ts fro m th e U n ite d S ta te s, n o ta b ly th e
U n ite d K in g d o m , C a n a d a , th e N e th e rla n d s, a n d S w itz e rla n d . I n 1942
th ese fo u r c o u n trie s a cc o u n ted fo r 73.7 p e rc e n t o f th e incom e p a id o ut,
a n d in 1945 fo r 69.2 p e rce n t. T h e sm a lle r sh a re o f th ese c o u n trie s in
1945 w as d u e in p a r t to in c rea se d p a y m e n ts to C h in a on h o ld in g s o f
U n ite d S ta te s G o v e rn m en t b o n d s a n d to la rg e r p a y m e n ts m a d e to th e
N e th e rla n d s W est In d ie s on d ire c t in v estm e n ts in th e p e tro le u m in d u s­
t r y in th e U n ite d S ta te s. T h e la tt e r p a y m e n ts, h o w ev er, w ere
e sse n tia lly th e sam e as p a y m e n ts to th e N e th e rla n d s, since th e y r e p re ­
sen ted p a y m en ts to th e B a ta v ia n P e tro le u m C o m p an y , w h ic h h a d its
h e a d office in th e N e th e rla n d s b e fo re 1940, a n d h a s re tu r n e d since
th e w ar.
I n te r e s t P a id b y t h e U . S . G o v e r n m e n t R e la tiv e ly U n im p o r ta n t

A lth o u g h th e U n ite d S ta te s G o v e rn m e n t m a d e no specific e ffo rt to
b o rro w fro m fo re ig n e rs, th e la tte r in crea se d th e ir h o ld in g s o f o b lig a ­
tio n s o f th e G o v e rn m en t— p a r tic u la r ly o f sh o rt-te rm p a p e r— a n d h e ld
ro u g h ly $1.8 b illio n o f sh o rt- te rm o b lig a tio n s a n d $493 m illio n o f
lo n g -te rm b o n d s a t th e end o f 1945. I n a d d itio n , th e P h ilip p in e G o v ­
e rn m e n t h a d d e p o sits w ith th e U n ite d S ta te s T re a s u ry o f a b o u t $520
m illio n on th e la tte r d ate. T h e in te re s t p a y m en ts o f th e U n ite d S ta te s
G o v e rn m en t on th ese o b lig a tio n s a m o u n ted to $14.2 m illio n in 1945
a n d ra n g e d fro m a b o u t $6 m illio n to $14 m illio n d u r in g th e w a r. I t
w a s n o t possible to m ea su re in te re st p a y m e n ts to fo re ig n e rs on G o v e rn ­
m e n t b o n d s w ith a h ig h d e g ree o f a ccu racy , because m a n y o f th e issues
w ere free o f incom e ta x , th u s e lim in a tin g ta x rec o rd s as a source o f
in fo rm a tio n , a n d because o f th e la ck o f se p a ra te d a ta on fo re ig n
p u rc h a se s a n d sales o f th ese securities.
R a te s o f R e tu r n o n F o r e ig n I n v e s tm e n ts

T h e ra te s o f r e tu r n on fo re ig n in v estm e n ts in th e U n ite d S ta te s
a n d on U n ite d S ta te s d ire c t in v estm e n ts a b ro a d , to g e th e r w ith ro u g h
c o m p ariso n s w ith th e e xp erien ce o f U n ite d S ta te s b u sin ess as a w hole,
a re p re se n te d in c h a r t 19 (p . 7 1 ). T h e ra te o f incom e receiv ed by
fo re ig n e rs on d ire c t in v estm e n ts in th e U n ite d S ta te s seems to have
been low , in th e a g g re g a te , th ro u g h o u t th e w a r. T h is is n o t neces81

sa rily a n in d ic a tio n t h a t e a rn in g s w ere re d u c ed , a lth o u g h m a n y
d ire c t in v estm e n ts in th e U n ite d S ta te s w ere a d v e rse ly affected w h e n
c o n ta c t w ith th e hom e c o u n try w as b ro k e n , b u t is p ro b a b ly a n in d i­
c a tio n t h a t f o r sev eral rea so n s e a rn in g s in th e U n ite d S ta te s w ere
a c c u m u la te d r a th e r th a n p a id o u t in d iv id e n d s. F u r th e r , th e re w as
co n sid e ra b le v a r ia tio n a m o n g in d u s tria l g ro u p s , w ith th e la rg e
C a n a d ia n in v e s tm e n t in A m e ric a n ra ilro a d s y ie ld in g little incom e
w h ile e a rn in g s o n fo re ig n in v e stm e n ts in p e tro le u m w e re su b sta n tia l.
T h e r a te o f r e tu r n on fo re ig n d ire c t in v estm e n ts in th e U n ite d
S ta te s w a s lo w e r th a n th e r a tio o f d iv id e n d p a y m e n ts to n e t w o rth
f o r A m e ric a n co m p an ies as a g ro u p . T h is difference is due p a r tly
to th e f a c t t h a t th e c o m p u te d r a te o f r e tu r n on d ire c t in v estm en ts
in c lu d e d in te re s t p a y m e n ts to p a r e n t com p anies on lo n g - a n d s h o rt­
te rm lo a n s a n d th e a m o u n t o f su ch lo a n s o u ts ta n d in g w a s in c lu d e d
in th e v a lu e o f fo re ig n e q u ity on w h ic h th e r a te o f r e tu r n w as b ased.
T h e y ie ld to fo re ig n e rs on th e ir p o r tf o lio h o ld in g s o f U n ite d S ta te s
c o rp o ra te stocks also is p re se n te d in c h a r t 19.24 T h e ra te s a re n eces­
sa rily o n ly a p p ro x im a te , since th e y a re b a se d on e stim a tes o f incom e
p a y m en ts a n d m a rk e t v a lu e o f in v estm e n ts a t y e ar-en d s. T h e y ie ld
on fo re ig n h o ld in g s o f c o rp o ra te stocks a p p e a rs to h av e b een r a th e r
close to th e p r e v a ilin g y ield s f o r M o o d y ’s series o f 200 U n ite d S ta te s
com m on stocks. T h e lo w er y ie ld to fo re ig n e rs w as to be ex p ected
since som e p r e fe r re d stocks w ere in c lu d e d a m o n g th e issues h e ld b y
fo re ig n e rs a n d because fo re ig n in v e sto rs h a v e g e n e ra lly p re fe rre d
h ig h -g ra d e stocks.
O u tlo o k

-Receipts o f incom e fro m A m e ric a n in v estm en ts in fo re ig n c o u n trie s
a re ex p ected to re m a in a t re la tiv e ly h ig h levels in co m ing y e ars,
b a r r in g a w o rld -w id e d e pressio n . T h e sam e is e x p e cted o f th e
volum e o f incom e p a y m e n ts to fo re ig n e rs o n in v estm en ts in th e
U n ite d S ta te s.
In c o m e re c e ip ts fro m d ire c t in v e stm e n ts a b ro a d a re e x p e cted to
re a c h n e w h ig h p o in ts. In c re a se s a re a n tic ip a te d in a ll in d u strie s ,
w ith p e tro le u m , m in in g , a g ric u ltu re , a n d m a n u fa c tu rin g p ro v id in g
th e la rg e s t g a in s. In c o m e fro m p e tro le u m , th e m o st im p o r ta n t
in c o m e -p ro d u cin g A m e ric a n in v estm e n t, is ex p ected to ris e w ith th e
in c rea se d e x p lo ita tio n o f fo re ig n resou rces. I n g e n e ra l, th e y e tu n satisfie d in d u s tria l a n d p u b lic d e m a n d f o r com m odities, co u p led
w ith r is in g p rices, w ill c o n tin u e to affect fa v o ra b ly A m e ric a n in ­
d u s tr y a b ro a d .
I n m in in g , th e incom e re s u ltin g fro m p ro d u c tio n to m ee t th e v ery
la rg e w o rld -w id e d e m a n d f o r c o p p e r is e xpected to be a u g m en ted b y
in c re a sin g incom e fro m g o ld a n d n ic k el p ro p e rtie s, d e sp ite ris in g p ro ­
d u c tio n costs. I t a p p e a r s th a t C a rib b ea n su g a r p ro d u c e rs w ill con­
tin u e to p ro s p e r as s u g a r p ric e s ris e a n d th e re a re re c o rd c ro p s in
t h a t a re a , w h ile th e s u p p ly o f su g a r fro m th e F a r E a s t w ill p ro b a b ly
n o t be on th e m a rk e t in g r e a t v o lu m e u n til 1948. B a n a n a -g ro w in g
co m p an ies sh o u ld e xp e rien ce in c re a sin g p ro fits, as th e y d id d u rin g
th e la tte r p a r t o f th e w a r once th e s h ip p in g s itu a tio n eased a n d im ­
p o rts in to th e U n ite d S ta te s in creased .
In c o m e fro m b r a n c h p la n ts a n d d istrib u tiv e e n te rp rise s sh o u ld in 24
T h e c a lc u la te d y ie ld to fo r e ig n e r s o n c o r p o r a te b o n d h o ld in g s is n o t s h o w n b e c a u s e o f
th e in a b ility o f m a n y fo re ig n e rs to p r e s e n t b e a r e r c o u p o n s f o r p a y m e n t.

82

f

-

41

crease as m a n u fa c tu rin g o u tp u t in creases in E u ro p e a n d ta x e s a re re ­
d u c e d in C a n ad a . In c o m e fro m co m p an ies p ro d u c in g p a p e r a n d p u lp
c a n also b e e xp ected to rise because o f fa v o ra b le m a rk e t co n d itio n s,
w h ic h a re ex p ected to c o n tin u e f o r th ese p r o d u c ts f o r a co n sid e ra b le
tim e . R e tu rn s fro m u tilitie s a re e x p e cted to follow th e g e n e ra l level
o f re ce ip ts, a lth o u g h th e y m a y be u n fa v o ra b ly affected b y sales o f
p ro p e rtie s re s u ltin g fro m n a tio n a liz a tio n p ro g ra m s , n o ta b ly in A rg e n ­
tin a a n d e lsew here in L a tin A m e ric a.
D u r in g th e w a r, th e sm all a m o u n t o f incom e t h a t w as received fro m
c o n tin e n ta l E u ro p e o rig in a te d in th e n e u tr a l c o u n tries. In c re a s in g
a m o u n ts o f incom e a re e xp e cted fro m th ese c o u n trie s a n d also fro m
G e rm a n y a n d c o u n trie s t h a t h a d b een u n d e r G e rm an c o n tro l o r d o m i­
n a tio n . I n 1940 incom e fro m c o n tin e n ta l E u ro p e an c o u n trie s, o th e r
th a n th e n e u tra ls , to ta le d a b o u t $20 m illio n , a n d p re su m a b ly w as m uch
h ig h e r in p re w a r y e ars. In c o m e fro m e a s te rn E u ro p e a n c o u n trie s
h a d n e v e r b een la rg e a n d a p p ro x im a te d $5 m illio n o f th e $20 m illio n
in 1940. L ittle o r n o incom e is e xp e cted fro m e a s te rn E u ro p e , since
im p o r ta n t A m e ric a n p ro p e rtie s th e re su ffered p h y sic a l d a m a g e o r
w ere n a tio n aliz ed . In c o m e fro m p ro p e rtie s in J a p a n a n d in o v e rru n
te rrito rie s in th e F a r E a s t, w h ic h h a d p ro d u c e d a b o u t $33 m illio n o f
incom e in 1940, can be e x p ected to re m a in low f o r som e y e ars, because
o f p o litic a l c han g e s a n d w a rtim e d e stru c tio n .
A m u ch -p u b licize d , a lth o u g h n o t y e t v e ry im p o rta n t, source o f
incom e seem s to be th e e x p o rt o f A m e ric a n k n o w -h ow , a cco m p an ied
b y m in o rity p a r tic ip a tio n b y A m eric an s in e n tr e p re n e u ria l in v e s t­
m ents. T h is fo rm o f p a r tic ip a tio n m a y re s u lt in a g ro w in g source
o f d iv id e n d incom e a n d in th e re c e ip t o f ro y a ltie s o n m a n u fa c tu rin g
processes (w h ic h a re tr e a te d in th e b a la n c e o f p a y m e n ts as re c e ip ts on
M iscellaneous S ervices a c c o u n t).
I n te r e s t re c e ip ts on fo re ig n -d o lla r b o n d s w ill p ro b a b ly a g a in resum e
th e ir d o w n w a rd tr e n d u n til new la rg e -sc a le lo a n s a re m a d e to fo r e ig n
c o u n trie s, th ro u g h e ith e r d ire c t flo tatio n s in th is c o u n try o r in d ire c tly
th ro u g h th e p u rc h a se b y A m eric an s o f b o n d s o f th e In te r n a tio n a l B a n k
f o r R e c o n stru c tio n a n d D e velop m en t. U n til su ch lo a n s ta k e p lace,
in te re s t re c e ip ts w ill decline, a t a p ace d e te rm in e d m a in ly b y th e r a te
o f a m o rtiz a tio n s a n d c onversion s to lo w er in te re st ra tes.
R e c eip ts o f in te re s t b y th e U n ite d S ta te s G o v e rn m e n t w ill be second
in im p o rta n c e o n ly to re c e ip ts fro m d ire c t in v estm e n ts in co m in g
y e a rs, as a r e s u lt o f th e la rg e a n d g r o w in g volum e o f lo an s m a d e b y
th e G o v e rn m e n t a f t e r 1944. B e g in n in g in 1951, w h e n in te re s t on th e
$3,750 -m illio n lo a n to th e U n ite d K in g d o m b e g in s to be p a y a b le ,
re c e ip ts b y th e G o v e rn m en t w ill p ro b a b ly a g g r e g a te a b o u t tw o a n d
a h a lf tim e s th e a m o u n t received in 1945 on d o lla r bon ds.
T h e tw o fa c to rs o f p rim e im p o rta n c e in d e te rm in in g incom e p a y ­
m en ts to fo re ig n e rs in th e n e x t few y e a rs w ill be fo re ig n sales o r
p u rc h a se s o f U n ite d S ta te s se c u ritie s a n d th e tr e n d s in A m e ric a n
business as a w hole. T h e re is little lik e lih o o d t h a t fo re ig n e rs w ill
m ak e la rg e n e w p u rc h a se s o f U n ite d S ta te s se c u ritie s in th e n e a r
fu tu re , p r im a r ily because a s h o rta g e o f d o lla rs w ill re q u ire th e con­
tin u a n c e o f E u ro p e a n a n d C a n a d ia n fo re ig n e xch an g e co n tro ls. A s
p a r t o f th e sam e p ro b le m , th e r e h a v e b een re p e a te d re p o rts t h a t
sh o rta g e s o f d o lla r exch an ge w ill fo rc e th e liq u id a tio n o f som e o f th e
ex ten siv e N e th e rla n d s a n d F re n c h h o ld in g s. H o w e v e r, i t is lik e ly
t h a t w hen th e In te r n a tio n a l B a n k b e g in s its le n d in g o p e ra tio n s th e
83

p r e s su re f o r liq u id a tio n w ill b e a t le a st p a r tly relieved . T h e re fo re ,
th e e x p erien ce f o r th e n e x t few y e a rs w ill p ro b a b ly be a re la tiv e ly
sm a ll volum e o f fo re ig n tra n s a c tio n s, w ith p e rh a p s a m o d e ra te liq u id a ­
tio n o f fo re ig n h o ld in g s.
I t is e xp ected th a t p a y m e n ts on p riv a te fo r e ig n in v estm en ts w ill
p ro b a b ly a v era g e m o d e ra te ly h ig h e r in th e 1947-50 p e rio d th a n th e
1945 to ta l o f $150 m illio n , b u t w ill n o t rec o v e r to th e h ig h e st p re w a r
levels o f w ell o v er $200 m illio n . P a y m e n ts on fo re ig n h o ld in g s o f
U n ite d S ta te s G o v e rn m e n t o b lig a tio n s w ill p ro b a b ly be re d u ce d fro m
th e 1945 a m o u n t o f $14 m illio n , since th e re w as a c on sid e ra ble red u c tio n
in fo re ig n h o ld in g s o f such b o n d s in 1946, a n d fo re ig n h o ld in g s o f
U n ite d S ta te s G o v e rn m en t sh o rt-te rm se c u ritie s w ill p ro b a b ly be
g re a tly red u ce d in th e n e a r fu tu r e .
P r iv a te

M is c e lla n e o u s

S e r v ic e s

T h e p rin c ip a l item s in th is g ro u p a re sh ow n se p a ra te ly in ta b le 19,
a n d notes r e g a rd in g th e ir c o m p o sitio n a n d m eth o d s o f c o m p ila tio n
a p p e a r in th e a p pe n d ix e s. M o st o f th e e n trie s a re re la tiv e ly sm all
a n d show ed no sig n ific a n t flu c tu a tio n s d u r in g th e w a r.
O n b alan c e, th e U n ite d S ta te s in crea se d its n e t rec eip ts in th is
c a te g o ry s u b sta n tia lly d u r in g th e w a r, p r im a r ily because o f th e rise
in m o tio n -p ic tu re r e n ta ls a n d fo re ig n g o v e rn m e n t a d m in is tr a tiv e
e x p e n d itu re s in th e U n ite d S ta te s.
T h e re la tiv e ly low level o f m o tio n -p ic tu re re c e ip ts in 1940 a n d
1941 reflected p r im a r ily th e p a r tia l b lo ck in g o f su ch re m itta n c e s by
B ritis h e xch an g e c o n tro l a u th o ritie s, w h ile th e u n fre e z in g o f th ese
block ed b alan ces in 1942 le d to an a b n o rm a lly h ig h to ta l f o r t h a t y e ar.
T h e w a rtim e rise in a d m in is tra tiv e e x p e n d itu re s o f fo re ig n g o v e rn ­
m e n ts a n d in te rn a tio n a l agen cies in th e U n ite d S ta te s re s u lte d fro m
a tre m e n d o u s e x pa n sio n in th e n u m b e r o f p e rso n n el in v o lv ed , as w ell
as h ig h e r sa la rie s a n d o th e r costs. T h e e sta b lish m e n t o f p u rc h a sin g
m issio n s a n d sim ila r o r g a n iz a tio n s in cre a se d th e n u m b e r o f p erso n s
w o rk in g f o r fo re ig n g o v ern m en ts m a n y tim e s in c o m p ariso n w ith th e
p re w a r level.

Tabl e 10.—P r iv a te

m isce lla n eo u s se rv ic e s, lOJ/O-J/o

[In m illio n s of dollars]
It e m

1940

1941

1942

1943

1944

149.9

210.1

334.1

379. 0

382.8

381.9

20.0
37.4
49.2
27.6
15.0
.7

27.0
37.3
48.9
35.9
60.0
1.0

27.1
50.4
125.0
32.3
98.0
1.3

32.2
68.6
114.1
31.9
131.2
1.6

37.4
74.9
109.9
33.0
125.2
2.4

39.4
79.3
111.3
34.7
113.9
3.3

P a y m e n ts , t o t a l _ __ __ __ __ __ __ __ __

95.4

92.0

114.5

135. 5

148.3

158.2

C o m m u n ic a ti o n s _____________ ______
In s u r a n c e ______ ____ _ __ __ __ __ . .
R o y a ltie s , h o m e office c ha rge s, e tc
O th e r s e rv ic e s ..........................................

17.0
65.9
8. 1
4.4

20.0
58.5
7. 7
5.8

18.4
71.6
9.3
15.2

23.3
81.2
8.0
23.0

22.3
88.5
10.4
27.1

24.1
92.8
10.4
30.9

R e c e ip ts , to t a l _ __ __ __ __ __ ____ ___ ____ _ __ _
C o m m u n ic a tio n s .......................................
I n s u r a n c e ..- __ ____________ . _ _ _ _ _ _ _ _ _ _ _ .
M o tio n p ic tu r e r e n ta ls . ____________
R oyalti.es, h o m e office c ha rge s, e t c ______
F o re ig n re p r e s e n ta tio n , e tc ____ ____________ .
O th e r se rv ic e s . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

84

1945

G o v e r n m e n t M is c e l l a n e o u s S e r v ic e s

I n p re w a r tim es, m iscellaneous service tra n sa c tio n s o f th e U n ite d
S ta te s G o v e rn m en t w ere n o t sig n ific a n t in th e U n ite d S ta te s balance
o f p a y m e n ts. D u rin g th e w a r, how ever, th e a cc o u n t assum ed g r e a t
im p o rta n c e w ith th e in c re a sin g p a r tic ip a tio n o f th e U n ite d S ta te s in
th e g lo b a l conflict.
A s m ig h t be e xpected, u n ila te ra l tra n s a c tio n s— d ire c t len d -le ase a n d
rev erse lend-lease— d o m in a ted th e account. A m o n g g o v e rn m e n t m ili­
ta r y tra n s a c tio n s, p a y m e n ts f a r exceeded rec eip ts, w ith so-called n e t
tro o p p a y b e in g th e m a jo r item .
Tabl e 20.'— G o ve rn m en t m isce lla n eo u s se rvices, 1940-45
[In m illio n s of dollars]
I te m

O th e r n o n m ilita ry s e rv ic e s __ ______ _________

O th e r m ilita r y serv ic e s..... ............................... ........
O th e r n o n m ilita r y serv ic e s___
_____________

1940

1941

1942

1943

1944

1945

20

167

963

1,936

2,090

1,448

20

125
9
33

905
13
45

1,853
47
36

1, 930
134
26

1, 285
118
45

93

166

699

1,863

2,439

2, 539

29
104
33

88
178
385
48

805
304
674
80

907
632
809
91

1,006
644
793
96

40
31
22

L e n d -L e a se S e r v ic e s L a r g e

T h e b re ak -d o w n o f lend-lease services by p u rp o se c a n n o t be c on sid­
ered too exact, because o f th e m eth o d h e re used to ta k e o u t lend-lease
tra n s p o rta tio n costs (see a p p e n d ix B , p p . 184 to 186) a n d because th e
official len d -le ase fiscal sta tis tic s d id n o t follow a p u rp o se classifica­
tio n w h ich w as v ery in fo rm a tiv e fo r b a la n c e -o f-p a y m e n ts pu rpo ses.
T h e la rg e s t service item sh ow n in th o se sta tis tic s a p p e a re d to be th e
tr a n s f e r o f vessels to fo re ig n c o n tro l, w hich m ig h t m o re p ro p e rly h av e
been c o n sid e re d a m e rch a n d ise , or, a lte rn a tiv e ly , a tr a n s p o rta tio n ,
item . A lso in c lu d e d is th e cost o f m ilita ry o r o th e r in s ta lla tio n s f u r ­
n ish e d to fo re ig n g o v ernm en ts. P a r t o f th is m a y c on sist o f item s
m o re p ro p e rly classifiable as m erch an d ise . T h e re m a in in g am o u n ts
w ent f o r “se rv ic in g o f vessels,” w h ich in cludes, b u t is n o t lim ite d to,
tr a n s p o rta tio n services as defined in th is volum e, c e rta in tr a in in g p r o ­
g ra m s, tr a n s p o rta tio n o f p e rso n n el, a n d o th e r item s.
I n a d d itio n to th e v ery la rg e a m o u n ts o f len d -lease “defense a id ,”
w h ich to a n o v e rw h e lm in g e x te n t w as re n d e re d fre e o f c h a rg e to f o r ­
eig n g o v e rn m e n ts a n d w as th u s offset in th e u n ila te ra l tr a n s f e r account,
th e re w ere also c e rta in G o v e rn m e n t cash receipts. T h e b u lk o f th ese,
as m ig h t hav e b een expected, w e n t to th e W a r a n d N a v y D e p a rtm e n ts ,
b u t r e g u la r c iv ilia n agencies also received sizable sum s in p a y m e n t
f o r v a rio u s services re n d e re d to fo re ig n g o v ern m e n ts a n d persons.
T ra n s p o rta tio n fu rn is h e d by th e A rm y to fo re ig n c iv ilia n w o rk e rs w as
one o f th e la r g e r item s a p p e a rin g u n d e r th is h e a d in g .
S e r v ic e s R e c e iv e d a s R e v e r s e L e n d -L e a se

O n th e p a y m e n ts side, rev erse len d -le ase services c o n stitu te d a n im ­
p o r ta n t item . T hese w ere o f th e sam e g e n e ra l n a tu r e as th e d ire c t
len d -lease services ju s t discussed, except th a t tr a n s f e rs o f fo re ig n ves­
sels to th e U n ite d S ta te s on a rev erse lend-lease basis w ere n o t a sig85

n ific a n t item . T h e o u tsta n d in g ty p e o f service re n d e re d to th e U n ite d
S ta te s w as th e c o n stru c tio n a n d m a in te n an ce o f in sta lla tio n s, such as
ro a d s, docks, airfield s, a n d b a rra c k s. I n th e U n ite d K in g d o m , espe­
c ially , p ra c tic a lly a ll su ch services w ere fu rn is h e d g r a tis to th e U n ite d
S ta te s as “m u tu a l a id ,” th e B ritis h te rm fo r rev erse len d -lease.2526
N e t T r o o p P a y F a ils T o R e a c h E x p e c ta t io n s

A sid e fro m rev erse lend-lease, th e m o st im p o r ta n t ty p e o f G o v e rn ­
m en t p a y m e n t w as th e p e rso n a l e x p e n d itu re s o f m ilita ry p e rso n n el,
h e re in re f e rr e d to as n e t tro o p p a y . M ore p recisely , n e t ti’oop p a y is
h e re defined as th e g ro ss a m o u n t o f p a y a n d allo w ances to tro o p s s ta ­
tio n e d a b ro a d less (1 ) a ll re m itta n c e s to th e U n ite d S ta te s th ro u g h
A rm y finance officers, (2) cash p u rc h a se s o f w a r bonds, a n d (3) p u rchases o f A m e ric a n m erch a n d ise in A rm y p o st exch an ges a n d N av y
sh ip service stores.
I n a few a re as, U n ite d S ta te s m ilita ry p e rso n n el w as p a id in a n d
sp e n t a c tu a l d o lla r c u rre n c y . I n o th e rs, th e tro o p s w ere p a id in local
c u rre n c y w h ich h a d b een p u rc h a se d fro m th e c o u n try concerned
a g a in s t d o lla rs ( o r a d o lla r lia b ility ) . I n s till o th ers, how ever, th e
lo ca l c u rre n c y w as fu rn is h e d to th e U n ite d S ta te s A rm y w ith o u t r e ­
im b u rse m en t, a n d e x p e n d itu re s o f su ch cu rre n c ie s w ere, th e re fo re , off­
set by a c re d it e n tr y in th e u n ila te ra l tr a n s f e r accoun t. T h e oc cu p a tio n
c u rren c ie s issued to th e U n ite d S ta te s A rm y in enem y c o u n trie s fe ll
in th is c ate g o ry , a lth o u g h in th e case o f I t a l y a d o lla r o b lig a tio n fo r
th e c u rre n c y w as su b se qu e ntly reco g n ized . L o c al c u rre n c ie s received
g r a tis o r a g a in st a d o lla r lia b ility su b je ct to a d ju s tm e n t w ere k n o w n
as sp ecial c u rre n c ies.28
I n a d d itio n , p a y m e n t in sp ec ia l c u rre n c y w ere m a d e fo r services
o th e r th a n n e t tro o p p ay . F o r th e m o st p a r t, th ese w ere also nonred eem able.
I t w as a n tic ip a te d t h a t th o se c o u n trie s in w h ich n e t tro o p p a y w as
re g a rd e d as a U n ite d S ta te s o b lig a tio n w o u ld th e re b y o b ta in c o n sid e r­
able q u a n titie s o f d o lla rs, a n d t h a t th is w o u ld be a v a lu a b le offset to
th e ir v a rio u s w a r-c re a te d o b lig a tio n s to th e U n ite d S ta te s. B u t in
som e c o u n trie s th is d id n o t p ro v e to be th e case to th e d e g ree o rig in a lly
envisag ed. T h is d e velopm ent, a s is g e n e ra lly k n o w n , re su lte d fro m th e
u n ex p ec ted ly h ig h r a tio o f re m itta n c e s to gross tro o p p a y ; f o r some
tim e p e rio d s a n d a re a s th e r a tio w as in excess o f 100 p e rc e n t. T h is
h ig h r a tio in tu r n w as p ro d u ce d b y v a rio u s circu m stan ces, in c lu d in g
th e conversion in to re m itta n c e s o f lo ca l c u rren c ie s receiv ed fro m th e
sale o f p e rso n a l p ro p e rty , a n d o th e r a c tiv itie s on th e p a r t o f th e
tro o p s.
T h e a p p a r e n t o v e rv a lu a tio n o f m o st lib e ra te d -a re a c u rre n c ie s a t
th e official r a te o f e xch an ge w as a lso a m a jo r d e te rre n t to tro o p sp en d in g , le a d in g th e m en to seek to sa tisf y th e ir d em a n d s f o r local goods
a n d services b y b a r te r in g c ig a re tte s, chocolate, so ap , a n d o th e r scarce
goods. A g a in , th e sh eer sh o rta g e s o f th in g s to b u y in m a n y c o u n trie s
led th e m ilita ry p e rso n n el to sen d la r g e r p o rtio n s o f th e ir p a y hom e
th a n th e y m ig h t o th e rw ise h a v e done.
25 F o r a m o r e e x t e n d e d d i s c u s s i o n o f l e n d - l e a s e a n d r e v e r s e l e n d - l e a s e o p e r a t i o n s i n
g e n e r a l, se e p . 1 8 6 .
26 S e e a p p e n d i x B , p . 0 0 0 , f o r a m o r e c o m p l e t e d i s c u s s i o n o f t h e s p e c i a l c u r r e n c y q u e s t i o n .

86

J

'

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U n ila te r a l T r a n s fe r s

F o r m a n y y e ars, p riv a te n o n co m m ercial re m itta n c e s h av e been an
im p o rta n t f e a tu re o f o u r b a la n c e o f p a y m en ts. A la rg e im m ig ra n t
p o p u la tio n led to la rg e tr a n s f e rs o f fu n d s as g if ts to rela tiv e s an d
frie n d s in th e “ O ld C o u n try ,” w h ile relig io u s a n d c h a rita b le in s titu ­
tio n s also m a d e la rg e c o n trib u tio n s to fo r e ig n c o u n tries. D u r in g th e
w a r, how ever, th ese tr a n s f e rs w ere f a r o v ersh a d o w e d b y u n ila te ra l
tr a n s f e rs u n d e r len d -lease, re c ip ro c a l a id , in v asio n c u rre n c ie s, a n d
o th e r schem es w h e reb y one n a tio n m a d e la rg e tr a n s f e rs o f goods a n d
services to o th e r n a tio n s , e ith e r v o lu n ta rily o r in v o lu n ta rily , w ith o u t
rec e iv in g a n y q u id p ro quo in th e fo rm o f goods, services, c a p ita l
claim s, o r g old.
G o v e rn m e n t T ra n sfe rs

<

A s in d ic a te d e lsew here, u n ila te ra l tr a n s f e rs m a y be e ith e r in c ash o r
in k i n d ; G o v e rn m en t tr a n s f e rs w ere o v erw h e lm in g ly in k in d as alm o st
$60 b illio n o f goods a n d services w e re tr a n s f e r r e d u n d e r len d -le ase a n d
re c ip ro c a l a id . I n th ese cases, th e e n try in th e u n ila te ra l a cc o u n t b a l­
ances o r offsets a n e n tr y o f o p p o site sig n in th e g oo ds a n d services
g r o u p ; th e tr a n s a c tio n s in v o lv ed h av e been p re v io u sly discussed.
T h e tra n sa c tio n s in n o n re d e em a b le in v asio n o r o c cu p a tio n cu rre n c ie s
h a v e been sim ila rly h a n d le d in th is r e p o r t ; th e e x p e n d itu re o f such
c u rren c ie s h a s b een e n te re d as a d e b it in th e goods a n d services accoun t,
offset by a c re d it o f e q u a l size in th e u n ila te ra l accoun t. T h u s , o n ly a
few sp ec ia l tra n sa c tio n s n eed be m en tio n ed here.
I n 1940 a n d 1941 th e o n ly G o v e rn m e n t u n ila te ra l item o f a cash
n a tu re w as th e c o n tin u e d (fro m p re w a r) re f u n d o f c e r ta in ta x e s on
P h ilip p in e im p o rts to th e G o v ern m en t o f th e C o m m o n w ealth a m o u n t­
in g to a b o u t $20 m illio n in each y e ar.
I n 1942 th e fir st $200 m illio n o f th e sp ec ial a id to C h in a a u th o riz e d
b y C o n g ress in F e b ru a r y o f t h a t y e a r w as d isb u rse d . B ecau se o f th e
r a th e r neb u lou s p ro v isio n s r e g a rd in g possible re p a y m e n t o f th is a id ,
we h a v e tr e a te d th e tra n s a c tio n as a u n ila te ra l tra n s fe r. A lso d u rin g
1942 o v e r $100 m illio n o f enem y a lie n p ro p e rty w as v ested by th e
G o v e rn m e n t; th is h a s been e n te re d as a u n ila te ra l rec e ip t. A c tu a lly ,
u n d e r th e P o tsd a m a g ree m e n t such seized assets a re to be re ta in e d by
th e U n ite d S ta te s as r e p a r a tio n s.
S p e cia l c u rre n c y tra n sa c tio n s a p p e a re d in volum e f o r th e first tim e
in 1944 a n d in c rea se d c o n sid erab ly in th e fo llo w in g y e a r. A n o th e r
c re d it item in th a t y e a r w as p ro fit on g o ld sales by th e S ta b iliz a tio n
F u n d , h e re c o n sid e re d a u n ila te ra l re c e ip t since su ch sales in effect
re s u lte d fro m p e rm issio n to p u rc h a se c e r ta in f o r e ig n c u rre n c ie s (n e ed ­
ed b y th e A rm y ) a t less th a n th e ir official e xch an ge ra tes.
F in a l in sta llm e n ts, to ta lin g $225 m illio n , on th e a id -to -C h in a p r o ­
g ra m w ere d isb u rse d in 1945. I n t h a t y e a r, also, tr a n s f e rs th ro u g h
U N R R A g o t u n d e r w a y in sig n ific a n t am o u n ts, a n d $92 m illio n in cash
w as m a d e a v a ila b le to t h a t agen cy as p a r t o f th e “ fre e f u n d ” p o rtio n
o f th e U n ite d S ta te s su b sc rip tio n . A re c e ip ts item o f som e size w as
a sp ecial b o n u s in fra n c s p ro v id e d th e A m e ric a n tro o p s b y th e F re n c h
G o v e rn m e n t to co m p en sate p a r tia lly f o r th e o v e rv a lu a tio n o f th e franc,
a t th e official ra te o f e xch an ge.

87

P e r s o n a l R e m itta n c e s

27

P e rs o n a l re m itta n c e s a re a n y n o n co m m ercial p a y m e n ts betw een
in d iv id u a ls. A s w ith G o v e rn m e n t tr a n s f e rs a n d in s titu tio n a l con­
trib u tio n s, th ese re m itta n c e s m ay be m a d e e ith e r in cash o r in k in d ,
a lth o u g h in n o rm a l tim e s re m itta n c e s in k in d h a v e n o t been v e ry
im p o rta n t. T h e e stim a tes in th is r e p o rt a re b a se d la rg e ly on d a ta
fu rn is h e d b y b a n k s a n d o th e r re m ittin g agencies, a n d , because th e
re p o rte rs a re n o t a lw ay s in a p o sitio n to kno w th e p u rp o se f o r w h ich
a re m itta n c e is m ade, i t is possible t h a t som e tr a n s f e rs f o r o th e r p u r ­
poses m a y be in clu d e d .
T h e p r in c ip a l fa c to r in flu en cin g th e volum e o f p e rso n a l fu n d s sen t
a b ro a d fro m th e U n ite d S ta te s h a s u n d o u b te d ly been th e size a n d
c h a ra c te r o f th e re m ittin g g r o u p s (p re su m a b ly a lm o st solely fo re ig n b o rn re sid e n ts) a n d th e s tre n g th o f th e ir ties w ith th e ir m o th e r co u n ­
tr ie s. A f te r th e cessatio n o f la rg e -sca le im m ig ra tio n , th e r e w as a
n o ticeab le se c u la r d ecline in fo re ig n p e rso n a l re m itta n c e s. O th e r fa c ­
to rs o p e ra te in th e s h o rt ru n , how ever, to v a ry th e volum e o f re m it­
tances. In c re a s e d n eed a b ro a d a cc ou n ted f o r e x tre m e ly la rg e p a y ­
m ents im m e d ia te ly fo llo w in g W o rld W a r I , a n d th e flu c tu a tio n s in
n a tio n a l incom e in th e U n ite d S ta te s also h a d th e ir effect. D u rin g
W o rld W a r I I , th e presen ce o f foi’eig n la b o re rs te m p o ra rily im p o rte d
in to th e U n ite d S ta te s m a rk e d ly in crea se d p e rso n a l re m itta n c e s to
M exico a n d c e rta in C a rib b e a n isla n d s (S ee a p p e n d ix C, ta b le X I I ) .
R e m itta n c e s b ro k e n dow n a c c o rd in g to th e a re a s discussed in c h a p te r
i I I I a re show n in c h a r t 21.
C h art 21

O v e r se a R e m itta n c e s D e c lin e D u r in g W a r

T h e o u tb re a k o f w a r in E u r o p e in c rea se d th e n e ed fo r fu n d s fro m
th e U n ite d S ta te s, a n d to ta l p e rso n a l rem itta n c e s in 1910 rea c h e d a
p o st-d e p re ssio n p e a k o f $188 m illio n in t h a t y e a r. T h e m u ch lo w er
to ta ls in 1941 a n d 1942 re su lte d e n tire ly fro m red u ce d rem itta n c e s to
E u ro p e , m o st o f w h ich w as c u t off fro m fin a n c ia l c o n ta c t w ith th e
27
T h e e s t i m a t e s o n p e r s o n a l a n d i n s t i t u t i o n a l r e m i t t a n c e s i n c l u d e d in t h i s c h a p t e r w e r e
p r e p a r e d b y J e s s ie L . C. A d a m s.

88

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^

e

U n ite d S ta te s a f te r o u r e n tr y in to th e w a r. I ta ly w as reo p en e d to
th e re c e ip t o f p e rso n a l re m itta n c e s la te in 1944 a n d in 1945, o f th e
$155 m illio n in to ta l tr a n s f e rs to E u ro p e , o n e -th ird w as d e stin ed to
I ta ly . G reece, also c u t off d u r in g th e w a r, received re m itta n c e s o f
$23 m illio n in 1945— th e la rg e s t a m o u n t se n t to t h a t c o u n try in a n y
sin g le y e a r since 1931.
T h e re la tiv e ly h ig h to ta l p a y m e n ts in 1943 a n d 1944 w’ere la rg e ly
th e re s u lt o f d e d u c tio n s fro m w ages o f a lie n w o rk ers a n d th e ir su p ­
p lem e n ta l v o lu n ta ry re m itta n ce s. B ecause o f th e m a n p o w e r sh o rta g e
in th e U n ite d S ta te s, tw o p ro g ra m s e m p lo y in g im p o rte d a lie n w o rke rs
w ere in o p e ra tio n d u r in g th e w a r.
O ne o f th ese w as th e p ro g ra m o f th e U n ite d S ta te s D e p a rtm e n t o f
L a b o r, in s titu te d u n d e r th e auspices o f th e W a r M an p o w er C om m ission
a n d p u t in to o p e ra tio n in M ay 1943. T h is p ro g ra m , fo r th e em p loy ­
m e n t o f M exican n a tio n a ls on U n ite d S ta te s ra ilro a d s, w as u ltim a te ly
respo n sib le fo r th e im p o rta tio n o f 61,000 w o rke rs in to th e U n ite d S ta te s.
T h e effect o f th is p ro g ra m w as reflected in th e s h a rp in crea se in re m it­
ta n c es to M exico b e g in n in g in 1943. A p o rtio n o f th e w ages e a rn e d
by th ese w o rk e rs w as d e d u c te d by th e e m p loy e rs a n d d e p o site d w ith
specified M exican b a n k s to th e sav in g s acco u n ts o f th e M exican w o rk ­
ers, b u t a d d itio n a l la rg e a m o u n ts w ere tr a n s f e rr e d th ro u g h re g u la r
c h an n e ls, su ch as p o s ta l m oney o rd e rs a n d b a n k re m itta n ce s.
T h e second p r o g ra m w as t h a t sp o n so re d by th e U n ite d S ta te s D e ­
p a rtm e n t o f A g ric u ltu re f o r th e e m p lo y m en t o f im p o rte d B a h a m ia n ,
B a r b a d ia n , B ritis h H o n d u ra n , Ja m a ic a n , a n d M ex ica n w o rkers. A p ­
p ro x im a te ly 16,000 w ere b r o u g h t in f o r e m p lo y m en t u n d e r th is p ro ­
g ra m fro m its b e g in n in g in 1943. D e du c tio n s w ere also m a d e fro m
th e sa la rie s o f th ese w o rke rs, b u t a g a in th ese sum s w ere su p p le m e n te d
by v o lu n ta ry re m ittan ce s.
G ift P a r c e ls I n c lu d e d

*

T h e p e rso n a l re m itta n c e s a cc ou n t in clud e s th e v a lu e o f g i f t p a r ­
cels— m o stly foo d a n d c lo th in g — se n t to E u r o p e a n a n d c e rta in o th e r
a re a s su ffe rin g fro m th e effects o f th e w a r. S u c h g ifts a re n eg lig ib le
in o r d in a r y tim es, b u t i t is e stim ate d t h a t p a ck ag es v a lu e d a t m ore
th a n $30 m illio n w ere sh ip p e d in 1945. S in ce in m a n y E u ro p e a n
c o u n trie s th e p ro b lem w as one o f o v e r-all sh o rta g e s o f goods, th e
food p ack ag e w as a m ore sa tisf a c to ry g i f t th a n a m oney tra n s fe r.
L o c al p ric es in som e c o u n trie s o u t o f lin e w ith official e xch an ge ra te s
also m ade it m u ch m ore d e sira b le to sen d goods th a n m oney. M an y
o f th e packages} too, w ere sen t by A m e ric a n fam ilie s to E u ro p e a n s
w hose n am es w ere fu rn is h e d by v a rio u s re lig io u s a n d c h a r ita b le o r ­
g a n iz a tio n s, a n d n o t m erely to frie n d s a n d rela tiv e s, as is th e u su al
case w ith p e rso n a l rem ittan c es.
R e c e ip ts

S ta b ility in p e rso n a l re m itta n c e re c e ip ts d u rin g th e w a r w as due
to c o n flicting tre n d s . D ecreased re m itta n c e s fro m w a r a re a s w ere off­
set b y in crea se d re c e ip ts fro m th e W e s te rn H e m isp h e re — chiefly fro m
L a t i n A m erica.
O u tlo o k

A s lo n g as p e rso n a l incom es in th e U n ite d S ta te s a re h ig h a n d th e
n eed s a b ro a d a re s u b s ta n tia l, p e rso n a l re m itta n c e s m ay be ex p ected to
769155— 48—

-7

89

m a in ta in o r exceed th e 1945 ra te . I n th e lo n g ru n , how ever, th e secu lar
decline e v id e n t in th e in te rw a r p e rio d w ill u n d o u b te d ly be resu m ed ,
a lth o u g h im m ig ra tio n a t a h ig h e r level th a n in th e 1930’s m ig h t te n d
to slow th e r a te o f decline.
I n s titu tio n a l R e m itta n c e s

I n s titu tio n a l re m itta n c e s in clu d e n o n co m m ercial tr a n s f e rs o f fu n d s
a n d m a te ria ls b y p h ila n th ro p ic , re lig io u s, e d u c atio n a l, a n d scientific
o rg a n iz a tio n s. T h e se o r g a n iz a tio n s a ssist in th e s u p p o rt o f h o s p ita ls,
m issions, ch u rch es, schools, a n d scientific u n d e r ta k in g s a b ro a d . C o n ­
tr ib u tio n s in crease d u r in g p e rio d s o f w a r a n d p o stw a r re h a b ilita tio n ,
w h e n su b s ta n tia l re m itta n c e s in cash a n d su p p lie s a re m ad e to a l­
le v ia te su ffe rin g in w a r areas.
F o r b a la n c e-o f-p ay m en ts p u rp o se s, e stim a te s o f in s titu tio n a l re ­
m itta n c e s o f th e U n ite d S ta te s to fo re ig n c o u n trie s h a v e been d iv id e d
in to th e fo llo w in g g ro u p s:
1. P r o te s ta n t c hu rch es a n d g ro u p s.
2. C a th o lic in stitu tio n s.
3. J e w is h o rg a n iz a tio n s.
4. N o n se c ta ria n in s titu tio n s .
T h e f o u r th g ro u p , o rd in a rily c o m p risin g in s titu tio n s devoted to
e d u c a tio n a l, scientific, a n d p h ila n th ro p ic p u rp o se s, h a s been g re a tly
a u g m en ted in rec e n t y e a rs b y o rg a n iz a tio n s fo rm e d f o r th e specific
p u rp o se o f p ro v id in g w a r re lie f. A b re ak -d o w n a cc o rd in g to th e a rea s
discussed in c h a p te r I Y is show n in c h a r t 21. F o r f u r th e r d e ta il see
a p p e n d ix C , ta b le X I I I .
T ren d s
F ro m th e close o f W o rld W a r I to 1935 th e re w as a s tro n g d o w n w a rd
tr e n d in in s titu tio n a l re m itta n c e s. T h e in itia l d ro p a f te r 1919 w as
th e re s u lt o f th e red u c ed n e ed f o r A m e ric a n a ssistan ce in th e re c o n ­
s tru c tio n a n d d e ve lo p m e nt o f w a r-d e v a sta te d E u ro p e . D u rin g th e
1920’s, ren ew ed in te re s t in fo re ig n relig io u s m issions a n d in te rn a tio n a l
n o n s e c ta ria n p h ila n th ro p ie s, acco m p an ied by h ig h e r incom e levels,
s tim u la te d in crea se d rem itta n c e s to o th e r c o u n trie s, a lth o u g h th e to ta l
c o n tin u ed to decline. B e g in n in g in 1936, in s titu tio n a l g ifts in crea se d
c o n sid e ra bly , th e d e ve lop m en t becom ing m o re p ro n o u n c ed in 1940 as
a re s u lt o f la rg e c o n trib u tio n s f o r E u ro p e a n a n d A sia tic w a r re lie f.
T h is w a r-in d u c e d in crea se in in s titu tio n a l re m itta n c e s c o n tin u e d
th ro u g h o u t th e p e rio d u n d e r stu d y , e xcept f o r a s lig h t set-back in 1942,
w hen e n tra n c e o f th e U n ite d S ta te s in to th e w a r severed connections
w ith som e c o u n trie s t h a t h a d been la rg e re c ip ie n ts o f th ese g ifts .
M o st agencies in crea se d fo r e ig n re m itta n c e s d u rin g th e y e a rs 1940
to 1945, a lth o u g h th e in crease w a s p ro p o rtio n a te ly la r g e r in th e Je w ish
a n d n o n s e c ta ria n g ro u p s. J e w is h c o n trib u tio n s show ed a m a rk e d rise
in 1944 a n d 1945, a f te r th e w a r h a d p ro g re sse d f a r en o u g h to m ake
possible th e b e g in n in g o f th e ta s k o f re s e ttlin g E u ro p e a n Je w s.
N o n s e c ta ria n agencies in clu d e d , a m o n g o th ers, th e A m e ric a n B ed
C ross a n d th e v a rio u s sp ecialized w a r-re lie f agencies o th e r th a n those
w ith d efin ite se c ta ria n connection s. E x p e n ses in c u rre d by th e R ed
C ro ss in se rv in g th e U n ite d S ta te s a rm e d forces a b ro a d a re also in ­
cluded in th e account.

90

S ig n i f i c a n c e s a n d O u t l o o k

R em itta n c e s by n o n s e c ta ria n a gencies a lone in 1945 w ere h ig h e r th a n
th e to ta l f o r a ll in s titu tio n s in th e p o st-W o rld W a r I p e a k y e a r o f
1919. A lth o u g h th e m u ch h ig h e r level o f U n ite d S ta te s n a tio n a l in ­
come in 1945 w as u n d o u b te d ly a sig n ifica n t fa c to r in th is difference, i t
w as also accoun ted fo r by th e g re a te r d e v a sta tio n a n d n eed a b ro a d ,
th e m u ch v a ste r c h a ra c te r o f a c tiv itie s u n d e rta k e n to m a in ta in th e
m o ra le o f A m eric an tro o p s in fo re ig n c o u n tries, a n d , p e rh a p s, a g re a te r
a w aren ess o f d istre ss overseas a n d w illin g n e ss to sh a re th e fin a n c ia l
b u rd e n o f re lie v in g it.
P r e lim in a ry d a ta in d ic a te a c o n tin u e d h ig h level o f d isb u rse m e n ts in
1946, w ith p ro sp e c ts f o r o n ly a slig h t decrease, if a n y , in 1947. A s
lo n g as fo r e ig n needs re m a in a c u te a n d A m e ric a n incom es re m a in
re la tiv e ly h ig h , a c o n tin u e d la rg e volum e o f fo re ig n in s titu tio n a l r e ­
m itta n c e s can be expected.

*,

91

C h a p te r III

C a p it a l M o v e m e n t s a n d G o ld
M o v e m e n ts o f L o n g -T e r m

C a p ita l1

T h e m ovem ent o f lo n g -te rm c a p ita l d u rin g W o i'ld W a r I I w as c h a r­
a cte riz e d b y a n outflow o f b o th A m e ric a n a n d fo re ig n fu n d s fro m th e
U n ite d S ta te s, p a ra lle lin g in m a n y resp ec ts th e experien ce o f W o r ld
W a r I a n d in sh a rp c o n tr a s t w ith th e in w a rd m o v em en t fro m 1931
th ro u g h 1939.
T h e U n ite d S ta te s w a s a d e b to r to th e e x te n t o f a b o u t $3.7 b illio n
a t th e o u tb re a k o f W o rld W a r I , b u t as a re s u lt o f p riv a te lo a n s ( p r i ­
m a rily to th e B ritis h a n d F re n c h G o v e rn m e n ts) a n d th e liq u id a tio n
o f fo re ig n h o ld in g s o f A m e ric a n sec u ritie s, th e U n ite d S ta te s em erged
a c re d ito r n a tio n , a t th e en d o f 1919, to th e e x te n t o f $3.7 b illio n .2
L a rg e a n n u a l in v e stm e n ts o f A m e ric a n c a p ita l in su bsequent y e ars
in c rea sed th e c re d ito r p o sitio n c on siderab ly .
I n th e la tte r h a lf o f 1928 a n d in 1929, th e g re a te r a ttra c tiv e n e s s o f
d o m estic in v estm e n ts d iv e rte d th e flow o f A m e ric a n c a p ita l to dom estic
se c u ritie s, a n d a f te r 1930 new U n ite d S ta te s in v e stm e n ts a b ro a d v i r t u ­
a lly ceased. U n s e ttle d c o n d itio n s a t hom e a n d a b ro a d d isc o u rag e d th e
outflow o f U n ite d S ta te s c a p ita l, a n d th e r e w as a c o n tin u ed n e t inflow
u n til W o rld W a r I I .
I n th e p e rio d betw een th e w a rs fo re ig n e rs p u rc h a se d la rg e a m o u n ts
o f A m e ric a n secu rities. T h is u p h ill m o vem ent o f c a p ita l c o n tra v e n e d
th e co n cep t o f th e p ro g re ss o f a c o u n try fro m a d e b to r to a c re d ito r
w h ic h h o ld s th a t, in g e n e ra l, th e re p a y m e n t o f fo re ig n d e b t precedes
th e a cc u m u la tio n o f fo re ig n in v estm en ts. I t is a b u n d a n tly cle ar, h o w ­
e v e r, t h a t in th is in sta nc e th e c re a tio n o f new fo re ig n d e b t by a c o u n try
a lre a d y a n e t c re d ito r re su lte d fro m th e in itia tiv e o f fo re ig n in v esto rs
in ta k in g a d v a n ta g e o f b o th in v e stm e n t a n d sp ec u lativ e o p p o rtu n itie s
in th is c o u n try w h ile a v o id in g in c re a sin g ly in secu re c o n d itio n s a t
hom e.
D u r in g th e 6 -year p e rio d , 1940-45, th e n e t o u tw a rd m o v em en t o f
lo n g -te rm c a p ita l fro m th e U n ite d S ta te s a g g re g a te d $2,371 m illio n
(see ta b le s 21 a n d 2 2 ). B o u g h ly th re e - q u a r te rs o f th e n e t m o vem ent
reflected U n ite d S ta te s G o v e rn m en t c re d its a n d lo a n s— a sum th a t,
o w in g to th e fin a n c ing p ro v id e d by lend-lease, w as sm a ll c o m p ared
w ith G o v e rn m en t lo ans d u r in g W o r ld W a r I.
1 P r e p a r e d b y t h e I n v e s t m e n t S e c tio n .
* L e w is , C le o n a .
A m e r i c a ’s S t a k e in I n t e r n a t i o n a l I n v e s t m e n t s , T h e B r o o k i n g s I n s t i ­
t u t i o n , W a s h i n g t o n , D . C ., 1 9 3 8 , p . 4 4 7 .
F ig u r e f o r 1 9 1 9 a d ju s te d to e x c lu d e s e q u e s tr a te d
p r o p e r ti e s a n d in te r g o v e r n m e n t d e b ts .

92

Ta bl e 2 1

.—

L o n g -te r m c a p ita l tr a n s a c tio n s b e tw e e n th e U n ite d S t a te s a n d f o r e ig n
c o u n t r i e s , 19Jt 0 - l f 5 1

[In m illio n s of d o lla rs; n e t r e c e ip t ( + ) o r p a y m e n t ( —)]
I te m

1940-45

1940

I . T h r o u g h m o v e m e n ts of U n ite d S ta te s
c a p ita l in v e s te d a b ro a d :
A . R e c e ip ts ....... ............................... .

1,984. 9
1,659.6
740. 6

1941

1942

1943

208.7

193.5

219.4

402.0

406.1

555.2

207.2
83.7

165.4
59.3

155. 4,
74.8

331.0
192.3

338.3
147.5

462.3
183.0

669.3

42.1

59.3

59.3

192.3

133.3

183.0

48.5
22.8
919.0
325.3

123.5
1.5

106.1
28.1

15.5
80.6
64.0

138.7
71.0

6.9
7.3
190.8
67.8

279.3
9 2.9

3,842. 9

192.1

507.8

293.9

486.4

559.8

1,802. 9

1,890. 5
1, 233.6
390.4

139.5
47.9

98.5
39.7
4.4

219.7
157.8
25.1

291.0
249.8
118.1

329.3
209.4
84.0

812.5
529.0
158.8

659.3
183.9
656.9
1,952.4

23.1
24.8
91.6
52.6

24.7
10.6
58.8
409.3

98.8
33.9
61.9
74.2

124.7
7 .0
41.2
195.4

125.4

D ir e c t in v e s tm e n ts 4..............
U . S. G o v e r n m e n t_ __ __ __ _ _ __ _

119.9
230.5

262.6
107.6
283.5
990.4

I I . T h r o u g h m o v e m e n ts of foreign c a p ita l
in v e s te d in t h e U n ite d S ta te s:
A . R e c e ip ts .........................................

629.5

156.9

78.2

87.2

43.3

233.6

' 30.3

629.5

156.9

78.2

87.2

43.3

233.6

30.3

56.6

42.3

233.5

30.3

P r i v a t e ................ ................... ......
P o rtfo lio in v e s tm e n ts ______
A m o r tiz a tio n of foreign
s e c u ritie s ....... .............. .
T ra n s a c tio n s in o u ts ta n d in g foreign sec u ritie s,
D ir e c t in v e s tm e n ts .............
U . S. G o v e r n m e n t......... ...........
B . P a y m e n ts ........... ..........................

P

P r i v a t e . .........................................
P o r tfo lio in v e s tm e n ts ........... .
T ra n s a c tio n s in o u tsta n d in g fo re ig n sec u ritie s,
n e t 123...............................

P o rtfo lio in v e s tm e n ts 5________
T ra n s a c tio n s in o u ts ta n d in g
d o m e stic sec u ritie s, n e t 6. . .
U n ite d K in g d o m c a p ita l as-

5 .7 '
150.8
6.1

72. 5

29. 8
.8

1.0

.1

B . P a y m e n ts _______ .............. - ........

1,142. 6

246.7

405.5

170.9

106.3

58.9

154.3

P o rtfo lio in v e s tm e n ts _________
A m o r tiz a tio n s of A m eric a n
se c u r itie s ..... ................... .
T ra n s a c tio n s in o u ts ta n d in g
d o m e stic sec u ritie s, n e t 6. . .
U n i te d K in g d o m c a p ita l as-

897.0

246.7

326.2

74.5

53.9

43.3

152.4

60.0

10.0

10.0-

10.0

10.0

10.0

10.0

639.5

231.0

257. 7 '

4 .5

12.8

133.5

140.2

5.7

V e stin g s b y A lie n P r o p e r ty

«*•

368.4

1945

254.2
6 .9

V e s tin g s b y A lie n P r o p e r ty

%

41.6

1944

51.4
5.9
245.6

52.7
5.8
79.3

154.8
90.8

56.8

16.1

8.9

7.7

11.6

8 .9

96.4

23.2
.1
“ "52.4

15.6

1.9

96.4

52.4

4.1
11.5

1.9

79.3

I I I . N e t m o v e m e n t of U n ite d S ta te s a n d
fo reig n c a p ita l......... ........................ - 2 ,3 7 1 .1

- 7 3 .2

- 6 4 1 . 6 - 1 5 8 .2

- 1 4 7 .4

+ 2 1 .0

- 1 ,3 7 1 .7

A . U n ite d S ta te s c a p ita l__________ - 1 , 858.0
-2 3 0. 9
P r i v a t e _______ ____ ______ —
- 4 9 3 .0
P o r tf o lio .................... . ...........
+ 2 62 .1
D ir e c t_ _ _ _ _ _ _ _ _ _________
1
, 627.1
U . S. G o v e r n m e n t..................... .
B . F o re ig n c a p i t a l . . . _ _ _ _ _ _ _ _ _ _ _ _
- 5 1 3 .1

+ 1 6 .6
+ 6 7 .7
+ 3 5 .8
+ 3 1 .9
- 5 1 .1
- 8 9 .8

- 3 1 4 .3
+ 6 6 .9
+ 1 9 .6
+ 4 7 .3
- 3 8 1 .2
-3 2 7. 3

-8 4 .4
+ 4 0 .0
-5 7 .5
+ 9 7 .5
- 1 2 4 .4
- 6 3 .0

- 1 5 3 .7
+ 9 .0
- 6 1 .9
+ 7 0 .9
-1 6 2 . 7
+ 174. 7

- 1 ,2 4 7 .7
-3 5 0. 2
- 3 4 6 .0
- 4 .2
-8 9 7 . 5
- 1 2 4 .0

- 7 4 .5
- 6 4 .3
-8 3 .0
+ 1 8 .7
- 1 0 .2
-8 3 .7

1 A re c e ip t (or a n inflow ) of c a p ita l r e su lts e ith e r fro m a n in c re a se in fo re ig n a s se ts in th e U n ite d S ta te s
o r a d ec rea se in U n ite d S ta te s a sse ts a b ro a d . C o n v e rse ly , a p a y m e n t (or a n o utflo w ) of c a p ita l r e su lts
e ith e r fro m a d ec rea se in fo re ig n a ssets in th e U n ite d S ta te s or a n in c rea se in U n ite d S ta te s a sse ts a b ro a d .
T h e ta b le c ov ers o n ly c h a n g e s in v o lv in g th e flow of c a p ita l a n d does n o t re fle c t c h a n g e s in th e v a lu e of
a sse ts r e su ltin g fro m o th e r fa c to rs.
2 I n th o se y e a rs for w h ic h b o th re c e ip ts a n d p a y m e n ts a r e sh o w n , th e p a y m e n ts re p r e s e n t u n r e c o rd e d
U n ite d S ta te s p u r c h a se s of foreign se c u ritie s (a p p e n d ix B , p . 189). T o ta ls fo r th e p e r io d a r e su m s of th e
a n n u a l n e t figures.
3 In c lu d e s issu es p la c e d p u b li c ly a n d p r iv a te ly for n e w c a p ita l a n d for re fu n d in g p u rp o se s. E x c lu d e s
d isc o u n ts a n d c o m m issio n s a n d issu es of fo re ig n -in c o rp o ra te d e n te rp ris e s c o n tro lle d in th e U n ite d S ta te s .
In c lu d e s th e follow ing e s ti m a te d a m o u n ts of p r iv a te ly ta k e n issu es (for e ach y e a r, in m illio n s of d olla rs);
1940 a n d 1941, n o n e ; 1942, 25; 1943, 34; 1944, 70; a n d 1945, 99.
4 In c lu d e s o fferings in t h e follow ing a m o u n ts b y fo re ig n -in c o rp o ra te d e n te rp ris e s c o n tro lle d in t h e U n ite d
S ta te s (for e a c h y e a r, in m illio n s of d o lla rs ): 1940, 1941, a n d 1942, n o n e ; 1943, 2; 1944, 27; a n d 1945, 12.
fi T h e re w e re n o k n o w n in w a r d m o v e m e n ts o f d ir e c t-in v e st m e n t c a p ita l.
6 In c lu d e s fo re ig n p u r c h a se s a n d sales of U . S . G o v e rn m e n t o b lig a tio n s w h ic h c a n n o t b e s e p a r a te ly
e s ti m a te d . T o ta ls for th e p e rio d a r e su m s of th e a n n u a l n e t figu re s.

93

Tabl e 22.

—

L o n g - t e r m c a p i t a l m o v e m e n t s , b y a r e a , 19Jf 0 - 4 5

[ I n m illio n s of d ollars]
R e c e ip ts
A re a a n d t y p e of c a p ita l
1940

1941

1942

1943

1944

A ll a re a s, t o t a l ....................

367.3

305.4

342.3

504.0

675.3

598.9

U n ite d S ta te s c a p i t a l ..
P r i v a t e . . . ......... .
G o v e rn m e n t—.......
F o re ig n c a p ita l...........

210.4
208.9
1.5
156.9

222.4
194.3
28.1
83.0

240.6
176.6
64.0
101.7

428.0
357.0
71.0
76.0

428.1
360.3
67.8
247.2

562.3
469.4
92.9
36.6

S te rlin g a re a , t o t a l ............ .

165.5

95.0

66.5

68.8

49.3

61.3

U n ite d S ta te s c a p i t a l ..
P r i v a t e . . - ....... —
G o v e r n m e n t......... .
F o re ig n c a p ita l...........

11.7
11.7
153.8

22.5
4 .9
17.6
72.5

36. 4
10.4
26.0
30.1

67.8
33.0
34.8
1.0

49.2
9.1
40.1
.1

61.3
20.4
40.9

C a n a d a , t o t a l .......... ...........

48.2

46.3

82.1

195.2

226.7

205.3

U n ite d S ta te s c a p i t a l p r iv a t e _________
G o v e r n m e n t------F o re ig n c a p ita l......... .

45.7
45.7

46.3
46.3

81.5
57.5
24.0
.6

195.2
195.2

195.6
188.4
7 .2
31.1

205.3
193.4
11.9

A m e r ic a n R e p u b lic s , to ta l.

60.1

85.9

84.0

112.4

167.7

154.1

U n ite d S ta te s c a p i t a l . .
P r i v a t e ------------G o v e r n m e n t_ _ _ _ _
F o re ig n c a p ita l--------

60.1
58.6
1.5

82.9
72.4
10.5
3 .0

76.3
70.3
6 .0
7.7

106.7
99.4
7.3
5 .7

152.8
132.3
20.5
14.9

127.2
101.5
25.7
26.9

O th e r , t o t a l ------------------

93.5

78.2

109.7

127.6

231.6

178.2

U n ite d S ta te s c a p ita l..
P riv a te _________
G o v e rn m e n t.........
F o re ig n c a p ita l......... .

92.9
92.9

70.7
70.7
7. 5

58.3
29.4
28.9
69.3

30.5
30.5

.6

46.4
38.4
8.0
03.3

168.5
154.1
14.4
9.7

2.5

201.1

1945

P a y m e n ts
A ll a re a s, t o t a l ---------------

440.5

947.0

500.5

051.4

654.3

1,970.6

U n ite d S ta te s c a p i t a l . .
P r i v a t e _________
G o v e rn m e n t------F o re ig n c a p ita l........... .

193.8
141.2
52.6
246.7

536.7
127.4
409.3
410.3

315.1
240.9
74.2
185.4

512.4
317.0
195.4
139.0

581.8
351. 3
230.5
72.5

1,810.0
819.6
990.4
160.6

S te rlin g a re a , t o t a l ----------

219.6

744.2

119.8

82.3

167.4

711.1

U n ite d S ta te s c a p ita l..
P r i v a t e _________
G o v e r n m e n t------F o re ig n c a p ita l---------

3 .9
3.9
215.7

371.1
21.1
350.0
373.1

47.5
7 .5
40.0
72.3

40.1
2.7
37.4
42.2

119.6
11.3
108.3
47.8

667.9
27.0
640.9
43.2

C a n a d a , t o t a l ......... ............

65.3

118.1

158.0

369.4

291.8

505.2

U n ite d S ta te s c a p ita l. .
P r i v a t e _________
G o v e rn m e n t------F o re ig n c a p i t a l .......... .

50.0
50.0

157.0
150.9
6.1

290.8
258.1
32.7

1.0

356.3
275.9
80.4
13.1

406.6
406.6

15.3

89.3
62.3
27.0
28.8

1.0

98.6

A m e ric a n R e p u b lic s , to ta l.

68.2

38.0

98.2

111.4

61.1

218.6

U n ite d S ta te s c a p i t a l . .
P r i v a t e ________
G o v e r n m e n t------F o re ig n c a p i t a l ..........

64.0
44.8
19.2
4 .2

37.5
35.7
1.8
.5

97.7
69.6
28.1
.5

110.9
34.3
76.6
.5

60.6
54.2
6.4
.5

218.1
192.1
26.0
.5

87.4

46.7

124.5

88.3

134.0

535.7

75.9
42.5
33.4
11.5

38.8
8 .3
30. 5
7 .9

12.9
12.9

5.1
4.1

111.6

83.2

110.8
27.7
83.1
23.2

517.4
193.9
323.5
18.3

O th e r , to t a l ----------------U n ite d S ta te s c a p i t a l . .
P r i v a t e ________
G o v e rn m e n t-----F o re ig n c a p ita l_____

N

—W

1.0

ot e
h ile th e n e t re c e ip ts o r p a y m e n ts sh o w n in th is ta b le for a n y y e a r ag re e w ith th o se sh o w n in
th e g lo b a l b a la n c e of p a y m e n ts ta b le 1, t h e to t a l re c e ip ts o r p a y m e n ts m a y d iffe r. C e r ta in it e m s a re in c lu d e d
o n a n e t b a sis in ta b le 21; o b v io u s ly th e g lo b a l n e t figu re s m a y b e th e r e s u lt of n e t r e c e ip ts in o n e a r e a a n d
n e t p a y m e n ts in a n o th e r. T h e g lo b a l to ta ls a b o v e a re th e su m s of t h e a r e a to ta ls ; th e y a re th u s g e n e ra lly
la rg e r t h a n th e figu re s in ta b le 21.
94

M o v e m e n ts o f U n ite d S ta te s L o n g -T e r m

^

C a p ita l

T h e r e tu r n flow o f A m eric an lo n g -te rm c a p ita l fro m fo re ig n co u n ­
trie s w h ich b e g a n d u r in g th e d ep ressio n in 1931 w a s a b r u p tly r e ­
v ersed d u r in g th e w a r, p r im a r ily as a re s u lt o f U n ite d S ta te s G o v e rn ­
m e n t loans to th e U n ite d K in g d o m a n d o th e r co u n tries. F o r th e 6-year
p e rio d no w u n d e r c o n sid e ra tio n , th e re w a s a sm a ll n e t outflow of
p r iv a te c a p ita l, a lth o u g h n o c o n siste n t tr e n d w a s a p p a re n t. F u n d s
in v este d in c o n tro lle d e n te rp ris e s a b ro a d c o n tin u e d to be re tu rn e d
to th is c o u n try u n til 1945. F o r e ig n e rs , p a r tic u la r ly C a n a d ia n s, con­
tin u e d to a m o rtiz e th e ir d o lla r b o n ds a n d o n ly one fo re ig n lo n g -te rm
lo a n f o r new m oney w as p u b lic ly offered in th is c o u n try .3 A b o u t
$700 m illio n o f o u ts ta n d in g C a n a d ia n se c u ritie s w a s p u rc h a s e d in
th is p e rio d , as n e t tr a n s a c tio n s in o u tsta n d in g fo r e ig n se c u ritie s (i. e.,
e x c lu d in g new issues so ld in th e U n ite d S ta te s a n d a m o rtiz a tio n s)
re s u lte d in a n outflow o f $611 m illio n o f U n ite d S ta te s c a p ita l.
G o v e rn m e n t L o a n s D o m in a tin g

*

L o n g -te rm lo an s, in v estm e n ts, a n d c re d its to fo re ig n e rs b y th o
U n ite d S ta te s G o v e rn m en t d u r in g th e y e a rs 1940-45 ( a f te r d e d u c tin g
re p a y m e n ts ) a m o u n te d to $1,627 m illio n . T h is to ta l, w h ich in clud es
o n ly th o se fin a n c ia l a g ree m e n ts c a rry in g s tip u la te d p ro v isio n s f o r re ­
p a y m e n t,4 can be c o m p a re d w ith $7,685 m illio n o f G o v e rn m e n t a d ­
vances to fo re ig n g o v e rn m e n ts in W o rld W a r I ( J u l y 1, 1914, to
D ecem b er 31, 1918).5 H o w e v e r, d u rin g a n d im m e d ia tely fo llo w in g
W o rld W a r I I , as discu ssed in c h a p te r I , th e fo u n d a tio n fo r a h u g e
p ro g ra m o f c a p ita l a ssistan c e to fo re ig n e rs w as la id , c o m p risin g le n d lease a n d s u rp lu s p r o p e r ty c re d its , E x p o r t- I m p o r t B a n k lo an s, sp ecial
lo a n s to th e U n ite d K in g d o m a n d th e R e p u b lic o f th e P h ilip p in e s , a n d
in v e stm e n ts in th e W o rld B a n k a n d F u n d .
T h e a c tu a l o utflow o f G o v e rn m e n t c a p ita l w as r e la tiv e ly sm a ll u n til
a f te r V J - d a y , ex ce pt in 1941, w h e n a lo a n o f $425 m illio n w a s m ad e
to th e U n ite d K in g d o m b y th e R e c o n stru c tio n F in a n c e C o rp o ra tio n
to p ro v id e fu n d s f o r w a r p u rc h a se s o rd e re d p r io r to th e p a ssa g e o f
th e L e n d -L ea se A c t. O f th is c re d it, $350 m illio n w a s u tiliz e d in 1941
a n d a f u r th e r $40 m illio n in 1942.6 T h e e x p e n d itu re b y th e D efen se
P l a n t C o rp o ra tio n o f som e $44 m illio n f o r th e c o n stru c tio n o f p ro ­
d u ctiv e fa c ilitie s in C uba, P e r u , C hile, a n d E c u a d o r, a n d len d -lease
silv e r lo a n s to c e r ta in ste rlin g -a re a c o u n trie s, p ro v id e d m o st o f
th e re m a in d e r o f G o v e rn m e n t c re d its d u r in g th e p e rio d o f a c tu a l
h o stilitie s.
N e t d isb u rse m e n ts b y th e E x p o r t- I m p o r t B a n k on lo an s m ad e
d ire c t to fo re ig n e rs to ta le d o n ly $120 m illio n d u r in g th e y e a rs 1940-45.
T h e b u lk o f th is outflow o c c u rre d b e fo re th e U n ite d S ta te s e n te re d th e
w a r a n d w as d e sig n e d p r im a r ily to f a c ilita te th e d e ve lop m e n t a n d o p e r­
a tio n o f specific in d u s tria l p ro je c ts ; fro m 1942 th ro u g h 1945 re p a y ­
m e n ts b y fo re ig n e rs o f lo an s g r a n te d e a rlie r n e a rly e q ua le d th e dis3 B y S t e e p R o c k I r o n M in e s , L i m i t e d .
H o w e v e r , a n u m b e r o f is s u e s w<*re f l o a t e d h e r e f o r
r e f u n d i n g p u r p o s e s a n d s e v e r a l s m a l l s t o c k is s u e s w e r e a l s o s o ld t o t h e p u b l i c ( s e e a p p e n d i x
C, ta b le X X ).
4 F o r a d i s c u s s i o n o f f i n a n c i a l a s s i s t a n c e w i t h o u t s p e c if ic t e r m s o f r e p a y m e n t , s e e sec*
tio n on u n ila te r a l tr a n s f e r s , p . 87.
5 W i l l i a m s , J o h n H ., T h e B a l a n c e o f I n t e r n a t i o n a l P a y m e n t s o f t h e U n i t e d S t a t e s f o r t h e
Y e a r 1 9 2 0 W ith a S ta te m e n t o f th e A g g re g a te B a la n c e J u ly 1, 1 9 1 4 -D e c e m b e r 3 1, 1 9 2 0,
i n T h e R e v ie w o f E c o n o m i c S t a t i s t i c s ( S u p p l e m e n t ) , H a r v a r d U n i v e r s i t y P r e s s , p r e l i m ­
i n a r y v o l u m e 3 , J u n e 1 9 2 1 , s u p p l e m e n t 1, p . 2 0 1 .
GT h e b a l a n c e o f t h i s l o a n , $ 3 5 m i l l i o n , i s s t i l l t e c h n i c a l l y a v a i l a b l e f o r u s e b y t h e U n i t e d
K in g d o m , b u t p r e s u m a b l y wTi l l n o t b e d r a w n .

95

b u rse m e n ts on new loans. A lth o u g h th e sum s a ctu ally d isb u rse d by th e
B a n k w ere re la tiv e ly u n im p o rta n t in 1945, c re d its o f $665 m illio n w ere
g r a n te d to finance th e p u rc h a se o f goods a n d services w h ich h a d been
re q u este d a n d a p p ro v e d u n d e r th e len d -le ase m ech an ism , b u t f o r w h ich
p ro c u re m e n t c o n tra c ts h a d n o t been sig n e d on Y J -d a y . A d d itio n a l
re c o n stru c tio n c re d its ($165 m illio n ) w ere e x te n d e d by th e B a n k f o r
th e p u rc h a se o f a g ric u ltu ra l a n d in d u s tria l p ro d u cts. I n all, th e E x ­
p o rt- I m p o r t B a n k a u th o riz e d lo an s in th e la s t h a lf o f 1945 a g g re g a tin g
$1,040 m illio n . H o w ev er, lo an d isb u rse m en ts in th is p e rio d (in c lu d in g
d isb u rse m e n ts on p rev io u s c o m m itm e n ts) w ere o n ly $58.6 m illio n
(in c lu d in g g u a ra n te e d lo a n s ), refle c tin g th e c o n sid e ra b le le n g th o f
tim e w h ich elap se d b etw een th e p la c em e n t o f th e lo a n s a n d th e
d e liv e ry o f goods.
M o st o f th e outflow o f $898 m illio n o f U n ite d S ta te s G o v e rn m en t
lo n g -te rm c re d it in 1945 c on sisted o f th e so-called “3 ( c ) ” lend-lease
c re d its. A g re em en ts sig n e d in th e e a rly p a r t o f 1945 w ith F ra n c e ,
B elg iu m , a n d th e N e th e rla n d s p ro v id e d s u b sta n tia lly t h a t len d -lease.
g o o d s in th e p ip e lin e on V J - d a y a n d re q u ire d f o r p eacetim e needs
could be s h ip p e d o n c re d it te rm s a f te r th e e nd o f h o stilitie s. I n O c to ­
b e r a n a g ree m e n t w as rea c h e d w ith th e U . S. S. R ., a n d a n in fo rm a l
a g ree m e n t w ith th e U n ite d K in g d o m w as confirm ed in th e c o m p reh e n ­
sive w a r-se ttle m e n t a g ree m e n t w ith t h a t c o u n try on D ecem ber 6 , 1945.7
A m o n g th e im p o rta n t a c tio n s ta k e n d u rin g 1945 w as th e p a ssag e o f
th e E x p o r t- I m p o r t B a n k A c t o f 1945, w h ich , in a d d itio n to ra is in g
th e lim it on o u tsta n d in g lo a n s a n d g u a ra n te e s o f th e B a n k fro m $700
m illio n to $3.5 b illio n , rem o v ed th e p ro h ib itio n on lo a n s by th e B a n k
to g o v ern m en ts in d e f a u lt on th e ir o b lig a tio n s to th e U n ite d S ta te s
G o v e rn m en t. T h e p re v io u sly m e n tio n e d a g ree m e n t w ith G re a t
B r ita in also p ro v id e d f o r a lo an to t h a t c o u n try o f $3,750 m illio n ; th e
a g ree m e n t w as ra tifie d in th e fo llo w in g y e ar.
T h e g ra n tin g o f le nd-lease c re d its, su rp lu s p r o p e r ty c re d its, a n d E x ­
p o r t- I m p o r t B a n k loans, to g e th e r w ith th e o p e ra tio n s o f th e U n ite d
N a tio n s R e lie f a n d R e h a b ilita tio n A d m in istra tio n , p ro v id e d f o r a con­
sid e ra b le p a r t o f th e fo o d a n d o th e r com m odities so d e sp e ra te ly needed
a b ro a d , a lth o u g h i t w as c le a r t h a t a d d itio n a l la rg e-sca le g ra n ts a n d
c re d its w o u ld be re q u ire d to re c o n s tru c t fo re ig n econom ies. I t is ex­
p e cted t h a t th e m a jo r p o rtio n o f th e c re d its w ill be p ro v id e d b y th e
I n te r n a tio n a l B a n k f o r R ec o n stru c tio n a n d D ev elop m en t a n d w ill come
fro m U n ite d S ta te s sources. H o w e v e r, o th e r c o u n trie s also c o n tr ib ­
u te d to th e ta s k o f w o rld -w id e re h a b ilita tio n a n d in som e cases to a
g re a te r p ro p o rtio n o f th e ir p ro d u c tiv e c a p a c ity th a n d id th e U n ite d
S ta te s.
T h e g e n e ra l tr e n d o f th e te rm s o f U n ite d S ta te s G o v e rn m e n t lo n g ­
te rm lo an s to fo re ig n e rs d u rin g th e p e rio d 1940-45 w as to w a rd a red u c tio n o f in te re s t ra te s a n d a n ex ten sion o f m a tu ritie s. T h e R eco n ­
stru c tio n F in a n c e C o rp o ra tio n lo a n to th e U n ite d K in g d o m in 1941
w as a t 3 p e rc e n t f o r 15 y e ars. T h ro u g h 1944, E x p o r t- I m p o r t B a n k
lo a n s w ere g e n e ra lly g ra n te d a t 4 p e rc e n t a n d v a rie d in m a tu rity u p to
fro m 10 to 12 'years. I n 1945 len d -lease p ic k -u p c re d its e x te n d e d by
7
S liire r, J o h n .
F o r e ig n C r e d its o f th e U n ite d S ta te s G o v e rn m e n t, S u rv e y o f C u r r e n t
B u s in e s s , U . S. D e p a r tm e n t o f C o m m e rc e , J a n u a r y 1 9 4 7 , p p . 1 9 - 2 3 .
T h e $ 6 5 0 - m ill io n
c r e d it e x te n d e d to G r e a t B r i t a i n o n D e c e m b e r 6, 1 9 4 5 , c o n s t itu te d a n o v e r-a ll s e ttle m e n t
o f v a rio u s tra n s a c tio n s .
O f t h e t o t a l , $ 4 7 2 m i l l i o n w a s t o c o v e r t h e t r a n s f e r o f t h e s o - c a l le d
l e n d - l e a s e i n v e n t o r y i n t h e U n i t e d K in g d o m , a n d t h e b a l a n c e w a s f o r s u r p l u s p r o p e r t y a n d
t h e e x c e s s o f p ip e -lin e le n d -le a s e d e liv e rie s o v e r b o th ( 1 ) r e v e r s e le n d -le a s e a f t e r V J -d a y ,
a n d ( 2 ) n e t c l a i m s d u e t h e U n i t e d K in g d o m b y t h e U n i t e d S t a t e s .

96

*

A

th e B a n k c a rrie d th e sam e te rm s as th o se o f th e len d -lease “ 3 (c) ” a g re e ­
m en ts, w h ich g e n e ra lly c alled f o r 2 % p e rc e n t c re d its due in a b o u t 30
y e ars. O th e r E x p o r t I m p o r t B a n k c re d its f o r re c o n s tru c tio n p u r ­
poses in th e second h a lf o f 1945 w ere m ad e a g a in s t 2i/2-p e rc en t to 3y2p e rc e n t n o tes t h a t fe ll d u e in a b o u t 20 y e ars. S ales o f su rp lu s p ro p e rty
on c re d it w ere m a d e on te rm s s im ila r to th e len d -lease c re d its.
D ir e c t-I n v e s tm e n t-C a p ita l W ith d r a w n

f

«

r

T h e n e t w ith d ra w a l o f A m eric an e n tr e p re n e u ria l c a p ita l fro m f o r ­
eig n c o u n trie s t h a t becam e e v id e n t f o r th e first tim e in 1933 c o n tin u ed
d u r in g th e w a r in a m o u n ts t h a t ra n g e d on b a la n c e fro m a b o u t $20 to
$100 m illio n p e r a n n u m (see ta b le 2 1 ). I n 1945, th e first n e t outflow
o f fu n d s since 1936 w a s reco rded . T h e w ith d ra w a l o f c a p ita l d u r in g
th e w a r seem ed closely re la te d to a c o n sid eratio n fo r th e sa fe ty o f p r o p ­
e rtie s a n d f o r p ro fit p ro sp e c ts in w a r areas. E lsew h ere, la rg e p ro fits
p e rm itte d th e re p a y m e n t o f in te rc o m p a n y a n d o th e r in d eb te d n e ss by
m a n y fo re ig n e n te rp rise s a n d in a few cases stim u la te d th e p u rc h a se by
fo re ig n e rs o f A m eric an -o w n ed p ro p e rtie s a b ro a d . I n som e in stan ces,
th e in a b ility o f fo re ig n affiliates to o b ta in su p p lies fro m u s u a l sources
in th e U n ite d S ta te s le f t th e m w ith u n u tiliz e d cash balances, w h ich
in d u c ed th e re p a y m e n t o f o b lig a tio n s to p a r e n t com panies.
A lth o u g h 400 A m eric a n -c o n tro lle d com p anies o p e ra tin g a b ro a d
w ere so ld to fo re ig n e rs o r liq u id a te d d u r in g th e w a r y e ars, a n even
la r g e r n u m b e r o f new com p anies (see p . 9 8 ), b u t in v o lv in g a sm a lle r
to ta l in v estm e n t, w ere re p o rte d to h av e been e sta b lish e d a b ro a d b y
A m eric an s. D a ta w ere a v a ila b le to th e D e p a rtm e n t o f C om m erce fo r
a b o u t o n e -th ird o f th e sales a n d liq u id a tio n s on w hich th e to ta l r e tu r n
o f A m e ric a n c a p ita l a p p ro x im a te d $290 m illio n .8 A m o n g th e la rg e s t
liq u id a tio n s w ere th ose o f th e I n te r n a tio n a l T e le p h o n e a n d T e le g ra p h
C o rp o ra tio n , w h ic h disp o sed o f its R u m a n ia n te le p h o n e -o p e ra tin g su b ­
s id ia ry in 1941 f o r a b o u t $14 m illio n a n d its te le p h o n e -o p e ra tin g su b ­
s id ia ry in S p a in in 1945 f o r a p p ro x im a te ly $88 m illio n .9
T h e se tra n sa c tio n s, a n d o th e r liq u id a tio n s o f h o ld in g s o f p u b lic
u tilitie s in L a tin A m e ric a, w ere a n evidence o f th e d e sire o f m an y
fo re ig n c o u n trie s to c o n tro l th e ir ow n b asic in d u strie s. S im ila r t r a n s ­
a c tio n s in c lu d e d th e sale o f a s u b s ta n tia l in te re s t in th e stock o f th e
C h in a N a tio n a l A v ia tio n C o rp o ra tio n b y P a n A m e ric a n A irw a y s C o r­
p o ra tio n to th e C hinese G o v e rn m en t, a n d o f th e m a jo rity sh a re s o f
sev e ra l o f th e sam e c o m p an y ’s L a tin A m e ric a n su b sid ia rie s to lo cal
in te re sts.
A d d itio n a l c a p ita l inflow s re su lte d fro m la rg e p ro fits in th e C u b a n
su g a r in d u stry . T h e se p e rm itte d th e re d u c tio n o f bon ded in d eb te d n e ss
(a s w ell as th e p a y m e n t o f in te re s t in a rr e a r s ) h e ld b y A m eric an s a n d
also in d u ce d th e p u rc h a se b y C u b a n s o f p ro p e rtie s in t h a t c o u n try , in ­
c lu d in g sev eral t h a t h a d been ta k e n o v er b y A m e ric a n b a n k s d u rin g
th e e a rly 1930’s to sa tisf y u n p a id b a n k loans.
A s a lre a d y n o te d , fa v o ra b le business c o n d itio n s— p a r tic u la r ly in
p e tro le u m , p a p e r a n d p u lp , a n d a g ric u ltu re — e nab le d su b sid ia rie s a n d
b ra n c h es to re p a y a d v an ces fro m , a n d even to m ak e a dvances to , p a re n t
com panies. T h e la tte r w as a m ean s o f a c c u m u la tin g c a p ita l u n til such
8 T h i s f i g u r e d o e s n o t i n c l u d e a l a r g e b u t u n k n o w n a m o u n t o f c a p i t a l lo s s e s r e s u l t i n g
f r o m w a r d a m a g e , n o r d o e s i t in c l u d e t h e v a l u e o f n a t i o n a l i z e d A m e r i c a n p r o p e r t i e s in
e a s t e r n E u r o p e a n d e l s e w h e r e f o r w h i c h c o m p e n s a t i o n w i l l p r e s u m a b l y b e r e c e iv e d .
9 L a t e i n 1 9 4 6 , t h e s a m e c o m p a n y s o ld i t s m a j o r A r g e n t i n e s u b s i d i a r y , t h e U n i t e d R i v e r
P l a t e T e l e p h o n e C o ., L t d . , t o t h e A r g e n t i n e G o v e r n m e n t f o r a b o u t $ 9 5 m i l l i o n .

97

tim e as c a p ita l e q u ip m en t (su c h as refin ery a n d re la te d e q uip m e n t)
becam e o b ta in a b le in th e U n ite d S ta te s f o r 'e x p o r t, o r o f re tu r n in g to.
th e U n ite d S ta te s a p o rtio n o f th e f o r e ig n in v estm e n t u n til in v e n to rie s
could be re p le n is h e d fro m th is .c o u n try . F ro m 1940 th ro u g h 1944, th e
n e t in flow o f in te rc o m p a n y fu n d s a p p ro x im a te d $170 m illio n , w h ile in
1945 th e n e t m o v em en t tu rn e d o u tw a rd (to th e e x te n t o f $61 m illio n ).
A s sta te d p re v io u sly , a lth o u g h th e n e t m o v em en t o f fu n d s w as
to w a rd th e U n ite d S ta te s, a la rg e n u m b e r o f A m e ric a n com p anies
in c rea sed th e ir in v estm e n ts a b ro a d b y re in v e stin g fo re ig n e a rn in g s,
b y m a k in g new in v estm e n ts, a n d b y a d v a n c in g a d d itio n a l f u n d s to
d ire c t-in v e stm e n t e n te rp rise s. Som e 1,000 new A m e ric a n e n te rp rise s
w ere r e p o rte d fo rm e d a b ro a d d u r in g th e w a r y e ars. T h e c a p ita l o u t­
flow in v o lv ed in less th a n 300 o f th ese f o r w h ic h d a ta w ere a v ailab le
to th e D e p a rtm e n t o f C om m erce a g g re g a te d o n ly $135 m illio n ,101a n d ,
as th ese figures su g g est, in v o lv ed no v e ry la rg e tra n sa c tio n s. A lm o st
a ll o f th e n e w in v estm e n ts w ere m a d e in th e W e s te rn H e m isp h e re,
p rin c ip a lly in C a n a d a a n d , to a lesser e x te n t, in M exico a n d th e
C a rib b ea n a re a. C a p ita l w as d ire c te d m a in ly to w a rd m a n u fa c tu rin g
a n d d is tr ib u tin g fac ilitie s. I m p o r ta n t in v estm e n ts w ere also m ad e
in th e p a p e r a n d p u lp in d u stry .
D o lla r -B o n d

A m o r tiz a tio n s

^

C o n tin u e

R e tire m e n ts o f fo re ig n d o lla r lo an s in th e 1940-45 p e rio d w ere $279
m illio n in excess o f new issues, p lac ed p riv a te ly a n d p u b lic ly . H o w ­
ever, to ta l U n ite d S ta te s h o ld in g s o f fo re ig n d o lla r b o n d s p ro b a b ly
in c rea se d d u r in g th ese y e ars, a su b s ta n tia l b u t u n k n o w n p a r t o f th e
n e t p u rc h a se s o f o u ts ta n d in g fo re ig n s e c u ritie s 11 c o n sistin g o f p u r ­
chases o f sec u ritie s, chiefly C a n a d ia n , p a y a b le solely o r o p tio n a lly in
U n ite d S ta te s d o lla rs.
N ew issues exceeded $100 m illio n in 1943 f o r th e first tim e since 1931,
a lth o u g h a ll b u t one o f th e p u b lic ly offered a n d m o st o f th e p riv a te ly
p la c ed lo a n s w ere f o r r e fu n d in g p u rp o se s (see ta b le 2 1 ). M an y o f
th e re fu n d in g s in v o lv ed th e re d e m p tio n o f o u ts ta n d in g issues p r io r
to m a tu rity , as fo re ig n , chiefly C a n a d ia n , d e b to rs to o k a d v a n ta g e o f
fa v o ra b le m o n e y -m a rk e t c o n d itio n s to red u c e in te re s t c h a rg e s a n d
e x te n d m a tu ritie s. (S ee ta b le 27 a n d a p p e n d ix C , ta b le X X I fo r
e stim a te s o f A m e ric a n h o ld in g s o f fo re ig n d o lla r b on ds.)
O th e r P o r tf o lio In v e s tm e n ts In c re a s e
A m e ric a n in v e sto rs p u rc h a se d , on b a la n c e, $611 m illio n o f fo re ig n
se c u ritie s (e x c lu d in g new issues a n d a m o rtiz a tio n s) in 1940-45, a n d
A m e ric a n b a n k in g in s titu tio n s m ad e n e t ad v an ces o f m ed iu m -te rm
c re d its to ta lin g a b o u t $160 m illio n .
T ra n sa c tio n s in o u ts ta n d in g fo r e ig n se c u ritie s, as a lr e a d y in d ic a te d ,
u n d o u b te d ly in c lu d e la r g e p u rc h a se s a n d sales o f d o lla r b on ds. D u r ­
in g th e in te rw a r p e rio d , especially, th e u su al n e t inflow o f fu n d s in
th is a cc ou n t re p re se n te d re p u rc h a se s o f fo re ig n d o lla r b o n d s b y d e b to r
c o u n tries, a n d n e t p u rc h a se s b y re sid e n ts o f o th e r c o u n trie s fro m
U n ite d S ta te s ow ners. F ro m 1941 to 1945, h ow ever, A m e ric a n s m ad e
in c re a sin g ly la rg e n e t p u rc h a se s o f fo re ig n , chiefly C a n a d ia n , issues.
A s a m a tte r o f fa c t, in th e w hole 6 -ye ar p e rio d n e t A m e ric a n p u r10 T h e a c t u a l t o t a l w a s n o d o u b t m u c h l a r g e r t h a n t h i s f i g u r e .
H o w e v e r , s in c e t h e d a t a
o b ta in e d by th e D e p a r tm e n t w e re p r im a r ily fr o m p u b lis h e d s o u rc e s a n d s in c e t h e r e w e re
n o re q u ir e m e n ts to r e p o r t s u c h tr a n s a c tio n s to it, th e in f o r m a tio n r e g a r d in g b o th n e w
i n v e s t m e n t s a n d l i q u i d a t i o n s w a s s e r i o u s l y d e f i c i e n t.
11 S e e t a b l e 2 1 a n d a p p e n d i x B .

98

x

chases o f fo re ig n se c u ritie s in C a n a d a w ere e stim a ted a t $695 m illio n ,
h a v in g been offset b y n e t sales to o th e r a re a s to red u ce th e to ta l n e t
m o vem ent to $611 m illio n .
S lig h tly h ig h e r in te re s t r a te s in C a n a d a , c ou p led w ith th e sp ec u la­
tiv e a ttr a c tio n (re a liz e d in 1946) o f a possib le r e tu r n to p a r o f th e
C a n a d ia n d o lla r, stim u la te d th e la rg e -sca le p u rc h a se s o f C a n a d ia n
issues fro m 1942 on.12 I n s titu tio n a l in v e sto rs, p a r tic u la r ly in su ran c e
com p anies, seem to h a v e b een th e p r in c ip a l p u rc h a s e rs in volved.
M o v e m e n ts o f F o r e ig n L o n g - T e r m C a p ita l

'

1

I n th e 6 y e a rs fi-om 1940 th ro u g h 1945, th e r e w as a n e t liq u id a tio n
o f $513 m illio n o f fo r e ig n lo n g -te rm in v estm e n ts in th e U n ite d S ta tes.
T h is fig u re w o u ld no d o u b t h a v e been m a n y tim e s la r g e r i f len d -lease
a id h a d n o t been g ra n te d to o u r A llie s a n d if th e y h a d h a d to re s o rt to
c o n v e n tio n a l m eth o d s o f fin a n c ing th e ir w a r effort. T h e la rg e s t w ith ­
d ra w a ls o f fo re ig n c a p ita l fro m th e U n ite d S ta te s o c cu rre d in 1940
a n d 1941— p r io r to th e la rg e-sca le o p e ra tio n o f lend-lease assistance—•
w h e n G re a t B r ita in liq u id a te d e xtensive A m e ric a n h o ld in g s to p ro v id e
d o lla r e xch an ge.13 S u b s ta n tia l re d u c tio n s also re s u lte d fro m th e v e st­
in g (seizu re o f title ) b y th e A lie n P r o p e r ty C u sto d ia n , m o stly in 1942
a n d 1943, o f $206 m illio n o f p ro p e rty in th e U n ite d S ta te s t h a t w as
u n d e r enem y c o n tro l.14
F o r e ig n

%

D ir e c t

In v estm en ts

R educed

R e la tiv e ly li ttle in fo rm a tio n is a v a ila b le on th e m o vem ent o f fo re ig n
d ire c t-in v e stm e n t c a p ita l in th e U n ite d S ta te s, e x ce p t f o r a few la rg e
tra n sa c tio n s w h ic h received a tte n tio n in th e press. T h e se in c lu d e d
tw o B r itis h liq u id a tio n s in 1941, w h ic h y ield ed a b o u t $80 m illio n in
d o lla r exchange, a n d th e sale in 1944 b y C a n a d ia n in te re sts o f th e
P u e rto R ico R a ilw a y L ig h t & P o w e r Co., fo r a b o u t $11.5 m illio n .
T h e A lie n P r o p e r ty C u sto d ia n vested enem y-ow ned A m e ric a n e n te r ­
p ris e s d u r in g th e w a r in w h ich th e enem y in te re s t w a s v a lu e d a t som e
$155 m illio n . S in ce th ese tra n sa c tio n s in v o lv ed no p a y m e n t to th e
ow ners, th e y w ere offset b y a re c e ip ts e n try in th e G o v e rn m e n t u n i­
la te r a l accoun t. A b o u t $93 m illio n o f th e in te re s t in th ese e n te rp ris e s
w a s G e rm a n , a n o th e r $52 m illio n w as Ja p a n e se , a n d th e re m a in d e r
w as p r im a r ily I ta lia n . S om e o f th e m ore im p o rta n t e n te rp ris e s w h ich
w ere v ested w ere A m e ric a n P o ta s h & C hem ical C o rp ., G e n era l A n ilin e
& F ilm C o rp., H u g o S tin n e s C o rp ., A m e ric a n B osch C o rp ., a n d th e
U n ite d S ta te s b ran ch e s o f th e Y o k o h am a S p ecie B a n k , L td . M o st
o f th e d ire c t in v e stm e n ts w ere v ested in 1942 a n d 1943. A n u m b e r
o f th e m , p a r tic u la r ly b a n k s a n d in su ra n c e com p anies, w e re liq u id a te d ;
a b o u t tw o dozen w ere offered f o r p u b lic sale, a n d th o se t h a t c ou ld co n ­
tr ib u te to th e w a r effo rt w ere re ta in e d in a ctiv e o p e ra tio n u n d e r G ov­
e rn m e n t co n tro l. G e rm a n a n d Ja p a n e s e e n te rp ris e s w e re ex p ected to
be u sed to m ee t a p o rtio n o f th e re p a ra tio n s cla im s a g a in s t G e rm a n y
12 S u b s t a n t i a l a m o u n t s o f t h e s e p u r c h a s e s w e r e n o t r e f l e c t e d i n t h e r e g u l a r c a p i t a l m o v e ­
m e n t s ta t is t ic s p u b lis h e d m o n th ly in th e B u lle tin o f th e T r e a s u r y D e p a r tm e n t a n d th e
F e d e r a l R e s e rv e B u lle tin . S ee a p p e n d ix B , p . 1 89.
13 T h e p r o c e e d s o f t h i s l i q u i d a t i o n a n d o f t h e l i q u i d a t i o n o f o t h e r a s s e t s w e r e p a r t l y
lo a n e d , i n e f f e c t, t o A m e r i c a n p r o d u c e r s o f w a r m a t e r i a l , p a r t i c u l a r l y m u n i t i o n s , i n a n
e ffo rt to s p e e d t h e m o v e m e n t o f p r o d u c ts to t h e U n ite d K in g d o m . U ltim a te ly , A m e ric a n
p r o d u c e r s re p a id m o s t o f th e s e a d v a n c e s b y fillin g t h e B r i tis h o rd e rs .
14 E x c l u d i n g t h e v a l u e o f a s s e t s t h a t a r e n o t c l a s s i f ie d a s i n t e r n a t i o n a l i n v e s t m e n t s , s u c h
a s p e r s o n a l p r o p e r t y a n d r o y a l t y in c o m e .

99

a n d J a p a n ,15 u n lik e th e e xp erien ce a f te r W o rld W a r I , w h e n u p to
80 p e rc e n t o f th e v a lu e o f v e sted enem y p ro p e rtie s w as p a id to th e ir
fo rm e r ow ners.
T h e decline in th e v a lu e o f fo re ig n d ire c t in v estm e n ts in th e U n ite d
S ta te s is believed to h a v e been la rg e ly offset b y a n in crea se o f a b o u t
$200 m illio n , re s u ltin g fro m th e re te n tio n o f e a rn in g s by su ch com ­
p a n ie s in lieu o f p a y m e n t o f d iv id e n d s.16
P o r tfo lio

In v estm en ts

A ls o

L iq u id a te d

F o re ig n e rs m ad e n e t p u rc h a se s o f U n ite d S ta te s se cu ritie s in each
y e a r fro m 1921 to 1939 ex ce pt 1927 a n d 1932. T h e re w as a m assive in ­
flow fro m 1934 to 1939 as E u ro p e a n fu n d s so u g h t sa fe ty in U n ite d
S ta te s sec u ritie s. I t h a s been p o in te d o u t 17 th a t th e n e t inflow s w ere
sm all b y c o m p a riso n w ith th e g ro ss tr a n s a c tio n s in v o lv e d ; f o r in ­
stan ce, th e n e t inflow o f $615 m illio n in 1936 re su lte d fro m gi-oss tr a n s ­
a c tio n s o f a b o u t $4,750 m illio n . T h e in w a rd m ovem ent w as sh a rp ly
rev erse d in 1939 as th e B ritis h liq u id a tio n b e ga n a n d c o n tin u e d on a
la rg e scale u n til la te in 1941.
I n th e y e a rs 1942 th ro u g h 1944, th e r e w ere n e t fo r e ig n p u rc h a ses
o f $285 m illio n o f U n ite d S ta te s secu rities. F ro m th e d a ta a v a il­
able, i t a p p e a rs t h a t a v e ry la rg e p a r t o f th e to ta l l’e p rese n te d p u r ­
chases o f U n ite d S ta te s G o v e rn m e n t lo n g -te rm issues f o r official f o r ­
e ig n account. T h e volum e o f tr a d in g f o r p riv a te fo re ig n accoun t
w as c o m p a ra tiv e ly sm all, as w as to be ex p ected w hen m o st fo re ig n ow ned d o lla r fu n d s w ere u n d e r g o v e rn m e n ta l c on trols. A c o n sid e r­
ab le p a r t o f th e C a n a d ia n liq u id a tio n in 1945 re s u lte d fro m sales o f
U n ite d S ta te s b o n d s p u rc h a se d in th e p rev io u s y e ar. B ritis h sales
o f U n ite d S ta te s se c u ritie s in 1945 a m o u n te d to $43 m illio n a n d w ere
v e ry ste a d y th ro u g h o u t th e y e ar. A m o d e ra te volum e o f p u rc h a ses
f o r B ritis h a cc ou n t w as rec o rd e d th ro u g h o u t th e w a r y e ars— p a r ­
tic u la rly in 1940 a n d 1941—b u t, in view o f th e re stric tio n s b y th e
B r itis h G o v e rn m en t on such p u rc h a se s, i t h a s been a ssum ed t h a t th e
p u rc h a se s w ere a c tu a lly f o r th e acc o u n ts o f c o n tin e n ta l E u ro p e a n s
a n d o th e rs th ro u g h B r itis h se c u rity d ealers. T h e y hav e, th e re fo re ,
been e lim in a te d fro m th e d a ta on B ritis h tr a n s a c tio n s a n d a d d e d to
th e tr a n s a c tio n s o f o th e r c o u n tries.
T h e fig u res f o r tr a n s a c tio n s in o u ts ta n d in g dom estic se cu ritie s in ­
clude th e p u rc h a se a n d su bsequent resale o f U n ite d S ta te s G o v e rn ­
m e n t issues w ith a m a tu r ity o f m o re th a n 1 y e a r b y th e m o n e ta ry a u ­
th o ritie s o f fo r e ig n c o u n tries. F re q u e n tly , if n o t u su a lly , th ese se­
c u ritie s w ere w ith in 1 y e a r o f m a tu rity w hen p u rc h a sed , a n d m ig h t
m o re lo g ic ally h a v e been in c lu d e d in th e sh o rt- te rm c a p ita l account.
I n each case, th e fo r e ig n c o u n trie s in v ested fu n d s in in te re st-e a rn in g
se c u ritie s w h ich w o u ld o th erw ise h av e been h e ld id le in b a n k balances.
O r d e r ly L iq u id a tio n o f B r itis h A s s e ts

A s in d ic a te d , th e liq u id a tio n o f B ritis h assets in th e U n ite d S ta te s
d u r in g th e e a rly p a r t o f th e w a r w as th e m ost im p o rta n t sin g le fa c to r
a ffe ctin g th e m ovem ent o f fo re ig n lo n g -te rm c a p ita l in th e U n ite d
13 U n d e r t h e t e r m s o f t h e P a r i s A g r e e m e n t o n R e p a r a t i o n s f r o m G e r m a n y , t h e U n i t e d
S t a t e s is e n ti tle d to a ll G e r m a n e x te r n a l a s s e ts w it h in th e ju r i s d ic tio n o f th e U n ite d S ta te s ,
e s tim a te d a t s o m e $ 2 0 0 m illio n . S ee D e p a r tm e n t o f S ta te , T h e D is tr ib u tio n o f R e p a r a tio n s
f r o m G e r m a n y , P u b l i c a t i o n N o . 2 5 8 4 , E u r o p e a n S e r i e s 1 2.
16 S e e r e f e r e n c e t o in c o m e p a y m e n t s to f o r e i g n e r s o n d i r e c t - i n v e s t m e n t s , p . 8 0 . a n d t o n o t e
i n a p p e n d i x B , p . 1 8 1 , w h i c h d is c u s s e s t h e t r e a t m e n t o f r e i n v e s t e d e a r n i n g s i n t h e b a l a n c e o f
p a y m e n ts .
17 L a r y , H a l B ., a n d a s s o c i a t e s , U . S . D e p a r t m e n t o f C o m m e r c e . T h e U n i t e d S t a t e s in
t h e W o rld E c o n o m y , W a s h in g to n , 1 9 4 3 , p . 1 0 7 .

100

*.

<

*

S ta te s. T h e B ritis h ex p e rien ce d u rin g W o rld W a r I in o b ta in in g
d o lla rs f o r se c u ritie s w a s u n s a tisfa c to ry . I n d iv id u a l in v e sto rs h a d
b een p e rm itte d to m ake la rg e-sca le liq u id a tio n s o f d o lla r sec u ritie s,
a n d c on seq u en tly liq u id a te d a t low v alues. D u r in g th e re c e n t w a r, th e
B ritis h G o v e rn m en t p la n n e d c a re fu lly . A n a tte m p t w as m ad e to
liq u id a te a t fa v o ra b le p ric es a n d a t th e sam e tim e p re se rv e th e flow
o f incom e fro m oversea in v estm e n ts as lo n g as possible. I n th e la tt e r
c onnection , th e B ritis h d isp o sed o f th e b u lk o f th e ir h o ld in g s o f g o ld
a n d sh o rt- te rm b alan ces (th e se p ro d u ce d p r a c tic a lly no incom e) a n d
th e n p roceeded to liq u id a te th e ir h o ld in g s o f re a d ily m a rk e ta b le se­
c u ritie s, in te n d in g to re ta in th e m o st p ro fita b le f o r th e la st.
A s p a r t o f th is p ro g ra m , th e B ritis h G o v e rn m en t o b ta in e d its n a tio n a ls’ h o ld in g s o f 484 issues o f A m e ric a n stocks a n d b o n d s by issu in g five
v e stin g o rd e rs betw een F e b ru a r y 1940 a n d A p r il 1941. T h e se re p re ­
se n ted p o rtfo lio in v e stm e n ts a n d , as such, d id n o t involv e th e c o n tro l
o f th e issu in g com panies. U n d e rw ritin g sy n d ic a te s a c tin g f o r th e
B ritis h T re a s u ry u n d e rto o k to sell th e se cu ritie s in N ew Y o r k b y offer­
in g blocks o f liste d issues off th e m a rk e t, a f te r th e close o f re g u la r
tra d in g h o u rs on th e exchanges. L a rg e blocks o f se c u ritie s w ere sold
in th is m a n n e r a t p re v a ilin g p ric e s w ith o u t d ep ressiv e effects. Som e
o f th e se cu ritie s— blocks sm all en o u g h to be so ld w ith o u t m a te ria lly
affe ctin g p ric es— w ere so ld on th e floor o f th e exchanges. T h is p rocess
fa c ilita te d th e B ritis h sale o f a b o u t $580 m illio n o f A m eric an se c u ritie s
fro m th e b e g in n in g o f th e w a r u n til th e end o f J u ly 1941.
A s its d o lla r assets d w in d le d , th e B ritis h G o v e rn m en t fo u n d i t neces­
sa ry to b eg in d isp o sin g o f som e o f its choice fo r e ig n in v estm e n ts,
n am ely , A m eric an com p anies c o n tro lle d in E n g la n d . I n A p r il 1941,
th e A m eric an V iscose C o rp ., th e U n ite d S ta te s su b sid ia ry o f C o u rta u ld s, L td ., w as so ld in th is c o u n try a t a su b s ta n tia l loss, fo llo w in g
n e g o tia tio n s th a t la ste d o v er a m o n th . T h e B ritis h received a b o u t
$55 m illio n f o r a co m p an y w hose book v a lu e exceeded $100 m illio n .
T o a v o id a sim ila r liq u id a tin g loss, th e B ro w n & W illia m so n T obacco
Co., a n A m e ric a n su b sid ia ry o f th e B ritis h - A m e ric a n T obacco Co.,
L td ., b o rro w e d fu n d s fro m th e R e c o n stru c tio n F in a n c e C o rp o ra tio n
a n d u sed m o st o f th e proceeds to p a y off in d eb te d n e ss to its p a r e n t a n d
also to p u rc h a se its ow n p re fe rre d sh ares a n d se c u ritie s o f affiliated
co m p an ies ow ned by its p a re n t. I n th is fash io n , th e B ritis h -A m e ri­
can T obacco Co., L td ., rea liz ed $25 m illio n fro m its A m eric an su b ­
s id ia ry w ith o u t re lin q u ish in g c o n tro l over th e la tte r.
A lth o u g h th e B ritis h G o v e rn m en t w as re liev ed o f th e f u r th e r neces­
sity f o r h u rrie d liq u id a tio n o f A m e ric a n assets by th e p a ssa ge o f th e
L e n d -L e ase A c t on M a rc h 11,1941, th e re w as a p re ssin g n eed f o r fu n d s
to m eet c o m m itm en ts m ad e p r io r to th a t d a te a n d to p a y f o r p u rch a se s
o f su p p lies in o th e r c ou n tries. C o nsequ ently, i t so ld several p la n ts in
th e U n ite d S ta te s f o r $46 m illio n in A p r il, a n d th e d e m a n d f o r d o lla rs
w as f u r th e r eased b y a lo a n o f $425 m illio n g ra n te d by th e R ec o n stru c ­
tio n F in a n c e C o rp o ra tio n in J u ly 1941. T h e lo an w as secu red b y
a b o u t $700 m illio n o f B ritish -o w n e d A m e ric a n sec u ritie s. T h e se
re p re se n te d a p o rtio n o f th e v ested se cu ritie s re fe rre d to e a rlie r, a n d
o th e r B ritish -o w n e d A m eric an assets, in c lu d in g stocks o f B ritis h c o n tro lle d com p anies in th e U n ite d S ta te s a n d th e e a rn in g s o f U n ite d
S ta te s b ra n c h es o f B ritis h in su ran ce com panies.
B y th e e nd o f 1941, th e B ritis h p ro b lem o f fin a n c in g th e p u rc h a se o f
fo re ig n m a te ria l a n d su p p lie s w as la rg e ly solved. T h e s itu a tio n w as
101

in s h a rp c o n tr a s t w ith t h a t in w h ich th e B ritis h fo u n d th em selves in
1940 a n d e a rlie r in 1941, w h en i t h a d b een necessary to liq u id a te assets
to p a y f o r p u rch a se s, to m ake ad v a n c e p a y m e n ts on o rd e rs f o r f u tu re
d eliv ery , a n d to p ro v id e c a p ita l assistan ce to A m eric an p ro d u ce rs. I n
J u n e 1941, th e a m o u n t o f o u tsta n d in g ad v an ce p a y m e n ts a n d c a p ita l
assistan c e to ta le d $850 m illio n .
O u tlo o k

F o r th e n e x t few y e a rs, a t le ast, th e p ro b lem fa c in g th e re s t o f th e
w o rld w ill be how to finance p u rc h a se s fro m th e U n ite d S ta te s in
la rg e r a m o u n ts th a n w e w ill be able a n d /o r w illin g to sp en d a b ro a d .
T h e a n sw e r c an lie only in g if ts o r m o v em en ts o f c a p ita l a n d g o ld ; a
su b s ta n tia l outflow o f lo n g -te rm c a p ita l fro m th e U n ite d S ta te s on an
econ om ically so un d b a sis could be one o f th e p rin c ip a l m ean s o f b r id g ­
in g a g a p b etw een e x p o rts a n d im p o rts. Som e o f th e p ro b lem s in v o lv ed
in in c re a s in g th e outflow o f lo n g -te rm c a p ita l w ill be o u tlin e d b riefly
in th e fo llo w in g p a ra g ra p h s .
I n th e first p lace, i t is e x trem e ly u n lik e ly t h a t th e re w ill be an y
s u b s ta n tia l u n d e rw ritin g o f fo re ig n se cu ritie s o f th e c h a ra c te r w h ich
p re v a ile d in th e 1920’s. I t is p ro b a b le t h a t th e A m e ric a n in v estm e n t
m a r k e t w o u ld n o t be re c e p tiv e to a n y la rg e a m o u n ts o f new fo re ig n
sec u ritie s, ex ce pt th o se o f th e W o rld B a n k , a n d i t is q u ite lik e ly t h a t
a m o rtiz a tio n s o f o u tsta n d in g issues w ill exceed new offerin gs in th e
foreseeable f u tu r e — exclusive a g a in o f W o r ld B a n k issues.
Som e evidence o f a m o d e ra te outflow o f d ire c t-in v e stm e n t c a p ita l
h a s been a p p a re n t in th e p o stw a r p e rio d , b u t so f a r ( J u n e 1947) n o t
on a scale a t a ll c o m m e n su rate w ith fo re ig n -c a p ita l req u irem e n ts.
M oreo v er, a su b s ta n tia l p o rtio n o f d ire c t-in v e stm e n t c a p ita l is tie d to
e x p o rts o f m a c h in ery a n d e q u ip m e n t w h ic h w o u ld lik e ly n o t h av e
been sh ip p e d h a d th e in v e stm e n t n o t been m ade. T h u s, o n ly th e local
e x p e n d itu re s in v o lv ed w o u ld a d d to th e g e n e ra l su p p ly o f d o lla rs
a v a ila b le fo r u n re s tr ic te d use in th e U n ite d S ta te s.
E x c e p t fo r M id d le E a s t o il p ro je c ts, m o st o f th e d ire c t-in v e stm e n t
c a p ita l w ill p ro b a b ly be p lac ed in C a n a d a a n d L a tin A m eric a. T h e
p a p e r a n d p u lp in d u s try , p e tro le u m , an d , p o ssib ly, iro n -o re m in in g in
C a n a d a , p e tro le u m a n d iro n -o re d e ve lo p m e nt in S o u th A m eric a, a n d
in d u s tria l d e ve lo p m e nt in M exico w ould seem to be th e m o st likely
o u tlets.
A tr e n d to w a r d m o re p a r tic ip a tio n by in d ig e n o u s c a p ita l in d ire ctin v estm e n t e n te rp ris e w as stre n g th e n e d d u r in g a n d a f te r th e w a r.
L a te in 1946, f o r in sta n c e, a rra n g e m e n ts f o r jo in t p a r tic ip a tio n w ere
fo rm a liz e d in th e N e th e rla n d s b y th e o rg a n iz a tio n o f th e I n s titu te fo r
N e th e rla n d s-A m e ric a n I n d u s tr ia l C o o p e ratio n , w h ich w as fo rm e d to
en co u rag e U n ite d S ta te s p a rtic ip a tio n in D u tc h in d u s try on a m in o r­
ity basis. E a r lie r in th e y e a r, th e B. F . G o o d ric h Co. h a d p a rtic ip a te d
to th e e x te n t o f a b o u t 23 p e rc e n t in th e fo rm a tio n o f a N e th e rla n d s
c o m p an y to m a n u fa c tu re tire s.
A th ir d so urce o f fu n d s w o u ld be th e liq u id a tio n o f fo re ig n lo n g ­
te rm in v e stm e n ts in th is c o u n try , e stim a te d a t $9 b illio n a t th e en d
o f 1945. A lth o u g h h a lf o f th is to ta l w as in re a d ily m a rk e ta b le se cu ri­
ties, o n ly F ra n c e a n d th e N e th e rla n d s h a v e serio u sly discu ssed an y
o rg a n iz e d liq u id a tio n o f such h o ld in g s.
I f th e g a p is to be filled d u r in g th e n e x t 3 o r 4 y e a rs a n d e x p o rts
m a in ta in e d a t, say, a level o f $10 b illio n o r m ore ( a t e a rly 1947 p r ic e s ) ,
1 0 2

i t w ill p ro b a b ly h a v e to be th ro u g h th e d ire c t a id o f th e U n ite d S ta te s
G o v e rn m e n t o r th ro u g h lo a n s b y th e W o rld B a n k , w h ic h w o u ld h a v e
th e p a r tia l b a c k in g o f th e U n ite d S ta te s G o v e rn m en t. I f t h a t i n s titu ­
tio n is ab le to m a rk e t s u b s ta n tia l q u a n titie s o f se cu ritie s in th e A m e ri­
can m a rk e t, i t c ou ld conceivab ly lo a n a b illio n d o lla rs o r m o re a y e ar
f o r th e n e x t sev eral y e ars. P re s e n tly a v ailab le G o v e rn m en t lo a n fu n d s,
how ever, w ill p ro b a b ly be e x h a u ste d b y m id-1948, i f d ra w in g s c o n tinu e
a t th e r a te o f th e first few m o n th s o f 1947.
S h o r t-T e r m

C a p ita l a n d

G o l d 18

F ro m 1934 th ro u g h 1941, th e re w as a c o n s ta n t g o ld flow to th e
U n ite d S ta te s o f m assiv e p ro p o rtio n s. F o r th e first 4 y e a rs o f th e
p e rio d th e re w as a n inflow o f $5.3 b illio n , w h ic h s ta rte d w ith th e d e ­
v a lu a tio n o f th e d o lla r a t th e en d o f J a n u a r y 1934 a n d th e r e a f te r w as
caused by, a n d serv ed to finance, a c a p ita l inflow o f s im ila r p ro p o rtio n s
(see c h a r t 1, p a g e 2 ) . A s is w ell k n o w n , th is flow to th e U n ite d
S ta te s re p re s e n te d a flig h t fro m u n s ta b le c o n d itio n s a b ro a d r a th e r
th a n th e re s u lt o f a b a la n c e-o f-p a y m e n ts d ise q u ilib riu m as such.
B e g in n in g w ith 1938, h ow ever, U n ite d S ta te s e x p o rt su rp lu se s w ere
a n in c re a sin g ly im p o rta n t fa c to r in th e g o ld inflow , a lth o u g h c a p ita l
flig h ts re m a in e d th e d o m in a n t fa c to r fro m th e la tte r h a lf o f 1938 u n til
la te in 1939. F ro m 1940 u n til len d -le ase becam e effective in 1941, th e
g o ld w as u sed p r im a r ily fo r s e ttlin g th e U n ite d S ta te s e x p o rt su rp lu s,
a lth o u g h th e re w as co n sid e ra b le a d d itio n a l c a p ita l inflow . W ith th e
U nited S ta te s e n try in to th e w a r, a la rg e a n d g ro w in g cash d eficit in
o u r b a la n c e o f p a y m e n ts led to a com b ined outflow o f g o ld a n d inflow
o f s h o rt-te rm c a p ita l o f a b o u t $6.2 b illio n in th e 4 y e a rs e n d e d in 1945.
T h e n e t in crea se in fo r e ig n d o lla r b alan c es p lu s g o ld p u rc h a se d fro m
th e U n ite d S ta te s in th e e n tire 1940-45 p e rio d a m o u n te d to $2.5 b illio n
(see ta b le 23).
T h e m o st sig n ific a n t a sp e ct o f th e m ovem ent o f g o ld a n d d o lla r
fu n d s, how ever, w as n o t so m u ch th e a g g re g a te in crea se o f fo re ig n
g o ld a n d d o lla r h o ld in g s in v o lv ed as th e re d is trib u tio n o f th ese re ­
serves th a t to o k p lac e a m o n g fo re ig n c ou n tries.
F o r e ig n

R e s e r v e s L iq u id a te d

E a r ly in

W ar

T h e tre m e n d o u s in flu x o f g o ld to th e U n ite d S ta te s re ac h ed a p eak
o f $4,095 m illio n in 1940 (ta b le 23) a n d c o n tin u ed on a la rg e scale
u n til M ay 1941. M o st o f tire inflow w as fro m th e s te rlin g a re a , con­
tin e n ta l E u ro p e , a n d C a n a d a , a n d se rv ed to finance th e p u rc h a se of
th e h u g e a m o u n ts o f goods re q u ire d fro m th e U n ite d S ta te s to c a rry
on th e w a r a g a in s t th e A xis.
N o t a ll o f th e d o lla r proceed s o f g o ld sales in 1940 in te n d e d f o r com ­
m o d ity p u rc h a se s could be u tiliz e d a t once f o r e x p o rts, because goods
w e re n o t a v a ila b le . A s a re s u lt, fo r e ig n d o lla r ba la nc es in c rea sed by
$1,353 m illio n in 1940. A la rg e p a r t o f th is in crease in fo r e ig n claim s
o n th e U n ite d S ta te s to o k th e fo rm o f ad v an ce p a y m e n ts by G re a t
B r ita in to U n ite d S ta te s p ro d u c e rs to stim u la te p ro d u c tio n o f w a r
goods. B r itis h d o lla r fu n d s w ere d e riv e d n o t o n ly fro m th e sa le o f
g o ld b u t also fro m a d ra s tic liq u id a tio n o f lo n g -te rm in v estm en ts in
th e U n ite d S ta te s (see p. 100).
18

P r e p a r e d by S a m u e l P iz e r.

T h e flig h t o f c a p ita l fro m n e u tr a l E u ro p e c o n tin u e d on a la rg e scale
in 1940. G o ld reserves o f th o se c o u n trie s w ere m u ch red u ce d b y th e
en d o f th e y e a r, b u t in th e re m a in d e r o f th e w a r p e rio d th e E u r o p e a n
n e u tr a ls w ere able to p u rc h a se a b o u t a b illio n d o lla rs in g o ld fro m th e
U n ite d S ta te s. A la rg e p a r t o f th e p r iv a te d o lla r b alan c es a c c u m u la te d
e a rlie r e n te re d official acco u n ts a n d w ere c o n v e rted to g o ld a n d , in
a d d itio n , su b s ta n tia l re c e ip ts acc ru ed d u r in g th e w a r. T h e o p e ra ­
tio n s o f F o re ig n F u n d s C o n tro l, w h ich p a r tia lly fro z e th e b alan c es o f
E u ro p e a n n e u tr a ls a fte r th e m id d le o f 1941, te n d e d to m in im ize w ith ­
d ra w a ls fro m acco u n ts o f th ese c o u n trie s (see a p p e n d ix C ,p . 2 23 ).
T h e d eclin e in fo re ig n g o ld a n d d o lla r reserves c o n tin u e d th ro u g h
1941, d e sp ite th e r e lie f a fforde d B r ita in b y le n d -le ase a n d th e R ec o n ­
s tru c tio n F in a n c e C o rp o ra tio n lo an . C o n tin u e d p a y m en ts on p relen d -le ase p ro c u re m e n t c o n tra c ts c o st th e s te rlin g a re a $720 m illio n
(n e t) in d o lla rs a n d g o ld d u rin g th e y e a r, a n d C a n a d a ’s d o lla r deficit
also c o n tin u ed la rg e .

Tabl e 23.—

C h a n g e s in fo r e ig n g o ld h o ld in g s a n d s h o r t-te r m

tr a n s a c tio n s

w ith

th e

U n ite d

S ta te s ,

6y

s p e c if ie d

d o l la r c la im s th r o u g h
a reas,

1 9 4 0 -4 5

1

[In m illio n s of d o llars; n e t in cre a se ( + ) o r d ec rea se ( —)]
A re a a n d ty p e o f a sse t

1940-45

A ll a re a s, to t a l --------------------

+ 2 , 473

- 2 ,7 4 2

-9 7 1

G o l d , . . . ...................... ........
S h o rt-te rm c la im s ____ . . .

- 2 ,0 4 7
+ 4 , 520

- 4 ,0 9 5
+ 1 ,3 5 3

-5 7 1
-4 0 0

S te rlin g a re a , t o t a l ____ _____

1940

1941

1942

1943

1944

1945

+ 297

+ 1 ,9 5 8

+ 1 ,8 1 4

+ 2 ,1 1 7

+ 1 15
+ 1 82

+ 736
+ 1 , 222

+ 1 ,3 0 5
+ 5 09

+ 4 63
+ 1 ,6 5 4

- 1 ,5 5 1

- 1 ,5 1 4

-7 2 0

-1 8 9

+ 4 30

+ 5 67

-1 2 5

G o ld ....... ........... .................
S h o rt -te rm c la im s ..... ..........

- 1 ,8 8 9
+ 3 38

- 2 ,0 5 3
+ 539

-5 5 1
-1 6 9

-1 2
-1 7 7

+50
+ 3 80

+ 672
-1 0 5

+5
-1 3 0

C a n a d a , to t a l .............. ..............

+ 3 14

-3 5 1

-2 7 2

-4 7

+ 3 00

+ 1 25

+ 5 59

G o ld ____________ _____
S h o rt -te rm c la im s _ _ _ _ _ _ _ _

-9 3 7
+ 1 ,2 5 1

-4 9 7
+ 146

-2 0 5
-6 7

-1 8 1
+ 134

-7
+ 3 07

-5
+ 130

-4 2
+ 601

A m e ric a n R e p u b lic s, to ta l

...

+ 2 , 410

-1 6

+12

+ 3 60

+ 7 37

+ 684

+ 633

G o ld ................... .................
S h o rt-te rm c la im s ....... ........

+ 1 ,4 6 4
+ 946

-1 2 2
+ 106

+19
-7

+ 1 09
+ 251

+ 5 79
+ 1 58

+ 406
+ 2 78

+ 473
+ 160

O th e r, t o t a l . ........................ ......

+ 1 ,3 0 0

-8 6 1

+9

+ 1 73

+491

+ 438

+ 1 ,0 5 0

G o ld ................. ...................
S h o rt-te rm c laim s 2.............

-6 8 5
+ 1 , 985

- 1 ,4 2 3
+ 562

+ 166
-1 5 7

+ 1 99
-2 6

+ 1 14
+ 3 77

+ 232
+ 206

+27
+ 1 ,0 2 3

1 I te m s in c lu d e d a re g o ld , sh o rt- te rm c laim s on U n ite d S ta te s b a n k s a n d b ro k e rs, U n ite d K in g d o m
a d v a n c e p a y m e n ts , U . S . G o v e rn m e n t sh o rt- te rm se c u ritie s, U n ite d S ta te s c u rre n c y , a n d o th e r sh o rt- te rm
c la im s on th e U . S. G o v e rn m e n t; c h a n g e s in U n ite d S ta te s c la im s o n foreigne rs are e x c lu d e d . F o r a n
e x p la n a tio n of th e d iffere nc e s b e tw e e n d a ta on g old in th is ta b le a n d in ta b le 1, see a p p e n d ix B , p . 191.
2 In c lu d e s in c rea se in s h o rt- te rm d o lla r c la im s of in te rn a ti o n a l in s titu tio n s a m o u n tin g to $10 m illio n in
1944 a n d $16 m illio n in 1945.

U n ite d S ta te s W a r E x p e n d it u r e s I n c r e a s e F o r e ig n B a la n c e s

B e g in n in g la te in 1941 a n d e x te n d in g th ro u g h m o st o f 1945, th e re
w a s a re m a rk a b le in crease in fo re ig n g o ld a n d sh o rt-te rm d o lla r h o ld ­
ings. T h e to ta l in crease in such fo r e ig n assets th ro u g h tr a n s a c tio n s
w ith th e U n ite d S ta te s over th e 4 -y e ar p e rio d ended D ecem ber 31,
1945, w as $6,185 m illio n , o f w h ich $2,620 m illio n w as in g o ld, $1,155
m illio n in sh o rt-te rm b a n k in g fu n d s a n d m iscellaneous claim s, $1,655
m illio n in U n ite d S ta te s G o v e rn m e n t sh o rt- te rm sec u ritie s, a n d $755
m illio n in o th e r sh o rt-te rm claim s on th e U n ite d S ta te s G o v e rn m en t

104

(ta b le 2 4 ). A la rg e p a r t o f th e g o ld p u rc h a s e d in th e U n ite d S ta te s
w as re ta in e d h e re in th e fo rm o f e a rm a rk e d g o ld , w h ich to ta le d $4,294
m illio n by th e e n d o f 1945 (ta b le 2 5 ).
T h e re w ere few c o u n trie s w h ich d id n o t a d d to th e ir g o ld a n d d o l­
la r resources a f te r 1941. T ire la rg e s t g a in s w ere m a d e by th e A m e ric an
R ep u b lics, w h ich , as a w hole, in crea se d th e ir d o lla r reserves a n d p u r ­
chased g o ld fro m th e U n ite d S ta te s to th e e x te n t o f $2,400 m illio n .
T h e g ro u p o f c o u n trie s covered in th e “ o th e r” c a te g o ry also a d d e d
a v ery la rg e a m o u n t—$2,150 m illio n — to th e ir g o ld a n d d o lla r claim s
th ro u g h tr a n s a c tio n s w ith th e U n ite d S ta te s, w ith E u ro p e a n n e u tra ls
a c c o u n tin g fo r a la rg e p a r t o f th is to ta l.
I n th e 1942-45 p e rio d , C a n a d ia n g o ld a n d d o lla r f u n d s in crea se d
b y a b o u t $935 m illio n a n d w ere h e ld in th e U n ite d S ta te s p r im a r ily in
th e fo rm o f U n ite d S ta te s G o v e rn m e n t sh o rt-te rm secu rities. S te r ­
lin g -a re a reserves w ere also b u ilt u p to th e e x te n t o f $684 m illio n ,
w h ich w as m ore o r less em bodied in th e e x p o rt o f a b o u t $695 m illio n
o f g o ld fro m th e U n ite d S ta te s to th e U n ite d K in g d o m in 1944.
F o re ig n d o lla r claim s a ris in g fro m U n ite d S ta te s G o v e rn m en t ex ­
p e n d itu re s o verseas to o k sev eral fo rm s. I n th e case o f th e P h ilip p in e s , 12

Ta bl e 2 4 . — S h o r t - t e r m

c a p ita l tr a n s a c tio n s b e tw e e n th e U n ite d S ta te s a n d fo r e ig n
c o u n tr ie s , 1 9 4 0 -4 5

{In m illio n s of d o llars; in flo w ( + ) o r o u tflo w ( —)]
1940-45

I te m

1941

1940

1942

N e t s h o rt- te rm c a p ita l m o v e ­
m e n t . ................. ............. ........ + 4 ,1 3 0 . 2 + 1 ,5 3 0 . 2 - 3 8 8 .6
N e t m o v e m e n t of U n ite d S ta te s
sh o rt- te rm c a p ita l a b r o a d ........... .
P r i v a t e ................ ............. ............
U n ite d S ta te s G o v e rn m e n t—.......

h e ld

in

th e

+ 1 ,2 2 4 .8

+ 356. 5

+ 1 ,3 4 0 .5

+ 1 7 6 .9

+ 1 1 .4

- 1 1 5 .5

+ 2 .6

- 1 5 2 .7

-3 1 3 .2

+ 1 7 6 .9

+ 2 1 .4
- 1 0 .0

+ 9 5 .8
- 2 1 1 .3

-1 2 .0
+ 1 4 .6

-8 4 . 7
- 6 8 .0

- 8 5 .6
-2 2 7 . 6

- 4 0 0 .0

+ 1 8 2 .3

+ 1 ,2 2 2 .2

P r i v a t e . . ................. ......... ........ .
B a n k in g a n d b ro k e ra g e b a l­
a n c e s .................................... + 1 , 520.9
H o ld in g s of U n ite d S ta te s
+ 356. 5
c u rre n c y a n d c o in ...............
U n ite d K in g d o m a d v a n c e
+ 1 8 .3
p a y m e n ts , n e t .............. ......
U n ite d S ta te s G o v e r n m e n t.......... + 2 ,6 2 5 .0

G o ld

1945

—390.5

+ 1 ,8 9 5 .7

25.—

+ 6 6 .8

1944

+ 1 1 1 .8
- 5 0 2 .3

N e t m o v e m e n t of foreign sh o rt- te rm
c a p ita l in th e U n ite d S t a t e s . . . ....... + 4 ,52 0 . 7 + 1 ,3 5 3 .3

Ta bl e

1943

+ 5 0 9 .2

+ 1 ,6 5 3 .7

+ 6 2 4 .5 + 247. 2

+ 5 2 8 .3

+ 5 6 .3

+ 6 1 5 .4

+ 1 6 7 .0

+ 4 5 7 .1

+ 7 0 .6

+ 5 8 .6

+ 8 3 .6

+ 7 1 .2

- 4 9 .5
- 3 .4
+ 597. 7 + 262. 0

+ 1 ,1 2 5 .4

+ 1 ,3 6 3 . 8 - 6 2 2 . 5 - 2 4 5 . 6
+ 708. 7 - 4 8 3 .6
+ 3 8 .3
+ 6 1 6 .8
- 1 0 .5

U n ite d

+ 3 4 .2

- 1 7 3 .1 - 3 7 2 .5
+ 222. 5 + 427. 9

S ta te s

fo r

fo r e ig n

a c c o u n t,

c o u n tr ie s a n d a r e a s a t y e a r e n d s, 1 9 3 9 - 4 5

by

s p e c ifie d

1

[In m illio n s of d o llars
C o u n tr y o r a re a

1939

1940

1941

1942

1943

1944

1,183

1,832

2,242

2,674

3,477

3,937

52

39

48

154
27
1,177
352
122

251
13
1,141
613
224

440
13
1,131,
879
211

1,078
13
1,127
945
262

1, 290
13
1,169
1,087
339

1,736
13
849
1,225
423

20
ÏÏ 2
11
793
211
36

1945
4, 294

1 P a r tly e s tim a te d ; w it h m in o r e x c e ptio n s d a ta re p r e s e n t g old h e ld u n d e r e a rm a rk for fo re ig n a c c o u n t.

2 I n c lu d e s a ll c o u n trie s o c c up ie d b y G e r m a n y p rio r to J u n e 6, 1944.

7 0 9 1 5 5 -4 8 -

-8

105

d o lla r d ep o sits w ith th e U n ite d S ta te s T re a s u ry f o r th e a ccoun t o f t h a t
c o u n try in crea se d by $300 m illio n in 1944-45. I n o th e r c ou n tries, such
as C h in a , F ra n c e , B elg iu m , o r I ta ly , w h e re o u r tro o p s w ere activ e ly
en g a g e d , local c u rre n c ie s w ere a d v a n ce d f o r th e ir use, c re a tin g a c laim
on th e U n ite d S ta te s G o v e rn m en t (see a p p e n d ix B , p . 191). T h e
claim s a ris in g o u t o f th ese a rra n g e m e n ts w ere in c lu d e d in th e b alan c e
o f p a y m e n ts, b u t d id n o t a p p e a r in th e sta tis tic s on U n ite d S ta te s
sh o rt-te rm lia b ilitie s to fo re ig n e rs, re g u la rly p u b lish e d b y th e T re a s ­
u ry D e p a r tm e n t, u n til such tim e a s th e y w ere co n v e rted in to b a n k
ba la nc es by th e issuance o f d o lla r checks.
W ith th e e n d o f th e w a r a n d th e te rm in a tio n o f len d -lease, th e c o n d i­
tio n s w h ich h a d a u g m en ted th e g o ld a n d d o lla r resources o f fo re ig n
c o u n trie s w ere soon rem oved. A lth o u g h a to ta l o f a b o u t $2,150 m il­
lio n w as a d d e d to fo r e ig n g o ld h o ld in g s (fro m U n ite d S ta te s stocks)
a n d d o lla r claim s in 1945— a rec o rd w h ich w ill p ro b a b ly s ta n d f o r som e
tim e to come— v e ry h e av y losses w ere su ffered by F ra n c e , th e U n ite d
K in g d o m , a n d o th e r n a tio n s , w h ic h h a d to m ak e cash p a y m e n ts f o r
a la rg e p a r t o f th e goods th e y re q u ire d . U n ite d K in g d o m d o lla r b a l­
ances w ere d ra w n dow n by som e $165 m illio n fro m A u g u st 1945 to
th e end o f th e y e a r, d e sp ite lend-lease c re d its a n d c o n tin u ed oversea
e x p e n d itu re s b y th e U n ite d S ta te s G o v e rn m en t, w h ile F r a n c e ’s loss
o f g o ld a n d d o lla rs to th e U n ite d S ta te s in th e sam e 5 -m o n th p e rio d w as
o v er $200 m illio n . T h e n eed f o r la rg e-sca le fin a n c in g d u r in g th e
tr a n s itio n p e rio d w as em p h asized as B ritis h d o lla r ba la nc es d ro p p e d
to $335 m illio n in J u n e 1946 a n d F re n c h ba la nc es fe ll to $250 m illio n in
A u g u st.
D u rin g 1945 la rg e im p o rt su rp lu ses fro m C a n a d a a n d th e A m eric an
R ep u b lics e x p a n d e d th e reserves o f th o se c o u n tries. T h e c o n tin u ed
e x p e n d itu re s o f U n ite d S ta te s tro o p s overseas a n d , in th e case o f
C h in a , th e u tiliz a tio n o f $225 m illio n o f th e sp ec ia l a id p ro v id e d e arly
in th e w a r also p ro v id e d su b s ta n tia l a d d itio n s to fo re ig n reserves.
C u rre n c y a n d C oin
T h e n e t e x p o rt o f U n ite d S ta te s c u rre n c y a n d coin fro m th e U n ite d
S ta te s w as a c o n sid e ra b le fa c to r in th e in crea se in fo re ig n d o lla r a ssets
discussed above, a m o u n tin g , so f a r as i t c an be m ea su red , to a b o u t
$355 m illio n in th e 6 -year p e rio d . T h e n e t outflow w as re d u ce d fro m
a b o u t $131 m illio n in 1939 to $34 m illio n in 1941 as fo re ig n tra v e l a n d
p e rso n a l re m itta n c e s declined. A f te r 1941 e x p o rts o f c u rre n c y a n d
co in e x p a n d e d to a m ax im u m o f a b o u t $80 m illio n in 1944, follow ed
by a decline to $70 m illio n in 1945, a lth o u g h th e re w e re re s tric tio n s
im posed b y th e T re a su ry D e p a rtm e n t on th e m ovem ent o f U n ite d
S ta te s c u rren c y (see a p p e n d ix C, p . 223, F o re ig n F u n d s C o n tro l).
M uch o f th e c u rre n c y e x p o rte d w e n t to C uba, w h ere th e d o lla r c ir ­
c u la te s fre e ly w ith th e peso. B ecause o f th e w a rtim e sh o rta g e s o f
c u rre n c y in C uba, th e U n ite d S ta te s G o v e rn m e n t, w h ic h p u rc h a s e d th e
C u b a n su g a r cro p , b e g a n in 1942 to su p p ly U n ite d S ta te s p a p e r c u r­
ren cy to fa c ilita te th is tra n s a c tio n .19 I n a d d itio n , sm a ll sh ip m e n ts o f
c u rre n c y w ere m ad e to H a iti a n d H o n d u ra s to a lle v ia te c u rren c y s h o rt­
ages in th o se co u n tries. A n o th e r la rg e outflow o f U n ite d S ta te s c u r­
re n cy re s u lte d fro m p a y m e n t in U n ite d S ta te s d o lla rs to A m eric an
tro o p s in C h in a a n d elsew here.
39 A b o u t ,$2 55 m i l l i o n o f U n i t e d S t a t e s c u r r e n c y w a s in C u b a n b a n k s a n d i n t h e h a n d s
o f t h e p u b li c o n D e c e m b e r 3 1 , 1 9 4 5 , a c c o r d i n g t o t h e C u b a n T r e a s u r y .

U n ite d S ta te s S h o r t-T e r m

w

•-

f ■

C a p ita l A b r o a d

U n ite d S ta te s p r iv a te sh o rt- te rm c a p ita l w as w ith d ra w n fro m
a b ro a d in e v ery y e a r fro m 1931 to 1943; fro m 1940 th ro u g h 1945 th e re
w as a n e t inflow to th e U n ite d S ta te s o f $112 m illio n . T h e inflow
to o k p lace p r im a r ily in 1940, as th e enem y occupied m o st o f E u ro p e ,
a n d in 1942, w h en o u r e n try in to th e w a r f u r th e r c u rta ile d p r iv a te e x ­
p o r ts a n d th e ir fin a nc in g . B e g in n in g in th e la tte r p a r t o f 1943, th e
tr e n d w as rev erse d a n d th e r e follow ed a n outflow o f p riv a te U n ite d
S ta te s sh o rt- te rm c a p ita l.
A f te r O c to b e r 1945, a n a cc elerated outflow w as a p p a re n tly re la te d
to a n in c re a sin g volum e o f cash e x p o rts to a ll a re a s a n d th e im p ro v e d
o u tlo o k f o r th e re s u m p tio n o f peac etim e p r o d u c tio n th ro u g h o u t th e
w o rld . B y th e e n d o f 1945, s h o rt-te rm claim s on fo re ig n e rs a m o u n te d
to $393 m illio n , b u t th is w as a v e ry m o d e ra te level o f sh o rt-te rm
c re d it b y c o m p ariso n w ith fro m $800 m illio n to m o re th a n $1 b illio n
o u tsta n d in g d u rin g th e e a rly 1930’s, w h e n th e U n ite d S ta te s e x p o rt
to ta l w as v e ry .m u c h low er. O f course, th e la rg e volum e o f U n ite d
S ta te s sh o rt- te rm c a p ita l s till a b ro a d in th e 1930’s w as la rg e ly th e
r e s u lt o f fo r e ig n ex ch an g e c o n tro ls w h ic h p re v e n te d w ith d ra w a l.
W h ile su b s ta n tia l a m o u n ts o f cla im s p a y a b le in fo re ig n c u rren c ie s
w ere o u tsta n d in g in p re w a r y e a rs , th e o n ly fo re ig n c u rre n c y b alan c es
h e ld in 1945, w ith m in o r e xceptions, w ere in C a n a d a a n d th e s te rlin g
a re a , refle ctin g th e in c rea se d d isp o sitio n to finance A m e ric a n e x p o rts
o n ly on d o lla r te rm s . I n 1946, th e outflow o f U n ite d S ta te s s h o rt­
te rm c re d it w as f u r th e r a cc elerated , a n d b y th e en d o f M a rc h 1947
th e a m o u n t o u ts ta n d in g w as a p p ro a c h in g th e levels o f th e e a rly
1930’s.
B e g in n in g in 1942, th e U n ite d S ta te s G o v e rn m e n t a cc u m u lated
s h o rt-te rm cla im s on fo re ig n e rs th ro u g h a dv an ce p a y m e n ts to v a rio u s
su p p lie rs o f s tra te g ic a n d c ritic a l w a r m a te ria ls, a n d also th ro u g h th e
a c q u isitio n o f fo re ig n cu rren cies. F o r th e e n tire 6 -year p e rio d , th e
U n ite d S ta te s G o v e rn m en t a c c u m u la te d sh o rt- te rm assets a b ro a d to
th e n e t e x te n t o f a b o u t $500 m illio n . A d v a n ce p a y m e n ts o f a b o u t
$200 m illio n o u ts ta n d in g in 1912 h a d b een a lm o st e n tire ly re p a id by
th e e nd o f 1945. I n 1944 a n d 1945 la rg e a m o u n ts o f fo re ig n c u rren c ie s
w ere a cc u m u lated in E u ro p e a n d elsew here in connection w ith th e
o p e ra tio n s o f o u r a rm e d forces.
W a r tim e C h a n g e s in F o r e ig n R e s e r v e s

T a b le 26 in d ic a te s ro u g h ly th e re d is trib u tio n o f g o ld a n d d o lla r
reserve s w h ich cam e a b o u t d u r in g th e w a r y e a rs, p r im a r ily th ro u g h
tra n sa c tio n s w ith th e U n ite d S ta te s a n d new g o ld p ro d u c tio n . I t is
e stim a te d t h a t a t th e e n d o f 1939 th e g o ld sto ck o f fo r e ig n c o u n trie s
a m o u n ted to a b o u t $12.5 b illio n , a n d t h a t o f th e U n ite d S ta te s to
$17.8 b illio n . I n th e 6 y e a rs o f w a r t h a t follow ed , th e re w ere n e t sales
o f g o ld to th e U n ite d S ta te s o f a b o u t $2 b illio n .
T h e g re a te st loss o f g o ld w as su ffered b y th e U n ite d K in g d o m ,
F ra n c e , a n d C a n ad a , w h ile th e E u ro p e a n n e u tr a ls a n d som e L a tin A m e ric a n c o u n trie s w ere a b le to a cc u m u late la rg e reserves. H o w e v e r,
th is loss o f g o ld, m o st o f Avhich o c cu rred e a rly in th e w a r, w as m ore
th a n offset b y p r o d u c tio n o f new g o ld, w h ich to ta le d a b o u t $6.4 b illio n
fro m 1940^45, in c lu d in g p ro d u c tio n w h ich e n te re d p riv a te stocks esti107

m a te d a t som e $850 m illio n . T h e n e t effect o f th ese g a in s a n d losses o f
g o ld w as to b rin g th e re p o rte d g o ld reserves o f fo re ig n c o u n trie s u p
to a b o u t $16 b illio n b y th e e n d o f 1945. T h u s , a t th e end o f th e w a r
p e rio d w o rld g o ld reserves a m o u n te d to a b o u t $36 b illio n ; $16 b illio n
o f th e to ta l w as h e ld a b ro a d a n d $20 b illio n in th e U n ite d S ta te s.

Tabl e 26.—

G o ld

and

s h o r t-te r m

d o lla r a s s e ts
1 9 3 9 a n d 1 9 1 ,5

o f fo r e ig n

c o u n tr ie s

a t y e a r-e n d s

1

,

[In m illio n s of d o lla rs]
G o ld 2
A re a

D o lla r a s s e t s 3

1939

1945

12,500

16,000

2,225
214
730
9,331

3,476
388
2,717
9,419

1939

.

1945

T o ta l
1939

1945

3,270

7,791

15, 770

23, 791

526
278
340
2,126

864
1,529
1,286
4,112

2, 751
492
1,070
11,457

4,340
1,917
4,003
13,531

i
In c lu d e s b o th p r iv a te a n d official h o ld in g s e x c e p t t h a t a n e s ti m a te d $850 m illio n of g old w h ic h e n te re d
p r iv a te sto c k s is e lim in a te d .
2. In c lu d e s a ll g old a t h o m e a n d a b r o a d e x c e p t for th e a d d itio n to p r iv a t e sto c k s n o te d a b o v e . T h e to ta l
g o ld h o ld in g s a t th e e n d o f 1945 w ere e s tim a te d in th e A n n u a l R e p o rt, B o a rd of G o v e rn o rs of th e F e d e r a l
R e se rv e S y s te m , 1945, p . 29. T h e t o ta l for 1939 w a s b a s e d o n t h e e s ti m a te for 1941 g iv e n in th e s a m e so urce
a fte r a d ju s tm e n t for p ro d u c tio n a n d tr a n sa c tio n s in 1940 a n d 1941. T h e a re a d is tr ib u tio n w a s e s ti m a te d a s
follow s:
S te rlin g a re a —b a s e d o n to ta ls for th e e n d of 1941 a s p u b li sh e d in th e F e d e r a l R e se r v e B u lle tin (e n d of
S e p te m b e r fig u re for th e U n ite d K in g d o m ), w it h a d ju s tm e n ts for p ro d u c tio n a n d tr a n s a c ti o n s c a rr ie d b a c k
to 1939 a n d fo rw a rd to 1945.
C a n a d a —e n d of 1939 to ta l a s p u b li s h e d in t h e F e d e r a l R e se rv e B u lle tin ; e n d of 1945 t o ta l a s p u b li sh e d in
th e A n n u a l R e p o r t, F o re ig n E x c h a n g e C o n tr o l B o a r d , 1946.,
A m e ric a n R e p u b lic s—e n d of 1939 a s p u b li sh e d in F e d e r a l R e s e rv e B u lle tin ; e n d of 1945 b a s e d o n 1939
to ta ls a d ju s te d for tra n sa c tio n s a n d p ro d u c tio n .
O th e r — th e to ta l for t h is g ro up is a re sid u a l.
I t sh o u ld b e n o te d t h a t th e r e w e re tr a n sf e r s b e tw e e n t h e v a r io u s a re a s w h ic h c o u ld n o t b e e s ti m a te d a n d
w h ic h m a y a ffe c t th e a r e a d is tr ib u tio n to so m e e x te n t.
3
D o lla r a s se ts a t e n d of 1939 in c lu d e o n ly b a n k in g a n d b ro k e ra g e b a la n c e s in th e U n ite d S ta te s ; th e to ta l
a t th e e n d of 1945 in c lu d e s b a n k in g a n d b ro k e ra g e b a la n c e s to ta lin g $6,987 m illio n a n d U n ite d S ta te s c u r ­
r e n c y , a d v a n c e p a y m e n ts , a n d c la im s o n th e U . S. G o v e rn m e n t a c q u ir e d th ro u g h tr a n s a c ti o n s w ith th e
U n ite d S ta te s , 1940-45. I t is e s ti m a te d o n th e b a sis of th e T r e a s u r y ’s C e n su s of F o re ig n -O w n e d A sse ts in
th e U n ite d S ta te s t h a t th e r e a r e ro u g h ly $500 m illio n of fo re ig n sh o rt- te rm d o lla r a sse ts n o t in c lu d e d in
th is ta b le , a lth o u g h a n e s tim a te fo r th e se ite m s is in c lu d e d in th e s ta t e m e n t of th e in te r n a tio n a l in v e s tm e n t
p o s itio n o f th e U n ite d S ta te s (t a b le 27).

T h e sh o rt- te rm d o lla r fu n d s o f fo r e ig n c o u n trie s in crea se d b y $4.5
b illio n d u r in g 1940-45 (see ta b le 2 3 ), w ith th e A m e ric a n R ep u b lics,
C a n a d a , a n d c o u n trie s w h e re o u r tro o p s w ere lo ca te d as th e p rin c ip a l
beneficiaries. T h e to ta l o f $7.8 b illio n h e ld by fo re ig n e rs a t th e end
o f 1945 in clu d e d $6.9 b illio n o f b a n k in g balances,20 a bo u t $100 m illio n
o f b ro k e ra g e balances, a n d som e $800 m illio n in th e fo rm o f U n ite d
S ta te s c u rre n c y a n d claim s on th e U n ite d S ta te s G o v e rn m e n t w h ich
a re n o t o rd in a rily in c lu d e d in p u b lish e d d a ta on U n ite d S ta te s s h o rt­
te rm lia b ilitie s to fo re ig n e rs a s re p o rte d b y b a n k s a n d b ro k e rs. O f
th e to ta l, a b o u t $4.2 b illio n w as in official b a n k in g balances.
A lth o u g h th e re w as a n e t in crea se o f a bo u t $8 b illio n in fo re ig n g o ld
a n d d o lla r h o ld in g s d u r in g th e 1940-45 p e rio d , th e re w as a w ide d i f ­
feren ce in th e e xp erien ce o f in d iv id u a l c o u n tries. T h e losses suffered
in 1940 a n d 1941 by th e U n ite d K in g d o m , F ra n c e , a n d th e N e th e r­
la n d s fo llow ed e a rlie r la rg e flows to th e U n ite d S ta te s a n d red u ce d
th e ir reserves to e x trem e ly low levels. F ra n c e h e ld a b o u t $5 b illio n
in g o ld in 1934, b u t th is w as red u ced to a b o u t $2 b illio n a t th e en d
o f 1941; U n ite d K in g d o m g o ld reserves o f a b o u t $4.2 b illio n e a rly in
1938 w ere n e g lig ib le b y la te 1941; N e th e rla n d s gold h o ld in g s of a b o u t
“ In c lu d in g U . S . G o v e rn m e n t s h o rt- te rm s e c u ritie s .

108

$1 b illio n in 1938 w ere red u c ed to $575 m illio n a t th e en d o f 1941 a n d
c o n tin u ed to decline th ro u g h o u t th e w ar.
A f te r 1941, as m e n tio n ed e a r lie r , m o st c o u n trie s w ere able to a d d
to th e ir reserve s o f g o ld a n d d o lla rs. T h e sh a r p e st re la tiv e in crease
w a s re g iste re d by C a n a d ia n reserves, w h ic h rose fro m 3 p e rce n t o f
th e 1939 to ta l sh ow n in ta b le 26 to 8 p e rc e n t o f th e 1945 to ta l. A g ­
g re g a te reserves o f th e A m e ric a n R ep u b lics e x p a n d e d n e a rly as sw iftly ,
fro m 7 to 17 p e rc e n t o f th e to ta l— m o re th a n re c o u p in g losses o f th e
1930’s a n d re a c h in g a sh a re in th e to ta l n e a r ly equal to t h a t o f th e
s te rlin g a re a . A rg e n tin a a n d B ra z il m a d e th e la rg e s t g a in s a m o n g
th e A m e ric a n R e p u b lic s ; A rg e n tin a in crea sed its to ta l fo re ig n e x­
c h an g e a n d g o ld h o ld in g s b y $1.1 b illio n in th e 1940-45 p e rio d , w hile
B ra z il a d d e d $475 m illio n o f g o ld a n d d o lla rs to its reserves in th e
w a r p e rio d . T h e s te rlin g a re a h a d a b o u t re g a in e d its 1939 p o sitio n ,
b y th e en d o f 1945, b y v irtu e o f th e g o ld p ro d u c tio n o f S o u th A fric a .
T h e a n n u a l p r o d u c tio n o f th is a re a a v e ra g e d a b o u t $500 m illio n fro m
1940 to 1945 a n d th e g o ld reserve o f th e U n io n o f S o u th A f ric a in ­
creased fro m $249 m illio n to $914 m illio n . T h e sh a re o f th e c o u n trie s
g ro u p e d u n d e r “ O th e r ” d r o p p e d to 58 p e rc e n t o f th e to ta l as th e
g a in s o f th e E u ro p e a n n e u tra ls, p rin c ip a lly S w itz e rla n d , w ere m ore
th a n offset b y th e losses o f F ra n c e a n d th e N e th e rla n d s.
A lth o u g h fo r e ig n g o ld a n d d o lla r h o ld in g s in c rea sed in th e a g g re ­
g a te d u r in g th e w a r y e a rs, th e r e w ere re la tiv e ly few c o u n trie s a t th e
e n d o f 1945 w ith sufficient reserves to view th e ir needs fro m th e U n ite d
S ta te s w ith o u t som e a p p reh e n sio n . M an y n a tio n s h a d b u ilt u p r e ­
serves d u rin g th e p e rio d w h e n goods w ere n o t o b ta in a b le in th e U n ite d
S ta te s an d , fac e d w ith a tre m e n d o u s p e n t-u p d e m a n d f o r U n ite d S ta te s
e x p o rts as th e w a r e nd ed , lim ite d e x p e n d itu re s in th e U n ite d S ta te s
to goods c on sidered e ssen tial. S w ed en a n d C a n a d a h e ld s u b s ta n tia l
reserves a t th e end o f th e w a r a n d w ere e n co u rag e d to a p p re c ia te th e ir
c u rren c ie s in 1946, b u t w ere e x p e rie n c in g som e difficulties b y th e end
o f t h a t y e a r as th e ir reserves declined. I t w as c le a r t h a t a d d itio n a l
fu n d s w o u ld h a v e to be p ro v id e d to th o se c o u n trie s w h ich u sed a g r e a t
p a r t o f th e ir g o ld a n d d o lla r reserves to fig h t th e A x is, o r w hich,
th ro u g h th e d e v a sta tio n o f w a r, w ere fac e d w ith needs fro m th e U n ite d
S ta te s f a r g re a te r th a n th e ir p re w a r experience. N e verth eless, th e
to ta l o f n e a rly $24 b illio n o f fo re ig n g o ld a n d d o lla r assets a t th e e n d
o f 1945 p ro v id e d a su b s ta n tia l cushion f o r th e rec on v ersio n p e rio d .
I n te r n a tio n a l In v e s tm e n t P o s it io n

T h e w a r le f t th e n e t d e b to r-c re d ito r p o sitio n o f th e U n ite d S ta te s
re la tiv e ly u n c h a n g e d , w ith a n in crea se o f so m e th in g o v er $4 b illio n in
U n ite d S ta te s in v estm en ts a b ro a d a n d n e a rly $5 b illio n in fo r e ig n
in v estm e n ts in th e U n ite d S ta te s betw een D ecem b er 3 1 ,19 3 9 , a n d D e ­
cem ber 31,1945. S ig n ific a n tly , how ever, p ra c tic a lly a ll o f th e in crease
iir fo re ig n in v estm e n ts in th e U n ite d S ta te s w as in th e fo rm o f s h o rt­
te rm balances, due to be d ra w n dow n h e a v ily in th e im m e d iate p o s t­
w a r p e rio d , w h ile in c rea se d U n ite d S ta te s h o ld in g s a b ro a d co n sisted
m a in ly o f lo n g -te rm , in te re st-b e a rin g o r in co m e-p rod u c ing assets (see
ta b le 27) .21
21 F o r r e c o n c i l i a t i o n s t a t e m e n t s h o w i n g a n n u a l c h a n g e s i n t h e i n t e r n a t i o n a l i n v e s t m e n t
p o s i t i o n o f t h e U n i t e d S t a t e s t h r o u g h b a l a n c e - o f - p a y m e n t s m o v e m e n ts a n d o t h e r f a c t o r s ,
see a p p e n d ix C, ta b le s X X I I a n d X X III .

109

C h an g e s in in te rn a tio n a l assets a n d lia b ilitie s re s u ltin g fro m b alan ceo f-p a y m e n ts tra n s a c tio n s h a v e been discu ssed p re v io u sly . T h e in ­
crease in fo r e ig n sh o rt-te rm in v estm e n ts in th e U n ite d S ta te s re su lte d
p r im a r ily fro m o u r n e g a tiv e cash b a la n c e o f p a y m e n ts o n c u rre n t tr a n s ­
a ctio n s d u r in g th e w a r y e ars. F o re ig n lo n g -te rm in v estm e n ts w ere
a p p ro x im a te ly th e sam e a t th e e n d o f th e p e rio d as a t th e b e g in n in g , th e
in crea se in m a rk e t v a lu e o f p o rtf o lio se c u ritie s (n o t, o f course, re ­
flected in th e b a lan c e o f p a y m e n ts) a b o u t o ffse ttin g re d u c tio n s in h o ld ­
in g s d u e to B r itis h liq u id a tio n s a n d th e v e stin g o f enem y-ow ned assets.
T h e rise in th e v a lu e o f A m e ric a n lo n g -te rm p riv a te in v estm e n ts
a b ro a d reflected m a in ly a ris e in th e q u o te d v a lu e s o f fo r e ig n se cu rities
(p rin c ip a lly C a n a d ia n ) , re in v e ste d e a rn in g s o f m o re th a n $900 m illio n
b y A m e ric a n d ire c t-in v e stm e n t e n te rp rise s, a n d a n e t c a p ita l outflow
o f $231 m illio n d u r in g th e w a r p e rio d . T h e re w as a m o d e ra te decline
in th e v a lu e o f A m e ric a n sh o rt-te rm asse ts d u r in g th e p e rio d , a lth o u g h
th e e stim a te d to ta l o f A m e ric a n d e p o sits a b ro a d re m a in e d a lm o st u n ­
ch an g e d . A t th e e n d o f 1939 th e claim s o f th e U n ite d S ta te s G o v e rn ­
m e n t on fo re ig n e rs wre re (e x c lu d in g W o rld W a r I d e b ts) a p p r o x i­
m a te ly $35 m illio n . B e g in n in g w ith th e R e c o n stru c tio n F in a n c e C o r­
p o ra tio n lo a n to th e U n ite d K in g d o m in 1941, loans, a dv an ces, a n d
o th e r in v estm e n ts a b ro a d by th e U n ite d S ta te s G o v e rn m e n t in crea se d
ra p id ly , re a c h in g a b o u t $1.6 b illio n b y th e e n d o f 1945.

Ta bl e

27.—

I n te r n a tio n a l in v e s tm e n t p o s itio n

o f th e

U n ite d

S ta te s , 1 9 3 9 -4 5

[Y e a r-e n d d a ta in m illio n s of dollars!
I te m

1939

1940

1941

U n ite d S ta te s in v e s tm e n ts a b ro a d , to ta l........

12,480

12, 275

P r iv a te _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 12, 445
L o n g -te rm _ _ _ __ _ _ _ _ _ _ _ __
11,385
D ir e c t.................. ..................... . - 7,280
F o re ig n d o lla r b o n d s _________
1,685
S ec u ritie s p a y a b le in loca l c u r1,240
re n c ie s ............ ................ ..........
E s ta te s a n d t r u s t s ____________
150
O th e r lo n g - te r m _ _ _ _ _ _ _ _ _ _ _ _ _ _
1,030
S h o rt -te rm . _______ ____ _____ _
1,000
405
D e p o s it s ____
_____________
O th e r ............ ................ ............. ...
655
35
U . S. G o v e r n m e n t__________________
L o n g -te rm _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
35
S h o rt -te rm ............ ................... ..........

12,195
11,310
7,340
1,445

1942

1943

1944

12,990

13,640

14,170

14,810

16, 760

12, 505
11,635
7, 525
1,445

12,930
12,175
7,740
1,510

13, 340
12, 575
7,845
1,560

13,765
12, 930
7,960
1.590

14, 590
13, 675
8,120
1,650

1,280
170
1,075
885
375
510
80
80

1,375
190
1,100
870
375
495
485
475
10

1,565
210
1,150
755
370
385
710
490
220

1,795
210
1,165
765
370
395
830
620
210

2,010
210
1,160
835
385
450
1,045
770
275

2,425
210
1,270
915
395
520
2,170
1,585
585

1945

F o re ig n in v e s tm e n ts in th e U n ite d S ta te s,
to ta l_ _ _ _ _ _ _ _ ____ ___ _ _ _ _ _ _ ______ ___

12,820

13, 535

12,300

12, 605

14,145

15,085

17,740

P r iv a te o b lig a tio n s ___ _ _ _ _ _ ________
L o n g -te rm ................ .......................... .
D ir e c t___ _ _ __ _ __ _ __ _ __ _ __ _ __
C o r p o ra te s to c k s _____________
C o r p o ra te b o n d s 1................. ........
E s ta te s a n d t r u s ts ............. ...........
O t h e r .__ _____ ______________
S h o r t- te r m ....... ................... ................
D e p o s it s .. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
O t h e r .__ _____ ____ _ _ _ _ _ _ _ _ _
U . S. G o v e rn m e n t o b lig a ti o n s..................
L o n g -te rm _ _ _ _ _ _ _ _ ______ _______
S h o r t- te r m ______ ____ ______ ____

12,495
8,095
2, 900
3, 255
525
850
1,165
3,800
3, 225
575
325
150
175

13, 225 11,770
8 ,1 0 0 ' 7,200
2,875
2,700
2, 625 • 1,950
500
475
800
775
1,300
1,300
5,125
4, 570
3,915
3, 510
1,210
1,060
310
530
150
150
380
160

11,645
7, 275
2,615
2,120
525
745
1.270
4,370
3, 665
705
960
150
810

12, 560
7, 570
2,605
2, 445
610
700
1,210
4.990
4, 290
700
1,585
200
1,385

13.080
7,865
2, 630
2, 700
715
665
1,155
5. 215
4,425
790
2, 005
425
1,580

14. 207
8, 502
2,675
3,370
692
655
1,110
5,705
4,855
850
3, 533
493
3,040

N e t d e b to r ( —) o r c r e d it o r ( + ) p o s itio n .........

-3 4 0

- 1 ,2 6 0

+ 090

+ 1 ,0 3 5

+25

-2 7 5

N e t p r iv a t e -------- ------- ------- ------------N e t U . S . G o v e r n m e n t_____ _________

-5 0
-2 9 0

- 1 ,0 3 0
-2 3 0

+ 735 + 1 ,2 8 5
—45
-2 5 0

+ 780
-7 5 5

+ 685
-9 6 0

+383
- 1 ,3 6 3

o

■ 'f

co"

+

N e t lo n g -te rm , p r iv a te a n d U . S. G ove m i n e n t_______ _ ________ ______ + 2 ,5 7 5
N e t sh o rt- te rm , p r iv a te a n d U . S . G ov e r n m e n t__________ _ __ _ _____ _ _ _ _ _ - 2 , 915 - 4 ,4 0 0

—980;

+ 4 ,7 6 0

+ 5 ,2 4 0

+ 5 ,4 2 5

+ 5 ,4 1 0

+ 6 ,2 6 5

- 4 ,0 7 0

- 4 ,2 0 5

- 5 ,4 0 0

- 5 ,6 8 5

- 7 , 245

1 C o r p o ra te b o n d s in c lu d e a n e s tim a te of $100 m illio n o f S ta te a n d m u n ic ip a l o b lig a tio n s.

Not e.—Fo r in fo rm a tio n re g a r d in g c o n c e p ts a n d m e th o d s of v a lu a tio n e m p lo y e d , see a p p e n d ix B , p . 225.

no

C h a p te r IV

T r a n s a c tio n s b y A r e a s 1
I n tr o d u c tio n

Som e b r ie f o b serv a tio n s on th e in te rn a tio n a l tr a n s a c tio n s o f th e
U n ite d S ta te s, b y a re a s o f th e w o rld , a re p re sen te d in th e follow ingp ages. T h e se a re as, re p re se n tin g a lo g ical g ro u p in g o f th e v a rio u s
c o u n trie s f o r p u rp o ses o f th is discu ssion, a re th e s te rlin g a re a , C a n a d a ,
th e 20 A m e ric a n R ep u b lics, a n d th e re s t o f th e w o rld .
E v e n in p e acetim e, th e s te rlin g bloc w as a f a ir ly close -k n it in te r ­
n a tio n a l fin an cial e n tity ; a n d d u r in g th e w a r, w h e n th e bloc w as
tr a n s fo r m e d in to th e s te rlin g a re a , th e c om p u lsory p o o lin g o f d o lla r
ba la nc es in L o n d o n a n d o th e r fe a tu re s in crea sed its econom ic a n d
fin a n c ia l u n ity co n siderab ly . T h u s, th e im p o rta n c e o f th e s te rlin g
a re a in tr a d e w ith th e w o rld in g e n e ra l a n d w ith th e U n ite d S ta te s in
p a r tic u la r n eed h a r d ly be e m p h asized . C a n a d a ra n k s even above th e
U n ite d K in g d o m in im p o rta n c e a s a tr a d in g p a r tn e r o f th e U n ite d
S ta te s ; m o reo v er, th e m a rk e d ly tr ia n g u la r p a tte r n o f tra n s a c tio n s
b etw een C a n ad a , th e U n ite d K in g d o m , a n d th e U n ite d S ta te s m akes
a n iso la tio n o f U n ite d S ta te s- C a n a d ia n tra n s a c tio n s o f sp ecial in te re st.
T h e 20 A m e ric a n R ep u b lics c o n stitu te a g e o g ra p h ic a lly c o n tigu o u s
a rea , w ith m a n y com m on c h a ra c te ris tic s a n d p ro b lem s, a n d th u s a re
tre a te d as a u n it. F in a lly , to com p lete th e d a ta to cover U n ite d S ta te s
tr a n s a c tio n s w ith a ll c o u n trie s o f th e w o rld , a n d because o f th e c o n sid ­
e rab le in tr in s ic in te re s t a tta c h in g to “ a ll o th e r c o u n trie s,” these,
tr e a te d as one a rea , a re discu ssed in a se p a ra te sta tem en t.
C e rta in U n ite d S ta te s tra n s a c tio n s in clu d e d in th e g lo b a l b a la n c e o f
p a y m e n ts c a n n o t be id en tified w ith a n y p a r tic u la r c o u n try . T h e se
in c lu d e tw o q u ite d is tin c t so rts o f tra n s a c tio n s : F ir s t, th o se w ith in te r ­
n a tio n a l in stitu tio n s , such as U N R R A o r th e I n te r n a tio n a l B a n k fo r
R e c o n stru c tio n a n d D e v e lop m e n t ; a n d , second, th o se w h ic h a re a c tu ­
a lly dom estic b u t w h ich a re show n in th e g lob a l b a la n ce o f p a y m en ts
because o f th e ir effect on th e in te rn a tio n a l reserv e p o s itio n o f th e
U n ite d S ta te s.
I n th is b u lle tin , b o th ty p e s o f tra n s a c tio n s a re in ­
c lu d e d in a f ifth “a re a ” g ro u p , n a m e ly , I n te r n a tio n a l In stitu tio n s. In
p ra c tic e , th e re is o n ly one tra n s a c tio n o f th e second ty p e m e n tio n e d
above, i. e., th a t p o rtio n o f th e in crea se (o r decrease) in th e stock o f
m o n e ta ry g o ld w h ich is a ttr ib u ta b le to th e n e t dom estic p ro d u c tio n (o r
e o n su m p tio n ) o f gold.
A c e rta in a m o u n t o f c a u tio n m u st be ex ercised in u sin g th e fig u res
g iven f o r b ila te ra l b alan ces o f p a y m en ts. T h e d e g ree o f a cc u ra cy o f
th ese figures is u su a lly less th a n in g lo b a l balances. M oreo v er, th e re
1 T h is c h a p te r w a s p r e p a r e d b y W illia m M c C a rro ll a n d J u d a h E . S m ith .

m

is an im p o rta n t c o n c ep tu a l difference betw een a g lo b a l a n d a b ila te ra l
b alan ce o f p a y m e n ts in th a t th e la tte r does n o t h av e to “ balance.” I t
fo llo w s fro m th is c o n sid e ra tio n th a t th e re s id u a l item in a b ila te ra l
b a la n c e -o f-p a y m e n ts sta te m e n t is c om posed o f tw o q u ite d is tin c t k in d s
o f th in g s : I t is p a r tly th e re s u lt o f (n o n o ffse ttin g ) e rro rs a n d o m is­
sions in th e e stim a tes o f th e o th e r item s, a n d p a r tly th e re s u lt o f m u lti­
la te ra l tra n sa c tio n s. S in ce th e la tte r c a n n o t u su a lly be iso la ted , i t is
im possib le to te ll to w h a t e x te n t th e size o f th e re s id u a l is d u e to each
o f th ese tw o k in d s o f “tr a n s a c tio n ” ( if e rro rs a n d om issions c a n be
re g a rd e d as tra n sa c tio n s) .2
Som e sm all a tte m p t h a s been m ad e a t su g g e stin g th e p ro b ab le source
o f th e resid u a ls a p p e a rin g in th e fo llo w in g sta te m e n ts, b u t a t th e. p re s­
e n t tim e n o sy ste m a tic in v e stig a tio n o f th e su b je ct c an be u n d e rta k e n .

Ta bl e

28.—

T r a n s a c tio n s

of

th e

U n ite d

S ta te s

w ith

th e

s te r lin g

a rea,

1 9 J /0 -4 5

[In m illio n s of d ollars]
I te m

1940

1941

I . R e c e ip ts , t o t a l . ------- ----------- ------ ------------- ------

1,821

3,209

7,427

12,958

14,085

7,644

A . G oo ds a n d serv ic e s, t o t a l _ _ _ _ _ _ _ _ _ _ _ _ ____ .
1. G o o d s ___ ______________ ___________ _
2. In c o m e on in v e s tm e n ts _ __ __ ____ _______
3. O th e r se rv ic e s ___ ____ ____ ___ ____ _ _ _ _ _
B . U n ila te r a l tr a n s f e rs ............................... .............
C . L o n g -te rm c a p ita l, t o t a l ..... ................ ..............
1. M o v e m e n ts of U n ite d S ta te s c a p ita l inv e ste d a b r o a d ____ _ _ __ _ __ _ __ _ __ _ ____
2. M o v e m e n ts of foreign c a p ita l in v e s te d in

1,647
1,403
77
167
8
166

3,111
2,621
66
424
3
95

6,532
5, 206
81
1,245
829
66

11,043
8,635
78
2,330
1,846
69

11,986
9,375
80
2,531
2,050
49

5,753
4, 430
76
1,247
1,830
61

12

23

36

68

49

61

154

72

30

1

I I . P a y m e n ts , to t a l ..... ...................................................

1,240

2,988

7,150

13,647

14,669

7,766

A . G oo d s a n d serv ic e s, to t a l ......... ............. .............
1. G o o d s............................... .............. ..............
2. In c o m e o n in v e s tm e n ts .................................
3. O th e r se rv ic e s................................... ............
B . U n i la te r a l tr a n sf e r s ____ ________ _________
C . L o n g -te rm c a p ita l, t o t a l . . ................. ................
1. M o v e m e n ts of U n ite d S ta te s c a p ita l inv e ste d a b r o a d ______________________
2. M o v e m e n ts of foreign c a p ita l in v e s te d in
U n ite d S ta te s .......... .............. ...................

946
743
74
129
74
220

1,254
1,009
60
185
990
744

2,127
1,536
49
542
4, 903
120

3,485
2,019
43
1,423
10,080
82

3,793
1,916
46
1,831
10, 708
168

3,365
1,966
47
1,352
3, 690
711

4

371

48

40

120

668

216

373

72

42

48

43

I I I . E x c e ss of re c e ip ts ( + ) o r p a y m e n ts ( —), to t a l ___

+581

+221

+ 277

-6 8 9

-5 8 4

-1 2 2

+ 4 , 405 + 7 ,5 5 8 + 8 ,1 9 3
- 4 ,0 7 4 - 8 , 234 - 8 ,6 5 8
+ 331
-6 7 6
-4 6 5
-5 4
-1 3
-1 1 9

+ 2 ,3 8 8
- 1 .8 6 0
+ 528
-6 5 0

A . G oo d s a n d se rv ic e s .......... .............. ......... .........
B . U n i la te r a l tr a n s f e rs ______ _____ ___ _ ____
N e t goods a n d services a n d u n i la te ra l tr a n s fe rs .
C . L o n g -te rm c a p ita l......... ............ ........................
IV . N e t inflow ( + ) o r o u tflo w ( —) of fu n d s o n gold
a n d sh o rt- te rm c a p ita l a c c o u n t, t o t a l ____________

+701 + 1 ,8 5 7
-6 6
-9 8 7
+ 635
+ 8 70
-5 4
-6 4 9
- 1 ,4 9 2

A . N e t U n ite d S ta te s g old sales ( + ) o r p u rc h a se s
(-)—
-------------------------------------------- - 2 , 053
B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm
c a p ita l a b r o a d _____ _____ _____ _ _ _ _ _ _ _ _
+22
G . N e t m o v e m e n t of foreign s h o rt- te rm c a p ita l
in U n ite d S ta te s ....... .......................................
+ 5 59
V . E rr o rs , o m issio n s, a n d th ir d - c o u n tr y tr a n s a c ti o n s ..

+ 911

T r a n s a c t io n s W it h t h e

-7 2 1

1942

1943

1944

1945

-2 3 1

+ 404

+ 5 50

-5 5 1

-1 2

+50

+ 6 72

-1

-4 2

-2 6

-1 7

-8

-1 6 9

-1 7 7

+ 3 80

-1 0 5

-1 3 0

+ 5 00

-4 6

+ 285

+34

+ 255

-1 3 3

S te r lin g A re a

T h e tra n s a c tio n s betw een th e U n ite d S ta te s a n d th e ste rlin g a re a 3
d u rin g 1940 a n d 1941 w ere m a rk e d b y e x tra o rd in a rily h e av y U n ite d
2 F o r a m o re d e ta ile d d is c u s s io n o f th e s e c o n c e p te d p ro b le m s , see a p p e n d ix A.
3 S in c e i t s f o r m a l i n c e p t i o n o n J u l y 1 7 , 1 9 4 0 , b y t h e i s s u a n c e o f S t a t u t o r y R u l e s a n d
O rd e r N o. 1 25 4 o f th e D e fe n c e ( F in a n c e ) R e g u la tio n s , th e s te r lin g a r e a h a s c o n s is te d
e s s e n tia lly o f B r i t i s h E m p ire c o u n tr ie s , w it h t h e e x c e p tio n o f C a n a d a a n d N e w fo u n d la n d .
I t a ls o in c lu d e s c e r ta in n o n -B ritis h c o u n trie s , n o ta b ly E g y p t a n d Ir a q .
I n r e s p o n s e to
c h a n g in g c o n d itio n s d u r in g th e w a r, s u c h o th e r n o n -B ritis h c o u n trie s a s th e B e lg ia n C ongo
a n d R u a n d a - U r u n d i , F r e n c h E q u a t o r i a l A f r i c a a n d o t h e r F r e n c h p o s s e s s io n s , I c e l a n d , a n d
th e F a r o e Is la n d s h a v e a d h e re d f o r v a r y in g p e rio d s o f tim e to th e s te r lin g a r e a .

112

*

♦

►

K in g d o m sales o f g o ld to th e U n ite d S ta te s a n d b y th e p a r tia l liq u i­
d a tio n o f U n ite d K in g d o m lo n g -te rm in v estm e n ts a n d d o lla r b alances,
th e p roceeds o f w h ich w ere used to p ro c u re th e v a st q u a n titie s o f e q u ip ­
m e n t necessary to c a rry on th e w a r w ith G e rm a n y . T h e se o u tla y s w ere
so e xten sive th a t, by th e e nd o f 1941, th e U n ite d K in g d o m ’s h o ld in g s
o f g o ld a n d d o llars4 w ere close to th e v a n is h in g p o in t a n d th e b u lk o f
its re a d ily d isp o sab le in v e stm e n ts in th e U n ite d S ta te s h a d been liq u i­
d a te d o r p le d g ed a g a in s t th e R ec o n stru c tio n F in a n c e C o rp o ra tio n loan.
I n th e o p en in g m o n th s o f th e w a r, th e U n ite d K in g d o m re lie d u p o n
th e in d u s tria l s tre n g th a n d self-sufficiency o f th e B r itis h E m p ir e a n d
its A lly , F ra n c e , to s u p p ly th e n ecessary e q u ip m e n t a n d m a te ria ls.
E a rlie r, how ever, w hen th e d a n g e r o f w a r th re a te n e d , m ea su res w ere
ta k e n to in su re th e c o n serv a tio n o f fo reig n -ex c h a n g e resources. I m ­
p o rts o f n o n esse n tia ls w ere re s tric te d a n d steps w ere ta k e n to s h if t th e
source o f s u p p ly f o r m a n y com m odities to a re a s w ith in th e B ritis h
E m p ir e . R e g is tra tio n o f fo re ig n assets w a s re q u ire d la te in A u g u st
o f 1939, a n d in S e p te m b e r e x ch an g e c o n tro l w a s im p o sed to c u rb th e
flig h t o f c a p ita l. S im ila r c o n tro ls w ere u n d e r ta k e n by th e re s t o f th e
B ritis h E m p ire .
W ith th e e m p h asis on th e c o n se rv a tio n o f fo re ig n exch an ge, B ritis h
p ro c u re m e n t o f w a r su p p lie s o u tsid e th e ste rlin g a re a w as v e ry sm all
up to M arch o f 1940. B u t w ith th e in v asio n o f N o rw a y in A p r il a n d
o f th e L ow C o u n trie s in M ay , a n d th e c ollap se o f F ra n c e in J u n e ,
B r ita in e n te re d u p o n th e p ro c u re m e n t o f th e g re a te st a m o u n t o f w a r
su p p lie s in th e sh o rte st possib le tim e, re g a rd le s s o f th e effect on its
e xch an g e resources.
T h e e x p e n d itu re m a d e u n d e r th is p ro c u re m e n t p ro g ra m a n d th e
c a p ita l flows w h ich o c cu rre d in th e first few m o n th s b e fo re th e ex ­
c h an g e-co n tro l re g u la tio n s w ere tig h te n e d p ro d u c ed u n p re c e d e n t defi­
c its in th e s te r lin g -a r e a b a la n c e o f p a y m e n ts.5 F o r th e 16 m o n th s
fro m th e b e g in n in g o f th e w a r in S e p te m b e r 1939 to th e en d o f 1940,
th e s te r lin g -a r e a deficit w ith th e U n ite d S ta te s a m o u n te d to $1,030
m illio n on m erch a n d ise a n d services a c co u n t alone.
I n a d d itio n , ad v a nc es a n d c a p ita l-a ssista n c e p a y m e n ts a m o u n tin g
to $720 m illio n (n e t) w ere m a d e to A m e ric a n co n cerns f o r th e p r o ­
d u c tio n o f w a r m a te r ia ls .6 C a p ita l w ith d ra w a ls p re c ip ita te d b y th e
o u tb re a k o f w a r w ere e stim a te d to h av e to ta le d $735 m illio n , o f w h ich
$200 m illio n rep re se n te d th e re p a y m e n t o f A m eric an e x p o rt c re d its in
acc orda nce w ith th e c a s h -a n d -c a rry req u irem e n ts o f th e N e u tra lity
A c t a n d $235 m illio n , th e a m o u n t em p loy ed in th e liq u id a tio n o f a
4 I t m a y be n o te d h e r e t h a t t h e m a jo r m o v e m e n ts in s te r lin g - a r e a d o l la r a s s e ts w e re fo r
t h e a c c o u n t o f t h e U n i t e d K in g d o m a s a r e s u l t o f t h e o p e r a t i o n s o f t h e s t e r l i n g - a r e a e x c h a n g e
p o o l. A s a m e a n s o f c o n s e r v i n g e x c h a n g e r e s o u r c e s a n d t o p r o v i d e f o r t h e i r r e p l e n i s h m e n t
f o r e s s e n t i a l w a r p u r p o s e s , t h e m e m b e r s o f t h e s t e r l i n g a r e a a g r e e d t o r e l i n q u i s h s p e c if ie d
c u rre n c ie s , p a r tic u la r ly d o lla r s , to th e p o o l in e x c h a n g e f o r s te r lin g .
T h e y a lso a g re e d
to lim it th e i r d e m a n d s o n th e p o o l fo r s u c h c u rr e n c ie s to a m o u n ts re q u ir e d f o r e s s e n tia l
p a y m e n t s . T h i s w a s r e i n f o r c e d b y t h e g e n e r a l a g r e e m e n t t o c o n f in e p u r c h a s e s o u t s i d e t h e
s t e r l i n g a r e a t o i t e m s w h i c h c o u ld n o t b e o b t a i n e d w i t h i n t h e a r e a i t s e l f . I n t h i s s y s t e m ,
t h e n , s u r p l u s e s o f d o l l a r s a b o v e t h e m in i m u m r e q u i r e m e n t s o f t h e m e m b e r c o u n t r i e s a c c r u e d
t o t h e U n i t e d K in g d o m a c c o u n t .
5 T h e d a t a r e g a r d in g th e g o ld a n d d o lla r tr a n s a c t i o n s o f t h e s te r lin g a r e a f o r S e p te m b e r
1 9 3 9 -D e c e m b e r 1 94 0 h a v e b een ta k e n fro m a le tte r , d a te d J a n u a r y 2 1, 1 9 4 1 , fro m th e S e c re ­
t a r y o f t h e T r e a s u r y t o M r . B lo o m , C h a i r m a n o f - t h e F o r e i g n A f f a ir s C o m m i t t e e o f t h e
H o u se o f R e p re s e n ta tiv e s .
S ee th e F e d e r a l R e s e rv e B u lle tin , F e b r u a r y 1 9 4 1 , p . 9 9 ; a n d
D e p a r tm e n t o f C o m m e rc e , T h e B a la n c e o f I n t e r n a t i o n a l P a y m e n ts o f t h e U n ite d S ta te s ,
1 9 4 0 , p . 9.
6 A re v ise d e s tim a te f o r a d v a n c e s a n d c a p ita l a s s is ta n c e o u ts ta n d in g a t th e e n d o f 1 940,
$ 7 6 2 m illio n , h a s b e e n u s e d in ta b le 2 8 .

113

sh oi't fo rw a rd p o s itio n in d o lla rs. T h e re m a in d e r, e s tim a te d a t $300
m illio n , re p re s e n te d c a p ita l w ith d ra w a ls th ro u g h th e sale o f fre e
ste rlin g .7
T h e s te rlin g a re a ’s p ro c u re m e n t o f w a r su p p lies in C a n a d a a n d in
o th e r c o u n trie s also re q u ire d th e p a y m e n t o f s u b s ta n tia l sum s o f g o ld
a n d d o lla rs. D u r in g th is 16-m onth p e rio d , its c u rre n t-a c c o u n t deficit
w ith C a n a d a a n d N e w fo u n d la n d a m o u n ted to $555 m illio n . O f th is
sum , $225 m illio n w as se ttle d b y g o ld , w h ich w as in tu r n tr a n s f e rr e d
to th e U n ite d S ta te s in p a r tia l se ttle m e n t o f C a n a d a ’s deficit w ith th e
U n ite d S ta te s. T h e g o ld a n d d o lla r deficits o f th e s te rlin g a re a w ith
c o u n trie s o th e r th a n th e U n ite d S ta te s a n d C a n a d a a m o u n te d to an
a d d itio n a l $500 m illio n .
T h e to ta l d r a in on th e U n ite d K in g d o m ’s g o ld a n d d o lla r resources
d u rin g th is p e rio d a m o u n te d to $2,316 m illio n a n d sales o f new ly m in e d
a n d d ish o a rd e d g o ld a m o u n te d to a n a d d itio n a l $965 m illio n .8 O f th e
d r a in in resources h e ld a t th e b e g in n in g o f th e p e rio d , $1,764 m illio n
consisted o f g o ld sales, $334 m illio n in sales o f A m e ric a n sec u ritie s, a n d
$234 m illio n in th e liq u id a tio n o f d o lla r balances.
A t th e en d o f 1940, a to ta l o f a b o u t $3 b illio n in A m e ric a n lo n g - a n d
sh o rt-te rm assets re m ain e d in th e h a n d s o f th e B ritis h , o f w h ic h a
m ax im u m o f a b o u t tw o -th ir d s could be so ld o r r e a d ily p le d g e d to m eet
im m e d ia te c o m m itm en ts. T hese assets consisted o f A m e ric a n se c u ri­
tie s v a lu e d a t a little o v er $775 m illio n , d ire c t in v estm e n ts h a v in g a
liq u id a tio n v a lu e e stim a ted a t $990 m illio n , a n d g o ld a n d d o lla r b a l­
ances o f $300 m illion. B u t, on th e b a sis o f w a r o rd e rs a lre a d y e n te re d
in to , th e s te rlin g a re a ’s g o ld a n d d o lla r deficit f o r 1941 w a s e stim ate d
a t a b o u t $1,500 m illio n . I t w a s obvious, th e re fo re , t h a t th e s te rlin g
a re a ’s a b ility to p u rc h a se e q u ip m e n t a n d to w age w a r su ccessfully w as
ra p id ly b e in g e x h a u sted . T h e in tr o d u c tio n o f th e len d -lease p ro g ra m
in M arc h , how ever, rem o v ed th e fin a n c ia l obstacles to th e n ecessary
flow o f m a te ria ls a n d services, a n d b e fo re th e en d o f th e y e a r $740
m illio n in len d -le ase tr a n s f e rs h a d been m ade.
F u r th e r

N eeds

fo r

D o lla r

E xchange

T h e p re ss u re o f th e U n ite d K in g d o m ’s d o lla r reso u rces w a s n o t
eased, how ever, u n til 1942, w h e n th e cash p ro c u re m e n t o f w a r m a ­
te r ia ls w as v irtu a lly com pleted. F o r th e y e a r 1941, th e s te rlin g a re a ’s
d eficit w ith th e U n ite d S ta te s on “c ash ” c u rre n t-a c c o u n t item s
a m o u n te d to $870 m illio n , e qu a l to th e deficit on “c a sh ” m e rch a n d ise
tr a d e as services re c e ip ts a n d p a y m e n ts w ere in b alan c e. T h e se ttle ­
m e n t o f th is deficit (a s w ell as d o lla r deficits w ith o th e r c o u n trie s)
w as a cco m p lish ed chiefly th ro u g h th e sale o f $551 m illio n in g o ld to
th e U n ite d S ta te s, a n d th e u tiliz a tio n o f $350 m illio n fro m th e $425m illio n lo an g ra n te d in J u ly by th e R ec o n stru c tio n F in a n c e C o rp o ra ­
tio n . L iq u id a tio n s o f U n ite d K in g d o m in v estm e n ts in th e U n ite d
S ta te s also c o n tin u ed on a la rg e scale, th e sale o f se c u ritie s a m o u n tin g
to $237 m illio n a n d d ire c t in v estm e n ts to $79 m illio n . T h e sh o rt- te rm
c a p ita l flows in th is y e a r c on sisted p rin c ip a lly o f a n e t re d u c tio n
7 T h e e s tim a te o f $ 7 3 5 m illio n f o r c a p ita l w it h d r a w a ls a p p e a r s to h a v e b e e n in d ir e c tly
d e riv e d fro m th e e s tim a te s o f c u r r e n t- a c c o u n t tr a n s a c tio n s , a d v a n c e s , a n d c a p ita l a s s i s t­
a n c e , a n d t h e r e c o r d e d fl o w s f r o m t h e g o l d a n d d o l l a r r e s o u r c e s o f t h e U n i t e d K in g d o m .
B e c a u s e d a t a b e a r in g d ir e c tly o n th e s e c a p ita l m o v e m e n ts w e r e n o t a v a ila b le to th e D e p a r t­
m e n t o f C o m m e rc e , t h e e s ti m a te h a s n o t b e e n e n te r e d in to ta b le 2 8 , a n d i t is p ro b a b ly p a r t l y
f o r t h i s re a s o n t h a t t h e r e s id u a l ite m fo r 1 9 4 0 is so la rg e .
8 T h e v a r i o u s d e f i c i t i t e m s e s t i m a t e d a b o v e t o t a l $ 3 ,2 1 0 m i l l i o n . O t h e r p a y m e n t s t o t a l i n g
$71 m illio n a r e n o t a c c o u n te d fo r.

114

(th ro u g h d e liv erie s) o f $173 m illio n in ad v an ces m ad e to A m e ric a n
m a n u fa c tu re r s.
B y th e e n d o f 1941, th e b u lk o f B r itis h lo n g -te rm in v e stm en ts in
th e U n ite d S ta te s h a d been so ld o u tr ig h t o r h a d been p le d g e d a g a in st
th e R ec o n stru c tio n F in a n c e C o rp o ra tio n lo an . B r itis h h o ld in g s o f
d o lla r se c u ritie s a v a ila b le f o r liq u id a tio n h a d been re d u ce d fro m
$1,055 m illio n to $255 m illio n , a n d d ire c t in v estm en ts fro m $1,030
m illio n to $455 m illio n . O f th ese declines, $205 m illio n in se cu ritie s
a n d $495 m illio n in d ire c t in v e stm e n ts w ere h e ld as p le d g e s a g a in st
th e $425-m illio n R e c o n stru c tio n F in a n c e C o rp o ra tio n loan.
A s im ila rly d ra s tic d eclin e h a d o c cu rred in th e U n ite d K in g d o m ’s
g o ld a n d d o lla r b alan c es.9 F ro m a p p ro x im a te ly $2,225 m illio n a t
th e en d o f 1939, th ese resou rces fe ll to $300 m illio n in 1940. B y th e
end o f 1941 th e y h a d reco v ered to $395 m illio n , p ro b a b ly because o f
a d d itio n a l n e w ly p ro d u c e d g o ld fro m th e E m p ire .
'

,

i.

U n ite d

K in g d o m

P o s itio n

im p r o v e s

in

1942

T h e y e a r 1942 m a rk e d th e b e g in n in g o f a p e rio d e x te n d in g th ro u g h
1944 in w h ich th e re w as a s h a rp im p ro v e m e n t in th e U n ite d K in g d o m ’s
g o ld a n d d o lla r h o ld in g s. T h e se resources w ere re p o rte d as $700 m il­
lio n a t th e en d o f 1942, $1,300 m illio n in 1943, a n d $1,710 m illio n in
1944.10
I n 1942, th e s te rlin g a re a ’s deficit w ith th e U n ite d S ta te s on m e r­
c h a n d ise a n d services tra n sa c tio n s w as s till v e ry la rg e , $330 m illio n ,
b u t th is rep re se n te d a re d u c tio n o f m o re th a n 60 p e rc e n t fro m th e 1941
deficit. O n m e rc h an d ise a cco u n t, w h ile len d -le ase e x p o rts so ared
to $4,032 m illio n , U n ite d S ta te s “ c ash” e x p o rts fe ll by $700 m illio n
to a to ta l o f $1,174 m illio n (see ta b le 2 9 ). T h e U n ite d K in g d o m ’s
sh a re w as a b o u t e qu a l to th e -p re w a r level o f $500 m illio n b u t, since
v e ry la rg e a m o u n ts o f w a r m a te ria ls d e liv ere d a g a in st a d v a n c e p a y ­
m e n ts w ere in clu d e d , th e effects o f U n ite d K in g d o m re s tr ic tio n s on th e
im p o rta tio n o f n o n e ssen tia ls a n d consu m er goods a re a p p a re n t.
T h e d iv e rsio n o f m a te ria ls a n d p ro d u c tiv e fa c ilitie s in th e B ritis h
Isle s a n d elsew here in th e s te rlin g a re a to w a r p ro d u c tio n fo rce d a
re d u c tio n o f a b o u t $460 m illio n in p u rc h a se s b y p r iv a te U n ite d S ta te s
im p o rte rs. D e sp ite a n in crea se in p r o c u re m e n t by U n ite d S ta te s G o v ­
e rn m e n t c iv ilia n agencies a n d p u rc h a se s a b ro a d b y th e U n ite d S ta te s
a rm e d forces d u r in g th e y e a r, th is re d u c tio n re s u lte d in a declin e of
p a y m e n ts on m e rc h an d ise a cc o u n t o f $218 m illio n . T h e tr a d e deficit
o f th e s te rlin g a re a th u s a m o u n te d to $382 m illio n , c o m p are d w ith
$872 m illio n in 1941.
A n o th e r fa c to r o f im p o rta n c e in th e re d u c tio n o f th e s te r lin g -a r e a
deficit w as th e e x p e n d itu re o f th e U n ite d S ta te s a rm e d fo rce s on in s ta l­
la tio n s, th e m a in te n an ce o f tro o p s, a n d th e p u rc h a se o f services in
m a n y c o u n trie s o f th e s te rlin g a rea . D u r in g th e y e a r, a to ta l o f $311
m illio n w as sp en t— a sum w h ic h m o re th a n offset (by $52 m illio n )
s h a rp in crea se s in re c e ip ts on o th e r services. P re v io u sly , in 1940 a n d
1941, th e s te rlin g a re a ’s n e t re c e ip ts fro m th e U n ite d S ta te s on services
a cc o u n t w e re n e g lig ib le, a ris in g fro m a volum e o f tra n sa c tio n s com ­
p a ra b le w ith p re w a r , a lth o u g h ris in g f r e ig h t ra te s e n la rg e d th e f r e ig h t
a n d s h ip p in g a cc ou n t on b o th th e re ce ip ts a n d p a y m e n t sides. I n 1942,
9 W h ite P a p e r : S ta tis tic a l M a te r ia l P r e s e n te d D u r in g W a s h in g to n N e g o tia tio n s , C m d.
6707.
T h e s e a m o u n t s a r e n e t o f o u t s t a n d i n g l i a b i l i t i e s t o p r o v i d e g o ld a g a i n s t s t e r l i n g
lia b ilitie s a n d lia b ilitie s to c o n v e rt U n ite d S ta te s h o ld in g s o f s te r lin g in to d o lla r s o n d e m a n d .
10 I b i d .

115

U n ite d S ta te s re c e ip ts on th is a cc o u n t rose v ery sh a r p ly , as d id r e m it­
ta n c es o f m o tio n -p ic tu re r e n ta ls fro m th e U n ite d K in g d o m . F ilm c o m p an y e a rn in g s, w h ic h h a d been p a r tia lly b lock ed u n d e r th e ex ­
c h a n g e-co n tro l re g u la tio n s since th e b e g in n in g o f th e w a r, w ere re le a s­
e d as th e len d -lease p ro g ra m p ro m ised to relieve th e U n ite d K in g d o m ’s
e xch an ge situ a tio n .
B ecause o f th e v ery la rg e re d u c tio n s in th e U n ite d K in g d o m ’s d o lla r
b alan c es in 1940 a n d 1941 f o r m a k in g a d v a n c e p a y m e n ts to U n ite d
S ta te s m a n u fa c tu re rs, th e “c ash ” deficit o f $330 m illio n o n m e rc h a n ­
d ise a n d services a cc o u n t in 1942 d id n o t re s u lt in a c o rre sp o n d in g
decline in e xch an ge reserves. T ra n sa c tio n s in g o ld a n d lo n g -te rm
c a p ita l w ere sm all. T o ta l d e liv erie s in re p a y m e n t o f ad v a nc es w ere
$528 m illio n w h ich , i f e lim in a te d fro m th e c o m p u ta tio n o f th e deficit
in th e c u r re n t a cco u n t, leave a su rp lu s o f a lm o st $200 m illio n as th e
in crea se in U n ite d K in g d o m d o lla r b alan ces.11

Tabl e 29.— M e r c h a n d i s e

tr a n s a c tio n s o f th e

U n ite d S ta te s w ith

th e s te r lin g a r e a

,

1 9 J /0 -4 5

[In m illio n s of dollars]

It e m

P r iv a te

G ov­
ern ­
m ent

T o ta l

P r iv a te

1940
U n ite d S ta te s e x p o rts, to ta l.

U n ite d S ta te s im p o rts , to ta l.

G ov­
ern ­
m ent

T o ta l

P r iv a te

1941

1,381

22

1,403

1,881

1,381

22

1,403

1,881

G ov­
e rn ­
m ent

T o ta l

1942

740

2,621

1,161

4,044

5,205

740

1,881
740

1,161

12
4,032

1,173
4,032

704

40

744

870

139

1,009

405

1,131

1,536

704

40

744

870

139

1,009

405

386
745

791
745

U n ite d S ta te s e x p o r t s u rp lu s
( + ) o r im p o r t s u rp lu s ( —)

+659

+ 382

+ 8 72

1943

1944

1945

U n ite d S ta te s e x p o rts, to ta l.

346

8, 290

8, 636

397

8,978

9, 375

529

3,902

4,431

“ C a s h ” _____________
U n i la te r a l tr a n s f e rs .......

346

192
8,098

538
8,098

397

405
8, 573

802
8, 573

529

1,086
2,816

1,615
2,816

462

1,556

2,018

483

1,432

1,915

500

1,566

2,066

462

446
1,110

908
1,110

483

282
1,150

765
1,150

500

334
1,232

834
1,232

U n ite d S ta te s im p o rts , to ta l.
“ C a s h ” ______ _ _ _ _ _ _
U n ite d S ta te s e x p o rt s u r ­
p lu s ( + ) o r im p o r t su r p lu s

U n ite d

S ta te s

D e fic its

-3 7 0

in

1943

and

+37

+ 781

1944

T h e tr e n d to w a r d im p ro v e m e n t in th e ste rlin g a re a ’s p o sitio n vis-àv is th e U n ite d S ta te s w as a cc elerated in th e y e ars 1943 a n d 1944 as th e
p e a k o f U n ite d S ta te s w a r a ctiv itie s a b ro a d w as reach ed . L en d -lease
tr a n s f e rs o f m erch a n d ise to th e s te rlin g a re a a m o u n te d to $8,098 m il11
T h e n e t o u t f lo w o f $ 1 7 7 m i l l i o n i n f o r e i g n s h o r t - t e r m c a p i t a l i n 1 9 4 2 , s h o w n i n t a b l e 2 8 ,
i s c o m p o s e d a l m o s t e x c l u s i v e l y o f t h e o u t f lo w o f $ 5 2 8 m i l l i o n r e p r e s e n t i n g t h e r e d u c t i o n o f
a d v a n c e s t h r o u g h d e l i v e r i e s o f m a t e r i a l s , a n in f lo w o f $ 1 5 6 m i l l i o n o f n e w a d v a n c e s m a d e
i n 1 9 4 2 , a n d a n in f lo w ( i n c r e a s e ) o f U n i t e d K in g d o m a n d o t h e r s t e r l i n g - a r e a b a l a n c e s o f
$ 1 9 3 m illio n . T h e d iffe re n c e s b e tw e e n t h i s in c r e a s e o f $ 1 9 3 m illio n a n d t h e $ 3 0 5 m illio n
g iv e n in th e W h ite P a p e r m e n tio n e d a b o v e p ro b a b ly c o n s is ts p r in c ip a lly o f t h e n e t c h a n g e
i n U n i t e d K in g d o m g o ld h o l d i n g s a r i s i n g m a i n l y f r o m n e w p r o d u c t i o n .

116

,

(-

r- *

'

lio n in 1943 a n d $8,573 m illio n in 1944— a p p ro x im a te ly equal to th e
p e ak d o lla r volum e o f U n ite d S ta te s e x p o rts to th e w o rld in 1920.
W h e n p ric e in creases a re ta k e n in to a cco u n t, th is d o lla r volum e r e p ­
rese n te d p e rh a p s six o r seven tim e s th e a v era g e 1936-39 p h y sic a l
volum e o f e x p o rts to th e s te rlin g a re a. C o m p a re d w ith th ese e n o r­
m ous a m o u n ts, “c a sh ” e x p o rts o f $538 m illio n in 1943 a n d $802 m il­
lion in 1944 w ere re la tiv e ly in sig n ific an t. T h e 1943 “c a sh ” e x p o rts
to th e U n ite d K in g d o m o f a p p ro x im a te ly $215 m illio n rep re se n te d
o n ly 40 p e rc e n t o f th e 1936-39 a v era g e v a lu e a n d o n ly 30 p e rc e n t o f
th e volum e. T h e e x p o rts to th e o th e r ste rlin g a re a c o u n tries, $323
m illio n , re p re se n te d 118 p e rc e n t o f th e a v era g e 1936-39 v a lu e a n d 87
p e rc e n t of th e volum e.
A lm o st 40 p e rc e n t o f th e to ta l “cash” e x p o rts to th e s te rlin g a re a
in 1943 c on sisted o f tr a n s a c tio n s b y U n ite d S ta te s G o v e rn m e n t agencies
a n d in clu d e d sales fro m m ilita ry stocks a b ro a d o f $78 m illio n ,12 lendlease tr a n s f e rs o f silv e r v a lu e d a t $30 m illio n ,13 C o m m o d ity C re d it
C o rp o ra tio n sales o f to bacco a m o u n tin g to $72 m illio n , a n d re im ­
b u rsa b le len d -lease tr a n s a c tio n s o f $10 m illio n . N e a rly a ll o f th e in ­
crease in to ta l “c ash ” e x p o rts in 1944 aro se fro m such tr a n s a c tio n s ;
silv e r d e liv erie s on c re d it in c re ased to $99 m illio n , sales fro m m ilita ry
stocks to $200 m illio n , a n d re im b u rsab le lend-lease tr a n s f e rs to $38
m illio n . C o m m o d ity C re d it C o rp o ra tio n sales a m o u n te d to $60 m il­
lion.
W h ile “c a sh ” e x p o rts fe ll to th e lo w est levels o f th e w a r p e rio d in
1943 a n d 1944, U n ite d S ta te s p u rc h a se s in th e ste rlin g a re a c o n tin u e d
a t h ig h e r th a n p re w a r levels. In c re a s e d p ro c u re m e n t b y th e a rm ed
fo rce s in th e field a n d by p r iv a te im p o rte rs b r o u g h t to ta l p a y m en ts
f o r m erch a n d ise to $908 m illio n in 1943, w h ile som e decline in p r o ­
c u re m e n t b y U n ite d S ta te s G o v e rn m e n t c iv ilia n agencies accoun ted
f o r a decline to $765 m illio n in 1944. I n s te a d o f v ery la rg e su rp lu se s
as in th e p re v io u s w a r y e ars, th e U n ite d S ta te s e x p erien ced a deficit
o f $370 m illio n on m e rch a n d ise tr a d e in 1943 a n d a sm a ll su rp lu s of
$37 m illio n in 1944.
E x p e n d itu re s by th e U n ite d S ta te s a rm e d forces rose c o rre sp o n d ­
in g ly as th e fig h tin g in a ll p a r ts o f th e w o rld re a c h e d its c lim a x in
1943 a n d 1944. N e t e x p e n d itu re s in th e ste rlin g a re a clim bed to $465
m illio n in 1943 a n d to $673 m illio n in 1944 (see ta b le 3 0 ). O n o th e r
services, th e U n ite d S ta te s c o n tin u e d to h a v e la rg e re c e ip ts balances.
M o tio n -p ic tu re r e n ta l re c e ip ts d eclin ed fro m 1942, since re m itta n c e s
w e n t b a ck to a c u rre n t basis. B u t th e la c k o f c o m p e titio n fro m m ost
E u ro p e a n sources o f film s, as w ell as in creased th e a te r a tte n d a n c e stem ­
m in g fro m h ig h w a rtim e incom es in th e s te r lin g -a r e a c o u n trie s a n d th e
presen ce o f la rg e n u m b e rs o f A m e ric a n tro o p s, re su lte d in rem itta n c e s
a lm o st th re e tim e s th o se o f p re w a r y e ars. F r e ig h t a n d s h ip p in g re ­
c eip ts also in c re ased as th e p a rtic ip a tio n o f A m e ric a n vessels in c a r r y ­
in g U n ite d S ta te s e x p o rts becam e g re a te r a n d as f r e ig h t ra te s con­
tin u e d to rise.
N o la rg e v a ria tio n s o c cu rred in o th e r service item s. Som e decline
in p a y m en ts on ste rlin g -a re a in v estm e n ts o c cu rred , o w ing to th e effects
o f th e liq u id a tio n s o f th e e a rly w a r y e a rs a n d to in crea se d U n ite d
12 C o n s i s t s p r i n c i p a l l y o f s a l e s b y t h e A r m y , d i r e c t l y
c lo th in g , a n d o th e r s u p p lie s a n d m a te r ia ls n e c e s s a ry f o r
13 F r o m 1 9 4 3 t h r o u g h 1 9 4 5 . l a r g e q u a n t i t i e s o f s i l v e r
o n a l o a n b a s i s t o I n d i a , t h e U n i t e d K in g d o m , A u s t r a l i a ,
n rin c ip a lly f o r c u rre n c y p u rp o se s. T h is s ilv e r m u s t be
5 y e a rs fro m th e en d o f th e w a r.

o r th r o u g h c o n tr a c t o r s , o f fo o d ,
t h e m a in te n a n c e o f c iv ilia n la b o r.
w e r e t r a n s f e r r e d u n d e r le n d - l e a s e
a n d a n u m b e r o f o th e r c o u n trie s ,
r e p a i d in k i n d w i t h i n a p e r i o d o f

117

S ta te s w ith h o ld in g ta x e s on incom e. O f th e re m a in in g services, th e
m o st n o te w o rth y w ere th e s te rlin g -a re a c o u n trie s’ e x p e n d itu re s in th e
U n ite d S ta te s f o r th e m a in te n a n c e o f p u rc h a s in g m issions a n d d ip lo ­
m a tic e sta blish m en ts, a n d in su ra n c e a n d re in su ra n c e p a y m e n ts b y th e
U n ite d S ta te s to th e U n ite d K in g d o m . B o th th ese ite m s w ere su b­
s ta n tia l, w ith n e t in su ra n c e a n d re in su ra n c e p a y m e n ts a m o u n tin g to
$22 m illio n in each year.

Ta bl e

30.—

“ C ash ”

s e r v ic e s

tr a n s a c tio n s o f th e
a r e a , 19J t 0 - 4 5

U n ite d

S ta te s

w ith

th e

s te r lin g

[In m illio n s of d o llars]
I te m

1940

1941

1942

1943

1944

1945

251

339

516

527

643

646

G o v e rn m e n t services 1............ .................. ..............
F r e ig h t a n d s h ip p in g . .............................................
In c o m e o n in v e s tm e n ts ....... ..................... ..............
T r a v e l_____________ _ _ _ _ _ ___________ _____
O th e r se rv ic e s ___ ___________ _______ _______

7
84
77
7
7G

17
137
66
7
112

20
161
81
23
231

43
171
78
18
217

153
167
8027
216

90
245
76
28
207

U n ite d S ta te s p a y m e n ts , t o t a l ___________________

276

341

568

834

1,145

900

2.
58
74
7
135

40
73
60
9
159

311
74
49
8
126

508
111
43
9
163

826
64
46
20
189

563
69
47
31
190

-5 2

-3 0 7

-5 0 2

-2 5 4

U n ite d S ta te s re c e ip ts, to ta l- .................................. . . .

G o v e rn m e n t serv ic e s i ....... .......................... ...........
F r e ig h t a n d s h i p p i n g ___ _____ ______ _______
In c o m e o n i n v e s t m e n t s . ______ _ _ __ _ __ _ __ _ __
T r a v e l......................... .................................. ...........
O th e r se rv ic e s ........... .................................. ...........
E x c e ss of p a y m e n ts ( —) ................ . ................... ...........

-2 5

-2

1 D o e s n o t in c lu d e re c e ip ts o r e x p e n d itu re s o n G o v e rn m e n t a c c o u n t for in c o m e o n in v e s tm e n ts (in te re st on
lo a n s) o r for fr e ig h t a n d s h ip p in g tr a n s a c ti o n s , b u t e x p e n d itu re s for G o v e r n m e n t tr a v e l a r e in c lu d e d .

I n a ll, U n ite d S ta te s n e t re c e ip ts on services o th e r th a n G o v e rn m en t
tr a n s a c tio n s a v era g e d $165 m illio n in 1943 a n d 1944. O n a ll services
accoun ts in c lu d in g th e G o v e rn m e n t accoun t, th e U n ite d S ta te s h a d n e t
deficits o f $307 m illio n a n d $502 m illio n . T o g e th e r w ith th e b alan ces
on m e rc h an d ise accoun t, th e U n ite d S ta te s c u r re n t-a c c o u n t deficits
a m o u n te d to $676 m illio n a n d $465 m illio n . T h is situ a tio n w as reflected
in th e g ro w th o f U n ite d K in g d o m ba la nc es in 1943 a n d th e p u rc h a se
a n d w ith d ra w a l o f $696 m illio n in g o ld by th e U n ite d K in g d o m in
1944.
S te r lin g -A r e a

D e fic it

R eem erges

in

1945

T h e p a tte r n o f tra n sa c tio n s b etw een th e U n ite d S ta te s a n d th e s te r ­
lin g a re a re v e rte d in 1945 to th a t p r e v a ilin g in th e y e a rs 1940 th ro u g h
1942, w ith a h u g e U n ite d S ta te s s u rp lu s on m e rc h an d ise a n d services ac­
c o u n t a g a in a p p e a r in g . T h is w as due p rin c ip a lly to th e se ttle m e n t o f
th e len d -lease a n d th e re c ip ro c a l-a id a c c o u n t14 u n d e r w h ic h $472 m il­
lio n o f len d -le ase goods a n d $60 m illio n o f su rp lu s w a r p r o p e r ty w ere
tr a n s f e r r e d a g a in s t th e $532-m illion c re d it p ro v id e d in th a t ag ree m e n t.
I n a d d itio n , $112 m illio n in len d -le ase goods w ere in c lu d e d in “c ash ”
tr a d e a n d offset a g a in s t re c ip ro c a l-a id tr a n s f e r s to th e U n ite d S ta te s
a n d sum s d u e to th e U n ite d K in g d o m in th e se ttle m e n t o f v a rio u s claim s
a ris in g o u t o f th e w a r. D ir e c t sales b y U n ite d S ta te s G o v e rn m en t
c o rp o ra tio n s, c h ie fly th e C o m m o d ity C re d it C o rp o ra tio n , a m o u n te d
to $206 m illio n , a n d a d d itio n a l lo an s o f silv e r on c re d it a m o u n tin g to
$104 m illio n w e re m ade. R eim b u rsab le lend-lease, o th e r su rp lu s p r o p ­
e rty , a n d m ilita ry sales a m o u n te d to $132 m illio n . I n a ll, th e above
14

118

See p. 121.

G o v e rn m en t “ c a sh ” m e rch a n d ise tra n sa c tio n s a m o u n te d to $1,086
m illio n , w h ich , to g e th e r w ith p r iv a te e x p o rts o f $529 m illio n , re s u lte d
in to ta l re c e ip ts on m e rc h an d ise a cc o u n t o f $1,615 m illio n , o r m o re
th a n d ou ble th e 1944 to ta l.
I m p o rts also c o n tin u e d a t th e p re v io u s h ig h levels, a m o u n tin g to
$834 m illio n , b u t th e U n ite d S ta te s e x p o rt b a la n c e w h ich e m e rg ed w as
$781 m illio n a s a g a in st o n ly $37 m illio n in 1944. T h is a m o u n t w as
offset on services acco u n t to th e e x te n t o f $254 m illio n , h a lf th e U n ite d
S ta te s deficit in 1944, as U n ite d S ta te s a rm e d forces e x p e n d itu re s d e ­
creased s h a rp ly w ith th e e n d in g o f th e w a r a n d a s U n ite d S ta te s
f r e ig h t a n d s h ip p in g re c e ip ts c lim bed w ith ris in g f r e ig h t ra te s . T h e
ste rlin g -a re a deficit on m erch a n d ise a n d services o f $528 m illio n w as
liq u id a te d c h ie fly th ro u g h th e g r a n t o f c re d it m e n tio n e d above. B u t
i t also re q u ire d a re d u c tio n o f U n ite d K in g d o m a n d o th e r ste rlin g a re a sh o rt- te rm d o lla r assets o f $130 m illio n .
JT"

'

B r itis h

B a la n c e -o f-P a y m e n ts

P r o b le m

T h e n e t effect o f th e tra n sa c tio n s o f th e ste rlin g a re a w ith th e
U n ite d S ta te s since 1940 h a s b e en to p e r m it th e U n ite d K in g d o m to
re g a in a su b s ta n tia l p o rtio n o f th e g o ld a n d d o lla r reserves lo st d u r ­
in g th e w a r. B u t, in te rm s o f its a b ility to b a la n ce its in te rn a tio n a l
acco u n ts a n d l i f t th e s ta n d a r d o f liv in g o f its peo p le fro m th e low
levels o f th e w a r a n d im m e d iate p o s tw a r p e rio d , B r ita in ’s w a r e ffort
h a s cost i t d e a rly . I t s e x p e n d itu re s in th e n e x t few y e a rs f o r goods
a n d services in volum es c o m p a ra b le w ith th o se o f p re w a r y e a rs w ill,
because o f h ig h e r p rices, in v o lv e f a r g re a te r th a n p r e w a r o u tla ys.
A t th e sam e tim e , its in te rn a tio n a l reso u rces a n d e a rn in g c a p a c ity n av e
s h a rp ly declined.
A s a re s u lt o f th e h ig h d e g ree o f m o b iliz a tio n f o r w a r, th e volum e o f
B r itis h e x p o rts s h ra n k to a t h ir d o f its p re w a r level a n d th e efficiency
o f B ritis h p ro d u c tio n g r e a tly d e te rio ra te d .13*1516 F o re ig n m a rk e ts f o r a
volum e o f e x p o rts e qu a l to t h a t o f p re w a r c ou ld n o t be re g a in e d b e ­
fo re th e en d o f 1946,10 i t w as e stim a te d . S h ip p in g incom e w o u ld be
su b sta n tia lly s m a lle r th a n p re w a r , since th e B ritis h m erch a n d ise fleet
h a d b een recluced to th re e -fo u rth s th e to n n a g e a v ailab le as o f th e o u t­
b re a k o f th e w a r.
T h e liq u id a tio n o f A m e ric a n assets (d e sc rib e d on p re v io u s p a ge s)
w as o n ly a p o rtio n o f th e to ta l c a r rie d o u t d u r in g th e w a r b y th e
U n ite d K in g d o m . I n a ll, th e B ritis h disposed o f oversea in v e stm e n ts
to th e v a lu e o f $4,500 m illio n betw een S e p te m b e r 1939 a n d J u n e 1945.
I n a d d itio n , th e h u g e cash e x p e n d itu re s b y th e U n ite d K in g d o m in th e
c o n d u c t o f th e w a r in crea se d its oversea d e b t fro m $1,920 m illio n to
$13,500 m illio n b y J u n e 1945 ($14,100 m illio n on D ecem ber 31, 1945).
T h e in te re s t p a y a b le on th is h u g e d e b t p lu s th e loss o f incom e o n o v e r­
sea assets w o u ld, i t w as e stim a te d , red u c e B r ita in ’s n e t incom e on
in v e s tm e n t a cc o u n t to a b o u t h a lf t h a t o f 1938.
G o v e rn m e n t e x p e n d itu re s, in sig n ific a n t b e fo re th e w a r, w o u ld be o f
c o n sid e ra b le im p o rta n c e in th e im m e d ia te fu tu re , because o f o ccu p a­
tio n expenses in enem y c o u n trie s a n d o th e r p o s tw a r co m m itm en ts.
T h e in crease in th e volum e o f e x p o rts w h ich w o u ld b e necessary to
p a y fo r th e p re w a r volum e o f im p o rts, a f te r a llo w in g f o r th e decline
13 F o r f u l l d a t a o n t h e B r i t i s h b a l a n c e - o f - p a y m e n t s p r o b l e m a s i t a p p e a r e d i n m id - 1 9 4 5 ,
se e th e W h ite P a p e r : S ta tis tic a l M a te r ia l P r e s e n te d D u r in g th e W a s h in g to n N e g o tia tio n s ,
C m d . 6 7 0 7 , fro m w h ic h t h e fo llo w in g o u tlin e h a s b e e n ta k e n .
16 A c t u a l l y , a s i t d e v e lo p e d , t h e p r e w a r v o l u m e w a s r e g a i n e d b y J u l y 1 9 4 6 .

119

in o th e r sources o f incom e a n d a ssu m in g a d o u b lin g o f im p o rt a n d
e x p o rt p ric e s o ver th e 1938 level, is o f th e o rd e r o f 50 p e rce n t. B u t i t
w as e stim a te d t h a t a d d e d req u irem e n ts f o r w o rk in g c a p ita l to finance
oversea tr a d e , fo r m a in ta in in g th e s ta n d a rd o f liv in g o f a la rg e r p o p u ­
la tio n , a n d fo r re p a y in g w a r a n d p o stw a r d e b ts w o u ld re q u ire a volum e
o f e x p o rts 75 p e rc e n t above t h a t o f 1938. B efo re th is g o a l could be
reach ed , a deficit on c u rre n t a cc ou n t in 1946 o f $3,000 m illio n w as
foreseen,17 a n d $2,000 m illio n fo r 1947 a n d 1948 ta k e n to g eth e r.
A m e r ic a n

A s s is ta n c e

T h e e xch an g e reso u rces a v a ila b le to th e U n ite d K in g d o m 18 a n d th e
fu n d s w h ich m ig h t becom e a v ailab le fro m th e I n te r n a tio n a l M one­
ta r y F u n d ($325 m illio n p e r y e a r a t th e m ax im u m ) could n o t cover
deficits o f th e size e stim a te d in th e W h ite P a p e r.19 N o r c ou ld f u r th e r
liq u id a tio n s o f B ritis h oversea in v e stm e n ts be co u n ted u p o n to p ro v id e
m uch a d d itio n a l m oney, since th e m o st m a rk e ta b le se cu ritie s h a d
a lre a d y been so ld o r p led g ed .
O n th e b a sis o f th e a n aly sis in th e W h ite P a p e r, n e g o tia tio n s fo r
d ire c t a id to th e U n ite d K in g d o m w ere e n te re d in to b etw een th e
G o v e rn m en ts o f th e U n ite d S ta te s a n d th e U n ite d K in g d o m in N o ­
vem b er 1945. A n a g ree m e n t w as a n n o u n ce d by P re s id e n t T ru m a n
on D ecem b er 6, 1945,20 a n d ra tifie d b y th e U n ite d S ta te s C o n g ress in
J u ly 1946. T h is a g ree m e n t p ro v id e d f o r th e e xten sio n o f a lin e o f
c re d it to th e U n ite d K in g d o m in th e a m o u n t o f $3,750 m illio n to be
a v a ila b le u n til D ecem ber 31, 1951. S ervice c h a rg e s a re to begin on
th a t d a te a n d a re to consist o f 50 equal a n n u a l in sta lm e n ts, in c lu d ­
in g in te re st a t 2 p e rce n t p e r a n n u m on th e a m o u n t o u ts ta n d in g a t th e
b e g in n in g o f each y ear.
T o ease th e c o n d itio n s o f re p a y m e n t w h e n th e “ p re se n t a n d p ro sp ec ­
tiv e c o n d itio n s o f in te rn a tio n a l e xch an ge a n d th e level o f th e U n ite d
K in g d o m ’s g o ld a n d fo re ig n e xch an ge reserve s” m a k e i t necessary
to do so, th e a g ree m e n t p ro v id e s t h a t th e U n ite d S ta te s w ill g r a n t a
w a iv e r o f in te re s t in c e r ta in circu m stan ces. S pecifically, th is w a iv e r
is c o n d itio n ed u p o n th e c ertific a tio n b y th e I n te r n a tio n a l M o n e ta ry
F u n d t h a t th e U n ite d K in g d o m ’s incom e fro m e x p o rts a n d n e t se rv ­
ices f o r th e five p re c e d in g y e ars w as on th e a v era g e less th a n its im ­
p o rts d u r in g th e p e rio d 1936-38 (h e re fixed a t $866 m illio n ) as such
fig u re m ay be a d ju s te d f o r im p o rt p rice changes.
, O ne o f th e sta te d p u rp o se s o f th e lo a n w as to a id th e U n ite d K in g ­
dom in a ssu m in g th e o b lig a tio n s in h e re n t in a m u ltila te ra l sy stem of
w o rld tra d e . I n rec o g n itio n o f th is aim , th e U n ite d K in g d o m ag reed
to p e rm it a ll s te r lin g -a r e a c o u n trie s, w ith in 1 y e a r fro m th e effective
d a te o f th e a g ree m e n t, to dispose fre e ly o f th e ir re c e ip ts o f s te rlin g
e a rn e d in c u rre n t tra n s a c tio n s w ith th e U n ite d K in g d o m . T h is p r o ­
v isio n w ill h av e th e effect o f d o in g a w a y w ith th e w a rtim e o p e ratio n s
o f th e ste rlin g -a re a d o lla r pool. I n a d d itio n , effective im m e d ia te ly,
th e U n ite d K in g d o m a g ree d n o t to a p p ly exch an ge c o n tro ls in such
a m a n n e r as to r e s tr ic t p a y m e n ts on c u rre n t acco u n t to th e U n ite d
17 T h e a c t u a l d e f i c i t a m o u n t e d t o $ 1 ,6 0 0 m il lio n . S e e p . 1 2 1 .
18 N e t h o l d i n g s o f g o l d a n d d o l l a r s w e r e e s t i m a t e d a t $ 1 ,8 4 0 m i l l i o n a s o f O c t o b e r 3 1 ,
1 9 4 5 , in th e W h ite P a p e r.
19 A l t h o u g h t h e I n t e r n a t i o n a l B a n k o f f e r e d g r e a t e r p o s s i b i l i t i e s f o r “ e c o n o m ie s d e s t r o y e d
o r d i s r u p t e d b y t h e w a r , ” t h e u s e o f i t s f a c i l i t i e s h a d n o t b e e n c o n s i d e r e d , in v ie w o f t h e
m o r e im m e d i a t e p l a n s f o r b a la n c e - o f - p a y m e n t s a i d .
20 “ F i n a n c i a l A g r e e m e n t b e tw e e n t h e G o v e r n m e n t s o f t h e U n i t e d S t a t e s a n d t h e U n i t e d
K i n g d o m .”
S ee S t a t e D e p a r tm e n t B u lle tin , r o l . X I I I , N o . 3 3 7 , D e c e m b e r 9, 1 9 4 5 .

120

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''V

S ta te s o r th e use o f s te rlin g b alan c es a ris in g o u t o f c u r re n t tr a n s ­
a ctio n s a n d ow ned b y U n ite d S ta te s resid e n ts.
T h e U n ite d K in g d o m also c o m m itte d its e lf to li f t , w ith in 1 y e ar,
re s tr ic tio n s on p a y m e n ts a n d tr a n s f e rs f o r c u r re n t tr a n s a c tio n s in re-^
sp ect o f a ll c o u n tries. I t f u r th e r a g re e d to e n te r in to n e g o tia tio n s w ith
c o u n trie s h o ld in g block ed ba la nc es lo o k in g to w a r d th e s e ttlin g o f
su ch b alan ces, fre e in g a p o rtio n o f th e m f o r use in o th e r c u rre n cy
a reas.
I n a “ S e ttle m e n t fo r L e n d -L ea se , R e cip ro c a l A id , S u rp lu s W a r
P r o p e r ty a n d C la im s” 21 a ris in g o u t o f th e c o n d u c t o f th e w a r, th e
U n ite d K in g d o m a g re e d to p a y th e U n ite d S ta te s $650 m illio n , su b ject
to a cc o u n tin g a d ju s tm e n ts fo r services a n d su p p lie s fu rn is h e d th ro u g h
len d -le ase a n d re c ip ro c a l-a id c h an n e ls a f te r V J -d a y . P a y m e n ts by
th e U n ite d K in g d o m on th is c re d it w ere to be m ad e on th e sam e te rm s
as th o se specified f o r th e re p a y m e n t o f th e c re d it p ro v id e d in th e
L o a n A g reem en t.
I n a s e p a ra te sta te m e n t, th e tw o G o v e rn m en ts in d ic a te d th e ir a g ree ­
m e n t on a set o f p r in c ip le s 22 d e sig n e d to p ro m o te m u ltila te ra lism in
w o rld tra d e . T h e se d ea l w ith th e re la x a tio n o r a b o litio n o f (1) ta riffs
a n d p r e fe re n tia l ag ree m e nts, (2) q u a n tita tiv e re stric tio n s on im p o rts,
(3) su bsid ies on e x p o rts, (4 ) c a rte l a rra n g e m e n ts, (5 ) sta te tr a d in g ,
a n d (6) o th e r ty p e s o f b a r rie r s to fre e tr a d e . T h e se p ro p o sals w ere
p re se n te d to o th e r g o v e rn m e n ts a n d a p re lim in a ry c h a r te r f o r a n
I n te r n a tio n a l T r a d e O rg a n iz a tio n w as d ra w n u p . A t th e p re se n t
w ritin g ( J u n e 194 7), d e le ga te s fro m 18 n a tio n s a re m ee tin g a t G eneva
in o r d e r to a g ree on c on crete m ea su res f o r f a c ilita tin g m u ltila te ra l
tra d e .
O u tlo o k

fo r

U n ite d

S ta te s -S te r lin g

A rea

T r a n sa c tio n s

D e velo p m en ts d u r in g 1946 h av e b o rn e o u t to a su b s ta n tia l d egree th e
a n aly sis a n d fo rec asts m ad e in th e W h ite P a p e r p re se n te d in th e n eg o ­
tia tio n s fo r th e $3,750 -m illio n U n ite d S ta te s lo a n to th e U n ite d K in g ­
dom . T h e U n ite d K in g d o m ’s b a la n c e -o f-p a y m e n ts deficit o f £400
m ill io n 23 in 1946 re p re s e n te d a g r e a t im p ro v e m e n t u p o n th e deficit
o f £750 m illio n a n tic ip a te d in th e W h ite P a p e r. B u t th e circu m stan ces
s u rro u n d in g th is im p ro v e m e n t in d ic a te c o n tin u ed b a la n c e-o f-p ay m e n ts
difficulties a n d re s tr ic te d liv in g s ta n d a rd s f o r th e B ritis h people.
I n th e first p lace, th e p h y sic a l volum e o f im p o rts in to th e U n ite d
K in g d o m rose to o n ly a little m o re th a n tw o -th ir d s t h a t o f 1938. P r i ­
m a r ily , th is re p re s e n te d a fa ilu re to fu lfill th e m in im u m im p o rt p r o ­
g ra m co v e rin g consu m er goods a n d in d u s tria l m a te ria ls a n d m a c h in ery
co n sidered e ssen tia l f o r rec o n stru c tio n . M oreov er, in ste a d o f th e sp e ­
c ialized m ac h in e ry a n d u r g e n tly need ed in d u s tria l ra w m a te ria ls w h ich
th e U n ite d K in g d o m h o p e d to im p o rt fro m th e U n ite d S ta te s, e x p e n d i­
tu re s in th e U n ite d S ta te s h a v e been p rin c ip a lly f o r c onsu m er goods.
I n th e 6 m o n th s fro m J u n e to D ecem ber 1946, f o r ex am p le, o f to ta l
B ritis h e x p e n d itu re s in th e U n ite d S ta te s f o r c iv il im p o rts a n d film s
a m o u n tin g to $496 m illio n , 56 p e rc e n t h a ve been f o r foo d a n d tobacco
a n d 7 p e rc e n t fo r film s, w h ile o n ly 11 p e rc e n t w ere fo r ra w m a te ria ls,
12 p e rc e n t f o r p e tro le u m p ro d u c ts, a n d 14 p e rc e n t f o r m achinery^
21 “ J o i n t S t a t e m e n t R e g a r d i n g S e t t l e m e n t f o r L e n d - L e a s e , R e c i p r o c a l A id , S u r p l u s W a r
P r o p e r t y a n d C l a i m s , ” ib id .
22 “ P r o p o s a l s f o r C o n s i d e r a t i o n b y a n I n t e r n a t i o n a l C o n f e r e n c e o n T r a d e a n d E m p l o y ­
m e n t , ” ib id .
23 N a t i o n a l I n c o m e a n d E x p e n d i t u r e o f t h e U n i t e d K in g d o m , 1 9 3 8 t o 1 9 4 6 , H M S O , C m d .
7 0 9 9 , A p ril 1 94 7.

7 6 9 1 5 5 -4 8 -

9

121

sh ip s, a n d o th e r m a n u fa c tu re d p ro d u c ts (in c lu d in g som e consu m er
g o o d s). G ro w in g d e m a n d s in th e U n ite d K in g d o m f o r m o re fre e ly
a v a ila b le foo d stu ffs a n d o th e r co n su m er goods m a y s till f u r th e r in ­
crease th e r a te o f im p o rta tio n o f su ch item s, w h ich , b y O c to b e r o f 1946,
h a d a lre a d y rea c h e d fo u r -fifth s o f th e 1938 level.
O n th e e x p o r t side, a m o re e n c o u rag in g p ic tu re is p rese n te d , th e
volum e o f e x p o rts h a v in g re ac h ed th e 1938 level b y J u l y a n d su rp a ss ­
in g t h a t level each m o n th u n til th e e n d o f th e y e ar. B u t by th e la st
q u a r te r o f 1946, th e h ig h r a te o f in crea se o f 1945 a n d th e e a rly p a r t of
1946 h a d slow ed a n d th e ris in g tr e n d o f e x p o rts a p p e a re d to h av e
re ac h ed a p la te a u . T h e p ro sp e cts f o r c o n tin u e d sh o rta g e s o f ra w
m a te ria ls a n d la g g in g e x p o r t p ro d u c tio n , as w ell as in crea sed c o m p e ti­
tio n in e x p o rt m a rk e ts, m a y slow th e r a te o f in crea se in e x p o rts in 1947
even below th e lessened r a te o f th e la s t m o n th s o f 1946.
O n e o f th e m o st u n f a v o ra b le asp e cts o f th e U n ite d K in g d o m ’s
d riv e fo r a volum e o f e x p o rts 75 p e rc e n t above th e 1938 level is th e fa c t
t h a t th e sm a lle st g a in s h a v e been m a d e w ith th e c o u n trie s w h ich loom
la rg e s t in th a t c o u n try ’s to ta l e x p e n d itu re s a b ro a d . E x p o rts to th e
U n ite d S ta te s, f o r ex am p le, w e re o n ly $156 m illio n , c o m p a re d w ith $118
m illio n in 1938, a n in crea se o f ,32 p e rc e n t in v a lu e b u t a d ro p o f 40
p e rc e n t in volum e. U n ite d K in g d o m im p o rts fro m th e U n ite d S ta te s,
on th e o th e r h a n d , rose to $856 m illio n , a n in crea se o f 64 p e rc e n t above
1938, a n d th e tr a d e deficit th u s a m o u n ted to th e h u g e sum o f $700
m illio n . A m o n g o th e r c o u n trie s w ith w h ich s im ila r situ a tio n s e x ist
a re C a n a d a , A rg e n tin a , S w eden, a n d C uba. W h e n th e U n ite d K in g ­
d o m ’s c o n tin u ed needs f o r fo o d , in d u s tria l m a n u fa c tu re s , a n d ra w
m a te r ia ls fro m th e se c o u n trie s a re co n sid e re d in th e lig h t o f its fa ilu re
to e x p a n d e x p o rts to th em d u rin g a p e rio d o f p e a k econom ic a c tiv ity ,
little re d u c tio n in th e size o f th e b a la n c e -o f-p a y m e n ts deficit can be
foreseen.
A c co rd in g to th e C h an ce llo r o f th e E x c h e q u e r, th e size o f th e U n ite d
K in g d o m deficit a n tic ip a te d f o r 1947 m ay be p u t a t £400 m illio n , equal
to th e 1946 deficit, o r p e rh a p s even la rg e r. T h e d eficit w ith th e “h a r d
c u rre n c y ” c o u n trie s m a y be la r g e r y e t i f th e u n fa v o ra b le tr e n d of
tr a d e w ith th o se c o u n trie s c on tinu es. I t is e stim a te d t h a t d ra w in g s
on th e $3,750 m illio n U n ite d S ta te s lo a n in 1947, f o r th e d ire c t deficit
w ith th e U n ite d S ta te s, as w ell as f o r d o lla r p a y m e n ts in connection
w ith th e o ccu p a tio n o f G e rm a n y a n d f o r p o ssib ly in crea se d conversion
o f o th e r c o u n trie s’ ste rlin g h o ld in g s, w ill a m o u n t to $1 b illio n in a d d i­
tio n to th e $2,050 m illio n a lre a d y d ra w n b y J u n e 30, 1947. T h is ra te
o f w ith d ra w a l su g g e sts th e p o ssib ility o f th e e x h a u stio n o f th e c re d it
e a rly in 1948.
T r a n s a c t io n s W it h

C anada

T h e d e v e lo p m e n t o f th e C a n a d ia n econom y d u r in g th e w a r y e ars
w as rem ark a b le . U n d e r th e stim u lu s o f w a r-b o rn necessity , C a n a d a
ex te n d e d its p o s itio n as one o f th e w o rld ’s g re a te s t p ro d u c e rs o f ra w
m a te ria ls b y d e v e lo p in g th e o u tp u t o f su ch p r o d u c ts as m ic a, tu n g ste n ,
c h ro m iu m , m o lyb d en u m , m ercu ry , p e tro le u m , iro n ore, a lum in u m ,
chem icals, p la stic s, a n d sy n th e tic ru b b e r.
T h e g re a te st p ro g re ss w as m a d e in th e in d u s tria l field, how ever.
T h e v a st e x p a n sio n o f e x istin g p la n t a n d th e c o n stru c tio n o f new
p ro d u c tiv e fa c ilitie s w h ich w ere u n d e rta k e n b y b o th p riv a te in d u stry
a n d G o v e rn m en t d u r in g th e w a r m ad e C a n a d a one o f th e w o rld ’s
122

Tabl e 31.—T ra n sa c tio n s

o f th e U n ited S ta te s w ith C a n a da , 1940-45
[ I n m illio n s of dollars]

I te m

1940

1941

1942

1943

1944

I . R e c e ip ts , t o t a l . ............................. ..................... ........

1,116

1,352

1, 645

2,019

2,107

1,827

A . G oo ds a n d services, t o t a l _ _ _ _ _ _ _ _ _ _ _ ______
1. G o o d s---------------------------------- ------ 2. In c o m e o n in v e s tm e n ts _______________
3. O th e r s e r v ic e s .._ _ _ _ _ _ _ _______________
B . U n i la te r a l tr a n sf e r s ..... ........ ......... .................. .
C . L o n g -te rm c a p ita l, t o t a l ....... ............. ................
1. M o v e m e n ts of U n ite d S ta te s c a p ita l inv e s te d a b r o a d ___ ______ ____ _ _ _ _ _ _ _ _ _
2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in

1,054
722
232
100
14
48

1,300
998
216
86
6
46

1, 546
1, 234
216
96
17
82

1,800
1,459
205
136
24
195

1,858
1,487
206
165
22
227

1,600
*1, 210
205
185
22
205-

46

46

81

195

196

205'

I I . P a y m e n ts , t o t a l .......... ................................. ...........

716

966

1,353

2,188

2,047

1,868

A . G oods a n d serv ic e s, to t a l __________ _______
1. G oo d s---------------------------------------------2. In c o m e o n in v e s tm e n ts ______ _
___ _
3. O th e r serv ic e s_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ______
B . U n ila te r a l tr a n sf e r s __ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _
C . L o n g -te rm c a p ita l, t o t a l ......... . __ ...............
1. M o v e m e n ts of U n ite d S ta te s c a p ita l inv e s te d a b r o a d ............................ _ ..........
2. M o v e m e n ts of fore ign c a p ita l in v e s te d in
U n ite d S ta te s ______________________

634
447
36
151
17
65

829
622
34
173
19
118

1,175
942
37
196
20
158

1, 794
1,447
33
314
25
369

1,733
1,317
32
384
22
292

1,345
999
35
311
18505

50

89

157

356

291

406

15

29

1

13

1

99

I I I . E xc ess of re c e ip ts (-f) or p a y m e n ts ( —) , to t a l ___

+ 400

+ 3 86

+292

-1 6 9

+60

-4 1

A . G oods a n d s e rv ic e s .---------- ----------------------

+ 420
-3
+ 4 17
-1 7

+ 471
-1 3
+ 458
-7 2

+ 371
-3
+ 368
-7 6

+6
-1
+5
-1 7 4

+ 1 25
-6 5

+255
+4
+259
-3 0 0

-3 3 9

-2 6 5

-1 0 9

+ 3 14

+ 1 51

+525

-4 9 7

-2 0 5

-1 8 1

-7

-5

-4 2

+14

+26

-3 4 .

N e t goods a n d services a n d u n ila te ra l tra n sf e rs .
C . L o n g -te rm c a p ita l---- -------- ------------ ------- -

2

1

1945

31

+125

I V . N e t inflow ( + ) o r o u tflo w ( —) of f u n d s o n g old
a n d s h o rt- te rm c a p ita l a c c o u n t, t o t a l _ _ _ _ _ _ _ _ _ _
A . N e t U n ite d S ta te s g old sales ( + ) o r p u r c h a se s
( - ) _ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __
B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm
c a p ita l a b r o a d _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____
C . N e t m o v e m e n t of fo re ig n sh o rt- te rm c a p ita l in
U n ite d S ta te s .............. . ........ ............. .............

+12

+7

-6 2

+ 1 46

-6 7

+ 1 34

+ 3 07

+ 1 30

+ 6 01

V . E rr o rs , o m issio ns, a n d th ir d - c o u n tr y tr a n s a c ti o n s ..

-6 1

-1 2 1

-1 8 3

-1 4 5

-2 1 1

-4 8 4

le a d in g in d u s tria l n a tio n s. C a p ita l e m p lo y e d in tlie m a n f a c tu r in g
in d u strie s rose fro m (C a n a d ia n ) $3,600 m illio n in 1939 to $6,300
m illio n in 1943. T h e g ro ss v a lu e o f p ro d u c ts o f th e m a n u fa c tu r in g
in d u strie s rose d u r in g th e sam e p e rio d fro m $3,500 m illio n to $8,700
m illio n a n d a m o u n te d to $9,100 m illio n in 1944.24 A f te r th e en d o f
th e w a r, th e e x p a n sio n o f in d u s try c o n tin u e d , p r iv a te in d u s try sp e n d ­
in g m o re th a n $1,000 m illio n in 1946 on in d u s tria l p la n t,25 60 p e rc e n t
o f w h ich w as d evoted to m a c h in e ry a n d e q u ip m e n t a n d th e re m a in d e r
to new c o nstru ctio n .
C a n a d a ’s close econom ic re la tio n s h ip s w ith th e U n ite d S ta te s w e re
e x tre m e ly im p o rta n t to th is g ro w th . A la rg e sh a re o f th e m a te ria ls
a n d e q u ip m e n t w h ich w e n t in to th e p la n t d e ve lo p m e nt in C a n a d a w a s
im p o rte d fro m th e U n ite d S ta te s. T h is w as m a d e p o ssib le in a la rg e
d e g ree b y th e sale o f w a r m a te r ia ls to th e U n ite d S ta te s as a re s u lt
o f th e a g re e m e n t re ac h ed in A p r il 1941 a t H y d e P a r k betw een th e
G o v e rn m en ts o f th e tw o N a tio n s. I t w as also a id e d by a la rg e inflow
o f c a p ita l fu n d s fro m th e U n ite d S ta te s a n d b y th e d ire c t e x p e n d itu re s
o f th e U n ite d S ta te s a rm ed forces on defense p ro je c ts u n d e r ta k e n
jo in tly w ith C a n ad a .
24 D e p a r t m e n t o f T r a d e a n d C o m m e r c e , D o m i n i o n B u r e a u o f S t a t i s t i c s , C a n a d a Y e a r b o o k ,
1 9 4 6 ; a n d C a n a d a , 1 9 4 7 . O ff ic ia l H a n d b o o k .
25 H o u s e o f C o m m o n s D e b a t e , A p r i l 2 9 , 1 9 4 7 , A p p e n d i x t o B u d g e t, 1 9 4 7 - 4 8 .

123

A t th e b e g in n in g o f th e w a r, in 1940 a n d 1941, th ese fa c to rs w ere
n o t y e t o p e rativ e . C a n a d a ’s im p o rt re q u ire m e n ts fro m th e U n ite d
S ta te s fo r fu lfillin g U n ite d K in g d o m w a r o rd e rs a n d f o r its ow n w a r
p r e p a ra tio n s w ere so g r e a t th a t in 1940 its v isible tr a d e deficit a lm o st
d o u b led as c o m p a re d w ith 1939. T o g e th e r w ith th e u s u a l la rg e n e t
p a y m e n ts on services, C a n a d a ’s c u rre n t-a c c o u n t deficit w ith th e U n ite d
S ta te s a m o u n te d to $417 m illio n ,2
0*26 o r a b o u t 55 p e rc e n t above th e 1939
figure. I n 1941, C a n a d a ’s deficit w as $458 m illio n .
T h is led to h e av y liq u id a tio n s o f C a n a d ia n g o ld a n d d o lla r reserves,
th e F o re ig n E x c h a n g e C o n tro l B o a rd re p o rtin g its ba la nc es a t th e
e n d o f 1941 as $188 m illio n , a g a in s t a to ta l o f $404 m illio n h e ld a t th e
e nd o f 1939, a decline o f $216 m illio n .27 I n a d d itio n , $225 m illio n of
g o ld received fro m th e U n ite d K in g d o m wTas tr a n s f e r r e d to th e U n ite d
S ta te s , to g e th e r w ith g o ld e q u iv a le n t to c u r re n t p ro d u c tio n . P r e ­
v iou sly , C a n a d a w as able to liq u id a te its u s u a l deficits w tih th e U n ite d
S ta te s b y tr a n s f e r r in g s te rlin g e a rn e d in e q u a lly p e rsis te n t su rplu se s
on c u r re n t a cc o u n t w ith th e U n ite d K in g d o m . B u t a t th e o u tb re a k
o f w a r, w h e n th e U n ite d K in g d o m in s titu te d ex ch an g e c o n tro l, such
tr a n s f e rs c o u ld no lo n g e r be m ad e a n d th e d r a in on C a n a d ia n r e ­
so urces occu rred .
F ro m 1942 th ro u g h 1945, C a n a d a ’s c u rre n t-a c c o u n t deficits w ere v e ry
m u ch sm alle r, o w in g p rin c ip a lly to h e av y U n ite d S ta te s G o v e rn m en t
p u rc h a se s re s u ltin g fro m th e H y d e P a r k a g ree m e n t a n d U n ite d S ta te s
a rm e d fo rce s e x p e n d itu re s. T o g e th e r w ith h e a v y c a p ita l flow s fro m
th e U n ite d S ta te s, c u rre n t g o ld p ro d u c tio n in C a n ad a , a n d h e av y d o lla r
re c e ip ts fro m t h i r d c o u n tries,28 th e g o ld a n d d o lla r h o ld in g s o f th e
C a n a d ia n F o re ig n E x c h a n g e C o n tro l B o a rd a t th e en d o f 1945 w ere
re p o rte d a t $1,508 m illio n , o r a lm o st fo u r tim e s th e sum h e ld a t th e
o u tb re a k o f th e w ar.
M e r c h a n d is e T r a d e

T ra d e b etw een th e U n ite d S ta te s a n d C a n a d a re ac h ed re c o rd levels
d u r in g th e w a r y ears. E a r ly in th e w a r, C a n a d a d rew h e av ily on th e
U n ite d S ta te s f o r c a p ita l e q u ip m e n t in o r d e r to e x p a n d p ro d u c tio n on
U n ite d K in g d o m a ccoun t. A s th e w a r becam e in ten sified , B ritis h
a n d o th e r A llie d d e m a n d s u p o n C a n a d ia n p ro d u c tio n , financed first
by th e b u ild in g u p o f C a n a d ia n s te rlin g balances, th e n b y loans, a n d
fin a lly th ro u g h g ifts u n d e r th e C a n a d ia n M u tu a l A id p ro g ra m , e x erte d
20 A l l f i g u r e s i n t h i s s e c t i o n r e f e r t o C a n a d a a n d N e w f o u n d l a n d a n d a r e b a s e d o n D e p a r t ­
m e n t o f C o m m e rc e e s tim a te s . B e c a u s e o f th e d iff e re n t s o u rc e s u se d , i t h a s n o t b ee n p o s­
s ib le c o m p le te ly to re c o n c ile t h e fig u re s p r e s e n te d h e r e in w it h t h e e s tim a te s in “ T h e C a n a ­
d ia n B a la n c e o f I n t e r n a ti o n a l P a y m e n ts ” o f th e D o m in io n B u r e a u o f S ta tis tic s . M o re o v e r,
i t s h o u l d b e n o t e d t h a t t h e C a n a d i a n e s t i m a t e s i n c l u d e , i n e f f e c t, t h e i r d o m e s t i c g o l d p r o d u c ­
t i o n a s a n e x p o r t t o t h e U n i t e d S t a t e s , a l t h o u g h o n l y t h a t p o r t i o n a c t u a l l y s o ld t o t h e
U n ite d S t a t e s w o u ld a p p e a r in o u r e s tim a te s .
27 C a n a d i a n F o r e i g n E x c h a n g e C o n t r o l B o a r d , R e p o r t t o t h e M i n i s t e r o f F i n a n c e , O t t a w a ,
M a rc h 1946, p. 20.
I t m a y b e n o te d t h a t t h e a c t u a l lo s s o f g o ld a n d d o lla r s w a s m u c h
g r e a t e r t h a n t h e d if f e r e n c e b e tw e e n t h e t w o y e a r - e n d f i g u r e s , s i n c e t h i s d o e s n o t t a k e i n t o
a c c o u n t t r a n s f e r s o f g o l d p r o d u c e d c u r r e n t l y i n C a n a d a . S e e s e c t i o n o n “ G o ld a n d C a p i t a l
M o v e m e n t s .”
28 W h i l e C a n a d a c o u l d n o t c o n v e r t s t e r l i n g h o l d i n g s i n t o d o l l a r s i n t h e U n i t e d S t a t e s ,
f r o m tim e to tim e t h e U n ite d K in g d o m tr a n s f e r r e d d o lla r s to C a n a d ia n a c c o u n t a n d o v e r
t h e w a r p e r i o d C a n a d a r e c e i v e d a b o u t .$ 230 m i l l i o n f r o m t h e U n i t e d K in g d o m , i n a d d i t i o n
t o t h e $ 2 2 5 m i l l i o n i n g o l d r e c e iv e d i n 1 9 4 0 . O n t h e b a s i s o f t h e r e c o r d e d t r a d e s t a t i s t i c s ,
C a n a d a w o u ld h a v e h a d to r e le a s e d o lla r s o n ly to L a ti n A m e ric a , a m o n g t h e m a jo r t r a d i n g
a r e a s o f t h e w o r l d , a l t h o u g h s p e c i a l a g r e e m e n t s w i t h s e v e r a l o f t h e A m e r i c a n R e p u b li c s
p e r m i t t e d C a n a d a t o u s e s t e r l i n g o r C a n a d i a n d o l l a r s i n p a r t i a l s e t t l e m e n t o f i t s d e f i c i ts .
A n a g r e e m e n t w i t h B r a z i l , f o r e x a m p le , w h i c h o p e r a t e d b e t w e e n 1 9 4 1 a n d 1 9 4 4 , p e r m i t t e d
C a n a d a t o m a k e p a y m e n t f o r G o v e r n m e n t - p r o c u r e d i m p o r t s t o t h e e x t e n t o f 5 0 p e r c e n t in
s te r lin g a n d 5 0 p e r c e n t in U n ite d S ta te s d o lla r s .
P r iv a te tr a d e w ith B r a z il c o n tin u e d
o n th e n o r m a l U n ite d S ta te s d o lla r b a s is .
C a n a d a ’s t r a d e w i t h o t h e r n o n s t e r l i i m - a r e a
c o u n tr ie s re s u lte d in la r g e e x p o r t s u rp lu s e s a n d u n d o u b te d ly c o n tr ib u te d s u b s ta n tia lly
to C a n a d ia n re c e ip ts o f U n ite d S ta te s d o lla r s .

124

a v e ry stro n g influence u p o n im p o rts fro m th e U n ite d S ta te s — th e only
so urce o f m an y o f th e c o m p o n e n t p a r ts need ed to fill th ese o rd e rs.
F in a lly , C a n a d a ’s req u ire m e n ts f o r its ow n w a r effort a n d f o r th e
h ig h e r c o n su m p tio n levels ste m m in g fro m th e in te n se econom ic a c tiv ­
ity o f th e C a n a d ia n p e op le also led to la rg e im p o rts fro m th e U n ite d
S ta te s.
C a n a d ia n W a r P r o d u c t io n

S p u r s U n ite d

S ta te s E x p o r ts

T h e e x tr a o rd in a ry g ro w th in C a n a d ia n econom ic a c tiv ity is illu s­
tr a te d in th e fo llo w in g d a ta : F ro m 1939 th ro u g h 1944 g ross n a tio n a l
e x p e n d itu re s in C a n a d a in crea se d fro m (C a n a d ia n ) $5.5 b illio n to
$11.8 b illio n ; G o v e rn m en t e x p e n d itu re s f o r w a r p u rp o se s rose in th e
sam e p e rio d fro m $75 m illio n to $4.3 b illio n .29 A n in d ic a tio n o f A llied
p a r tic ip a tio n is fu r n is h e d in th e fo llo w in g e s tim a te s : O f to ta l C a n a ­
d ia n w a r p r o d u c tio n 30 in th e y e a r e nd e d M a rc h 31, 1943, 45 p e rc e n t
w as f o r th e U n ite d K in g d o m a n d o th e r c o u n trie s, 19 p e rc e n t f o r th e
U n ite d S ta te s, a n d 35 p e rc e n t f o r C a n a d a itse lf .31
A ll c ateg o ries o f U n ite d S ta te s e x p o rts were in c rea sed b y th e g ro w th
in C a n a d ia n p ro d u c tio n . T h e m etals, m a c h in e ry a n d vehicles, a n d
fuels g r o u p s sh ow ed th e la rg e s t in creases, because o f th e e x p a n sio n
in C a n a d ia n in d u s tria l p la n ts th ro u g h o u t th e w a r. A sid e fro m m ili­
ta r y item s, e x p o rts in th e m a c h in e ry a n d vehicles g ro u p rose fro m a n
a v era g e o f a b o u t $120 m illio n in 1938-39 to $321 m illio n in 1942, a n d
w ere m a in ta in e d a t a b o u t $270 m illio n in each o f th e y e a rs 1943-45.
L a rg e n u m b e rs o f m ac h in e to o ls a n d o th e r m e ta lw o rk in g m ac h in es
w ere in clu d e d , a n d i t m a y be e xp e cted t h a t th is e q u ip m e n t w ill be
v e ry im p o rta n t in sh a p in g th e p o stw a r econom y o f C a n ad a . U n ite d
S ta te s e x p o rts in th e m e tals g ro u p , c o n sistin g m o stly o f iro n a n d steel
a n d th e ir m a n u fa c tu re s, rose fro m a n a v e ra g e o f $45 m illio n in 1938-39
to $195 m illio n in 1942, a n d a m o u n te d to $125 m illio n in 1945. E x p o rts
o f coal in crea se d ste a d ily fro m $48 m illio n in 1938 to $89 m illio n in
1943 a n d a v era g e d close to $78 m illio n in 1944-45. W a r e q u ip m e n t
a n d su p p lies, in c lu d in g ta n k s, o th e r c om b at v ehicles, a ir c r a ft, a ir c r a f t
p a r ts a n d engin es, a n d a r tille r y a n d c om m u n ica tio n s e q uip m e n t, rose
fro m n eg lig ib le q u a n titie s b e fo re th e w a r to a to ta l value o f $260 m il­
lio n in 1942, $350 m illio n in 1943, $340 m illio n in 1944, a n d th e n fe ll
to $90 m illio n in 1945.
H y d e P a r k A g r e e m e n t S tim u la te s U . S . G o v e r n m e n t P u r c h a s e s

U n ite d S ta te s im p o rts fro m C a n a d a w e re influenced p rin c ip a lly b y
th e H y d e P a r k A g re e m e n t o f A p ril 1941, u n d e r w h ich th e U n ite d
S ta te s u n d e rto o k to in crease its p u rc h a se s o f u rg e n tly need ed w a r
su p p lies in o rd e r to b r in g a b o u t a b e tte r b a la n c e in th e tr a d e b etw een
th e tw o c o u n trie s a n d a t th e sam e tim e m ax im ize p ro d u c tio n b y p r e ­
v e n tin g th e d u p lic a tio n o f p ro d u c tiv e fac ilitie s. T h e a g ree m e n t p r o ­
v id e d t h a t “in m o b iliz in g th e resou rces in th is c o n tin e n t each c o u n try
sh o u ld p ro v id e th e o th e r w ith th e defense a rtic le s w h ich i t is b est ab le
to p rod u ce , a n d above a ll, p ro d u ce q u ick ly , a n d t h a t p ro d u c tio n p ro 29 D e p a r t m e n t o f T r a d e a n d C o m m e r c e , D o m i n i o n B u r e a u o f S t a t i s t i c s .
N a tio n a l A c­
c o u n ts : In c o m e a n d E x p e n d itu re , 1 9 3 8 -1 9 4 6 .
30 N o t e q u i v a l e n t t o “ g o v e r n m e n t e x p e n d i t u r e s f o r w a r p u r p o s e s . ” C o n s i s t s o f p r o d u c t i o n
o f w a r m a t e r ia l s a n d c o n s tr u c tio n o n o rd e rs p la c e d o n ly b y D e p a r tm e n t o f M u n itio n s a n d
S u p p l y t o t a l i n g a l m o s t $ 3 ,5 0 0 m i l l i o n f o r t l i e c a l e n d a r y e a r 1 9 4 3 . D e l i v e r y o f w a r e x p o r t s
t h r o u g h o t h e r G o v e r n m e n t a n d p r i v a t e a g e n c i e s a r e e x c lu d e d . C a n a d a a t W a r , A u g u s t 1 9 4 4 ,
p . 51.
81 H . J . C a r m i c h a e l , C o o r d i n a t o r o f P r o d u c t i o n , a n d C h a i r m a n , P r o d u c t i o n B o a r d , D e p a r t ­
m e n t o f M u n i t i o n s a n d S u p p l y , i n a n a d d r e s s b e f o r e t h e C a n a d i a n M a n u f a c t u r e r s A s s o c ia ­
tio n in J u n e 1 9 4 4 , p u b lis h e d in I n d u s tr i a l C a n a d a , J u ly 1 9 4 4 , p. 143.

125

g ra m s sh o u ld be c o o rd in a te d to th is e n d .” I t sta te d t h a t “th e re is e x ­
is tin g a n d p o te n tia l c a p a c ity in C a n a d a fo r th e sp eedy p r o d u c tio n o f
m u n itio n s, stra te g ic m a te ria ls, a lu m in u m , a n d sh ip s, w h ic h a re u r ­
g e n tly re q u ire d by th e U n ite d S ta te s ” a n d “ i t is h o p e d t h a t d u r in g th e
n e x t 12 m o n th s C a n a d a can su p p ly th e U n ite d S ta te s w ith betw een
$200 m illio n a n d $300 m illio n w o rth o f su ch d efen se a rtic le s .” I t w as
n o te d t h a t su ch a c tio n “w ill m a te ria lly a ssist C a n a d a in m ee tin g p a r t
•of th e cost o f C a n a d ia n d efen se p u rc h a se s in th e U n ite d S ta te s .” A s
a d ire c t c o n trib u tio n to th e e asin g o f C a n a d a ’s e xch an g e p roblem , th e
a g re e m e n t p ro v id e d t h a t c o m p o n e n t p a r ts f o r e q u ip m en t p ro d u c e d
b y C a n a d a f o r th e U n ite d K in g d o m could be o b ta in e d fro m th e U n ite d
S ta te s u n d e r lend-lease.
D u r in g 1941, b e fo re th e U n ite d S ta te s e n te re d th e w a r, little b ey o n d
th e p la c in g o f a n E x p o r t- I m p o r t B a n k lo a n o f $25 m illio n fo r th e
p ro d u c tio n o f a lu m in u m h a d been a ccom plished u n d e r th is a g ree m e n t.
H o w e v e r, u n d e r th e d ire c tio n o f th e J o in t E co n o m ic a n d W a r P ro d u c ­
tio n C om m ittees, set u p to im p le m e n t it, th e w a y w as p a v e d f o r th e
p a r tic ip a tio n o f C a n a d ia n in d u s try on a p a r w ith U n ite d S ta te s in ­
d u s tr y in U n ite d S ta te s w a r-p r o d u c tio n p lans. T h e a g ree m e n t led
to enorm o us p u rc h a se s in C a n a d a b y U n ite d S ta te s G o v e rn m en t a g e n ­
cies a f te r th e U n ite d S ta te s e n te re d th e w a r. B etw een 1942 a n d 1945,
$154 m illio n w as e x p e n d e d f o r th e p u rc h a se o f sh ip s a n d vessels by
th e W a r S h ip p in g A d m in is tr a tio n , $220 m illio n f o r w h e at a n d o th e r
g r a in s b y th e C o m m o d ity C re d it C o rp o ra tio n , a n d $293 m illio n f o r
refin ed a lu m in u m a n d o th e r m eta ls by th e M e ta ls B eserve C o m p a n y ;
a n d th e U . S . C o m m ercial C o m p an y , th e T re a s u ry D e p a rtm e n t, a n d
th e D e fe n se S u p p lie s C o rp o ra tio n sp en t a b o u t $105 m illio n f o r o th e r
com m odities.
M ilita ry e q u ip m e n t p u rc h a se d b y th e W a r a n d N a v y D e p a rtm e n ts
w e n t f a r b e y o n d w h a t w a s o rig in a lly e n v isag ed a t th e tim e th e a g re e ­
m e n t w as m ad e, b o th in volum e a n d in th e ty p e o f eq u ip m e n t. I t is
e s tim a te d th a t, over th e p e rio d o f th e w a r, a to ta l o f $1,087 m illio n
w as e x p e n d e d b y th ese d e p a rtm e n ts f o r e q uip m e n t, in c lu d in g item s
re q u ir in g co m p lica ted p ro d u c tio n e fforts, such as a ir c r a f t, a ir c r a f t
en g in es, a r tille r y , D iesel engines, a n d ra d io a n d c o m m u n ication
e q u ip m e n t.
P r iv a te

U n ite d

S ta te s

Im p o r ts

R is e

P r iv a te im p o rts fro m C a n a d a , s tim u la te d by w a r-in d u c e d d e m a n d s
in th e U n ite d S ta te s, also re ac h ed p e a k levels. B y 1941, U n ite d S ta te s
im p o rts on p r iv a te a cc o u n t a m o u n te d 'to $598 m illio n , a n in crea se o f
75 p e rc e n t above th e to ta l f o r 1939. I n 1942, w ith p ro c u re m e n t la rg e ly
in G o v e rn m en t h a n d s a n d w ith re s tr ic tio n s on im p o rts f o r co n su m p ­
tio n , p r iv a te p u rc h a se s fro m C a n a d a fe ll to $498 m illio n . H o w e v e r,
th e e x pa n sio n o f p ro d u c tiv e fa c ilitie s in C a n a d a m ad e a v a ila b le la rg e
q u a n titie s o f goods w h ich c ou ld be fitte d in to th e p ro d u c tio n p la n s
o f m a n u fa c tu re r s in th e U n ite d S ta te s, a n d p r iv a te p u rc h a ses fro m
C a n a d a rose to $776 m illio n in 1943. C e r ta in co n su m er goods, r e la ­
tiv e ly m ore p le n tif u l in C a n a d a , w ere also im p o rte d in g re a te r q u a n ti­
ties, w h ile w h e a t a n d o th e r g r a in im p o rts f o r in d u s tria l a n d fe e d p u r ­
poses ro se to $45 m illio n , in a d d itio n to C o m m o d ity C re d it C o rp o ra ­
tio n p u rc h a se s o f a b o u t $94 m illio n . T o ta l p r iv a te im p o rta tio n s rose
to $796 m illio n in 1944, p rin c ip a lly because o f im p o rts o f g ra in s

126

a m o u n tin g to $177 m illio n , th e re s u lt o f c o n tin u in g sh o rta g e s in th e
U n ite d S ta te s.
W ith th e en d o f th e w a r in 1945, b o th im p o rts a n d e x p o rts d eclined,
w ith p r iv a te im p o rts a t $771 m illio n a n d U n ite d S ta te s G o v e rn m en t
p u rc h a se s a t $227 m illio n f o r th e y e a r, 55 p e rc e n t o f th e 1944 volum e.
T h e to ta l decline in im p o rts a m o u n te d to $318 m illio n . E x p o rts to
C a n a d a fe ll fro m $1,487 m illio n to $1,210 m illio n , a decline o f $277 m il­
lio n , as e x p o rts o f w a r e q u ip m en t w ere sh a rp ly cut. I r o n a n d steel
p ro d u c ts, n o n fe rro u s m etals, a n d o th e r p ro d u c ts f o r w a r p ro d u c tio n
also declined, w h ile e x p o rts o f foods, te x tile s, a n d o th e r p ro d u c ts f o r
c o n su m p tio n a n d f o r p eacetim e p r o d u c tio n in crea sed o r re m ain e d a t
th e a b n o rm a lly h ig h levels o f th e p re c e d in g w a r y ears.
S e r v ic e I te m s

T h e c u sto m a ry p re w a r p a tte r n o f U n ite d S ta te s n e t su rp lu ses on se rv ­
ice tra n sa c tio n , a ris in g p rin c ip a lly fro m excesses o f re c e ip ts o f incom e
on in v estm en ts, w as n o t m a in ta in e d u n b ro k en d u rin g th e w a r p e rio d .
F ro m $145 m illio n in 1940, th e U n ite d S ta te s s u rp lu s on service a c­
c o u n ts d w in d le d to $95 m illio n in 1941 a n d $79 m illio n in 1942, p r in ­
c ip a lly because o f th e re d u c tio n in C a n a d ia n tra v e l in th e U n ite d S ta te s
a n d a decline in incom e p a y m e n ts to th e U n ite d S ta te s. F ro m 1942
th ro u g h 1944, U n ite d S ta te s G o v e rn m en t e x p e n d itu re s in C a n a d a , a l­
m o st exclusively b y th e a rm e d forces, w ere so la rg e t h a t n e t deficits,
n e g lig ib le in 1943 b u t a m o u n tin g to $45 m illio n in 1944, a p p e are d .
W ith th e c u rta ilm e n t o f su ch e x p e n d itu re s in 1945, th e p re w a r p a tte r n
o f U n ite d S ta te s su rp lu ses re em e rg e d w ith a b a la n c e in fa v o r o f th e
U n ite d S ta te s o f $44 m illio n .
In v e stm e n t

In com e

D e c lin e s

U n ite d S ta te s re c e ip ts o f incom e fro m in v estm e n ts in C a n a d a d e ­
fin e d fro m $232 m illio n in 1940 to $216 m illio n in 1942 a n d to $205
m illio n in 1945. T h is d ro p w as due p rin c ip a lly to a decline in d iv id e n d
p a y m e n ts b y A m eric a n -c o n tro lle d com panies. C a n a d ia n exchangec o n tro l re g u la tio n s p re v e n te d th e re m itta n c e o f som e p re w a r e a rn in g s
w h ich n o rm a lly w o u ld h a v e b een tr a n s f e r r e d in 1940 a n d 1941. A lso,
in J u n e 1941, w ith h o ld in g -ta x r a te s on d iv id e n d s p a id to re sid e n ts o f
th e U n ite d S ta te s b y a ll ex ce pt w h o lly o w ned su b sid ia rie s o f A m eric an
com p anies w ere ra ise d fro m 5 p e rc e n t to 15 p e rce n t.
A n o th e r rea so n fo r th e decline a p p e a rs to h av e been th e re in v e st­
m e n t o f la rg e r-th a n -u s u a l p r o p o rtio n s o f e a rn in g s, in fin e w ith th e
g e n e ra l C a n a d ia n p ro g ra m o f in d u s tria l e xp an sion . E a rn in g s in
g e n e ra l d e clin ed w ith th e le v e lin g off o f p ro d u c tio n in 1944 a n d th e
c an c ella tio n o f o rd e rs a n d reco n v ersion efforts in 1945. I t also a p p e a rs
t h a t th e a n tic ip a tio n o f a n a p p re c ia tio n o f th e C a n a d ia n d o lla r m ay
h a v e a d v e rsely affected th e p a y m e n t o f d iv id e n d s in 1945.
In c o m e p a y m e n ts to C a n a d ia n s on th e ir in v estm e n ts in th e U n ite d
S ta te s show ed p r a c tic a lly no decline o v e r th e w a r y ears. A p p ro x i­
m a te ly $36 m illio n in incom e w as p a id in 1940 a n d $35 m illio n in 1945,
h ig h e r e a rn in g s o ffse ttin g th e effects o f a sm a ll re d u c tio n in C a n a d ia n
h o ld in g s o f U n ite d S ta te s se c u ritie s d u r in g th e p e rio d .
T r a n s p o r ta tio n

P a y m en ts to

C anada S h ow

S m a ll In c r e a s e

I n th e tr a n s p o rta tio n a cc ou n t w ith C a n a d a , a n excess o f U n ite d
S ta te s p a y m e n ts, a m o u n tin g to $8 m illio n , $17 m illio n , a n d $12 m illio n ,
127

resp ec tiv e ly , em erg ed in th e y e a rs 1943 th ro u g h 1945, su cceeding a p ­
p ro x im a te ba la nc es in th e a cc ou n t in 1940-42. T h e se in crea se s aro se
fro m h ig h e r p a y m e n ts on r a il- f r e ig h t acco u n t a n d a s lig h t decline in
n e t re c e ip ts on ocean sh ip p in g .
W h ile th e re w as a s h a rp in crease in C a n a d ia n e x p o rts tra n s p o rte d
by r a il fo r oversea sh ip m e n t fro m A m e ric a n p o rts , th e re c e ip ts b y .
A m eric an r a ilr o a d s in th is tr a d e a re c h a rg e d to th e c o u n try rec eiv in g
th e g oods a n d n o t to C a n a d a . O n th e o th e r h a n d , p a y m e n ts f o r se rv ­
ices re n d e re d b y C a n a d ia n r a ilr o a d s in c a rry in g U n ite d S ta te s goods
fro m one p o in t in th e U n ite d S ta te s to a n o th e r rose, as d id th e e x ­
p e n d itu re s o f A m e ric a n r a ilr o a d s o p e ra tin g in C a n ad a . T h e se w ere
th e p rin c ip a l rea so n s f o r th e in crea se in n e t p a y m e n ts to C a n a d a
on r a il f r e ig h t a cc ou n t fro m $15 m illio n in 1940 to $26 m illio n in 1945.
R e c eip ts a n d p a y m e n ts on d ire c t U n ite d S ta te s- C a n a d ia n tr a d e b y a ll
m eans o f tr a n s p o rta tio n d u r in g th e p e rio d w ere a p p ro x im a te ly in
b alan ce. S lig h t in crea se s in p o r t e x p e n d itu re s in c u rre d in C a n a d a
b y A m e ric a n vessels a n d in crea se s in f r e ig h t p a y m e n ts on G re a t L a k es
sh ip m e n ts th ro u g h 1944 a u g m e n te d th e d eclin e (d u e p rin c ip a lly to
d iv e rsio n to ra il tr a n s p o rta tio n ) o f U n ite d S ta te s su rp lu se s o f sh ip ­
p in g re c e ip ts e a rn e d in th e ocean -bo rne tr a d e b etw een C a n a d a a n d th e
U n ite d S ta te s.
T r a v e l E x p e n d it u r e s S h a r p ly C u t— R e c o v e r to P r e w a r L e v e ls

O ne o f th e rea so n s fo r a p p re h e n sio n on th e p a r t o f th e C a n a d ia n
a u th o ritie s re g a r d in g th e ir d o lla r p o sitio n w as th e s h a rp decline fro m
$149 m illio n in 1939 to $89 m illio n in 1940 in re c e ip ts fro m U n ite d
S ta te s re sid e n ts on to u r is t accoun t. T h e in tr o d u c tio n o f re s tric tio n s
o n tra v e l fro m C a n a d a , how ever, c u t C a n a d ia n e x p e n d itu re s in th e
U n ite d S ta te s fro m $61 m illio n in 1939 to $36 m illio n in 1940, th u s
re d u c in g th e n e t loss o f d o lla rs.
I n 1941, U n ite d S ta te s e x p e n d itu re s f o r tr a v e l in C a n a d a rose to
$97 m illio n , o w in g in p a r t to C a n a d ia n p ro m o tio n a l e fforts in th is
c o u n try . A t th e sam e tim e , in c re a sin g ly s trin g e n t a p p lic a tio n o f tr a v e l
re s tric tio n s c u t C a n a d ia n e x p e n d itu re s in th e U n ite d S ta te s to $17
m illio n . C a n a d ia n n e t re c e ip ts on to u ris t acco u n t th u s in crea se d
s h a rp ly fro m $53 m illio n in 1940 to $81 m illio n in 1941.
F ro m 1942 on, C a n a d ia n tra v e l e x p e n d itu re s in crea se d , e sp ecially
in 1944 a n d 1945 as re s tric tio n s on tr a v e l w ere re la x e d w ith th e im ­
p ro v e m e n t in C a n a d a ’s e xch an g e p o sitio n . T ra v e l b y U n ite d S ta te s
re sid e n ts in C a n a d a w as affected p r im a r ily b y severe g a so lin e a n d tir e
sh o rta g e s in 1942 a n d 1943, b u t sh a rp in creases in e x p e n d itu re s w ere
rec o rd e d in 1944 a n d 1945, w h e n th e p re w a r 1939 level o f $150 m illio n
w as rea ch ed . N e t C a n a d ia n re c e ip ts w e re sm a lle r th a n in 1939, th e ir
e x p e n d itu re s in th e U n ite d S ta te s h a v in g rise n to $76 m illio n as a g a in st
$61 m illio n in 1939.
U . S . G o v e r n m e n t E x p e n d i t u r e s A i d C a n a d a ’s E x c h a n g e P o s i t i o n

U n ite d S ta te s a rm ed forces e x p e n d itu re s on su ch defense p ro je c ts
u n d e rta k e n jo in tly w ith C a n a d a as th e A lc a n H ig h w a y , th e C ano l
p e tro le u m de ve lo p m e nt, th e te le p h o n e lin e fro m E d m o n to n to th e
A la sk a b o u n d a ry , a n d m a n y la n d in g fields a n d a ir s trip s p ro v id e d
la rg e sum s o f d o lla rs to C a n a d a as th e w a r p ro g re sse d . I n a ll, U n ite d
S ta te s G o v e rn m en t e x p e n d itu re s, in c lu d in g th o se b y m ilita ry a n d
c iv ilia n p e rso n n e l, b u t e x c lu d in g p u rc h a se s o f m e rc h an d ise b y th e
128

G o v e rn m en t agencies as such, m o u n te d r a p id ly fro m $1 m illio n in 1940
to $19 m illio n in 1941 a n d $59 m illio n in 1942. A t th e h e ig h t o f th ese
a ctiv itie s, e x p e n d itu re s a m o u n te d to $149 m illio n in 1943 a n d $187
m illio n in 1944. T h e y to ta le d a b o u t $77 m illio n in 1945. M o st o f
th ese o u tla y s w ere f o r C a n a d ia n la b o r a n d f o r tra n s p o rta tio n a n d
o th e r services r a th e r th a n f o r tro o p m a in te n a n ce , as in o th e r c o u n trie s,
since re la tiv e ly few A m e ric a n tro o p s w ere u sed in c o n n e ctio n w ith
th ese p ro je c ts.
G o ld a n d C a p ita l M o v e m e n ts

G o ld a n d sh o rt-te rm c a p ita l m ovem ents b etw een th e U n ite d S ta te s
a n d C a n a d a w ere e sse n tia lly o f a “b a la n c in g ” n a tu r e d u rin g th e w ar.
T h e m ovem ents in C a n a d ia n fu n d s , c o n tro lle d as th e y w ere b y th e
F o re ig n E x c h a n g e C o n tro l B o a rd in th e in te re s t o f m a in ta in in g a n
a d e q u a te su p p ly , w ere, o f course, u n m a rk e d b y a n y a ctiv e o r a u to n o ­
m ous influences. T h e m ovem ents o f U n ite d S ta te s sh o rt- te rm fu n d s
w ere n e g lig ib le, a p a r t fro m ad v a nc es o f $72 m illio n m ad e by th e U n ite d
S ta te s G o v e rn m e n t in co n n ectio n w ith c o n tra c ts in C a n ad a . I n ta b le
31, th e n e t m o vem ent o f a ll sh o rt-te rm c a p ita l item s is show n, th e
p rin c ip a l m o v e m e n t c o n sistin g o f th e g ro w th o f C a n a d ia n d o lla r
b alan ces in th e la s t few y e a rs u n d e r th e influence o f fa c to rs w h ich
h a v e b een in d ic a te d p re v io u sly .
G o ld

E x p o r ts

P r o v id e

D o lla r s

I n th e fir s t 3 y e a rs o f th e w a r p e rio d , 1940-42, e x p o rts o f g o ld w ere
th e p rin c ip a l “b a la n c in g ” item . I n 1940, to ta l sh ip m e n ts fro m C a n a d a
fo r its a cc ou n t a m o u n te d to $497 m illio n , o f w h ich $225 m illio n h a d
been received fro m th e U n ite d K in g d o m in p a r tia l se ttle m e n t o f its
deficit w ith C a n a d a. T h e sh ip m e n ts w ere in excess o f th e c u r re n ta cc o u n t deficit a n d re su lte d in a su b s ta n tia l in crea se in d o lla r h o ld in g s.
G o ld re c e ip ts fro m th e U n ite d K in g d o m ceased in 1940 w ith th e n e a r­
e x h a u stio n o f th e U n ite d K in g d o m ’s reserves, a n d C a n a d ia n g o ld
sales to th e U n ite d S ta te s in 1941 a n d 1942, a m o u n tin g to $205 m illio n
a n d $181 m illio n , consisted w h o lly o f C a n a d ia n p ro d u c tio n a n d w ith ­
d ra w a ls fro m stocks.
S in ce C a n a d ia n g o ld p ro d u c tio n a m o u n ted to' a n a n n u a l a v era g e o f
a b o u t $186 m illio n in 1940 a n d 1941 a n d $169 m illio n in 1942, C a n a d ia n
sales to th e U n ite d S ta te s re p re s e n te d w ith d ra w a l o f $117 m illio n fro m
th e $214 m illio n re p o rte d as h e ld b y th e B a n k o f C a n a d a a t th e en d
o f 1939. I n 1943 a n d 1944, g o ld sh ip m e n ts to th e U n ite d S ta te s f o r
C a n a d ia n a cc o u n t p ra c tic a lly ceased, b u t in 1945 C a n a d a so ld $42
m illio n o f g o ld to th e U n ite d S ta te s.
U . S . S e c u r ity P u r c h a s e s A ls o P r o v id e D o lla r s

A s trik in g fe a tu re o f th e b a la n ce o f p a y m e n ts b etw een th e U n ite d
S ta te s a n d C a n a d a d u r in g th e w a r y e ars w as th e m o v em en t o f c a p ita l
fu n d s fro m th e U n ite d S ta te s, w h ich c o n trib u te d g re a tly to th e m a in ­
te n a n ce o f th e n ecessary flow o f goods a n d services to C a n a d a . T h e
m o v e m e n t b e g a n in 1941, a s m o u n tin g C a n a d ia n econom ic a c tiv ity
a n d a re la tiv e ly h ig h r a te o f r e tu r n a ttr a c te d A m e ric a n in v esto rs.
T h e m a g n itu d e o f th e m o vem ent w as due also to th e a cc u m u la tio n o f
a v a ila b le fu n d s in th e h a n d s o f in su ra n c e com panies, fo u n d a tio n s, a n d
o th e r in s titu tio n s in th e U n ite d S ta te s. P u rc h a se s b y such o rg a n i­
z a tio n s, p a r tic u la r ly th e in su ra n c e com p anies, w ere h e a v y d u rin g th e
p e rio d .
129

B etw een 1941 a n d 1945 n e a rly $700 m illio n o f o u ts ta n d in g se c u ri­
ties w ere p u rc h a se d in C a n a d a b y A m e ric a n in v esto rs, a n a n n u a l a v e r­
a g e o f $140 m illio n . T h is w a s a s h a rp re v e rsa l c o m p a re d w ith th e
s itu a tio n in 1936-39, w h e n n e t C a n a d ia n p u rc h a se s o f fo re ig n se­
c u ritie s h e ld in th e U n ite d S ta te s a v era g e d $9 m illio n p e r y e ar. T h e
p e a k y e a r o f th is m o v em en t w as in 1945, w h e n C a n a d ia n se cu ritie s
in th e a m o u n t o f $245 m illio n w ere p u rc h a se d .
I n a d d itio n to p u rc h a se s o f o u ts ta n d in g sec u ritie s, U n ite d S ta te s
re s id e n ts p ro v id e d $336 m illio n to C a n a d a b y su b sc rip tio n s to new
C a n a d ia n c o rp o ra te a n d g o v e rn m e n ta l issues, p ra c tic a lly a ll o f w h ich ,
how ever, w ere fo r r e fu n d in g p u rp o se s. T h is w as a b o u t equal to p r e ­
w a r le n d in g , w h ic h a m o u n te d to $372 m illio n d u r in g th e 1936-39
p e rio d .
T h e r e tu r n flow o f c a p ita l to th e U n ite d S ta te s w as also u n p re c e ­
d e n te d , as th e fa v o ra b le e x ch an g e p o sitio n a n d low in te re s t ra te in
th e U n ite d S ta te s sp u rre d th e re tire m e n t o r re fu n d in g o f C a n a d ia n
d eb t h e ld h e re. F ro m $23 m illio n in 1940, a m o rtiz a tio n p a y m e n ts by
C a n a d a rose to $181 m illio n in 1943 a n d a m o u n ted to $112 m illio n in
1944 a n d $151 m illio n in 1945. T h e to ta l f o r th e w a r y e a rs as a w hole
w as $551 m illio n .
T r a d in g in U n ite d S ta te s se cu ritie s w as sm all fro m 1940 th ro u g h
1944, re p u rc h a se s b y A m e ric a n re sid e n ts b e in g slig h tly g re a te r th a n
p u rc h a se s by C a n a d ia n s. I n 1944, how ever, som e $50 m illio n o f lo n g ­
te rm U n ite d S ta te s G o v e rn m en t se c u ritie s w ere p u rc h a se d n e a r m a ­
tu r i ty a n d liq u id a te d in 1945, w h ich to g e th e r w ith o th e r liq u id a tio n s
b ro u g h t n e t sales to th e U n ite d S ta te s in t h a t y e a r to $98 m illio n .
T h e m ovem ent o f d ire c t in v e stm e n t c a p ita l d u r in g th e w a r y e ars
w as n e g lig ib le ; th e m o st n o te w o rth y c han g e s o c cu rred in 1944, w hen
sev eral sm all U n ite d S ta te s in v estm e n ts to ta lin g a b o u t $25 m illio n
w e re liq u id a te d . O v e r th e p e rio d as a w hole, how ever, s u b s ta n tia l
ch an g es in th e p o sitio n o f U n ite d S ta te s d ire c t in v estm e n ts o c cu rred ,
because o f th e re in v e stm e n t o f e arn in g s.
O u tlo o k f o r U n ite d S ta te s -C a n a d a T r a n s a c tio n s

C a n a d a ’s e x p an d e d in d u s tria l a n d a g r ic u ltu ra l econom y o p e ra te d in
1946 a t levels co m p arab le w ith th o se a tta in e d d u r in g th e w a r. E m ­
p lo y m en t, incom e, a n d c o n su m p tio n re g a in e d m o st o f th e g ro u n d lo st
w h e n w a r p ro d u c tio n slac ke ne d la te in 1944. G ross p r iv a te in v e s t­
m e n t in c o n stru c tio n a n d e q u ip m e n t o f $1.1 b illio n w as e qu a l to th e
levels re ac h ed in 1940 a n d 1941 a n d w a s m o re th a n d o u b le t h a t o f
1938.32 I n fo re ig n tr a d e , e x p o rts a m o u n tin g to $2,312 m illio n exceeded
a ll p re v io u s p eacetim e levels, w h ile im p o rts f o r c o n su m p tio n , a m o u n t­
in g to $1,859 m illio n , e stab lish e d a n a ll-tim e record.
T h e p ro g re ss w h ich h a s been m ad e in th e in d u s tria l field a p p e a rs to
be m a k in g its e lf f e lt u p o n C a n a d a ’s e x te rn a l tra d e . I t is sig n ifica n t
t h a t in th e first f u ll y e a r o f peace th is in d u s tria liz a tio n w as accom ­
p a n ie d b y th e g re a te s t inflow o f im p o rts in C a n a d ia n h isto ry , w h ile, o f
its e x p o rts, 70 p e rc e n t c on sisted o f m a n u fa c tu re d a n d p a r tly processed
goods, c o m p a re d w ith 60 p e rc e n t b e fo re th e w ar.
T h e e x tr a o rd in a ry level o f econom ic a c tiv ity a n d tr a d e in 1946 w as
n o t, how ever, w ith o u t its a tte n d a n t prob lem s. W ith h e av y d ependence
u p o n th e U n ite d S ta te s f o r goods consum ed a t hom e, as w ell as fo r
32
D e p a r tm e n t o f T r a d e a n d C o m m e rc e ,
A c c o u n ts : In c o m e a n d E x p e n d itu r e , 1 9 3 8 -4 6 .

130

D o m in io n

B u rea u

of

S ta tis tic s .

N a tio n a l

com p o n en ts o f m a te ria ls se n t a b ro a d , im p o rts fro m th e U n ite d S ta te s
a m o u n te d to $1,460 m illio n — a lm o st 80 p e rc e n t o f th e to ta l a n d a p p ro x ­
im a te ly equal to th e levels re a c h e d d u r in g th e w a r y ears. E x p o rts to
th e U n ite d S ta te s, on th e o th e r h a n d , fe ll to $884 m illio n , o w ing p r in ­
c ip a lly to th e d isco n tin u a n ce o f U n ite d S ta te s G o v e rn m en t p u rc h a sin g .
T h u s , C a n a d a ’s tr a d e deficit w ith th e U n ite d S ta te s a m o u n te d to $576
m illio n , th e h ig h e st in h isto ry .
S ervice tra n sa c tio n s, a c c o rd in g to p re lim in a ry e stim a te s, re s u lte d in
a n a d d itio n a l C a n a d ia n deficit o f a p p ro x im a te ly $116 m illio n . T h e n e t
flow on lo n g -te rm c a p ita l a cco u n t, in ste a d o f b e in g to w a r d C a n a d a as
in th e p re c e d in g few y e a rs, w as to w a rd th e U n ite d S ta te s, to a sm all
e x te n t.
T h e rec o rd e d losses o f C a n a d ia n g o ld a n d d o lla rs to th e U n ite d
S ta te s a m o u n te d to $441 m illio n . A lth o u g h th is w as a lm o st 30 p e rc e n t
o f C a n a d a ’s h o ld in g s a t th e b e g in n in g o f 1946, th e losses w ere m iti­
g a te d by s u b s ta n tia l g o ld a n d d o lla r re c e ip ts fro m t h i r d c o u n trie s, p a r ­
tic u la rly fro m th e U n ite d K in g d o m . H o w e v e r, C a n a d a ’s deficit w ith
th e U n ite d S ta te s in th e first q u a rte r o f 1947 w as ru n n in g a t a h ig h e r
r a te th a n in 1946.
T o slow th e d w in d lin g o f d o lla r resources, C a n a d a m u st e ith e r r e ­
duce im p o rts o r receive a la r g e r volum e fro m th e E u ro p e a n c o u n trie s,
e sp e cia lly th e U n ite d K in g d o m , a n d fro m o th e r c o u n trie s to w h ich i t
is e x p o rtin g on c re d it te rm s. T h e u tiliz a tio n o f C a n a d ia n e x p o rt
c re d its a n d lo a n s in 1946 a m o u n te d to (C a n a d ia n ) $750 m illio n , o f
w h ich th e U n ite d K in g d o m ’s s h a r e w as $540 m illio n . I n r e tu r n , C a n ­
a d a ’s im p o rts fro m th e U n ite d K in g d o m w ere o n ly $130 m illio n a n d
im p o rts fro m o th e r d e b to r c o u n trie s w ere o n ly $22 m illio n . M o re
b a la n ce d tr a d e b etw een C a n a d a a n d th ese c o u n trie s w o u ld p ro b a b ly
re d u ce C a n a d a ’s dep en d en ce u p o n th e U n ite d S ta te s, b u t, in view o f th e
slow ness o f r e h a b ilita tio n in th e U n ite d K in g d o m a n d elsew here, as
w ell as p ric e, q u a lity , a n d o th e r c o m p etitiv e b a rrie rs to im p o rts in to
C a n a d a , no g r e a t im p ro v e m e n t can be foreseen in th e n e a r f u tu r e .
T h e b e st so lu tio n w o u ld lie, o f course, in g r e a te r e x p o rts to th e
U n ite d S ta te s. I f C a n a d ia n in d u strie s , p a rtic u la rly th e n ew ly d e ve l­
o p e d ones, c o u ld p a r tic ip a te to a la r g e r e x te n t in th e U n ite d S ta te s
m a r k e t, th e p re se n t h ig h levels o f C a n a d ia n c on su m p tio n , in v estm e n t,
a n d p ro d u c tio n f o r e x p o rt to o th e r fo r e ig n c o u n trie s c ou ld be m a in ­
ta in e d . A t th e sam e tim e, how ever, a f u r th e r in crea se in th e volum e
o f U n ite d S ta te s e x p o rts m ig h t develop as h ig h e r incom es a n d in v e s t­
m e n t c re a te new d e m a n d s in C a n a d a.
T r a n s a c t io n s W i t h t h e A m e r i c a n R e p u b l i c s

T h e o u ts ta n d in g c h a ra c te ristic o f th e v a rio u s d evelopm ents o f tr a n s ­
a ctio n s b etw een th e U n ite d S ta te s a n d th e 20 o th e r A m e ric a n R e ­
p u b lic s 33 w as th e la rg e excess o f U n ite d S ta te s im p o rts o v er e x p o rts,
a n d th e r e s u lta n t a cc u m u latio n o f g o ld a n d d o lla rs b y th e A m e ric a n
R ep u b lics. A n excess o f e x p o rts over im p o rts c h a ra c te riz e d th e tr a n s ­
action s o f th e a re a w ith a ll th e re s t o f th e w o rld as w ell, so t h a t th e
33
T h e t e r m s “ A m e r ic a n R e p u b lic s ,” “ L a t i n A m e r ic a n R e p u b lic s ,” a n d “ L a t i n A m e r ic a ”
a r e u s e d i n t e r c h a n g e a b l y in t h i s s e c t i o n t o m e a n t h e 2 0 i n d e p e n d e n t c o u n t r i e s o f t h e
W e s te rn H e m is p h e re to th e s o u th o f th e U n ite d S ta te s . N o n e o f th e s e e x p re s sio n s , e x c e p t
p e r h a p s “ L a t i n A m e r i c a n R e p u b l i c s ,” i s s t r i c t l y a c c u r a t e , b u t t h e y a r e a l l e m p lo y e d h e r e
f o r t h e s a k e o f c o n v e n ie n c e a n d v a r ie ty . T h e 2 0 c o u n tr ie s a r e A r g e n tin a , B o liv ia , B ra z il,
C h ile , C o lo m b ia , C o s t a R i c a , C u b a , D o m i n i c a n R e p u b l i c , E c u a d o r , G u a t e m a l a , H a i t i ,
H o n d u r a s , M e x ic o , N i c a r a g u a , P a n a m a , P a r a g u a y , P e r u , E l S a l v a d o r , U r u g u a y , a n d
V e n e z u e la .

131

Tabl e 32.— T ra n sa c tio n s

o f th e U n ited S ta te s ic ith th e A m e ric a n R e p u b lic s ,
1 9 4 0 -4 5
[In m illio n s of dollars]
1940

1941

1942

1943

1944

I . R e c e ip ts , t o t a l ................ .......................................... -

1,088

1,415

1,214

1,457

1,903

2,101

A. G oo ds a n d se rv ic es, to t a l ............ ..................... .
1. G o o d s_ _ _ _ _ _ _ _ _ _ ____ _____ __________
2. In c o m e o n in v e s tm e n ts .___ _ _ _ _ _ _ _ _ _ _ _ _
3. O th e r s e r v ic e s ............ ........ ..........................
B . U n ila te r a l tr a n sf e r s ___________ __________
C . L o n g -te rm c a p ita l, t o t a l _ __ __ __ __ __ ______
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in ­
v e s te d a b r o a d _____________ _ _ _ _ _ _ _ _ _
2. M o v e m e n ts of foreign c a p ita l in v e s te d in
U n ite d S ta te s ......... ................ ...................

1,017
682
170
165
11
60

1,321
902
198
221
8
86

1,116
711
196
209
14
84

1,328
830
200
298
17
112

1,718
1,112
260
346
18
167

1,921
1,284
239
398
26
154

60

83

76

107

152

127

3

8

5

15

27

971

1,409

1, 602

2,073

2,415

2,428

891
670
10
211
12
68

1,356
1,076
9
271
15
38

1,443
1,166
8
269
61
98

1,763
1,445
8
310
199
111

2,065
1,726
8
331
289
61

2,108
1, 772
8
328
101
219

64

37

97

110

60

218

4

1

1

1

1

1

+ 1 17

+6

-3 8 8

-6 1 6

-5 1 2

-3 2 7

A . G oo ds a n d s e rv ic e s ___ _____ _ __ __ __ __ __ __
B . U n i la tc r a l tr a il sfers _____ _ __ __ __ __ __ __ __ __
N e t goods a n d se rv ice s a n d u n ila te ra l tra n sfe rs .
C . L o n g -te rm c a p ita l................................ .............

+ 1 26
-1
+ 1 25
-8

-3 5
-7
-4 2
+48

-3 2 7
-4 7
-3 7 4
-1 4

-4 3 5
-1 8 2
-6 1 7
+ i

-3 4 7
-2 7 1
-6 1 8
+ 106

-1 8 7
—75
-2 6 2
-6 5

IV . N e t inflow ( + ) o r o u tflo w ( —) of fu n d s o n gold
a n d sh o rt- te rm c a p ita l a c c o u n t, to t a l _ _ _ _ _ _ _ _ _

-2 2

-1 4

+ 345

+ 732

+ 648

+ 6 06

-1 2 2

+ 473

It e m

I I . P a y m e n ts , to t a l _________ ____ _ _______ _____
A . G oo d s a n d se rv ic es, to t a l ____ ____ _ ____ _ __ _
1. G o o d s _______ __ _ _ _ _ _______ _________
2. In c o m e o n in v e s tm e n ts __________ _____
3. O th e r se rv ic e s............... .................. ..............
B . U n ila te r a l tr a n sfe rs _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C . L o n g -te rm c a p ita l, t o t a l . . ............ ........ ......... .
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in ­
v e ste d a b r o a d ------------------- ------ -------2. M o v e m e n ts of foreign c a p ita l in v e s te d in
U n ite d S ta te s ______________________
I I I . E xc ess of re c e ip ts ( + ) o r p a y m e n ts ( —) , to t a l __

1945

A . N e t U n ite d S ta te s g old sales ( + ) o r p u r ­
c ha ses ( —) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm
c a p ita l a b r o a d _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C . N e t m o v e m e n t of foreign sh o rt- te rm c a p ita l
in U n ite d S ta te s ............................ .................

+19

+ 109

+ 579

+ 4 06

-6

-2 6

-1 0

—5

-3 6

-2 7

+ 1 06

-7

+ 2 52

+ 158

+ 278

+ 160

V . E rr o rs , o m issio n s, a n d th ir d - c o u n tr y tr a n s a c tio n s ..

-9 5

+8

+43

-1 1 6

-1 3 6

-2 7 9

a g g re g a te a c c u m u la tio n o f g o ld a n d f o r e ig n e xch an g e w a s la r g e r th a n
th e a cc u m u latio n due to tra n sa c tio n s w ith th e U n ite d S ta te s alone.
T h e A m e ric a n R ep u b lics h av e tr a d itio n a lly been e x p o rte rs o f p r o d ­
u c ts o f th e e x tra c tiv e in d u s trie s— a g r ic u ltu re , live sto c k ra isin g , a n d
m in in g . E x p o rts o f m a n u fa c tu re d goods (ex ce p t fo r m e a t a n d a few
o th e r p ro d u c ts d ire c tly connected w ith p r im a r y in d u s try ) h a v e been
n eg lig ib le.
M oreov er, m o st o f th e A m e ric a n R ep u b lics h a v e d e p e n d e d on only
one o r tw o p ro d u c ts f o r th e b u lk o f th e ir e x p o rts. F o r ex am p le, in
1938 p e tro le u m a cc ou n ted f o r m o re th a n 90 p e rc e n t o f V en ez u e la ’s
e x p o rts, a n d coffee f o r m o re th a n 80 p e rc e n t o f E l S a lv a d o r’s. I n 9
o f th e 20 A m eric an R ep u b lics, th e le a d in g e x p o r t acco u n ted f o r m ore
th a n 50 p e rc e n t o f th e to ta l, a n d in 7 m o re th e tw o le a d in g e x p o rts
to g e th e r acco u n ted f o r m ore th a n 50 p e rce n t.
A s a consequence o f th is situ a tio n , th e volum e o f e x p o rts o f th e
A m e ric a n R ep u b lics h a s te n d e d to be even m o re se nsitive to cyclical
flu c tu a tio n s th a n h a s w o rld tr a d e g e n e ra lly . T h e g r e a t d e pressio n
o f th e 1930’s, d u r in g w h ic h p ric e s o f ra w m a te ria ls fe ll to u n p re c e ­
d e n te d ly low levels, h a d c a ta stro p h ic effects on th e e x p o rts o f th ese
c o u n tries.
132

V

■r

T h e p ric e s o f m a n u fa c tu re d goods, o n th e o th e r h a n d , d id n o t f a ll
to th e sam e e x te n t, a n d im p o rts in to th e A m eric an E e p u b lic s con­
siste d in th e m a in o f g o o d s in th is c ateg o ry . T h e r e s u lt w as t h a t
d u r in g th e d ep ressio n p e rio d th e v a lu e o f e x p o rts fro m th e a re a
te n d e d to f a ll m o re th a n th e v a lu e o f im p o rts in to it.
I n “n o rm a l” tim es, th e A m e ric a n R e p u b lic s g e n e ra lly h a d a n e x p o rt
su rp lu s w h ich , su p p le m en ted by som e fo re ig n le n d in g , w as sufficient
to c om p en sate fo r th e c h a ra c te r is tic deficit o n th e in v isib le item s. T h e
d o m in a n t item s in th is g ro u p w ere (a n d a re ) p a y m e n ts f o r tr a n s ­
p o rta tio n services a n d p a y m e n ts o f incom e on in v estm en ts. T h e
A m e ric a n R e p u b lic s’ in v estm e n ts a b ro a d w e re n e g lig ib le a n d th e ir
m e rc h a n t m a rin e s re la tiv e ly sm all, so t h a t o u tp a y m e n ts f o r th ese
services w ere h e av y , a n d a n e x p o rt su rp lu s w as n ecessary in o r d e r
to co m p en sate fo r th em .
T h e re la tiv e ly stee p e r decline in e x p o rts b r o u g h t a b o u t b y d e p res­
sion c o n d itio n s conseq u en tly p re se n te d th e A m eric an R ep u b lics w ith
v e ry p r e ss in g b a la n c e -o f-p a y m e n ts p rob lem s. T h e so lu tio n w h ic h
m o st o f th em chose as th e e asiest w a y o u t w as e x ch an g e c o n tro l, d e ­
sig n e d to a llo c ate th e red u c ed volum e o f a v ailab le fo re ig n e xch an ge
in th e m o st d e sira b le w ay fro m th e p o in t o f view o f th e econom y as
a w hole, a n d to red u ce th e d e m a n d f o r e xch an g e in s o fa r as possible.
H o w e v e r u n d e sira b le su ch c o n tro ls m a y be u n d e r h a p p ie r c ircu m ­
stan ces, a t th e tim e i t w as p ro b a b ly th e o n ly p r a c tic a b le choice f o r
m o st o f th e c o u n trie s concerned.
I f d e pressio n c o n d itio n s w ere esp e cially u n f a v o ra b le to econom ies
o f th e ty p e w h ich p re v a ils in L a tin A m e ric a, w a r c o n d itio n s te n d e d
to be esp e cially fa v o ra b le. T h e d e m a n d o f th e c h ie f b e llig e re n t n a ­
tio n s, a n d o f th e U n ite d S ta te s in p a r tic u la r , fo r ra w m a te ria ls es­
se n tia l to w a r p r o d u c tio n w as a lm o st in sa tia b le d u r in g th e w a r y e a r s ;
a n d as th e conflict d re w to a close, w o rld d e m a n d f o r foo d stu ffs a n d
fee dstu ffs fro m th e W e s te rn H e m isp h e re w as also g re a tly in crea se d
as th e re s u lt o f th e d is ru p tio n o f a g ric u ltu ra l p r o d u c tio n in th e w a rd e v a sta te d reg ions.
T h e fa v o ra b le effects o f w a r d ev e lo p m e n ts on th e b a la n ce -o f-p ay m e n ts p o s itio n o f th e A m e ric a n R ep u b lics a re d ra m a tic a lly d e m o n ­
s tra te d by ta b le 33, sh o w in g th e re p o rte d g o ld a n d fo reig n -ex c h a n g e
h o ld in g s o f th e 20 A m e ric a n R ep u b lics, 1941-45.
T h e S itu a tio n in 1 9 4 0

E v e n w ith re sp e c t to th e ir tra n sa c tio n s w ith th e U n ite d S ta te s ,
how ever, th e re a l tr a n s itio n fro m a “n o rm a l” b a sis to th e new w a r
fo o tin g cam e a b o u t b etw een 1940 a n d 1941. I n th e y e a r 1940, a lth o u g h
th e w a r in E u ro p e w as w ell u n d e r w ay a n d th e U n ite d S ta te s w as b e ­
g in n in g to a rm u n d e r its d efen se p ro g ra m , th e f u ll im p a c t o f th ese
even ts on L a tin A m eric an tra n sa c tio n s w ith o th e r c o un tries, e specially
w ith th e U n ite d S ta te s, h a d n o t y e t m a d e its e lf fe lt. T h e re w as, i t is
tr u e , som e in crease in m o st o f th e la r g e r item s e n te rin g in to o u r tr a n s ­
a c tio n s w ith L a tin A m eric a, b u t a p p a re n tly b o th re c e ip ts a n d p a y ­
m e n ts on th ese v a rio u s accoun ts rose in m u ch th e sam e p ro p o rtio n , leav­
in g th e g e n e ra l s tru c tu re o f th e b a la n c e o f p a y m en ts v e ry m u ch th e
sam e as i t h a d been in th e im m e d ia te p re w a r y ears.

133

Tabl e 33.—R e p o rte d g ro ss g o ld a n d exc h a n g e h o ld in g s

o f th e A m e ric a n R ep u b lics,

[In m illio n s of dollars]
A s of D e c . 31 C o u n tr y
1941

1942

1943

1944

1945

T o t a l ........... ........................................................

1,070.0

1,693.6

2,888. 5

3,808.1

4,385.0

A r g e n tin a ------------------------ ---------------------------B o liv ia _ _ _ _ _ _ _ _ ____ _____ ______ ________ ____
B r a z il_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ - ........
C h ile __________ ____ _____ _ _ _ _ _ _ _ __________
C o lo m b ia .......................................... .......... . ........... .
C o s ta R ic a ........... . ........— _____ ______________
C u b a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ ________________ . .
D o m in ic a n R e p u b lic _____ _____ _____ _ _ _ _ _ _ _ _
■ Ecuador_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __________ ____
E l S a lv a d o r..............
.................................... .
G u a te m a la ------------------- ------ -------------------------H a i t i ________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
H o n d u r a s . ____ _________ _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _
M e x ic o ---- ------- ------- --------- ----------------- -------- N ic a r a g u a .......... .............. ........ ....................................
P a n a m a 2_.______ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
P a r a g u a y ........... ............ ................ ......... ........ ...........
P e r u _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ _
U r u g u a y _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ _____ ____
V e n e z u e la . ______ _____ ____ ____ _ __ __ __ __ __ __

459.2
15.7
146.9
45.4
22.5
2 .7
67.9
5 .7
7 .8
8 .2
13.2
4 .8
1.3
53.0
1.9
27.0
2 .5
27.4
103.7
53.0

624.3
19.3
267.6
59.6
61.8
10.1
205. 9
8.7
17.2
17.4
23.8
5 .9
4.1
104.0
4.7
28.8
5.9
39.1
95.7
89.7

1,136. 6
19.0
538.3
87.8
113.3
15. 9
263.6
12.1
29.1
25.3
30.3
7 .9
3 .9
250.0
7.4
47.8
8.6
46.5
129.8
115.2

1,434.7
21.4
663.4
116.3
158.2
14.2
462.6
11.5
36.2
28.1
31.1
9 .0
9 .6
300.0
6.7
80.4
9 .4
46.9
207.4
161.0

1,703.6
34.2
669.2
125.6
176.8
9.1
553.5
11.5
33.2
31.3
38.0
11.8
15.5
i 376.0
6.7
61.0
10.3
48.7
228.9
240. 2

1 A ug . 31, 1945.
2 A ll figure s a re for J u n e 30 a n d in c lu d e U n ite d S ta te s c u rre n c y in c irc u la tio n a n d h e ld b y b a n k s a n d fo r ­
e ig n d e p o sits of b a n k s .
S ou rc e: U . S. D e p a r tm e n t o f C o m m e rc e , Office o f I n te r n a ti o n a l T ra d e .
to to ta ls b e c au se o f ro u n d in g .

Not e.—D e ta il w il l n o t n e c e ssa rily a d d
M e r c h a n d is e

T rade

in

B a la n c e

M e rc h a n d ise tr a d e betw een th e tw o a re a s in 1940 w as re la tiv e ly
b a la n c ed , e x p o rts o f th e U n ite d S ta te s b e in g v a lu e d a t $682 m illio n a n d
im p o rts a t a b o u t $670 m illio n . I n th e im m e d iate ly p re c e d in g y ears,
m erc h a n d ise -tra d e tra n sa c tio n s h a d re s u lte d in su rp lu se s f o r th e
U n ite d S ta te s, b u t th is s ta te o f a ffa irs w as a c o m p a ra tiv e ly new d e ve l­
o p m en t. P r i o r to 1938, th e U n ite d S ta te s, lik e th e re s t o f th e w o rld ,
h a d u su ally im p o rte d so m e w h a t m o re fro m th e a re a as a w hole th a n
i t h a d e x po rte d to it. T h e new s itu a tio n a p p a re n tly aro se as a co n ­
sequence o f th e b usiness recession o f 1938, w h ich w as c o nsid e ra b ly m ore
severe in th is c o u n try th a n elsew here. A s a lre a d y m en tio n ed , b o th
o u r im p o rts a n d o u r e x p o rts rose m o d e ra te ly in 1940, th e in crease in
im p o rts b e in g so m e w h a t g re a te r th a n th e in crea se in e x p o rts b u t n o t
e n o u g h to w ip e o u t th e su rp lu s c om p letely a n d re s to re th e m o re u su al
re la tio n sh ip .
I n v is ib le

Ite m s

Y ie ld

a

S u r p lu s

T h e 1940 su rp lu s on a cc ou n t o f in v isible, o r service, item s w as $114
m illio n . T h is su rp lu s w a s p r im a r ily a ttrib u ta b le to th e v e ry h e av y
n e t re c e ip ts o f in v e s tm e n t incom e, w h ic h in t h a t y e a r re ac h ed $160
m illio n . A deficit o f $46 m illio n w as in c u rre d on th e o th e r service
item s.
T h e se o th e r services c on sist o f fre ig h t, sh ip p in g , a n d p a sse n g e r-fa re
c h arg e s, tra v e l e x p e n d itu re s, a n d a h o st o f sm all accoun ts c o n v e n tio n ­
a lly lu m p e d to g e th e r as m iscellaneous services. I n th e p a r tic u la r case
o f L a tin A m eric a, b o th th e tr a n s p o rta tio n a cc o u n t a n d th e tra v e l ac­
c o u n t w ere im p o rta n t, a lth o u g h th e seem in g im p o rta n c e o f th e tra v e l
a cc o u n t is de ce ptive in re la tio n to th e a re a as a w hole, since th e b u lk
134

o f tr a v e l tr a n s a c tio n s to o k p lac e b etw een th e U n ite d S ta te s a n d one
L a tin A m eric an c o u n try , M exico.
A m e ric a n tra v e le rs sp e n d m u ch la r g e r sum s in a ll th e A m e ric a n
R ep u b lics th a n do re sid e n ts o f th o se c o u n trie s here. I n 1940, tr a v e l
re c e ip ts fro m a ll L a tin A m e ric a n c o u n trie s w ere e stim ate d a t $39 m il­
lio n , a n d p a y m e n ts a t $84 m illio n . T h e M ex ican sh a re in th ese
a m o u n ts w as $31 m illio n on th e re c e ip ts side a n d $57 m illio n on th e
p a y m e n ts side.
R e c eip ts on a c c o u n t o f tr a n s p o rta tio n services w ere o n ly s lig h tly
in excess o f p a y m e n ts in 1940. T h is m ay h a v e been fa irly ty p ic a l o f
th e p eacetim e p a tte rn . I t sh o u ld be rem em bered, how ever, t h a t th e
situ a tio n v a rie d g re a tly fro m one in d iv id u a l L a tin A m e ric a n c o u n try
to a n o th e r. W ith re sp e c t to a n u m b e r o f c o u n trie s w hose vessels r e ­
ceive a la rg e p ro p o rtio n o f o u r to ta l tr a n s p o rta tio n p a y m e n ts (e. g.,
P a n a m a a n d H o n d u r a s ) , th o se p a y m e n ts w ere in effect p a r tia lly offset
by re c e ip ts o f in v e stm e n t incom e fro m th e s h ip p in g com p anies in ­
volved, w h ich a re la rg e ly A m erican -o w n ed .
A s a r e s u lt o f a ll tr a n s a c tio n s in goods a n d services, o u r rec e ip ts
fro m th e A m e ric a n R ep u b lics w ere in th e n e ig h b o rh o o d o f $1,017
m illio n a n d p a y m e n ts w ere a b o u t $891 m illio n , le a v in g a s u rp lu s on
su ch tra n sa c tio n s o f som e $126 m illio n to be se ttle d in o th e r w ays.
N et

L o n g -T e r m

C a p ita l

M o v em en ts

S m a ll

T o a v e ry sm a ll e x te n t, th e A m e ric a n R ep u b lics d id fin d a d d itio n a l
sources o f U n ite d S ta te s d o lla rs th ro u g h lo n g -te rm b o rro w in g . T h e
f u n d s cam e fro m th e U n ite d S ta te s G o v e rn m en t th ro u g h th e E x p o rtI m p o r t B an k . I n 1940 th is in s titu tio n a u th o riz e d lo an s— to A rg e n ­
tin a , B ra z il, C olom bia, P e r u , U ru g u a y , a n d C h ile— to ta lin g $168 m il­
lion. B u t o n ly a sm all p ro p o rtio n o f these c re d its, a b o u t $19 m illio n ,
w as a c tu a lly d isb u rse d in 1940; a n d m o st o f th e re m a in in g b alan ce
h e ld w as su b seq u en tly canceled (see p. 95). T h e n e t flow o f p r iv a te
c a p ita l w as to w a rd th e U n ite d S ta te s, how ever, so t h a t th e A m e ric a n
R ep u b lics d e riv e d o n ly $8 m illio n n e t fro m a ll lo n g -te rm c a p ita l
tr a n s a c tio n s ta k e n as a g ro u p .
T h ir d -C o u n tr y

T r a n sa c tio n s

and

th e

R e s id u a l I te m

T h e n e t outflow o f f u n d s fro m th e U n ite d S ta te s on acco u n t o f g o ld
a n d s h o rt-te rm c a p ita l m ovem ents com b ined w as o n ly $22 m illio n — a n
a m o u n t w h ich fa lls s h o rt b y $95 m illio n o f e q u a lin g th e excess o f L a tin
A m e ric a n p a y m e n ts to th e U n ite d S tate s.
I t h a s a lre a d y been n o te d t h a t in th e case o f a b ila te ra l b a la n c e o f
p a y m e n ts th e r e is no necessity , as th e re is f o r a g lo b a l sta te m e n t, t h a t
th e so -called “b a la n c in g ite m ” (i. e., g o ld a n d s h o rt- te rm c a p ita l m ove­
m en ts) cancel o u t th e excess o f re c e ip ts o r p a y m e n ts re s u ltin g fro m
o th e r tra n s a c tio n s. I n th e p re se n t case, th e re s id u a l ite m o f $95
m illio n m a y be due e ith e r to a n u n d e re stim a te o f U n ite d S ta te s p a y ­
m e n ts to L a tin A m e ric a , to a n o v e re stim ate o f U n ite d S ta te s re c e ip ts
fro m L a tin A m e ric a, o r to th e fa c t t h a t th e L a tin A m eric an c o u n trie s
d e riv e d n e t re c e ip ts fro m o th e r c o u n trie s w h ich th e y used to cover
th e ir d eficit w ith th e U n ite d S ta te s.34 S till a n o th e r p o ssib ility is th a t
34
I f , f o r e x a m p le , A r g e n t i n a s e t t l e s i t s d e f i c i t v is - à - v i s t h e U n i t e d S t a t e s b y d r a w i n g o n
d o l l a r s h e l d b y t h e U n i t e d K i n g d o m , w h i c h l a t t e r c o u n t r y i n t u r n h a s a d e f i c i t v is - à - v i s
A r g e n tin a , th e t r a n s a c ti o n w ill a p p e a r a s o n e b e tw e e n th e U n ite d S ta te s a n d th e U n ite d
K in g d o m i n s t e a d o f b e t w e e n t h e U n i t e d S t a t e s a n d A r g e n t i n a — i. e ., U n i t e d K in g d o m d o l l a r
b a la n c e s w ill b e d r a w n d o w n r a t h e r t h a n A r g e n tin a d o lla r b a la n c e s .

135

th e L a tin A m e ric a n “re c e ip ts” o f d o lla rs fro m th ir d c o u n trie s m ay
h av e com e a b o u t n o t in d ire c tly , fro m th e b u ild in g u p o f b alan c es as a
re s u lt o f tr a d e o r service tra n sa c tio n s, b u t d ire c tly , fro m th e tr a n s f e r
o f d o lla r ba la nc es fro m th ird -c o u n try to L a tin A m e ric a n o w n e rsh ip
th ro u g h a sim p le c h a n g e in residence o f th e h o ld e rs o f th e balances.
T h is m ay h av e h a p p e n e d in 1940 on a f a ir ly e xtensive scale.
T h e W a r P e r io d , 1 9 4 1 - 4 4

I n 1941, th e e x p a n sio n ist effect o f th e w a r on o u r tr a d e w ith th e
A m e ric a n R ep u b lics b e g a n to be a p p a re n t. D u r in g th is y e a r, th e
U n ite d S ta te s w as p la y in g in e a r n e st its ro le o f “A rse n a l o f D em oc­
ra c y .” T h e ste p p in g -u p o f p ro d u c tio n f o r o u r ow n d e fen se a n d f o r
a id to B r ita in re q u ire d g re a tly in c rea se d im p o rts o f stra te g ic m a te ria ls
a n d o f ra w m a te r ia ls in g e n e ra l. T h e A m eric an R ep u b lics, b e in g
a m o n g th e w o rld ’s g re a te s t storeho uses o f su ch m a te r ia ls (o th e r th a n
th e basic m in e ra ls, iro n a n d c o a l) , benefited g re a tly fro m th is e x p a n d e d
im p o r t p ro g ra m .
Im p o rts

R is e

U n ite d S ta te s p a y m e n ts to L a tin A m eric a on a cc ou n t o f m e rc h an ­
d ise tr a d e w e n t u p fro m $670 m illio n i n 1940 to $1,075 m illio n in 1941,
a n in crea se o f 61 p e rce n t. T h o u g h im p o rts c o n tin u e d to g ro w y e a r
b y y e a r th ro u g h o u t th e w a r y e ars, in c lu d in g 1945, th is w as b y f a r th e
la rg e s t a n n u a l in crease, b o th re la tiv e ly a n d ab so lutely . I n te rm s o f
volum e, fu rth e rm o re , c o m p a ra tiv e ly little in crea se o c cu rre d aftejr
1941; in 1942, in d ee d , w h e n th e s h ip p in g sh o rta g e w as p a r tic u la r ly
a cu te, im p o rt volum e fe ll off h e av ily . T h e co n tin u o u s ris e in im p o rt
v alu es a f te r 1941 a p p e a rs to b e due m a in ly (in som e y e a rs p e rh a p s
e n tire ly ) to ris in g im p o rt p rices.
A s w o u ld be e xpected, th e re w as a s h if t in th e co m p o sitio n o f im ­
p o rts to w a rd m a te r ia ls e ssen tia l f o r w a r p ro d u c tio n . T h e g re a te r
d e g ree o f c o n c e n tra tio n on such com m odities w as o bservable th ro u g h ­
o u t th e w a r y e ars, b u t w as e sp ecially m a rk e d in th e c ritic a l y e a r 1942,
w h en th e s h ip p in g sh o rta g e m a d e i t im p e ra tiv e to confine im p o rts as f a r
as possib le to th e e sse n tial categ o ry . I n t h a t y e a r, th re e -fifth s b y v a lu e
o f o u r im p o rts fro m th e A m eric an R ep u b lics w ere classified a s s t r a ­
te g ic o r c ritic a l m a te ria ls, c o m p are d w ith o n ly 46 p e rc e n t in 1939.
M oreo v er, since E u ro p e a n a n d A sia tic sources o f th ese m a te ria ls h a d
b een la rg e ly c u t off, th e L a tin A m eric an sh are in o u r g lo b a l im p o rts
o f th ese com m o d ities also in crea se d . A f te r 1942, im p o rts fro m th e r e ­
g io n b e g a n to in crease once m ore, n o t o n ly because o f th e e asin g o f th e
sh ip p in g situ a tio n b u t also because p ro g ra m s b e g u n in t h a t y e a r f o r in ­
c re a sin g p ro d u c tio n o f ru b b e r a n d m a n y o th e r stra te g ic a n d c ritic a l
m a te r ia ls g o t w ell u n d e r w ay o n ly in la te r y ears.
R is e

in

E x p o r ts

L ess

M arked

T h e rise in U n ite d S ta te s e x p o rts to L a tin A m eric a w as m u ch m o re
m o d e ra te d u r in g th is p e rio d . T h e v a lu e o f e x p o rts in 1941 w as 32
p e rc e n t h ig h e r th a n in 1940, b u t in 1942 i t w as 20 p e rc e n t lo w er th a n in
1941. T h is d ro p c o rresp o n d e d to a p re c ip ito u s decline o f a b o u t onet h i r d in e x p o rt volum e, w h ich w as below th e volum e w h ich h a d been
re ac h ed in 1940. T h e v a lu e o f e x p o rts d id n o t re a c h th e 1941 level
even in 1943. B y 1944 i t h a d ad v a n c ed c o n sid erab ly b eyon d th e 1941
level, how ever.
136

T h e p rin c ip a l rea so n f o r th e sm a ll in crea se in U n ite d S ta te s e x p o rts,
c o m p are d w ith th e in crease in im p o rts, w as th e ti g h t su p p ly s itu a ­
tio n f o r m a n y o f th e m a n u fa c tu re d g oods w h ich c o n stitu te th e g re a te r
p a r t o f o u r e x p o rts to th e a rea . A s m en tio n ed elsew here,35 a lice n sin g
sy stem w as in s titu te d f o r a ll e x p o rts, in o r d e r to c u rta il th e ir volum e
a n d to r a tio n e q u ita b ly th e p e rm itte d q u a n tity . A d e lib e ra te effort
w a s m a d e in m a n y in sta n c es to su p p ly th e A m e ric a n R ep u b lics w ith
m a n y scarce com m odities, le st th e ir econom ies collapse a lto g e th e r;
ne ve rth e le ss, i t w as o fte n n o t possible to m a in ta in e x p o rts even a t p r e ­
w a r levels, le t alone to m eet th e v a stly e x p a n d e d L a tin A m e ric a n
d em and.
O ne r e s u lt o f th is sca rc ity o f m a n u fa c tu re d g oods w h ich w ill d o u b t­
less p ro v e beneficial to th ese c o u n trie s in th e lo n g r u n w as th e e x p a n ­
sio n o f d om estic m a n u fa c tu rin g in d u s trie s. B ra z il— to ta k e a p a r tic ­
u la r ly s trik in g exam ple— b u ilt u p its c o tto n te x tile in d u s try to th e
p o in t w h e re i t w as ab le n o t o n ly to su p p ly th e hom e m a rk e t b u t in
a d d itio n to e x p o rt to o th e r c o u n trie s w hose n o rm a l sources o f su p p ly
h a d also been c u t off. D e velo p m en ts o f th is s o rt in t u r n le d to a g r e a t
e x p a n sio n o f tr a d e a m o n g th e L a tin A m eric an R ep u b lics, them selves.
I t is h a r d ly a n e x a g g e ra tio n to sa y t h a t in te r- L a tin A m e ric a n tr a d e
w as n o n e x iste n t b e fo re th e w a r, w ith th e e x cep tio n o f a few p a irs o f
c o ntig u o u s c o u n trie s, like A rg e n tin a a n d P a r a g u a y , C hile a n d P e ru ,
o r M exico a n d G u a te m a la . I n 1940 im p o rts o f th e A m e ric a n R e p u b ­
lics fro m one a n o th e r w ere o n ly a little m o re th a n o n e -te n th o f th e ir
to ta l im p o rts ; by 1944 th is fra c tio n h a d rise n to a b ou t o n e -fo u rth .
M e x ic o

and

P anam a

E x p e rie n c e

D e fic its

W h ile a h e a v y deficit on m e rc h a n d is e -tra d e tra n sa c tio n s c h a ra c te r­
ized o u r a cc ou n t w ith th e A m e ric a n R ep u b lics as a g ro u p , o u r tr a d e
b a la n ce w a s n o t n e g a tiv e w ith e very c o u n try in d iv id u a lly (see ta b le
3 4 ). T h e c h ie f ex cep tio n s w ere M exico a n d P a n a m a .
U n ite d S ta te s tr a d e tr a n s a c tio n s w ith M exico re s u lte d in fa irly
su b s ta n tia l su rp lu ses in e v ery y e a r except 1943. I n co m p en sation ,
how ever, th e re w ere n e t U n ite d S ta te s p a y m e n ts to M exico on c e rta in
o th e r acco u n ts (e. g., tr a v e l a n d p e rso n a l re m itta n c e s) to a n e x te n t
t h a t d id n o t e x ist in connection w ith o th e r L a tin A m eric an countries.
T h e existen ce o f th e P a n a m a C a n a l Zone p u ts th e R e p u b lic of
P a n a m a in a v e ry sp ecial b a la n c e -o f-p a y m e n ts situ a tio n vis-à-vis th e
U n ite d S ta te s. P a n a m a a lw a y s h a d a n enorm o us deficit on rec o rd e d
m e rc h a n d ise -tra d e tra n sa c tio n s w ith th e U n ite d S ta te s, a n d no chan ge
in th e s itu a tio n o c cu rred d u r in g th e w a r y e a rs, e x ce p t f o r ro u g h ly
p ro p o rtio n a te increases in b o th im p o rts a n d e x p o rts. T h is tr a d e
d eficit w as offset by la rg e n e t re c e ip ts on service tr a n s a c tio n s w ith th e
Zone. A la rg e p a r t o f th ese “services” a c tu a lly c on sisted o f u n re ­
c o rd ed e x p o rts o f m e rc h a n d ise to th e Zone, th ro u g h p u rc h a se s b y Zone
re sid e n ts in P a n a m a n ia n sh ops, a n d s im ila r tra n sa c tio n s. I n a d d i­
tio n , th e re a re la rg e U n ite d S ta te s p a y m e n ts o f w ages a n d sa la rie s to
p e rso n s w ho re sid e in P a n a m a b u t w o rk in th e Zone. I t is believed
t h a t b y th ese m eans P a n a m a d u r in g th e y e a rs 1940-45 m ore th a n off­
set its tr a d e deficits w ith th e U n ite d S ta te s, a n d in fa c t h a d sizable
su rp lu ses on c u rre n t a cco u n t.36
85 S e e p . 1 7 .
3° W e a r e i n d e b t e d f o r m u c h i n f o r m a t i o n o n P a n a m a - U n i t e d S t a t e s t r a n s a c t i o n s t o a
v e ry v a lu a b le u n p u b lis h e d s tu d y o f th e s u b je c t m a d e by F in d le y W e a v e r, o f th e U n ite d
S ta te s F o r e ig n S e rv ic e .

7 6 9 1 5 5 -4 8 -

-10

137

Tabl e 34.—

U n ite d S t a te s tr a d e w it h th e A m e r ic a n R e p u b lic s : e x p o r ts , in c lu d in g
r e e x p o r ts , a n d g e n e r a l im p o r ts o f m e r c h a n d is e , 1 9 4 0 -4 5

[In m illio n s of dollars]
1941

1940

1942

C o u n tr y
E x p o rts
T o ta l_______________
A r g e n ti n a ________ ____ _ __ _
B o liv ia -------- ------------- -----B ra z il___________________
C h i l e . . . , ___ _ __ __ __ __ __ __
C o lo m b ia ___________ ____
C o s ta R ic a ........ .......................
C u b a . . _____ _ __ __ __ __ __ __
D o m in ic a n R e p u b li c . ......... .
E c u a d o r _________________
E l S a lv a d o r................... .....
G u a te m a la _______________
H a iti . . . ______ ____ _ _ _ _ _
H o n d u ra s_____________ . . .
M e x ic o __________________
N ic a ra g u a _______ _ _ _ _ _ _ _
P a n a m a _____________ . . .
P a r a g u a y __ ____ _________
P e r u ___
_________ ____
U r u g u a y ........... ......... .............
V e n e z ue la ................... ...........

Im p o r ts

E x p o rts

Im p o r ts

E x p o rts

Im p o r ts

683

619

902

1,008

718

977

107
8
111
43
52
12
85
7
6
5
9
5
7
97
6
19
1
23
11
69

83
6
105
65
48
4
105
5
5
7
11
4
9
76
3
4
2
18
18
42

109
12
148
58
66
13
126
9
8
6
11
6
9
159
9
35
1
32
18
68

167
27
184
112
53
9
181
10
7
7
13
7
9
98
3
5
3
24
40
49

72
11
105
41
30
7
133
9
9
6
9
5
6
148
4
28
2
28
17
47

150
26
165
140
78
6
161
8
9
12
15
6
5
124
5
3
3
21
21
20

1943

1944

1945

C o u n tr y
E x p o rts
..

813

A r g e n ti n a ........................ ........
B o liv ia . ............................. ......
B r a z il .____ _________ _ __ _
C h ile ________ _ _ _ _ _ ______
C o lo m b ia ______
_ __ . . .
C o sta R ic a ____ _ __ _ _______
C u b a _____ ____ _________
D o m in ic a n R e p u b li c ______
E c u a d o r _________________
E l S a lv a d o r................ .............
G u a te m a la __________ ___
H a i t i ___ ____ _____ _______
H o n d u r a s _______ . . . _ _ _
M e x ic o ____________
. ...
N ic a ra g u a _ __ __ __ __ __ __ __ _
P a n a m a _____________ ____
P a ra g u a y _________________
P e r u ___ _ _ _ _ _ _____ ____ _
U r u g u a y ........ ........................
V e n e z u e la _ _ _ _ ___ _ _ _ _ _ _ _ _ _

T o t a l ______ ____ _

32
14
156
43
46
11
134
12
11
7
10
7
6
186
7
35
2
34
14
45

Im p o r ts
1,319
145
32
228
141
98
9
292
12
14
14
16
8
5
192
5
2
426
49
26

E x p o rts

Im p o rts

E x p o rts

Im p o rts

1,055

1,594

1,257

1,623

29
12
218
52
60
13
167
14
14
7
11
9
9
264
7
23
2
37
19
87

177
39
293
154
105
8
387
17
15
14
18
12
7
204
6
2
4
30
48
54

39
14
219
52
88
16
196
19
15
3
15
10
10
309
8
34
3
42
29
137

170
28
311
137
103
11
338
14
14
17
24
16
9
231
5
3
6
34
66
87

Not e—De ta il w ill n o t n e c e ssarily a d d to to ta ls , b e c a u se of ro u n d in g .
S ourc e: U . S . D e p a r tm e n t of C o m m e rce , B u r e a u of th e C e n su s.

U n ite d

S ta te s

In v e stm e n ts

P rosp er

T h e g re a tly e x p a n d e d d e m a n d f o r th e m in e ra l a n d a g ric u ltu ra l
p ro d u c ts o f th e A m e ric a n R ep u b lics—-and th e in fla tio n w h ic h u su a lly
re s u lte d fro m th e influx o f fo re ig n m oney— n a tu r a lly b r o u g h t fin a n ­
cial p ro s p e rity to business e n te rp ris e s lo ca te d in th e A m e ric a n R e ­
p u b lics. A s a consequence, re m itta n c e s o f in te re st a n d d iv id e n d s to
fo re ig n o w n ers o r c re d ito rs o f th o se e n te rp rise s in crea se d , in sp ite o f
th e re s tric tio n s im posed by som e L a tin A m eric an c o u n trie s on th e
tr a n s f e r o f in v e s tm e n t incom e. J u s t as in th e case o f m erch a n d ise
tr a d e , th e re w as a sh a rp u p w a rd m ovem ent b etw een 19-1-0 a n d 1941,
U n ite d S ta te s re c e ip ts o f incom e on in v e stm e n ts ris in g fro m $170
138

m illio n to $198 m illio n , o r 16 p e rce n t. In v e stm e n t incom e re m ain e d
a p p ro x im a te ly stab le a t th is level th ro u g h 1942 a n d 1948, b u t sh o t
u p in 1944, p r im a r ily as a re s u lt o f in crea se d incom e o f A m e ric an ow ned p e tro le u m com panies.
T h e in crea se in in v e stm e n t incom e is a ttr ib u ta b le e n tire ly to th e
p ro fits o f U n ite d S ta te s d ire c t in v e stm e n t. I n te r e s t on d o lla r b on ds
d id n o t rise— on th e c o n tra ry i t fe ll d u r in g th e la tte r p a r t o f th e
p e rio d as v a rio u s b o n d issues w ere red eem ed o r o th e rw ise r e p a tr ia te d
w ith o u t a n e q u iv ale n t volum e o f new issues ta k in g th e ir place.
R ec eip ts o f in te re st on G o v e rn m en t ( E x p o r t- I m p o r t B a n k ) lo an s
to L a tin A m e ric a h av e v a rie d w ith th e B a n k ’s e x p a n d in g o r c o n tr a c t­
in g lo an p ro g ra m , w h ich w as a t its pre-1945 h e ig h t in 1943. T h e sum s
in v o lv ed in th ese in te re s t re c e ip ts w ere sm all, n e v e r r u n n in g h ig h e r
th a n $4 m illio n p e r a n nu m .
P a y m e n ts to L a tin A m eric a on a cc ou n t o f in te re s t a n d d iv id e n d s
h av e n e v e r been o f m a jo r significance, a n d th e y te n d e d to decline d u r ­
in g th e w a r y e ars.
O th e r

P r iv a te

S e r v ic e

T r a n sa c tio n s

J u s t as c om m o d ity p ric e s in c rea se d d u r in g th e w a r y e ars, so d id
th e “ p ric e s” o f tr a n s p o rta tio n services— a p h e n o m e no n w h ic h led to
g re a t in crea se s in e x p e n d itu re s on tra n s p o rta tio n services. T h is f a c to r
alo n e w o u ld h av e b ro u g h t a b o u t p a ra lle l c han ges in b o th re c e ip ts a n d
p a y m e n ts, le a v in g th e n e t b alan ce, w h ich h a d been sm all in 1940,
a lm o st u n c h an g e d . I n re a lity , how ever, o th e r fa c to rs cam e in to o p e r­
a tio n (see p. 4 9 ), as a re s u lt o f w h ich o u r p a y m e n ts to L a tin A m eric a
a c tu a lly fell d u r in g th is p e rio d . T h e y rea c h e d a low p o in t in 1942 o f
less th a n tw o -th ir d s o f w h a t th e y h a d been in 1940, a n d n o t u n til 1944
d id th e y p a ss th e 1940 level. R ec eip ts, on th e o th e r h a n d , rose stea d ily
in e very y e a r except 1942, w hen th e y declined c o n c o m itan tly w ith th e
m e rc h a n d is e -tra d e de cline o f t h a t y e a r. B y 1944, U n ite d S ta te s r e ­
c eip ts on a cc o u n t o f tr a n s p o rta tio n services h a d rise n to m o re th a n
$200 m illio n , o r 220 p e rc e n t o f th e 1940 receipts.
T h e tra v e l p ic tu re re m a in e d c o m p a ra tiv e ly s ta tic d u r in g th e w a r
y e ars. T h e new p ro s p e rity o f 1941 b ro u g h t a s p u r t in tr a v e l p ay m e n ts,
w h ich to ta le d a lm o st $100 m illio n , b u t in th e n e x t y e a r tr a v e l re s tric ­
tio n s (esp ec ia lly g a so lin e r a tio n in g ) c o u n te ra c te d th e influence o f
h ig h incom es in th is c o u n try a n d tr a v e l p a y m e n ts d r o p p e d a b ru p tly .
T h e re a fte r, th e y g ra d u a lly re c o v e re d ; in 1943 th e y w ere a p p ro x i­
m ate ly eq u al to th e 1940 fig u re o f $84 m illio n , a n d in 1944 so m ew h at
above it. R ec eip ts v a rie d o n ly b etw een a h ig h o f $39 m illio n a n d a low
o f $33 m illio n . A s in th e p a st, m o st o f th ese tra v e l tr a n s a c tio n s to o k
p lac e betw een th e U n ite d S ta te s a n d M exico.
*

G overnm ent

S e r v ic e

P a y m en ts

E xpanded

I n c o n tr a st w ith th e b e h a v io r o f p a y m e n ts fo r services by p riv a te
p erso n s, U n ite d S ta te s G o v e rn m en t p a y m e n ts to L a tin A m eric a fo r
v a rio u s k in d s o f services in crea se d g re a tly . T h e se c on sisted o f m ili­
ta r y e x p e n d itu re s a n d o f e x p a n d e d o u tla y s by c iv ilia n agencies f o r
v a rio u s p r o g ra m s connected w ith th e w a r (in c lu d in g w o rk on th e
P a n -A m e ric a n H ig h w a y ). T h e a m o u n ts in v o lv ed in th is acco u n t
w ere sm a ll by co m p ariso n w ith th e c o rre sp o n d in g fig u res f o r o th e r
a reas, because th e A m eric an R ep u b lics w ere n o t th e scene o f a n y larg escale fig h tin g . S till, G o v e rn m en t e x p e n d itu re s fo r services re n d e re d
139

b y L a tin A m eric an s w ere m ore th a n $125 m illio n in each o f th e y e ars
1942,1943, a n d 1944.
R e c eip ts f o r services re n d e re d b y th is G o v e rn m en t to th e A m e ric a n
R ep u b lics also rose as a consequence o f v a rio u s w a r-in sp ire d a c tiv ities,
b u t n o t as m uch as d id p a y m e n ts ; n e t p a y m e n ts conseq u en tly w e n t up.
M oreov er, a c on sid e ra ble p a r t o f o u r “re c e ip ts” a c tu a lly c on sisted o f
services re n d e re d g r a tis — i. e., th e re c e ip ts a re offset b y e q u iv a le n t
a m o u n ts o f u n ila te ra l tr a n s f e rs in th e b a la n ce -o f-p ay m e n ’t s state m e n t.
R o le

of

L e n d -L e a se

N ot

D o m in a tin g

W h ile u n ila te ra l tr a n s f e rs becam e m u ch m o re sig n ific a n t a f te r 1940
th a n th e y h a d b een p re v io u sly , th e y n e v e r a ssum ed th e p re d o m in a n t
sta tu s t h a t th e y d id in o u r tr a n s a c tio n s w ith m a n y o th e r a re as. T h is
a g a in is tra c e a b le to th e fa c t t h a t L a tin A m e ric a w as n o t a b a ttle ­
g r o u n d , a n d conseq u en tly its needs f o r m ilita ry e q u ip m en t w ere lim ­
ite d in c o m p a riso n w ith th o se o f E u ro p e a n a n d A sia tic c ou n tries.
N evertheless, th e A m e ric a n R e p u b lic s w ere in v o lv ed in th e w a r ; m a n y
o f th e m h a d d e cla re d w a r on th e A x is P o w e rs a n d th e re m a in d e r h a d
b ro k e n re la tio n s w ith th em . T h e p ro b lem o f th e defense o f th e
A m eric as w as u rg e n t— b o th f o r its ow n sake a n d because o f its con­
n e ctio n s w ith th e d efen se o f th e U n ite d S ta te s p ro p e r.
T h e A m e ric a n R ep u b lics d id th e re fo re receive co n sid e ra b le q u a n ti­
tie s o f lend-lease goods a n d services necessary f o r b u ild in g u p th e
se c u rity o f th e W e s te rn H e m isp h e re. D u rin g th e 3 y e ars 1942-44,
tr a n s f e rs o f len d -le ase m a te ria ls to th e A m e ric a n R ep u b lics on a n o n ­
re im b u rsa b le b a sis w ere e stim a te d a t $235 m illio n . I n a d d itio n , th e re
w e re $93 m illio n in n o n re im b u rsa b le len d -lease services, so t h a t to ta l
u n ila te ra l tr a n s f e rs on lend-lease a cco u n t-w ere a b o u t $328 m illio n .
F u r th e r le nd-lease tr a n s f e rs to L a tin A m eric a v a lu e d a t $59 m illio n
w ere re im b u rsab le on cash o r c re d it te rm s, a n d th u s a re n o t offset by
a n e q u iv a le n t v a lu e o f u n ila te ra l tr a n s fe rs .
T h e U n ite d S ta te s G o v e rn m en t also m a d e m o d e ra te u n ila te ra l
tr a n s f e rs o f cash, c o n sistin g o f e x p e n d itu re s in th e a re a b y th e C o­
o rd in a to r o f In te r-A m e ric a n A ffairs, a n d sm a ll su m s f o r p en sion s a n d
a n n u itie s to p e rso n s re s id e n t in th e a rea , to ta lin g $38 m illio n th ro u g h
1944. T h e Office o f th e C o o rd in a to r o f In te r-A m e ric a n A ffa irs w as
e sta b lish e d f o r th e p u rp o se o f fo ste r in g good w ill b etw een th e U n ite d
S ta te s a n d th e L a tin A m e ric a n c o u n trie s by p ro m o tin g closer c u ltu ra l
re la tio n sh ip s. I t p ro v id e d c o n sid e ra b le a id to L a tin A m e ric a n c o u n ­
trie s th ro u g h v a rio u s c u ltu ra l, e d u c a tio n a l, a n d h e a lth a n d sa n ita tio n
p ro je c ts.
R e m itta n c e s

to

M e x ic o

E xpand

T h e re w as also som e g r o w th in p r iv a te u n ila te ra l tr a n s f e rs in th e
pex-iod 1941-44, esp e cially b e g in n in g in 1943, w h e n p e rso n a l re m it­
ta n c es to L a tin A m eric a rose s h a r p ly , b e in g m ore th a n double th e 1942
e stim a te o f $13 m illio n ; by 1944 th e y w ere m o re th a n $85 m illio n .
T h is tre m e n d o u s g ro w th w as d u e p rim a rily to th e p resen ce o f la b o re rs
im p o rte d fro m M exico. T h e d o lla rs e a rn e d b y th ese w o rk e rs a n d r e ­
m itte d to th e ir fam ilie s a t hom e w ere a m a jo r source o f fo re ig n ex­
c han g e to M exico d u rin g th is p e rio d .
N o T r e n d in L o n g -T e r m

C a p ita l M o v e m e n t s

L o n g -te rm c a p ita l m ovem ents w ere so m e w h a t e rra tic . O v e r th e
e n tire p e rio d , th e re w as a n excess o f U n ite d S ta te s re c e ip ts a m o u n tin g
140

to a b o u t $140 m illio n , b u t m o st o f th ese cam e in 1944. U n ite d S ta te s
p r iv a te p o rtf o lio c a p ita l w as w ith d ra w n fro m L a tin A m e ric a to th e
e x te n t o f a b o u t $55 m illio n ; p r iv a te d ire c t-in v e stm e n t c a p ita l w as also
w ith d ra w n in every y e a r ex ce pt 1942, th e n e t w ith d ra w a l f o r th e 4
y e a rs a m o u n tin g to a b o u t $125 m illio n . L a tin A m eric an s also in ­
creased th e ir h o ld in g s o f U n ite d S ta te s se cu ritie s a n d a m o rtiz e d some
o f th e ir o b lig a tio n s to th e U n ite d S ta te s. A lto g e th e r, p riv a te lo n g ­
te rm c a p ita l m ovem ents re su lte d in a n e t p o sitiv e b a lan ce o f som e $180
m illio n .
G overnm ent

P

L e n d in g

N ot

a

M a jo r

F a c to r

T h is b a la n ce w as o n ly p a r tia lly offset b y G o v e rn m e n t le n d in g to th e
A m e ric a n R e p u b lic s; U n ite d S ta te s G o v e rn m e n t c re d its o u ts ta n d in g
in crea se d by o n ly $69 m illio n fro m th e en d o f 1940 to th e e n d o f 1944.
I t h a s a lre a d y been m e n tio n ed th a t la rg e E x p o rt-I m p o r t B a n k com ­
m itm e n ts w ere m a d e to L a tin A m eric an c o u n trie s in 1940, b u t m an y
o f th ese w ere f o r p ro je c ts w h ich c ou ld n o t be c om p le te d on a cc ou n t o f
th e w a r, w ith th e re s u lt t h a t th e c re d its la p se d o r w ere canceled. T h e
in c rea se in L a tin A m e ric a ’s o u ts ta n d in g o b lig a tio n s as d ire c t lo an s to
th e E x p o r t- I m p o r t B a n k w as o n ly $39 m illio n b etw een D ecem b er 31,
1940, a n d D ecem ber 31, 1944. H o w e v e r, m a n y p r iv a te lo an s to L a tin
A m eric a w ere g u a ra n te e d b y th e E x p o r t- I m p o r t B a n k a n d p re su m a b ly
w o u ld n o t h a v e been m ad e w ith o u t su ch g u a ra n te e . T a b le 35 show s th e
to ta l o f d ire c t a n d g u a ra n te e d E x p o rt-I m p o r t B a n k lo an s o u ts ta n d in g
as o f th e en d o f each w a rtim e y e ar.

Ta bl e

3 5 .— E x p o r t-Im p o r t B a n k : D ir ec t a n d g u a ra n te e d lo an s, o u ts ta n d in g a s o f

D ecem b er 31, o n a cco un t o f th e A m e ric a n R e p u b lics, 1939-1/5
[In th o u s a n d s of dollars]
C o u n tr y

C h ile ..................... ....................

*•

H a i t i ........................................

1939

1940

1941

1942

1943

18, G69

29,405

37,693

70,386

93,302

122,275

.155,125

245
1,506
12,232
7,866
13,438
4,295

156
2,142
30,879
11,307
8,162
6,395
1,462
2,023
2,255
600

50,158
15,318
8,666
6,645
815
2,809
3,890
900

59,425
13,778
15,815
6,950
7,739
2,459
5,701
1,431

7,936
165
8,280
3,510

8,917
310
7,134
3,068

8,110
715
14,363
2,961

105

75

13,621
2,890
5,825
4

9,125
5,106
8,916
1,000

15

802
368

1,905

3,435

4,775

7,010

136
50

130
1,080
965
1,206

77
2,271
2,121
2,210

9,401
2,586
2,064
2,805

848

34
4,293

15,930
485
36

125

130

1,395
966
250

1944

1945

3, 555

4,553

4,992

304
4,172

5,677
3,414

8,139
2,647

S ou rc e: E x p o r t- I m p o r t B a n k of W a sh in g to n .

Not e.—D e ta il w ill n o t n e c e ssa rily a d d

to to ta ls b e c a u se of ro u n d in g .

M ore th a n h a lf o f th e to ta l in crease in U n ite d S ta te s G o v e rn m en t
in v e stm e n t in th e A m e ric a n R ep u b lics d id n o t ta k e th e fo rm o f
E x p o rt-I m p o r t B a n k lo a n s b u t a ro se in c o n n e ctio n w ith p ro d u c tiv e
fa c ilitie s c o n stru c ted b y o th e r U n ite d S ta te s G o v e rn m en t agencies in
v a rio u s c o u n trie s. A n o te w o rth y ex am p le w as th e N ic a ro n ick e l
p la n t, w h ich w as ere cted in C u b a w ith D efen se P la n t C o rp o ra tio n
141

fu n d s . A g a in s t b o th these a m o u n ts m u st be offset re g u la r p a y m en ts
b y M exico to th e U n ite d S ta te s G o v e rn m en t in se ttle m e n t o f claim s
a ris in g fro m th e M ex ican e x p ro p ria tio n o f p e tro le u m reso u rces a n d
a g ric u ltu ra l p ro p e rty b e lo n g in g to U n ite d S ta te s citizens.
T h e n e t b a la n ce on a ll U n ite d S ta te s tr a n s a c tio n s w ith th e A m e ric a n
R ep u b lics— goods, services, u n ila te ra l tra n s fe rs , a n d lo n g -te rm c a p i­
ta l— w as n e g a tiv e in every y e a r except 1941, in w h ich y e a r p a y m en ts
a n d re c e ip ts w ere a lm o st equal, th e excess o f re c e ip ts on lo n g -te rm
c a p ita l a cc o u n t o ffse ttin g th e c o m p a ra tiv e ly sm all excess o f p a y m e n ts
on th e o th e r accounts. O v e r th e e n tire 4 y e ars, th e e s tim a te d excess
o f p a y m e n ts w as $1,500 m illio n .
G r e a t E x p a n s io n o f L a tin A m e r ic a n G o ld a n d D o lla r H o ld in g s

C o rre sp o n d in g ly , we find t h a t L a tin A m e ric a n g o ld a n d d o lla r
h o ld in g s in c rea se d in each o f th e y e ars 1941 th ro u g h 1944. I n th e
la tt e r y e a r, L a tin A m eric a g a in e d som e g o ld fro m th is c o u n try b u t
d rew d o A v n its b alan ces to a n a lm o st eq u a l e x te nt. T h e c u m u la te d in ­
crease in g o ld a n d d o lla rs ba la nc es due to tra n sa c tio n s w ith th e U n ite d
S ta te s w as $1,710 m illio n .
»
T h e in crea se in L a tin A m e ric a n g o ld a n d sh o rt-te rm assets a c­
q u ire d fro m th is c o u n try w as th u s g re a te r by som e $210 m illio n th a n
th e a m o u n t necessary to b a la n c e th e excess o f U n ite d S ta te s p a y m en ts.
H o w e v e r, th e s itu a tio n v a rie d fro m y e a r to y e ar. T h e re s id u a l item
w as sm a ll in 1941; i t h a d a p o sitiv e sig n in 1942, in d ic a tin g t h a t L a tin
A m e ric a n g o ld a n d d o lla r h o ld in g s d id n o t in c re ase sufficiently to
equal th e U n ite d S ta te s deficit. T h e re su lts fo r 1941 a n d 1942 w ere
v ery lik e ly due to e rro rs a n d om issions in th e e stim a te s, b u t th e n e ga tiv e
re s id u a l f o r 1943-44 o f $252 m illio n is so m e w h a t la rg e to be accoun ted
f o r e n tire ly in th is w a y a n d p ro b a b ly reflects L a tin A m eric an rec eip ts
o f d o lla rs fro m th ir d c ou n tries. A lth o u g h th e e x te n t o f such d o lla r
tr a n s a c tio n s is n o t k n o w n w ith c e rta in ty , i t is k n o w n t h a t th e y d id
occur.
E v e n ts o f 1 9 4 5

U n ite d S ta te s e x p o rts to L a tin A m eric a c o n tin u ed th e ir r is in g tr e n d
in 1945; im p o rts also in crea se d , b u t by a sm a lle r a m o u n t. T h e U n ite d
S ta te s im p o rt s u rp lu s c on seq u en tly w as less th a n $500 m illio n as co n ­
tr a s te d w ith m ore th a n $600 m illio n in th e p rev io u s y e a r. R ec eip ts
o f in v estm e n t incom e d e clin e d slig h tly fro m th e p e a k y e a r 1944, la rg e ly
as a re s u lt o f h ig h e r ta x e s on th e o il com p anies o p e ra tin g in V e n e z u e la ;
b u t re c e ip ts fro m o th e r services rose b y m o re th a n $40 m illio n . T h e
m o st im p o rta n t source o f th is in c re m e n t w as th e in crea se in rec eip ts
on a cc o u n t o f tr a n s p o rta tio n services, w h ich p re su m a b ly reflects th e
la r g e r volum e o f U n ite d S ta te s e x p o rts. T ra v e l e x p e n d itu re s of
U n ite d S ta te s re sid e n ts also rose to a c e rta in ex ten t.
A s a re s u lt o f th ese chan ges, th e excess o f U n ite d S ta te s p a y m en ts
on goods a n d services w as c o n sid erab ly red u ce d as c o m p ared w ith th e
p re v io u s y e ars. U n ila te r a l tra n s fe rs w ere a b o u t $100 m illio n , o f w h ich
o n ly a b o u t o n e -fo u rth re p re s e n te d tr a n s f e rs fro m th e U n ite d S ta tes
G o v e rn m en t u n d e r th e len d -lease a n d o th e r p ro g ra m s. T h e re m a in d e r
c on sisted p r im a r ily o f re m itta n c e s b y M ex ican la b o re rs, w h ich con­
tin u e d th ro u g h o u t 1945. R ec eip ts o f u n ila te ra l tr a n s f e r s b y p r iv a te
re sid e n ts o f th is c o u n try a n d by th e U n ite d S ta te s G o v e rn m en t b r o u g h t
n e t U n ite d S ta te s p a y m e n ts on th is acco u n t clown to $75 m illio n .
142

L o n g -te rm c a p ita l m ovem ents in 1945 re s u lte d in n e t p a y m e n ts o f
$65 m illio n , in sp ite o f r a th e r h ig h rec e ip ts. N ew L a tin A m eric an
in v e s tm e n t in th is c o u n try is n o rm a lly q u ite s m a ll; th e r e w as a v e ry
c on sid e ra ble in c re ase o v er th e p re v io u s w a r y e ars, b u t th is in crea se
b ro u g h t th e to ta l a m o u n t o f new L a tin A m e ric a n in v e stm e n t f o r th e
y e a r u p to o n ly s lig h tly m o re th a n $25 m illio n . A t th e sam e tim e ,
U n ite d S ta te s c a p ita l m oved in to L a tin A m eric a in a n e t a m o u n t o f
$90 m illio n . A s f o r m ovem ents o f U n ite d S ta te s G o v e rn m e n t c a p ita l,
th e n e t fig u re w as sm all, since G o v e rn m e n t le n d in g to L a tin A m eric a
a n d L a tin A m e ric a n re p a y m e n ts o f o u ts ta n d in g o b lig a tio n s w ere
a lm o st equal.
T h e U n ite d S ta te s deficit on a ll tra n sa c tio n s w ith th e A m e ric a n
R ep u b lics w as som e $330 m illio n . T h e inflow o f fu n d s on acco u n t o f
sh o rt- te rm c a p ita l m ovem ents a n d g o ld m ovem ents w as, how ever, v e ry
m u ch la r g e r th a n w o u ld h av e been n ecessary to offset th is deficit,
a m o u n tin g , in d ee d, to m ore th a n $600 m illio n . T h e r e s u ltin g re sid u a l
item w as, th e re fo re , a b o u t $280 m illio n ; i t p re su m a b ly reflects th e
re v iv a l o f L a tin A m e ric a n e x p o rts to th e E a s te rn H e m isp h e re as
fig h tin g cam e to a n end, w ith p a y m e n t b e in g m ad e in d o llars.
T h e O u tlo o k a t th e E n d o f 1 9 4 5

T h e e xtensive settle m e n ts o f w a r acc o u n ts w h ich d o m in a te d th e
b a la n c e-o f-p a y m e n ts o u tlo o k f o r tr a n s a c tio n s b etw een th e U n ite d
S ta te s a n d m an y E u ro p e a n a n d s te r lin g -a r e a c o u n trie s to w a rd th e
e n d o f 1945 a n d d u r in g 1946 d id n o t possess a c o rre sp o n d in g im ­
p o rta n c e f o r th e f u tu r e o f fin a n c ia l re la tio n s betw een th e U n ite d S ta te s
a n d th e A m e ric a n R ep u b lics, since th e n e t a m o u n t o f G o v e rn m en t
lo an s a n d len d -lease tra n s a c tio n s h a d been q u ite sm all.
A t th e e n d o f 1945, i t c ou ld re a so n ab ly h a v e been e xp e cted th a t th e
p re d o m in a n t fe a tu re o f 1946 tr a n s a c tio n s w ith L a tin A m e ric a w o u ld
be a m a rk e d in crea se in th e re la tiv e p o s itio n in th e to ta l b a la n ce o f
p a y m e n ts o f U n ite d S ta te s e x p o rts, b u t w ith p e rh a p s som e d im in u tio n
in th e v a lu e o f m e rc h an d ise tr a d e a n d in b o th d ire ctio n s. I t w ould
h a v e been rea so n ab le to ex p ect th e service accoun ts to re m a in sm all
b y c o m p ariso n w ith m erch a n d ise tr a d e a n d to f a ll off so m ew h at b y
c o m p a riso n w ith th e w a rtim e figures. O n th e o th e r h a n d , i t w o u ld
h a v e been n a tu r a l to e n v isag e s u b s ta n tia l in creases in th e flow o f
A m e ric a n lo n g -te rm c a p ita l in to th e a re a , esp e cially G o v e rn m en t
c a p ita l. A s a re s u lt o f th ese tr e n d s, L a tin A m e ric a n g o ld a n d d o lla r
assets c ou ld h a v e been e xp ected to decline.
I n s o f a r as th e ev en ts o f 1946 a re k n o w n a t p re se n t, th ese e x p e cta ­
tio n s h a v e been fu lfille d o n ly p a r tia lly . T h is d e ve lop m e n t w as p r i ­
m a rily th e re s u lt o f th e v e ry s h a rp rise in w o rld p ric es in g e n e ra l a n d in
U n ite d S ta te s p ric es in p a r tic u la r — a fa c to r w h ic h p e rh a p s sh o u ld
h a v e been a n tic ip a te d a t th e e n d o f 1945, in view o f th e course o f
even ts fo llo w in g W o rld W a r I . T h e v a lu e o f m erch a n d ise tr a d e
b etw een th e U n ite d S ta te s a n d th e A m e ric a n R ep u b lics rose con­
sid e ra b ly , a n d m a n y L a tin A m e ric a n c o u n trie s— e sp ecially th e la rg e r
ones, su ch as A rg e n tin a , B ra z il, a n d C u b a — e njo y ed a “ fa v o ra b le ”
b a la n ce o f tr a d e in 1946. P ric e rises w ere, o f course, p a r tic u la r ly
sp e c ta c u la r f o r a g r ic u ltu ra l e x p o rt com m odities. A t th e sam e tim e ,
in fla tio n a n d sc arcities in th e U n ite d S ta te s h e ld d o w n th e volum e
o f L a tin A m e ric a n im p o rts fro m th is c o u n try to so m e w h a t sm a lle r
levels th a n m ig h t h a v e been expected.
143

I t s till re m ain s tru e , how ever, t h a t sev eral A m e ric a n R ep u b lics
a c tu a lly h a d th e e xp ected d r a in on e x te rn a l assets. T h e exch an ge—■
a n d p a r tic u la r ly th e d o lla r— p ro b lem assum ed serio u s p ro p o rtio n s in
C osta R ic a, N ic a ra g u a , a n d E c u a d o r, to n a m e o n ly th e h a rd e s t h it.
T r a n s a c t io n s W it h

A ll O t h e r C o u n t r ie s

D iscu ssed h e re a re tra n sa c tio n s w ith th e re m a in in g p a r ts o f th e
w o rld — sections o th e r th a n L a tin A m e ric a, C a n a d a , a n d th e ste rlin g
a re a. T h is g ro u p o f c o u n trie s in clud es c o n tin e n ta l E u ro p e , th e oversea
te r rito r ie s o f th e c o n tin e n ta l E u ro p e a n c o u n trie s (ex ce p t fo r c e rta in
F re n c h a n d B e lg ia n te r rito r ie s w h ic h b e lo n g ed to th e s te rlin g a re a
th ro u g h o u t m o st o f th e p e rio d u n d e r re v ie w ), th e U . S. S. R ., C h in a ,
a n d th e in d e p e n d e n t c o u n trie s o f A sia a n d A fric a , ex ce pt E g y p t ancl
Ira q .

Ta bl e 36 .—

T r a n s a c tio n s o f th e

U n ite d S ta te s w ith

“ a l l o t h e r c o u n t r i e s , ” 1 9 .'i0 ~ i5

[ I n m illio n s of d o llars]
I te m

1940

1941

1942

1943

1944

1945

1,609

1,123

2, 734

5,341

6,425

7,690

1,490
1,170
85
235
26
93

1,019
676
65
278
26
78

2,482
1,943
22
517
142
110

4,963
4,192
25
746
251
127

5,877
4,995
27
855
310
232

6,799
5,297
36
1,466
' 713
178

93

71

47

58

31

168

7

63

69

201

10

1,419

1,250

3,090

5,861

7,014

8,783

1,165
'853
90
222
167
87

1,048
780
84
184
155
47

610
321
65
224
2,355
125

1,032
'494
70
468
4, 741
88

1,351
'586
75
690
5,529
134

2,520
1,008
77
1,435
5,727
536

76

39

13

5

111

518

11

8

112

83

23

18

I I I . E xc ess of re c e ip ts ( + ) o r p a y m e n ts ( —) , t o t a l ___

+ 190

-1 2 7

-3 5 6

-5 2 0

-5 8 9

- 1 ,0 9 3

N e t goods a n d se rv ice s a n d u n ila te r a l tr a n sf e rs .

+ 3 25
-1 4 1
+ 184
+6

-2 9
-1 2 9
-1 5 8
+31

+ 1 ,8 7 2 + 3 ,9 3 1
- 2 , 213 - 4 ,4 9 0
-3 4 1
-5 5 9
-1 5
+39

+ 4 ,5 2 6
- 5 ,2 1 3
-6 8 7
+98

+ 4 ,2 7 9
- 5 ,0 1 4
-7 3 5
-3 5 8

-7 1 2

+39

+ 1 78

+ 511

+ 302

+ 7 89

- 1 ,4 2 3

+ 166

+ 199

+ 1 14

+ 2 32

+27

0 . N e t m o v e m e n t of fo re ig n s h o rt- te rm c a p ita l in
U n ite d S ta te s ______ _____ _ _ _ _ _ _ _ _ _ _ _ _ _

+ 149

+30

+5

+20

-1 2 6

-2 4 5

+ 5 62

-1 5 7

-2 6

+ 3 77

+ 196

+ 1 ,0 0 7

V . E rr o rs , o m issio n s, a n d th ir d - c o u n tr y tr a n s a c tio n s .

+ 5 22

+88

+ 1 78

+9

+ 8 87

+ 3 04

1. M o v e m e n ts of U n ite d S ta te s c a p ita l in2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in

1. M o v e m e n ts of U n ite d S ta te s c a p ita l in 2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in

I V . N e t inflow ( + ) o r o u tflo w ( —) of fu n d s o n g old
A . N e t U n ite d S ta te s g o ld sales ( + ) o r p u rc h a s e s

...... ............... ........ ......

B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm

W ith re sp e ct to U n ite d S ta te s tr a n s a c tio n s w ith th ese c o u n trie s,
i t is obvious t h a t o n ly a few b ro a d g e n e ra liz a tio n s o f r a th e r lim ite d
significance can be m a d e a b o u t th e b e h a v io r o f a g g re g a te q u a n titie s
w hose c om p o n en ts a re so h etero g en eo u s. T h e c h ie f o b serv atio n s to
be m a d e a re , first, t h a t b o th re c e ip ts a n d p a y m e n ts, a f te r f a llin g
sh a rp ly in 1941, e x p a n d e d a t a tre m e n d o u s r a te th ro u g h 1944; an d ,
144

second, t h a t u n ila te ra l tr a n s f e rs a n d th e ir offsets cam e to d o m in ate
th e figures, le a v in g “c a sh ” tra n sa c tio n s in a re la tiv e ly m in o r p o s itio n
(see ta b le 3 7 ).
T h e c o u n trie s in c lu d e d in th is “ a ll o th e r” g ro u p c ou ld be d iv id e d
in to th re e f a ir ly d is tin c t su b g ro u p s, n a m e ly , th e E u ro p e a n n e u tra ls ,
th e enem y c o u n trie s, a n d th e A llies. O n ly w ith th e first o f th ese
g ro u p s, th e n e u tra ls , d id th e U n ite d S ta te s m a in ta in econom ic a n d
fin a n c ia l re la tio n s a lo n g lin e s b e a rin g som e resem blance to th e
“n o rm a l” p a tte r n o f tra n sa c tio n s. D e a lin g s w ith th e enem y co u n tries
w ere, o f course, c om p letely su sp e n d e d a f te r we e n te re d th e w a r ; a n d
even b e fo re t h a t tim e th e y h a d been c u t dow n f a r below th e ir p re w a r
level. T h e sam e th in g h e ld tr u e o f th e enem y-occupied A llie d c oun­
trie s in E u ro p e a n d A sia a f te r th e y w ere o v e rru n , ex ce pt f o r som e
d e alin g s w ith th e g o v ernm en ts-in -e xile. B u t tra n s a c tio n s d id c on tinu e,
o r w ere resu m e d a t an e a rlie r tim e , w ith th e oversea possessions of
th ese c ou n tries. P r iv a te tr a d e also cam e to a s ta n d s till w ith th o se
E u r o p e a n a n d A s ia tic c o u n trie s w h ich d id m an a g e to s ta y activ e ly
in th e w a r on th e ir ow n te r r ito r y , b u t, in s o fa r as th e to ta l volum e o f
tr a d e is concerned, th is sto p p a g e w as co m p en sated m a n y tim e s o v er
b y th e tre m e n d o u s e x p a n sio n o f G o v e rn m e n t tra n sa c tio n s.

Tabl e

37.— “ C

a sh ” tr a n s a c tio n s

of t h e U n i t e d S t a t e s w i t h “ a l l o t h e r c o u n t r i e s , ”

m o- 4 5
[I n m illio n s of d ollars]
I te m

1940

1941

1942

1943

1944

1945

-

1,609

1,085

524

518

801

1,918

A . G oo ds a n d se rv ic es, t o t a l ------ ------ ------------1. G o o d s _ __ __ __ __ __ __ _ ______ _________
2. In c o m e o n i n v e s tm e n ts ______ ____ ____
3. O th e r se rv ic e s ............ ..................... ..............
B . U n i la te r a l tr a n s fe rs 1_ __ __ __ __ __ __ __ __ __ __
C . L o n g -te rm c a p ita l, t o t a l _ _ _ _ _ _ _ ____ _______
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in ­
v e s te d a b r o a d ............ ............................. . .
2. M o v e m e n ts of foreign c a p ita l in v e s te d in
U n ite d S ta te s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1,489
1,169
85
235
26
94

981
645
65
271
26
78

408
223
22
163
6
110

390
214
25
151
1
127

545
353
27
165
24
232

1,661
1,355
36
270
79
178

93

71

47

58

31

168

1

7

63

69

201

10

I I . P a y m e n ts , t o t a l . ................. ...... ................... ...........

1,419

1,212

880

1,038

1,390

3,011

A . G oo ds a n d se rv ic es, t o t a l ......... ...................... ...
1. G o o d s ............. ...... ................... ...............
2. In c o m e o n in v e s tm e n ts ........................ ........
3. O th e r serv ic e s..... ............................ ..............
B . U n i la te r a l tra n sfe rs 1......... ................... .............
C . L o n g -te rm c a p ita l, t o t a l ....... ............... ...... . .
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in ­
v e s te d a b r o a d -------- ------ ----------------- .
2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in
U n ite d S ta te s .......... ................... ..............

1,165
853
90
222
107
87

1,048
780
84
184
117
47

579
312
65
202
281
20

857
447
70
340
168
13

1,075
507
75
493
197
118

1,898
825
77
996
588
525

76

39

13

5

111

517

11

8

7

8

7

8

I I I . E xc ess of re c e ip ts ( + ) o r p a y m e n ts ( —) , to ta l----

+ 190

-1 2 7

-3 5 6

-5 2 0

-5 8 9

- 1 ,0 9 3

A . G oo ds a n d se rv ic e s ..... ........... ......... . ......... .---B . U n i la te r a l tr a n sf e r s .......... ................ ........ .........
N e t goods a n d se rv ice s a n d u n ila te ra l tra n sfe rsC . L o n g -te rm c a p ita l------------..----------------------

+ 324
-1 4 1
+ 1 83
+7

-6 7
-9 1
-1 5 8
+31

-1 7 1
-2 7 5
-4 4 6
+90

-4 6 7
-1 6 7
-6 3 4
+ 1 14

-5 3 0
-1 7 3
-7 0 3
+ 114

-2 3 7
-5 0 9
-7 4 6
-3 4 7

-7 1 2

+39

+ 1 78

+511

+ 3 02

+ 7 89

+ 165

+ 1 99

+ 1 14

+ 232

+27

+30

+5

+20

-1 2 6

-2 4 5

-1 5 6

-2 6

+ 3 77

+ 196

+ 1 ,0 0 7

+88

+ 178

+9

+ 287

+ 3 04

I. R e c e ip ts , t o t a l ....... ......... ................................. .

I V . N e t inflow ( + ) o r o u tflo w ( —) of fu n d s o n gold a n d
s h o rt- te rm c a p ita l a c c o u n t, t o t a l . . _____ ______

A . N e t U n ite d S ta te s g old sales ( + ) o r p u rc h a s e s
( - ) -------- ------------------------------------------ - 1 , 423
B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm
+ 1 40
c a p ita l a b r o a d _ __ __ __ __ __ __ __ __ __ __ __ __
C . N e t m o v e m e n t of foreign sh o rt- te rm c a p ita l in
+662'
U n ite d S ta te s ..................... .......................... —
V . E rr o rs , o m issio ns, a n d th ir d - c o u n tr y tr a n s a c tio n s ..

+ 522

1 G o v e rn m e n t fin a n c ia l u n ila te r a l tr a n sf e rs a n d p e rso n a l a n d in s titu tio n a l re m itta n c e s.
p r e d o m in a tl y c a sh , b u t in c lu d e so m e re m itta n c e s in k in d .

T h e la tte r are

145

T rade

W ith

th e

N e u tr a ls

F lu c tu a te s

T ra d e w ith th e n e u tr a l c o u n trie s o f E u r o p e 37 d u rin g 1940 w as o f th e
sam e g e n e ra l o rd e r o f m a g n itu d e as i t h a d b een in p re w a r days,
th o u g h e x p o rts w ere so m e w h a t h ig h e r a n d th e re w as a m a rk e d d im i­
n u tio n in im p o rts ow ing p rin c ip a lly to a c han g e in im p o rts fro m
S w eden (see ta b le 38). I n th e fo llo w in g y e a r, b o th e x p o rts a n d im ­
p o rts —h u t e sp ecially th e fo rm e r— d ecreased c o n sid e ra b ly . T h e se d e ­
creases w ere b ro u g h t a b o u t b y th e sh ip p in g situ a tio n ( tr a d e w ith
th ese c o u n trie s c ou ld n o t b e c a rrie d on in A m e ric a n s h ip s ), b y th e
B ritis h blockade, a n d b y th e g e n e ra l p o litic a l a n d m ilita ry situ a tio n ,
in c lu d in g p re ssu re fro m th e A x is P o w e rs a n d , in som e cases, w o rse n in g
p o litic a l re la tio n s on o u r side. T h e p ro g re ssiv e declines in o u r tr a d e
w ith th e n e u tr a ls w ere n o t a rre ste d u n til 1943. I n t h a t y e a r, how ever,
th e r e w as a g r e a t im p ro v e m e n t. T h e s h ip p in g s itu a tio n h a d eased, th e
tid e o f v ic to ry w as b e g in n in g to tu r n to w a rd th e A llie s, a n d som e o f
th e sea la n e s fo rm e rly block ed h a d b een cleared . T h is u p w a rd tr e n d
w as c o n tin u ed in 1944 a n d 1945.

Tabl e 38.—

U n ite d S ta te s tr a d e w i t h fiv e n e u tr a l c o u n tr ie s : E x p o r ts , in c lu d in g
r e e x p o r ts , a n d g e n e r a l im p o r ts o f m e r c h a n d is e , 1 9 3 6 -3 8 a n d 1 9 4 0 -4 5

[In m illio n s of d ollars]
Y ear

P o r tu g a l

S p a in

S w ed en

S w itz e rla n d

T u rk ey

A ll n e u tr a ls

E x p o rts
1936-38 a v e ra g e _ _ _ _ _ _ _ _ _ _ _ _
1 9 4 0 ........... ............... .............
1941..................... . ...................
1942................................. .........
1 9 4 3 ............ ......................... .
1944...................................... .
1945................ ............... .........

11.5
18.1
16.2
7.0
9.4
12.3
23.3

13.3
27.0
14.3
2 .9
28.2
25.8
40.7

57.3
38. 5
22.4
8 .6
7 .6
13.1
45.9

9 .3
22.6
13.4
15.2
32.2
79.7
63.5

11.5
8 .3
6 .8
16.0
87.3
11.6
15.6

102.8
114.5
73.1
49.7
164.7
142.5
189.0

23.5
27.2
30.3
33.2
49.5
56.2
83.4

15.5
13.9
10.7
17.4
32.7
50.0
69.9

110.1
84.0
78.9
69.5
124.1
192.2
277.7

Im p o rts
1936-38 a v e ra g e ........... ............
1940................................ .........
1941.................. ......... ..............
1 9 4 2 ...______ _ _ _ _ _ _ _ _ _ ____
1 9 4 3 -_____ ______ _ _ _ _ _ _ _ _
1944...................... ...................
1945........................... ............

6 .6
11.1
19.0
10.3
22.9
35.9
20.9

13.8
14.6
14.5
8.1
18.6
49.6
57.4

50.6
17.3
4 .4
.4
.4
.7
46.0

S ourc e: U . S. D e p a r tm e n t o f C o m m e rc e , B u r e a u o f t h e C e n su s.

Not e: D e ta il w ill n o t n e c e ssa rily a d d to

to ta ls b ec a u se of ro u n d in g .

N o len d -le ase a id w a s received b y a n y o f th e n e u tr a l c o u n trie s o f
E u ro p e a n d A sia ex ce p t T u rk e y . T h a t c o u n try , how ever, w as in a
u n iq u e p o sitio n , c o n tro llin g as i t d id th e D a rd a n e lle s—th e M e d ite r­
ra n e a n lin k b etw een th e w e ste rn A llie s a n d th e S o v ie t U n io n . T h is
s tra te g ic p o sitio n m ad e i t v ita l to p ro v id e fo r T u rk e y ’s d efense a g a in st
possible A x is a ggressio n.
T rade

W ith

th e

E nem y

C o u n tr ie s

Cut

O ff

W ith resp ec t to th e A x is P o w e rs— G e rm an y , I ta ly , a n d J a p a n — tr a d e
w ith G e rm a n y h a d a lre a d y been e lim in a te d , f o r a ll p ra c tic a l p u rp o se s,
37 F o r p r e s e n t p u r p o s e s t h i s t e r m i n c l u d e s P o r t u g a l , S p a i n , S w e d e n , S w i t z e r l a n d , a n d
T u rk e y .
T h e l a t t e r c o u n tr y is a s o m e w h a t d o u b tfu l c a se , s in c e i t is n o t “ E u r o p e a n ” in
t h e s t r i c t e s t s e n s e o f t h e w o r d a n d s i n c e i t d id e v e n t u a l l y e n t e r t h e w a r ; b u t o u r w a r t i m e
t r a n s a c ti o n s w it h T u r k e y re s e m b le d m o re c lo s e ly th o s e w it h t h e E u r o p e a n n e u t r a l s t h a n
t h e y d id t r a n s a c t i o n s w i t h t h e e n e m i e s o r t h e A ll ie d c o u n t r i e s o f t h e E a s t e r n H e m i s p h e r e .
E i r e c o u ld a l s o b e g r o u p e d v e r y l o g i c a l l y w i t h t h e s e n e u t r a l c o u n t r i e s b u t h a s b e e n
in c l u d e d i n t h e s t e r l i n g a r e a .

146

in 1940, a n d m erch a n d ise tr a d e w ith I ta ly w as also m a rk e d ly c u rta ile d .
O n th e o th e r h a n d , th e v a lu e o f o u r tr a d e w ith J a p a n , b o th e x p o rts a n d
im p o rts , w as a c tu a lly above th e 1936-38 level, in d ic a tin g t h a t th e
“ v o lu n ta ry ” re s tric tio n s on tr a d e w ith t h a t c o u n try h a d n o t been v ery
successful.
I n th e fo llo w in g y e a r, 1941, tr a d e w ith I t a l y also v a n ish e d , b u t tr a d e
w ith J a p a n , w h ile v e ry sh a rp ly re d u ce d , w as still g o in g o n in a p p re c i­
able a m o u n ts. N o t u n til 1942, w h e n th e U n ite d S ta te s w as officially a t
w a r w ith a ll th re e o f th e A x is pow ers, w ere d e alin g s w ith a ll th re e
e n tire ly a b se n t.38
I n 1945, w ith th e collapse o f th e A x is P o w e rs a n d th e e nd o f th e
w a r, th e r e w as a m in im a l volum e o f e x p o rts to G e rm a n y a n d J a p a n .
I n th e case o f I ta ly , w h ic h h a d now becom e a c o b e llig e re n t, o u r cash
e x p o rts h a d a v a lu e o f $58 m illio n a n d even im p o rts w ere n o t com ­
p le te ly ne gligib le.
I n 1944 a n d 1945, in a d d itio n to th e rec o rd e d len d -lease e x p o rts to
I ta ly , th e re w ere also la rg e re lie f sh ip m e n ts in co n n ectio n w ith th e
A m eric an A rm y ’s “ disease a n d u n re s t” p ro g ra m . I t w as n o t defin itely
k no w n to w h a t e x te n t th ese su p p lies w ere p r o c u re d in th is c o u n try ;
som e o f th e m m ay h a v e been o b ta in e d in o th e r p a r ts o f E u ro p e a n d
elsew here.
I n 1945, th re e a d d itio n a l p r o g ra m s f o r a id to I t a l y cam e in to o p e ra ­
tio n . F ir s t, i t w as a rra n g e d t h a t th e d o lla r e q u iv a le n t o f n e t tro o p
p a y sp e n t b y A m e ric a n so ld iers in I t a l y w ould be c re d ite d to a sp ecial
f u n d se t u p in th e U n ite d S ta te s T re a s u ry fo r I t a l y ’s benefit a n d fro m
w h ich th e I ta lia n s w ere p e rm itte d to d ra w f o r th e p u rc h a se o f su p ­
p lies in th is c o u n try . T h e use o f th is m oney w as n o t ex ten siv e in
1945, how ever. S econd, a p a r t o f th e 1945 len d -le ase a p p ro p ria tio n
w as d e vo ted to p ro c u rin g c iv ilia n su p p lie s f o r I t a l y ; a n d , th ir d ,
U N R R A se n t som e re lie f su p p lie s to I ta ly , th o u g h U N R R A o p e ra ­
tio n s th e re w ere on a r a t h e r r e s tric te d scale in 1945.
T h e W a r D e p a rtm e n t w as oblig ed to b rin g re lie f su p p lie s in to th e
o th e r enem y c o u n trie s as w ell, th o u g h in 1945 th e a m o u n ts in v o lv ed
w ere sm a lle r th a n in th e case o f I ta ly . Som e U N E E A su p p lies, to be
u sed f o r th e re lie f o f d isp la c ed p e rso n s, also fo u n d th e ir w a y to th e
enem y c o u n trie s, e sp ecially A u s tr ia .
T h e lend-lease p ro g ra m f o r
I t a l y w as u n iq u e , h o w e v e r; n o r d id a n y o f th e o th e r enem y c o u n trie s
receive a n y c o m p en satio n f o r n e t tro o p p ay . T h e m o re fav o ra b le
tre a tm e n t o f I ta ly w as due to its la te r s ta tu s as a co b elligeren t.
T ra d e

W ith A llie d C o u n tr ie s A ls o S e v e r e ly R e s tr ic te d

T r a d e tr a n s a c tio n s w ith A llie d c o u n trie s on th e E u ro p e a n c o n tin e n t
(o th e r th a n th e U . S. S. E .) d e veloped sim ila rly to th o se w ith th e
enem y c o u n trie s in th a t th e y w ere a lm o st c om p letely a b se n t d u r in g th e
w a r y e a rs (see ta b le 3 9 ). T ra n sa c tio n s d id ta k e p lace w ith som e o f th e
n o n -E u ro p e a n possessions o f th ese c o u n tries, how ever— esp ecially th ose
in th e A m eric as a n d in A fric a .
T r a d e w as p a r tic u la r ly h e av y w ith th e D u tc h possessions in th e N ew
W o r ld , because o f th e h u g e o il refin eries in C u rac ao a n d A ru b a a n d th e
v a lu a b le b a u x ite d ep o sits in S u rin a m (D u tc h G u ia n a ) . T ra n sa c tio n s
3S T h e v e r y s m a l l a m o u n t s s h o w n in t h e r e c o r d e d t r a d e s t a t i s t i c s r e p r e s e n t , o n t h e e x p o r t
s id e , p r i s o n e r - o f - w a r p a c k a g e s , a n d o n t h e i m p o r t s id e , g o o d s r e l e a s e d f r o m b o n d e d w a r e ­
h o u s e s a n d s im ila r d e la y e d im p o rts .
T h e tr a d e s ta t is t ic s a lso sh o w la rg e U n ite d S ta te s e x p o r ts to I t a l y in 1 9 4 4 .
T h e se w ere
s h i p m e n t s o f l e n d - l e a s e m a t e r i a l s t o t h a t c o u n t r y f o r t h e u s e o f t h e o t h e r A ll ie d a r m i e s i n
th e I t a l i a n c a m p a ig n .

147

w ith th e N e th e rla n d s I n d ie s, on th e o th e r h a n d , cam e to a n e n d e a rly
in 1942, a f te r th e J a p a n e s e in v asio n . T h e s u rp ris in g ly la rg e m e r­
c h a n d ise -tra d e fig u res w h ich a p p e a r in th e tr a d e s ta tis tic s f o r 1942 are
due m o stly to r e p o rtin g lags. T h e tim e la g b etw een th e d a te o f ex ­
p o rta tio n fro m th e In d ie s a n d th e d a te o f im p o rta tio n in to th e U n ite d
S ta te s w as o fte n c on siderab le, because o f th e d ista n c e a n d th e fa c t t h a t
m a n y o f th e p r o d u c ts o f th e N e th e rla n d s In d ie s w ere tra n s s h ip p e d
th ro u g h th ir d c ou n tries. T ra d e w as n o t resu m e d w ith th e In d ie s (o r
w ith th e P h ilip p in e s , w h ich w ere in a s im ila r situ a tio n ) u n til 1945, a n d
even th e n o n ly to a v e ry lim ite d ex ten t.
B e g in n in g in 1943, la rg e len d -le ase sh ip m e n ts w ere d ire c te d to
F re n c h N o rth A fric a , as a consequence o f th e N o rth A f ric a n c a m p a ig n
w h ich h a d b e g u n in th e f a ll o f 1942. N o t o n ly m ilita ry sh ip m e n ts b u t
also c iv ilia n re lie f su p p lie s w ere sent, a n d th e la tte r p r o g ra m c o n tin u e d
on a sm a lle r scale th ro u g h th e n e x t 2 y ears.

Tabl e 39.—

T o ta l

and

“ca sh ”
to

e x p o r ts

s e le c te d

,

in c lu d in g

A llie d

r e e x p o r ts ,

of

th e

U n ite d

S ta te s

c o u n t r i e s , 1 9 J /0 -4 5

[ I n m i l l i o n s o f d o ll a r s ]

C o u n tr y

1940

1941

1942

1943

1944

1945

T o ta l e x p o rts
B e lg iu m 2_ __ __ __ __ __ __ __ __________
F r a n c e ___________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
F r e n c h N o r th A f r ic a 3 _________ _____ _
U . S . S . R _ _ _ _ _ _ _ _ ______ _ _ _ _ _ _ _ _____

25.0
34.0
252.2
4 .5
86.9
105. 2

(0
0)

0)

4.4
6 .7
107.5
127.7

1.1
2 .9
1,417. 5
79.6

( ')
(0
0)

325.6
2,955.8
50.5

17.9
135.3
3, 459.8
51.8

135. 0
81.8
472. 3
136.4
1,838.3
94.4

.8
7.3
29.9
10.3

47.4
46.3
125.9
40.5
55.0
42.5

“ C a s h ” e x p o rts
B e lg iu m 2____ ____ _____

_________

F r a n c e __
________
F re n c h N o r th A fric a 3 - ....... .
U . S . S . R _ __ __ __ __ __ __ __ __ __ __ __ __ __

25.0
34.0
252.2
4 .5
86.9
105.2

8

2.4
6 .7
107.0
104.9

0)

1.1
4 .9
63.0
12.4

(0
(0
(0

2.1
28.9
8 .9

1 L e s s t h a n $ 5 0 ,0 0 0 .

2 In c lu d in g L u x e m b u rg .
3 A lg e r ia , T u n is ia , a n d F r e n c h M o r o c c o .
S ou rce: U . S . D e p a r tm e n t o f C o m m e r c e , B u r e a u o f th e C e n su s.

T h e m o st im p ressiv e fe a tu re o f o u r m e rc h a n d ise -tra d e tra n s a c tio n s
w ith A llie d c o u n trie s w as, o f course, th e h u g e len d -le ase p ro g ra m f o r
S o v ie t R u ssia. E x p o rts o f m e rc h a n d ise to th e U . S. S. R . u n d e rw e n t a
th irte e n fo ld e x p a n sio n b etw een 1941 a n d 1942. U n ite d S ta te s com ­
m e rc ial tr a d e w ith th e S o v iet U n io n h a d n e v e r b e en la rg e in p re w a r
tim es, c o n sid e rin g th e size a n d reso u rces o f th e tw o c o u n tries, a n d d id
n o t becom e so d u r in g th e w a r. I n 1936-38, U n ite d S ta te s e x p o rts w ere
v a lu e d a t $49 m illio n a n d im p o rts a t $25 m illio n . C ash e x p o rts a n d
im p o rts rose so m e w h a t above th e p re w a r level in 1940 a n d 1941 (th e y
w ere a b o u t double th e 1936-38 fig u re in 1941) b u t declined a g a in a f te r
th e com m encem ent o f th e len d -le ase p ro g ra m .
A lth o u g h th e L en d -L ea se A c t h a d been p a sse d in M a rc h a n d th e
U . S. S. R . h a d e n te re d th e w a r in Ju n e , len d -lease tr a n s f e r s to th a t
c o u n try w ere n e g lig ib le in 1941. B y 1942, how ever, th e p ro g ra m w as
w ell u n d e r w ay. T h e y e a r 1943 saw a f u r th e r e x p a n sio n to double th e
p re v io u s y e a r, a n d 1944 figures also show ed som e rise o v e r 1943, a l­
th o u g h n o t o f such a sen sa tio n a l n a tu r e in p e rce n ta g e te rm s. L e n d 148

lease sh ip m e n ts to R u ssia fe ll q u ick ly a f te r th e e n d o f th e E u ro p e a n
w a r in M ay 1945, b e in g a b o u t h a lf th e 1944 v a lu e f o r th e c a le n d a r
y e a r as a w hole.
T h e y e a r 1945 b ro u g h t a g r e a t in crea se in len d -lease e x p o rts to con­
tin e n ta l E u ro p e . Som e e x p o rts o f len d -lease m a te ria ls to F ra n c e
o ccu rred in 1944, fo llo w in g th e in v asio n o f N o rm a n d y , b u t th e y d id n o t
becom e la rg e u n til 1945. T ra n sa c tio n s , in c lu d in g som e p r iv a te cash
e x p o rts, also b e g a n w ith th e L o w C o u n trie s, S c a n d in a v ia , a n d som e o f
th e c o u n trie s o f so u th e a ste rn E u ro p e . W h ile th e a p p ro a c h to n o r ­
m a lity w as f a r fro m b e in g com p lete, th e re s u m p tio n o f tr a d e , even in
sm all am o u n ts, w as a sig n ific an t chan ge fro m th e p rev io u s y e ar.
T h e ta s k o f r e h a b ilita tin g th e w a r-d e v a sta te d c o u n trie s w as a lre a d y
b e in g u n d e rta k e n in 1945. R e lie f w as fu rn is h e d to a n u m b e r o f th em
u n d e r th e U n ite d S ta te s A rm y “P la n A ” f o r b rin g in g in c iv ilia n su p ­
p lies. E x p o r t o f c a p ita l goods, to m ee t m o re lo n g -ru n re q u ire m e n ts
f o r re h a b ilita tio n a n d re c o n stru c tio n , also com m enced in th e la tte r
h a lf o f th e y e ar.
T h e c o u n trie s o f so u th e rn a n d e a s te rn E u ro p e , i t w as fe lt, w ere n o t in
a p o sitio n to finance th e ir re lie f a n d r e h a b ilita tio n needs. F o r th e ir
benefit, an in te rn a tio n a l agency— th e U n ite d N a tio n s R e lie f a n d R e ­
h a b ilita tio n A d m in is tr a tio n — w as c re ated . U N R R A a lso c a rrie d o u t
p r o g ra m s in A sia , C h in a rec eiv in g a s u b s ta n tia l p a r t o f U N R R A
su p p lies.
T h e p rin c ip a l E u r o p e a n re c ip ie n ts o f U N R R A su p p lie s w e re Y u g o ­
slav ia , P o la n d , G reece, C zechoslovakia, a n d I t a l y (see ta b le 4 0 ).

Ta bl e 40 .—

U n ite d S t a t e s e x p o r ts u n d e r th e U N R R A P r o g r a m ,, 1 9 J f5 1

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ [In m illio n s of dollars]_ __ __ __ __ __ __ __ __ __ __ __ __ __ _
UNRRA
e x p o rts

A re a a n d c o u n try

T o t a l . . ------- ----------- -----------E u r o p e , e x c lu d in g U n ite d K in g d o m
a n d U . S. S. R

A lb a n ia _ _ _ _ _ _ _ _ _ _ _ ____ __ _ _ _ _ -

355.3
323.4
51.4
82.9
87.3
6 .9

A re a a n d c o u n try

UNRRA
e x p o rts

E u r o p e , e tc .— C o n tin u e d .
G re e c e _______ _
_ ________
U . S. S. R _____ ____ ___ _ _ _ _ _ ____

18.1
76.8
16.5
14.7
14. 2
.7

» U N R R A e x p o rts b e g a n in S e p te m b e r 1944 b u t to ta le d o n ly $609,000 th r o u g h th e e n d of t h e y e a r.
S ou rc e: U . S. D e p a r tm e n t o f C o m m e rc e , B u r e a u of th e C e n su s.

U N R R A goods w ere classified by t h a t a gen cy in to five c ateg o ries :
F o o d ; te x tile s, c lo th in g , a n d fo o tw e a r ; m e d ic al a n d s a n ita tio n ; a g r i­
c u ltu ra l re h a b ilita tio n ; a n d in d u s tria l re h a b ilita tio n . Som e o f th ese
goods w ere p ro b a b ly in th e n a tu re o f c a p ita l e q u ip m e n t w h ic h w ill be
o f p e rm a n e n t v a lu e in re c o n s tru c tin g w a r s h a tte re d econom ies.
In v e stm e n t

In com e

B e lo w

N orm al

D u r in g th e w a r y e a rs, b o th re c e ip ts a n d p a y m e n ts o f incom e o n in ­
v estm e n ts w ere red u ce d c o n sid e ra b ly below n o rm a l levels. T h is w as
p a r tic u la r ly tr u e o f rec eip ts, since c a p ita l in v e ste d in th e w a r-ra v a g e d
c o u n trie s, w h ic h c o m p rise d m o st o f th e “a ll o th e r” g ro u p , w as h a rd ly
p ro fita b le a t t h a t tim e , even i f tr a n s f e r o f in v e stm e n t incom e h a d been
le g a lly perm issib le. T h e de cline in p a y m e n ts w as c o nsid e ra b ly less
m a rk e d , since p ro fits on in v e stm e n t in th is c o u n try w ere r u n n in g a t a
re la tiv e ly h ig h ra te . N evertheless, p a y m e n ts to fo re ig n e rs d id d e­
crease, p a r tly because o f th e re s tr ic tio n s on th e tr a n s f e r o f fu n d s
149

a b r o a d ; 39 p a r tly because p ro p e rty in th is c o u n try b e lo n g in g to enem y
n a tio n a ls w as seized b y th e Office o f th e A lie n P r o p e r ty C u sto d ia n , a n d
w ith th e liq u id a tio n o f th e in v estm e n t th e incom e th e re fro m also d is­
a p p e a re d ; a n d p a r tly because o f in creases in U n ite d S ta te s c o rp o ra te
incom e taxes.
W a r A ffe c ts O th e r P r iv a te S e r v ic e T r a n s a c tio n s A ls o

O th e r p r iv a te service tr a n s a c tio n s follo w ed e sse n tia lly th e sam e
course as d id m e rc h an d ise tr a d e , a lth o u g h th e f a ll a n d th e su bsequent
rise w ere n o t a lto g e th e r so d ra s tic in p e rc e n ta g e te rm s. T o ta l tr a n s ­
a c tio n s on a cc ou n t o f tra n s p o rta tio n c h a rg e s a re c o rre la te d w ith th e
v a lu e o f m erch a n d ise tr a d e (th e d ire c t co n n ectio n is w ith th e volum e
o f tr a d e , b u t since sh ip p in g ra te s a re lik e ly to m ove in sy m p a th y w ith
g e n e ra l p ric e chan ges, th e c o rre la tio n w ith v a lu e is u su a lly h ig h a ls o ) .
S in ce m o st o f o u r e x p o rts w ere on lend-lease accoun t, m o st o f th e s h ip ­
p in g “re c e ip ts” c on sisted o f services p ro v id e d on len d -le ase term s.
T h e tr a v e l a cc o u n t w as n e g lig ib le th ro u g h o u t th e w a r p e rio d . E v e n
in 1940, re c e ip ts a n d p a y m e n ts w ere each r u n n in g a t th e re la tiv e ly low
r a te o f a b o u t $10 m illio n , w ith re c e ip ts slig h tly h ig h e r th a n p a y m e n ts ;
a n d in la te r y e ars th e a n n u a l figures fe ll to $2 m illio n o r less. I n 1945,
th e re w as som e recovery, p a r tic u la r ly on th e p a y m e n ts side, th e la tte r
b e in g e stim a te d a t $25 m illio n f o r t h a t y e ar.
R ec eip ts on acco u n t o f m iscellaneous services rose b y q u ite la rg e
a m o u n ts ; p a y m en ts, w h ich a re m u ch sm a lle r th a n rec e ip ts, in a n y case,
re m a in e d sta tio n a ry . T h e in crea se in re c eip ts w as d ue to th e b e h a v io r
o f tw o ite m s : F o re ig n g o v e rn m e n t re p re se n ta tio n in th e U n ite d S ta te s,
e x p e n d itu re s f o r w h ich w ere g re a tly a u g m e n te d d u rin g th e w a r on
a cc ou n t o f th e n e ce ssity f o r m a in ta in in g p u rc h a sin g m issions a n d
sim ila r o r g a n iz a tio n s in th is c o u n try ; a n d m o tio n -p ic tu re re n ta ls.
T h e la rg e g ro w th in re c e ip ts o f m o tio n -p ic tu re r e n ta ls p re su m a b ly
reflected th e in crea se d d e m a n d f o r A m e ric a n film s, consequent in p a r t
u p o n th e presence o f la rg e n u m b e rs o f A m e ric a n tro o p s ab road .
T rem endous

G r o w th

of

G overnm ent

S e r v ic e s

U n ite d S ta te s G o v e rn m e n t re c e ip ts a n d p a y m e n ts on a cc ou n t of
services g rew tre m e n d o u sly . I n s o f a r as re c e ip ts a re concerned, these
c on sisted a lm o st e n tire ly o f s tr a ig h t len d -le ase services re n d e re d to
fo re ig n g o v ern m en ts a n d a re th u s offset b y e q u iv a le n t u n ila te ra l
tr a n s fe rs . T h e re w ere, how ever, som e re la tiv e ly sm a ll cash m ilita ry
rec e ip ts, a n d a n even sm a lle r a m o u n t o f c ash re c e ip ts by v a rio u s re g u ­
la r c iv ilia n agencies. T h e se tw o ty p e s o f cash re c e ip ts rose as h ig h
as $160 m illio n to w a rd th e la te r y e a rs o f th e w a r, b u t services p ro v id e d
u n d e r len d -le ase a rra n g e m e n ts w ere ru n n in g a t a r a te o f a lm o st $2
b illio n a t th e sam e tim e.
T o a c e r ta in e x te n t, a m o u n ts sh o w n on th e p a y m e n ts sid e o f th e
G o v e rn m en t m iscellaneous services a cc o u n t w ere also offset by u n i­
la te r a l tra n s fe rs , i. e., th e y co n sisted o f services re n d e re d to th e U n ite d
S ta te s G o v e rn m en t u n d e r rev erse lend-lease. B u t th e volum e o f m ili­
ta r y services f o r w h ich cash p a y m e n t w as m ad e b y th e U n ite d S ta te s
w as a lm o st as la rg e . A f u r th e r v e ry s u b s ta n tia l ite m w h ich a p p e a rs
h e re is “n e t tro o p p a y .” M ost o f th e g lob a l n e t-tro o p -p a y accoun t
a p p e a re d in co n n ectio n w ith tr a n s a c tio n s w ith c o u n trie s in th e “a ll
39 A s s e t s o f e n e m y , e n e m y - o c c u p ie d , a n d s o m e n e u t r a l c o u n t r i e s w e r e b lo c k e d a f t e r o u r
e n tr y in to th e w a r.
W h e r e i n v e s t m e n t e a r n i n g s w e r e p a i d i n t o t h e s e b lo c k e d a c c o u n t s ,
t h e y a r e i n c l u d e d i n t h e b a l a n c e - o f - p a y m e n t s s t a t e m e n t ( b e i n g o f f s e t b y t h e i n c r e a s e s in
f o r e i g n b a l a n c e s ) ; b u t i n s o m e c a s e s , e . g ., b e a r e r b o n d s p h y s i c a l l y l o c a t e d i n t h e c o u n t r y
o f o w n e r s h i p , t h e a c c r u e d in c o m e d o e s n o t a p p e a r i n o u r d a t a .

1.5 0

o th e r” g ro u p , a n d tra n s a c tio n s in sp ecial cu rre n c ie s w ere e n tire ly con­
c e n tra te d in th is a re a .40
R e m itta n c e s

F a ll

and

R is e

P r iv a te u n ila te ra l tr a n s f e rs h a v e a lw a y s p la y e d a c o m p a ra tiv e ly
la rg e p a r t in U n ite d S ta te s tra n sa c tio n s w ith c o u n trie s in th e “ a ll
o th e r” g ro u p , because th e y w ere th e c o u n trie s (o th e r th a n th e B ritis h
Isle s) fro m w h ich m o st im m ig ra n ts to th e U n ite d S ta te s h av e come.
P e r so n a l re m itta n c e s d eclin e d th ro u g h 1941 a n d 1942, in th e la tte r
y e a r a m o u n tin g to o n ly a b o u t o n e -th ird o f th e 1940 e stim a te o f $110
m illio n ; th e decline w as, o f course, d u e to w a r-c re a te d difficulty in
tr a n s f e r r in g fu n d s to m o st o f th e E u ro p e a n a n d A sia tic c o u n trie s in ­
c lu d e d in th is g ro u p . T h e la rg e v a lu e o f re m itta n c e s to n e u tr a l co u n ­
tr ie s, e sp ecially S w itz e rla n d , in d ic a te s t h a t som e m oney d id g e t
th ro u g h .
I n 1943 a n d 1944, re m itta n c e s in crea se d once m ore, a n d in 1945 th e
p e n t-u p b a ck lo g b e g a n to m ove. T h e re la tiv e ly h ig h e stim a te o f $151
m illio n f o r t h a t y e a r w as a refle ctio n o f th e stro n g d e sire f e lt b y r e ­
m itte rs in th is c o u n try to a id re sid e n ts o f w a r-d e v a sta te d a re as. T h e
la rg e figure is e sp ecially s trik in g in view o f th e fa c t t h a t m o st o f th e
e x ch an g e ra te s in existence a t th e e n d o f th e w a r te n d e d serio u sly
to o v e rv a lu e fo re ig n c u rren c ie s in te rm s o f d o llars.
I n s titu tio n a l re m itta n c e s b e g a n to rise ste e p ly as e a rly as 1942, a n d
b y 1943 h a d rea c h e d im p ressiv e h e ig h ts, w h ich w ere su sta in e d in th e
fo llo w in g y e ars. A la rg e p a r t o f th ese re m itta n c e s to o k th e fo rm of
goods r a th e r th a n m oney. N o t o n ly th e o ld a n d e sta b lish e d re lie f a n d
service agencies such as th e A m eric an R e d C ro ss b u t also a h o st o f
new ones, o rg a n iz e d specifically f o r w a r re lie f, c o n trib u te d to th e
la rg e volum e o f in s titu tio n a l re m ittan ce s.
G overnm ent

U n ila te r a l T r a n s fe r s

of

V a st

Im p o r ta n c e

T h e m a jo r item in G o v e rn m e n t u n ila te ra l tr a n s f e r s w as th e lendlease p ro g ra m . U p to 1945, a lm o st a ll lend-lease tr a n s f e r s o f b o th
m erch a n d ise a n d services w ere m ade w ith o u t re m u n e ra tio n . S h ip ­
m en ts o f m a te r ia ls on re im b u rsab le len d -le ase te rm s d id occur, b u t
th e y fo rm e d a v e ry sm all p a r t o f th e to ta l p ro g ra m . S ervices, in c lu d ­
in g tr a n s p o rta tio n , w ere also re n d e re d m o stly on a n o n reim b u rsa b le
basis.
R ev e rse lend-lease, on th e o th e r h a n d , d id n o t p la y a v ery sig nifica n t
role. I t is tr u e t h a t re v erse len d -le ase w h ich we receiv ed fro m th e
w e ste rn E u ro p e a n c o u n trie s w as q u ite s u b s ta n tia l in re la tio n to th e
a m o u n t o f a id w h ich w e re n d e re d to th e m — th e a m o u n t o f rev erse len d lease received fro m B e lg iu m w as a c tu a lly g re a te r th a n th e a m o u n t o f
d ire c t lend-lease g iv en to B elg iu m —b u t th e size o f th ese p r o g ra m s
w as sm a ll b y co m p ariso n w ith t h a t o f th e p ro g ra m f o r R u ssia. A n d
fro m t h a t c o u n try , on th e o th e r h a n d , th e a m o u n t o f rev erse lendlease w as in sig n ifica n t, because o f th e fa c t t h a t th e te r r ito r y o f th e
S o v iet U n i o n . n e v e r becam e a base f o r U n ite d S ta te s m ilita ry
o p e ratio n s.
T h e re a re som e item s in th e n a tu re o f G o v e rn m en t n o n fin a n c ial u n i­
la te r a l tr a n s f e rs w h ich f a ll o u tsid e th e scope o f lend-lease. O ne such
ite m is a n offset to th e v e stin g a c tiv itie s o f th e A lie n P r o p e r ty C u s­
to d ia n . S in ce th e v a lu e o f enem y p ro p e rtie s ta k e n over w ith o u t re40 S e e p . 1 8 6 f o r a f u l l e r d i s c u s s i o n o f s p e c i a l c u r r e n c i e s .

151

n u m e ra tio n h a s been e n te re d in th e lo n g -te rm c a p ita l a cc o u n t (see
p . 9 9 ), i t h a s been offset b y a p e r contra ite m in th e u n ila te ra l tr a n s f e r
account.
T h e s ta tu s o f “ P la n A ” a n d o th e r c iv ilia n su p p lies sh ip p e d by th e
W a r D e p a rtm e n t is u n c e rta in . A t th e tim e th ese su p p lie s w ere m a d e
a v aila b le i t w as c o n te m p la te d t h a t th e y w ould b e p a id fo r. H o w e v e r,
th e lia b ility h a s a lre a d y b een fo rg iv e n o r offset a g a in st o th e r claim s
f o r c e rta in c o u n trie s a n d m a y be f o r o th e r s ; c on seq u en tly i t h a s seem ed
sa fe st in th is re p o rt to re g a r d th e offset to “P la n A ” su p p lie s as
u n ila te ra l r a th e r th a n as a c a p ita l m ovem ent.
A n o th e r so m e w h a t difficult p ro b lem o f classificatio n is in v o lv ed in
th e la rg e s t o f th e item s to be f o u n d u n d e r th e h e a d in g o f fin a n cia l u n i­
la te r a l tr a n s fe rs . T h is is th e $500 m illio n o f “fin a n c ial a id ” a p p ro ­
p r ia te d b y C ongress in 1942 f o r th e benefit o f th e C h in ese G o v e rn ­
m en t. T h is sum w as d ra w n on th ro u g h th e su cceeding y e ars to such
a n e x te n t t h a t o n ly a sm all fra c tio n re m a in e d u n d isb u rse d a t th e
e n d o f 1945. T h is so-called a id w as n o t a n o u tr ig h t g if t, b u t th e
q u estio n s how o r w h e th e r re p a y m e n t w ould be m a d e w ere le f t open, a n d
th e p o s sib ility t h a t th e C hinese o b lig a tio n w o u ld be fo rg iv e n a p p e a rs
de finitely to h a v e been envisag ed. I t w a s d e cid e d f o r th is rea so n to
c o n sid e r th e ite m as u n ila te ra l in n a tu re , in th e b a lan c e-o f-p a y m e n ts
sta tem en t.
T h e o n ly im p o rta n t G o v e rn m e n t fin a n c ia l u n ila te ra l tr a n s f e r o th e r
th a n th e C hinese fin a n c ial a id is th e offset to th e a lre a d y m e n tio n e d
n e t tro o p p a y a n d o th e r e x p e n d itu re s in sp ecial cu rren cies.
L o n g -T e rm C a p ita l M o v e m e n ts
O n ly sc a tte re d com m ents on c a p ita l m ovem ents a re possible. T h e re
w a s som e n e t w ith d ra w a l o f p r iv a te U n ite d S ta te s c a p ita l fro m th e
“ a ll o th e r” g ro u p , a n d also som e n e t w ith d ra w a l o f fo re ig n c a p ita l
fro m th e U n ite d S ta te s, d u r in g th e y e a rs 1940-43. T h e la tte r m ove­
m e n t w as d u e to th e a lre a d y -m e n tio n e d o p e ra tio n s o f th e A lien P r o p ­
e rty C u sto d ia n , w h ich te n d e d to o u tw eig h p u rch a se s o f U n ite d S ta te s
sec u ritie s, w h ich w e re f a ir ly h e av y in 1942 a n d 1943. T h e p o sitiv e
b alan ce on m o v em en ts o f U n ite d S ta te s c a p ita l w as la rg e r th a n th e
n e g a tiv e ba la n c e o n m o v em en ts o f f o r e ig n c a p ita l in ev ery y e a r e xce pt
1942, how ever, so t h a t th e n e t b a la n ce on a ll ty p e s o f c a p ita l m ovem ents
w as p o sitiv e in e very y e a r ex ce pt 1942.
I n 1944, th e a c tiv itie s o f th e A lie n P r o p e r ty C u sto d ia n w ere sm all,
a n d a t th e sam e tim e th e re w as a h e av y n e t in flux o f fo re ig n c a p ita l,
la rg e ly as th e r e s u lt o f p u rc h a se s o f o u ts ta n d in g U n ite d S ta te s secu­
ritie s. M ovem ents o f b o th U n ite d S ta te s a n d fo re ig n c a p ita l w ere
th e re fo re in th e sam e d ire c tio n a n d th e n e t p o sitiv e b a la n c e w as
la rg e .
U n ite d S ta te s le n d in g to th e “a ll o th e r” g ro u p o f c o u n trie s w as
ren ew e d in 1945 w ith th e cessatio n o f a c tu a l h o s tilitie s , a n d sm all
a m o u n ts o f fo r e ig n c a p ita l w ere also w ith d r a w n ; c onsequently, th e
d ire c tio n o f m o v em en t w as rev erse d fro m t h a t in 1944 a n d th e to ta l
n e t b a la n ce w as n eg a tiv e.
T ra n s a c tio n s

W ith

In te rn a tio n a l

In s titu tio n s

T h e in te rn a tio n a l in s titu tio n s “a re a ,” as n o ted elsew here (see p . I l l )
in clu d e s b o th in te rn a tio n a l o r g a n iz a tio n s such as U N E E A a n d th e
n e t g o ld p ro d u c tio n (o r c o n su m p tio n ) item , w h ich a p p e a rs w ith
o ffse ttin g sig n s u n d e r m e rc h a n d ise tr a d e a n d in th e g o ld a n d sh o rt152

Tabl e 41.— T ra n sa c tio n s

o f th e U n ited S ta te s w ith in te rn a tio n a l in s titu tio n s ,
1 9 ! ,0 - J ,5

[ I n m illio n s of d o lla rs]
I te m

1940

1941

1942

148

147

92

148
148

147
147

92
92

1943

1944

1945

1. M o v e m e n ts of U n ite d S ta te s c a p ita l in2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in
23

45

177

23
23

45
45

85
85
92

1. M o v e m e n ts of U n ite d S ta te s c a p ita l in 2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in
I I I . E x c e ss of re c e ip ts ( + ) o r p a y m e n ts ( —) , to t a l _ _ _

N e t goods a n d se rv ice s a n d u n ila te ra l tr a n s fe rs .
IV . N e t inflow ( + ) or o u tflo w ( —) of fu n d s o n gold
A . N e t U n ite d S ta te s g old sa le s ( + ) o r p u r c h a se s
( - ) . ............ .............
B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm
C . N e t m o v e m e n t of fo re ig n sh o rt- te rm c a p ita l in

+ 148

+ 1 47

+92

-2 3

-4 5

-1 7 7

+ 148

+ 1 47

+92

-2 3

-4 5

+ 1 48

+ 147

+92

-2 3

-4 5

-8 5
-9 2
-1 7 7

-1 4 8

-1 4 7

-9 2

+23

+55

+ 101

-1 4 8

-1 4 7

-9 2

+23

+45

+85

+10

+16

-1 0

+76

te rm c a p ita l a ccoun t. T h e g o ld item in th e la tte r a cc o u n t f o r th e
o th e r fo u r a re a s re p re se n ts in each case tr a n s a c tio n s w ith th e resp ec ­
tiv e a re a specifically (i. e., e x p o rts, im p o rts , a n d ch an g es in e a r­
m a rk in g ) ; th e a lg e b ra ic sum o f th e g o ld item f o r a ll five a re a s con­
seq u e n tly eq u als the. c han g e in th e U n ite d S ta te s stock o f m o n e ta ry
g o ld . F o r th e y e ars 1940-43, th e item s re p re se n tin g n e t dom estic p r o ­
d u c tio n o r c o n su m p tio n o f g o ld a re th e o n ly e n trie s in th e ta ble .
T h e cash g i f t o f $92 m illio n by th e U n ite d S ta te s G o v e rn m e n t to
U N R R A in 1945 a p p e a r s as a u n ila te ra l tr a n s f e r to “in te rn a tio n a l
in s titu tio n s ,” as does th e in crea se o f $16 m illio n in sh o rt-te rm lia b ilitie s
o f th e U n ite d S ta te s to U N R R A (i. e., U N R R A ba la nc es in U n ite d
S ta te s b a n k s ). T h e difference b etw een th ese tw o figures, o r $76
m illio n , c o rre sp o n d s e ith e r to p u rc h a se s b y U N R R A in t h i r d c o u n trie s
o r to e x p o rts fro m th is c o u n try . O n ly U N R R A e x p o rts fin a nc ed
d ire c tly by th e U n ite d S ta te s G o v e rn m en t a re se g re g a te d in tr a d e
sta tistic s.
U n fo rtu n a te ly , as n o te d in a p p e n d ix B , o u r d a ta on “ fo re ig n g o v ern ­
m e n t re p re se n ta tio n in th e U n ite d S ta te s ” w ere too sc a n ty to enab le
u s to iso la te w ith a n y p re cisio n t h a t p o rtio n — v e ry sm a ll in th e p e rio d
covered— a ttr ib u ta b le to e x p e n d itu re s in th is c o u n try by in te rn a tio n a l
in s titu tio n s ; c on seq u en tly we h av e m ad e no e stim a te f o r it.
7 6 9 1 5 5 -4 8 -

11

153

C h a p te r Y

I m p lic a tio n s fo r th e F u tu r e
T h e re c an be little d o u b t t h a t th e m o st im m e d ia te p ro b lem a t th e
e n d o f th e w a r w as th e re c o n stru c tio n o f th e d e v a sta te d a re a s a n d
th e re p le n ish m e n t o f e x h a u ste d stocks o f p ro d u c e r a n d consu m er
goods in p r a c tic a lly a ll c o u n tries. I n s o f a r as th e lo n g -ru n effects a re
concerned, i t is scarcely to be ex p ected t h a t th e ev en ts o f W o rld W a r
I I a n d th e y e a r s im m e d ia te ly follow ing- i t w ill leave th e p re v io u sly
e sta b lish e d p a tte r n o f w o rld -w id e econom ic re la tio n s h ip s a n d tr a n s ­
a c tio n s u n affected . H is to r y show s, how ever, t h a t w a rs u s u a lly do n o t
c re a te e n tire ly n ew s itu a tio n s : th e y g e n e ra lly in te n sify a n d acc elerate
co n d itio n s a n d tre n d s a lre a d y in e xistence. T o ju d g e th e effects o f th e
w a r o n o u r f u tu r e in te rn a tio n a l tra n s a c tio n s, i t seem s m o st p ro m isin g ,
th e re fo re , to lo ok f o r d ev elo p m en ts a lre a d y d isce rn ib le b e fo re th e w a r
w h ich , because o f th e ev en ts o f re c e n t y e ars, a re lik e ly to h av e been
m o re o r less a g g ra v a te d o r a ccelerated.
I n c r e a s e d G o v e r n m e n t C o n t r o ls

O ne o f th e fa c to rs w h ich h a d g ra d u a lly g a in e d in im p o rta n c e b e ­
fo re th e w a r, b u t w as g re a tly stre n g th e n e d d u rin g th e conflict, w as
th e d ire c t a n d in d ir e c t role ta k e n on b y o u r ow n a n d fo r e ig n g o v e rn ­
m e n ts in in te rn a tio n a l tra n sa c tio n s.
D u r in g th e w a r p ra c tic a lly a ll o u r in te rn a tio n a l tra n sa c tio n s, b o th
on c u r re n t a n d on c a p ita l a cco u n t, w ere e ith e r d ire c tly c o n d u cted o r
closely re g u la te d b y th e G o v e rn m en t. A lth o u g h th e step s ta k e n
d u r in g th is p e rio d exceeded by f a r th e p re w a r A m e ric a n p ra c tic e o f
in d ire c t c o n tro ls b y such m ean s as ta riffs, th e y w ere c o n sid e re d th e
m o st effective w a y to m obilize o u r resources f o r w a r, a n d w ere con­
siste n t w ith c o n tro ls im posed on dom estic econom ic a ctiv itie s.
To
w h a t e x te n t a n d in w h a t fo rm g o v e rn m e n t c o n tro ls a re c o n tin u e d
h e re a n d a b ro a d c o n stitu te s one o f th e m a jo r p ro b lem s a ris in g o u t
o f th e w a r.
G o v e rn m e n t c o n tro ls a n d c e n tra liz e d econom ic p la n n in g , w hich
u su a lly h a v e th e ir o rig in in n a tio n a l em ergencies, h a v e been m a in ­
ta in e d a f te r th is w a r in m an y m o re fo re ig n c o u n trie s th a n a f te r
W o rld W a r I . T h is w as d u e p a r tly to th e m u ch b ig g e r ta s k o f re ­
c o n stru c tio n a n d th e m uch m o re u rg e n t n eed fo r h u s b a n d in g scarce
fo r e ig n e xch an g e a n d g o ld reserves a n d p a r tly to g ro w th o f ideologies
fa v o rin g s ta te c o n tro l o f econom ic affairs. T o th e e x te n t t h a t g o v ­
e rn m e n t c o n tro ls w ere c re a ted a b ro a d to m eet th e specific e m e rg en ­
cies a ris in g fro m th e w a r a n d th e re c o n stru c tio n , th e y could be
d isco n tin u e d as soon as th e em erg en cy p e rio d is passed. H o w e v e r,
154

th e re can be little d o u b t th a t, even in th e lo n g er ru n , g o v e rn m e n t
c o n tro ls a n d p a rtic ip a tio n w ill p la y a g re a te r ro le in in te rn a tio n a l
tr a n s a c tio n s o f fo r e ig n c o u n trie s; a n d t h a t th e U n ite d S ta te s a n d
o th e r c o u n trie s w hose econom ies a re e ssen tia lly b a sed u p o n p riv a te
e n te rp ris e w ill h av e to fac e th e p ro b lem s a ris in g fro m th is
situ a tio n .
G o v e rn m en t p a rtic ip a tio n in fo re ig n tr a d e m a y m a k e f o r a la rg e
m on o p o ly elem ent, b o th on th e b u y in g a n d se llin g sides. B y g u a r ­
a n te e in g a fixed m a rk e t fo r a c o n sid e ra b le p e rio d o f tim e , a n im ­
p o r tin g c o u n try could o b ta in su p p lie s a t fa v o ra b le p ric e s on a
p re clu siv e b a sis a t th e o rig in a l source. T h is m a y ex clud e o th e r
c o u n trie s fro m th e sam e m a rk e ts o r m ay fo rce sm a lle r c o u n trie s o r
p r iv a te p u rc h a se rs w ho b u y in sm a lle r q u a n titie s to p a y h ig h e r
p ric es. T h e c o u n trie s re ly in g u p o n p r iv a te im p o rte rs o f r a w
m a te ria ls, w o u ld, th e re fo re , be a t a d is tin c t d isa d v a n ta g e .
G iv e n a su b s ta n tia l d e g re e o f g o v e rn m e n t c o n tro l, in te rn a tio n a l
tra n s a c tio n s m a y also be m o re open to influence b y p o litic a l c o n sid era­
tio n s — in te rn a tio n a l o r dom estic. T h e se m ay n o t o n ly d e te rm in e th e
choice o f th e fo r e ig n tr a d e p a r tn e r b u t also th e e x te n t, tim in g , a n d
te rm s o f tra d e . C om m erce c o n d u cted a lo n g such lines w ould in crease
th e u n c e rta in tie s u n d e r w h ic h p r iv a te bu sin ess w o u ld h a v e to b e
conducted.
T h e c ru c ia l p rob lem w h ich w ill h a v e to be solved c e n ters a ro u n d th e
issue o f m ee tin g th e effect o f econom ic c o n tro ls a b ro a d w h ich affect o u r
in te rn a tio n a l tra n sa c tio n s, w ith o u t im p o sin g sim ila r c o n tro ls on o u r
o w n d o m estic econom y. A so lu tio n w h ich w o u ld re q u ire u s to in ­
te n s ify o u r c o n tro ls to m a tc h th o se im p o sed a b ro a d w o u ld obviously
be u n s a tis fa c to ry to th e g r e a t m a jo rity o f A m eric an s. R a th e r, w e
sh o u ld exercise a successful le a d e rsh ip in re s to rin g a n d m a in ta in in g a
h ig h a n d stab le level o f w o rld econom ic a c tiv ity , th u s e lim in a tin g m a n y
o f th e c o n d itio n s w h ich h av e le d to th e im p o sitio n o f re s tric tio n s
a b ro a d . T h is m a y m ea n a la rg e m easu re o f a id th ro u g h g ra n ts , loans,
o r in v estm e n ts d u rin g th e n e x t few y e ars ; in th e lo n g ru n , i t m ean s th e
e sta b lish m en t o f a la rg e a n d stab le m a rk e t f o r fo re ig n p r o d u c ts in th is
c o u n try , by m a in ta in in g o u r econom y a t a h ig h level o f a c tiv ity a n d
re d u c in g ta riffs a n d o th e r im p o rt b a rrie rs to th e lo w est p ra c tic a b le
level.
The

S h o rta g e

o f D o lla r E x c h a n g e

T h e econom ic effect o f th e w a r w h ich is m o st obvious— a n d a t th e
sam e tim e o f m o st im m e d ia te im p o rta n c e — is th e w id e sp re a d d e stru c ­
tio n o f p ro d u c e r a n d consu m er c a p ita l, a n d p h y sic a l in ro a d s on th e
la b o r force, in th e w a r a re as, w ith th e re s u ltin g sh o rta g e s o f p ro d u c ­
tio n t h a t a re th e m a in cause o f th e so -called d o lla r sc a rc ity . I n a d d i­
tio n , even in a rea s w h ich w ere n o t exposed to d ire c t d e stru c tio n , stocks
o f consu m er a n d p ro d u c e r goods w ere d e p le te d o w in g to th e in a b ility
o f th e ir o w ners to o b ta in necessary rep lac em e nts.
C o m p a re d w ith th e s itu a tio n in W o r ld W a r I , th e a re a s exposed
to d ire c t d e stru c tio n w ere m u ch la rg e r a n d sp re a d o v e r m an y m o re
c ou n tries, a n d th e a c tu a l d am a g e w as m uch m o re in ten se. B ecause o f
th e lo n g e r d u r a tio n a n d th e la r g e r w a r re q u ire m e n ts, th e d e p le tio n o f
stocks even in a re a s rem oved fro m a ctiv e w a rfa re , such as th e W e s te rn
H e m isp h e re , w as m u ch g re a te r. O n th e p o s itiv e sid e — i f one c an
sp e ak in such te rm s o f a n y th in g p e rta in in g to th e w a r— h a s been th e
155

in crea se in p ro d u c tiv e c ap a city a n d im p ro v e m e n ts in tech n o log ical
processes w h ich can be a p p lie d in p eacetim e. T h e se benefits h a v e ac­
c ru e d p rin c ip a lly to c o u n trie s o u tsid e th e w a r zone.
T h e re is no w a y o f e s tim a tin g re lia b ly th e to ta l cost o f re p la c in g
w h a t w a s d e stro y ed o r u sed u p , b u t th e re can be no q u e stio n t h a t it
is m an y tim e s h ig h e r th a n a f te r W o rld W a r I , a n d p e rh a p s even
h ig h e r th a n th e costs o f e q u ip p in g a n d m a in ta in in g th e a rm ed forces
d u r in g th e re c e n t h o stilitie s. U n d o u b te d ly m o st c o u n trie s, n o t only
th o se d ire c tly e n g a g e d in th e w a r, v ic to rs as w ell as v a n q u ish e d , b u t
also m a n y w h ich re m a in e d on th e sid e lin e s, e m e rg ed p h y sic a lly p o o re r
a f t e r th e conflict th a n th e y w ere a t its s ta r t, 6 y e a rs e a rlie r. T h e
in c rea sed volum e o f liq u id assets (m o n ey a n d g o v ern m en t b o n d s) h e ld
b y c itizen s in a ll c o u n trie s c a n n o t h id e th e fa c t o f p h y sic a l im p o v e r­
ish m e n t, a n d h a s in itse lf ra ise d serious difficulties in th e e q u itab le
d is tr ib u tio n o f scarce g o o d s a n d h a m p e re d p ro d u c tiv e effort.
O n b alan c e, o f course, econom ic losses w ere m u ch h e a v ie r -in th e
c o u n trie s o f E u ro p e a n d A sia d ire c tly exposed to w a rfa re th a n in
o th e r c o u n tries, in c lu d in g th e U n ite d S ta te s. T h e s ta n d a r d o f liv in g
in th e fo rm e r c o u n tries, a t le a st d u rin g th e re c o n stru c tio n p erio d , is
in even g re a te r c o n tr a st w ith t h a t o f th e U n ite d S ta te s th a n w as th e
case b e fo re th e w a r. T h is c o n d itio n m u st fo rce th e re s t o f th e w o rld
to look chiefly to th e U n ite d S ta te s f o r th e su p p lies, eq u ip m e n t, a n d p r o ­
d u ctio n te ch n iq u es th e y n eed to b r in g th e ir s ta n d a r d o f liv in g closer
to th e level th e y conceive as th e ir u ltim a te goal.
U n til re c o n stru c tio n is com p leted, th e w a r-to rn c o u n trie s can n o t
a p p ro a c h even th e ir p re w a r s ta n d a rd s o f liv in g except th ro u g h su b ­
s ta n tia l o u tsid e a id in th e fo rm o f lo ans o r g ra n ts . O n ly a few
c o u n trie s in th e w o rld a re p h y sic a lly able to p ro v id e t h a t a id . C h ie f
of th ese is th e U n ite d S ta te s, w ith C a n a d a, A rg e n tin a , a n d a few
o th e rs able to p ro v id e assistan ce in m u ch sm a lle r am o u n ts.
I t could be m a in ta in e d th a t th e stric k e n c o u n trie s sh o u ld a d ju s t
th e ir sta n d a r d s o f liv in g to th e low er levels d ic ta te d by th e ir p re se n t
p ro d u c tiv e resources, a n d th u s b rin g th e ir acco u n ts w ith th e U n ite d
S ta te s in to b alan ce b y c u ttin g im p o rts a n d seeking to in crease e x p o rts
th ro u g h red u ce d in te rn a l p ric es o r e xch an ge ra te s. A sid e fro m m o ral
a n d h u m a n ita ria n rea so n s f o r n o t a d v o c a tin g a so lu tio n th a t w ould
m ean a c tu a l m ass s ta rv a tio n in m an y c o u n trie s, i t w ould n o t be to th e
lo n g -ru n p o litic a l o r econom ic a d v a n ta g e o f th e U n ite d S ta te s to p e r ­
p e tu a te th e p re se n t in eq u ality .
I n a n y even t, f o r th e n e x t sev e ra l y e ars a g g re g a te fo re ig n a b ility
to p rod u ce w ill be too low to m eet req u irem e n ts fo r e x p o rt in a d d i­
tio n to th o se f o r dom estic c o n su m p tion a n d rec o n stru c tio n . C onse­
q u e n tly , o u r im p o rts w ill re m a in c o m p a ra tiv e ly sm all, w h ile fo reig n
d e m a n d fo r o u r p ro d u c ts w ill co n tin u e to be re la tiv e ly h ig h . T h e
re s u ltin g deficit in th is in te rim p e rio d can be a m e lio ra te d by a n y one
o r a c o m b in a tio n o f th e fo llo w in g m e th o d s :
U n ila te r a l T r a n s fe r s

I n th e first place, we can h e lp w a r-d e v a s ta te d c o u n trie s to m eet
m in im u m e sse n tial needs f o r subsistence a n d n a tio n a l se c u rity
th ro u g h a sy stem o f u n ila te ra l tra n s fe rs , p a r tic u la r ly to th o se c oun­
tr ie s w hose p o litic a l s ta b ility — a n d , hence, econom ic w e lfare — is a
p rim e o bjective o f o u r fo re ig n policy. T h is so lu tio n h a s th e v irtu e
o f re c o g n iz in g th e h a r d fa c ts o f th e situ a tio n , because, lik e w a rtim e
156

lend-lease, i t w o u ld p re v e n t th e c re a tio n o f a b u rd e n o f “ d e ad w e ig h t”
in te rn a tio n a l d e b t o f th e c h a ra c te r t h a t p la g u e d th e w o rld econom y in
th e in te rw a r p erio d .
L iq u id a tio n

of

G o ld

and

D o lla r

A ssets

A s a second a lte rn a tiv e , w h ich , how ever, is n o t a v a ila b le to som e
o f th e n a tio n s in g re a te s t need , fo r e ig n c o u n trie s can d ra w on th e ir
e x istin g lo n g - a n d sh o rt- te rm d o lla r assets a n d sell us go ld, e ith e r
fro m new p r o d u c tio n o r fro m stocks. A s discu ssed elsew here in th is
volum e,1 fo r e ig n c o u n trie s h e ld a b o u t $23.8 b illio n in g o ld a n d s h o rt­
te rm d o lla r assets a t th e e n d o f 1945, c o m p a re d w ith a b o u t $15.8 b il­
lio n a t th e e n d o f 1939. A p a r t o f th is $8-billion in crease, to g e th e r
w ith g o ld c u rre n tly p ro d u ce d , w ill u n d o u b te d ly be u sed to p u rc h a se
goods a n d services in th is c o u n try ; in fa c t, $3.1 b illio n w as so used
betw een J a n u a r y 1,1946, a n d M a rc h 31,1947.
H o w m u ch o f th e re m a in d e r w ill be u sed is c o n je c tu ra l, d e p e n d in g
on m a n y fa c to rs— som e o f th e m su b jectiv e. T h e b e tte r th e econom ic
p ro sp e cts, f o r in stan c e, th e sm a lle r w o u ld be th e n e ed f o r reserves
re q u ire d to m ee t a d v e rse flu c tu a tio n s in fo re ig n b alan c es o f p a y ­
m en ts. I n a n y event, th e d e sire to m a in ta in a d eq u ate w o rk in g b a l­
ances w ould b e w eig h e d a g a in s t th e n e ed f o r U n ite d S ta te s goods
a n d services in excess o f th e a m o u n ts w h ich c ou ld be financed o u t o f
c u rre n t e a rn in g s o r U n ite d S ta te s g r a n ts a n d c re dits.
A n im p o r ta n t a sp e ct o f th is reserv e p ro b le m is t h a t th e n e ed f o r
w o rk in g b alan c es w ill be re la tiv e ly la r g e r i f fo re ig n c o u n trie s p r a c ­
tic e m u ltila te ra l r a th e r th a n b ila te ra l in te rn a tio n a l tra d e . S ince m u l­
tila te r a l tr a d e is m ore lik e ly to ra ise , a t le a st in th e lo n g ru n , th e s ta n d ­
a rd o f liv in g o f th e p a r tic ip a tin g c o u n trie s a n d to red u ce th e d a n g e r
o f th e fo rm a tio n o f econom ic a n d p o litic a l blocs, we sh o u ld find i t to
o u r a d v a n ta g e to see to i t t h a t fo re ig n c o u n trie s as a w hole h av e a
sufficient su p p ly o f a g e n e ra lly a ccep tab le m ed iu m o f exch an ge. B e ­
fo re W o rld W a r I , go ld, s te rlin g ba la nc es h e ld in L o n d o n , a n d to a
lesser e x te n t F re n c h a n d S w iss fra n c s, D u tc h g u ild e rs, a n d o th e r
E u ro p e a n c urren cies, se rv ed a s th e p rin c ip a l m ed ia o f exchange.
A f te r W o rld W a r I th e U n ite d S ta te s d o lla r w a s a d d e d to th e list,
as it cam e to be used n o t o n ly in tr a d e w ith th e U n ite d S ta te s itse lf
b u t also in tr a d e b etw een t h ir d c o u n tries.
T h e rec e n t w a r c o n sid erab ly in crea se d th e use o f th e d o lla r as an
in te rn a tio n a l m edium o f exch an ge, m a in ly because th e U n ite d S ta te s
em e rg ed fro m th e w a r as th e o n ly m a jo r c o u n try w hose m oney w as
m ore o r less fre e ly e x ch an g ea b le a g a in st com m odities a n d gold. T h e
p o u n d ste rlin g , w h ile s till used f o r in te rn a tio n a l tra n sa c tio n s betw een
m a n y c o u n trie s, h a s lo s t som e o f its fo rm e r significance.
B ecause o f th is de ve lo p m e nt, th e rem o v a l o f re s tric tio n s in w o rld
tr a d e w ill d e pe n d to a la rg e e x te n t u p o n th e size a n d d is tr ib u tio n o f
fo reig n -o w n e d d o lla r reserves. O u r p o lic y o f re s to rin g a n d m a in ta in ­
in g m u ltila te ra l tr a d e c a rrie s w ith i t th e re s p o n sib ility , th e re fo re , o f
m a k in g a v ailab le to fo re ig n c o u n trie s d o lla r ba la nc es m o re th a n ju s t
sufficient to m eet c u rre n t o b lig a tio n s h e re. S h o rt- te rm c re d it w as one
o f th e p rin c ip a l m ean s b y w h ich G re a t B r ita in lo n g p ro v id e d th e
w o rld w ith a m ed ium o f e x ch an g e t h a t h a d th e e la stic ity to e x p a n d
w ith th e volum e o f tr a d e its e lf. B ecause o f th e decline in th e le n d ­
in g c a p a c ity o f G re a t B rita in , th e w a r le f t a v acu u m in t h a t field. T o
1 S ee p . 1 0 8 .

157

Im p lem en t th e p o licy o f p ro m o tin g m u ltila te ra l tr a d e , i t w o u ld be
d esirab le f o r th e U n ite d S ta te s to fo rm th e m a c h in e ry to fill t h a t
vacu um . P e n d in g th is de ve lo p m e nt, th e m o re o f th e ir p re s e n t g o ld
a n d d o lla r b alan c es fo re ig n c o u n trie s can p re serv e, th e b e tte r th e
p o ssib ilitie s t h a t m u ltila te ra l tr a d e c an be re estab lish ed .
L oans

and

In v estm en ts

A f te r m ee tin g basic re lie f req u ire m e n ts th ro u g h g if ts a n d c o n trib u ­
tio n s, th e th ir d a n d p ro b a b ly m o st d e sira b le so lu tio n to th e p ro b le m
lies in th e re s to ra tio n a n d d e v e lo p m e n t o f fo re ig n p ro d u c tiv e fa c ilitie s
th ro u g h fo re ig n lo a n s a n d in v estm en ts. T h e se lo an s a n d in v estm e n ts
sh o u ld red u ce th e g a p b etw een A m e ric a n a n d fo r e ig n p ro d u c tiv ity suffi­
c ie n tly to service th e lo a n s a n d still leave m o re f o r in te rn a l in v e s t­
m e n t a n d c o n su m p tio n w ith in fo r e ig n c o u n trie s th a n th e y p re se n tly
have.
A t th e e n d o f th e w a r to ta l U n ite d S ta te s in v estm e n ts a b ro a d w ere
ro u g h ly $15 b illio n . P o s tw a r lo a n co m m itm e n ts d u rin g th e fo llo w in g
4 o r 5 y e a rs m a y a d d a n a m o u n t eq u al to o r g r e a te r th a n th a t. T h e
su m o f a ll fo re ig n in v estm e n ts a t th e e n d o f th e re c o n stru c tio n p e rio d
m a y n o t be m u ch h ig h e r in re a l te rm s th a n th e $20- to $25 -b illion p e a k
o f B ritis h fo re ig n in v estm e n ts re ac h ed b e fo re th is w a r a t m u ch lo w er
p ric e levels.
S u c h in v estm e n ts w o u ld c o n tin u e th e d e ve lo p m e nt o f th e U n ite d
S ta te s as a n in te rn a tio n a l le n d in g c o u n try w h ich s ta rte d lo n g b e fo re
W o rld W a r I b u t w h ich w as in te rr u p te d d u rin g th e 1930’s. T h e y
w o u ld also le a d to a f u r th e r in crease in th e p ro p o rtio n o f lo n g -te rm
in te rn a tio n a l c a p ita l m o v em en ts o rig in a tin g fro m th e U n ite d S ta te s.
W h ile th is d e v e lo p m e n t c an be observed f o r th e la s t h a lf c e n tu ry
(a g a in o m ittin g th e 1930’s ) , i t m a y be assum ed t h a t W o rld W a r I I h a s
g re a tly a cc ele ra ted th e tr e n d . T h is reflects th e in crea sed econom ic
s tre n g th o f th e U n ite d S ta te s a n d th e d eclin e o f th e U n ite d K in g d o m ,
th e N e th e rla n d s, F ra n c e , a n d B elg iu m as m a jo r in te rn a tio n a l in v es­
to rs. T h e rise o f C a n a d a , A rg e n tin a , a n d p o ssib ly a few o th e rs can
h a r d ly c o m p en sate f o r th e d ecline o f th e E u ro p e a n c ou n tries.
T h u s th e U n ite d S ta te s is a ssu m in g th e m a jo r in te rn a tio n a l b a n k in g
fu n c tio n o f th e w o rld a n d w ith i t a la rg e sh a re in th e re sp o n s ib ility f o r
o rd e rly d e velo p m en t o f th e in te rn a tio n a l econom y. T h is req u ire s s ta ­
b ility in in te rn a tio n a l le n d in g , a v o id in g su d d e n in te rru p tio n s as in
th e la te 1920’s a n d e a rly 1930’s. I n th is ta s k th e In te r n a tio n a l B a n k
c an be o f m a jo r a id , p a r tic u la r ly b y p ro v id in g new m a c h in e ry to
a p p ra is e th e d e sira b ility o f such in v estm e n ts a n d by ta k in g o v er a
la rg e p a r t o f th e risk .
T h e P r o b le m

o f R ep aym en t

I n te r n a tio n a l lo an s a n d in v estm en ts n ece ssarily influence n o t only
o th e r b a la n c e -o f-p a y m e n ts item s such as in te rn a tio n a l tr a d e , b u t in ­
d ire c tly also th e do m e stic econom ies o f th e c o u n trie s in v o lv ed . T h e
tr a n s f e r p rob lem s in co n n ectio n w ith th e outflow o f fu n d s a rs u su a lly
m in o r, because o f th e fre q u e n t tie -in o f lo an s w ith m e rc h an d ise t r a n s ­
fe rs, o r because o f th e n e ed f o r a d d itio n a l im p o rts b y th e b o rro w in g
c o u n try . M a jo r p ro b lem s a n d c o m p lica tio n s m ay , how ever, a rise w ith
th e r e tu r n flow o f th e fu n d s . I n a n a ly z in g th e lo n g -ru n effect o f th e
w a r on in te rn a tio n a l econom ic re la tio n s, th e a b ility o f th e new d e bto r
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c o u n trie s to service th e ir d e b t— a n d o f th e U n ite d S ta te s a n d o th e r
c re d ito r c o u n trie s to ab so rb th e p a y m e n ts—m u s t h e ta k e n in to c on sid­
e ra tio n .
I n th is c on n ectio n th e d e velo p m en ts a f te r W o r ld W a r I m ay to som e
e x te n t be lo oked u p o n as a h isto ric p re ce d e n t. I n c o m p a rin g th e 20
y e ars b etw een th e tw o W o rld W a rs w ith th e la s t 100 y e a rs b e fo re
W o rld W a r I , th e in te n sity a n d e x te n t o f m a jo r econom ic fric tio n s d u r ­
in g th e in te rw a r p e rio d re p re se n t p e rh a p s th e m o st obvious change.
T h e re la tiv e ly sm ooth d ev e lo p m e n t o f in te rn a tio n a l econom ic r e la tio n ­
sh ip s d u r in g th e n in e te e n th a n d e a rly tw e n tie th c en tu rie s m a y be
a scribed , in la rg e degree, to a c o n tin u o u s g ro w th o f w o rld p r o d u c tio n
a n d tr a d e in w h ich m a la d ju stm e n ts due to th e o v e rra p id d e velo p m en t
o f a n y p a r ts o f th e w o rld econom y w ere ne ce ssarily lim ite d in d u ra tio n .
T h is g ro w th w as stim u la te d th ro u g h c a p ita l m ovem ents f ro m in d u s­
tr ia lly a n d c o m m ercially a d v a n ce d c o u n trie s to re la tiv e ly new a re as
w ith th e in te n t o f d e v e lo p in g th e p ro d u c tio n a n d tr a n s p o r t o f p r o d u c ts
w h ich th e c a p ita l- e x p o rtin g c o u n trie s req u ire d . S h ip m e n ts o f th ese
goods fro m th e d e b to r to th e c re d ito r c o u n trie s m a d e possible th e tr a n s ­
f e r o f p ro fits o r th e se rv ic in g o f lo an s w ith o u t th e n e ed f o r m a jo r
a d ju s tm e n ts in e ith e r g ro u p ’s econom y o r in o th e r p a r ts o f th e w o rld .
T h e g ro w th o f p r im a r y in d u strie s a n d tr a n s p o r t f a c ilitie s le d to th e
d e v e lo p m e n t o f p ro c essin g a n d m a n u fa c tu rin g in d u strie s in th e “n e w ”
a re as, re d u c in g th e n e ed f o r im p o rts in re la tio n to th e ir volum e o f p r o ­
d u c tio n . A t th e sam e tim e th e im p o rt req u irem e n ts o f th e ad v a n c ed
c o u n tries, p r im a r ily f o r ra w m a te ria ls, re m a in e d a t a re la tiv e ly con­
s ta n t r a tio to th e ir level o f p ro d u c tio n . T h e se tw o d e ve lo p m e nts m ay
e x p la in th e a p p a re n tly slow er rise o f w o rld tr a d e in m a n u fa c tu re d
goods as c o m p a re d w ith w o rld p ro d u c tio n o r w o rld tr a d e in p r im a r y
p ro d u c ts.2
T h e re la tiv e ly f a s te r rise o f p r im a r y p ro d u c ts th a n o f m a n u fa c tu re d
goods in w o rld tr a d e coin cid ed w ith a cc eleratio n in th e p a y m e n ts of
in te re s t a n d o th e r p ro p e rty incom es b y th e “new ” a re a s to th e econom ­
ic a lly o ld e r c o u n tries, as c o m p a re d w ith th e re la tiv e ly sta b le r a te o f
n ew lo an s a n d in v estm en ts b y th e l a tt e r c o u n trie s to th e fo rm e r. T h e
n o rm a l d e ve lo p m e nt o f tr a d e , th e re fo re , com p lem ented th e n o rm a l
d e ve lo p m e nt o f c a p ita l a n d c ap ital-in c o m e m ovem ents, th u s o b v ia tin g
m a jo r b a la n c e-o f-p a y m e n ts difficulties.
I n sev e ra l re sp e c ts 'W o rld W a r I in te rr u p te d th e c o m p lem e n ta ry r e l­
a tio n o f tr a d e a n d fin a n c ia l tra n s a c tio n s, th e p rin c ip a l ch an g es b e in g :
(1) T h e g re a tly a d v a n c ed in d u s tria liz a tio n o f th e econom ically new
a re as, w h ich red u c ed w o rld sp ec ia liz a tio n a n d in te rn a tio n a l d iv isio n o f
p r o d u c tio n a n d g e n e ra lly sp eeded u p th e decline o f in te rn a tio n a l tr a d e
in m a n u fa c tu re d goods in re la tio n to w o rld p ro d u c tio n .
(2 ) T h e em ergence o f one o f th e p rin c ip a l “n e w ” a re as, th e U n ite d
S ta te s, w ith a la rg e incom e fro m fo r e ig n in v estm en ts, a n d o f som e o f
th e o ld e r in d u stria liz e d c o u n trie s w ith red u ce d n e t incom es f ro m th e ir
fo re ig n in v estm en ts. T h is a p p lie s m o st o f a ll to G e rm a n y , w h ich
c h a n g ed fro m a c re d ito r to a d e b to r n a tio n , b u t also because o f w a r
debts, to th e U n ite d K in g d o m , F ra n c e , a n d I ta ly .
(3 ) T h e la rg e in crea se o f in te rn a tio n a l in d eb ted n ess, m o stly o f th e
ty p e r e q u ir in g fixed-service p a y m e n ts, r a th e r th a n d ire c t in v estm e n ts
w h ich u s u a lly in v o lv e v a ria b le p a y m e n ts o f p rofits.
T h e c h an g e o f th e U n ite d S ta te s to a c re d ito r n a tio n w as, how ever,
2 S e e I n d u s t r i a l i z a t i o n a n d F o r e i g n T r a d e , p p . 1 4 ff., L e a g u e o f N a t i o n s , 1 9 4 5 .

159

n o t in d u c ed , as m ig h t h a v e been e xp e cted in th e o ry , by a re la tiv e de­
clin e in th e p ro fita b ility o f new in v estm e n ts in th is c o u n try below th e
expected p ro fita b ility o f new in v estm e n ts in th e d e b to r c o u n tries, p r i ­
m a rily G e rm a n y a n d th e A llie d N a tio n s. I n th e case o f lo a n s b y th e
U n ite d S ta te s to th ese c o u n trie s, th e outflow o f c a p ita l d id n o t lead,
th e re fo re , to th e d e ve lo p m e nt o f in d u strie s w h ich , because o f th e ir
h ig h e r p ro fita b ility , could su ccessfully com pete w ith th o se o f th e
c re d ito r c o u n try a n d th u s f a c ilita te th e se rv ic in g o f th e lo a n s o r in ­
vestm ents.
N ev erth eless, because th e b o rro w in g c o u n trie s w ere in d u stria liz e d
n a tio n s w hose m ain e x p o rts c on sisted o f m a n u fa c tu re d p ro d u c ts, d e b t
service re q u ire d a re la tiv e ly in c re a sin g a m o u n t o f m a n u fa c tu re d goods
in in te rn a tio n a l tra d e .
T h e n e ed f o r h ig h e r e x p o rts o f m a n u fa c tu re d g o o ds b y th e new
d eb to rs, w as acco m p an ied b y e x p a n d e d p ro d u c tiv ity a n d , consequently,
re la tiv e ly sm a lle r im p o rt req u irem e n ts fo r such g oo ds b y th e p r in ­
c ip a l c re d ito r c o u n try — th e U n ite d S ta te s. T h is s itu a tio n u n d o u b t­
e d ly c o n trib u te d to tr a n s f e r difficulties a n d in te rn a tio n a l insolvencies,
th e' collapse o f lo n g -estab lish e d c u rre n c y re la tio n s h ip s, th e s u b s titu ­
tio n o f b a r te r f o r in te rn a tio n a l tr a d e , a n d th e g e n e ra l su sp en sion o f
new in te rn a tio n a l lo a n s a n d in v e stm e n ts d u rin g th e 1930’s.
I n m a n y w ays th e d ev elo p m en ts d u r in g a n d a f te r W o rld W a rs I a n d
I I a re sim ila r.
(1 ) C re d ito r c o u n trie s a g a in , as a f te r W o rld W a r I , a re p r im a r ily
th e re la tiv e ly “n e w ” c o u n trie s, in c lu d in g th e U n ite d S ta te s.
(2 ) I n d u s tr ia liz a tio n o f econom ically new a re a s h a s m ad e f u r th e r
a n d even la r g e r strid e s th a n d u r in g W o rld W a r I . I t is p ro b a b le ,
th e re fo re , t h a t th e te n d e n c y w ill be f o r th e d iv ergen ce b etw een th e
d e ve lo p m e nt o f w o rld tr a d e in m a n u fa c tu re d goods a n d th e d ev elo p ­
m e n t o f w o rld p r o d u c tio n to c o n tinu e to grow .
(3) T h e new b o rro w e rs, ju s t as a f te r W o rld W a r I , a re th e in d u s­
tria liz e d c o u n trie s, th e U n ite d K in g d o m , F ra n c e , I ta ly , th e N e th e r­
la n d s, a n d , p e rh a p s a t som e f u tu r e tim e , G e rm an y . T h e se c o u n trie s
can service th e ir d eb ts o n ly th ro u g h in crea se d e x p o rts o f m a n u fa c tu re d
goods.
(4 ) T o ta l w o rld in d eb ted n e ss, p a r tic u la r ly th e p a r t w h ich consists
o f o b lig a tio n s re q u ir in g fixed in te re s t a n d a m o r tiz a tio n p a y m en ts, h a s
g re a tly in crea se d , th u s f u r th e r e x p o sin g th e solvency o f th e d e b to r
c o u n trie s to th e flu c tu a tio n s o f w o rld b u sin e ss a c tiv ity a n d prices.
T h e coincidence o f th ese circu m stan ce s en g e n d e rs, ju s t as a f te r
W o rld W a r I , difficulties in th e tr a n s f e r o f d e b t o b lig a tio n s w h ich
w o u ld be g re a tly a cc e n tu a te d i f new lo ans a n d o th e r a id sh o u ld su d ­
d e n ly be su sp en d ed . I t does n o t seem in ev ita b le , how ever, t h a t th e
e xp erien ce o f th e in te rw a r p e rio d n e ed be re p ea te d . U n d e r th e f o l­
lo w in g circu m stan ce s, difficulties a ris in g fro m th e tr e n d s in th e devel­
o p m e n t o f w o rld tr a d e a n d th e p e c u lia r econom ic re la tio n s h ip betw een
d e b to r a n d c re d ito r c o u n trie s could be resolved :
(a)
S ervice c h arg e s on lo an s h a v e to be tr a n s f e rr e d b y th e new
d e b to rs p r im a r ily th ro u g h in c rea se d e x p o rts o f m a n u fa c tu re d goods
o r th ro u g h th e re n d e rin g o f services, such as s h ip p in g o r to u ris t se rv ­
ices. E x p o rts o f th ese goods a n d services d ire c t to th e c re d ito r co u n ­
tr ie s , p a r tic u la r ly th e U n ite d S ta te s, m ay n o t be sufficient to m eet
a ll th e d e b t o b lig a tio n s in a d d itio n to m a k in g p a y m e n ts f o r c u rre n t
tra n sa c tio n s.
I t is necessary t h a t th ese d e b to r c o u n trie s h av e an
160

e x p o r t su rp lu s on c u rre n t a cc o u n t w ith th e c o u n trie s p ro d u c in g a n d
e x p o rtin g p r im a r y p ro d u c ts, a n d t h a t th e U n ite d S ta te s a n d a ll o th e r
c re d ito r c o u n trie s w h ic h su p p ly m o st o f th e ir re q u ire m e n ts f o r m a n u ­
fa c tu re d p ro d u c ts fro m d o m estic p r o d u c tio n h a v e a n e q u iv a le n t im ­
p o r t su rp lu s fro m th e c o u n trie s p ro d u c in g p r im a r y m a te ria ls. I n
o th e r w o rds, de bt-se rv ice c h a rg e s could h a r d ly be tr a n s f e r r e d w ith o u t /
m u ltila te ra l tr a d e , w h ich w o u ld be fa c ilita te d by a w o rld -w id e red u c-/
tio n in tr a d e b a rrie rs .
'
(b ) E v e n th is p rin c ip le , how ever, w o u ld n o t be sufficient unless
b o th th e c re d ito r n a tio n s a n d th e in te rm e d ia ry c o u n trie s h a v e a
sufficiently h ig h dom estic p ro d u c tio n a n d incom e to re q u ire im p o rts
o f a m a g n itu d e sufficient to p ro v id e fo re ig n e xch an g e to m eet b o th
th e d e b to rs’ c u rre n t im p o rt req u irem e n ts a n d th e ir d e bt-se rv ic e o b li­
g a tio n s. I t is necessary, th e re fo re , to p re v e n t econom ic flu c tu a tio n s
n o t o n ly in th is c o u n try b u t also in th e m a jo r c o u n trie s p ro d u c in g
p r im a r y p ro d u c ts. T h e U n ite d S ta te s, as th e o u ts ta n d in g e x p o rte r
o f new c a p ita l, is in a key p o s itio n to h e lp keep econom ic e x p a n sio n
in th ese c o u n trie s ste a d y as w ell a s to e x e rt a p ro m in e n t influence
u p o n th e sta b iliz a tio n o f w o rld d e m a n d f o r th e ir p r in c ip a l p ro d u c ts.
T h e n eed f o r su ch a c tiv itie s h a s been rec og n iz ed a n d th e fra m e w o rk
f o r a p p r o p r ia te a ctio n h a s b een p ro v id e d b y th e o rg a n iz a tio n o f th e
U n ite d N a tio n s, a n d its sp ecialized agencies.
(c) T h e p r o d u c tiv ity o f th e d e b to r c o u n trie s w ill h av e to be suffi­
c ie n tly in crea se d to enab le th e m to com pete su ccessfully w ith o th e r
c o u n trie s in w o rld m ark e ts. S in ce a la r g e r p a r t o f th e lo a n s a f te r
th is w a r— as c o m p ared w ith th e lo an s d u r in g W o rld W a r I — w as fo r
th e re c o n s tru c tio n o f th e p ro d u c tiv e p la n t in fo re ig n c o u n trie s, i t m ay
be assum ed t h a t a f te r co m p le tio n o f th e re c o n s tru c tio n process a la rg e
p a r t o f fo re ig n in d u s try w ill be e q u ip p ed w ith m o d ern fa c ilitie s a n d
w ill be in a re la tiv e ly b e tte r c om p etitiv e p o sitio n th a n b e fo re th e w ar.
F u rth e rm o re , i t m a y be rec og n iz ed a b ro a d t h a t th e c o m p etitiv e a d ­
v a ntag e s o f th e d eb to r c o u n trie s’ in d u strie s c an be in c rea sed if, th ro u g h
th e c o m b in a tio n o f sev e ra l c o u n trie s in to la rg e r econom ic u n its,
g r e a te r use c an be m ad e o f m ass-p ro d u c tio n techniq ues.
(d ) A f u r th e r a id in sm o o th in g th e tr a n s f e r o f in te rn a tio n a l d e b t
service a n d in a v o id in g re s tric tio n s u p o n in te rn a tio n a l tr a d e a n d
c a p ita l m ovem ents, such as th o se t h a t o b ta in e d in th e e a rly 1930’s,
w ould be th e m o re g e n e ra l a d o p tio n o f d e fe rm e n t p ro v isio n s f o r in ­
te re st p a y m e n ts, such as fo u n d in th e B r itis h lo a n ag ree m e n t. T h e
a v a ila b ility o f a id in m ee tin g te m p o ra ry b a la n c e-o f-p ay m en ts diffi­
c u ltie s th ro u g h th e M o n e ta ry F u n d , a n d th e g e n e ra lly lo w er in te re s t
a n d a m o rtiz a tio n ra te s , sh o u ld also be co n sid e re d as su b s ta n tia l im ­
p ro v e m e n ts o v er th e situ a tio n e x istin g a f te r W o rld W a r I .
B y 1951, w’h e n p ra c tic a lly a ll G o v e rn m en t p o stw a r lo a n s m a d e u p
to th e en d o f 1947 w ill re q u ire f u ll service, re c e ip ts o f in te re s t a n d
a m o rtiz a tio n on su ch lo an s sh o u ld a m o u n t to a b o u t $450 m illio n . I n
a d d itio n , if d o lla r lo a n s th ro u g h th e I n te r n a tio n a l B a n k rise to $4
billion, in te re s t a n d a m o rtiz a tio n on th ese m a y re q u ire a ro u n d $200
m illio n . E a rn in g s a n d a m o rtiz a tio n on lo an s a n d in v e stm e n ts e x istin g
u p to th e e n d o f th e w a r a re a ro u n d $1 b illio n . F u r th e r p r iv a te o r
G o v e rn m en t lo a n s w o u ld in crea se a g g re g a te re ce ip ts even above th e
in d ic a te d to ta l o f fro m $1.6 b illio n to $1.7 b illio n . T h is a m o u n t is
h ig h e r th a n th e to ta l d o lla rs received b y fo r e ig n c o u n trie s fro m th e
sale o f goods to th e U n ite d S ta te s in 1932. O b v iously, th e re fo re ,
161

fo re ig n c o u n trie s w o u ld n o t be able to m eet th e ir d e b t o b lig a tio n s a n d
even th e ir m in im u m im p o rt re q u ire m e n ts fro m th e U n ite d S ta te s if
we a n d th e re s t o f th e w o rld slid e in to a n o th e r d ep ressio n o f th e
1932 m a g n itu d e .
T h e re a re , how ever, sev eral rea so n s to believe t h a t a n o th e r d e p res­
sio n o f th is m a g n itu d e w ill be av o id ed . T h e experien ce d u r in g th e
w a r a n d th e first tw o p o s tw a r y e a rs h a s p ro v e d t h a t a h ig h level o f
p r o d u c tio n is possible. T h e peo p le o f th e U n ite d S ta te s h a v e le a rn e d
th a t severe dep ressio n s a re n o t in e v ita b le a n d th a t th e y c an be a vo id ed
th ro u g h a p p r o p r ia te a n d courag eou s a ctio n s on th e p a r t o f G o v e rn ­
m e n t a n d business. F u rth e rm o re , since 1933 v a rio u s m eans o f k e ep ­
in g u p incom e a n d in v e stm e n t h a v e been d e veloped a n d a p p ro p ria te ly
o rg a n iz ed . T h e se in clud e, a m o n g o th ers, so cial in su ra n c e , in su re d
lo an s to h om e o w n ers a n d fa rm e rs , a n d p ric e su p p o rts fo r a g ric u ltu ra l
p ro d u c ts. I n a d d itio n , th e re is th e consciousness on th e p a r t o f all
th o se in te re s te d in o r resp o n sib le f o r th e c o n d u c t o f p o litic a l a n d eco­
nom ic a ffa irs th a t th e m a in te n an ce o f th e d em o cratic fo rm o f g o v e rn ­
m e n t h e re as w ell as a b ro a d is based u p o n th e success w ith w h ic h o u r
ty p e o f econom ic sy stem o p erates.
I m p o rts in to th e U n ite d S ta te s o f goods a n d services, w h ich con­
s titu te th e m o st im p o r ta n t source o f d o lla r e xch an ge f o r fo re ig n coun­
trie s, h av e h isto ric a lly fo llo w ed r a th e r closely th e c han ges in o u r
business a c tiv ity . I t is d o u b tfu l th a t th e w a r, on b alance, h a s le f t th e
U n ite d S ta te s re la tiv e ly m ore self-sufficient. T ru e , we h av e developed
m a n y su b s titu te s f o r p ro d u c ts w h ich we fo r m e rly im p o rte d , o r have
le a rn e d to g e t a lo n g w ith o u t th em . I t re m a in s to be seen, how ever, to
w h a t e x te n t we w ill co n tin u e to do w ith o u t th ese p ro d u c ts w hen
th e y becom e re a d ily av ailab le.
M oreo v er, w e h a v e c o nsid e ra b ly re d u ce d th e reserves o f som e o f
o u r m o st im p o rta n t n a tu r a l resources, a n d i f h ig h levels o f in d u s tria l
p r o d u c tio n p re v a il h e re, som e o f o u r dom estic su p p lie s m ay h a v e to
be su p p le m e n te d by im p o rts fro m a b ro a d . T h e re sh o u ld also be a
la r g e r m a rk e t h e re f o r d istin c tiv e consu m er goods w h ic h a re n o t th e
p r o d u c ts o f m a ss-p ro d u c tio n in d u strie s , a n d w h ich , th e re fo re , co u ld be
p ro d u c e d a b ro a d a t lo w er c o m p a ra tiv e costs. T h e lo n g e r, how ever, th e
re h a b ilita tio n o f fo r e ig n p r o d u c tio n is d elay ed , th e g re a te r w ill be
th e tr e n d to w a r d self-sufficiency in th e U n ite d S ta te s.
E v e n a ssu m in g t h a t th e fa c to rs w h ich w o u ld red u ce im p o rts in
r e la tio n to th e level o f d om estic p ro d u c tio n a re n o t q u ite co m p en sated
by th o se w h ic h w o u ld in crea se th e m , o u r p u rc h a ses o f goods a n d se rv ­
ices m ig h t be expected to rise to $10 b illio n o r $11 b illio n p e r y e a r a t
p ric es p re v a ilin g d u r in g th e first 6 m o n th s o f 1947— u n d e r c o n d itio n s
o f p ro sp e rity in th is c o u n try a n d a f te r p ro d u c tiv e a n d service fa c ilitie s
a b ro a d a re re sto red . E v e n h ig h e r levels m a y b e re ac h ed i f U n ite d
S ta te s tr a d e b a r rie r s a re su b sta n tia lly red u ce d. C o m p a re d w ith th is
level o f im p o rts, w h ich could be su p p le m e n te d b y p riv a te a n d p u b lic
g ifts a n d by c o n tin u e d c a p ita l e x p o rts, th e p ro sp ec tiv e b u rd e n im p o sed
u p o n fo r e ig n c o u n trie s by th e ir d e b t o b lig a tio n s does n o t seem to be
in to le ra b ly h ig h .
I t sh o u ld n o t be a ssum ed fro m th e fo re g o in g p a r a g r a p h s t h a t th e
d o lla r p ro b lem w ill a u to m a tic a lly be solved b y th e co m p le tio n o f
re c o n stru c tio n . T h e existen ce o f r a p id c om m u n ica tio n s a n d th e w a r ­
tim e m ovem ents o f A m e ric a n tro o p s, eq u ip m e nt, a n d su p p lie s h av e
m ad e th e w hole w o rld b e tte r a cq u a in te d w ith A m eric an tech n iq u es,
162

„

#

a n d th e use o f A m e ric a n p ro d u c ts w ill c o n tin u e to g row . H o w e v e r, a
c o ntin u o u s s h o rta g e o f d o lla rs m ig h t in d ic a te a b asic d iseq u ilib riu m in
th e r a te o f e x ch an g e b etw een th e d o lla r a n d fo re ig n c urren cies.
B e fo re th e w a r, d o lla r sc a rc ities w ere accom pan ied by sc arcities
o f o th e r cu rre n c ie s w h ich w ere fre e ly c o n v e rtib le in to d o lla rs o r
gold. T h e re fo re , if fo re ig n c o u n trie s im p o sed im p o rt o r exch an ge
c o ntro ls, th e y w ere n o t n ece ssarily d isc rim in a to ry a g a in st th e U n ite d
S ta te s. I f , in th e fu tu re , th e d o lla r a n d o n ly a re la tiv e ly few o th e r
c u rren c ie s becom e scarce in th e r e s t o f th e w o rld , im p o r t r e s tric ­
tio n s w ill h av e to b e d ire c te d specifically a g a in st th e sc arc e-cu rre nc y
c ou n tries. T h e e x ac t m eth o d s o f d e a lin g w ith th e sc arc e-cu rre nc y
p ro b le m w ill be d e te rm in e d by th e M o n e ta ry F u n d . E v e n th o u g h
th is in te rn a tio n a l agency m ay in su re an o rd e rly process in a d ju s t­
in g d o lla r-s c a rc ity p rob lem s, i t w ould n e v e rth e le ss be to th e a d v a n ­
ta g e o f th e U n ite d S ta te s n o t to becom e econom ically isolated.
T h is situ a tio n can be a v o id ed th ro u g h g r e a te r d isb u rse m e n ts of
d o lla rs by th e U n ite d S ta te s f o r im p o rts o f goods a n d services o r
th ro u g h fo re ig n in v estm en ts. A h ig h level o f dom estic p ro d u c tio n
a n d c o n su m p tio n , fa v o ra b le policies in re sp e c t to ta rif fs a n d e x p o rt
subsid ies, c o n se rv a tio n o f d o m estic n a tu r a l resources, stim u la tio n
o f fo re ig n tr a v e l, a n d fo re ig n in v estm e n ts to in crea se fo re ig n p ro ­
d u c tiv ity sh o u ld in th e lo n g r u n p ro v id e a s a tisf a c to ry a n sw e r to
th e d o lla r-s c a rc ity problem .
Sum m ary

V ie w in g a ll th ese tr e n d s to g e th e r, i t seems t h a t th e w a r h a s le ft
th e U n ite d S ta te s th e o p p o rtu n ity a n d re sp o n sib ility o f a ssistin g
in th e re c o n stru c tio n o f th e w o rld econom y on th e b asis o f p rin c ip le s
w h ich p ro v id e f o r th e g re a te s t p o ssib le fre e d o m o f tr a d e a n d th e
h ig h e st s ta n d a rd o f liv in g a tta in a b le w ith th e e x istin g n a tu r a l r e ­
sources a n d tech n o log y . T h is re sp o n s ib ility involv es th e a d o p tio n
o f policies w h ich w ould su ccessfully m in im ize econom ic flu c tu a tio n s
in th is c o u n try as w ell as in w o rld tra d e .
I f we f a il to m ee t th is o p p o rtu n ity su ccessfully w e m a y be faced
w ith econom ic iso la tio n ism th ro u g h th e c re a tio n o f econom ic a n d
p o litic a l blocs a b ro a d , a n d w ith a g re a tly red u ce d w o rld tr a d e con­
d u c te d to a n in c re a s in g e x te n t on b ila te ra l p rin c ip le s th ro u g h G o v ­
e rn m e n t o rg a n iz a tio n s o r u n d e r G o v e rn m en t d ire c tio n . A d a p ta tio n
o f o u r ow n fo re ig n tr a d e to such c o n d itio n s m ig h t c re a te th e neces­
sity o f e x te n d in g c o n tro ls to a n in c re a sin g e x te n t over o u r dom estic
econom y.

163

&

A p p e n d ix A

C o n c e p ts a n d D e fin itio n s
G e n e r a l S ta te m e n t
A s w ill h a v e b e e n n o te d , t h e d a t a in t h is b u lle t in h a v e b e e n p r e s e n t e d in a n e w
fo r m , fir s t a d o p te d
e s tim a te s fo r

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e ffe c ts o n th e d o m e s tic e c o n o m y o f in te r n a t io n a l t r a d e w e r e o f in t e r e s t p r im a r ily
in e x p la in in g t h e w o r k in g o f t h e a d j u s t m e n t m e c h a n is m u n d e r w h ic h a n e x c e s s
o f e x p o r t s o r im p o r ts w o u ld s e t in m o tio n c e r t a in e c o n o m ic c h a n g e s
in t e r e s t r a t e s a n d p r ic e s ) t h a t w o u ld te n d to r e v e r s e th e flo w
r e s t o r e e q u ilib r iu m in t h e in t e r n a t io n a l a c c o u n ts .
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b u y g o o d s a n d s e r v ic e s
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in g lo n g -te r m

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c a p ita l m o v e m e n ts.

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reserves,

n o r m a lly

g o ld

and

sh o r t­

te r m f o r e ig n -e x c h a n g e h o ld in g s .
T h e e x p o r t in g c o u n tr y m a y a c c e p t g o ld , in ­
c r e a s e it s h o ld in g s o f f o r e ig n c u r r e n c y o r o th e r s h o r t-te r m c la im s o n fo r e ig n
c o u n tr ie s , o r th e f o r e ig n
e x p o r tin g c o u n tr y .

c o u n tr ie s

m ay

redu ce

th e ir

sh o r t-te r m

c la im s

on

th e

T h e fo r m o f p r e s e n ta tio n a d o p te d ( ta b le 1 ) d is c lo s e s a ll t h e s e f a c t s in a r e la ­
t iv e ly s u c c in c t m a n n e r .
U n d e r t h e g e n e r a l h e a d in g o f r e c e ip t s ( a ls o c o m m o n ly
c a lle d
U n ite d
su ch

c r e d its )

are

S ta te s

fr o m

p a y m e n ts.

s im p ly

as

e n te r e d

F ir s t,

go o d s— a n d

(in c o m e o n

a ll th o s e

abroad, or
of

cou rse,

s o -c a lle d

in v e s tm e n ts ), o ce a n

th e c o u n tr y , a n d s im ila r ite m s .
ta b le .

w h ic h
are

tr a n s a c tio n s
w o u ld

th a t

m e r c h a n d is e

in v is ib le

in v o lv e

o r d in a r ily

p a y m e n ts

p resu m ed

e x p o r ts — h e r e in

e x p o rts, su ch

f r e ig h t , e x p e n d itu r e s
T h e s e a r e c la s s ifie d

be
as

th e

s e r v ic e

o f fo r e ig n

to

to

th e

in v o lv e

r e fe r r e d

to

of

c a p ita l

to u r is ts

w ith in

a s g o o d s a n d s e r v ic e s in th e

E x p o r ts f o r w h ic h n o p r e s e n t o r f u t u r e p a y m e n t i s r e q u ir e d , f o r e x a m p le ,

1 U . S . I n t e r n a t i o n a l T r a n s a c t i o n s i n 1 9 4 5 , F o r e i g n C o m m e r c e W e e k ly , J a n u a r y 1 9 , 1 9 4 6 .

164

s h ip m e n ts u n d e r th e

U N ItR A

p r o g r a m , a r e in c lu d e d .

S im ila r

c a te g o r ie s

on

th e

p a y m e n ts ( d e b it ) s id e o f t h e a c c o u n t r e fle c t t h e a c q u is itio n o f g o o d s a n d s e r v ic e s
fr o m fo r e ig n e r s , in c lu d in g v is ib le tr a d e , t o u r is t s e r v ic e s , m ilit a r y e x p e n d itu r e s
abroad, an d

m any

o th e r s.

T iie s e c o n d m a jo r g r o u p o f t r a n s a c tio n s is d e s ig n a t e d a s u n ila t e r a l tr a n s f e r s —
v a lu e s tr a n s fe r r e d to fo r e ig n e r s w ith o u t a n y im m e d ia te q u id p ro q u o o r w ith o u t
c r e a tin g o r e x tin g u is h in g a n in te r n a tio n a l d e b t. T h e e s ta b lis h m e n t o f th is a c c o u n t
s o lv e s th e p r e v io u s ly e m b a r r a s s in g
r e m itta n c e , f o r in s ta n c e , r e p r e s e n te d

p r o b le m o f e x p la in in g t h a t a n im m ig r a n t
th e p u r c h a s e o f a s e r v ic e , o r t h a t a r e p a r a ­

tio n s p a y m e n t w a s a m o v e m e n t o f c a p ita l.
T h e a c c o u n t a ls o in c lu d e s o ffs e ttin g
e n t r ie s f o r g o o d s o r s e r v ic e s e x p o r te d o r im p o r te d o n a “f r e e ” b a s i s ; th e p a y m e n t
(d e b it)

e n tr y , f o r in s ta n c e , in c lu d e s t h e v a lu e o f m e r c h a n d is e f u r n is h e d th r o u g h

th e U N R R A

m e c h a n is m

o r u n d e r o th e r c ir c u m s ta n c e s n o t r e q u ir in g p a y m e n t.

T h e a r r a n g e m e n t o f t h e c a p it a l a c c o u n ts f o llo w s t h a t f ir s t e s t a b lis h e d in t h e
D e p a r tm e n t o f C o m m e r c e p u b lic a tio n , T h e U n it e d S t a t e s in t h e W o r ld E c o n o m y .
L o n g -te r m

c a p ita l m o v e m e n ts

a r e c o n s id e r e d

a s g e n e r a lly

b e in g a u to n o m o u s

in

n a tu r e a n d c o n s titu tin g p a r t o f th e d o lla r s “s u p p lie d ” o r “u s e d ” ; fo r t h is r e a s o n
th e y a r e s h o w n , a lo n g w ith g o o d s a n d s e r v ic e s a n d u n ila t e r a l t r a n s fe r s , u n d e r th e
g e n e r a l h e a d in g s o f r e c e ip ts a n d p a y m e n ts .
T h e n e t r e s u lt o f th e s e th r e e ty p e s o f tr a n s a c tio n s is c lo s e ly a k in
o f in te r n a tio n a l p a y m e n ts ” a s th a t te r m

to a

“b a la n c e

h a s b e e n e m p lo y e d b y e c o n o m ic w r it e r s

w it h le a n in g s t o w a r d t h e c la s s ic a l s c h o o l.2 E r r o r s a n d o m is s io n s a s id e , t h e n e t
b a l a n c e t h u s d e t e r m i n e d i s e x a c t l y o f f s e t b y a n i n c r e a s e o r d e c r e a s e i n a c o u n t r y ’s
n e t s to c k o f in te r n a t io n a l fin a n c ia l r e s e r v e s — g o ld a n d sh o r t-te r m b a la n o e s .
T he
la t te r a r e th e n g r o u p e d u n d e r o n e h e a d in g a s th e f o u r th m a jo r ty p e o f in te r n a tio n a l
tr a n s a c tio n s .

I t m u s t b e r e c o g n iz e d , o f c o u r s e , t h a t s h o r t-te r m

c a p ita l m o v e m e n ts

m a y t h e m s e lv e s b e a u t o n o m o u s in c h a r a c t e r , p a r t ic u la r ly w h e n a flig h t o f c a p it a l
i s o c c u r r in g , w h ile i t h a s b e e n a m p ly
t h a t lo n g -te r m

c a p ita l m o v e m e n ts

d e m o n str a te d

( e s p e c ia lly

in

t h e lit e r a t u r e o f t h e fie ld

tr a n s a c tio n s in

o u ts ta n d in g

s e c u r i­

t ie s ) m a y b e e q u ilib r a tin g in n a tu r e .
In su m m a r y , it m a y b e o b se r v e d th a t th e s ta te m e n t fu lfills th e d u a l p u r p o se o f
r e fle c t in g a ll in t e r n a t io n a l e c o n o m ic t r a n s a c tio n s o f a c o u n tr y w h ile a t th e s a m e
t i m e e x h i b i t i n g t h e n e t e f f e c t o f t h e s e t r a n s a c t i o n s o n t h e n a t i o n ’s i n t e r n a t i o n a l
fin a n c ia l p o s itio n .

R e la tio n
T he

m ost

to

G r o s s N a t i o n a l P r o d u c t S t a t is t ic s

c o m p r e h e n s iv e

sta te m e n t

of

th e

to ta l

e c o n o m ic

a c tiv ity

of

a

c o u n tr y is t h e t a b le n o w c o m p ile d b y m a n y n a t io n s o f t h e w o r ld a n d c o m m o n ly
r e f e r r e d t o a s n a t io n a l p r o d u c t ( o r in c o m e ) a n d e x p e n d it u r e .3
A c tu a lly th e
v a r io u s c o m p o n e n ts o f t h is s ta te m e n t— G o v e r n m e n t p u r c h a s e s o f g o o d s a n d s e r v ­
ic e s , d o m e s tic a n d f o r e ig n in v e s t m e n ts , a n d p e r s o n a l c o n s u m p tio n e x p e n d itu r e s —
rep resen t th e
w h ile

th e

p r o d u c t.

o u tla y s

a lg e b r a ic

(e x p e n d itu r e s )

su m

o f th e

o f each

th re e

o f th e

co m p o n e n ts

se g m e n ts

m easu res

o f th e

th e

gross

econom y,
n a tio n a l

I n a c lo s e d e c o n o m y , e x p e n d itu r e s b y G o v e r n m e n t, c o n s u m e r s , a n d f o r '

d o m e s tic

c a p ita l

fo r m a tio n

w o u ld

o b v io u s ly

have

to

equal

th e

v a lu e

of

to ta l;

d o m e s t ic p r o d u c tio n .
T h e in te r n a tio n a l b a la n c e is

a c c o u n te d

fo r b y in c lu d in g it a ls o

e x p e n d itu r e — a n e x c e s s o f e x p o r ts , f o r in s ta n c e ,
f o r t h e p u r p o s e o f m a k in g f o r e ig n in v e s t m e n ts .
part

o f th e

tr e a te d

d o m e s t ic p r o d u c tio n , g r o s s

e x p o rts

a s a s p e c ia l a n d s e p a r a te d is p o s itio n

im p o r t e d

com pon ent o f each

in v e s tm e n t, e x p o r ts , a n d
T h e ta b le w o u ld

th e n

o f th e fo u r ite m s
a c c u r a te ly

a

d o m e s tic

of

goods

and

s e r v ic e s

m ig h t b e

o f t h e n a tio n a l p r o d u c t, w h ile t h e
(G o v e r n m e n t p u r c h a s e s , d o m e s tic

c o n su m e r e x p e n d itu r e s )

sh ow

as

is in c lu d e d a s a n e x p e n d it u r e
I n f a c t, s in c e fo r e ig n e r s ta k e

c o u ld

th e d is p o s itio n

b e d e d u c te d fr o m

each.

o f t o t a l d o m e s tic p r o d u c ­

tio n to f o u r g r o u p s o f c la im a n t s , f o r e ig n c o u n tr ie s c o n s t it u t in g t h e fo u r th g r o u p .
S i n c e t h i s l a s t p r o c e d u r e w o u ld b e s t a t i s t i c a l l y d iff ic u lt,4 t h e s a m e u l t im a t e
r e s u lt is a c h ie v e d b y e n te r in g t h e n e t fo r e ig n b a la n c e ( in o u r t a b le t h e n e t b a la n c e
o n g o o d s a n d s e r v ic e s a n d u n ila te r a l t r a n s fe r s ) a s a c o m p o n e n t o f c a p ita l fo r m a ­
tio n — a lo g ic a l p r o c e d u r e s in c e s u c h b a la n c e d o e s m e a s u r e th e n e t a m o u n t
o f fo r e ig n

in v e s tm e n t, e r r o r s a n d

o m is s io n s in

th e d a ta

a s id e .

T h e title

“g r o s s

2 O f. a r t i c l e o n I n t e r n a t i o n a l T r a d e , E n c y c l o p e d i a o f t h e S o c ia l S c ie n c e s , v o l. 8, p. 2 0 0 ff.
3 T h e e s tim a te s f o r th e U n ite d S ta te s h a v e r e c e n tly b ee n re v ise d .
S ee N a tio n a l In c o m e
a n d P r o d u c t S t a t i s t i c s o f t h e U n ite d S ta te s , 1 9 2 9 -4 6 , S u rv e y o f C u r r e n t B u s in e s s ,
S u p p le m e n t, J u l y 1 9 4 7 . U . S . D e p a r tm e n t o f C o m m e rc e .
4 F o r a p re s e n ta tio n s o m e w h a t a lo n g th is lin e see N a tio n a l A c c o u n ts : In c o m e a n d
E x p e n d itu re , 1 9 3 8 -4 0 .
O tta w a , 1947.
D e p a r tm e n t o f T r a d e a n d C o m m e rc e , D o m in io n
B u re a u o f S ta tis tic s , N a tio n a l In c o m e U n it.

165

c a p it a l f o r m a t io n ,” a s u s e d in t h e D e p a r tm e n t o f C o m m e r c e s e r ie s o n
n a t io n a l p r o d u c t, is c le a r ly s o m e th in g o f a m is n o m e r in t h is c a s e , a s it
c o u r s e , f o r t h e in v e n to r y e n tr y , w h ic h

is a ls o

gross
is , o f

a n e t fig u r e .

B e c a u s e o f t h e im p o r t a n t r o le o f o u r G o v e r n m e n t in o u r in te r n a t io n a l t r a n s ­
a c t io n s in r e c e n t y e a r s , a n a tt e m p t h a s b e e n m a d e to s e p a r a te a ll th e a c c o u n ts
in to
in

G overnm ent an d

th e

se c tio n ,

e v e r , is in

p r iv a te

G overnm ent

se c to r s,

and

a s d isc u sse d

P r iv a te

m o r e fu lly

T r a n s a c tio n s .

te r m s o f w h e th e r o r n o t th e G o v e r n m e n t is a

t r a n s a c tio n in v o lv e d , a n d n o t w h e t h e r a c h a n g e in
a b r o a d (o r lia b ilit y to fo r e ig n e r s ) h a s o cc u r r e d .

T h is
p a r ty

in

th is

a p p e n d ix

b r e a k -d o w n ,
to

how ­

th e p a r tic u la r

n e t G o v e r n m e n t in v e s tm e n t

E ith e r tr e a tm e n t, w h ile s ig n ific a n t fo r so m e p u r p o se s, in v o lv e s c o n c e p tu a l
d iffic u ltie s .
C o n s id e r t h e c a s e o f a c o u n tr y w it h a n im p o r t s u r p lu s fin a n c e d b y
G o v e r n m e n t b o r r o w in g a b r o a d .
N e t f o r e ig n in v e s t m e n t is o b v io u s ly n e g a tiv e ,
a n d th e
p r iv a te .

d is in v e s t m e n t c o u ld p r o p e r ly b e c o n s id e r e d G o v e r n m e n t r a t h e r th a n
B u t t h e d e fic it c o u ld c o n c e iv a b ly b e fin a n c e d b y f o r e ig n e r s ’ n e t p u r ­

c h a s e s o f o u t s t a n d in g G o v e r n m e n t s e c u r it ie s ; in t h is e v e n t w o u ld t h e d is in v e s t ­
m e n t b e G o v e r n m e n t o r p r iv a te ?
T h e to ta l G o v ern m en t d eb t is u n ch a n g ed , b u t
t h e a m o u n t o w e d to f o r e ig n e r s h a s in c r e a s e d .
W o u ld a d iffe r e n t t r e a t m e n t b e
in o r d e r in t h is s e c o n d c a s e i f t h e s e c u r it ie s w e r e d e n o m in a te d in a n e x t e r n a l
r a th e r th a n

t h e d o m e s tic c u r r e n c y ?

S u p p o se th e s e c u r itie s p u r c h a se d w e r e n o t

p r e v io u s ly o u t s t a n d in g b u t w e r e p u r c h a s e d fr o m th e G o v e r n m e n t a t t h e tim e o f
is s u e — t h e is s u e b e in g o s te n s ib ly ' o n ly a d o m e s t ic o ffe r in g .
T h is in e ffe c t h a p ­
p e n e d t o t h e U n it e d S t a t e s d u r in g 1 9 4 3 a n d 1 9 4 4 , w h e n w e h a d a n e t “c a s h ” d e fic it
o n c u r r e n t a c c o u n t, a n d f o r e ig n c o u n t r ie s in v e s t e d p a r t o f t h e ir a c c u m u la tin g
d o lla r b a la n c e s in U n ite d S t a te s G o v e r n m e n t s e c u r itie s .
I n o th e r w o r d s , s h o u ld
t h e f a c t t h a t th e G o v e r n m e n t is a p a s s iv e r a th e r th a n a c t iv e p a r tic ip a n t in in te r ­
n a t io n a l in v e s t m e n t b e c o n s id e r e d ?
S h o u ld t h e a c c u m u la tio n o f f o r e ig n e x c h a n g e b y G o v e r n m e n t-o w n e d c e n t r a l
b a n k s b e c o n s id e r e d a G o v e r n m e n t in v e s t m e n t a b r o a d ?
I f so , s h o u ld t h e F e d e r a l
R e s e r v e B a n k s b e s im ila r ly c o n s id e r e d in t h is c o u n tr y ?
I f fo r e ig n e r s in c r e a s e
t h e ir h o ld in g s o f U n ite d S t a t e s p a p e r c u r r e n c y , s h o u ld th is b e c o n s id e r e d a s G o v ­
e r n m e n t o r p r iv a te d is in v e s tm e n t a b r o a d ?
P u r c h a s e o f g o ld fr o m a b r o a d to
fin a n c e a n e x p o r t s u r p lu s i s o b v io u s ly “n e t f o r e ig n in v e s t m e n t ” f o r p r e s e n t p u r ­
p oses.
S h o u ld t h is b e t r e a t e d a s a G o v e r n m e n t in v e s t m e n t in th e U n it e d S t a t e s
s t a t is t ic s , t o t h e e x t e n t t h a t s u c h g o ld b e c o m e s t h e p r o p e r ty o f t h e T r e a s u r y
D e p a r tm e n t?
W h a t a b o u t G o v e r n m e n t-g u a r a n te e d fo r e ig n
p r iv a t e b a n k p a r tic ip a t io n in E x p o r t-I m p o r t B a n k lo a n s ?

in v e s tm e n t,

su ch

as

P a r t ly in v ie w o f t h e a b o v e q u e s t io n s w e h a v e n o t, e ith e r in t h is v o lu m e o r t h e
r e v is e d g r o s s n a t io n a l p r o d u c t ta b le , a tt e m p t e d t o d iv id e , in t o G o v e r n m e n t a n d
p r iv a te , “n e t fo r e ig n in v e s t m e n t ” a s su c h .
T h e ite m s m e a s u r in g n e t fo r e ig n in ­
v e s t m e n t ( g o ld a n d c a p it a l m o v e m e n t s ) a r e s e g r e g a t e d in t a b le X X V , a p p e n d ix
C , w h ile th e n e t c h a n g e s in th e in te r n a t io n a l in v e s tm e n t p o s itio n o f t h e G o v e r n ­
m e n t a n d p r iv a t e s e c to r s a r e r e fle c te d in t a b le 2 7 , p . 1 1 0 .
N e ith e r o f t h e s e c la s ­
s ific a tio n s , h o w e v e r , a c c u r a te ly m e a s u r e s th e U n ite d S t a te s G o v e r n m e n t c o n tr i­
b u tio n t o t h e f in a n c in g o f t h e c u r r e n t e x p o r t s u r p lu s o r d e fic it.

G o v e r n m e n t a n d P r i v a t e T r a n s a c t io n s
T h e fo r e g o in g d is c u s s io n

le a d s d ir e c tly

in to

t h e p r o b le m

a c t io n s in t h e b a la n c e o f p a y m e n ts in to t w o c a te g o r ie s : ( 1 )
p r iv a te , o r p e r h a p s m o r e a c c u r a te ly n o n g o v e r n m e n t.
i s m o r e te c h n ic a lly th a n e c o n o m ic a lly s ig n ific a n t ;

o f d iv id in g

a ll tr a n s ­

G o v er n m en t, a n d

(2 )

T h e d is tin c tio n in so m e c a s e s
d u r in g th e w a r m o s t o f o u r

f o r e ig n tr a n s a c tio n s w e r e e ith e r c o n tr o lle d o r a c t u a lly c o n d u c te d b y th e G o v e r n ­
m e n t. T h e a tte m p t h a s b e e n m a d e, h o w e v e r , to c la s s ify a s G o v er n m en t a ll tr a n s­
a c t io n s to w h ic h th e U n ite d S ta te s G o v e r n m e n t w a s a p a r ty ; a ll o th e r tr a n s a c ­
t io n s a r e c la s s ifie d a s p r iv a t e .5 F o r t h is p u r p o s e th e d u a l n a tu r e (d e b it a n d
c r e d it) o f e a c h tr a n s a c tio n h a s b e e n r e c o g n iz e d ; in so m e c a s e s th e c r e d it e n tr y
i s c la s s ifie d a s G o v e r n m e n t w h ile t h e o f f s e t t in g d e b it is p r iv a te , a n d v ic e v e r s a .
F o r in s t a n c e , i f t h e C o m m o d ity C r e d it C o r p o r a tio n s e lls w h e a t a b r o a d a n d
t h e p a y m e n t is m a d e o u t o f a fo r e ig n b a n k a c c o u n t in th e U n ite d S ta te s , th e c r e d it
e n tr y

fo r

th e

exp ort

of

w heat

is

a

G overnm ent

tr a n s a c tio n

w h ile

th e

c a p ita l

d e b it f o r t h e r e d u c tio n in f o r e ig n b a la n c e s w it h A m e r ic a n b a n k s is c o n s id e r e d p r i
v a te . C o n v e r s e ly , i f t h e E x p o r t-I m p o r t B a n k le n d s m o n e y to a f o r e ig n g o v e r n m e n t
to

buy

m a te r ia ls

fro m

a

p r iv a te

A m e r ic a n

e x p o r te r

th e

export

tr a n s a c tio n

is

p r iv a t e a n d t h e c a p ita l d e b it is G o v e r n m e n t.
I f E x p o r t-Im p o r t B a n k fu n d s w e r e
u s e d to b u y w h e a t f r o m t h e C o m m o d ity C r e d it C o r p o r a tio n , b o t h s id e s o f t h e

5 S ee a p p e n d ix C, ta b le X X V .

166

tr a n s a c tio n — o r r a th e r b o th tr a n s a c tio n s — a r e c la s s ifie d a s G o v e r n m e n t.

A s im ila r

e x a m p le is th e s a le o f s u r p lu s p r o p e r ty o n a c r e d it b a s is ; t h is c r e a te s a c r e d it fo r
g o o d s tr a n s f e r r e d to f o r e ig n e r s a n d a n o f f s e t t in g d e b it fo r lo a n s to f o r e ig n e r s — b o th
b e in g G o v e r n m e n t tr a n s a c tio n s .
O n ly a f e w

s p e c ia l c a s e s n e e d b e m e n tio n e d .

c a n p e r s o n n e l, m ilita r y

and

c iv ilia n , o f th e

M o n e y s p e n t a b r o a d b y th e A m e r i­

U n ite d

S ta te s G overn m en t h a s

b een

c o n s id e r e d a G o v e r n m e n t t r a n s a c tio n ( s e e p . 8 6 ) .
C h a n g e s in fo r e ig n h o ld in g s o f
U n ite d S t a te s G o v e r n m e n t s h o r t-te r m s e c u r itie s h a v e b e e n c la s s ifie d a s G o v e r n ­
m e n t ; it is n o t k n o w n to w h a t e x t e n t t h e s e is s u e s w e r e p u r c h a s e d d ir e c t fr o m th e
G o v e r n m e n t a t t h e t im e o f o ffe r in g o r p u r c h a s e d fr o m p r iv a t e A m e r ic a n h o ld e r s .
O n t h e o th e r h a n d , p u r c h a s e s o f lo n g -te r m
ered

p r iv a te ,

as

if

th e y

w ere

G o v e r n m e n t is s u e s h a v e b e e n

a lw a y s p u r c h a se d

fro m

p r e v io u s

c o n s id ­

h o ld e r s , p a r tly

b e c a u s e tr a n s a c tio n s in G o v e r n m e n t s e c u r itie s c a n n o t b e s e g r e g a te d fr o m tr a n s ­
a c tio n s in a ll d o m e s tic s e c u r itie s in th e T r e a s u r y D e p a r tm e n t c a p ita l m o v e m e n ts
s e r ie s .
S e tt le m e n ts o f c la im s o n t h e T u r k is h a n d M e x ic a n G o v e r n m e n ts f o r
p r o p e r ty

e x p r o p r ia te d

a c c o u n t.

S o h a v e a ll d is b u r s e m e n ts a n d r e c e ip ts o f t h e A m e r ic a n m e r c h a n t m a r in e

b e g in n in g
le g a lly ,

w ith

under

th e

fro m

A m e r ic a n s

secon d

p r iv a te

q u a r te r

o p e r a tio n .

of

On

have

been

1942,
th e

e n te r e d

a lth o u g h

o th e r

a

on

th e

fe w

hand, no

G overnm ent

v e s s e ls

fr e ig h t

r e m a in e d ,

on

im p o r ts

in

fo r e ig n b o tto m s h a s b e e n in c lu d e d a s a G o v e r n m e n t t r a n s a c tio n s ; w ith o u r m e th o d
o f e s tim a tin g , i t w o u ld h a v e b e e n im p r a c tic a b le to a tte m p t s u c h a s e g r e g a tio n .
A s n o te d in th e n e x t, m o s t o f th e c o m m o d itie s p r o c u r e d a b r o a d b y th e G o v e r n ­
m e n t w e r e r e s o ld to p r iv a t e in d u s t r y in t h is c o u n tr y .
A lth o u g h t h e fin a l e x p e n d i­
tu re w a s

n o t,

th e r e fo r e ,

th e

G o v e r n m e n t tr a n s a c tio n s

G o v e r n m e n t ’s , a l l

in

th e

su ch

p u rch ases

w ere

c o n s id e r e d

sta te m e n t.

A ll g o o d s a n d s e r v ic e s tr a n s fe r r e d u n d e r le n d -le a s e
in c lu d e d in th e G o v e r n m e n t s e c to r o f t h e a c c o u n ts .

or

r e c ip r o c a l

a id

w ere

F in a lly , i t s h o u ld b e n o t e d t h a t th e d e fin itio n o f G o v e r n m e n t e m p lo y e d h e r e in
d iffe r s fr o m t h a t u s e d in th e n a t io n a l p r o d u c t s e r ie s , w h e r e G o v e r n m e n t c o r p o r a ­
tio n s a n d

c e r ta in

o th e r a g e n c ie s

are

trea ted

a s b u s in e s s e s .

G e o g r a p h ic a l C o v e r a g e
T r a n s a c t io n s b e tw e e n r e s id e n t s o f t h e U n it e d S t a t e s a n d t h e r e s t o f t h e w o r ld
a r e m e a s u r e d in th e e s t im a t e s o f th e b a la n c e o f p a y m e n ts .
T h e te r m “ U n ite d
S t a t e s ” in c lu d e s t h e c o n t in e n t a l U n it e d S t a te s , A la s k a , H a w a ii, P u e r to R ic o ,
th e V ir g in I s la n d s , th e P a n a m a C a n a l Z o n e , A m e r ic a n S a m o a , a n d c e r t a in m in o r
A m e r ic a n is la n d s in th e P a c ific . T h is d o e s n o t a g r e e w it h th e t e r r it o r ia l c o v e r a g e
f o r n a t io n a l in c o m e a n d p r o d u c t s t a t is t ic s , w h ic h in c lu d e s o n ly t h e 4 8 S t a t e s
a n d t h e D is t r ic t o f C o lu m b ia .
N e v e r t h e le s s , t h e “ n e t f o r e ig n in v e s t m e n t ” fig u r e
in th e g r o s s n a t io n a l p r o d u c t t a b le is b a s e d o n t h e d e fin itio n o f U n it e d S t a te s
set

fo r th

h e r e in ,

w ith

an

a d ju stm e n t,

d u r in g

th e

w ar

e x p e n d it u r e s in t h e t e r r ito r ie s .
T h e te r m “ r e s id e n t s ” in c lu d e s a ll “p e r s o n s ” o r d in a r ily
S ta te s , in c lu d in g :
1. T h e F e d e r a l G o v er n m en t, a n d

a ll

years,

fo r

G overnm ent

r e s id e n t in

S ta te , m u n ic ip a l, a n d

th e U n ite d

te r r ito r ia l g o v e r n ­

m e n ts.
2 . A ll d o m e s t ic c o r p o r a tio n s , e x c e p t t h a t f o r e ig n b r a n c h e s o f s u c h c o r p o r a tio n s
a r e c o n s id e r e d a s f o r e ig n a n d n o t d o m e s tic e n t it ie s .
3 . A ll U n it e d S t a t e s b r a n c h e s o f f o r e ig n c o r p o r a tio n s .
4 . A ll in d iv id u a ls o r d in a r ily d o m ic ile d in th e U n it e d
in g f o r f o r e ig n e m p lo y e r s .
5 . A m e r ic a n c it iz e n s m o r e
by

th e

or

F e d e r a l G o v er n m en t.

le s s

T h is

p e r m a n e n tly
in c lu d e s

S ta te s e x c e p t a lie n s w o r k ­

r e s id in g

m em b ers

of

abroad,

th e

arm ed

if

e m p lo y e d
fo rces

and

t h e ir d e p e n d e n ts a c c o m p a n y in g th e m .
6. A lie n s t e m p o r a r ily a d m it t e d to t h e U n it e d S t a t e s i f e m p lo y e d in t h e U n it e d
S t a t e s b y a n A m e r ic a n e m p lo y e r .
T h is c o r r e s p o n d s to th e d e fin itio n a d o p te d
f o r in c lu s io n in t h e n a t io n a l in c o m e s t a t is t ic s .
e r s im p o r te d

d u r in g

th e

w ar

th u s b eca m e

M e x ic a n

r e s id e n ts fo r

T h e fo llo w in g a r e n o t r e s id e n ts o f t h e U n ite d
p u rp oses:
1 . E m b a s s ie s , le g a tio n s , a n d

a n d W e s t I n d ia n

w ork­

s ta tis tic a l p u r p o se s.

S t a te s f o r b a la n c e -o f-p a y m e n ts

c o n s u la te s o f fo r e ig n

g o v e r n m e n ts , in te r n a tio n a l

o r g a n iz a tio n s , a n d th e a lie n e m p lo y e e s o f s u c h in s tit u t io n s .
2 . A lie n s a d m it te d t o t h e U n it e d S t a t e s f o r te m p o r a r y p e r io d s , u n le s s e m p lo y e d
in th e U n ite d S t a te s b y a r e s id e n t th e r e o f.
3 . A m e r ic a n c itiz e n s p e r m a n e n tly r e s id in g
U n ite d S t a te s G o v e r n m e n t.
4 . F o r e ig n b r a n c h e s (a n d

abroad,

o f c o u r s e s u b s id ia r ie s )

u n le s s

e m p lo y e d

o f A m e r ic a n

by

th e

c o r p o r a tio n s .

167

D e fin itio n

o f Ite m s I n c lu d e d

in

th e A c c o u n ts

G oods
A ll m o v a b le

go o d s, th e

title

to

w h ic h

changes

hands

in te r n a tio n a lly ,

are

in ­

c lu d e d u n d e r t h is h e a d in g , in c lu d in g a s im p o r ts g o o d s a c q u ir e d a b r o a d b y a n
A m e r ic a n r e s id e n t ( e s p e c ia lly t h e F e d e r a l G o v e r n m e n t, s e e a p p e n d ix B , p . 1 7 4 )
e v e n i f n o t p h y s ic a lly im p o r te d .
G o o d s g iv e n a w a y a r e in c lu d e d , a s w e ll a s
g o o d s e x p o r t e d t o b e in c o r p o r a te d in a f o r e ig n b r a n c h p la n t b y t h e e x p o r t e r ( t h e
f o r e ig n b r a n c h to w h ic h s u c h g o o d s a r e “ s o ld ” is n o t a
our

d e fin itio n ).

G oods

s h ip p e d

on

c o n s ig n m e n t

in t h e s t a t e m e n t u n t il t h e y a r e a c t u a lly s o ld .
I

T h e v a lu e s o f b o th

are

U n ite d S t a t e s r e s id e n t b y
th e o r e tic a lly

not

r e fle c te d

S ilv e r is in c lu d e d .

e x p o r ts a n d im p o r ts a r e t h e v a lu e s a t th e f r o n t ie r

or port

I o f e x p o r t in t h e e x p o r t in g c o u n t r y ; a n y f r e ig h t p a y m e n t s in v o lv e d a r e h a n d le d
' in t h e f r e ig h t a n d s h ip p in g a c c o u n t.
D o m e s t ic g o ld p r o d u c tio n in e x c e s s o f
n o n m o n e ta r y

u se

of

g o ld

in d u s t r ia l c o n s u m p tio n

is

sh ow n

exceed ed

as

a

m e r c h a n d is e

ex p o rt;

d o m e s tic p r o d u c tio n , s u c h

in

excess

years
is

w hen

tr ea ted

as

a n im p o r t ( s e e s e c t io n in t h is a p p e n d ix , N o t e o n T r e a t m e n t o f G o ld in t h e B a la n c e
o f P a y m e n ts).

I n c o m e o n I n v e s tm e n ts
A ll

in te r e s t,

p e r io d

are

d iv id e n d s ,

sh ow n

r e fle c te d , e v e n

in

th is

th o u g h

and

p r o fits

a c c o u n t.

th ey

e ffe c tiv e ly

T h u s,

a r e m e r e ly

p a id

d iv id e n d s

c r e d ite d

to

or

c r e d ite d

d e c la r e d

an

and

d u r in g

th e

p a y a b le

are

in te r c o m p a n y

a cc o u n t so

t h a t n o a c tu a l fo r e ig n e x c h a n g e tr a n s a c tio n ta k e s p la c e .
E a r n in g s o f s u b s id ia r ie s
n o t d is tr ib u te d a s d iv id e n d s a r e n o t in c lu d e d , b u t a ll b r a n c h p r o fits a r e in c lu d e d
w h e n e v e r t h e y a r e c o m p u t e d a n d c r e d it e d t o t h e h o m e o ffic e a c c o u n t .
S in c e so m e
c o r p o r a tio n s c lo s e th e ir b o o k s m o n th ly o r q u a r te r ly a n d o th e r s o n ly s e m ia n n u a lly
or

a n n u a lly ,

th e

q u a r te r ly

d is tr ib u tio n

of

branch

p r o fits

is

c o r r e s p o n d in g ly

a ffe c te d .
I n c o m e f r o m t r u s t s a n d e s t a t e s h a s b e e n a r b i t r a r i l y c l a s s if ie d a s “ i n t e r e s t ” in
t h e a c c o u n t, a lth o u g h it m a y o r ig in a lly h a v e c o n s is t e d o f d iv id e n d s , in te r e s t , r e n ts ,
o r e v e n c a p ita l g a in s .
a r e in c lu d e d .

P a y m e n ts a n d r e c e ip ts b y th e U n ite d

S ta te s G o v ern m en t

T r a n s p o r ta tio n
T h is a c c o u n t in c lu d e s a ll in te r n a t io n a l p a y m e n ts a n d r e c e ip ts a r is in g o u t o f th e
in te r n a t io n a l m o v e m e n ts o f g o o d s a n d p e r s o n s , s p e c ific a lly : ( 1 ) F r e ig h t a n d p a s ­
s e n g e r r e v e n u e s p a id b y A m e r ic a n s to fo r e ig n a ir a n d o c e a n c a r r ie r s a n d s im ila r
r e v e n u e s r e c e iv e d b y A m e r ic a n c a r r ie r s fr o m f o r e ig n e r s , ( 2 ) e x p e n d it u r e s o f
A m e r ic a n c a r r ie r s in f o r e ig n p o r ts a n d f o r e ig n c a r r ie r s in A m e r ic a n p o r ts , ( 3 )
reven ues and
c o u n try , a n d
g o o d s (b u t n o
A ll fr e ig h t

e x p e n d it u r e s in C a n a d a o f A m e r ic a n r a ilr o a d s o p e r a t in g in t h a t
( 4 ) r e v e n u e s r e c e iv e d b y A m e r ic a n r a ilr o a d s f o r h a u lin g f o r e ig n
t p a s s e n g e r s ) in t r a n s it th r o u g h t h e U n ite d S ta te s .
r e v e n u e s o n e x p o r ts a n d im p o r ts a r e c o n s id e r e d to b e p a y m e n ts

b y th e im p o r te r , s in c e b o th e x p o r t s a n d im p o r ts a r e v a lu e d , f o r a ll p r a c tic a l
p u r p o s e s , o n a n f . o . b ., p o r t o f s h i p m e n t , b a s i s .
T h u s e v e n if , s a y , a n e x p o r t is
b i l l e d o n a c. i. f . b a s i s , w i t h t h e e x p o r t e r p r e p a y in g t h e f r e i g h t , t h e t o t a l p a y m e n t
b y t h e f o r e ig n im p o r te r is d iv id e d b e tw e e n t h e m e r c h a n d is e a n d s h ip p in g a c c o u n ts .
T h r e e ite m s w h ic h
f o r la c k

s h o u ld

o f a d e q u a te d a ta

t h e o r e t ic a lly h a v e b e e n in c lu d e d

on

w h ic h

to

b a se

an

e s tim a te .

h a v e been

T he

m ost

o m itte d

im p o r ta n t

is th e p e r s o n a l e x p e n d itu r e s o f m e r c h a n t s e a m e n , w h ic h , p a r tic u la r ly d u r in g th e
w a r , c o u ld

e a s ily

o n d , fr e ig h t
of

o r ig in

has

on

have

U n ite d

n o t been

a m o u n te d
S ta te s

to

ten s

im p o r ts

e s tim a te d ; a n

o f m illio n s

tr a v e lin g
e x a m p le

o f d o lla r s

o v e r la n d

w o u ld

be

a n n u a lly .

o u ts id e
fr e ig h t

th e
to

F ren ch

I t a lia n r a ilr o a d s f o r h a u lin g S w is s g o o d s in t r a n s it to t h e U n it e d S t a t e s .
m a r in e

cargo

in s u r a n c e h a s

n ot been

in c lu d e d .

P r e m iu m s o n

export

Sec­

co u n try
or

F in a lly ,
cargo

in ­

s u r a n c e p la c e d in t h e U n it e d S t a t e s a n d o n im p o r t c a r g o in s u r a n c e p la c e d a b r o a d
c o n s t it u t e in te r n a t io n a l p a y m e n ts a n d r e c e ip ts , r e s p e c tiv e ly , b u t t h e r e a r e n o
a v a ila b le d a t a r e g a r d in g t h e p r o p o r tio n o f e it h e r e x p o r t s o r im p o r t s in s u r e d
in th e A m e r ic a n m a r k e t.

T ravel
A ll e x p e n d it u r e s o f A m e r ic a n

r e s id e n ts w ith in

fo r e ig n

c o u n t r ie s a r e r e fle c te d

in t h is a c c o u n t, a lt h o u g h s o m e o f th e m o b v io u s ly r e p r e s e n t t h e p u r c h a s e o f g o o d s
in s te a d o f s e r v ic e s .
P a y m e n ts to in te r n a tio n a l o c e a n o r a ir c a r r ie r s o r e x -

168

p e n d itu r e s
in

on

board

th e fo r m e r

t h e tr a n s p o r ta tio n

son n el are
co u n t.

are

a c c o u n t.

n o t in c lu d e d

n o t in c lu d e d ;

su ch

E x p e n d itu r e s o f U n ite d

h e r e b u t in

th e

p a y m e n ts
S ta te s

are

r e fle c te d

G overnm ent p er­

G o v e r n m e n t m is c e lla n e o u s

s e r v ic e s

ac­

O b v io u s ly , h o w e v e r , b o th c o n s u m e r -fin a n c e d a n d b u s in e s s -fin a n c e d t r a v e l

a r e in c lu d e d .

M is c e lla n e o u s S e r v ic e s
T h is a c c o u n t in c lu d e s r e c e ip ts a n d p a y m e n ts f o r a ll o th e r s e r v ic e s n o t a lr e a d y
d is c u s s e d .

T h e p r in c ip a l ite m s

in c lu d e d

are

d e fin e d

b r ie fly

as

fo llo w s :

P r iv a te T ra n sa ctio n s
1 . M o tio n -p ic tu r e r o y a ltie s .— T h e s e a r e th e p r o d u c e r s ’ s h a r e o f r e n ta l r e c e ip ts
r e s u ltin g fr o m

t h e e x h ib itio n

o f A m e r ic a n

film s a b r o a d

and

fo r e ig n

film s in

th e

U n ite d S ta te s .
2 . I n s u r a n c e .— T h i s
o p e r a tio n

of

c o m p a n ie s

fo r e ig n

abroad,

d ir e c t w r it in g

or

in c lu d e s

a ll

in s u r a n c e
e ith e r

in te r n a t io n a l

c o m p a n ie s

th r o u g h

r e in s u r a n c e

in

branches

w ith

p a y m e n ts

th e

U n ite d

or

r e s u ltin g

S ta te s

s u b s id ia r ie s ,

n o n a d m itte d

c o m p a n ie s .

and
In

fro m

and

th e

A m e r ic a n

fro m

e ith e r

fu tu r e

s tu d ie s ,

i t is p la n n e d t o t r e a t in s u r a n c e b r a n c h e s a n d s u b s id ia r ie s in t h e s a m e m a n n e r a s
o th e r d ir e c t in v e s t m e n t s ; it w a s n o t p o s s ib le to c o m p le te th e n e c e s s a r y r e v is io n s
in t h e a c c o u n ts f o r t h is v o lu m e .
3 . C o m m u n ic a tio n s .— T h is c a t e g o r y

in c lu d e s

p a y m e n ts

r e s u ltin g

fro m

in te r ­

n a t io n a l c a b le , r a d io , a n d t e le p h o n e o p e r a t io n s .
I t in c lu d e s p a y m e n ts to a n d
f r o m f o r e i g n c o n n e c t io n s , a d v e r t i s i n g , o ffic e e x p e n s e s , a n d a l l o t h e r t r a n s a c t i o n s
o f c o m m u n ic a tio n s c o m p a n ie s , e x c e p t a s th e y m a y b e in c lu d e d
a c c o u n ts.
4 . C a s a n d e l e c t r i c i t y s a le s .— T h e s e t r a n s a c t io n s , a l l w it h
a r e in c lu d e d h e r e th o u g h t h e y m ig h t w ith
in th e m e r c h a n d is e a c c o u n t.
5. R e n ts

a n d r o y a ltie s .— O n ly n e t a m o u n t s p a id

branches

and

s u b s id ia r ie s

as

C a n a d a a n d M e x ic o ,

e q u a l j u s t ific a tio n h a v e b e e n in c lu d e d

6 . H o m e o ffic e e x p e n s e s . — A m o u n t s c h a r g e d
e ig n

in t h e in v e s t m e n t

in te r n a tio n a lly

are

in c lu d e d .

b y p a r e n t c o m p a n ie s to

m anagem ent

fees,

th e ir fo r ­

a p p o r tio n m e n t

of

hom e

o ffic e e x p e n s e s , a n d s i m i l a r i t e m s a r e i n c lu d e d .
7. F o r e ig n g o v e r n m e n t a d m in is tr a tiv e e x p e n s e s in

th e U n ite d S ta te s .— A ll a r e

e x p e n s e s o f fo r e ig n g o v e r n m e n ts a n d in te r n a tio n a l o r g a n iz a tio n s o f a n

a d m in is ­

tr a tiv e c h a r a c te r , a n d

th is

r e c e ip t s ite m

th e

e x p e n d itu r e s o f t h e ir p e r s o n n e l.

O b v io u s ly

is a

o n ly .

G o v ern m en t T ra n sa ctio n s
A ll e x p e n d itu r e s a n d r e c e ip ts o f F e d e r a l a g e n c ie s a n d t h e ir p e r s o n n e l a b r o a d
fo r th e p u r c h a s e o f s e r v ic e s .
I n c lu d e s a ll c o s ts , in c lu d in g m a te r ia ls , o f in s t a lla ­
t io n s

abroad,

w h ic h

have

except

been

th o se

trea ted

in s ta lla tio n s

as

of

in v e s tm e n ts .

tr a n s a c tio n s f o llo w s :
P a y m e n ts .- — 1 . E x p e n d it u r e s

of

tr o o p s

U n ite d S t a te s G o v e r n m e n t a b r o a d .
2 . W a g e s a n d s a la r ie s to fo r e ig n

an

A

and

in c o m e -p r o d u c in g

p a r tia l
o th e r

lis t

of

ch a r a c te r ,

s p e c ific

A m e r ic a n

ty p es

e m p lo y e e s

a

c r e d it e n tr y

in

th e

u n ila te r a l

tra n sfer

R e c e ip ts .— 1 . T r a n s p o r ta t io n
f u r n is h e d

and

under

c o m m u n ic a tio n

le n d - le a s e ,

s e r v ic e s

excep t

th o se

in s ta lla tio n s ,
c o n s tr u c tio n .

par­

fu r n is h e d

fo r ­

in c lu d e d

in

a n d s h ip p in g a c c o u n t.
I t s h o u ld b e n o te d th a t, in th e o r y a t le a s t , a ll t r a n s a c t io n s b e tw e e n
fo r c e s a n d th e m e m b er s th e r e o f, o r
d o m e s tic e n tity , h a v e b e e n e x c lu d e d .
exchanges

lo c a te d

abroad, fo r

are, o f

a c c o u n t.

5. A s in d ic a te d a b o v e , e x p e n d itu r e s fo r “ n o n p r o d u c tiv e ”
t ic u la r ly c a n to n m e n ts , a ir fie ld s , a n d o th e r t y p e s o f m ilit a r y
e ig n e r s .
2.
S e r v ic e s

th e

la b o r .

3 . P u r c h a s e s o f tr a n s p o r ta tio n a n d o th e r c o m m u n ic a tio n s s e r v ic e s .
4 . A ll s e r v ic e s f u r n is h e d t h e a r m e d f o r c e s a s r e c ip r o c a l a id .
T h ese
c o u rse , o ffse t b y

of

of

to
th e

fr e ig h t

th e a rm ed

b e tw e e n s u c h m e m b e r s a n d a n y o th e r
A m e r ic a n -m a d e g o o d s s h ip p e d t o p o s t

in s ta n c e , a r e

n o t c o n s id e r e d

ex p o rts fo r

b a la n c e -

o f-p a y m e n ts p u rp o ses.

U n ila te r a l T r a n s fe r s
A ll t r a n s f e r s o f v a lu e , in
c a p ita l
in c lu d e d

a ssets,
in

not

th is

7 6 9 1 5 5 — 48-

th e fo rm

a c c o m p a n ie d

a c c o u n t.

■ 12

A

by

d e b it,

of goods
a

q u id
or

p ro

and

s e r v ic e s o r m o n e y

quo

p a y m e n ts,

in

one

e n tr y

of

th o se

in d ic a te s

a n d o th e r
fo r m s
a

are

tra n sfer

169

fro m
t h e U n ite d S t a t e s to f o r e ig n c o u n tr ie s .
A s in d ic a te d in th e t e x t, t h e
a c c o u n t in c lu d e s p e r s o n a l a n d in s tit u t io n a l r e m itta n c e s , le n d -le a s e a n d r e c ip ­
r o c a l a id , r e p a r a tio n s , c iv ilia n
la r

ite m s

not

r e q u ir in g

s u p p lie s f u r n is h e d

r e im b u r s e m e n t

or

m e n t a r e n o t s u ffic ie n tly c le a r to j u s t if y

th e

w here

o c c u p ie d a r e a s ,

th e

r e c o g n itio n

c o n d itio n s

of

o f t h e c r e a tio n

and

s im i­

r e im b u r s e ­
of a

c a p ita l

a sset.

L o n g -T e rm
C hanges
o r ig in a l
a sse ts

in

c a p ita l

m a tu r ity

(U n ite d

in v e s t m e n ts

in

a ssets

of

lo n g e r

S ta te s
th e

of

C a p ita l M o v e m e n ts

in d e fin ite

th a n

1

in v e s tm e n ts

U n ite d

m a tu r ity

year

c o m p r is e

abroad)

S ta te s)

are

or

(e.

g .,

th is

d ecreases

p a y m e n ts,

or

e q u itie s )

a c c o u n t.
in

d e b it,

or

of

an

In crea ses

lia b ilitie s
ite m s .

in

(fo r e ig n

C o n v e r s e ly ,

d e c r e a s e s in a s s e t s o r in c r e a s e s in lia b ilit ie s a r e r e c e ip t s , o r c r e d it, it e m s .
E x c e p t f o r t r a n s a c t io n s in o u t s t a n d in g s e c u r itie s , t h e e n t r ie s a r e la r g e ly o n
a g r o s s b a s is .
I n m a n y c a s e s , f o r e x a m p le , le n d -le a s e a n d s u r p lu s p r o p e r ty
c r e d its ,

th e

w ith

fo r e ig n

no

c a p ita l

m ovem ent

exchan ge

is

a

d ir e c t

tr a n s a c tio n

o ffse t

b e in g

to

th e

in v o lv e d .

ite m s a r e :
1 . N e w f o r e ig n is s u e s , in c lu d in g G o v e r n m e n t
2 . A m o r t iz a t io n o f o u t s t a n d in g lo a n s .

and

m ovem ent

Som e

p r iv a te ly

of

th e

p la c e d

3. P u r c h a s e s a n d s a le s o f o u ts ta n d in g b o n d s a n d sto c k s.
4. M o v e m e n ts o f d ir e c t- in v e s tm e n t c a p ita l, in c lu d in g c h a n g e s in

of

good s,

p r in c ip a l
lo a n s .

in te r c o m p a n y

a c c o u n ts.
.
5. P u r c h a s e s a n d s a le s o f r e a l e s t a t e a n d o th e r m is c e lla n e o u s c a p ita l a s s e ts .
6.

C h a n g es fro m

d o m e s tic to f o r e ig n

le g a c ie s , r e p a r a tio n s , u n c o m p e n s a te d
c a s e s , a n o ff s e t t in g e n tr y w o u ld

o f c a p ita l a s s e ts d u e to g ifts ,
s im ila r

cases.

In

th ese

a p p e a r in t h e u n ila t e r a l a c c o u n t.

S h o r t-T e r m
T h e sh o r t-te r m

o w n e r s h ip

le g a l s e iz u r e , a n d

C a p ita l M o v e m e n ts

c a p ita l a c c o u n t in c lu d e s a ll in te r n a t io n a l c la im s p a y a b le w ith in

1 5m a r .
P r iv a te s h o r t-te r m
c o m m e r c ia l p a p e r , s h o r t-te r m

c la im s c o m p r is e b a n k d e p o s its , b ills , a c c e p ta n c e s ,
S t a te a n d m u n ic ip a l o b lig a tio n s , b r o k e r a g e b a la n c e s ,

c o m m e r c ia l d e p o s its

abroad

fo r

vance

m e r c h a n d is e ,

p a y m e n ts

fo r

th e

d ir e c t

and

account

U n ite d

of

S ta te s

U n ite d

S ta te s

currency

and

fir m s ,
c o in s

ad­
h e ld

abroad.
F o r e ig n s h o r t-te r m c la im s o n th e U n ite d S t a te s G o v e r n m e n t in c lu d e
h o ld in g s o f U n ite d S t a t e s G o v e r n m e n t s h o r t-te r m o b lig a tio n s , d e p o s its w it h th e
T r e a s u r y , a n d v a r io u s c la im s a r is in g o u t o f th e p r o v is io n o f c u r r e n c y f o r e x ­
p e n d itu r e s b y o u r a r m e d fo r c e s .
U n ite d S t a te s G o v e r n m e n t s h o r t-te r m c la im s
o n fo r e ig n e r s in c lu d e h o ld in g s o f fo r e ig n
ous advances and

c u r r e n c ie s , d e p o s it s

abroad, an d

v a r i­

s e ttle m e n ts .

G o ld
T h e g o ld e n tr ie s in th e b a la n c e o f p a y m e n ts a r e in b o th th e c u r r e n t a n d th e
“ s h o r t-te r m c a p it a l a n d g o ld ” a c c o u n ts .
I n th e c u r r e n t a c c o u n t, m e r c h a n d is e
e x p o r t s o r im p o r t s a r e a d j u s t e d b y n e t d o m e s t ic g o ld p r o d u c tio n o r c o n s u m p ­
tio n .
N e t p r o d u c tio n is a r e c e ip t a n d n e t c o n s u m p tio n i s a p a y m e n t.
In th e
sh o r t-te r m
ta r y

g o ld

c a p ita l a n d
sto ck

S ta b iliz a tio n

o f th e

Fund

a p p e n d ix , N o te o n

(se e

g o ld

a cco u n t is

U n ite d

e n te r e d

S t a te s , in c lu d in g

th e

a p p p e n d ix B , p . 1 9 1 ), a n d

t h e T r e a t m e n t o f G o ld

in

a n n u a l c h a n g e in

ch an ges

in

th e

t h e f o llo w in g

th e B a la n c e

th e m o n e­

h o ld in g s
s e c tio n

of

th e

o f th is

o f P a y m e n ts).

N o t e o n T r e a t m e n t o f G o ld i n t h e B a la n c e o f P a y m e n t s
I n t h is v o lu m e a m e th o d f o r e n te r in g g o ld t r a n s a c t io n s h a s b e e n a d o p te d
w h ic h d iffe r s fr o m t h a t u s e d h e r e to fo r e in t h e U n it e d S t a t e s b a la n e e -o f-p a y m e n ts sta te m e n ts.
T h e S u b c o m m itte e o n B a la n c e
o f P a y m e n ts S ta tis tic s o f
t h e L e a g u e o f N a tio n s p r o p o s e d in D e c e m b e r 1 9 4 5 t h a t n e t c u r r e n t g o ld p r o ­
d u c tio n ( o r c o n s u m p tio n ) s h o u ld a p p e a r a s a c r e d it ( d e b it ) in th e c u r r e n t a c ­
c o u n t o f t h e b a la n c e o f p a y m e n ts , w h ile a n in c r e a s e (o r d e c r e a s e ) in t h e m o n e ­
t a r y g o ld s to c k o f a n a t io n
sh o r t-te r m c a p ita l a c c o u n t.

s h o u ld
S in c e

a p p e a r a s a d e b it ( c r e d it ) in t h e g o ld
th e d iffe r e n c e b e tw e e n n e t p r o d u c tio n

and
and

t h e c h a n g e in t h e g o ld s t o c k is e q u a l to t h e n e t in t e r n a t io n a l g o ld m o v e m e n t, t h e
u s e o f t h e s u g g e s te d m e th o d d o e s n o t r e s u lt in a n y n e t c h a n g e in t h e b a la n c e
o f p a y m e n ts a s a w h o le , a s id e fr o m p o s s ib le d iffe r e n c e s in th e “ e r r o r s a n d o m is ­

170

s io n s ”

in v o lv e d

in

th e

a lte r n a tiv e

m e th o d s

of

e s tim a tio n

(see

a p p e n d ix

B,

p.

1 9 1 ).
T h e f u n d a m e n t a l c r it ic is m o f t h e o ld e r m e th o d is t h a t, s in c e a ll g o ld t r a n s a c ­
t io n s w e r e lu m p e d in t o o n e g r o u p ir r e s p e c t iv e ly o f w h e t h e r t h e g o ld m o v e d
r e p r e s e n te d a m e r c h a n d is e tr a n s a c tio n (s u c h a s e x p o r t o f n e w ly m in e d g o ld ) o r a
c h a n g e in g o ld h o ld in g s , a c lo s e e s t im a t e o f t h e c u r r e n t b a la n c e -o f -p a y m e n ts p o s i­
t io n w a s n o t p r o v id e d .
T h is o b v io u s ly is t r u e o f a c o u n tr y w h ic h e x p o r t s it s
g o ld

p r o d u c tio n , a n d

g o ld

sto ck .

In

th e

is

e q u a lly

la tte r

c o n d itio n s , a c u r r e n t c la im
o r n o t.

case,

tru e

of a

current

co u n try

net

g o ld

w h ic h

adds

p r o d u c tio n

is ,

th e

g o ld

under

to

its

p resen t

a g a in s t th e g o o d s o f o th e r n a tio n s w h e th e r e x p o r te d

I t m ig h t b e s a id t h a t w h e n

a c o u n tr y c h o o se s n o t to e x p o r t its c u r r e n t

g o ld p r o d u c tio n t h is is e q u iv a le n t to a n o u tflo w o f c a p ita l.
T h is is r e c o g n iz e d
in t h e m e th o d n o w b e in g u s e d , s in c e t h e in c r e a s e in g o ld s to c k is e n te r e d a s a
d e b it j u s t a s w o u ld b e a n o u tflo w

o f c a p ita l.

f

17Ï

A p p e n d ix B

M e th o d o lo g y a n d S o u r c e s o f D a ta
M e r c h a n d ise T r a d e
B a s ic d a t a u s e d a r e t h e o ffic ia l U n it e d S t a t e s f o r e ig n t r a d e s t a t i s t i c s c o m p ile d
b y th e B u r e a u o f t h e C e n s u s o f t h e U n ite d S t a te s D e p a r tm e n t o f C o m m e r c e .

E x p o r ts
U n a d j u s t e d e x p o r t s a s s h o w n in t a b le 4 in c lu d e g o o d s o f b o th d o m e s t ic a n d
f o r e ig n o r ig in ( e x c e p t s h ip m e n ts to t h e U n it e d S t a t e s a r m e d f o r c e s ) .
C u sto m s
r e g u la t io n s r e q u ir e t h a t e x p o r t s b e d e c la r e d a t t h e ir v a lu e a t t h e p o r t o f e x ­
p o r ta t io n , i f p o s s ib le a t a c t u a l s e llin g p r ic e , o t h e r w is e a t c o s t to t h e e x p o r te r .
B e c a u s e o f o v e r s ig h ts a n d
s h ip p e r s , h o w e v e r , d e c la r e d

la c k o f c o m p le te in fo r m a tio n o n t h e p a r t o f th e
e x p o r t v a lu e s s o m e tim e s e x c lu d e c h a r g e s , s u c h a s

in la n d f r e ig h t a n d I n s u r a n c e , w h ic h b y d e fin itio n
p o r t o f e x p o r ta tio n v a lu e .
O n th e o th e r h a n d ,
f r e ig h t o n U n ite d

S ta te s e x p o r ts fr o m

d e s tin a t io n s , s o m e tim e s a r e w r o n g ly
th e

I

exact

e x te n t

of

th e

a r e c o m p o n e n ts o f th e f. o. b.
c e r ta in c h a r g e s , s u c h a s r a il

C a n a d ia n b o r d e r p o in ts to fin a l C a n a d ia n
in c lu d e d

d is c r e p a n c ie s

in

d e c la r e d

e x p o r t v a lu e s .

W h ile

b e tw e e n

d e c la r e d

and

export

sta tu to r y

v a lu e s is u n k n o w n , m a n y o f th e d iffe r e n c e s p r e s u m a b ly te n d to o ffs e t o n e a n o th e r .
E v e n in c a s e s w h e r e e x p o r t d o c u m e n ts a r e file d in s t r ic t c o n fo r m it y w it h c u s ­
to m s r e g u la t io n s , d e c la r e d v a lu e s s o m e tim e s d o n o t r e fle c t a c c u r a t e ly r e c e ip t s o n
a c c o u n t o f m e r c h a n d is e e x p o r ts .
I f g o o d s a r e e x p o r te d b e fo r e b e in g s o ld , f o r

i e x a m p le , t h e y a r e v a lu e d o n th e b a s is o f c o s t to t h e e x p o r te r .
I n p r a c tic e , s u c h
j v a lu e s m a y b e c o n s id e r a b ly d iffe r e n t th a n th e a m o u n ts a c t u a lly r e a liz e d th r o u g h
u lt im a t e s a le s .
W h ile t h e p o s s ib le in a c c u r a c ie s
v a lu e s f o r m e a s u r in g r e c e ip ts o n

r e s u ltin g fr o m
t h e u s e o f d e c la r e d e x p o r t
m e r c h a n d is e a c c o u n t a r e f u lly r e c o g n iz e d ,

l a c k o f c o m p l e t e i n f o r m a t i o n h a s t h u s f a r m a d e i m p o s s i b l e a l l o f tir e n e c e s s a r y
a d ju stm e n ts.
S o m e s u b s ta n tia l a d ju stm e n ts h a v e b e en m a d e, h o w e v e r , fo r
s h ip m e n ts w h ic h , f o r b a la n c e -o f-p a y m e n ts p u r p o s e s , s h o u ld b e a d d e d to o r d e ­
d u c te d fr o m re co rd ed e x p o r t s ta tis tic s .
A d d itio n s in c lu d e th e f o llo w in g ( s e e ta b le 4 , p . 1 5 ) :
1 . S h ip m e n t s o f s ilv e r o r e , b a s e b u llio n , r e fin e d b u llio n , a n d f o r e ig n c o in .
( M o v e m e n t s o f U n it e d S t a t e s c o in a r e r e c o r d e d in t h e c a p it a l a c c o u n t .)
2 . N e t d o m e s t ic g o ld p r o d u c tio n .
F o r a d is c u s s io n o f t h e r e a s o n s u n d e r ly in g
th e in c lu s io n

o f n e t d o m e s tic p r o d u c tio n

(o r

c o n s u m p tio n )

in

th e

m e r c h a n d is e

a c c o u n t, s e e p . 1 7 1 o f t h is a p p e n d ix .
3 . U n r e c o r d e d ite m s .
T h e s e in c lu d e c h ie fly t h e t r a n s f e r o f a ir p la n e s
c o u n tr y a n d s h ip m e n t s a b r o a d th r o u g h p a r c e l-p o s t c h a n n e ls .
4. T r a n s f e r s o f m e r c h a n d is e b y U n it e d
D e d u c tio n s in c lu d e :
1.

(/K

in

th is

S t a t e s G o v e r n m e n t a g e n c ie s .

E x p o r ts to th e P a n a m a C a n a l Z on e.

2 . N o n c o m m e r c ia l im p o r t s , s u c h a s h o u s e h o ld e ffe c ts .
3 . M e r c h a n d is e e x p o r te d b y U n ite d S t a t e s G o v e r n m e n t a g e n c ie s .
T h e m a jo r a d j u s t m e n t s to th e r e c o r d e d e x p o r t s t a t is t ic s in v o lv e d t h e s u b s t i­
t u tio n o f d a ta o n G o v e r n m e n t t r a n s f e r s fo r th o s e G o v e r n m e n t e x p o r ts k n o w n
to b e in c lu d e d in th e r e c o r d e d e x p o r t s t a t is t ic s , a n d t h e a d d it io n o f d a t a o n
G o v e r n m e n t t r a n s f e r s w h ic h w e r e k n o w n to b e e x c lu d e d fr o m r e c o r d e d e x p o r ts .
L e n d -le a s e t r a n s f e r d a t a c o m p ile d fr o m t h e r e g u la r c u m u la t iv e r e p o r ts o f th e
L e n d -L e a s e A d m in is tr a tio n w e r e p r o r a te d o n a n a n n u a l b a s is a c c o r d in g to th e
a n n u a l d is tr ib u tio n o f th e le n d - le a s e e x p o r t s t a t is t ic s .
I t w ill b e n o te d th a t th e
v a lu e o f le n d -le a s e t r a n s f e r s

172

(th e

a m o u n t o ffic ia lly c h a r g e d

to t h e r e c ip ie n t fo r -

e ig n

g o v er n m e n ts)

is s u b s ta n tia lly

in

e x c e ss o f th a t reco rd ed

fo r le n d -le a s e e x ­

p o r ts , n o t o n ly b e c a u s e t h e la t t e r a p p a r e n tly w e r e u n d e r v a lu e d b u t a ls o b e c a u s e
th ey

e x c lu d e d

tr a n s fe r s in

th e fie ld

o r d ir e c tly

fro m

o th e r f o r e ig n

so u rces an d

s o m e g o o d s s h ip p e d o n m ilit a r y t r a n s p o r t s f o r w h ic h n o e x p o r t d e c la r a tio n s w e r e
file d .
tio n s

I n t h e s a m e m a n n e r , U n ite d S t a te s t r a n s f e r s o f g o o d s to th e U n ite d N a ­
R e lie f a n d R e h a b ilita tio n A d m in is tr a tio n w e r e u s e d in p la c e o f U N R R A

e x p o r t s ; s u c h t r a n s f e r s in c lu d e g o o d s s u p p lie d fr o m o v e r s e a s t o c k s a n d fr o m
o th e r fo r e ig n s o u r c e s a s w e ll a s th o s e p h y s ic a lly e x p o r te d fr o m t h e U n ite d S ta te s .
P a r t ly b e c a u s e o f t h e d iffic u ltie s in v o lv e d in id e n t if y in g m ilit a r y s h ip m e n ts o f
c iv ilia n s u p p lie s t o lib e r a t e d a n d o c c u p ie d a r e a s u n d e r t h e “ d is e a s e a n d u n r e s t ”
p r o g r a m fr o m r e g u la r W a r a n d N a v y D e p a r tm e n t s h ip m e n ts f o r t h e u s e o f th e
a r m e d f o r c e s a b r o a d , n o e x p o r t d e c la r a t io n s w e r e r e q u ir e d f o r s u c h s h ip m e n t s .
T h e n e c e s s a r y d a t a w e r e o b ta in e d fr o m

t h e a g e n c ie s c o n c e r n e d th r o u g h t h e C le a r ­

i n g O ffic e f o r F o r e i g n T r a n s a c t i o n s ( D e p a r t m e n t o f C o m m e r c e ) .
T h e y in c lu d e
fie ld t r a n s f e r s a s w e ll a s s h ip m e n t s e a r m a r k e d f o r t h is p u r p o s e a t t h e t im e o f
e x p o r t fr o m th e U n ite d S ta te s .
D a ta
by

o n b o th

m ilita r y

t h e C l e a r i n g O ffic e .

and

p o r ts w e r e n e c e s s a r y , s in c e
s t o c k s in t h e fie ld .

n o n m ilita r y

F o r m ilita r y
th e

s a le s

a b r o a d w e r e lik e w is e

s a le s , n o d e d u c tio n s fr o m

goods

in v o lv e d

w ere

f u r n is h e d

th e reco rd ed e x ­

tr a n sfe r r e d

fro m

m ilita r y

F o r f o r e i g n s a l e s b y n o n m i l i t a r y a g e n c i e s , t h e C l e a r i n g O ffic e

d a t a w e r e s u b s t itu te d f o r a m o u n t s k n o w n to b e in c lu d e d in t h e o ffic ia lly r e c o r d e d
s ta tis tic s .
C h ie f s o u r c e s o f d a t a c o v e r in g s a le s o f s u r p lu s w a r p r o p e r ty w e r e
th e a c tu a l a g r e e m e n ts n e g o tia te d

w ith

th e p u r c h a s in g g o v e r n m e n ts a n d

r e p o r ts

o f th e d is p o s a l a g e n c ie s .

Im p o rts
U n a d ju sted

im p o r ts

are

“ g e n e r a l i m p o r t s ”— i n c l u d i n g

b o th

d ia t e c o n s u m p tio n a n d t h o s e g o in g in to b o n d e d w a r e h o u s e s .
W h ile c u s to m s r e g u la t io n s p r o v id e f o r t h e r e c o r d in g o f

e n tr ie s

im p o r t

fo r

im m e ­

v a lu e s ,

lik e

t h o s e f o r e x p o r t s , o n a n f . o . b ., f r o n t i e r o f t h e e x p o r t i n g c o u n t r y , b a s i s , 1 d e c l a r e d
im p o r t v a lu e s s o m e tim e s d o n o t r e fle c t a c t u a l p a y m e n ts m a d e .
I n d ic a tio n s a r e
t h a t d iffe r e n c e s b e tw e e n d e c la r e d v a lu e s a n d p a y m e n ts v a lu e s a r is e m o s t f r e ­
q u e n tly in t h e c a s e o f c o m m o d itie s f o r w h ic h d u t ie s a r e n o t le v ie d o n t h e b a s is
o f e n t r y v a lu e s — -g o o d s w h ic h a r e e it h e r d u t y - f r e e o r s u b j e c t to s p e c ific d u tie s .
I m p o r te r s o f s u c h g o o d s p r e s u m a b ly h a v e le s s in c e n tiv e t o e lim in a t e o c e a n f r e ig h t ,
m a r in e

in s u r a n c e ,

c o n s u la r

fe e s, a n d

o th e r

p o r te r s o f m e r c h a n d is e s u b je c t to a d v a lo r e m
A m ong
im p o r t

th e

v a lu e s

p r a c tic e s w h ic h
and

s o m e tim e s

a c tu a l p a y m e n ts

are

n o n d u tia b le c h a r g e s

r e s u lt in
th e

th a n

have

im ­

d u tie s .
d iffe r e n c e s b e tw e e n

a s s ig n m e n t

o f a r b itr a r y

record ed
v a lu e s

to

im p o r ts f r o m f o r e ig n s u b s id ia r ie s o r b r a n c h e s o f A m e r ic a n c o m p a n ie s , t h e a p ­
p r a is a l o f c o n s ig n m e n t s h ip m e n ts a t v a lu e s w h ic h m a y d iffe r fr o m e v e n tu a l s e ll­
in g p r ic e s , a n d u n in t e n t io n a l in c lu s io n s o f im p r o p e r c h a r g e s o r e x c lu s io n s o f
le g itim a te c h a r g e s .
W h ile p r e c is e in fo r m a tio n c o v e r in g a ll p o s s ib le d is c r e p a n ­
c ie s b e tw e e n d e c la r e d v a lu e s a n d v a lu e s w h ic h a r e a c c u r a te fr o m a b a la n c e -o fp a y m e n ts s ta n d p o in t is n o t a v a ila b le , c o r r e c tio n s (a d d itio n s o r d e d u c tio n s ) h a v e
b e en m a d e fo r t h o s e in a c c u r a c ie s w h ic h w e r e k n o w n to e x is t.
A d d itio n s
in c lu d e d
m a in ly
th o se
to
correct
u n d e r v a lu a tio n s
of
banana
im p o r ts — b a s e d u p o n t h e le v e l o f d o m e s tic w h o le s a le p r ic e s a f t e r a llo w a n c e fo r
f r e ig h t, in s u r a n c e , a n d o th e r c h a r g e s in c u r r e d in s h ip p in g t h e b a n a n a s f r o m t h e
f r o n tie r
and

o f t h e e x p o r tin g c o u n tr y

a d d itio n s

fo r

C a n a d ia n

to

in la n d

t h e p o in t o f a r r iv a l in
fr e ig h t

r e c e ip ts

t h e U n ite d

earned

on

S ta te s—

im p o r ts

fro m

C anada.
O th e r a d d it io n s to r e c o r d e d im p o r t d a t a in c lu d e :
1 . I m p o r t s o f s ilv e r o r e , b a s e b u llio n , r e fin e d b u llio n , a n d f o r e ig n c o in .
2 . N e t d o m e s t ic g o ld c o n s u m p tio n .
3 . P u r c h a s e s o f g o o d s b y U n ite d S t a t e s G o v e r n m e n t a g e n c ie s .
T h e d e d u c tio n s m a d e in c lu d e :
1. Im p o rts fro m

th e P a n a m a C a n a l Z on e.

1
S ee U . S . D e p a r tm e n t o f C o m m e rc e , B u r e a u o f th e C e n su s , A n n u a l R e p o r ts o f F o r e ig n
C o m m e rc e a n d N a v ig a tio n o f th e U n ite d S ta te s , E x p la n a tio n o f S ta tis tic s .
“ In g en era l
t h e v a l u e s h o w n is t h e f o r e i g n o r e x p o r t v a l u e , w h i c h e v e r i s h i g h e r a s p e r o n e o f t h e
fo rm u la e c o n ta in e d th e r e in .
*
*
*
T h e fo re ig n v a lu e o f th e im p o rte d m e rc h a n d is e
is th e m a r k e t v a lu e o r th e p ric e a t th e tim e o f e x p o r ta tio n o f s u c h m e r c h a n d is e to th e
U n ite d S ta te s , a t w h ic h s u c h o r s im ila r m e r c h a n d is e is f r e e ly o ffe re d f o r s a le f o r h o m e
c o n s u m p tio n to a l l p u r c h a s e r s in t h e p r in c ip a l m a r k e t o f th e c o u n tr y fr o m w h ic h e x p o rte d ,
in th e u s u a l w h o le s a le q u a n t iti e s a n d in th e o r d in a r y c o u rs e o f tr a d e .
*
*
*
In a d d i­
tio n , th e f o r e ig n v a lu e in c lu d e s a ll o th e r c o s ts , c h a rg e s , a n d e x p e n s e s in c i d e n t a l t o p la c in g
t h e m e r c h a n d is e in c o n d itio n , p a c k e d re a d y f o r s h ip m e n t to t h e U n ite d S ta te s .
* *
*
I f a n e x p o r t v a lu e , h ig h e r t h a n th e f o r e ig n m a r k e t v a lu e d e s c rib e d a b o v e , is e s ta b lis h e d
b y C u s to m s
*
*
*
t h e h ig h e r e x p o r t v a lu e is r e g a r d e d a s t h e v a lu e o f im p o rte d
m e r c h a n d is e .”

173

2 . N o n c o m m e r c ia l im p o r ts , s u c h a s h o u s e h o ld

e ffe c t.

3 . M e r c h a n d is e im p o r t e d b y U n it e d S t a t e s G o v e r n m e n t a g e n c ie s .
A s in t h e c a s e o f e x p o r ts , t h e m a jo r a d ju s tm e n ts w e r e m a d e in t h e G o v e r n m e n t
a c c o u n t. T h e s e in v o lv e d th e s u b s t itu tio n o f r e v e r s e le n d - le a s e d a t a c o m p ile d fr o m
r e p o r ts o f th e L e n d -L e a s e A d m in is t r a t io n f o r t h e r e la tiv e ly s m a ll p o r tio n o f
r e v e r s e le n d - le a s e g o o d s in c lu d e d in t h e r e c o r d e d im p o r t s t a t i s t i c s ; th e s u b s t itu ­
t i o n o f a d j u s t e d C l e a r i n g O ffic e f ig u r e s c o v e r i n g n o n m i l i t a r y p r o c u r e m e n t a b r o a d
a n d m ilit a r y p r o c u r e m e n t f o r im p o r t f r o m C a n a d a f o r r e c o r d e d G o v e r n m e n t
i m p o r t s ; t h e a d d i t i o n o f C l e a r i n g O ffic e d a t a c o v e r i n g m i l i t a r y p u r c h a s e s f o r
c o n s u m p tio n a b r o a d b y t h e U n it e d S t a t e s a r m e d fo r c e s ; a n d t h e a d d itio n o f o th e r
d a t a c o v e r in g m is c e lla n e o u s a c q u is itio n s o f m e r c h a n d is e a b r o a d b y th e U n ite d
S t a t e s G o v e r n m e n t w h ic h w e r e n o t in c lu d e d in t h e o ffic ia l im p o r t s t a t is t ic s .

T h e T r a n sp o r ta tio n A c c o u n t
T h e d e r iv a t io n o f t h e f r e ig h t a n d s h ip p in g e s t im a t e s m a y b e e x p la in e d w ith t h e
a id o f a

O cean

d e ta ile d s t a te m e n t o f th e c o m p o n e n t p a r ts ( s e e ta b le I ) . 2
fr e ig h t ( I te m s l a a n d 5 a ) .— E s t im a t e s o f e a r n in g s o f U n ite d

S ta te s

a n d f o r e ig n v e s s e ls in th e c a r r ia g e o f U n it e d S t a t e s fo r e ig n t r a d e d u r in g t h e w a r
w ere b a sed u p on to n n a g e a n d

ra te d a ta

s u p p lie d b y th e U n ite d

S t a t e s M a r itim e

C o m m is s io n a n d t h e W a r S h ip p in g A d m in is t r a t io n , a n d v a lu e d a t a fr o m t h e
B u r e a u o f t h e C e n s u s .3 E a r n in g s f o r 1 9 4 0 a n d 1 9 4 4 w e r e c o m p u t e d f r o m d e t a il e d
d a ta , b y a p p ly in g o c e a n f r e ig h t r a t e s to c o m m o d ity s h ip p in g w e ig h t s ,4 b r o k e n
d o w n b y c o n tr o l o f v e s s e l (U n ite d S ta te s , B r itis h , a n d o t h e r ) , tr a d e a r e a 5 o f
o r ig in a n d d e s tin a t io n , a n d , in 1 9 4 4 , b y t y p e o f t r a n s a c tio n , w h e t h e r le n d - le a s e
o r c o m m e r c ia l.
E a r n in g s f o r o th e r y e a r s o f A m e r ic a n

a n d fo r e ig n v e s s e ls

(b ro k en

dow n

la te r

in to A m e r ic a n , B r it is h , a n d o th e r ) w e r e d e r iv e d fr o m t h e m u lt ip lic a t io n o f to n ­
n a g e d a ta b y w e ig h te d a v e r a g e f r e ig h t r a te s .
F o r 1 9 4 1 , a d j u s t e d 1 9 4 0 o v e r -a ll
average

r a t e s w e r e a p p lie d

to

th e

1941

exp ort and

im p o r t to n n a g e t o t a ls .

1942 a n d 1943, to n n a g e s w e r e g ro u p ed b y tra d e a rea s, a n d

F or

th e r a te s w e r e b a sed

u p o n th e 1 9 4 0 a v e r a g e tr a d e -a r e a r a te s c o r r e c te d f o r y e a r ly r a t e tr e n d s .
F r e ig h t
e a r n in g s f o r 1 9 4 1 th r o u g h 1 9 4 3 w e r e th e n a d j u s t e d to a llo w f o r t h e c h a n g in g p r o ­
p o r tio n o f v a lu e o f f in is h e d m a n u f a c t u r e s t o t o t a l e x p o r t s a n d im p o r t s , r e s p e c ­
t iv e ly .
E a r n in g s f o r 1 9 4 5 , b y c o n tr o l o f v e s s e l, w e r e d e r iv e d b y m u lt ip ly in g t o n ­
n a g e t o t a ls f o r e a c h c o n tr o l, b a s e d u p o n 1 0 -m o n th d a ta , b y a d j u s t e d 1 9 4 4 a v e r a g e
f r e ig h t r a t e s f o r e a c h c o n tr o l.
T r a n s p o r ta t io n e a r n in g s w e r e d iv id e d in to le n d - le a s e a n d c o m m e r c ia l t r a n s ­
a c tio n s .
T h e d e ta ile d c a lc u la tio n f o r 1 9 4 4 s h o w e d le n d -le a s e a n d n o n -le n d -le a s e
e a r n in g s b y c o n tr o l o f v e s s e l.
L e n d -le a s e e a r n in g s b y A m e r ic a n a n d fo r e ig n
d r y c a r g o v e s s e ls ,0 r e s p e c t iv e ly , f o r t h e y e a r s 1 9 4 1 th r o u g h 1 9 4 3 , w e r e d e r iv e d
fr o m t o t a l e a r n in g s b y a p p ly in g p e r c e n ta g e s e s tim a te d a s f o llo w s :
E st. %

le n d -le a s e e a r n in g s to t o ta l

% v a lu e o f le n d -le a s e e x p o r t s to t o t a l

L e n d -le a s e a n d

(in 1 9 4 1 -4 2 -4 3 ) =

%

l e n d - l e a s e e a r n i n g s t o t o t a l ________

%

v a lu e o f le n d -le a s e e x p o r ts to to t a l ^

c o m m e r c ia l to n n a g e

d a ta

w ere

r e p o r te d

_

.

'
s e p a r a te ly

fo r

th e

fir s t

1 0 m o n th s o f 1 9 4 5 , b r o k e n d o w n b y c o n tr o l o f v e s s e l (U n ite d S ta te s , B r itis h , a n d
o t h e r ) , a n d s e p a r a t e e a r n in g s d a ta , th e r e fo r e , c o u ld b e e s t im a te d f o r th e w h o le
year.
T a n k e r e a r n in g s 0 w e r e

c o m p u te d

p in g A d m in is t r a t io n r a t e .o r d e r s )

by

a p p ly in g t a n k e r r a t e s

to e x p o r t a n d im p o r t to n n a g e s .

(fr o m

W ar

S h ip ­

W h ile d a ta fo r

194Ó , 1 9 4 4 , a n d 1 9 4 5 , b y t y p e o f t r a n s a c t io n a n d c o n tr o l o f v e s s e l, w e r e a d e q u a te ,
o m is s io n s in o th e r y e a r s n e c e s s it a t e d s o m e a r b itr a r y a d j u s t m e n t s .
G lo b a l A m e r ic a n v e s s e l f r e ig h t e a r n in g s w e r e f u r t h e r b r o k e n d o w n

in to

earn­

in g s w it h r e s p e c t to t h e s t e r lin g a r e a , C a n a d a , th e A m e r ic a n R e p u b lic s , a n d o th e r
c o u n tr ie s .
T h is w a s d o n e f o r 1 9 4 0 th r o u g h 1 9 4 4 b y a d d in g f r e ig h t e a r n in g s on

2 F o r la c k o f d a ta , n o e s tim a te s h a v e b e e n m a d e o f r e c e ip ts a n d p a y m e n ts a r is in g fro m
m o to r t r a n s p o r t o f f r e i g h t a c r o s s t h e C a n a d ia n a n d M e x ic a n b o r d e rs , o r fr o m r a i l o p e r a tio n s
a c r o s s th e M e x ic a n b o rd e r.
3 I n c lu d in g U n ite d

S t a t e s v e s s e l e a r n in g s o n in d ir e c t tr a d e .

* S ee te x t , p . 5 2 , f o o tn o te 7, f o r a p p lic a tio n o f f r e i g h t r a t e s q u o te d b y w e ig h t o r m e a s u re .
“ T r a d e a r e a s r e f e r r e d to in t h i s d is c u s s io n a r e g e o g r a p h ic a r e a s , a n d s h o u ld n o t b e
c o n fu s e d w it h t h e f o u r “ b i l a t e r a l ” a r e a s w it h r e s p e c t to w h ic h g lo b a l t r a n s p o r t a t i o n
e a rn in g s w ere b ro k e n dow n.
" D r y c a rg o a n d ta n k e r e a r n in g s r e f e r to f r e ig h t e a rn in g s o n s h ip m e n ts in d ry c a rg o a n d
t a n k e r v e s s e ls , r e s p e c t i v e l y .

174

dry

cargo

and

ta n k e r

tra d e

w ith

in d iv id u a l

c o u n tr ie s ;

and

th en , fo r

1945, by

a p p ly in g to t o t a l e a r n in g s p e r c e n ta g e s e s t im a t e d a s f o l l o w s ;
E st. %

a r e a e a r n in g s to t o t a l

..

% v a lu e o f tr a d e w ith a r e a to t o t a l '

%

a r e a e a r n in g s to to ta l

- r j ----- ------ — — - -- -- - — - - -- - -- - -- .
. . . (in 1 9 4 4 )
% v a lu e o f tr a d e w ith a r e a to to ta l
A r e a e a r n in g s w e r e f u r t h e r s u b d iv id e d in to le n d - le a s e a n d c a s h t r a n s a c tio n s .
G lo b a l e s t im a t e s o f f o r e ig n - v e s s e l e a r n in g s in t h e c a r r ia g e o f U n it e d S t a t e s
e x p o r t s a n d im p o r ts w e r e b r o k e n d o w n in to b ila t e r a l a r e a e a r n in g s in p r o p o r tio n
to t h e c a r g o to n n a g e ( e s t im a t e d f o r s o m e y e a r s ) c a r r ie d in v e s s e ls c o n tr o lle d
b y t h e c o u n tr ie s o f th e fo u r a r e a s c o n c e r n e d .
F o r b a la n c e - o f - p a y m e n t s p u r p o s e s , o n l y e a r n in g s o f U n it e d S t a t e s v e s s e l s in
c a r r y in g e x p o r ts

( a r e c e ip ts it e m )

a n d o f f o r e ig n v e s s e ls in c a r r y in g im p o r ts

(a

p a y m e n ts it e m ) w e r e in c lu d e d .
( F o r w a t e r - b o r n e f r e i g h t e a r n i n g s in c lu d e d in
a n d e x c lu d e d fr o m t h e b a la n c e o f p a y m e n ts , s e e ta b le I I .)
C o n tr a r y to t h e fla g o f- c a r r ie r m e th o d u s e d in p e a c e tim e , c o n tr o l o f o p e r a t io n w a s t h e c r ite r io n f o r
d is t in g u is h in g A m e r ic a n fr o m f o r e ig n s h ip s fr o m 1 9 4 2 th r o u g h 1 9 4 5 .
V e s s e ls
,

c o n s id e r e d A m e r ic a n in c lu d e d : ( 1 ) A m e r ic a n -o w n e d s h ip s , o ld a n d n e w , r e m a in in g u n d e r U n it e d S t a t e s c o n t r o l; ( 2 ) f o r e ig n s h ip s a llo c a t e d to A m e r ic a n c o n tr o l
b y t h e C o m b in e d S h ip p in g A d j u s t m e n t B o a r d ( J a n u a r y 1 9 4 2 -A u g u s t 1 9 4 4 ) a n d
b y t h e U n it e d M a r itim e A u t h o r it y ( A u g u s t 1 9 4 4 -M a r c h 1 9 4 6 ) ; ( 3 ) A m e r ic a n
v e s s e ls

b a r e b o a te d

to

e n e m y -o c c u p ie d

c o u n tr ie s

(so

t h a t t h e s e r v ic e s o f fo r e ig n

s e a m e n c o u ld b e u t iliz e d ) a n d t im e -c h a r te r e d b a c k b y t h e U n it e d S t a t e s ; ( 4 ) r e ­
q u is it io n e d s h ip s , w h e t h e r A m e r ic a n o r f o r e i g n ; a n d ( 5 ) c h a r t e r e d f o r e ig n s h ip s .
A m e r ic a n -o w n e d

v e s s e ls

a llo c a te d

to

fo r e ig n

c o n tr o l b y

th e

in te r n a t io n a l s h ip ­

p in g a u t h o r itie s , o r le n d -le a s e d to f o r e ig n c o u n tr ie s o n a “ c u s to d y a n d p o s s e s s io n ”
b a s is , w e r e c o u n te d fo r e ig n .
A ll o c e a n r e c e ip ts a n d p a y m e n ts w e r e c o n s id e r e d
G o v e r n m e n t t r a n s a c tio n s a f t e r th e fir s t q u a r te r o f 1 9 4 2 , s in c e c o n tr o l w a s v e s te d
in t h e W a r S h ip p in g A d m in is t r a t io n .

G r e a t L a k e s fr e ig h t (I te m s l b a n d 5 6 ) .— T h e f r e ig h t o n e x p o r ts a n d im p o r ts v ia
t h e G r e a t L a k e s w a s e s tim a te d

fro m

d a ta f u r n is h e d

by

th e C a n a d ia n

D o m in io n

B u r e a u o f S t a t is t ic s , t h e U . S . M a r itim e C o m m is s io n , a n d t h e B u r e a u o f t h e
C en su s.
T h e t o n n a g e d is tr ib u tio n b y A m e r ic a n a n d C a n a d ia n f la g w a s a v a ila b le
f o r a ll w a r y e a r s e x c e p t 1 9 4 3 a n d 1 9 4 4 , th e fig u r e s f o r w h ic h w e r e e s t im a te d o n th e
b a s is

o f s ta tis tic s

on

n e t to n n a g e

a c tu a l c a r g o d is tr ib u tio n in 1 9 4 5 .

o f v e s s e ls e n te r e d

and

c le a r e d

in

r e la tio n

to

A v e r a g e f r e ig h t r a t e s o n m a in c o m m o d itie s in

t h e G r e a t L a k e s t r a ffic b e t w e e n t h e U n it e d S t a t e s a n d C a n a d a , s u p p lie d b y t h e
L a k e C a r r ie r s ’ A s s o c ia t io n o f C le v e la n d , O h io , w e r e w e ig h t e d b y c o m m o d ity s h ip ­
p in g w e ig h ts , a n d th e n a p p lie d to a n n u a l to n n a g e d a ta .
A ir f r e ig h t ( I te m s l c a n d 5 c ) .— A ir -fr e ig h t e a r n in g s w e r e c o m p u te d
fo r

1945 fro m

C en su s

B u reau

d a ta

on

e x p o rts

to

and

im p o r ts

fro m

in

d e ta il

in d iv id u a l

c o u n t r ie s , a n d f r e i g h t r a t e s f ile d a t t h e C iv il A e r o n a u t ic s B o a r d a n d p u b lis h e d in
A ir T r a n s p o r ta tio n .
T h e 1 9 4 5 o v e r -a ll w e ig h t e d a v e r a g e r a t e s w e r e a p p lie d to
C e n s u s p o u n d a g e d a ta fo r 1 9 4 3 a n d 1 9 4 4 , a n d to e s tim a te d d a ta fo r 1 9 4 0 th r o u g h
1942.
E a r n in g s o n a ir e x p o r ts , 1 9 4 0 -4 4 , w e r e a llo c a t e d to b ila te r a l a r e a s a c c o r d ­
in g to th e 1 9 4 5 d is tr ib u tio n p a t te r n o f e a r n in g s , b y a r e a s .
A n n u a l m a il p a y re ­
c e iv e d b y U n it e d S t a t e s a ir lin e s d ir e c t fr o m f o r e ig n g o v e r n m e n t s in t h e A m e r ­
ic a n R e p u b lic s a r e a w a s in c lu d e d w it h f r e ig h t r e c e ip t s fr o m t h a t a r e a .
(M a ilp a y r e c e i p t s a n d p a y m e n t s b y t h e U . S . P o s t O ffic e D e p a r t m e n t w e r e i n c l u d e d i n
t h e G o v e r n m e n t m is c e lla n e o u s s e r v ic e s a c c o u n t.)
P a s s e n g e r fa r e s ( I te m s 2 a , 6 a n d 6 a , 6 ) .— F a r e r e c e ip ts a n d p a y m e n ts w e r e
e s t im a t e d in c o n n e c tio n w it h t r a v e l e x p e n d it u r e s , a n d in c lu d e d e x p e n d it u r e s o n
<r

board

th e

c a r r ie r

as

w e ll

as

fa r e

p a y m e n ts

proper.

T he

b a la n c e -o f-p a y m e n ts

it e m s c o n s is t o n ly o f f a r e s p a id t o U n it e d S t a t e s c a r r ie r s ( a r e c e ip ts it e m ) b y
fo r e ig n r e s id e n ts a n d f a r e s p a id to fo r e ig n c a r r ie r s ( a p a y m e n ts ite m ) b y U n ite d
S t a t e s r e s id e n ts .
T h e n u m b e r o f p a s s e n g e r s in e a c h c a t e g o r y , c o m p ile d b y
tr a v e l a rea ,

w as

m u ltip lie d

by

average

p assen ger

fa r es

(o b ta in e d

fr o m

tra v el

q u e s tio n n a ir e s ) w ith a n a d ju s tm e n t f o r th e a n n u a l e x c e s s o f d e p a r tu r e s o r a r r iv a ls
in t h e c a s e o f c itiz e n s a n d a lie n v is it o r s .
B e g in n in g w it h th e s e c o n d q u a r te r o f 1 9 4 2 , r e c e ip ts b y U n it e d
fro m

fo r e ig n

r e s id e n ts

w ere

c o n s id e r e d

G overnm ent

F a r e p a y m e n ts m a d e b y th e G o v er n m en t fro m

S t a t e s c a r r ie r s

tr a n s p o r ta tio n

r e c e ip ts .

1 9 4 0 th r o u g h 1 9 4 5 to fo r e ig n

car­

r ie r s w e r e s e g r e g a t e d f r o m t o t a l f a r e p a y m e n ts , a n d in c lu d e d in t h e m is c e lla n e o u s
s e r v ic e s a c c o u n t.

F a r e p a y m e n ts a r is in g fr o m

tr a v e l b e tw e e n th e U n ite d S ta te s

a n d C a n a d a a n d M e x ic o w e r e in c lu d e d in t h e t r a v e l a c c o u n t .

P o r t e x p e n d itu r e s

( I te m s 3 a , 6, c a n d 7 a , 6 , c ) .— O c e a n p o r t e x p e n d itu r e s o f

175

A m e r ic a n a n d f o r e ig n v e s s e ls w e r e r e s p e c t iv e ly e s t im a t e d a s fix e d p e r c e n t a g e s o f
t h e ir g r o s s r e v e n u e s o n th e c a r r ia g e o f f r e ig h t a n d p a s s e n g e r s t o a n d fr o m th e
U n it e d S t a t e s , a n d a ls o , in t h e c a s e o f A m e r ic a n v e s s e ls , o n t h e ir c a r r ia g e o f in d ir e c t tr a d e .
S e r v ic e s r e c e iv e d b y A m e r ic a r r v e s s e ls in f o r e ig n p o r t s u n d e r r e ­
v e r s e le n d -le a s e w e r e s u b tr a c te d fr o m t o t a l e s t im a t e s to g iv e c a s h p o r t e x p e n d i­
tu res.

T h e d iv is io n o f e x p e n d itu r e s o f f o r e ig n v e s s e ls in U n it e d S t a t e s p o r ts in to

le n d - le a s e (G o v e r n m e n t a c c o u n t) a n d c a s h it e m s w a s r e la t iv e ly a r b itr a r y .

B ila t­

e r a l p o r t e x p e n d it u r e s w e r e e s t im a t e d in p r o p o r tio n t o b ila t e r a l a r e a t r a n s p o r t a ­
t io n e a r n in g s , a n d f u r t h e r d iv id e d in t o le n d - le a s e a n d c a s h ite m s .
L a k e p o r t e x p e n d itu r e s

o f A m e r ic a n

and

C a n a d ia n

v e s s e ls

w ere

r e s p e c tiv e ly

e s t im a te d a s fix e d p e r c e n ta g e s o f t h e ir g r o s s r e v e n u e s .
A ir p o r t e x p e n d itu r e s o f
U n it e d S t a t e s s c h e d u le d a ir lin e s a b r o a d w e r e e s t im a te d f r o m C iv il A e r o n a u tic s
B o a r d d a ta .

R a i l t r a f f i c ( I t e m s Jf a , 6 a n d 8 a , h ) .— T h e s e e s t i m a t e s w e r e b a s e d u p o n i n ­
f o r m a t i o n f u r n i s h e d b y A m e r i c a n r a i l r o a d s o p e r a t i n g i n C a n a d a , M o o d y ’s S t e a m
R a ilr o a d s , C a n a d ia n G o v e r n m e n t p u b lic a tio n s , a n d D e p a r tm e n t o f C o m m e r c e d a ta
on

C a n a d ia n

S ta te s.

and

M e x ic a n

ex p o rts

and

im p o r ts

in

tr a n s it

th ro u g h

th e

U n ite d

A m e r ic a n r a ilr o a d r e c e ip t s in C a n a d a in c lu d e d f r e ig h t o n U n it e d

S ta te s

e x p o r t s a n d in t r a - C a n a d ia n t r a ffic c a r r ie d w i t h i n C a n a d a b y A m e r ic a n r a ilr o a d s .

Ta bl e I .— C o m p o s i t i o n

o f f r e i g h t a n d s h i p p i n g a c c o u n t , 19Jt 0 ~ 4 5

[In m illio n s of d ollars]
I te m

1940

RECEIPTS

-

1941

1942

1943

1944

1945

1. F r e ig h t o n w a te r -b o rn e a n d a ir cargo:
a . O c e a n ___ _____ __________ _______ ______
b . G re a t L a k e s . . . ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
c. A ir ___
_ _ _ ______________ _____ 1______

139
3
2

280
3
2

387
3
8

787
4
13

979
5
12

987
3
16

T o ta l, f r e ig h t_ __ __ __ __ __ __ __ __ __ __ __ __

144

285

398

804

996

1,006

2. P a sse n g e r fares:
a. O c e a n ............. .......... .............. ........... ................
b . A i r . . . ___ _ __ __ __ __ __ __ __ __ __ . ______

10
3

10
4

3
9

2
8

3
14

14
15

T o ta l, fa re s ____ ________ _ _ _ _ _ _ _ _ _ _ _ _ _ _

13

14

12

10

17

29

3. E x p e n se s of fo re ig n c a rriers in U n ite d S ta te s p o rts:
a . O ce a n p o r ts ..................... .............. ............. ........
b . L a k e p o r ts . ____________ ._ _ _ _ _ _ _ _ _ _ _ _ _
c. A ir p o r ts _ _ _ _ ____________________
____

21G
4
«

229
4
(0

215
5
«

201
5
(0

215
4
«

209
4
0)

T o ta l, p o r t e x p e n d itu re s . ______________
4. R a il traffic:
a. A m e ric a n ra ilr o a d r e c e ip ts in C a n a d a _______
b . I n - tr a n s it tra ffic th ro u g h th e U n ite d S ta te s ___
T o t a l, ra il r e c e ip ts ________ ____ ________

220

233

220

206

219

213

5
21

6
24

7
52

6»
84

7
68

5
56

20

30

59

90

G r a n d to ta l, re c e ip ts _ __ __ _ _ __ __ __ __ __ _

403

562

089

1,110

197
4

99
7
(>)
106

106
6
w
112

75
1,3 07 .

61
1,306

PAYMENTS
5. F r e ig h t o n w a te r- b o r n e a n d a ir cargo:
a . O c e a n _______ ____ _ _ _ _ _ _______________
b . G re a t L a k e s ........................ ........................ ........
c. A ir __ _ ____________
T o ta l, f r e ig h t___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
6. P a sse n g e r fares:
a. O cean_________________________________
b . A ir _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

236
5
241

201

119
5
0)
124

13

10

3

3
1

4
1

6
2

«

«

«

o

C)

114
3
0)
117

T o ta l, fa re s .................... ...... _ __ __ __ __ ____

13

10

3

4

5

8

7. E x p e n se s of A m e ric a n c a rrie rs in fo re ig n p o r ts:
a. O ce a n p o r ts _ __ __ __ __ __ __ __ __________ . .
b . L a k e p o r ts ................................ .........
c. A ir p o r ts _ __ __ __ __ __ __ __ __ __ __ ____ ______

52
1
4

99
1
5

98
1
6

184
2
10

226
3
11

242
3
14

T o ta l, p o r t e x p e n d itu re s ......... ................... .

57

105

105

196

240

259

8. R a il traffic:
a. A m e ric a n ra ilr o a d ex pen se s in C a n a d a ......... .
b. I n - tr a n s it tra ffic th ro u g h C a n a d a ___________

14
9

16
11

19
12

23
14

25
17

25
11

23
334

27

31
263

37
343

42

343

399

36
420

T o ta l, ra il p a y m e n ts _____________

___

G ra n d to ta l, p a y m e n ts _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
1 L ess t h a n $500,000.

Tabl e

I T .— E s t i m a t e d

f r e ig h t e a r n in g s b y U n ite d S t a te s a n d f o r e ig n
t h e c a r r i a g e o f U n i t e d S t a t e s i m p o r t s a n d e x p o r t s , 1 9 J tO -J {5

v e s s e ls

in

[ I n m illio n s of dollars]
U n ite d S ta te s
le nd -le a se ex­
p o r ts

U n ite d S ta te s
im p o rts
Y e a r a n d ite m

O ce an fre ig h t:

O ce an freig h t:

O ce an freig h t:

O ce an freig h t:

1940
113
23

205
31

122
10

437
73

235
33

642
104

136
1

236
5

132
3

510
10

268
4

746
15

137

241

135

520

272

761

205
42

155
42

28
7

65
47

216
5

456
35

449
54

676
124

247
3

197
4

35

112

221
3

491
13

503
6

800
17

250

201

35

112

224

504

509

817

157
20

112
7

167
37

303
75

155
11

243
19

479
68

658
101

177
2

119
5

204

378

166
3

262
14

547
5

759
19

179

124

204

378

169

276

552

778

268
28

92
7

453
83

347
109

219
6

134
16

940
117

573
132

296
4

99
7

536

456

225
4

150
14

1,057
8

705
21

300

106

536

456

229

164

1,065

726

322
36

95
11

515
171

389
96

254
8

153
4

1,091
215

637
111

358
7

106
6

686

485

262
5

157
12

1,306
12

748
18

365

112

686

485

267

169

1, 318

766

360
47

101
13

392
82

263
89

391
7

227
31

i 1, 218
136

591
133

407
7

114
3

474

352

398
3

258
12

i 1, 354
10

724
15

414

117

474

352

401

270

i 1,364

739

1941

1942

1943

G r a n d to ta l, fr e ig h t_ _ _ _ _ _ _ _ _

O ce a n freigh t:

T o ta l

E a r n e d E a r n e d E a rn e d
E a rn e d E a r n e d E a r n e d E a r n e d E a r n e d
by
by
by
by
b y for­
b y for­
b y for­
b y for­
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U n ite d
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S
ta
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S
ta
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v
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v esse ls
v esse ls
vessels
vessels vesse ls

T a n k e r s ........................... ........ ...

O ce an freig h t:

U n ite d S ta te s
c o m m e rc ia l ex­
p o r ts

1944

1945

G re a t L a k e s fr e ig h t...T ......................

1 In c lu d e s U N R R A fre ig h t, $75 m illio n .

T ravel A ccou n t
O versea A ccou n t
P a y m e n t s .-— T h e o u t b r e a k
t h e U n ite d

S ta te s ch a n g ed

a

in

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m e th o d o lo g y

r e c e ip ts a r is in g fr o m

in

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th e su b se q u e n t e n tr y b y

c o m p le te ly e x is t in g t r a v e l p a tte r n s , a n d
u n d e r ly in g

th e

c o m p u ta tio n

of

n e c e s s ita te d

p a y m e n ts

and

in t e r n a t io n a l tr a v e l.

177

I n 1 9 4 1 a n d p r io r y e a r s , q u e s tio n n a ir e s w e r e m a ile d to a g r o u p o f U n it e d
S t a t e s c itiz e n s s e le c te d a t r a n d o m fr o m lis t s o f p a s s p o r t a p p lic a n ts .
In o rd er to
c o v e r t h e t r a v e l in f o r e ig n c o u n t r ie s o f a lie n r e s id e n t s o f t h e U n it e d S t a t e s , w h o
c a n n o t o b ta in A m e r ic a n p a s s p o r ts , s im ilia r q u e s tio n n a ir e s w e r e d is tr ib u te d to
h o ld e r s
U n ite d

of

r e e n tr y

p e r m its ,

d o c u m e n ts

r e q u ir e d

of

a lie n

S t a te s fo r te m p o r a r y t r ip s a b r o a d i f th e y w is h

F or each
fo r a lie n

r e s id e n ts

le a v in g

to b e a ssu r e d

th e

o f r e e n tr y .

y e a r , a v e r a g e p e r c a p ita e x p e n d itu r e s w e r e c o m p u te d f o r c itiz e n s a n d
r e s id e n t s o f th e U n ite d S t a te s , b y c la s s o f s te a m s h ip a c c o m m o d a tio n

u tiliz e d a n d b y g e o g r a p h ic a r e a v is ite d .
S in c e n e a r ly a ll c o u n t r ie s in t h e W e s t I n d ie s a n d C e n tr a l A m e r ic a a d m it
U n it e d S t a t e s c it iz e n s o n te m p o r a r y v is it s w ith o u t th e n e c e s s ity o f o b ta in in g
p a s s p o r ts , in o r d e r to c o m p u te a v e r a g e p e r c a p ita e x p e n d itu r e s fo r c itiz e n s
tr a v e lin g

to

n on p assp ort

oversea

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it

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p a y m e n ts a n d s h ip b o a r d e x p e n d it u r e s b y t h is g r o u p
4 1 p e r c e n t o f t h e ir to ta l g r o s s t r a v e l e x p e n d itu r e s .
e x p e n d itu r e s o n b o a r d s h ip w e r e d e r iv e d

fro m

to

a ssu m e

th a t

fa r e

c o n s titu te d a p p r o x im a te ly
F a r e p a y m e n ts a n d to ta l

f a r e s c h e d u le s

and

o th e r d a ta

as

a p p lie d t o d e p a r tu r e s b y c a b in c la s s f o r t h e W e s t I n d ie s a n d C e n tr a l A m e r ic a
f r o m v a r io u s p o r ts o f d e p a r tu r e to s p e c ifie d d e s t in a t io n s .
A v era g e gross ex ­
p e n d itu r e s in n o n p a s s p o r t a r e a s w e r e th u s p la c e d a t a p p r o x im a te ly $ 3 0 0 in 1 9 3 5
b y in fla t in g th e e s t im a te d f a r e p a y m e n ts ($ 1 2 3 ) o n t h e th e o r y t h a t t h e la t t e r
a m o u n ted

to

41

percent

o f gross

e x p e n d itu r e s .

If

per

c a p ita

e x p e n d itu r e s

fo r

e a c h c a b in c la s s in p a s s p o r t a r e a s in 1 9 3 5 w e r e w e ig h t e d b y t h e p e r c e n t a g e o f
d e p a r tu r e s in e a c h c la s s fo r n e a r b y o v e r s e a a r e a s , th e p e r c a p ita a v e r a g e f o r a ll
c itiz e n s v is it in g p a s s p o r t c o u n tr ie s in

t h a t y e a r w o u ld

have

a m o u n te d

to

$ 1 ,0 1 9

( a s c o m p a r e d w ith a n a c tu a l a v e r a g e fo r p a s s p o r t a r e a s o f $ 7 2 2 ). T h e e s tim a te d
a v e r a g e f o r n o n p a s s p o r t a r e a s in t h a t y e a r w a s , h o w e v e r , o n ly $ 3 0 0 , o r a p p r o x i­
m a t e l y 2 9 p e r c e n t o f $ 1 ,0 1 9 .
T h is r a t io o f 2 9 p e r c e n t w a s a p p lie d in o th e r y e a r s
to t h e e s tim a te d a v e r a g e fo r p a s s p o r t a r e a s w e ig h te d b y p e r c e n ta g e o f d e p a r ­
t u r e s t o n o n p a s s p o r t a r e a s f o r t h e r e le v a n t y e a r , in a m a n n e r a n a lo g o u s to th e
c o m p u ta tio n s h o w n b e lo w fo r 1 9 3 5 :

C lass

A v era ge gross
e x p e n d itu re s
in p a s sp o r t
are as

W e ig h t (p e r­
c e n t of d e p a r ­
tu r e s to n o n ­
p a s sp o r t area s)

$1,285
863
541
819
612
406

62.1
4 .0
28.7
1.3
2.1
1.8

S e c o n d __________ _ _ _ _ _ _ _ _ ____________
T h i r d ...... ............... ......... ..........................

W e ig h te d
am ount

$798
35
155
11
13
7

T o t a l _ _ _ _ _ _ _ _ _ _ _ ____ ____

1,019

• E q u iv a le n t to c a b in class in n o n p a s s p o r t a re a s.

Not e.—R a tio o f $300 to $1,019 is 29.25 p e rc e n t.
Q u e s t io n n a ir e a v e r a g e s f o r 1 9 4 0 w e r e e m p lo y e d in c o m p u tin g e s t im a t e s f o r t h a t
year.
S in c e n o q u e s tio n n a ir e s w e r e s e n t o u t a f t e r 1 9 4 1 a n d s in c e th e r e p lie s
r e c e iv e d in 1 9 4 1 w e r e r a th e r s p a r s e , a c o m b in a tio n o f 1 9 4 0 -4 1 a v e r a g e s w a s u s e d
fo r 1941 a n d su b seq u en t w a r y ea rs.
B a s ic v o lu m e d a t a
a d ju sted
and

to

to

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by

I m m ig r a tio n

e x c lu d e t r a v e l b e tw e e n

in c lu d e a r r iv a ls

fro m

th e

ov ersea

and

U n ite d

N a tu r a liz a tio n

S ta te s a n d

c o u n tr ie s

at

M e x ic o

C a n a d ia n

S e r v ic e w e r e
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C anada,
en

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to th e U n ite d S t a te s a n d d e p a r tu r e s fr o m o v e r s e a a r e a s v ia C a n a d ia n s e a p o r ts .
I n a d d itio n , a lie n r e s id e n t t r a v e l d a ta w e r e f u r t h e r a d j u s t e d in o r d e r to e q u a liz e
th e n u m b e r o f a lie n

r e s id e n t s d e p a r tin g f o r a n d r e tu r n in g fr o m

te m p o r a r y tr ip s

a b r o a d w ith in a g iv e n y e a r .
T h is a d ju s tm e n t is n e c e s s ita t e d b y t h e f a c t th a t
t h e d is tin c t io n b e tw e e n a lie n r e s id e n t s d e p a r tin g f o r te m p o r a r y tr ip s a b r o a d a n d
e m ig r a n t a lie n s is b a s e d u p o n t h e d e c la r e d in te n t io n o f s u c h a n a lie n a t t h e t im e
o f h is d e p a r tu r e fr o m

th e U n ite d

S ta te s.

s o -c a lle d e m ig r a n t a lie n s r e tu r n e d
a b r o a d , a n d m a n y a lie n r e s id e n ts
o f d e p a r tu r e o n th e b a s is o f th e ir
w ith in a y e a r a c t u a lly r e m a in e d a b

A c tu a lly , i t w a s d is c o v e r e d th a t m a n y

to t h e U n ite d S t a te s a f t e r te m p o r a r y tr ip s
w h o o b ta in e d r e e n tr y p e r m its a t t h e t im e
d e c la r e d in te n t io n t o r e tu r n t o t h is c o u n tr y
r o a d fo r e x t e n d e d p e r io d s o r p e r m a n e n tly .

I n t h e c a s e w h e r e d e p a r tu r e s o f a lie n r e s id e n t s (b y d e fin itio n , o n te m p o r a r y
v is it s a b r o a d o f le s s t h a n 1 y e a r ) e x c e e d e d t h e a r r iv a ls o f a lie n r e s id e n t s d u r in g
a

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th e

excess

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over

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d e p a r tu r e s

In

e x is te d ,

years w hen

th e

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of

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su ch

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w a s d e d u c te d fr o m r e p o r te d e m ig r a n t d e p a r tu r e s .
E s t im a t e s o f t r a v e l e x p e n d itu r e s in o v e r s e a a r e a s

w ere

over

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by

a p p ly ­

in g t h e a p p r o p r ia te a v e r a g e s t o t h e r e s p e c t iv e v o lu m e fig u r e s f o r e a c h c la s s
o f tr a v e l a n d f o r e a c h g e o g r a p h ic a r e a , w ith a n a d ju s tm e n t in t h e t o t a l fo r
th e

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e x p e n d it u r e s o f G o v e r n m e n t o ffic ia ls t r a v e lin g o v e r s e a s , o n t h e b a s is o f r e d u c in g
th e

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r a tio
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to

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s p e c ia l p a s s ­

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th e tr a v e l a cco u n t

by

(s in c e th e s e

e x p e n d itu r e s a r e in c lu d e d in t h e G o v e r n m e n t s e r v ic e s a c c o u n t ) , in fo r m a tio n w a s
o b ta in e d fr o m t h e W a r D e p a r tm e n t a n d t h e C a n a l Z o n e C o m m is s io n c o n c e r n in g
t h e c o u n tr ie s w h e r e w o r k e r s w e r e s e n t.
T r e n d s w e r e d e r iv e d fr o m p lo tt in g
d e p a r tu r e s b y m o n th d u r in g la t e p r e w a r y e a r s to e a c h o f t h e s e c o u n tr ie s , a n d
a n y e x c e s s o f d e p a r tu r e s d u r in g th e p e r io d
w a s d e d u cted .

R e c e i p t s .— A l i e n

v is ito r s

to

th e

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covered
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c o m p r is e

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f o r p le a s u r e , te m p o r a r y v is it o r s f o r b u s in e s s , s tu d e n ts , p e r s o n s in t r a n s it th r o u g h
th e

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S ta te s

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ser v a n ts.
D u r in g t h e w a r y e a r s t r a v e l fr o m o u t s id e t h e W e s te r n H e m is p h e r e
w a s lim it e d to f o r e ig n m is s io n s , g o v e r n m e n t o ffic ia ls , a n d w a r r e f u g e e s . N u m b e r s
o f f o r e ig n g o v e r n m e n t o ffic ia ls d e p a r tin g fr o m

t h e U n ite d

S ta te s w e r e n o t a v a il­

a b le ; h o w e v e r , d a t a w e r e o b t a in e d c o v e r in g t o t a l a lie n g o v e r n m e n t o ffic ia ls
a r r iv in g in th e U n it e d S t a te s , a n d r a t io s w e r e c o m p u te d o f a lie n v is it o r s a r r iv in g

e x c lu d in g g o v e r n m e n t o ffic ia ls to a lie n v is it o r s a r r iv in g in c lu d in g g o v e r n m e n t
o ffic ia ls , o n t h e a s s u m p t io n t h a t t h e s a m e r a t io w o u ld h o ld f o r a lie n v is it o r s
d e p a r tin g .
fr o m a lie n

T h e s e r a t io s w e r e t h e n u s e d to a d j u s t t h e e s t im a t e s o f r e c e ip ts
v is it o r s o b ta in e d b y a p p ly in g a v e r a g e s , id e n t ic a l w it h t h o s e e s t a b ­

lis h e d f o r c itiz e n tr a v e le r s , to t h e n u m b e r s o f v is it o r s fr o m th e p r in c ip a l o v e r ­
s e a a r e a s , in t h e a b s e n c e o f e m p ir ic a l d a t a b e a r in g u p o n th e e x p e n d itu r e s o f
fo r e ig n v is it o r s to th e U n ite d S ta te s .
A p p r o x im a te ly 4 0 p e r c e n t o f t h e to t a l e x p e n d itu r e s

o f ov ersea

tr a v e le r s

con­

s is t e d in t h e in t e r w a r p e r io d o f f a r e s a n d s h ip b o a r d e x p e n d it u r e s a n d t h e s e
o u t la y s a r e t h e s a m e f o r a n y g iv e n c la s s o f a c c o m m o d a tio n f o r c itiz e n s a n d
a lie n s a lik e .
A g r ic u lt u r a l w o r k e r s im p o r te d fr o m t h e B r it is h W e s t I n d ie s a n d
in c lu d e d
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by

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d a ta
and

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C a n a d ia n

A ccount

P a y m e n t s .— T h e U n i t e d S t a t e s D e p a r t m e n t o f C o m m e r c e c o l l a b o r a t e s w i t h t h e
D o m in io n

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e s tim a tin g

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Q u e s tio n n a ir e s a r e d is tr ib u te d

by

U n it e d S t a t e s C u s t o m s o ffic e r s o n a r a n d o m b a s i s t o a p p r o x im a t e ly o n e U n it e d
S t a t e s r e s id e n t o u t o f e v e r y s e v e n w h o r e tu r n to th e U n ite d S t a te s o v e r th e
C a n a d ia n

border by

r a il, b o a t, p la n e ,

o r lo n g -d is ta n c e

b u s.

C a n a d ia n

a u th o r i­

t ie s s a m p le t h e t r a v e l o f U n ite d S t a te s r e s id e n ts w h o e n te r C a n a d a b y a u to ­
m o b ile b y m e a n s o f q u e s t io n n a ir e s p r in t e d o n t h e r e v e r s e o f t h e V e h ic le P e r m its ,
o n e o f w h ic h is is s u e d to a m e m b e r o f e a c h p a r ty o f fo r e ig n r e s id e n t s w h o e n te r s
V

C a n a d a b y a u to m o b ile f o r a p e r io d o f m o r e th a n 4 8 h o u r s o r w h o p la n s to d e p a r t
fr o m C a n a d a b y a p o r t o th e r th a n th e p o r t o f e n tr y .
T r a v e le r s w h o e n te r C a n a d a
b y c a r a n d w h o d o n o t r e q u ir e a V e h ic le P e r m it a r e h a n d e d a q u e s t io n n a ir e b y
C a n a d ia n
th e

a u t h o r itie s w h ic h

C a n a d ia n

o ffic ia ls u p o n

th e
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lik e w is e d e r iv e a v e r a g e e x p e n d it u r e s f o r p e r s o n s w h o c r o s s t h e b o r d e r b y
b u s o r o n fo o t f o r b r ie f v is it s o f a p u r e ly lo c a l c h a r a c te r .

lo c a l

T h e r e s u lt s f r o m t h e s e s a m p lin g o p e r a t io n s a r e p o o le d , s e p a r a t e a v e r a g e s b e in g
c o m p u te d

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each

m eans

o f tr a n s p o r ta tio n

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by

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p r o v in c e o f in g r e s s .
P a y m e n ts to c a r r ie r s f o r f a r e s a r e in c lu d e d in th e e s t im a t e s
o f o v e r -a ll t r a v e l e x p e n d itu r e s .
T h e q u e s tio n n a ir e s d is tr ib u te d to tr a v e le r s b y
b o a t,

tr a in ,

b u s,

or

p la n e

req u est

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a m o u n t p a id f o r f a r e s p u r c h a s e d in C a n a d a a n d fo r th r o u g h tr a n s p o r ta tio n p u r ­
c h a s e d in t h e U n it e d S t a t e s t o a n y p o in t in C a n a d a .
In

t h e c a s e o f tr a v e l b y t r a in

and

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t r a n s p o r ta tio n

179

i s p r o r a te d b e tw e e n t h e tw o c o u n tr ie s o n t h e b a s is o f t h e m ile a g e c o v e r e d
e a c h c o u n tr y , a n d in c lu d e d w ith th e e s t im a t e fo r o th e r t r a v e l e x p e n d itu r e s .

in
In

th e c a s e o f p la n e a n d b o a t t r a v e l, f a r e p a y m e n ts a r e in c lu d e d w it h o th e r t r a v e l
e x p e n d itu r e s o n ly i f th e c a r r ie r is o w n e d b y t h e fo r e ig n c o u n t r y ; o th e r w is e n o
e s tim a te

fo r

fa r es

is

in c lu d e d .

T he

num bers

of

p a ssen g ers

in

d ir e c t

tr a n s it

th r o u g h C a n a d a fr o m o n e p o in t in t h e U n ite d S t a te s to a n o th e r a r e d e d u c te d
fr o m t o t a ls r e p o r te d b y t h e D e p a r tm e n t o f M in e s a n d R e s o u r c e s o f e n t r ie s o f
U n ite d S t a t e s t r a v e le r s in to C a n a d a , b y m e a n s o f t r a n s p o r ta tio n a n d b y p o r t a n d
p r o v in c e o f e n tr y .

T h e r e s u lt a n t v o lu m e fig u r e s a r e a p p lie d

to

e x p e n d itu r e a v e r a g e s c o m p u te d fo r e a c h c la s s o f t r a v e le r .
t h e s a m e fin a l e s t im a t e s h a v e b e e n u s e d b y b o th c o u n tr ie s .

R e c e i p t s .— T h e D o m i n i o n

of

C anada

m e a n s o f q u e s tio n n a ir e s d is tr ib u te d

s a m p le s

tra v el o f

b y C a n a d ia n

t h e a p p r o p r ia te
In

recent

C a n a d ia n s

I m m ig r a tio n

years,

abroad

by

o ffic e r s t o r e t u r n ­

in g C a n a d ia n s .
A v e r a g e e x p e n d itu r e s a r e c o m p u te d th e r e fr o m , b y m e a n s o f
t r a n s p o r t a tio n a n d b y p r o v in c e o f r e e n tr y in to C a n a d a , to w h ic h a r e a p p lie d
v o lu m e

d a ta

s u p p lie d

by

th e

D e p a r tm e n t

of

M in e s

and

R eso u rces,

w h ic h

are

s t r a tifie d a s s p e c ifie d a b o v e a s in t h e c a s e o f c o m p u tin g e s t im a t e s f o r p a y m e n ts .
T h e m e th o d o lo g y

u n d e r ly in g th e

c o m p u ta tio n

o f p a ssen g er fa r es

and

th e e x c lu ­

s io n o f in -t r a n s it p a s s e n g e r s is th e s a m e a s t h a t d is c u s s e d u n d e r P a y m e n ts .

M e x ic a n

A ccount

P a y m e n t s . — 1 . T r a v e l t o t h e i n t e r i o r o f M e x i c o .— T h e B a n k o f M e x i c o a n d t h e
U n it e d S t a t e s D e p a r tm e n t o f C o m m e r c e c o lla b o r a t e in t h e ir fin d in g s in c o n n e c tio n
w it h r e c e ip ts a n d p a y m e n ts a r is in g fr o m t r a v e l b e tw e e n th e tw o c o u n tr ie s .
In
1 9 4 4 t h e B a n k o f M e x ic o c o n d u c te d a s u r v e y b y m e a n s o f q u e s t io n n a ir e s h a n d e d
to U n it e d S t a t e s t o u r is t s v is it in g M e x ic o C ity w h o s t a y e d in h o t e ls a n d lo d g in g
h o u s e s a n d to s tu d e n ts w h o p u r s u e d c o u r s e s o f s tu d y in t h a t c ity .
P ro m th ese
q u e s tio n n a ir e s
p e r c a p ita , f o r

s e p a r a te a v e r a g e s w e r e c o m p u te d f o r e x p e n d itu r e s
fo o d , lo d g in g , s id e tr ip s , a n d m is c e lla n e o u s p u r p o s e s .

p e r d ie m
T h e ite m

f o r t r a n s p o r ta tio n w a s c o m p u te d s e p a r a t e ly o n th e b a s is o f p u b lis h e d f a r e s fo r
p la n e , b u s , a u to , a n d t r a in t r a v e l t o p r in c ip a l c it ie s w it h in e a c h M e x ic a n S t a t e ;
th e s e a v e r a g e s w e r e w e ig h te d

b y th e

n u m b e r s o f t r a v e le r s to

su ch

S ta te , u s in g

t h e v a r io u s m e a n s o f t r a n s p o r t a tio n a s r e p o r te d to t h e D ir e c c ió n d e E s t a d ís t ic a
o f M e x ic o .
I n th e c a s e o f a u to m o b ile t r a v e l, it w a s a s s u m e d t h a t th e p e r m ile
a v e r a g e w h ic h a p p lie d o n t r ip s t o M e x ic o C ity a s
lik e w is e a p p lie d o n tr ip s to o th e r M e x ic a n c itie s .

sh ow n

in

th e

q u e s tio n n a ir e s

B y m a k in g u s e o f a b r e a k -d o w n o f t r a v e le r s to t h e in te r io r o f M e x ic o b y t h e ir
le n g t h o f s t a y , w h ic h h a d b e e n c o m p ile d f o r 1 9 4 3 b y o ffic ia l M e x ic a n s o u r c e s , t h e
v o lu m e d a t a
c o r d in g
r e fe r r e d

to

r e p o r te d

th e

le n g th

fo r t r a v e le r s
o f sta y

to

and

t h e in te r io r o f M e x ic o

a p p lie d

to

to a b o v e , e x c e p t th a t t r a n s p o r ta tio n

th e

per

d ie m

w e r e c la s s ifie d

per

w a s co m p u te d

on

c a p ita

ac­

averages

a p e r tr ip

b a s is .

T h e it e m s f o r s id e tr ip s , f o r fo o d , a n d fo r lo d g in g w e r e a d j u s t e d d o w n w a r d fo r
a s t a y o f m o r e t h a n 1 m o n th , o n t h e t h e o r y t h a t d u r in g a p r o lo n g e d s t a y t h e s e
e x p e n s e s w o u ld d e c r e a s e s o m e w h a t.
2 . B o r d e r t r a v e l .— I n 1 9 4 5 , t h e B a n k o f M e x i c o a n d t h e U n i t e d S t a t e s D e ­
p a r tm e n t o f C o m m e r c e c o n d u c te d a j o in t in v e s t ig a t io n a lo n g t h e U n ite d S ta te s M e x ic a n

border

to d e te r m in e

a

m e th o d fo r

e s t im a tin g e x p e n d itu r e s m a d e

a lo n g

th e b o r d e r z o n e in e a c h c o u n tr y b y r e s id e n t s o f t h e o th e r c o u n tr y .
A repre­
s e n t a t iv e o f e a c h c o u n tr y in te r v ie w e d b a n k s , e x c h a n g e d e a le r s , b u s in e s s m e n ,
c u s to m s o ffic ia ls , m e r c h a n t s , a n d

c h a m b e r s o f c o m m e r c e in

b o rd er to w n s.

A s a

r e s u lt o f t h is in v e s t ig a tio n , i t w a s d e te r m in e d t h a t th e m o s t p r a c tic a b le s o lu ­
t io n o f t h e p r o b le m w a s to o b t a in p e r io d ic a lly d ir e c t f r o m b a n k s in b o r d e r
c itie s

in fo r m a tio n

n a tio n a l

r e g a r d in g

cu rrency.

For

b o rd er a r e r e q u ested
t h e ir M e x ic a n
p r e s u m a b ly

to

th e ir

e x a m p le ,

r e c e ip ts ,
U n ite d

r e p o r t m o n th ly

c o r r e sp o n d e n ts a n d

a r e s p e n t o r ig in a lly

fro m

S ta te s

th e

is

r e c o g n iz e d

th a t

a ll

m oneys

exp en ded

th e

in te r n a tio n a l

b order.

T he

s id e , t h e s e r e p o r ts c a n
S ta te s

on

th e

fu n d s

in v e s tig a tio n

sp en t

th e ir
to

th e

M e x ic a n

in d ic a te d

be
on
ch
e ly

s id e

be u sed

in

M e x ic a n

by

U n ite d

b r o u g h t b a c k to
t h is s id e o f th e
a n n e ls .
T h is is
a lo n g b o th s id e s

th a t

an

a m o u n t e q u a l to a p p r o x im a te ly 2 0 p e r c e n t o f f u n d s p a s s in g th r o u g h
r e tu r n e d
to th e U n ite d
S ta te s th ro u g h
n o n b a n k in g c h a n n e ls .
A n
w a s a ls o d e r iv e d d u r in g t h e in v e s t ig a t io n to c o v e r e x p e n d it u r e s in

180

of

c lo s e

S ta te s cu rren cy fro m

S t a t e s r e s id e n t s d o n o t fin d t h e i r w a y t o b a n k s , b u t m a y
t h e U n it e d S t a t e s in t h e p o c k e t s o f M e x ic a n s a n d s p e n t
b o r d e r , w it h o u t h a v in g p a s s e d th r o u g h r e g u la r b a n k in g
p a r tic u la r ly tr u e s in c e U n ite d S t a te s c u r r e n c y c ir c u la te s fr e
of

border,

to w n s

S in c e a ll th e fu n d s th u s r e p o r te d

M e x ic a n

a s t h e b a s is f o r m a k in g e s t im a t e s o f U n ite d
b o r d e r a r e a s b y U n it e d S t a te s r e s id e n ts .
It

th e
in

r e c e ip ts o f U n it e d

d e p o s ito r s .

on

a cro ss
banks

a d d itio n a l
b a n k s is
e s tim a te
p esos of

*

U n ite d
d a ta ,
s h ip
to

S t a t e s r e s id e n ts a lo n g th e M e x ic a n

it

s e e m s lo g ic a l

to

d o lla r

cover

to

assu m e

e x p e n d itu r e s .

th ese p eso

b order.

th a t p eso

An

a d ju stm e n t

e x p e n d itu r e s , b a s e d

on

In

th e a b s e n c e o f a d d itio n a l

e x p e n d itu r e s
w as

bear

a

in

th e

to ta l

e s tim a te

to

d o lla r

e x p e n d i­

m ade

th e ir r e la tio n s h ip

d ir e c t r e la tio n ­

tu res

d u r in g t h e p e r io d c o v e r e d b y t h e in v e s t ig a tio n .
R e c e i p t s . — 1 . T r a v e l t o t h e i n t e r i o r o f t h e U n i t e d S t a t e s .— I n

o th e r

e m p ir ic a l

d a ta

b a s e d , in fo r m a tio n
o ffic ia ls a lo n g
bers

of

upon

w h ic h

s u p p lie d

th e

M e x ic a n

M e x ic a n s

e s tim a te s

b y U n ite d
to

th e

th e

p e r io d

th e

a c c e p te d

in te r io r

of

as

a b a s is

th e

a b sen ce o f

1 9 4 0 -4 5

S t a te s c o n s u ls , c u s to m s , a n d

border w a s

tr a v e lin g

fo r

m ig h t

fo r e s tim a tin g

U n ite d

be

im m ig r a tio n

S ta te s,

as

num ­

w e ll

as

a v e r a g e e x p e n d itu r e s o f s u c h t r a v e le r s .
O n J u ly 1, 1 946, a p r o g ra m o f q u e s­
t io n n a ir e s a m p lin g w a s in itia t e d , w h e r e b y e a c h M e x ic a n r e s id e n t e n te r in g th e
U n ite d
area
T h is

S ta te s fo r

m o re th a n

t h is c o u n tr y a n d d e p o s ite d
d e p a r tu r e fr o m th e U n ite d
to

2 4 h o u r s o r d e s tin e d

to

a p o in t b e y o n d

th e

border

is h a n d e d a q u e s tio n n a ir e , b y t h e U n it e d S t a t e s im m ig r a t io n in s p e c to r .
q u e s t io n n a ir e i s t o b e fille d in s h o r t ly b e fo r e t h e M e x ic a n r e s id e n t le a v e s
w it h t h e im m ig r a t io n in s p e c to r o r m a ile d p r io r to
S ta te s.
P r e lim in a r y r e s u lts fr o m t h is s u r v e y te n d

c o n fir m t h e 1 9 4 0 -4 5 e s t im a t e s .
2 . B o r d e r t r a v e l .— E s t i m a t e s f o r

border

by

M e x ic a n

e s tim a te s

fo r

r e s id e n ts ,

as

r e s id e n ts

tr a v e l

t r a v e l e x p e n d itu r e s

w ere

d e r iv e d

e x p e n d itu r e s

o u tlin e d

above,

a lo n g

except

in

th e

th a t

m uch

a lo n g

th e

M e x ic a n

th ey

w ere

th e

sam e

border

U n ite d

m anner
by

e s tim a te d

S ta te s

as

U n ite d
to

w ere
S ta te s

in c lu d e

th e

U n ite d S t a t e s d o lla r c u r r e n c y s p e n t o n t h e M e x ic a n s id e b u t n o t r e tu r n e d th r o u g h
b a n k in g c h a n n e ls .

In com e

on

In v e stm e n ts

I n g e n e r a l, r e c e ip t s a n d p a y m e n ts o f in c o m e w e r e e n te r e d in t h e b a la n c e o f
p a y m e n ts a f t e r t a x e s w e r e d e d u c te d . T h e s e t a x e s in c lu d e d n o t o n ly in c o m e t a x e s
p a id

b y A m e r ic a n

o p e r a t in g in
d iv id e n d s

th e

or

d ir e c t-in v e s tm e n t e n te r p r is e s

U n ite d

o th e r

S t a te s b u t a ls o

in c o m e

p a y m e n ts

abroad

and

fo r e ig n

in c o m e t a x e s w ith h e ld
b e tw e e n

th e

U n ite d

e n te r p r is e s

a t th e

S ta te s

so u rce o n

and

fo r e ig n

c o u n tr ie s .

In co m e

R e c e ip ts

E s t im a t e s o f r e c e ip t s o f in c o m e f r o ih d ir e c t in v e s t m e n ts d u r in g t h e w a r y e a r s
w e r e b a s e d e s s e n t ia lly o n in c o m e d a t a s u p p lie d to th e T r e a s u r y D e p a r tm e n t fo r
t h e y e a r 1 8 4 2 in c o n n e c tio n w it h i t s C e n s u s o f (A m e r ic a n ) P r o p e r t y in F o r e ig n
C o u n tr ie s

(T F R

5 0 0 ).

A s

a

r e s u lt

of

th is

su rv ey

fa ir ly

c o m p le te

d a ta

w ere

a v a ila b le f o r t h e fir s t t im e r e g a r d in g d ir e c t-in v e s tm e n t in c o m e r e c e ip ts f o r a
g iv e n y e a r , b y c o u n t r y , in d u s t r y , a n d t y p e o f in c o m e .
In c o m e e s tim a te s fo r p r e ­
v io u s a n d s u b s e q u e n t y e a r s w e r e b a s e d o n s a m p le s , c o m p r is in g a la r g e n u m b e r
o f c o m p a n ie s , w h ic h w e r e u s e d to e x t r a p o la t e fr o m 1 9 4 2 a s a b a s e y e a r .
A n­
n u a l in c o m e r e c e ip t s f o r a b o u t 2 0 0 la r g e c o m p a n ie s w e r e o b t a in e d b y m e a n s o f
q u e s tio n n a ir e s .
D a t a f o r r o u g h ly 5 0 0 m o r e c o m p a n ie s w e r e o b t a in e d fr o m in ­
f o r m a t io n file d a n n u a lly o n F o r m 1 0 - K w it h t h e S e c u r it ie s a n d E x c h a n g e C o m ­
m is s io n .
C o r p o r a te in c o m e -t a x r e tu r n s ( F o r m 1 1 2 0 ) a n d t h e p u b lis h e d
r e p o r ts o f c o m p a n ie s f u r n is h e d a d d it io n a l in c o m e in fo r m a tio n .

apnual

R e c e ip t s o f in t e r e s t a n d d iv id e n d s fr o m s u b s id ia r ie s a n d th e n e t in c o m e (o r
l o s s ) o f b r a n c h e s w e r e in c lu d e d in t h e t o t a l o f d i r e c t - in v e s t m e n t in c o m e r e c e ip t s .
T h e d a t a p r e s e n t e d in t h i s v o l u m e a r e n o t ( p a it e c o m p a r a b l e w i t h f i g u r e s p r i o r t o
1 9 4 0 in a s m u c h a s d o m e s tic a lly in c o r p o r a te d e n te r p r is e s o p e r a tin g s o le ly o r
m a in ly a b r o a d h a v e b e e n t r e a t e d a s b r a n c h e s s in c e 1 9 3 9 a n d t h e n e t in c o m e
o f s u c h c o m p a n ie s h a s t h e r e f o r e b e e n r e g a r d e d a s a n in c o m e r e c e ip t ( a n d th e
p o r tio n o f n e t in c o m e n o t tr a n s m it te d to th e U n it e d S t a te s — r e in v e s te d e a r n ­
in g s — h a s b e e n tr e a t e d a s a n o u tflo w o f U n it e d S t a t e s c a p it a l) .
P r e v io u s ly , o n ly
t h e d i v id e n d a n d i n t e r e s t p a y m e n t s b y t h e h e a d o ffic e s i n t h e U n i t e d S t a t e s o f
c o m p a n ie s o f t h is ty p e w e r e in c o r p o r a te d in in c o m e r e c e ip t s j u s t a s s im ila r p a y ­
m e n t s b y f o r e ig n s u b s id ia r ie s o f A m e r ic a n c o m p a n ie s h a v e b e e n c a r r ie d in a l l
years.
D iv id e n d s
change

o f in c o m e .
s e ttin g

if

or

by

fo r

a

fo r e ig n

any

o th e r

s u b s id ia r y
reason

but not

w ere

r e m itte d

in c lu d e d

in

b ecau se

c a lc u la te d

of

ex­

r e c e ip ts

H o w e v e r , th e f a c t th a t th e p a y m e n t w a s b lo c k e d g a v e r is e to a n o ff­

ite m — e ith e r

d iv id e n d
or an

d e c la r e d

c o n tr o ls

w a s p la c e d

an

in c r e a s e

in

a fo r e ig n

in

A m e r ic a n

bank

b a la n c e s

in

fo r e ig n

in c r e a s e in t h e in te r c o m p a n y in d e b te d n e s s o f t h e s u b s id ia r y

t h e s u b s id ia r y

m e r e ly

c r e d ite d

b a n k s,

f o r t h e a c c o u n t o f t h e A m e r ic a n

th e p a ren t com p an y

w ith

th e

to

if

th e

p a r e n t,

its p a r e n t,

d iv id e n d

on

its

o w n b o o k s.

181

D u r in g 1 9 4 5 a q u a r te r ly s u r v e y
ra ted

D e p a r tm e n t o f C o m m erce.
226.
in g

o f d ir e c t-in v e s tm e n t t r a n s a c tio n s w a s

in a u g u ­

in w h ic h s e v e r a l h u n d r e d la r g e c o m p a n ie s h a v e b e e n c o o p e r a tin g w it h
C o p ie s o f t h e in it i a l fo r m s a p p e a r

th e

on p ages 183

and

C o lla te r a l d a t a a r e o b ta in e d f r o m t h e s e f o r m s a n d fr o m o th e r s o u r c e s r e g a r d ­
r e c e ip ts

o ffic e r s in

of

r o y a ltie s ,

t h e U n ite d

m anagem ent

S ta te s, a n d

fe e s,

s e r v ic e

ch arges,

c o m p e n s a tio n

o t h e r h o m e o ffic e e x p e n s e s a l l o c a b l e t o

o p e r a t io n s ; t h e s e a m o u n ts a r e c a r r ie d
u n d e r in c o m e o n in v e s t m e n t s .

u n d e r m is c e lla n e o u s s e r v ic e s

fo r

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E s t im a t e d r e c e ip ts o f in t e r e s t o n A m e r ic a n h o ld in g s o f f o r e ig n d o lla r b o n d s
w e r e b a s e d o n ( a ) d a ta r e g a r d in g th e a m o u n t o f s u c h s e c u r itie s h e ld in th e
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S t a t e s , s u p p lie d to th e T r e a s u r y D e p a r tm e n t in c o n n e c tio n w it h t h e c e n ­
A m e r ic a n -o w n e d p r o p e r ty a b r o a d ;
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to

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a g e n ts

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a ll

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r e q u e s tin g ,

fo r

e a c h is s u e , in fo r m a tio n r e g a r d in g t o t a l in t e r e s t p a y m e n ts to a ll h o ld e r s , A m e r ic a n
and

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o f s t a t is t ic s o f tr a n s a c tio n s in d o lla r b o n d s, a s d is tin c t fr o m fo r e ig n c u r r e n c y
o b lig a tio n s ( s e e , u n d e r C a p ita l M o v e m e n ts in t h is a p p e n d ix , n o t e o n a m o r tiz a ­
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d o lla r -b o n d in t e r e s t r e c e ip t s b y A m e r ic a n s ; h o w e v e r , s u c h r e c e ip t s i f n o t in c lu d e d
in t h is
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abroad w ere b a
c o m p ila tio n s p u b lis h e d in C a n a d ia n b a la n c e -o f-p a y m e n ts s t a te m e n ts a n d
v a lu e o f m is c e lla n e o u s in v e s t m e n t s a b r o a d a s c o m p ile d b y t h e U n it e d
T r e a s u r y D e p a r tm e n t in it s s u r v e y
(T F R
5 0 0 ).
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sed on
o n th e
S ta te s
to th e

U n it e d S t a t e s a c c o u n te d f o r m o s t o f th e t o t a l a n d w e r e d e r iv e d b y d e d u c tin g
fr o m t h e C a n a d ia n e s t im a t e f o r t o t a l in c o m e p a y m e n ts t o t h e U n it e d S t a t e s t h e
U n it e d S t a t e s e s t im a t e s f o r r e c e ip ts o f d ir e c t-in v e s tm e n t in c o m e a n d d o lla r b o n d
in te r e s t fro m C a n a d a .
A r a t e o f r e tu r n w a s c a lc u la t e d f o r C a n a d a b y a p p ly in g
t h e e s t im a t e o f in c o m e r e c e ip t s t h u s d e r iv e d t o t h e v a lu e o f s u c h

in v e s t m e n ts a s

c o m p ile d b y th e T r e a s u r y .
T h is r a t e o f r e tu r n w a s th e n a p p lie d
s im ila r in v e s t m e n t s in o th e r a r e a s n o t u n d e r A x is c o n tr o l.

to

th e v a lu e o f

S t a t is t ic s o f U n it e d S t a t e s G o v e r n m e n t r e c e ip t s o f in t e r e s t o n it s lo n g -te r m
l o a n s w e r e o b t a i n e d f r o m t h e C le a r i n g O ffic e f o r F o r e i g n T r a n s a c t i o n s o f t h e
D e p a r tm e n t o f C om m erce.

In co m e

P a y m en ts

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m a te r ia l fo r

e s tim a tin g

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d iv id e n d s , a n d

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to n o n r e s id e n t a lie n s w a s p r o v id e d b y w ith h o ld in g - ta x r e tu r n s ( F o r m s 1 0 4 2 , 1 0 1 2 ,
a n d 1 0 1 3 ) file d w it h t h e B u r e a u o f I n t e r n a l R e v e n u e .
In c o m e r e p o r te d o n F o rm
1 0 4 2 o n w h ic h t a x

is p a id a t th e s o u r c e in c lu d e s in te r e s t , d iv id e n d s , r e n ts , r o y a l­

t ie s , a n n u itie s , s a la r ie s , a n d d is tr ib u ta b le in c o m e o f e s t a te s a n d t r u s t s , p a id to
n o n r e s id e n t a lie n in d iv id u a ls , o r to fo r e ig n p a r tn e r s h ip s a n d f o r e ig n c o r p o r a ­
t io n s n o t e n g a g e d in t r a d e o r b u s in e s s in th e U n ite d S t a te s .
N e t p r o fits o f
U n ite d S t a te s b r a n c h e s o f f o r e ig n c o m p a n ie s w e r e a ls o e s t im a t e d o n t h e b a s is
o f in c o m e -ta x r e tu r n s file d w it h t h e B u r e a u o f I n t e r n a l R e v e n u e ( F o r m 1 1 2 0 ).
A s e p a r a te e s t im a t e w a s n e c e s s a r y f o r in c o m e p a id o n s e c u r itie s h e ld b y th e
B r it is h T r e a s u r y o n w h ic h n o U n it e d S t a t e s t a x w a s w ith h e ld .
M o st o f th ese
w e r e p le d g e d a s c o lla te r a l f o r th e lo a n b y t h e R F C .
A s e p a r a te e s tim a te w a s
a ls o m a d e f o r in te r e s t p a y m e n ts o n U n ite d S t a t e s F e d e r a l, S t a te , a n d m u n ic ip a l
b on d s.

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T r e a s u r y ’s C e n s u s o f F o r e i g n O w n e d A s s e t s i n t h e U n i t e d S t a t e s , w h i c h e s t a b l i s h e d
a v a lu e f o r th e m id d le o f 1 9 4 1 .
A d ju stm e n ts w e r e m a d e, h o w e v e r , to ta k e a c ­
c o u n t o f s e v e r a l la r g e t r a n s a c tio n s in

su b seq u en t y ea rs.

A

w a s a p p lie d to h o ld in g s o f F e d e r a l b o n d s a n d 4 p e r c e n t to
b on d s.
In co m e p a y m e n ts o n G o v er n m en t sh o r t-te r m
th e b a s is o f c u r r e n t in te r e s t r a te s p a id o n s u c h p a p e r .

paper

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D a t a o n in te r e s t p a y m e n ts b y th e U n ite d S t a te s T r e a s u r y D e p a r tm e n t o n
P h ilip p in e d e p o s its w ith t h e T r e a s u r y w e r e o b ta in e d fr o m t h a t a g e n c y .
P ay­
m e n t s to in d iv id u a l c o u n t r ie s , e x c e p t C a n a d a , a r e d e c id e d m a in ly o n th e b a s is
o f t h e a d d r e s s e s o f t h e r e c ip ie n ts a s r e p o r te d to th e B u r e a u o f I n te r n a l R e v e n u e
b y p a y o r c o r p o r a tio n s a n d w ith h o ld in g a g e n ts .
R e p o r te d p a y m e n ts to C a n a d a
w e r e re d u c e d b y th e a m o u n t o f k n o w n p a y m e n ts to C a n a d a fo r th e a c c o u n t o f
r e s id e n t s o f o th e r f o r e ig n c o u n tr ie s .

182

Depa r t ment

F o r m '5 7 8

of

Commer ce

Buds e t B u re a u N° - 41-R 621
A p p ro v a l E x p ir e s 1 0 -3 1 -4 6

B U R E A U O F F O R E I G N A N D D O M E S T IC C O M M E R C E
W A S H IN G T O N

2 5

QUARTERLY REPORT ON OPERATIONS OF FOREIGN BRANCHES OR OTHER
UNINCORPORATED FOREIGN BUSINESS OF U . S . CORPORATIONS
Q u a rte r ended
Name o f U . S . c o m p an y __ _ _ _ _ _ _
C o u n tr y o f f o r e i g n o p e r a t i o n s
CHANGES IN INVESTMENT

1.

2

.

3

.

5.
S.

7.

8.

(A m o u n ts i n d o l l a r s )

B oo k v a l u e o f f o r e i g n p r o p e r t i e s a t b e g i n n i n g
o f q u a rte r
A d d itio n s (c h a rg e s ):
Home o f f i c e c h a r g e s f o r c a s h r e m i t t e d o r
m e r c h a n d is e , m a c h in e ry , e t c . , s h ip p e d to
b ra n c h
O t h e r hom e o f f i c e c h a r g e s ( r o y a l t i e s ,
s e r v ic e f e e s , U. S . e x p e n se s c h a rg e a b le
to b ra n c h o p e r a tio n s , e t c . )
N et e a rn in g s o f fo re ig n p r o p e r tie s
( P e r i o d _ __ __ __ __ __ __ __ __ __ __ __ __ _ )
T o ta l a d d itio n s
D e d u c tio n s ( c r e d i t s ) :
C a s h r e m i t t a n c e s o f in c o m e t o hom e o f f i c e
A l l o t h e r c a s h r e m i t t a n c e s t o hom e o f f i c e
S h i p m e n t s o f m e r c h a n d i s e , e t c . , t o hom e
o ffic e
T o ta l d e d u c tio n s
B oo k v a l u e o f f o r e i g n p r o p e r t i e s a t e n d o f
q u a rte r
In s tru c tio n s

A.
R e p o r t o n t h i s fo rm u n i n c o r p o r a t e d f o r e i g n b r a n c h e s a n d o t h e r d i r e c t
f o r e i g n o p e r a t i o n s o f A m e r ic a n c o r p o r a t i o n s , a s r e f l e c t e d o n t h e b o o k s o f t h e
•h e a d o f f i c e i n t h e U n i t e d S t a t e s .
S e p a ra te r e p o r ts sh o u ld b e f i l e d f o r each
fo re ig n - b r a n c h .
T he r e p o r t s h o u l d b e b a s e d o n q u a r t e r s e n d i n g M a rc h 3 1 , J u n e 3 0 ,
S e p te m b e r 3 0 , a n d D ecem ber 3 1 , a n d s h o u ld b e s u b m itt e d w it h i n 30 d a y s a f t e r th e
c lo s e o f th e q u a r te r .
B.
T he f o ll o w in g i n s t r u c t i o n s a p p ly t o t h e c o r r e s p o n d i n g ly n u m b ered
ite m s ab o v e :
1 and 8 .
B ook v a l u e o f f o r e i g n p r o p e r t i e s s h o u l d c o m p r i s e a l l
a s s e t s o f th e b ra n c h , in c lu d in g th o s e c a r r i e d o n ly
o n t h e hom e o f f i c e b o o k s .
3.
Do n o t i n c l u d e U n i t e d S t a t e s in c o m e t a x e s i n t h i s i t e m .
4.
R e p o r t t h e " n e t e a r n i n g s o f f o r e i g n p r o p e r t i e s " w hen
t a k e n u p o n t h e b o o k s o f t h e h o me o f f i c e a n d a f t e r
d e d u c tio n f o r an y e x p e n s e s i n c u r r e d i n th e U n ite d S t a t e s by
o r on b e h a l f o f th e f o r e ig n b r a n c h , o th e r th a n U n ite d S t a t e s
in c o m e t a x e s .
( I t i s a s s u m e d t h a t s u c h e x p e n s e s w o u ld b e
r e f l e c t e d i n ite m 2 o r 3 ) .
6.
I f re m itta n c e s a r e n o t s e g re g a te d a s to p u rp o se , r e p o r t a l l
c a sh r e m itta n c e s in t h i s ite m .
0.
I f th i s i s th e f i r s t re p o rt f o r th i s b ra n c h , p le a s e
o f b u s i n e s s i n w h ic h t h e b r a n c h w i l l e n g a g e .

in d ic a te

th e ty p e

183

P r i v a t e M i s c e l l a n e o u s S e r v ic e s
T h e p r iv a te m is c e lla n e o u s s e r v ic e s a c c o u n t c o n s is ts o f n in e ite m s , a s f o llo w s :
(1 )

in s u r a n c e

r e la te d
(6 )

and

ite m s ;

e le c tr ic

(2 )

(4 )

r e in s u r a n c e ;

m o tio n -p ic tu r e

hom e

and

o ffic e

p u rch ases

c o m m u n ic a tio n s ;

(8 )

exp en ses,
of

(5 )

and

gas and
and
and

(2 )

in te r n a tio n a l

s a le s

a d v e r tis in g ;

In su ra n ce an d

(7 )

r o y a ltie s ,

( 9 ) fo r e ig n g o v e r n m e n t r e p r e s e n ta tio n in t h e U n ite d S ta te s .
T h e sou rces
m e th o d s o f e s t im a t io n o f t h e s e c o m p o n e n ts a r e d is c u s s e d b r ie fly b e lo w :
(1 )

pow er;

(3 )

r e n ta ls ;

r e in s u r a n c e .— A n n u a l d a t a r e g a r d in g t r a n s a c t io n s b e ­

t w e e n f o r e ig n -c o n t r o lle d in s u r a n c e c o m p a n ie s o p e r a t in g in t h e U n it e d
t h e ir p a r e n t c o m p a n ie s w e r e o b ta in e d p r im a r ily fr o m

S ta te s an d

th e In su r a n c e D e p a r tm e n t

o f th e S ta te o f N e w Y o r k , w h ic h o b ta in e d th e in fo r m a tio n fr o m p u b lis h e d fin a n c ia l
s t a t e m e n t s file d w it h it .
D a t a f o r t h e r e la t iv e ly s m a ll n u m b e r o f c o m p a n ie s n o t
d o in g b u s in e s s in th e S t a t e o f N e w Y o r k w e r e o b ta in e d d ir e c t f r o m t h e c o m p a n ie s .
I n fo r m a tio n r e g a r d in g th e o p e r a tio n s o f A m e r ic a n -c o n tr o lle d c o m p a n ie s d o in g
b u s in e s s a b r o a d w a s o b ta in e d m a in ly fr o m th e c o m p a n ie s t h e m s e lv e s .
G ro ss
r e c e ip ts a n d p a y m e n ts in c lu d e d th e o p e r a tio n s o f b o th A m e r ic a n a n d fo r e ig n
c o m p a n ie s a n d a ls o in c lu d e d d a ta p r e p a r e d b y t h e D e p a r tm e n t o f C o m m e r c e
r e g a r d in g t h e p r e m iu m s r e c e iv e d fr o m A m e r ic a n s a n d c la im s p a id to A m e r ic a n s
b y fo r e ig n r e in s u r e r s lo c a te d o u ts id e th e U n ite d S ta te s .
( 3 ) R o y a l t i e s , h o m e o ffic e e x p e n s e s , a n d r e l a t e d i t e m s . — S e e

th e

s e c tio n

of

t h is a p p e n d ix d e a lin g w it h in c o m e o n in v e s tm e n ts , p . 1 8 2 .
( 4 ) M o tio n -p ic tu r e r e n ta ls .— R e c e ip t s fr o m f o r e ig n e r s f o r t h e r e n t a l o f A m e r i­
can

m o tio n

p ic tu r e s w e r e c a r r ie d

e a r n in g s fr o z e n
“ r e c e iv e d .”
A s

on

a

r e m itta n c e b a s is a n d

in t h e U n it e d K in g d o m
in th e c a s e o f in c o m e

t h e r e fo r e e x c lu d e d

a n d in o th e r c o u n tr ie s , u n til a c tu a lly
r e c e ip ts fr o m
d ir e c t in v e s tm e n ts , th e

T r e a s u r y D e p a r t m e n t ’s s u r v e y o f A m e r i c a n i n v e s t m e n t s i n f o r e i g n c o u n t r i e s
( T F R 5 0 0 ) p r o v id e d t h e b a s ic d a t a f o r 1 9 4 2 a n d d a t a f o r o th e r y e a r s w e r e
d e r iv e d b y m e a n s o f s a m p le d a t a o b t a in e d d ir e c t f r o m A m e r ic a n f ilm p r o d u c e r s
a n d s u p p le m e n te d b y c o n s u la r r e p o r ts a n d in c o m e -t a x r e tu r n s file d w it h th e
B u rea u o f In te r n a l R ev en u e.
(5 )

G as

and

(G )

p o w e r .— E x p o r t s

e le c tr ic

and

im p o r ts

of

gas

and

e le c tr ic

p o w e r a r e n o t in c lu d e d in t h e o ffic ia l U n it e d S t a t e s t r a d e s t a t is t ic s , n o r is
t h e r e a n y o t h e r o ffic ia l U n it e d S t a t e s s o u r c e f o r t h e s e d a t a .
C o n s e q u e n tly , th e
f ig u r e s u s e d

in

t h is b u lle tin

a re ta k en

fro m

M e x ic o — t h e t w o f o r e ig n c o u n t r ie s w it h
th e c a se

o f C an ad a, th e

d a ta

o ffic ia l p u b lic a t io n s o f C a n a d a

w h ic h

w e r e o b ta in e d

su ch

fro m

p u b lic a tio n o f th e D o m in io n B u r e a u o f S t a t is t ic s .
fr o m t h e A n u a r io E s t a d ís t ic o f o r 1 9 4 1 a n d fr o m

tr a n s a c tio n s ta k e p la c e .
T rade of C anada, an

and
In

annual

F o r M e x ic o , t h e y w e r e t a k e n
v a r io u s is s u e s o f th e R e v is ta

d e E s t a d ís tic a , a m o n th ly p e r io d ic a l ; b o th o f t h e s e a r e p u b lis h e d b y th e D ir e c c ió n
G e n e r a l d e E s t a d ís t ic a d e lo s E s t a d o s U n id o s d e M é jic o .
( 7 ) I n te r n a tio n a l c o m m u n ic a tio n s a n d ( 8 ) a d v e r tis in g .— D a t a

o n r e c e ip ts a n d

p a y m e n ts o n a c c o u n t o f c o m m u n ic a tio n s s e r v ic e s in v o lv in g t r a n s a c tio n s b e tw e e n
U n it e d S t a t e s a n d f o r e ig n c o m m u n ic a tio n s c o m p a n ie s , a s w e ll a s th e e x p e n d it u r e s
o f U n ite d S t a t e s b u s in e s s e s f o r a d v e r t is in g a b r o a d , a r e o b ta in e d d ir e c t b y
c ir c u la r iz a tio n

of

th e

c o m p a n ie s .e n g a g e d

a d j u s t e d to a llo w f o r in c o m p le t e c o v e r a g e .
( 9 ) F o r e ig n g o v e r n m e n t r e p r e s e n ta tio n

in

in

th ese

th e

b u s in e s s e s .

U n ite d

T h ese

d a ta

S ta te s .— T h is

are

account

in c lu d e s a d m in is t r a t iv e e x p e n d it u r e s in t h e U n it e d S t a t e s b y f o r e ig n g o v e r n m e n ts
f o r d ip lo m a tic r e p r e s e n ta tio n , p u r c h a s in g m is s io n s , a n d o th e r a c t iv it ie s .
D ir e c t
in fo r m a tio n o n

th is su b je c t w a s s c a n ty

a n d it w a s p o s s ib le to m a k e o n ly

a very

r o u g h e s t im a t e o f th e a m o u n ts in v o lv e d in t h e a c c o u n t.

G o v e r n m e n t M is c e lla n e o u s

S e rv ic e s

A s in o th e r G o v e r n m e n t a c c o u n ts , th e s o u r c e o f d a ta o n U n ite d

S ta te s G o v ern ­

m e n t s e r v ic e tr a n s a c tio n s w a s w it h f e w e x c e p tio n s — t r a n s p o r ta tio n b e in g t h e m o s t
im p o r ta n t— th e

a p p r o p r ia te

G overnm ent

C l e a r i n g O ffic e f o r F o r e i g n T r a n s a c t i o n s .

agency,

e ith e r

d ir e c t

or

th ro u g h

th e

I n so m e c a s e s , h o w e v e r , c e r ta in a d ju s t­

m e n ts o r r e fin e m e n ts o f th e d a ta a s o r ig in a lly tr a n s m it te d to u s h a d to b e m a d e
t o b r in g th e m in to c o n fo r m it y w it h b a la n c e -o f-p a y m e n ts r e q u ir e m e n ts .
C o m m e n ts
o n th e e s tim a tio n a n d c o n te n t o f t h e G o v e r n m e n t s e r v ic e s a c c o u n ts f o l lo w :
T h e fig u r e s p r e s e n t e d u n d e r t h e h e a d in g o f G o v e r n m e n t m is c e lla n e o u s s e r v ic e s
in c lu d e a ll s e r v ic e t r a n s a c tio n s to w h ic h th e U n it e d S t a t e s G o v e r n m e n t w a s a

184

p a r t y ,7 e x c e p t f o r t r a n s p o r t a t io n s e r v ic e s , w h ic h a r e s h o w n s e p a r a t e ly b u t a r e
d is c u s s e d b e lo w to s o m e e x te n t, f o r r e a s o n s w h ic h w ill b e a p p a r e n t.
T h e d a ta
in c lu d e ' b o t h le n d - le a s e a n d
cash

r e v e r s e le n d -le a s e t r a n s a c tio n s o n

r e c e ip ts a n d p a y m e n ts

L e n d -L e a se

on

th e o n e h a n d

and

th e o th e r .

S e r v ic e s

T h e fig u r e s u s e d in t h is b u lle tin f o r s e r v ic e s r e n d e r e d to fo r e ig n g o v e r n m e n ts
u n d e r le n d - le a s e a r r a n g e m e n t s a r e b a s e d o n t h o s e s h o w n in t h e l e n d - le a s e f is c a l
s t a t is t ic s , b u t a n in d e p e n d e n t e s t im a t e o f th e c o s t o f le n d -le a s e s h ip p in g s e r v ic e s
( i . e ., f r e i g h t o n l e n d - l e a s e e x p o r t s )
in t h a t so u r c e .

h a s b een su b tr a c te d fro m

t h e fig u r e s a s g iv e n

T h e r e s u lt in g fig u r e f o r G o v e r n m e n t le n d - le a s e s e r v ic e s is , c o n s e ­

q u e n tly , a r e s id u a l ite m .
T h e e s t im a t e f o r le n d - le a s e s h ip p in g s e r v ic e s w a s d e r iv e d in a w a y e n tir e ly
a n a lo g o u s t o t h e m e th o d u s e d in e s t im a t in g o th e r s h ip p in g s e r v ic e s .
I t fo r m s an
a p p r e c ia b ly s m a lle r p r o p o r tio n o f to t a l le n d - le a s e s e r v ic e s t h a n t h e “ a p p r o x im a te ly
o n e -h a lf” o f t o t a l s e r v ic e s w h ic h , a c c o r d in g to t h e t e x t u a l d is c u s s io n a c c o m p a n y ­
in g t h e le n d - le a s e r e p o r ts , w a s d e v o te d to s h ip p in g ite m s .

S in c e o u r p r o c e d u r e is

d iffe r e n t fr o m t h a t w h ic h w a s e m p lo y e d in th e le n d -le a s e r e p o r ts , t h e r e is n o
r e a s o n w h y t h e t w o e s t im a t e s s h o u ld a g r e e e x a c t ly ; in a d d itio n , h o w e v e r , th e
le n d -le a s e r e p o r ts tr e a t a s t r a n s p o r ta tio n
n o t c u s to m a r ily so r e g a r d e d
T he

la i'g e s t

ite m

of

th is

co sts

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s iz a b le

ite m s w h ic h

are

fo r b a la n c e -o f-p a y m e n ts p u r p o se s.
sort

is

th e

v a lu e

of

v e s s e ls

tra n sfer red

to

fo r e ig n

g o v e r n m e n ts.
T h e te c h n iq u e e m p lo y e d f o r e f fe c t in g t h e s e t r a n s f e r s w a s to
c h a r te r th e v e s s e ls to fo r e ig n g o v e r n m e n ts fo r 1 d o lla r a y e a r ; b u t u n d e r th e
le n d - le a s e a c c o u n tin g s y s t e m , t h e ir f u ll v a lu e w a s e n te r e d in t h e b o o k s a s a c o s t
o f le n d -le a s e o p e r a tio n s , d e s p ite t h e f a c t t h a t it w a s d e fin ite ly u n d e r s to o d , u n d e r
t h e te r m s o f t h e L e n d -L e a s e A g r e e m e n ts , t h a t th e v e s s e ls w o u ld b e r e tu r n e d to
th e U n ite d S t a te s a t t h e e n d o f th e w a r .
F r o m t h e b a la n c e -o f-p a y m e n ts s t a n d ­
p o in t, t h e m o s t d e s ir a b le p r o c e d u r e w o u ld b e to t a k e o u t t h e f u ll v a lu e o f t h e v e s ­
s e ls a n d s u b s t it u t e s o m e a p p r o p r ia t e ly e s t im a t e d fig u r e f o r r e n t a l o r c h a r t e r
v a lu e

of

th e

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it p o s s ib le

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over

tio n a c c o u n t in a u n ifo r m
T h e p r e s e n t a llo c a t io n
tim e

th e

p e r io d

d u r in g

w h ic h

th ey

w ere

a c tu a lly

under

fo r e ig n g o v e r n m e n ts .
B u t s in c e it is im p o s s ib le u n d e r th e c ir c u m ­
m a k e s u c h a n e s t im a te , it w o u ld s e e m t h a t th e n e x t b e s t t h in g is to
it e m u n d e r G o v e r n m e n t m is c e lla n e o u s s e r v ic e s , w h ic h a t le a s t m a k e s
to t r e a t th e le n d -le a s e a n d n o n -le n d -le a s e p o r tio n s o f th e tr a n s p o r ta ­

d is tr ib u tio n

w a y .8
o f le n d -le a s e

o b ta in a b le

fro m

th e

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by

le n d -le a s e

years
r e p o r ts.

a ls o

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L arge

fr o m

and

th e

v a r ia b le

la g s in r e p o r tin g m a k e t h e te m p o r a l d is tr ib u tio n o f le n d - le a s e t r a n s f e r s a s s h o w n
in th e le n d -le a s e s t a t is t ic s u n r e lia b le fr o m a b a la n c e -o f-p a y m e n ts p o in t o f v ie w .
T h is p r o b le m w a s a t t a c k e d in t h e c a s e o f le n d - le a s e m e r c h a n d is e b y d is tr ib u tin g
t h e t r a n s f e r d a t a o v e r tim e in p r o p o r tio n to th e c o r r e s p o n d in g te m p o r a l d is tr ib u ­
t io n o f le n d -le a s e e x p o r ts a s s h o w n in th e U n ite d

S t a te s tr a d e s t a tis t ic s .“

In

th e

a b s e n c e o f a m o r e p la u s ib le m e th o d o f d e a lin g w it h t h e a n a lo g o u s p r o b le m fo r
le n d -le a s e s e r v ic e s , t h e s e h a v e a ls o b e e n p h a s e d w it h th e le n d -le a s e e x p o r t
s ta tis tic s .

O th e r
U n ite d
w ith th e

C a sh

M ilita r y

P a y m e n ts

S t a t e s m ilit a r y c a s h e x p e n d itu r e s w e r e m a d e la r g e ly in c o n n e c tio n
c o n s tr u c tio n a n d o p e r a tio n o f v a r io u s ty p e s o f in s t a lla t io n s .
It has

a lr e a d y b e e n n o te d t h a t m o s t o f t h e s e w e r e fu r n is h e d to th e U n ite d S t a t e s G o v ­
e r n m e n t a s r e v e r s e le n d -le a s e .
I n a d d it io n , a la r g e p r o p o r tio n o f s u c h p a y m e n ts
a s w e r e m a d e f o r in s t a lla t io n s a b r o a d w e n t to d o m e s t ic fir m s a n d
c o n s id e r e d f o r e ig n tr a n s a c tio n s .
F o r th e s e r e a so n s, m ilita r y c a sh
fo r s e r v ic e s
e x p e c te d .

o th e r

th a n

net

tr o o p

pay

w ere

not

as

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as

th u s a r e n o t
e x p e n d itu r e s

m ig h t

have

been

, N e t tr o o p p a y m ig h t b e r e g a r d e d a s a n e x c e p tio n to t h i s s ta t e m e n t, s in c e t h e U n ite d
S ta te s p a r tie s to th is ty p e o f tr a n s a c tio n s w e re in d iv id u a l m e m b e rs o f th e a r m e d fo rc e s .
H o w e v e r , t h e l o c a l c u r r e n c y w i t h w h i c h t h e t r o o p s w e r e p a i d w a s r e c e iv e d b y t h e G o v e r n ­
m e n t , a n d i t s e e m s m o r e r e a l i s t i c , a s w e l l a s m o r e c o n v e n i e n t , t o r e g a r d t h e o f f s e t, i. e.,
th e s u b s e q u e n t e x p e n d itu r e o f th e m o n e y , a s b e in g a ls o a G o v e rn m e n t tr a n s a c ti o n .
T h is
is ta n t a m o u n t to re g a r d in g th e e x p e n d itu re s a s h a v in g b e e n m a d e b y th e tr o o p s in th e ir
o ff ic ia l c a p a c i t y .
8 F o r a m o r e d e t a i l e d d e s c r i p t i o n o f t h e m e t h o d o l o g y in v o l v e d i n e s t i m a t i n g o c e a n
s h ip p in g s e rv ic e s , see th e s e c tio n o f t h i s a p p e n d ix d e a lin g w it h th e t r a n s p o r t a t i o n
a c c o u n t, p. 174.
0 S ee p . 1 72 o f th e s e c tio n o n m e rc h a n d is e tr a d e .

7 6 9 1 5 5 — 48

-13

185

N o n m ilita r y

C a sh

P a y m en ts

U n it e d S t a t e s c iv ilia n a g e n c ie s c o n tin u e d in w a r tim e , a s t h e y h a d in p e a c e tim e ,
to m a k e c a s h e x p e n d itu r e s a b r o a d .
T h ese
r e p r e s e n ta tio n , t h e m a in te n a n c e o f v a r io u s
f o r e ig n

d is b u r s e m e n ts o f th e

eral W ork s A gen cy)

e x p e n d it u r e s w e n t f o r d ip lo m a tic
m is s io n s , a n d s im ila r it e m s .
T he

P u b lic R o a d s A d m in is tr a tio n

a r e a ls o in c lu d e d in t h is c a te g o r y .

(a

part of

th e

F ed­

T h e s e d is b u r se m e n ts r e p ­

r e s e n t s u m s e x p e n d e d a b r o a d b y fir m s u n d e r c o n tr a c t to t h e P u b lic R o a d s A d m in ­
is t r a t io n f o r c o n s tr u c tio n w o r k in L a t in A m e r ic a ( t h e P a n -A m e r ic a n H ig h w a y ) .

S p e c ia l-C u r r e n c y T r a n s a c tio n s
In

m any

c o u n tr ie s ,

c u r r e n c y w h ic h
p a y m e n ts

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e a r ly

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few
of

th e

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in v a s io n — tr o o p

r e c ip ie n ts

w ere fr e e

u n d e r a n y m u tu a lly a g r e e a b le a r r a n g e m e n t.
sy ste m

w as

not

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a re a , tro o p s w e r e

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th e

d e s ir a b le ,

at

v a r io u s

N e th e r la n d s

and

tim e s

and

lo c a l
N o r th

a ctu a l

lo c a l r e s id e n ts

a n u m b e r o f c o u n tr ie s th is
s p e c ia l

a r r a n g e m e n ts

w e r e m a d e w h e r e b y th e c o u n tr y c o n c e r n e d w o u ld a d v a n c e it s c u r r e n c y
U n ite d S t a t e s A r m y w it h o u t r e c e iv in g c o n c u r r e n t p a y m e n t in d o lla r s .
T h e s e s o -c a lle d “ s p e c ia l c u r r e n c y ” a r r a n g e m e n ts w e r e o f tw o k in d s :
D enm ark,

in

concurrent

B e lg iu m ,

its

to

th e

C z e c h o s lo v a k ia ,

p o s s e s s io n s ,

N orw ay,

and

e v e n t u a lly I t a ly — th e U n it e d S t a t e s d id r e c o g n iz e a d o lla r lia b ilit y fo r e x p e n d i­
t u r e s b y m e m b e r s o f th e a r m e d f o r c e s a s w e ll a s f o r o th e r m ilit a r y s e r v ic e s
r e c e iv e d f r o m t h e s e c o u n t r ie s b u t n o t e lig ib le to b e c la s s if ie d a s r e v e r s e le n d le a s e .
T o w a r d t h e e n d o f 1 9 4 5 o r in 1 9 4 6 , s e t t le m e n t s o f s p e c ia l-c u r r e n c y
o b lig a tio n s w e r e r e a c h e d w it h m o s t o f t h e s e c o u n tr ie s .
I n g e n e r a l, th e p r in c ip le
fo llo w e d

in

m a k in g

th ese

s e ttle m e n ts

w as

to

r e im b u r s e

th e

co u n try

con cerned

f o r “ n e t tr o o p p a y ” ( in c lu d in g in t h is c o n c e p t c e r ta in o th e r s e r v ic e ite m s , a s
a lr e a d y m e n t io n e d ) a s c e r tifie d b y th e W a r D e p a r tm e n t; t h e s e n e t tr o o p p a y
fig u r e s w e r e n o t n e c e s s a r ily t h e s a m e a s t h o s e u s e d in c o m p ilin g o u r b a la n c e -o fp a y m e n ts s t a t is t ic s , s in c e c e r t a in a d j u s t m e n t s w e r e m a d e in t h e d a t a b e fo r e th e
fig u r e s c e r tifie d to b y t h e A r m y w e r e f in a lly a r r iv e d a t.
T h e “ s p e c ia l c u r r e n c y ” a r r a n g e m e n ts w it h t h e s e A llie d

c o u n tr ie s

have

now

(J u n e 1 9 4 7 ) b e e n te r m in a te d a n d s e t t le m e n t s o f t h e o b lig a tio n s u n d e r th e m
r e a c h e d , e x c e p t in th e c a s e s o f C z e c h o s lo v a k ia a n d th e N e th e r la n d s .
2 . I n th e e n e m y c o u n tr ie s , A u s tr ia , G e r m a n y , J a p a n
(a n d
th e R y u k y u s),
K o r e a , a n d , a c c o r d in g to th e o r ig in a l p la n , I t a ly , w h ic h

w a s la t e r p la c e d

on

th e

s a m e b a s is a s t h e A llie d c o u n tr ie s , t h e W a r D e p a r tm e n t a s s u m e d n o o b lig a tio n
to r e im b u r s e t h e c o u n tr y c o n c e r n e d f o r it s lo c a l-c ù r r e n c y e x p e n d it u r e s .
I n th is
s e c o n d ty p e o f a r r a n g e m e n t, t h e m a r k s , s c h illin g s , o r y e n w e r e in e ffe c t a g if t
t o t h e U n it e d S t a t e s G o v e r n m e n t a n d a s s u c h h a v e b e e n o f f s e t in t h e u n ila t e r a l
tr a n s fe r a c c o u n t.
I t s h o u ld b e k e p t in m in d t h a t th e s p e c ia l-c u r r e n c y t r a n s a c tio n w h ic h a ffe c ts
t h e G o v e r n m e n t m is c e lla n e o u s s e r v ic e s a c c o u n t is ( n e t ) e x p e n d itu r e s in s p e c ia l
c u r r e n c ie s b y th e G o v e r n m e n t, a n d n o t t h e ir o r ig in a l a c q u is itio n .
T he net ex­
p e n d itu r e s a r e o ffs e t b y c r e d it e n tr ie s in t h e u n ila t e r a l o r s h o r t-te r m c a p ita l
( lia b il it ie s ) a c c o u n ts , d e p e n d in g o n w h e t h e r th e c u r r e n c y w a s n o n r e d e e m a b le o r
r e d e e m a b le .

P e r s o n a l R e m itta n c e s

P a y m e n ts
E s t im a t e s o f t o t a l c o n tr ib u tio n s o f in d iv id u a ls in t h e U n it e d
c o u n tr ie s
th ro u g h

w ere

com p osed

of

v a r io u s

a g e n c ie s

su ch

sep a ra te
as

b an k s,

e s tim a te s

of

s te a m s h ip

and

c o m m u n ic a tio n s c o m p a n ie s , a n d b y p o s t a l m o n e y o r d e r s .
s p e c ia l d e d u c tio n s fr o m

t h e w a g e s o f im p o r te d

a lie n

S t a te s to fo r e ig n

c o n tr ib u tio n s

fo rw a rd ed

t r a v e l c o m p a n ie s , a n d
I n a d d itio n , t h e r e w e r e

w o r k e r s w h ic h

w ere m ade

b y t h e D e p a r tm e n t o f A g r ic u ltu r e a n d th e D e p a r tm e n t o f L a b o r u n d e r t h e ir w o r k
p rogram s.
B a n k s a n d s im ila r in s t it u t io n s h a n d lin g p e r s o n a l r e m itta n c e s h a d b e e n c ir c u ­
la r iz e d a n n u a lly f o r d a t a o n t h e s u b je c t.
I n 1 9 4 4 in fo r m a tio n o b ta in e d fr o m th e
F o r e ig n F u n d s C o n tr o l, c o n c e r n in g b a n k s r e p o r tin g p e r s o n a l r e m it t a n c e s to
b lo c k e d n a t io n a ls o n f o r m s G L 3 2 a n d G L 3 3 in 1 9 4 2 a n d 1 9 4 3 in d ic a te d t h a t o u r
s a m p le fo r p r e v io u s y e a r s h a d c o v e r e d a b o u t 5 0 p e r c e n t o f th e p e r s o n a l-r e m itta n c e

186

b u s in e s s b e in g t r a n s a c te d

th ro u g h

b a n k in g c h a n n e ls .

m a tio n , w e w e r e e n a b le d t o in c r e a s e o u r s a m p le t o
p e r c e n t o f t h e t o t a l b u s in e s s .

A s a

r e s u lt o f t h is

c o v e r b a n k s d o in g

in fo r ­

about 95

D a t a h a v e a ls o b e e n o b ta in e d th r o u g h r e p o r ts r e c e iv e d fr o m o th e r a g e n c ie s —
s t e a m s h ip a n d t r a v e l c o m p a n ie s , a n d o th e r s .
D u r in g th e w a r , th e n u m b e r o f
t h e s e h a n d lin g p e r s o n a l r e m itta n c e s d e c r e a s e d .
ous

r e m itte r s

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on

R e p o r ts fro m

th e

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t h e s e m is c e lla n e ­
th a t

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had

fu ll

o n a s a m p le b a s is w a s n e c e s s a r y .

A n e s t im a te w a s a ls o m a d e f o r t h e v a lu e o f g if t p a r c e ls , c h ie fly fo o d a n d c lo th ­
in g , w h ic h b e g a n t o g o a b r o a d In la r g e v o lu m e a f t e r t h e w a r e n d e d .

S u c h p a r c e ls

a r e n o t in c lu d e d in th e r e g u la r e x p o r t s t a t is t ic s a n d it w a s n e c e s s a r y t o e s t im a t e
t h e ir v a lu e , w h ic h

w a s d o n e b y a p p ly in g a n

a v e r a g e ra te o f 6 0 c e n ts p er p ou n d .

D a t a r e g a r d in g th e n u m b e r o f p o u n d s o f p a r c e l-p o s t s h ip m e n ts , b y
d e s t i n a t i o n , w e r e r e c e i v e d f r o m t h e P o s t O ffic e D e p a r t m e n t .

c o u n tr y

o f

D a t a r e g a r d in g d e d u c tio n s fr o m t h e w a g e s o f im p o r te d a lie n w o r k e r s w e r e o b ­
ta in e d fr o m t h e D e p a r tm e n t o f A g r ic u ltu r e a n d th e D e p a r tm e n t o f L a b o r c o v e r ­
in g th e fo r c e d s a v in g s o f t h e s e w o r k e r s .
d e d u c tio n p la n w e r e in c lu d e d e ls e w h e r e .

V o lu n ta r y

r e m itta n c e s

o u ts id e

P o s t a l m o n e y o r d e r d a t a f o r fis c a l y e a r s 1 9 4 0 -4 4 w e r e o b ta in e d fr o m
R eport

of

th e

P o stm a ste r

G e n e r a l.

T h ese d a ta

w ere

ta b u la te d

o f th e

th e A n n u a l

g e o g r a p h ic a lly

j u s t a s w e r e t h o s e f o r t h e b a n k s — w it h a d j u s t m e n t s b e in g m a d e to e lim in a t e o r ­
d e r s p a y a b le in t h e C a n a l Z o n e a n d V ir g in I s la n d s .
B e g i n n i n g w i t h J u n e 1 9 4 4 ,.
q u a r t e r l y d a t a w e r e f u r n i s h e d b y t h e P o s t O ffic e D e p a r t m e n t t o t h e C le a r i n g O f f ic e
fo r F o r e ig n T r a n s a c tio n s .
A s in p a s t y e a r s , it w a s a s s u m e d t h a t a ll p o s t a l m o n e y
o r d e r s c o n s is t e d o f p e r s o n a l r e m itta n c e s .
e n tir e ly so u n d ; h o w e v e r , it is lik e ly th a t,

T h is a s s u m p tio n
in g e n e r a l, p o s ta l

o b v io u s ly is n o t
m o n e y o r d e r s do-

c o v e r t r a n s a c tio n s n o t e ls e w h e r e e n te r e d in th e b a la n c e -o f-p a y m e n ts s t a te m e n t.

R e c e ip ts
D a t a f o r p o s t a l m o n e y o r d e r r e c e ip t s w e r e o b t a in e d in t h e m a n n e r d e s c r ib e d
f o r p a y m e n ts fig u r e s .
B e c a u s e o f t h e in a b ility o f b a n k s to fu r n is h in fo r m a tio n o n p e r s o n a l r e m itta n c e s
r e c e iv e d fr o m a b r o a d , w e h a v e e s t im a te d s u c h r e c e ip ts b y a s s u m in g t h a t p o s t a l
m on ey

o r d e r s r e p r e se n te d

a c c o u n t.

th e s a m e p r o p o r tio n

T h e r e s u lt in g fig u r e s , s h o w n

o f th e to ta l o n b o th

in a p p e n d ix C , d o n o t s e e m

s id e s o f t h e
u n r e a s o n a b le

c o n s id e r in g th e n u m b e r o f A m e r ic a n s k n o w n to b e r e s id in g a b r o a d .

I n s t i t u t i o n a l R e m it t a n c e s
E s t im a t e s o f r e m it t a n c e s to a n d e x p e n d it u r e s in f o r e ig n c o u n t r ie s b y in s t it u ­
t io n s fo r r e lig io u s , s c ie n tific a n d p h ila n th r o p ic p u r p o s e s (in c lu d in g w a r r e lie f )
w e r e b a s e d o n tw o p r in c ip a l s o u r c e s o f d a t a :
1.
R e p lie s to a n a n n u a l le t t e r fr o m th e
w h ic h f o l lo w s :
of

D e p a r tm e n t o f C o m m erce, th e

tex t o f

“ I n c o n n e c tio n w it h i t s a n n u a l s tu d y o f th e b a la n c e o f in te r n a t io n a l p a y m e n ts
th e U n ite d S t a te s , t h is U n it r e c e iv e s e a c h y e a r fr o m r e lig io u s , c h a r ita b le ,

e d u c a tio n a l a n d s c ie n tific o r g a n iz a t io n s r e p o r ts s h o w in g th e a m o u n t o f f u n d s
a n d th e v a lu e o f g o o d s s e n t to f o r e ig n c o u n tr ie s .
A s ta te m e n t o f r e m itta n c e s
a n d s h ip m e n ts b y y o u r o r g a n iz a tio n d u r in g 1 9 4 5 w ill b e a p p r e c ia te d .
in g in s tr u c t io n s a r e g iv e n f o r y o u r c o n v e n ie n c e :

T h e fo llo w ­

“ ( 1 ) I t is d e s ir e d to o b ta in a d is tr ib u tio n o f r e m it ta n c e s b y in d iv id u a l c o u n ­
t r ie s in s o f a r a s p o s s ib le ; a m o u n t o f fu n d s r e m it te d a n d v a lu e o f g o o d s s h ip p e d
s h o u ld b e s h o w n s e p a r a te ly .
“ (2)

P r e c is e

a m o u n ts

are

not

e s s e n tia l;

e s tim a te s

in

rou nd ed

th o u sa n d s

d o l l a r s w i l l s u ffic e .
F o r t h is r e a s o n , it is n o t n e c e s s a r y th a t r e tu r n s b e
u n til a ll a c c o u n ts f o r th e y e a r a r e c lo s e d .
“ ( 8 ) D a t a f o r t h e c a le n d a r y e a r a r e p r e fe r r e d , b u t fig u r e s c o v e r in g
c o m p le te d f is c a l p e r io d a r e a c c e p ta b le .
“ (4)

S u m s s p e n t in

th is

c o u n tr y

fo r

a d m in is tr a tiv e

ex p en ses, su m s

o f

w ith h e ld
th e

la s t

c o lle c te d

d u r in g t h e y e a r b u t n o t t r a n s f e r r e d a b r o a d , o r s u m s c o lle c t e d in o th e r c o u n t r ie s
s h o u ld n o t b e in c lu d e d in r e p o r te d a m o u n ts . R e m it t a n c e s o r s h ip m e n t s to A la s k a ,
H a w a ii, P u e r to R ic o , C a n a l Z o n e , o r t h e V ir g in I s la n d s s h o u ld n o t b e in c lu d e d ,
s in c e t h e s e a r e p a r ts o f th e b a la n c e -o f-p a y m e n ts a r e a o f th e U n ite d S ta te s .
“ ( 5 ) I f r e m it ta n c e o r s h ip m e n ts b y y o u r o r g a n iz a tio n a r e lik e ly to h e d u p li­
c a t e d in t h e
y o u r r e p ly .

r e tu r n

fro m

any

o th e r

o r g a n iz a tio n ,

th e

fa c t

s h o u ld

be

n o ted

in

187

“If

th e r e is n o th in g to

r e p o r t o n b e h a lf o f y o u r o r g a n iz a tio n , a

t h a t e ffe c t w ill b e a p p r e c ia te d .
r e p ly .”
2.
R e p o r ts

to

th e

A

fra n k e d

P r e s i d e n t ’s

C o m m itte e o n V o lu n ta r y

W ar

r e tu r n

R e lie f

s ta te m e n t to

e n v e lo p e is e n c lo s e d

C o n tro l B o a r d

F o r e ig n A id o f t h e U n it e d

(n o w

fo r yo u r

th e

S ta te s G o v er n m en t)

A d v is o r y
by w ar

r e lie f a g e n c ie s r e g is te r e d w it h t h a t o r g a n iz a tio n .
T h e d a t a w e r e c o m p ile d b y c o u n t r y a n d b y s e c ta r ia n g r o u p s , a n d a s m a ll
o m is s io n s e s t im a t e w a s m a d e f o r e a c h g r o u p to a llo w f o r a g e n c ie s n o t r e p o r tin g .

P r iv a te
D ir e c t

C a p it a l M o v e m e n t s

In v estm en ts

T h e b a s ic s t a t is t ic s r e g a r d in g m o v e m e n ts o f A m e r ic a n
ta l

abroad

s e c tio n

w ere

d e a lin g

o b ta in e d
w ith

fr o m

in c o m e

th e

on

q u e s tio n n a ir e s

in v e s tm e n ts .

d ir e c t- in v e s tm e n t c a p i­

r e fe r r e d

T h ese

to

p r o v id e d

in

th e

a p p e n d ix

in fo r m a tio n

cov­

e r in g a d v a n c e s b y p a r e n t c o m p a n ie s to s u b s id ia r ie s , a d v a n c e s b y s u b s id ia r ie s in
f o r e ig n c o u n t r ie s to A m e r ic a n p a r e n t c o m p a n ie s , c h a n g e s in A m e r ic a n e q u ity
in fo r e ig n b r a n c h e s , a n d , b e g in n in g w it h th e la s t h a lf o f 1 9 4 5 , d a t a f o r p u r c h a s e s
a n d s a le s o f s e c u r it ie s o f s u b s id ia r y c o m p a n ie s .
fro m

F orm s 8K

A d d itio n a l d a ta

a n d 1 0 K file d b y c o r p o r a t io n s w it h

w e r e o b ta in e d

th e S e c u r itie s a n d E x c h a n g e

C o m m is s io n , in c o m e -ta x r e tu r n s file d w it h t h e B u r e a u o f I n t e r n a l R e v e n u e
1 1 2 0 ),

a n n u a l r e p o r ts

of

c o m p a n ie s , r e p o r ts

of

(F o rm

fin a n c ia l s e r v ic e s , c o n s u la r

p o r ts , th e p r e s s , a n d c o r r e s p o n d e n c e w it h A m e r ic a n c o m p a n ie s .
C a p ita l m o v e m e n ts d a t a r e la t in g to f o r e ig n d ir e c t in v e s t m e n ts

in

th e

re­

U n ite d

S t a te s w e r e n o t g e n e r a lly a v a ila b le e x c e p t in a f e w in s ta n c e s w h e n s u c h t r a n s ­
a c t io n s w e r e p u b lic iz e d .
S u c h d a ta a s w e r e a v a ila b le w e r e , o f c o u r s e , u tiliz e d .

N ew

Issu es

T h e a n n u a l v o lu m e o f n e w is s u e s o f f o r e ig n s e c u r itie s in th e U n ite d S t a t e s
c o m p r is e d b o th p u b lic a n d p r iv a t e o ffe r in g s a s c o m p ile d p r im a r ily fr o m in fo r m a ­
tio n
fo r

o b ta in e d
each

fro m

u n d e r w r ite r s a n d

is s u e w a s th e p o r tio n

f i n a n c i a l s e r v i c e s . 101 T h e

o f th e is s u e

ta k en

in

a m o u n t in c lu d e d

th e U n ite d

S ta te s le s s d is ­

c o u n ts a n d c o m m is s io n s .
I n t h is v o lu m e , r e fu n d in g is s u e s w e r e in c lu d e d a s
n e w is s u e s , w h ile t h e is s u e s r e fu n d e d w e r e in c lu d e d in a m o r tiz a tio n s .
T h is p r o ­
c e d u r e d iffe r s fr o m

th a t u sed

in

e a r lie r

c o m p ila tio n s

in

w h ic h

r e fu n d in g

is s u e s

w e r e n o t in c lu d e d a s n e w is s u e s (n o r t h e r e fu n d e d is s u e s c a r r ie d in a m o r tiz a ­
tio n s ).
S e c u r it ie s is s u e d in t h e U n it e d S t a t e s b y A m e r ic a n d ir e c t-in v e s tm e n t
c o m p a n ie s o p e r a t in g a b r o a d w e r e n o t in c lu d e d in t h e c a p ita l-m o v e m e n t fig u r e s f o r
n e w i s s u e s b u t w e r e i n c l u d e d i n m o v e m e n t s o f d i r e c t i n v e s t m e n t s . 11
t e r r it o r ie s o r p o s s e s s io n s o f t h e U n it e d S t a t e s w e r e n o t in c lu d e d .
In so m e c a se s it w a s n o t
tr a n s a c tio n s in o u ts ta n d in g
S ta te s

account

o f C a n a d ia n

p o s s ib le
is s u e s .
s e c u r itie s

N e w is s u e s o f

to d iffe r e n tia te b e tw e e n n e w
T h is w a s tr u e o f p u r c h a s e s
in

C anada

(se e

s e c tio n

on

is s u e s a n d
f o r U n ite d

T r a n s a c tio n s

in C a n a d ia n S e c u r it ie s ) s in c e t h e d a t a u s e d c la s s ifie d is s u e s a s o u t s t a n d in g e v e n
w h e n t h e A m e r ic a n p u r c h a s e r b o u g h t ( fr o m a C a n a d ia n b r o k e r ) a n e w s e c u r ity
t h a t w a s s t ill in t h e d is tr ib u tio n s ta g e .

A m o r tiz a tio n s
I n fo r m a tio n
bonds

w as

r e g a r d in g

o b ta in e d

fr o m

p a r tia l

and

c o m p le te

q u e s tio n n a ir e s

a m o r tiz a tio n s

d is tr ib u te d

to

th e

of

fo r e ig n

A m e r ic a n

d o lla r
p a y in g

a g e n ts o f s u c h is s u e s ( s e e a p p e n d ix d is c u s s io n o f in t e r e s t r e c e ip ts fr o m d o lla r
b o n d s).
R e c e ip t s b y A m e r ic a n s c a n n o t b e p r e c is e ly m e a s u r e d in a s m u c h a s th e
s e c u r ity -tr a n s a c tio n d a ta r e p o r te d b y d e a le r s in s e c u r itie s c o v e r a ll fo r e ig n b o n d s
a n d d o n o t d is tin g u is h b e tw e e n fo r e ig n b o n d s p a y a b le in U n ite d S t a t e s d o lla r s
a n d t h o s e p a y a b le in f o r e ig n c u r r e n c ie s .
H o w e v e r , a n y o v e r e s tim a te o r u n d e r ­
e s tim a te
e s tim a te

o f d o lla r b o n d a m o r tiz a tio n r e c e ip ts w a s c o m p e n s a te d b y a n u n d e r ­
o r o v e r e s tim a te o f tr a n s a c tio n s in o u ts ta n d in g s e c u r itie s , s in c e th e

c o m b in e d n e t m o v e m e n t o f b o th
p o r te d b y s e c u r ity d e a le r s .

s e r ie s w a s a d ju s te d

to

eq u a l th e m o v em en t re­

10 N e w i s s u e s o f U n i t e d S t a t e s s e c u r i t i e s a r e r a r e l y f l o a t e d a b r o a d a n d s u c h o f f e r in g s
a s d o o c c u r a r e i o r s m a ll a m o u n ts , so t h a t t h e r e is n o a p p re c ia b le r e c e ip ts ite m f o r th is
p a r tic u la r a c c o u n t.
11 H o w e v e r , t a b l e X X , a p p e n d i x C , h a s b e e n p r e p a r e d p r i m a r i l y f o r t h o s e i n t e r e s t e d in
a l i s t o f a l l n e w i s s u e s s o ld i n t h e U n i t e d S t a t e s r e g a r d l e s s o f c l a s s i f i c a t i o n , a n d h e n c e
i n c l u d e s i s s u e s o f d i r e c t - i n v e s t m e n t c o m p a n ie s .

188

R e tir e m e n ts
d e m p tio n
m e n ts

of

U n ite d

p a y m e n ts

in

to

1935, a d ju sted

c o n tin e n ta l E u r o p e a n
d u r in g th e w a r .

T r a n sa c tio n s

in

S ta te s

c o r p o r a te

fo r e ig n e r s
to

w ere

r e fle c t

h o ld e r s )

th e

of

in a b ility

th ese

O u ts ta n d in g

bonds

th ro u g h

e s tim a te d

on

s in k in g -f u n d

th e

b a s is

o f fo r e ig n

bonds

F o r e ig n

to

h o ld e r s

p resen t

and

of

th e m

re­
pay­

(p a r tic u la r ly

fo r

D o m e s tic

and

know n

r e tir e m e n t

S e c u r itie s

T h e b a s ic d a t a u s e d f o r t h is s e r ie s w e r e c o m p ile d m o n th ly f o r t h e T r e a s u r y
D e p a r tm e n t b y th e F e d e r a l R e se r v e B a n k s fr o m r e p o r ts o f b a n k s, b r o k e rs, a n d
d e a le r s lo c a te d

in t h e U n ite d

B u l l e t i n 12 i n s u m m a r y f o r m
lic a tio n o f t h e s e
N ovem b er 1945.
T h e d a ta
is s u e s

and

d a ta

in

a s c o m p ile d

S ta te s , a n d w e r e p u b lis h e d

in

th e F e d e r a l R ese r v e

a n d i n t h e T r e a s u r y B u l l e t i n 13 i n m o r e d e t a i l .
d e ta il

w as

su sp en d ed

fro m

in c lu d e a ll fo r e ig n -s e c u r ity

a m o r tiz a tio n s .

T he

e s tim a te s

of

th e

th e

en d

of

tr a n s a c tio n s

D e p a r tm e n t

th e

d a ta

S ta te s
on

r e p o r te d

to

T r a n sa c tio n s
becam e

C a n a d ia n
v o lu m e
ch a ses

som e ca ses w h en

F ed eral

d ir e c t in v e s tm e n ts a b r o a d

T r a n s a c tio n s in

It

th e

C a n a d ia n

in

F o r e ig n

of
in

S ta te s

1 9 4 0 -4 5

th e
A n

fo r

r e m a in in g
a d d itio n a l

a tr a n s a c tio n w a s n o t in c lu d e d
B anks

in c lu d e d

in

or
th e

w hen

is s u e s

c o m p ila tio n

of

in

U n ite d

( s e e s e c tio n

S e c u r itie s

th e

E xchange

U n ite d
th e

d u r in g

w ere

new

C om m erce

S e c u r itie s ).

C a n a d ia n

e v id e n t

R eserv e

u n til

in c lu d in g

of

n e w is s u e s a n d a m o r tiz a tio n s w e r e d e d u c te d fr o m th e s e d a ta ,
a m o u n t s b e in g c o n s id e r e d t r a n s a c t io n s in o u t s t a n d in g s e c u r itie s .
a d ju s tm e n t w a s n e c e s s a r y in

Pub­

1941

w ar,

as

C o n tro l

tr a n s a c tio n s

p e r io d )

w h ic h

a

r e s u lt

B oard,
in

of

th a t

C a n a d ia n

w as

not

th e

d a ta

th ere

c o lle c te d

w as

s e c u r itie s

b e in g

a

by

(p r im a r ily

record ed

in

th e

c o n s id e r a b le
th e

pu r­

d a ta

on

s e c u r ity t r a n s a c tio n s r e g u la r ly r e p o r te d t o th e F e d e r a l R e s e r v e B a n k s .
The
p r in c ip a l o m is s io n a p p e a r e d to h a v e b e e n th e la r g e n e t p u r c h a s e s o f C a n a d ia n
s e c u r it ie s th r o u g h d e a le r s lo c a t e d in C a n a d a b y U n it e d S t a t e s in s u r a n c e c o m ­
p a n ie s

it

w as de­

c id e d to s u b s t it u t e t h e C a n a d ia n d a t a f o r th e d a t a c o m p ile d b y t h e
R e se r v e B a n k s, o r b y th is D iv is io n o f th e C o m m e rc e D e p a r tm e n t fr o m

and

o th e r

in s titu tio n a l

F ederal
v a r io u s

a d d itio n a l

so u rces.

are

b e lo w .

sh ow n

Ta bl e

T he

in v e s to r s .

c o m p a r a tiv e

In

s e r ie s

v ie w

and

of

th e

th is

s itu a tio n ,

d iffe r e n c e s

b e tw e e n

th em

I I I .— U n ite d S ta te s a n d C a n a d ia n d a ta o n U n ite d S ta te s n e t p u r c h a s e s o f

C a n a d ia n s e c u r itie s

[ I n m illio n s o i U n ite d S ta te s d olla rs; n e t U n ite d S ta te s p u r c h a s e ( —) o r sale ( + ) ]
I te m
N e t tr a n s a c ti o n s w it h C a n a d a in fo re ig n sec u ritie s;
C a n a d ia n F o re ig n E x c h a n g e C o n tr o l B o a rd d a t a 1----N e t p u r c h a s e s n o t re c o rd e d in U n ite d S ta te s sta tis tic s,4

1940

1941

1942

1943

1944

1945

+ 3 6 .1
+ 1 3 .0
-2 3 .1

+ 1 0 .4
- 1 2 .0
- 2 2 .4

-4 2 .9
- 9 7 .0
-5 4 .1

+ 2 8 .2
- 8 4 .0
-1 1 2 .2

+ 2 6 .4
- 9 9 .0
-1 2 5 . 4

-7 0 .8
- 2 0 1 .0
-1 3 0 .2

' R e p o r t of t h e F o re ig n E x c h a n g e C o n tro l B o a rd to th e M in is te r of F in a n c e , O tt a w a , C a n a d a , M a r c h
1946, p . 21.

A ssets
D a ta

and
on

L ia b ilitie s

m e d iu m -te r m

M a tu r in g

a d v a n c e s to

in

and

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fro m

T han

O ne

Y ear

fo r e ig n e r s w e r e c o lle c te d

F e d e r a l R e s e r v e B a n k s t h r o u g h o u t th e 1 9 4 0 -4 5 p e r io d fr o m

by

th e

r e p o r tin g b a n k s a n d

b a n k ers.
T h e s e d a t a w e r e n o t in c lu d e d in a n y p r e v io u s ly p u b lis h e d s e r ie s a l­
t h o u g h s u c h lo a n s w e r e o f g r o w in g im p o r ta n c e b e g in n in g w it h 1 9 4 5 ( s e e ta b le
X X II).

S h o r t-T e r m

C a p ita l

M o v e m e n ts

D e t a ile d s t a t is t ic s o f fo r e ig n c la im s o n th e U n ite d

S t a t e s a n d o f U n ite d

S ta te s

c la im s o n f o r e ig n e r s a r e c o m p ile d m o n th ly f o r t h e T r e a s u r y D e p a r tm e n t b y t h e
F e d e r a l R e s e r v e B a n k s . A lth o u g h th e d a ta w e r e n o t p u b lis h e d d u r in g th e w a r , th e
S e p te m b e r 1 9 4 5 is u e o f th e F e d e r a l R e s e r v e B u lle t in c o n ta in e d t a b le s c o v e r in g th e
w a r years.

T h e s e r ie s o n b a n k in g f u n d s is c u r r e n tly p u b lis h e d in th e F e d e r a l R e ­

12 B o a r d o f G o v e r n o r s o f t h e F e d e r a l R e s e r v e S y s te m , W a s h i n g t o n , D . C ., m o n t h l y .
13 U n i t e d S t a t e s T r e a s u r y D e p a r t m e n t , W a s h i n g t o n , D . C ., m o n t h l y .

189

s e r v e B u lle tin
tio n

on

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b a la n c e s .

B u lle tin , a n d

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ty p e s

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th e la tte r

fu n d s

a ls o

in c lu d e d

in c lu d e s
are

in fo r m a ­

d e p o s its ,

b ills ,

U n ite d S ta te s G o v e r n m e n t s h o r t-te r m s e c u r itie s a n d o th e r sh o r t-te r m a c c o u n ts
a n d c o m m e r c ia l p a p e r .
M in o r a d j u s t m e n t s h a v e b e e n m a d e in t h e p u b lis h e d
d a ta

on

th e

b a s is o f a d d itio n a l in fo r m a tio n

in C a n a d a .
A d d itio n a l
brokers
p o r te r s,
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e n te r e d

d a ta

on

c o m m e r c ia l

on

b a la n c e s

U n ite d

not

S ta te s

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sh o r t-te r m

th r o u g h

fu n d s

banks

and

w e r e c o lle c t e d in t h is p e r io d b y t h e F e d e r a l R e s e r v e B a n k s f r o m e x ­
im p o r te r s , a n d o t h e r c o n c e r n s .
H o w e v e r , o n ly d a t a c o v e r in g d e p o s its
e ig n b a n k s w e r e u s e d s in c e m o s t o f t h e a c c o u n ts r e p o r te d w e r e a lr e a d y
in t h e b a la n c e o f p a y m e n ts u n d e r m o v e m e n t s o f d ir e c t in v e s t m e n t s , a s

in te r c o m p a n y a c c o u n ts .
F o r t h e y e a r s 1 9 4 0 a n d 1 9 4 1 t h e a n n u a l n e t m o v e m e n ts o f U n ite d
ren cy w ere b ased on

d a ta r e p o r te d b y th e F e d e r a l R e se r v e B a n k s

S ta te s cu r­

of N ew

Y ork

a n d A tla n ta a n d e s tim a te s o f u n r e c o r d e d n e t e x p o r ts.
A ft e r 1 9 4 1 , o n ly r e p o r te d
m o v e m e n ts o f c u r r e n c y w e r e in c lu d e d in t h e b a la n c e o f p a y m e n ts , e x c e p t f o r
m o v e m e n ts b e tw e e n
d is c u s s io n ).

th e U n ite d

S ta te s a n d

C anada

( s e e fin a l p a r a g r a p h

o f th is

I n a d d itio n to th e d a ta r e c o r d e d b y th e F e d e r a l R e s e r v e B a n k s , d a ta w e r e o b ­
ta in e d fr o m th e fo llo w in g s o u r c e s : C e n su s B u r e a u s t a tis t ic s o f th e e x p o r t a n d
im p o r t o f

U n ite d

S ta te s

s ilv e r

c o in s

(u n til

1940

c a r r ie d

as

a

cu rrent

account

it e m ) , s p e c ia l T r e a s u r y D e p a r tm e n t r e p o r ts w h ic h in c lu d e d d a t a r e g a r d in g s a le s
o f U n it e d S t a t e s c u r r e n c y to fo r e ig n c o u n tr ie s a n d r e c e ip ts fr o m a n d s h ip m e n ts
t o C u b a f o r a c c o u n t o f t h e T r e a s u r y , o c c a s io n a l c o n s u la r r e p o r ts , a n d C le a r in g
O ffic e r e p o r t s

o f e s tim a te s

of

“ n e t tr o o p

pay”

m a d e in

U n ite d

S ta te s

cu rrency

t o A m e r ic a n t r o o p s s t a t io n e d in C h in a a n d e ls e w h e r e .
D a t a w e r e n o t a v a ila b le
f o r m o v e m e n ts o f fo r e ig n c u r r e n c y , b u t th e s u m s in v o lv e d a r e b e lie v e d to b e
s m a ll.
A f t e r 1 9 4 1 n o e s t im a te w a s m a d e o f u n r e c o r d e d m o v e m e n ts o f U n ite d
S t a t e s c u r r e n c y . T h e s e m a y h a v e o c c u r r e d in th e f o llo w in g w a y s , a m o n g o t h e r s :

( a ) B y s m u g g lin g ;
o p e r a tio n s a b r o a d ;
U n ite d

( 6 ) b y s o ld ie r s e n g a g e d in u n a u th o r iz e d o r b la c k -m a r k e t
(c ) b y m em b ers o f th e a rm ed fo r c e s a b r o a d ; a n d ( d ) b y

S t a te s t r a v e le r s a b r o a d .

I n g e n e r a l, A m e r ic a n s o ld ie r s in f o r e ig n

c o u n tr ie s w e r e p a id in lo c a l c u r r e n c y .

I t h a s n o t b e e n p o s s ib le to m e a s u r e t h e n e t tr o o p p a y w h ic h w a s p a id in A m e r ic a n
g o ld s e a l d o lla r s to U n it e d
p a ig n s .
S in c e
U n ite d

th er e

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reason

C anada

to

are

b e lie v e

th e N o r th

th a t

o ffs e ttin g , a n

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currency

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m o v e m e n ts

a d ju stm e n t w a s

e x p o r t s o f c u r r e n c y to C a n a d a a n d im p o r ts fr o m

and

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b e tw e e n

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cam ­

in

th e

recorded

e lim in a te

in d ic a te d n e t m o v e m e n t.
T h is w a s d o n e b y s e ttin g b o th e x p o r ts a n d
e q u a l to t h e h i g h e r o f t h e t w o r e c o r d e d f ig u r e s f o r t h e y e a r c o n c e r n e d .

th e

im p o r ts

G o v e r n m e n t C a p it a l A c c o u n t
L o n g -T e r m

C a p ita l A c c o u n t

O n ly G o v e r n m e n t a s s e t s w e r e in c lu d e d h e r e ; f o r e ig n p u r c h a s e s a n d s a le s o f
l o n g - t e r m G o v e r n m e n t s e c u r i t i e s ( i . e ., l i a b i l i t i e s ) w e r e s h o w n i n t h e p r i v a t e
a c c o u n t, o n th e g r o u n d
governm ent
m e n t w ith

e n titie s .

fo r e ig n

t h a t t h e y p r e s u m a b ly w e r e b o u g h t fr o m
A ll

lo a n

and

c o u n tr ie s w e r e

c r e d it

tr a n s a c tio n s

of

th e

in c lu d e d , e x c e p t s h o r t- te r m

o r s o ld
F ed eral

to

non­

G overn­

b a la n c e s , a d v a n c e

p a y m e n ts , a n d o th e r it e m s m a tu r in g in 1 y e a r o r le s s , w h ic h w e r e e n te r e d in th e
G o v e r n m e n t sh o r t-te r m c a p ita l a c c o u n t.
I n g e n e r a l, th e s o u r c e s o f in fo r m a tio n fo r a ll ite m s in t h is a c c o u n t w e r e th e
G o v e r n m e n t a g e n c ie s r e s p o n s ib le f o r th e t r a n s a c tio n s .
I n fo r m a tio n c a m e e ith e r
(1 )

d ir e c t to

th e

I n te r n a tio n a l E c o n o m ic s D iv is io n ,

s ta te m e n ts o f th e a g e n c y co n ce rn e d , o r (3 ) to
T r a n s a c tio n s .
S p e c ia l n o te s a b o u t in d iv id u a l ite m s f o l lo w :
1 . R e c o n s tr u c tio n F in a n c e
(r e p a y m e n ts ) o n th is lo a n
t h e R e c o n s tr u c tio n F in a n c e
lo a n b y t h a t a g e n c y a s o f t h e

th e

C o r p o r a tio n lo a n t o
in c lu d e d f u n d s p a id
C o r p o r a tio n b u t n o t
la s t d a y o f t h e p e r io d

(2 )

th r o u g h

C le a r in g

th e

O ffic e

p u b lis h e d

fo r

F o r e ig n

th e U n it e d K in g d o m : C r e d its
in to a s u s p e n s e a c c o u n t w ith
f o r m a lly c r e d ite d a g a in s t th e
s p e c ifie d .

2 . E x p o r t- I m p o r t B a n k l o a n s : O n ly d ir e c t d is b u r s e m e n t s a n d r e c e ip t s o f t h e
B a n k ’s o w n f u n d s w e r e i n c l u d e d i n t h e G o v e r n m e n t a c c o u n t ; t h e s o - c a l l e d i n ­
d ir e c t, o r g u a r a n te e d , lo a n s w e r e c o n s id e r e d p r iv a te c a p ita l m o v e m e n ts in t h is
stu d y .

190

3. L e n d -le a s e s ilv e r : T h e v a lu e o f le n d - le a s e s ilv e r t r a n s f e r r e d u n d e r a s p e c ific
a g r e e m e n t to r e p a y in k in d h a s b e e n e n te r e d a s a n o u tflo w o f G o v e r n m e n t lo n g ­
te r m c a p ita l. T h e s ilv e r w a s v a lu e d a t t h e o ffic ia l U n it e d S t a t e s T r e a s u r y b u y in g
p r ic e

(a p p r o x im a te ly

th e se

tr a n s a c tio n s

7 0 .5 c e n t s

to o k

per

tro y

oun ce

d u r in g

t h e p e r io d

d u r in g w h ic h

p la c e ).

4 . O th e r le n d -le a s e c r e d its : D e b it e n tr ie s in th e c a p ita l a c c o u n t o ffs e t e x p o r ts
o f le n d - le a s e g o o d s f o r w h ic h r e p a y m e n t w a s t o b e m a d e o v e r a p e r io d o f y e a r s .
T h e s e w e r e c h ie fly g o o d s t r a n s f e r r e d

a fte r V J -d a y .

T h e a m o u n ts in v o lv e d w e r e

e s tim a te d o n t h e b a s is o f g o o d s tr a n s fe r r e d a s s h o w n b y t h e fis c a l r e c o r d s o f th e
le n d -le a s e

p rogram s,

and

m ay

d iffe r

som ew h at

fr o m

th e

a m o u n ts

f in a lly

de­

t e r m in e d to b e p a y a b le a ft e r a l l a c c o u n tin g a d ju s tm e n ts h a v e b e e n m a d e .
5. S u r p lu s p r o p e r ty c r e d its : A s w it h le n d -le a s e , th e v a lu e o f s u r p lu s p r o p e r ty ,
in c lu d in g s h ip s , s o ld o n a lo n g -te r m c r e d it b a s is , h a s b e e n e n te r e d in t h is a c c o u n t.
A s e x p la in e d in t h e m e r c h a n d is e tr a d e a c c o u n t, t h e s e t r a n s a c tio n s w e r e e n te r e d
in th e b a la n c e -o f-p a y m e n ts s t a te m e n t a s o f th e tim e o f s a le a s r e p o r te d b y th e
O f fic e o f F o r e i g n L i q u i d a t i o n C o m m i s s i o n e r .
I n p a r tic u la r , it s h o u ld b e n o te d
t h a t t h e s o - c a lle d b u lk s a le s h a v e b e e n
s p e c t iv e a g r e e m e n t s w e r e s ig n e d .

>

in c lu d e d

in

th e p e r io d s

in

w h ic h

th e r e ­

6. P r o d u c tiv e f a c ilit ie s : T h e a c c o u n t a ls o in c lu d e s d ir e c t in v e s t m e n ts o f G o v ­
e r n m e n t f u n d s , c h ie fly b y t h e D e f e n s e P la n t s C o r p o r a tio n , in p r o d u c tiv e f a c ilit ie s
abroad.
7. P a y m e n t s b y f o r e ig n g o v e r n m e n ts to t h e U n it e d S t a t e s G o v e r n m e n t in s e t t le ­
m en t fo r

e x p r o p r ia te d

p r o p e rty

o f U n ite d

S ta te s

n a tio n a ls

w ere

a ls o

in c lu d e d ,

s in c e th e f u n d s in t h e fir s t in s ta n c e a r e r e c e iv e d b y th e U n ite d S t a t e s D e p a r tm e n t
o f S ta te .

S h o r t-T e r m

C a p ita l A c c o u n t,

F o r e ig n s h o r t- te r m

a s s e ts o f th e

th e f o llo w in g it e m s w e r e o b ta in e d

U n ite d , S t a t e s
fro m

G o v e r n m e n t.— D a t a

r e g a r d in g

r e c o r d s o f t h e a g e n c ie s in v o lv e d :

1. F o r e ig n
c u r r e n c y a n d d e p o s its o f U n ite d
S ta te s G o v e r n m e n t a g e n c ie s :
T r e a s u r y d e p o s its a r e r e p o r te d in t h e D a ily T r e a s u r y S ta te m e n t.
B a la n c e s o f
o th e r a g e n c ie s w e r e n o t g e n e r a lly o b ta in a b le a n d o n ly c e r ta in is o la t e d m o v e m e n ts
h a v e b e e n in c lu d e d , s u c h a s t h e r e p a t r ia t io n o f u n e x p e n d e d f u n d s in G r e a t
B r it a in a n d A u s t r a lia a f t e r t h e w it h d r a w a l o f o u r tr o o p s in t h o s e c o u n tr ie s .
2 . A d v a n c e p a y m e n ts : T h e p r o c u r e m e n t a g e n c ie s f r e q u e n tly m a d e a d v a n c e
p a y m e n ts in c o n n e c tio n w ith p u r c h a s e c o n tr a c t s ; t h e s e h a v e b e e n in c lu d e d a s
in v e s tm e n ts o f sh o r t-te r m

S h o r t-te r m

fu n d s ab ro a d .

lia b ilitie s o f th e

U n ite d S ta te s

T h e s e in c lu d e t h e f o llo w in g c a t e g o r ie s :
1 . P h ilip p in e d e p o s its w it h th e T r e a s u r y
1946, th e
and

sh o r t-te r m

lia b ility

c o v e r in g t h e y e a r s fr o m

fo r ea ch o f th e se y ea rs.
2 . S p e c ia l I t a lia n d e p o s its
m e n ts

w ith

I ta ly

fo r

net

d a ta

w ith

tr o o p

D e p a r tm e n t:

a p p e a r in g

1939 to

in

th e

d a te w ere

th e

pay

B e g in n in g

to

in c lu d e

D e p a r tm e n t:

c r e d ite d

to

a

s p e c ia l

T r e a s u r y in s t e a d o f b e in g m a d e f r e e ly a v a ila b le b y is s u in g a
I ta lia n

G o v er n m en t.

In e ffe c t, th e lia b ility

w a s s h ifte d

lia b ilit y ( s e e ite m 3 ) t o t h is a c c o u n t.
3 . S p e c ia l-c u r r e n c y lia b ilit y : T h e e s t im a te d

w ith

F ed era l R eserve

r e v is e d

T rea su ry

w ere

f o r e i g n c o u n t r i e s .—

G o v e r n m e n t to

am ount

b a la n c e s

fir s t

account

s e ttle ­
in

th e

d o lla r c h e c k to th e

fro m
of

T he

th e

J u ly

B u lle tin s

a

s p e c ia l-c u r r e n c y

s p e c ia l-c u r r e n c y

ex­

p e n d itu r e s f o r w h ic h t h e U n it e d S t a t e s G o v e r n m e n t w a s o b lig a te d to r e im b u r s e
t h e r e s p e c t iv e f o r e ig n g o v e r n m e n ts in d o lla r s w a s c o n s id e r e d a s a G o v e r n m e n t
s h o r t-te r m lia b ilit y in t h e s e a c c o u n ts .
T h e d o lla r s e t t le m e n t s w h ic h f o llo w e d
w e r e t h u s e n te r e d a s d e b its in t h is a c c o u n t, r a t h e r t h a n in th e c u r r e n t a c c o u n t.
4 . H o ld in g s o f s h o r t- te r m U n it e d S t a t e s G o v e r n m e n t s e c u r it ie s : C h a n g e s in
1

fo r e ig n h o ld in g s o f U n ite d S t a te s G o v e r n m e n t s e c u r itie s w it h o r ig in a l m a t u r itie s
o f le s s th a n 1 y e a r , a s r e p o r te d to th e T r e a s u r y D e p a r tm e n t o n F o r e ig n E x c h a n g e
F o r m B - l , w e r e c o n s id e r e d a s G o v e r n m e n t c a p it a l m o v e m e n ts in t h e a c c o u n ts .
5 . D e p o s it s w it h t h e C o m m o d ity C r e d it C o r p o r a tio n : A f t e r t h e t e r m in a t io n o f
le n d - le a s e , f o r e ig n p u r c h a s in g m is s io n s p la c e d m o s t o f t h e ir o r d e r s
s t u f f s in t h e U n it e d S t a t e s w it h t h e C o m m o d ity C r e d it C o r p o r a tio n .

fo r fo o d ­
W o r k in g

b a la n c e s w e r e d e p o s it e d w it h t h e C o m m o d ity C r e d it C o r p o r a tio n in c o n n e c tio n
w ith th e s e p u r c h a se s , a n d su c h b a la n c e s w e r e tr e a te d a s s h o r t-te r m G o v e r n m e n t
lia b ilitie s .

G o ld

M o v e m e n ts

U n d e r th e m e th o d n o w
p r o d u c tio n

a d o p te d f o r t h e t r e a t m e n t o f g o ld m o v e m e n ts , n e w g o ld

( le s s d o m e s tic c o n s u m p t io n ) , is e n te r e d a s a r e c e ip t u n d e r g o o d s , a n d

th e n e t c h a n g e in

th e

g o ld

sto ck

is e n te r e d

as

“ N e t in flo w

o r o u tflo w

o f fu n d s

191

o n g o ld a n d s h o r t- te r m

c a p ita l a c c o u n t”

( s e e a p p e n d ix A , N o te

G o ld in t h e B a l a n c e o f P a y m e n t s ) .
T h e a n n u a l n e t m o v e m e n t a s co m p u te d fr o m

o n T r e a tm e n t o f

e x p o r t s , im p o r t s , a n d e a r m a r k in g

w a s d e te r m in e d to b e th e b e s t a v a ila b le , s in c e t h e r e a r e u n a v o id a b le la g s b e tw e e n
t h e d a t a o n c u r r e n t p r o d u c tio n a n d c h a n g e s in t h e g o ld s to c k . T h e fo r m e r s e r ie s
m u s t b e u s e d , o f c o u r s e , t o c o n s tr u c t a b a la n c e o f p a y m e n ts w it h a s p e c ifie d c o u n tr y
or

area,

w h ile

net

p r o d u c tio n

is

e n te r e d

as

a

tr a n s a c tio n

w ith

in te r n a tio n a l

in s tit u t io n s .
T h e b a s ic d a ta o n e x p o r t s a n d im p o r ts a r e c o lle c te d b y t h e B u r e a u
C en su s.
T h e y h a v e b e e n a d ju s te d , in s o f a r a s is p o s s ib le , to r e fle c t t h e

o f th e
a ctu a l

c o u n tr y o f o r ig in w h e r e g o ld i s k n o w n to h a v e e n te r e d th r o u g h a t h ir d c o u n tr y .
D a t a o n e a r m a r k in g t r a n s a c t io n s a r e p r o v id e d b y t h e F e d e r a l R e s e r v e B a n k o f
N e w Y o r k a n d a p p e a r in t h e F e d e r a l R e s e r v e B u lle t in ; m in o r a d j u s t m e n t s h a v e
b e e n m a d e to e lim in a t e tr a n s a c tio n s w h ic h a r e in c lu d e d in th e s e r ie s s h o w n in
t h e B u lle t in b u t a r e n o t c o n s id e r e d t o a ffe c t f o r e ig n g o ld h o ld in g s in t h is c o u n tr y
f o r b a la n c e -o f-p a y m e n t's p u r p o s e s .
C h a n g e s in t h e g o ld s t o c k o f t h e U n it e d S t a t e s a r e p u b lis h e d r e g u la r ly in t h e
T r e a s u r y B u lle t in a n d to t h is s e r ie s h a v e b e e n a d d e d c h a n g e s in t h e g o ld h e ld
by

th e

E xchange

n o t in c lu d e d

in

S ta b iliz a tio n

t h e p u b lis h e d

Fund

(S p e c ia l A c c o u n t

g o ld -s to c k

fig u r e .

N um ber

T h e h o ld in g s

1 ),

w h ic h

S t a b iliz a t io n F u n d a r e p u b lis h e d p e r io d ic a lly in th e T r e a s u r y B u lle t in .
on

g o ld

B ureau

p r o d u c tio n
o f th e

and

M in t a n d

M i n t . 14
H ow ever,
t h e e x p o r t, im p o r t,

c o n s u m p tio n
r e p o r te d

in

in

th e

U n ite d

S ta te s

th e A n n u a l R ep ort

are

o f th e E x ch a n g e

are

o f th e

S ta tis tic s

c o lle c te d

by

th e

D ir e c to r o f th e

a s s t a t e d a b o v e , th e a n n u a l m o v e m e n t a s d e r iv e d fr o m
a n d e a r m a r k s e r ie s i s c o n s id e r e d to b e th e m o r e a c c u r a te

fo r t h is p u rp o se, a n d to c o n fo r m to t h is a n n u a l m o v e m e n t a
h a s b e e n m a d e in e a c h y e a r in t h e g o ld c o n s u m p tio n s e r ie s .

m in o r

a d ju stm e n t

T r a n s a c t io n s W it h M a jo r A r e a s
In

g e n e r a l, th e m e th o d s o f e s t im a tin g

tr a n s a c tio n s

w ith

in d iv id u a l c o u n tr ie s

o r a r e a s a r e t h e s a m e a s t h e m e th o d s f o llo w e d in c o m p ilin g th e g lo b a l b a la n c e
o f p a y m e n ts.
S p e c ific p r o b le m s c o n n e c t e d w it h t h e s o u r c e s a n d m e th o d o lo g y
o f c o m p ilin g “ b ila t e r a l” b a la n c e s o f p a y m e n ts a r e d is c u s s e d in t h e a p p r o p r ia te
s e c t io n s o f t h is a p p e n d ix .
I t r e m a in s to p o in t o u t h e r e th a t t h e r e is a n im ­
p o r ta n t c o n c e p tu a l d iffe r e n c e b e tw e e n a g lo b a l a n d a b ila te r a l b a la n c e o f p a y ­
m e n t s i n t h a t t h e l a t t e r d o e s n o t h a v e t o “ b a l a n c e ,” i. e ., t h e r e i s n o n e c e s s i t y
t h a t t h e s u m o f a ll r e c e ip t s s h o u ld e q u a l t h e s u m o f a ll p a y m e n ts ( in c lu d in g g o ld
m o v e m e n ts a n d c h a n g e s in s h o r t-te r m a s s e t s a n d lia b ilit ie s a m o n g r e c e ip ts a n d
p a y m e n ts).
I n t h e fo r m o f p r e s e n t a tio n e m p lo y e d in a g lo b a l b a la n c e o f p a y m e n ts o n ly
tw o p a r tie s to th e t r a n s a c tio n s c o v e r e d a p p e a r — th e c o u n tr y u n d e r c o n s id e r a tio n
and
In a
to a
th a t

a ll th e r e s t o f t h e w o r ld — a n d t h u s t h e m u lt ila t e r a lit y o f t r a d e
b ila te r a l s ta te m e n t, o n th e o th e r h a n d , o n ly tw o o f t h e th r e e o r
m u lt ila te r a l tr a n s a c tio n a r e a c c o u n te d f o r a n d , c o n s e q u e n tly ,
r e c e ip t s a n d p a y m e n ts s h o u ld b e e q u a l n o lo n g e r h o ld s .
T h

is c o n c e a le d .
m o r e p a r tie s
th e n e c e s s ity
e o ffse t to a

tr a n s a c tio n b e tw e e n c o u n tr y A a n d c o u n tr y B m a y b e a tr a n s a c tio n b e tw e e n
c o u n tr y A a n d c o u n tr y O, o r b e tw e e n c o u n tr y B a n d c o u n tr y C .
F o r e x a m p le ,
i f a g iv e n c o u n tr y h a s a d e fic it w it h
t h e d e fic it w it h d o lla r s e a r n e d fr o m

th e U n ite d S ta te s , it m a y b e a b le to s e t t le
o th e r c o u n t r ie s ; in t h is c a s e , th e tr a n s fe r

o f d o lla r s fr o m f o r e ig n to A m e r ic a n o w n e r s h ip w ill n o t a p p e a r a s a tr a n s a c tio n
b e tw e e n t h e U n ite d S t a t e s a n d t h e fir s t c o u n tr y b u t a s o n e b e tw e e n t h e U n ite d
S t a t e s a n d t h e o th e r c o u n tr y o r c o u n tr ie s .
I t w o u ld b e f o r m a lly p o s s ib le to s p lit u p e v e r y m u lt ila te r a l t r a n s a c tio n

in to a

s e r ie s o f b ila te r a l tr a n s a c tio n s a n d b y t h is m e a n s to b r in g in to b a la n c e th e s t a t e ­
m ent

fo r

each

area

in d iv id u a lly .

p r o je c t, s in c e i t w o u ld s e r v e in

T h is

w o u ld ,

in d e e d ,

be

a

h ig h ly

d e s ir a b le

e ffe c t to t r a c e a ll th e s te p s o f w h ic h m u lt ila te r a l

tr a n s a c tio n s a r e c o m p o s e d a n d t h u s to e x p la in c o m p le te ly t h e s u p p ly a n d u s e
o f t h e c u r r e n c y o f a g i v e n c o u n t r y , a s w e l l a s t h e s a m e c o u n t r y ’s s u p p l y a n d u s e
o f a ll o th e r c u r r e n c ie s in w h ic h it h a s d e a lin g s ; b u t u n f o r t u n a t e ly s u c h a p r o je c t
is im p r a c tic a b le a t t h e p r e s e n t tim e .

14 U . S . T r e a s u r y D e p a r t m e n t , W a s h i n g t o n , D . C ., a n n u a l .

192

f

A p p e n d ix C

S u p p le m e n ta r y I n fo r m a tio n
Tabl e I V .—

C itiz e n a n d a lie n 1 d e p a r tu r e s fr o m a n d a r r iv a ls in to th e U n ite d S ta te s ,
b y s e a a n d a ir , v ia s e a p o r ts , 1 9 4 0 -4 5

C it iz e n s 2

A li e n s 2

T y p e of tr a v e l a n d re g io n
D e p a r tu r e s

D e p a r tu r e s

F in la n d __________________ ____ - ________
F r a n c e ------ - ------ -------- ---------------- ----------G ib r a lta r a n d M a l t a ................. ............... .........
G re e c e ....... ........................ .......... ......... . ......... .
I c e la n d ---------- ---------------------- ----------------I t a l y ................................... . ................................
N e t h e r la n d s .----------- -------------- ---------------N o r w a y .................. _............. ..............................
_______
P a le s tin e _____ _____ ___________
P o r tu g a l_____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

2
64
2
1
18
3
62
17
1,983
3
72
55
417

S p a in ...................................................... ..............
S w e d e n ............ ................................. — ......... —S y r ia ........ .......................... ......... — ...................
T u r k e y . ................................................................
U n ite d K in g d o m _________________ _______
Y u g o sla v ia ........................... ................ ................

57
55
58
4
183
1

35
47
17
237
2, 790
91
730
22
691
10
7,352
67
432
389
3,339
26
194
314
81
32
288
44

T o ta l, E u r o p e a n d M e d ite r r a n e a n -------------

D e n m a r k ...... ............. ....................... ..................
E g y p t ------- -------------- ------- ---------------------

A rr iv a ls

1940

SEA
E u r o p e a n d M e d ite r ra n e a n :
A lg e ria , M o ro cc o , a n d T u n is ia _____________

A rriv a ls

13

6
28
6
37
73
505
6
495
75
4,315'
319
953
85
1,801
1
687
741
32
10
3,653
4

36
1,484
29
126
447
484
2,656
333
942
77
14,475
1,429
981
146
6,971
3
861
774
40
4
20,757
166

3,070

17,228

13,832

53,221

F a r E a s t:
A u s tr a lia ....... ........... ............ ......... ....................
C h i n a __________________ ______ ________
I n d i a . ___ ___________ ________ ____ _____
J a p a n .......... ................... ............. .......... ............
N e w Z e a la n d _ _ _ _ _ _ _ _ ____ _ __ __ __ __ _ _ _ _ _ _
P h i lip p in e s . -------- ---------------- --------------O th e r n o n - M e d ite r r a n e a n A fric a ........................
O th e r n o n - M e d ite rr a n e a n A sia ----------- -------O th e r P a c ific is la n d s --------- -------- --------------

646
2,042
351
6,175
208
2,600
450
163
590

1,028
5, 321
764
6,302
274
3,260
613
423
499

1,480
2,465
105
7, 504
557
2,411
322
167
334

785
2,477
241
6, 696
233
1,023
404
204
276

T o t a l, F a r E a s t-------- ----------- -------- --------

13, 225

18,484

15,345

12,339

6,627
20
78
10, 403
10, 249
897
392
48,664
1,668
7
2,727
852
935

N e th e r la n d s W e s t I n d ie s ............ ............ ..........
N ic a ra g u a -------------- ------------- -----------------E l S a lv a d o r___ _ _ __ _ __ _ __ _ __ _ __ _ __ ______
V en e z u e la .......... ..................... ............................

6,824
36
54
9,690
12,891
916
744
46,934
1,472
13
2,258
555
1,438
70
1,715
145
31
2,103

1,499
71
59
3,022
1,362
1,346
433
13,340
1,859
37
575
335
534
17
1,108
80
88
2,504

1,325
72
148
2,809
2,227
1,057
380
14,946
1,776
22
649
322
567
1
981
69
51
2,164

T o ta l, C a r ib b e a n ........... ..................................

87,889

28,269
87,407
-------------- !-----------------

29,566

B e r m u d a . . . ----- --- ------- ----------------- --------B r itis h G u ia n a .......... ......................... . ......... .
B r itis h H o n d u r a s ........................ ................. ......
B r itis h W e st I n d ie s ---------------------------------C a n a l Z on e a n d P a n a m a _____________ ____
C o lo m b ia .......... ......... ........... ................ .............
C o sta R ic a ----- ----------------- ---------------------C u b a . . . ......... ......... . .............. ...........................
D o m in ic a n R e p u b lic --------------- -------- -------1 G u a te m a la ____________ ______ ____ ______
H o n d u r a s ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1,850
147
13
1,878

S ee f o o tn o t e s a t e n d o f ta b le .

193

Tabl e I V .— C itizen a n d

a lie n 1 d ep a r tu res fr o m an d a rriv a ls in to th e U n ited S ta te s,
b y sea a n d air, v ia sea p orts, 1940-45 — C o n t i n u e d
C itiz e n s 2

A li e n s 2

T y p e of tr a v e l a n d re gio n
D e p a r tu r e s

A rr iv a ls

T o ta l, s o u th e rn S o u th A m e r ic a ........ .
T o ta l, s e a . . . _____ _____ ________

A rriv a ls

1940

s e a —c o n t i n u e d

S o u th e r n S o u th A m e ric a (n o n - C a rib b e a n ) :
A r g e n ti n a .,_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
B ra z il......... ................................... .........
C h ile ........... . ......................................... .
E c u a d o r _____ ____ ______________
P e r u _ _ _ _ _ _ _ _ _ _ _ ____ _______ _ __ __ _
U r u g u a y .............. ...................................

D e p a r tu r e s

1,972
1,811
819
190
676
7

1,871
2,121
1,160
262
781
107

1,432
1,620
893
281
579
9

1,077
1,454
1,125
357
757
114

6,302

5,475

4,884

4,814

110,486

128,594

62,330

99,940

1
510

501

678

AIR

E u r o p e a n d M e d ite r ra n e a n :
E i r e . . ....... ..................... .............. ......
P o r tu g a l_ __ __ __ __ __ _ ____ ______
U n ite d K in g d o m _____ _____ _ _ _ _ _

1

503

T o ta l, E u r o p e a n d M e d ite r ra n e a n .
F a r E a s t:
A u s tr a li a .___________ ______ ___
C h i n a .......................... .......................
N e w Z e a la n d ..____ _ __ __ __ __ __ __
P h ilip p in e s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
O th e r P a c ific I s la n d s ....... ..................

112

70
193
14

T o ta l, F a r E a s t ................. .............
C a rib b e a n :
B e r m u d a _ _ _ _ _ _ _ _ _ _ _ _ _ _____ ___
B ri tis h G u ia n a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
B ri tis h W e st I n d ie s _____________
C a n a l Z on e a n d P a n a m a _________
C o lo m b ia _____________________
C u b a ............ ......... . .................. .......
D o m in ic a n R e p u b li c ____________
F re n c h W e st I n d ie s ______ _ _ _ _ _ _ _
G u a te m a la ____________________
H a i ti_ __ __ __ __ __ __ __ __ __ __ __ __
N e th e r la n d s G u ia n a ____________
V e n e z u e la ................................... .

1

2

5
97
43

104
66

320
5

1 20

1

495

197

1,301

1,603

224

263

6,084
195
103
23,771
225
24

7,466
988
864
22, 412
361
29

999
58
54
4, 743

2

2

266

2

26

1,334
476
555
4,185
198
26

152

105

2

649
14
480

T o ta l, C a r ib b e a n _____________

32,377

34,870

6,356

S o u th e r n S o u th A m erica :
A rg e n ti n a ........ ................ ................
B ra z il_ __ __ __ __ __ __ __ __ __ __ __ _
E c u a d o r _ __ __ __ __ __ __ __ __ __ __ _
P e r u _ _ _ _ _ _ _ _____ ___ _____ ___

38

376

T o ta l, so u th e r n S o u th A m e r ic a ...

667
3

2

1

205
7,352

1

2

223
2

38

378

35

226

T o ta l, a i r ___________________

33, 226

36,255

7,091

8,525

G ra n d to ta l, sea a n d a i r _______

143,712

164,849 i

69,421 |

T o ta l, E u r o p e a n d M e d ite r ra n e a n
See fo o tn o te s a t e n d of ta b le .

108,465

1941

SEA

E u r o p e a n d M e d ite r ra n e a n :
A lg eria, M o ro cc o, a n d T u n is ia .
D e n m a r k __ ____ __________
E g y p t ........................................
E ir e _ _ _ _ _ _ _ _ _ _ _ __________
F in la n d ________ __________
F r a n c e ....... ............ ......... . ......
G re e c e ....... ........................... .
I c e la n d ....... .............. . ..............
N o r w a y _ _ _ _ _ _ _ _ _ _ _ _ _____ _
P o r tu g a l_ _ _ _ _ _ _ ____ _ __ __ __
S p a i n . ......................... .............
S w e d e n __________________
U n ite d K in g d o m ............ .........
U . S . S. R __ ..............................

194

1 00

2

11
7
7
3
37
674
38
2

828

239'
.....

9
48

25
124

41

142

1,105
1,537
30
1,572

13,386
3,410
40
2,670
105

1

28
13
4,074
126

1

297

650
4

6

10

4,801

4,353

10
8

2 0 ,8

Tabl e IV.— C itizen a n d

a lie n 1 d e p a rtu re s fro m an d a rriv a ls in to th e U n ited S ta te s,
l y sea a n d a ir, v ia sea p orts, 19Jf0-45 — - C o n t i n u e d
C it iz e n s 2

A lie n s 2

T y p e o f tr a v e l a n d re g io n
D e p a r tu r e s

F a r E a s t:

S o u th e r n S o u th A m e ric a :

A rr iv a ls

1941

sea —
c o n tin u e d

C a rib b e a n :

D e p a r tu r e s

A rriv a ls

335
548
365
3,053
76
1,133
1, 265
608
124

617
4,421
884
4,079
ir o
2,945
880
235
106

1,000
1,265
207
6,815
260
1,819
590
581
149

1,904
2,468
656
4,581
969
1,419
624
563
245

7,507

14, 277

12,686

13,429

9,188
104
56
17,756
18,351
1,008
'490
45, 537
1,411
9
2,492
458
922
64
1,184
119
2
2,017

4,967
73
63
12, 747
16,300
783
493
45,852
1,698
19
2,830
542
797
7
1,069
137
14
1,395

1,214
179
50
2,785
1,252
1,606
437
10,046
1,622
66
618
285
489
41
1,103
44
9
2,397

1,0 6$
54
97'
3,131
1,633
1,337
396
12,677
1,471
478
616
269
542
3
752
80
18
2, C55

101,168

89,786

24, 243

26,677

1,650
2,042
1,251
347
885
156

1,424
1,883
885
227
779
8

1,317
1,413
1,263
490
867
106

1,536
2,391
1,210
394
673
28

6,331

5,206

5,456

6,232

116, 602

114,070

46,738

67,201

43
695

1
21
856

122
820
4

2
43
1,244
4

738

878

946

1,293

1
132

51

4
64

167
328
205
159
27

93
512
92
47
11

200
103
7
64
11

83
7
285
166
9
49
23

1,019

806

453

622

2,205
7
7,670
i ; 471

2,532
3
8,789
1,710
1,157
26,758
472
1
31
6
727

4
603
402
8
1,211
4,627

641
3
1,646
766
673
4,266
240

AIR
E u r o p e a n d M e d ite r ra n e a n :

T o ta l, E u r o p e a n d M e d ite r r a n e a n ............. .
F a r E a s t:

O th e r P a c ific is la n d s ------------------- ------- -----T o ta l, F a r E a s t ________ _____ _________
C a r ib b e a n :

30,584
223
35
H a i ti___ _______ ____ - ........... ................... ......
S ee fo o tn o t e s a t e n d o f ta b le .

497

111

66

17

110

195

Tabl e TV .— C itizen a n d

a lie n 1 d e p a rtu re s fr o m a n d a rriv a ls in to th e U n ited S ta te s,
b y sea a n d a ir, v ia sea p orts, 1 940 -^5 — C o n t i n u e d
A lie n s 2

C itiz e n s 2
T y p e of tr a v e l a n d re gio n
D e p a r tu r e s

A rr iv a ls

air —c o n tin u e d

D e p a r tu r e s

A rr iv a ls

1941

C a r ib b e a n — C o n ti n u e d

1

S o u th e r n S o u th A m erica :

46

527

114
29

11
261

42,739

42,713

7,126

8,683

981

ÏÔ8
1
3

65

5

117
C h i l e . . . _____ _ __ __ __ __ ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _
T o ta l, s o u th e r n S o u th A m e r ic a ...... _......... .

G r a n d to ta l, sea a n d a i r ............... ................. .

502
1

122

981

177

503

44,618

45,378

8,702

11,101

161,220

159,448

55,440

78,302

1942
SEA
E u r o p e a n d M e d ite r ra n e a n :
F r a n c e ................. ...... .......................... ................
I t a l y _ _ _ _ _ _ _ _ _ _ _ _____ ______ _ _
P o r tu g a l_______ ____ ______
S w e d e n ____ _______
U n ite d K in g d o m ......................
U . S . S . R __________
T o ta l, E u r o p e a n d M e d ite r r a n e a n _ __ __ __ __

T o ta l, F a r E a s t . . . ....... . ...........
____

B r itis h I I o n d u r a s _ __ __ __ _ ____ ___________
C o lo m b ia ______

_____

C u b a _ __ __ __ __ __ __ __ __
D o m in ic a n R e p u b li c .........................................
H a i ti ............................... ........
N e th e r la n d s G u ia n a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____
N e th e r la n d s W e s t I n d i e s . . . ____ ___________

S o u th e r n S o u th A m eric a :

C h ile _ _ _ _ _ _ _ _ _ _ _________ _____ _____ _
E c u a d o r . ......... .
....................... . ..................
S e e f o o tn o t e s a t e n d o f ta b le .

515

51

812
1

1,438
9
257
3,680
218

385
29
4
2, 561
18

1
4
200
4
2,694
237
2
17,112
282

6,117

3,060

20,536

2,083
39
51
28

O th e r A frica ____ ____ .
O th e r n o n -M e d ite rr a n e a n A sia __
________
O th e r P a c ific i s l a n d s . . . . . ......................

C a r ib b e a n :
B e r m u d a . _____ _ _ __ _ __ _ __ _ __ _

100

1,075

F a r E a s t:
A u s tr a li a ___ __________
C h i n a ._ _ _ _ _ _ _ _ __ __ __ __
I n d i a _______ _ _______
J a p a n ________ ____ _____

12

95

1
1,003
198
4

1,615
2,789
2,794

5
23
298
197
25

617
4,047
2,287

1,324

7,198

548

6,951

2,973
395

175
21
6
1,601
158
83
24
1,682
145

226
4
381
4,644
442
150

190
21

2,916
11
21
7,098
7,981
50
68
2,435
141
14
115
37
125
25
193
30

28
8
38
28
108
8

890
116
32
102
68
75
7
262
18

84

38

80

95

15,940

21,298

4,195

7,549

73
4
140
223
66

118

185
9

5

4,627
3,057
22
1
4,347
90
42
12
69
5

169
184
35

2

m

671
m

35

2

306
307
397
58

Tabl e IV.— C itizen a n d

a lie n 1 d e p a rtu re s fr o m a n d a rriv a ls in to th e U n ited S ta te s,
b y sea a n d a ir , v ia se a p o rts , 1940-45 — C o n t i n u e d
A lie n s 2

C itiz e n s 2
T y p e of tr a v e l a n d re g io n
D e p a r tu r e s

sea —
c o n tin u e d
S o u th e r n S o u th A m e ric a —C o n ti n u e d
P e r u _ _ _ ____ _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
U r u g u a y ................................................................

A rr iv a ls

D e p a r tu r e s

A rr iv a ls

1942
62
12

114 .
13

278
4

157
14

T o ta l, s o u th e rn S o u th A m e r ic a ___ ________

580

633

1,369

1,239

T o ta l, s e a _ _ _ ____ _______ _ __ __ __ __ ____

19,927

35, 246

9,172

36,275

1,948

611
7
23
338
104

609

745
5
7
461
51

1,083

886

1,260

AIR

E u r o p e a n d M e d ite r ra n e a n :
E ir e .................... ............................... ........
P o r tu g a l....... ............. ............ . .......................
U n ite d K in g d o m ..... ............................. ..............
U . S. S . R ________________________ _ _ _ _ _ _
T o ta l, E u r o p e a n d M e d ite r r a n e a n ___ ____
F a r E a s t:

510
428
3
2,889
53

168
102
7

71

O th e r n o n -M e d ite rr a n e a n A fr ic a ........................
O th e r n o n - M e d ite rr a n e a n A sia .......... .............. .

2, 255
9

59
582
33

127
2

297
10

T o ta l, F a r E a s t _ _ _ _ _ _ _ _ __ __ __ __ ______

2,317

674

129

378

3,221
55
14
5,981
4,968
2, 643
122
17,923
306
3
13
168
1
16
224

3,962
675

776
5

1, 211
264

Ï 2 ,Ï Ï 9
4,960
1,530

1,892
1,543
1,724
102
7,033
166

3,463
1,354
1,023

C a r ib b e a n :
B e r m u d a _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
B r itis h G u ia n a __ ____ _______ ____________
B r itis h W e s t I n d ie s _________ _____ _______
C a n a l Z o n e a n d P a n a m a ______________ ____
C o l o m b ia --------------- --------------------- ------ - .
C u b a . ....... .................. .................................. ......
D o m in ic a n R e p u b lic -------------------- ------ -----F re n c h W e s t I n d ie s . . . . . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
H a i ti------ ------------------ --------------------------H o n d u r a s --------------------------------------------N e th e r la n d s W e st I n d ie s ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _
V e n e z u e la ____ ____________ ____ ________
T o ta l, C a r ib b e a n ----------------- ----------- -----S o u th e r n S o u th A m e ric a :
B ra z il---------------- ---------------------------- -----C h ile

1,522

15,591
610
2
8
657
235
65
27
3
1,264

37,180

41,608

3
5, 745

6,426
8

73
58
1

7,576
474
10

212

1,067

196
107
8
3
800

14,442

16,701

23
580

6
2, 461

2

T o ta l, s o u th e r n S o u th A m e r ic a ------------------

5,748

6,434

603

2,467

T o ta l, a i r ----------------- ------ ---------------------

48,134

49,799

16,060

20,815

G r a n d t o ta l, sea a n d a i r _________________

68,061

85,045

25,232

57,090

1943
SEA

E u r o p e a n d M e d ite r ra n e a n :
E ir e ____ - ------- -----------------------G ib r a lta r ........... ............. ................ .
I c e l a n d .----- -------- --------- ----------Ita ly __________________________
P o r tu g a l--------- ------- ----------------S p a in --------- -------- ------------------S w e d e n ___________________ _ __ _
U n ite d K in g d o m ...............................
U . S. S. R _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

465
19

202
559
14
412
27

1,491
1

T o ta l, E u r o p e a n d M e d ite r ra n e a n .

2,001

25

3, 927
57

1,585
33
33
4,145
165

4
44
209
31
890
185
6
13,195
2,096

5,198

6,006

16,660

45

S ee fo o tn o t e s a t e n d o f ta b le .

197

Tabl e I V .— C itizen a n d
6y

a lie n 1 d e p a r tu res fro m a n d a rriv a ls in to th e U n ited S ta te s,
sea a n d air, v ia sea p orts, ld lfi- I fi — C o n t i n u e d
A li e n s 2

C it iz e n s 2
T y p e of tr a v e l a n d re g io n
D e p a r tu r e s

A rriv a ls

—

sea c o n tin u e d
F a r E a s t:
A frica 3--------- ------ -------------- ---------------A sia 4______ ______
_ _ _ _ _ _ _ ____ _ _ _ _ _
O c e a n ia ----------- ------ -------------------------- l . . .
T o ta l, F a r E a s t ....... - ......... . .

- ........ .........

C a rib b e a n :
B e r m u d a ..................... . ............ ... ........... .........
B r itis h W e st I n d ie s ______________________
C a n a l Z o n e a n d P a n a m a __________________
C o l o m b ia _ _ _ _ _ _ _ _______________________
C o s ta R ic a _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C u b a . ........... . ........................... ........ ..................
F re n c h W e s t I n d ie s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ _

D e p a r tu r e s

A rr iv a ls

1943
348
531
257

4,427
2,209
6,422

91
159
311

1,315
2,125
2,722

1,136

13,058

561

6,162

46
1

2,427

357

97

26
3,470
4, 511
8
28
122
4
540
11

1
9,091
22
98
7
7

156
13,854
680
152
25
123
3

14

130

2
72
3
266
296

6
96
21
286
1
1
3

505
498
116
14
4
2
1

V e n e z u e la ............ ............... ................... ...........

20
1
440
1
8
1

26

1
5
10
109
1
1
2

T o ta l, C a r ib b e a n _________ ____ _ _ _ _ _ ____

1,658

11,812

9, 726

15, 634

46
1
113
17
08
1

113
178
148
23
34
1

130
16
121
13
34

407
201
266
35
185
35

H o n d u r a s ______ _ __ _ _ _ _ __ __ __ _________
N e th e r la n d s G u ia n a . __ _ _ _ _ _______________
N e th e r la n d s W e st I n d i e s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
N ic a r a g u a ___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ______ _

S o u th e r n S o u th A m erica :
A rg e n ti n a _____ ___ _____ _ __ __ __ __ __ __
B ra z il_ _ _ _ _ _ _ _ _ _ _ _ _ _
_________________
C h ile .____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
E c u a d o r________________________ _______
P e r u . ................. ........... ................... ...................
T o ta l, s o u th e r n S o u th A m e ric a _ __ __ ____ _

246

497

314

1,129

5,041

30, 565

16,607

39, 585

1,475

786

370

704
3
8

P o r t u g a l .___ _______ __________________
U n ite d K in g d o m _ __ __ __ __ __ __ _ . . . _ _ _ _ _ _
U . S. S. R ____________________

204
1,274

135
5
146
4,809
3

48
174
39

139
355

T o ta l, s e a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
AIR
E u r o p e a n d M e d ite r ra n e a n :
E ir e _ __ __ __ __ __ __ __ __ __ __ __

__________

T o ta l, E u r o p e a n d M e d ite r r a n e a n ..................

2,953

5,884

031

1,209

F a r E a s t:
A f r ic a 3____ _____ ____ _ _ _ _ _ _ _ _ _ _ _ _ _•...........
A s i a 4______________ __________________

1,304
564

1,531
16
265

60
13

540
20

T o ta l, F a r E a s t _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1,868

1,812

73

707

2,059
949
16
4,860
8,314
2,450
356
11,390
837
7
17
603
457
23
250
751

2,784
1,207

1, 104
162

10, 240
8, 325
241
26
17, 300
1,030

7,325
2,024
2,163
143
5, 681
437
3

9,068
2, 488
143
4
13,632
442

224
267

78
318
237

61
319

31
90

C a r ib b e a n :
B e r m u d a .................... ............. ............. ........ ......
B r itis h G u ia n a ______ _____ ____ ______ ___
B r itis h H o n d u r a s _ _ _ _ _ _ _ _ _ _ _ _ ________
B r itis h W e s t I n d ie s ______________________
C a n a l Z on e a n d P a n a m a __ _____ _________
C o lo m b ia _ __ __ __ __ __ _ _ _ __ __ __ __ __ __ __ _
C o sta R ic a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ ______
C u b a _____ ____________________________
D o m in ic a n R e p u b li c ___________ _________
G u a te m a la __ _ _____ ________ _______
H a i t i _________ ____ _________________
N e th e r la n d s G u ia n a .................................. .
N e th e r la n d s W e st I n d ie s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
S e e fo o tn o t e s a t e n d o f t a b le .

198

32
511
299
670
41
27

246

Tabl e I V .— C itizen a n d

a lie n 1 d e p a r tu res fro m a n d a rriv a ls in to th e U n ited S ta te s,
t>y sea a n d a ir, v ia sea p orts, 1940-45 — C o n t i n u e d
A lie n s !

C it iz e n s 2
T y p e of tr a v e l a n d re gion
D e p a r tu r e s

A rr iv a ls

air —
c o n tin u e d
C a r r ib b e a n —C o n ti n u e d

S o u th e r n S o u th A m erica :

U n ite d K in g d o m ________ ______ _____ ___
u . S. S. It
_________________________
T o ta l, E u r o p e a n d M e d ite r r a n e a n _ __ __ __ __
F a r E a s t:

C a rib b e a n :

1
1
1,283

48
77
170

709

33
94
109

34, 624

43,028

20,690

28,808

2
10,246

7
10,377

1
1,327

19
4, 576
7

10,248

10,384

1,328

4,602

49, 693

61,108

22,722

35,326

54,734

91,673

39,329

74,911

1944

22
6
67
787
82
9
843
1
847

87
30
15
863
1,310
32
2
8,407
25
171

74
1
981
135
107
5,593
9
5,600

2,664

10,942

12, 500

16,162

908
829
400

2, 776
1,289
5,424

273
964
696

1,191
4,824
3, 232

2,137

9, 489

1,933

9,247

8

42

1
449
60
10
14
104

22
1,469
1,395
2
9
96
3
15
16
19
63

135
3
8
13,042
24
5
21
79

485
46
1,307
28,867
' 378
11
18
138
22
813
5
6
113
36
611
2

11
1
2
24
3
53

S o u th e r n S o u th A m e ric a :

A rriv a ls

1943

SEA

E u r o p e a n d M e d ite r ra n e a n :

D e p a r tu r e s

51
6
250
57
1, 590
175
114
13,855
64

197

670
1
2
44
31
78

4

32

4
10

744

3,380

14,157

32,926

130
52
27
2
102
1

243
87
105
9
48
18

146
21
55
15
95
5

370
104
110
93
40
9

68

314

510

337

726

5,859

24,321

28, 927

59,061

S e e fo o tn o t e s a t e n d o f ta b le .

199

Tabl e I V .-—C itizen a n d
6y

a lie n 1 d e p a r tu res fr o m an d a rriv a ls in to th e U n ited S ta te s,
sea a n d a ir, v ia sea p orts, 1940-45 — C o n t i n u e d
A li e n s 2

C it iz e n s 2
T y p e of tr a v e l a n d re gio n
D e p a r tu r e s

U . S . S. R I

............................................... .

F a r E a s t:

C a rib b e a n :

1,533
360
246
10
1,016
6,573
6,342

660
405
1,110
25
1,285
29,742
1
935

197

103

16,080

34,163

1,737

2,701

9,974
137
476

20,541
158
770

209
11
228

2,887
511
298

10, 587

21,469

448

3,696

3,253
319

6,165
246
227
4,513
9,622
27
2
22,824
1,738

1,819
'5 55
10,282
2,303
2,142
524
6, 877
885

2,139
'233
156
8,084
3' 720
46
27
22,225
510

12
1,130
137
272
7
75
197
33
14

49
832
529
3
74
482
21
6
. 1,606

83
1,020
99
450
31
118
345
33
67

47,241

28,989

39,386
40
1
2,601
1
21

3,139
7, 585
1,835
777
9,754
1,525
2
30
2,357
771
7
144
695
60
20
2,416
34,689
S o u th e r n S o u th A m e ric a :

C h ile ............................... .................................... .

200

105
1,050

229
1,137

6

3

2,499
1
4

2,356

1

2

4,257

2,511

2,360

2,666

65,613

105,384

33,534

48,449

71,472

129, 705

62,461

1C7,510

246
81
2, 501
4

380
204
4,185
34
2
361
206
755
742
263
502
2,148
10

1945

SEA

P o la n d - D a n z ig ___ _______________ _______

1,086
67
79

18

1

S e e f o o tn o t e s a t e n d o f ta b le .

311
54
20

4,238
1

E u r o p e a n d M e d ite r ra n e a n :

A rr iv a ls

1944

AIR

E u r o p e a n d M e d ite r ra n e a n :

D e p a r tu r e s

A rr iv a ls

1
126
24
1,870
1
4
154
7
257
1,195
158
37
251
5

420
46
5, 516
9
26
1,216
62
2, 846
1 , 676
99
51
215
2

100
66
175
358
76
168
2,139
94

Tabl e I V .— C itizen a n d a lie n 1 d e p a rtu re s fro m

a n d a rriv a ls in to th e U n ited S ta te s,
l y sea a n d air, v ia sea p o rts, 1940-45 — C o n t i n u e d
A lie n s 2

C itiz e n s 2
T y p e of tr a v e l a n d re gio n
D e p a r tu r e s

sea—
c o n tin u e d
E u r o p e a n d M e d ite r r a n e a n — C o n tin u e d

U S. S. R

......... ........................... ................

F a r E a s t:

C a rib b e a n :

H a i ti

.............. ..........................................

S o u th e r n S o u th A m e r ic a :

C h ile

......... —................ ..................... .

A rr iv a ls

D e p a r tu r e s

A rr iv a ls

1945
897
4
260
277
16
4,696
7
3
837

1,253
31
175
337
16
5,939
7

1,077
' 108
1,273
653
32
9,367
184
20
5,040

988
75
921
476
86
8,439
84

11,087

19,942

23, 762

20,891

623
1, 239
1,794

2,001
3,657
16,020

456
1,648
1, 729

1,187
8', 069
6,143

3,656

21,678

3,833

15, 399

493
5
1
690
1,107
41

320
1
8
970
3,963
34
9
182
23
19
26
26
150
4
145
3

608
179
37
35,419
527
91
26
210
15
526
27
4
230
51
796
7
3
164

30

103

398
36
1, 003
39, 628
89
95
11
79
7
1,198
4
1
117
96
379
1
30
455

2,989

5,986

43,627

38, 920

420

385
507
96
10
45
34

515
1
463
96
48
69
25

998

562
99
14
67
15

94
12
5
12
6
124
3
200
2
5
189

542
261
91
90
52

1,177

1,077

1,217

2,034

18,909

48,683

72,439

77,244

1
2,169
13,131
16

695
149
3

1
919
963
2

AIR

E u r o p e a n d M e d ite r ra n e a n :

1
1
2
2
2,219
5,012
124
3
1,583
82
333
48

1,685
8
555
43

204

199
4
28
5

2,272
130
1
4,319
10,096

11,979
228

30
5
1
5
244
237

9,944
174

2,052
654

2,930

26,228

39,933

4, 279

5,908

546
311

S ee fo otn ote s a t e n d of ta b le .
7 6 9 1 5 5 — 4 S ------ 1 4

201

Tabl e I V .— C itizen a n d a lie n 1 d e p a rtu re s

fr o m a n d a rriv a ls in to th e U n ited S ta te s,
b y sea a n d a ir, v ia sea p o rts, 1940-45 — C o n t i n u e d
A lie n s 2

C itiz e n s 2
T y p e of tr a v e l a n d region
A n iv a ls

D e p a r tu r e s

A rriv a ls

D e p a r tu r e s
1945

—

air c o n tin u e d
F a r E a s t:
N o n -M e d ite rr a n e a n A fric a ............... ..................
N o n - M e d ite r r a n e a n A sia -------------------------O c e a n ia _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ ____ _

11,299
105
2,197

11,573
79
2,384

644
94
689

1,670
100
570

T o ta l, F a r E a s t .............................. ........ ..........

13,601

14,036

1,427

2,340

C a r ib b e a n :
B e r m u d a ............. .............................. ..................
B r itis h G u ia n a ........................................ . _ . ........

4, 970
137

7,876
231

2,756
181
4
8,305
4,095
51
464
32, 483
848

F r e n c h W e s t I n d ie s .............. ............ ..................
G u a te m a la ............ ............................... ................
H a i t i .......... ......... .................... .................. ........ .

3,891
7,879
2,613
718
20,205
2,161
10
42
392
904

1,829
169
42
6, 791
2,353
3,006
827
12,130
1,426
40
176
671

N e th e r la n d s G u i a n a . _ _ _ _ _ _ _ _ _ _ _ _
_____
N e th e r la n d s W e s t I n d ie s .................. ..................

93
1,714

50
956
285
277
2
1,189
477
299
64
52,786

B r itis h W e s t I n d ie s .......... ............. ........ ......... .
C a n a l Z on e a n d P a n a m a ------ ------ -------------C o lo m b ia .............. ............................... ...... ........ .
C o s ta R ic a _____ ____ ____ . _ _ _ _ _ _________
C u b a .............. ...................... ............. ...........
D o m in ic a n R e p u b li c ................. ............. .............

V e n e z u e la _ __ __ __ __ __ _ __ __ __ __ _____ ____

2,736

4,031
6,228
2
12
32,994
1,568
1
9
106
682
11
56
575
36
4
7

T o ta l, C a r ib b e a n _______ ____ ___________

48,465

54,429

S o u th e r n S o u th A m erica :'
A rg e n ti n a ----------- . . ------- . . ------ --------------B ra z il____________ ____ ________ _ _ _ _ _ _ _ _ _
C h ile ______________ _____ _____ _ _ _ _ _ _ _ _
P e ru ..

___

T o ta l, a i r _

______

_______________________

_

G ra n d to ta l, sea a n d a i r _ _ _ _ _ _ _ _ _ _ _ _ ____

2,286
33,148

29

3

15

3, 771
144

542

2,707

__ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

T o ta l, s o u th e rn S o u th A m e r ic a ___

106
1,296

2

2

5
1

3,946

547

2, 728

50
11
1,046
48
25
10
61

8

1, 259

92. 240

108,945

41j, 582

62,293

111,149

157,628

114,021

139,537

1 I t s h o u ld h e n o te d t h a t th e b re a k - d o w n in to c itiz e n s a n d a lie n s is n o t e q u iv a le n t to t h a t in to re sid e n ts
a n d n o n re sid e n ts u s e d for b a la n c e -o f-p a y m e n ts p u rp o se s.
2 B y c o u n try of im m e d ia te d e s tin a tio n or e m b a r k a tio n .
3 In c lu d e s M e d ite r ra n e a n A frica.
4 In c lu d e s M e d ite r ra n e a n A sia.
S ourc e: I m m ig r a ti o n a n d N a tu r a liz a tio n S ervice, U . S. D e p a r tm e n t of Ju stic e .

Ta bl e

V .-— R e s i d e n t s o f t h e

U n ite d S ta te s d e p a r tin g fo r o versea d e s tin a tio n s ,
g e o g r a p h ic a r e a a n d b y c l a s s o f tr a v e le r , 1 9 4 0 - 4 5 1

C lass of tr a v e le r

1940

1941

1942

1943

1944

by

1945

E u r o p e a n d M e d ite r ra n e a n
U n ite d S ta te s c itiz e n s (e xc lu d ing c r u ise ).
A lie n re sid e n ts of th e U n ite d S ta te s:
E m ig r a n ts .......................................... .
T o t a l_ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _____ _

3,492

2, 334

4, 972

4,954

18, 744

37,315

7,347
2, 257
1

4, 454
2,334

1,424

1,130
622

1,556
1,441

2,974
6, 726

13,097

9,122

6, 396

6,706

21, 741

47,015

O c e an ia a n d n o n -M e d ite rr a n e a n A sia a n d A frica
U n ite d S ta te s c itiz e n s (e x c lu d in g cruise)
A lie n re sid e n ts of th e U n ite d S ta te s:
C ru is e p a sse ng ers_ _ _ _ __ __ __ __ __ __ __ __
T o t a l_ _ _ ____ _____

13,614

8, 526

3,641

3,004

12, 724

17,257

3, 209
3,693
20

2,496
3, 321

207

147
31

219
189

286
742

20, 536

14, 343

3,848

3,182

13,132

18,285

\

1
S ee fo o tn o t e s a t e n d o f ta b le .

202

Ta bl e V.—

R e s i d e n t s o f th e U n i t e d S t a t e s d e p a r t i n g f o r o v e r s e a d e s t i n a t i o n s ,
g e o g r a p h ic a r e a a n d b y c l a s s o f tr a v e le r , 1 9 4 0 - 4 5 '— C o n t i n u e d

C la ss of tr a v e l e r

1940

1941

1942

1943

1944

by

1945

C a r ib b e a n 2
U n ite d S ta te s c itiz e n s (e x c lu din g c r u is e ) ..
A lie n re sid e n ts of th e U n i te d S ta te s :
T e m p o r a r y v isito rs a b r o a d ............. .

T o t a l ......... ...... ..................................

120,266

143,907

53,120

36,282

35,433

51,454

1,831
1,864
33,414

1,852
2,187
32, 465

1,125

1,150
64

1,456
191

2,328
494

157,375

180,411

54,265

37,496

37,080

54, 276

20

S o u th e r n S o u th A m eric a 3
U n ite d S ta te s c itiz e n s (e xc lu d ing c r u ise ). .
A lie n re sid e n ts of th e U n ite d S ta te s:
T e m p o r a r y v isito rs a b r o a d ........ .........

T o t a l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ______ _

6,340

6,453

6,328

10,494

4,571

5,123

150
544
1,316

143
686
2,083

85

67
39

86
108

131
423

8,350

9,365

6,413

10,600

4,765

5,677

T o ta l
U n ite d S ta te s c itiz e n s (e x c lu din g c r u ise ). .
A lie n re sid e n ts of th e U n ite d S ta te s:
T e m p o r a ry v isito rs a b r o a d ----- ------ -

T o t a l ....... ...... ..................... ......... .

143,712

161,220

68,061

54,734

71,472

111, 149

12,537
8,358
* 34,753

8,945
8,528
34, 548

2,841

2,494
756

3,317
1,929
............

5,719
8,385

199, 360

213,241

70,922

57,984

76,718

125, 253

20

1 T r a v e l b e tw e e n t h e U n ite d S ta te s a n d C a n a d a a n d M e xico is e x c lu d e d ; tr a v e l v ia C a n a d ia n s e a p o rts,
tr a v e l v ia a irc ra f t, a n d tr a v e l b e tw e e n in su la r possessions of th e U n ite d S ta te s a n d fo re ig n c o u n trie s a re
in c lu d e d . T o ta ls sh o w n fo r a lie n re sid e n ts of th e U n ite d S ta te s w ill d iffe r fro m th e to ta ls in ta b le V I
o w in g to c e rt a in a d ju s tm e n ts i n to ta l a lie n figu re s to e xc lud e a g ric u ltu ra l w ork e rs from th e C a r ib b e a n .
2 In c lu d e s C olo m b ia ; V en ez u e la, a n d th e G u ia n a s.
3 E x c lu d e s C olo m b ia , V en ez u e la, a n d t h e G u ia n a s.
* I n c lu d e s tw o p a ssen g e rs o n w o rld cruise s.
Source: B a se d u p o n re c o rd s of Im m ig r a ti o n a n d N a tu r a liz a tio n S ervice, U . S. D e p a r tm e n t of Ju stic e .

Ta bl e V I .-— T o t a l

p a s s e n g e r tr a ffic ( e x c lu d in g c r u is e s ) b e tw e e n th e U n ite d S t a te s
a n d o v e r s e a c o u n tr ie s , b y c la s s o f tr a v e le r , 1 9 4 0 -4 5 1

C la ss of tr a v e le r

1940

1941

1942

1943

1944

1945

O u tb o u n d

r

U n ite d S ta te s c itiz e n s ............. ...................
A lie n re sid e n ts o f t h e U n ite d S ta te s:
T e m p o r a r y v isito rs a b r o a d ..............
E m ig r a n ts ----------------- ----------A lie n v isito rs to t h e U n ite d S ta te s ---------

143,712

161, 220

68,061

54,734

71,472

111,149

12,537
8,358
48, 526

8,945
8, 528
37,953

2,841
22,391

2.529
740
36,060

3,392
1,883
57,186

5,797
8,395
98,800

T o t a l............ .............. .......................

213,133

216,646

93,293

94,063

133,933

224,141

In b o u n d
U n ite d S ta te s c itiz e n s ......... .................... .
A lie n re sid e n ts of th e U n ite d S ta te s:
T e m p o r a ry v isito rs a b r o a d ............. .
I m m ig r a n ts -------------------------------A lie n v isito rs to th e U n ite d S ta te s --------T o t a l ----- ------------ -------------------

165,425

159,732

85,792

92,121

129,839

158,311

12,537
42,068
54,543

8,945
24,436
45,523

2,841
6, 585
48,542

2,529
6,065
65,503

3,392
8,954
94,001

5, 797
15,631
119,626

274,573

238,636

143,760

166, 218

236,186

299,365

* T ra v e l b e tw e e n th e U n ite d S ta te s a n d C a n a d a a n d M e xico is e x c lu d e d ; tr a v e l v ia C a n a d ia n se a p o rts,
tr a v e l v ia a ir c ra f t, tr a v e l b e tw e e n in su la r p osse ssio ns of th e U n ite d S ta te s a n d fo re ig n c o u n trie s, a n d tr a v e l
b y a g ric u ltu ra l w o rk e rs fro m J a m a ic a , B a rb a d o s, a n d t h e B a h a m a s a re in c lu d e d .
S ou rc e: B a se d u p o n re c o rd s of Im m ig r a ti o n a n d N a tu r a li z a tio n S ervic e, U . S . D e p a r tm e n t o f Ju stic e .

203

204

Tabl e

V I I .—

A r r iv a ls a n d d e p a rtu re s o f re sid e n ts o f o versea co u n trie s a d m itte d to th e U n ite d S ta te s as te m p o ra ry v is ito r s , 19JfO-Jf5
1940
C o u n tr y
A rriv a ls

E u r o p e a n d M e d ite r ra n e a n :

U . S . S. R _______ _______ - ____ __________
O th e r E u r o p e ----- ------ ------- -------------------

O ce ania, n o n -M e d ite rr a n e a n A sia a n d A frica:

\

*

--

1942

1941

D e p a r­
tu r e s

A rriv a ls

846
26
56
274
55
88
13
117
3,603
245
399
185
68
1,096
43
89
35
70
699
698
141
181
408
88

310
1,459
975
540
115
62
666
9
11
9
5
506
633
131
35
296
51

350
15
15
71
43
129
7
71
1,939
151
91
86
112
190
26
150
10
95
208
425
72
206
532
78

936
387
895
14
121
288
11,085
93
20

457
395
281
9
32
234
3,503
84
17

466
227
516
6
95
281
7, 729
71
8

23,362

11, 598

14,471

707
2, 613

1,264
1, 633

413

331

131
9
6
401
59
106

D e p a r­
tu r e s

38
9
3
41
7
25
1
19
287
116
10
39
34
78
50
3
1
10
63
116
21
7
221
56
2
298
103
170
1
4
242
2,631
6

A rriv a ls

116

D e p a r­
tu re s

10

A rriv a ls

56

1
27
25
1
6
48

27
52
61
165
23
13
275
12
44
1
139
24
9
3
5
66
205
508
17
1,503
155

108
168
95
9
72
540
21, 346
140
13

21
15
32
1
2
56
2,776
1
1

136
129
40
5
44
1,999
17,293
19
10

4, 712

25,945

3,187

2,045
2, 925

861
1, 045

2,067
723

175
56

338

344

479

20

10
288
82
135
33
16
588
149
181
3
129
250
24
1
2
27
349
907
9
49
102
4

1944

1943

5
19
29
40
1
25
44
1

D e p a r­
tu r e s

A rriv a ls

6
1
114
36
1
27
2
30
7

52
2
26
137
136
164
14
22
1,045
147
59
18
271
55
13
2

1945

D e p a r­
tu r e s

11
3
1
21
28
4
72
1
44
7

A rriv a ls

559
5
56
384
233
124
9
56
4,703
101
620
9
289
249
4
2
7
244
1,053
2,246
136
268
262
8

D e p a r­
tu re s

233
27
284
42
72
14
1,101
6
38
30
64
2
17
230
1, 510
65
21
172
5

2
69
24
1
5
82

462
170
375
31
215
473
24

2
33
18
10
16
55

28
37
6
1
158
3,888
3
2

464
275
98
17
280
2, 719
17,945
54
5

77
65
9
1
18
326
10,107
3
8

428
916
325
89
306
1, 714
11,047
68
18

1,073
258
229
6
72
753
7,143
24
5

23,038

4, 530

25, 770

10, 940

26, 538

13,496

1, 923
742
5
353

257
100
1
42

1,574
1,307
1
2,140

725
82
6
165

1,673
4, 209
8
2,918

1, 527
858
7
770

I r a n _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - - - - - ____
I r a q _ _ _ _ _ _ _ _ _ _ ___________
___________
L ib e r ia ________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
N e w Z e a la n d _____ _ _ _ _ _ _ __ __ __ __ __ __ __ __ _
U n io n of S o u th A fric a

___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

O th e r n o n - M e d ite r r a n e a n A fr ic a . .............. ......
O th e r n o n - M e d ite r r a n e a n A s ia . — .................
O th e r O c e a n ia _____ ____ ____________ _____
T o t a l _ __ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ _________
C a r ib b e a n :
B r itis h G u i a n a . ............................ ........................
B r itis h H o n d u r a s _ __ __ __ __ __ _ ______ ______
B r itis h W e st I n d ie s 1.......... ......
................
C a n a l Z on e a n d P a n a m a ......... ............ ................
C o l o m b ia ............ ....................................... ...........
C o s ta R ic a .. ........................... - ...... ........... .
C u b a _______
_ __ __ __ __ __ __
_________
D o m in ic a n R e p u b lic ______________
______
F r e n c h W e s t I n d ie s ______________ ________ G u a te m a la _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
H o n d u r a s ________ ______ ___
________ N e th e r la n d s G u ia n a ...... ........... ......... ..................
N e th e r la n d s W e s t I n d ie s ------ -------------- ------N ic a r a g u a --------- ------- ---------------- -------E l S a lv a d o r .. _____________
. -------------

T o t a l . _ _ _ _ _ _ _ _ _ ______ _________ _ __ _
S o u th e r n S o u th A m e ric a (n o n - C a rib b e a n ) :
A rg e n ti n a ___
________________

____

C h ile ____ ____ _____ ______________ ______
E c u a d o r _____ _____ ____________
___ ___
U r u g u a y .............. ...................................................

5
2

75
43

13
1

10
41

1
127

242
8
41

39
1,364
42
168
4
628
196
139

4,748

753

69
5
2,162
76
188
19
2, 524
256
3
5
14
15
36
30
100
7
4
198
12,076

131
93
22,298
664
1,109
439
4,959
649
1
277
360
192
246
149
551
229
350
1,032

13
10
9,467
67
24
38
52
170

14,357

17,787

33, 729

610
172
1,274
551
299
45
512
150

299
55
192
311
88
8
250
73

672
150
2,148
640
347
75
685
161

507
151
261

2
13
91
6
1,333
86
164
8
303
135
1,164

105
10
14

20
3
53
26
789
83
75
3
386
50
237

8, 985

4,639

6, 574

574

82
63
3,407
766
1,448
366
11,048
1,590
3
38
307
296
407
12
686
98
192
2,490

76
88
2, 957
721
1,550
404
10,185
1,048

158
418
4,384
455
848
279
5,018
378

29
466
286
420
24
567
143
272
2,322

102
55
2, 985
692
1,756
340
9, 768
1,380
1
72
304
264
407
35
723
112
171
2,442

22,448

23,299

21, 558

21,609

1,136
115
1,282
775
273
16
652
94

1,048
182
1,052
820
376
17
681
118

1,255
128
1,686
1,204
397
29
724
185

1,104
134
1,170
1,031
485
21
815
104

22
36
1,388
5
220
485
176
53
291
156
358

11
25
1, 207
5
427
391
117
70
301
116
337

n . s. s.
n . s. s.
931
n . s. s.
1,143
517
n . s. s.

n . s. s.
n . s. s.
941
n . s. s.
221
308
n . s. s.

387
220
479

6,923

6, 235

75
82
2,882
868
1,474
416
10,761
1,326
1
28
440
276
379
25
669
94
218
2,434

46
262
201
227
56
283
177
238
929

2
3
4
95
90

232
15
30

148
54
99
40
472
2,407
490
17
517
109
141

318
93
196

7,720

1,426

13,302

3,863

366
1,330
35, 623
992
1,862
611
7,134
1,114
6
463
669
323
325
361
1,442
377
560
2,039

18
7
11,825
54
26
84
186
276
142
569
80'
23
31
16
82
29
50
36
33, 456

314
193
46,134
1,213
3,028
904
12, 522
1,470
8
397
1,084
604
498
216
1,870
499
795
2,990
1,682

67
270
16, 742
255
201
39
329
454
1,255
16
26
79
60
253
22
63
429
66,838

30, 521

55,597

46,990

76,421

87,398

115
8
13
91
19
4
42
8

633
197
2,437
797
522
41
939
294

83
13
26
52
31
4
59
9

1,604
210
3,346
1,048
673
61
1,162
392

303
20
328
111
59

4

26
68
8
35
9
30
16
34
22
20,431

27

11
8
7
5
361
150
52

77
53

____ _____

4,343

4, 294

5,608

4,864

3, 613

1,276

4,878

300

5,860

277

8,496

951

G r a n d t o t a l __________ . . --------------------1 I n c lu d e s B e r m u d a .
n . s. s. N o t s e p a r a te ly s h o w n .

57,076

45,426

50,622

35,824

50,489

22,824

66,393

36,104

94,947

59, 633

124,757

105, 708

T o t a l ____________________

205

n . s. N o t spe cified .
S o u rc e : I m m ig r a ti o n a n d N a t u r a li z a tio n S e rvic e, U . S. D e p a r tm e n t of J u s tic e .

Tabl e VIII.— E s tim a te d

rec eip ts fr o m C a n a d ia n tr a v e le rs to th e U n ited S ta te s,
1 9 4 0 -4 5
[I n m illio n s of U n ite d S ta te s dollars]

M e a n s of tr a v e l

1941

1940

1942

1943

1944

1945

A u to m o b ile ._____ _ _ _ _ _ _ _ _ _ ____ ____
T r a i n _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _
B o a t.......... ......................... .......... ...
B u s i __________ ______ ____ ____ ___
A ir p la n e ___ _ __ __ __ __ . . . ___________
O t h e r 2.................................. ...................

9.5
18.3
1.1
2 .9
.5
4 .1

3.5
7 .6
.6
1.3
1.1
2 .3

2.4
12.1
.5
2.4
1.0
3 .4

1.7
20.3
.6
2 .9
1.1
4 .3

3.5
30.1
1.0
7.9
2 .2
7.2

7.3
38.7
1.7
14.3
3 .5

T o t a l ......... .........................................

36.4

16.4

21.8

30.9

51.9

75.5

1 0.0

1 E x c lu siv e of loca l b u s .
2 I n c lu d e s p e d e s tr ia n , lo ca l b u s , e tc .
S o u rc es: U . S. D e p a r tm e n t of C o m m e rc e , O ffice of B u s in e ss E c o n o m ic s, I n te r n a tio n a l E c o n o m ic s D iv i­
sio n ; C a n a d a 's D e p a r tm e n t o f T r a d e a n d C o m m e rc e , D o m in io n B u r e a u o f S ta tis tic s , I n te r n a tio n a l P a y ­
m e n ts B r a n c h .

Tabl e IX.— E s t i m a t e d

p a y m e n t s fr y U n i t e d S t a t e s

tr a v e le r s

to

C a n a d a , 1 9 4 0 -4 5

[I n m illio n s of U n ite d S ta te s dollars]
1940

M e a n s of tr a v e l

R a i l...................................................... .

1941

1942

1943

1944

1945

45.0
24.0
5.5
5 .2
1.2
8 .2

49.1
25.4
6.4
6 .4
2 .7
7.3

23.6
29.1
3 .6
5.5
2 .7
7.3

15.5
44.5
5.5
4 .5
2.7
6 .4

22.2
61.1
7.2
5.7
2.9
6.8

49.7
59.3
11.7
11.9
5.9
11.0

89.1

97.3

71.8

79.1

105.9

149.5

1 E x c lu siv e of loca l b u s .
2 I n c lu d e s p e d e s tr ia n , lo ca l b u s , e tc .
S ou rc es: U . S . D e p a r tm e n t o f C o m m e rc e , O ffice of B u sin e ss E c o n o m ic s, I n te r n a tio n a l E c o n o m ic s D iv i­
sio n ; C a n a d a 's D e p a r tm e n t of T r a d e a n d C o m m e rc e , D o m in io n B u r e a u of S ta tis tic s , I n te r n a tio n a l P a y ­
m e n ts B ra n c h .

Ta bl e

X .— D e p a r t u r e s f r o m

M e x ic o o f f o r e ig n to u r is ts r e s id in g i n f o r e ig n c o u n tr ie s ,
b y m o n th , 1 9 4 0 - 4 5

[I n h u n d r e d s]
M o n th

1940

J a n u a r y ........ ...... .............. ........ ..................
F e b r u a r y ____ _____ _______ _ _ _ _ _ _ _ _ _
M a r c h ................. .................. .............. . ___

1941

1942

1943

1944

1945

117
150
154

98
126
127

78
66
66

43
54
71

85
97
104

74
84
91

F i r s t q u a r te r _ _ _ _ _ _ ____ ________

421

351

210

168

286

249

A p r il___ ______ __________ _________
M a y ....... ........ ............. ............ ................ .
J u n e ............... ............................. ................

104
79
95

100
93
117

58
65
81

77
95
103

94
81
83

87
82
93

S e c on d q u a r te r ....................... .

. .

278

310

204

275

258

262

J u l y ...................................................... ........
A u g u s t_ __ __ __ __ __ __ __ __ _______ ____
S e p te m b e r.............. ................... ..................

93
133
81

218
266
151

86
105
88

103
164
123

105
134
98

119
164
154

T h i r d q u a r te r ....................................

307

635

279

390

337

437

O c to b e r.................................................. ......
N o v e m b e r ____________ ____ ________
D e c e m b e r_ _ _ _ _ ______ ________ ____

56
53
74

95
85
72

54
57
42

91
77
78

79
62
64

116
138
154

F o u r t h q u a r te r _________________
A n n u a l t o t a l . . .............. ...... ...........

183

252

153

246

205

408

1,189

1,548

846

1,079

1,086

1,356

S o u rc e : R e v is ta d e E s ta d ís tic a , M a y 1944 a n d J a n u a r y 1947.

206

Ta bl e

X I .— P e r s o n a l r e m itta n c e r e c e ip ts , 1 9 4 0 -4 5

[I n m illio n s of dollars]
A m ount

1940.
1941.
1942

59.4
42.6
40.4

Ta bl e

A m o u n t

1943.
1944.
1945.

45.3
44.9
46.6

X I I .— P e r s o n a l r e m i t t a n c e p a y m e n t s , b y c o u n t r y , 1 9 4 0 - 4 5

[ I n m illio n s of d o lla rs]
A re a a n d c o u n tr y

1941

1940

1942

1943

1944

1945

T o ta l, a ll a r e a s ______ _______ ___

188.1

139.6

98.6

179.7

221.3

286.3

W e s te r n H e m is p h e r e . ......................... ......

25.2

32.1

40.0

85.5

140.0

93.5

B r itis h d e p e n d e n c ie s in th e C a r ib b e a n .
C a n a d a .......................... ........ ........ ...
M e x ic o __ ___ __________ ____ ____
O th e r W e ste rn H e m is p h e re ..... ......... .

2 .5
15.0
4 .5
3 .2

4.1
17.3
5 .5
5 .2

6.1
17.4
9 .7
6 .8

14.9
21.9
41.8
6 .9

21.6
18.6
92.1
7 .7

11.9
15.3
59.8
6 .5

60.3

31.6

36.8

42.7

155.1

E u ro p e _______________

_________

90.9

C ze c h o slo v a k ia ................................. .
E i r e . _______ _______ _______ _

.1
8 .7
2 .0
8 .4
34.5
1.1
.8
3 .9
1.8
14.4
15.2

G r e e c e ..____ ___________________
I t a l y . . _____ ___ _____ ___________
P o la n d _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
S p a in ....... ............. ........................ ........
S w e d e n __________ ____ _________
S w itz e r la n d _____________________
U n ite d K in g d o m
. . . _ _________
O th e r E u r o p e ............... ........... .............

.9
7.5
10. 5
22.7
50.3
1.0
4 .4
4 .3
5 .2
28.2
20.1

( !)

7.5
2. 2
4 .2
19.9
.1
.6
3 .5
3.9
12.6
5.8

7.4
1.0

8 .8

.5
2 .7
3.5
12.5
4 .0

.8
3 .4
4 .9
14.9
4 .0

1.6
2 .9
2.3
12.8
2 .9

7.8
w

12.4

A sia _ _ _ __ __ _ _ _ _ _ _ ________ _________

71.5

46.5

25.7

56.3

37.1

33.7

C h in a ___________ ____ _________

24.9
25.7
2 .6
18.3

lo .8
17.1
1.7
11.9

21.5
0)
2.0
2 .2

52.9

32.7

24.0

2 .6
.8

2 .6
1.8

3 .9
5 .7

P a le s tin e ......... ................... ..................
O th e r A s ia _ _ _ _ _ _ _ _ _ _ _ _________

( !)

O th e r ....... ................... ......... . ........... ..........

.5

.7

1.3

1.1

1.5

4 .0

A fr ic a . _____ ______ _____ _______ _
O c e a n ia ......................................... ........

.2
.3

.3
.4

.8
.5

.4
.7

.4
1.1

1.8
2 .2

i L e ss t h a n $50,000.

Not e .—De t a i l

w ill n o t n e c e s s a r ily

add

to

to ta ls

b eca u se

o f r o u n d in g .

207

Ta bl e

X I I I . — I n s t i t u t i o n a l c o n t r i b u t i o n s to f o r e i g n c o u n t r i e s , b y c l a s s o f i n s t i t u t i o n

a n d b y g e o g r a p h ic a r e a , 1 9 4 0 - 4 5
[In m illio n s of d o llars]

Y ea r

E u ro p e

T o ta l

A sia

A fric a

L a tin
A m e ric a

O th e r
are as

P r o te s ta n t
1 9 4 0 ...______ _ __ __ __ __ __ __
1941_______ _ _ _ _ _ _ __ __ __ __
1 9 4 2 .................................. .
1943_____________________
1944_____________________
1 9 4 5 ..._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1.4
3.0
3.1
3 .7

16.5
17.8
15.9
19.6
23.2
32.3

6 .1

9 .9

10.2
10.4
7.5
9 .2
9 .5
12.6

2.4
2 .6
3 .2
4.0
4.9
6 .2

2 .3
1.7
2.1
2 .6
2 .5
3 .0

0 .2
.1
0)

.1
.2
.6

C a th o lic
1940........ ..................................
1 941........................... ..............
1 9 4 2 ............. .................. ..........
1943_ __ __ __ __ _ _ _ _ _ _ ______
1944_____________________
1945............................ ..............

1.0
1.4
.9
1.0
4.1
4 .3

3 .0
3 .3
2.3
3.5
7.1
7.9

1.6
1.4
.8
1.9
2.0
2.7

0 .3
.4
.5
.5
.7
.5

«
(*)
0)
(0

0 .1
.1
O

0 .2
.1

(0
(0

.3

J e w is h
1940___ ________ _________
1 9 4 1 ............ ............
1 9 4 2 ....______ _____ _______
1 943..___ ________________
1944___ _____ ____________
1945.................. ........... .............

10.1
12.1
11.6
14.7
27.2
37.2

3 .2
4 .3
4 .2
3.1
10.9
20.0

6.1
7.1
6.8
10.7
15.3
15.9

0)
(>)
w

0 .2
.4
.3

0.07
.6
.6
.6
.6
1.0

0.1

0 .2
.9
.8
4 .2
4 .6
1.0

0 .4
.5
.8
1.3
1.9
1.7

0 .4
.4
1.2
7 .3
9 .0
8 .7

2 .8
3 .0
3.4
7.5
8 .2
4 .8

3.5
3 .7
4 .6
6 .0
7 .6
9 .0

0 .8
.7
1 .3
7 .5
9 .3
9 .6

(0
to

(0
0)
(0

N o n s e c ta r ia n
1940........... ........ ...................
1941.................. ........................
-1942.................. ............ ...........
1943............... ...........................
1944_____________________
1945_ __ __ _ __________

19.2
49.4
35.0
76.8
123.5
156.4

16.3
44.1
24.9
51.0
89.8
118.8

1.9
3.5
7.3
13.0
18.2
26.2
T o ta l

1940............. ............ .
1941_____ _________
1942.................. ...................
1943............ . .............
1944.......................... ................
1945________ _ __ __ __ __ __ __

48.8
82.6
64.8
114.6
181.0
233.8

21.9
52.8
33.1
58.8
110.9
153.0

19.8
22.4
22.4
34.8
45.0
57.4

1 L ess t h a n $50,000.

Not e—D e ta il w il l n o t n e c e ss a rily a d d

208

to to ta ls b e c a u se of ro u n d in g .

Tabl e

X IV

.— I n c o m e

on

in v e s tm e n ts , b y

a re a a n d ty p e , 1 9 4 0 -4 5

[ I n m il lio n s o f d o lla rs ]

A re a a n d ty p e

1941

1940

1942

1944

1943

1945

R e c e ip ts
T o t a l ------------------ ------ ------------ --------

564.0

544.3

514.2

508.3

572.4

555.3

L o n g -te rm ---- -------- --------------------P o r tfo lio ....... .............. - ..............
D ir e c t_________ _____ _______
S h o rt -te rm ____________ _____ ____
U . S. G o v e rn m e n t_ __ __ __ __ __ __ __ _

554.9
142.4
412.5
6 .0
3.1

530.4
130.0
400.4
5.0
8 .9

491.9
133.6
358.3
4 .0
18.3

492.9
125.1
367.8
4.0
11.4

551.8
133.8
418.0
4 .0
16.6

534.5
142.4
392.1
5.0
15.8

S te rlin g a r e a ........................................ ........

76.7

65.6

80.7

78.4

79.7

75.5

L o n g -te rm __________ ____ _______
P o r tfo lio _ _ _ _ _ _ _ _______ ____
D ir e c t_____________ ____ ____
S h o r t- te r m ----- ---------------------------U . S. G o v e rn m e n t------------------------

75.7
14.6
61.1
1.0

61.9
14.6
47.3
1.0
2 .7

67.9
14.5
53.4
1.0
11.8

72.5
14.4
58.1
1.0
4.9

68.9
14.4
54.5
1.0
9 .8

66.5
14.4
52.1
1.0
8 .0

C a n a d a _ __ __ __ __ __ __ __ __ __ __ __ _ ____

231.5

215.5

215.8

204.6

205.5

205.3

L o n g -te rm ---- ----------------------------P o r tfo lio _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _
D ir e c t--------- -------- ---------------S h o rt -te rm ------ ---------- _ _ _ ------U . S. G o v e rn m e n t______ _________

230.5
102.9
127.6
1.0

213.4
92.8
120.6
1.0
1.1

214.7
100.7
114.0
1.0
.1

203.0
93.5
109.5
1.0
.6

204.0
103.0
101.0
1.0
.5

203.5
110.5
93.0
1.0
.8

A m e ric a n R e p u b li c s ............ .............. ........

170.7

198.1

195.6

200.3

259.9

238.4

167.7
14.7
152.9
2.0
1.0

194.8
15.5
179.2
2.0
1.3

191.4
14.8
176. 6
2 .0
2 .2

194.6
13.7
180.9
2.0
3.7

255.3
13.6
241.7
2.0
2.6

233.6
13.5
220.1
2.0
2 .8

85.1

65.1

22.1

25.0

27.3

36.0

17.9
3 .6
14.3

22.8
3 .5
19.3

23.6
2 .8
20.8

4 .2

2 .2

3 .7

30.8
4.0
26.8
1.0
4.2

L o n g -te rm _________ ______ ______
P o r tfo lio ____________ __ _ _ _ _
D ir e c t
---------- -----------------S h o rt -te rm __ _______________
.
U . S. G o v e rn m e n t____ ___________
O th e r _________________________ ——
L o n g -te rm _____ ____ _ __ __ __ __ —
P o rtf o lio ____________ ____ _ __ _
D ir e c t______________________

81.0
10.2
70.8
2. 0
2.1

U . S. G o v e rn m e n t.................... ...........

60.3
7.1
53.3
1.0
3 .8

P a y m e n ts

210.1

186.9

158.7

155.2

161.5

167.6

204.1

180.6

151.2

146.0

149.3

153.4

6.0

6 .3

7 .5

9 .2

12.2

14.2

S te rlin g a r e a ----------- --------- --------------

73.8

59.6

49.0

43.4

46.3

47.1

L o n g -te rm -------------- ----------- --------

73.3

59.1

48.5

42.9

45.8

46.6

U . S. G o v e rn m e n t.......... ....................

0 .5

.5

.5

.5

.5

.5

36.2

33.7

36.8

33.5

32.3

34.9

T o t a l ................... — ____ _____ _ _ _ _ _ _ _ _ _
L o n g -te rm ___

.

................-

U . S. G o v e r n m e n t_____________ .

C a n a d a --------

------------- ------ ------------

35.7

33.2

35.5

31.4

28.2

30.7

U . S. G o v e rn m e n t_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

.5

.5

1.3

2.1

4.1

4 .2

A m e ric a n R e p u b li c s .............. . ......... - ........

10.4

9.1

8.0

8 .4

8.1

8 .3

L o n g -te rm -------- -------- ----------- ------

10.4

9.1

8.0

8 .4

8.1

8 .3

O th e r ________________ __ _ _ _ _ _ _ _ _ _ _ _

89.7

84.5

64.9

69.9

74.8

77.3

L o n g -te rm ................. ......................... .

84.7

79.2

59.2

63.3

67.2

67.8

5.0

5.3

5.7

6 .6

7.6

9.5

L o n g -te rm _ _ _ ________________

_ _

U . S . G o v e rn m e n t...........................

Not e.—De ta il w ill n o t n e c e s s a ri ly a d d

to to ta ls , b e c a u s e o f ro u n d in g .

209

Tabl e

X V .— I n c o m e r e c e iv e d f r o m

A m e r ic a n

d ir e c t in v e s tm e n ts i n

s e le c te d

c o u n trie s, 1 9 4 0 - 4 4

[I n m illio n s of dollars]
C o u n tr y

1940

1941

1942

1944

1943

S te rlin g a rea :

C a n a d a __ _______ ________ ________ ________
A m e ric a n R e p u b lic s:

U r u g u a y ..................... ............................................

4 .8
1 .2
.8
3 .6
9 .0
35.8

4 .5
.7
1 .4
2 .3
8 .2
26.2

7.0
.8
2 .2
5 .3
5.4
28.1

7 .8
.7
1.9
6.5
5 .5
32.1

9.5
.6
2.1
5.1
7 .0
26.8

127.6

120.6

114.0

109.5

101.0

18.2
11.0
39.0
16.1
1 .9
2 .6
2 .4
12.0
3 .0
13.8
1.8
33.1

20.0
13.9
41.7
27.0
1.3
2. 2
2 .2
12.2
4 .0
9 .7
.9
43.2

20.6
15.4
35.6
26.4
4 .7
3 .6
1.6
14.6
3 .7
10.3
.9
32.2

15.8
23.5
34.6
19.9
5 .7
4 .4
1.8
16.9
6 .0
8 .0
.6
38.1

19.7
18. 7
31.1
27.5
6 .7
3 .7
3 .6
15.9
4.1
8.1
1.2
81.4

1.0
1.0

.9
.3
.3
2.0
1.0

.2
1.3
.7
1 .0
1.3

.2
1.1
3 .3
.9
1 .2

O th e r:
5.1
.3
.3
1 .2
2 .0

(0

1 .2
1.0

* L ess t h a n $50,000.

Ta bl e

X V I . — I n c o m e r e c e iv e d f r o m

A m e r ic a n d ir e c t in v e s tm e n ts : V a lu e
m e n ts a n d y i e l d , i n 1 9 4 3 , b y a r e a s a n d se le c te d c o u n tr ie s

o f in v e s t­

[In m illio n s o f dollars]
A re a a n d c o u n try

C h ile .................................. ................ ........................ .....................

H o n d u r a s _____ _ __ _ ______ _____ ___ ____ ________ ______

In c o m e

V a lu e i

P ercent

58.1

862.8

7 .8
.7
1.9
6.5
5.5
32.1
3 .6

114.5
33.0
16.7
41.0
53.4
526.3
77.9

109.5

2,289.5

18

180.9

2,728.3

6 .6

15.8
23. 5
34.6
19.9
5.7
4.4
1.8

393.3
232.0
336.2
527.8
70. 5
86.9
37.0

4.0
10.1
10.3
3 .8
8.1
5.1
4 .9

S ee fo o tn o te a t e n d of ta b le .

i

210

Y ie ld

6.7
6.8
2.1
11.4
15.9
10.3
6.1
4 .6

Tabl e X V I . — In c o m e

rece ive d fro m A m er ic a n d ir ec t in v e s tm e n ts : V a lu e o f in v e s t­
m e n ts a n d yield , in 1948, l)y a rea s a n d sele cted co u n trie s — C o n t i n u e d
A re a a n d c o u n try

A m e r ic a n R e p u b lic s— C o n tin u e d

P ercent

5 .9
5 .3
11.3
JO. 9
10.3
2 .8

16.9
6 .0
8.0
.6
38.1
5.6

286.2
112.9
70.8
5.5
370.5
198.7

19.3

1,884.9

1.0

.2
1.3

40.0
14.1
123.5
32.8
43.6
1,630.9

.5
9 .2
.6
3 .0
3 .0
.9

.7

S w itz e r la n d _______ ____ ___ ______ ________ . -----------------

Y ie ld

V a lu e 1

In c o m e

1.0
1.3
14.8

i V a lu e figure s a r e a s of M a y 31,1943, a n d in c lu d e c a p ita l of U n ite d S ta te s c itiz e n s re sid in g a b ro a d , a m o u n t­
in g to ro u g h ly $50 m illio n , for w h ic h a g eo g ra p h ic d is t r ib u tio n is n o t a v a ila b le . In c o m e o n th is in v e s tm e n t
is n o t in c lu d e d in th is ta b le . F ig u r e s also e x c lu d e in v e s tm e n ts in in su r a n c e co m p an ie s.

Ta bl e

X Y I I . — A v e r a g e y i e l d 1 o n A m e r ic a n d ir e c t in v e s tm e n ts a b r o a d , b y

in d u s tr y

an d area, 1948

[V a lu e o f in v e s tm e n t a n d in c o m e in m illio n s of d olla rs; y ie ld in p e rc e n t]

I te m

M anu­
fa c tu rin g

D is tr i­
b u tio n

A g ric u l­
tu r e

M in in g
and
sm e ltin g

P e tr o ­
le u m

P u b li c
u tilitie s

2 ,2 9 5
104.1
4 .5

648
2 9 .8
4 .6

427
1 8 .5
4 .3

899
7 8 .4
8 .7

1 ,39 3
7 7 .7
5 .6

1 ,4 15
4 3 .5
3 .1

688
1 5 .8
2 .3

7 ,7 6 5
3 6 7 .8
4 .7

382
2 4 .3
6 .4

126
1 2 .0
9 .5

19
0 .2
1 .0

58
1 .8
3 .1

204
1 5.1
7 .4

0.1

3 5

(? )

79
4 .6
5 .8

863
5 8 .1
6 .7

<957
< 51 .7
< 5 .4

128
3 .8
3 .0

34
0 .1
0 .3

435
2 8 .1
6 .5

161
6 .2
3 .8

381
1 8 .2
4 .8

194
1 .4
0 .7

2 ,2 9 0
1 0 9.5
4 .8

333
2 2 .1
6 .6

139
1 1 .7
8 .4

373
1 8 .2
4 .9

407
4 8 .5
1 1 .9

569
5 1.1
9 .0

872
2 4 .8
2 .8

35
4 .5
1 2 .9

2 ,7 2 8
1 8 0.9
6 .6

623
6 .0

255
2 .3
0 .9

458
5 .3
1 .2

167
0 .4
0 .2

381
5 .3
1 .4

1 ,8 85
1 9 .3

M isc e l­
la n e o u s

T o ta l

ALL AREAS

V a lu e of in v e s tm e n t_ _ _ _ _ _ _
I n c o m e . .___ _____ ______
Y ie ld ......................................
STERLING AREA

V a lu e of in v e s tm e n t_ _ _ _ _ _ _
In c o m e ............ .
............
Y ie ld ..___ _____ ____ ____
C A N A D A

V a lu e of in v e s tm e n t_ _ _ _ _ _ _
In c o m e _ _ _ _ _ _ _ __________
Y ie ld ......................................
AMERICAN REPUBLICS

V a lu e of in v e s tm e n t..............
In c o m e ............ ...... ................
Y i e l d . ................. . ................
OTHER

V a lu e of in v e s tm e n t_ __ __ __
In c o m e .......... ................ ........
Y ie ld ................. .....................

1.0

(*)
m
«

«
M
0)

1.0

1 Y ie ld is th e ra tio of in co m e re c e iv e d in th e U n ite d S ta te s in 1943 to v a lu e of in v e s tm e n t in M a y 1943 a n d
d oe s n o t in c lu d e in v e s tm e n t in in su ra n c e c o m p a n ie s.
2 L ia b ilitie s exceed a sse ts.
8 Y ie ld n o t c o m p u te d .
4 I n c lu d e s p a p e r a n d p u lp .
8 I n c lu d e d in m isce lla ne o us.

N .—F

ot e o r p u rp o se s of th is ta b le u n d is tr ib u ta b le in c o m e re c e ip ts fro m e a c h a re a , sh o w n in ta b le 16,
h a v e b e e n a r b itr a r ily d is tr ib u te d a m o n g th e in d u s tr ie s sh o w n a b o v e .
D e ta il w il l n o t n e c e ss a rily a d d to to ta ls b e c a u se of r o u n d in g .

211

Tabl e

X V I I I .—

I n c o m e r e c e iv e d f r o m
in d u s tr y , a n d

A m e r ic a n

d ir e c t in v e s tm e n ts ,

by

a rea ,

ty p e o f in c o m e , 1 9 4 4

[I n m illio n s of dollars]
In c o m e fro m su b sid ia rie s
A re a a n d in d u s tr y

34.5

6.1

181.6

222.2

195.7

418.0

3 .5
.3
2 .3
2 .6
.8
.4
24.2
.4

1.9
.1
.2
1 .2
.8
.2
1.3
.3

69.4
16.3
7 .5
1. 5
30.6
32.5
13.1
10.8

74.8
16.6
10.0
5 .3
32.2
33.1
38.6
11.5

10.7
14.4
18.4

85.4
31.0
28.4

32.6
106.8
3 .9
9 .0

64.8
140.0
42.5
20.6

M a n u f a c tu r in g ........ ................. ...........
D is tr i b u ti o n _____________ ______ _
A g r ic u l tu r e . - .................... ...... ........... .
P a p e r a n d p u l p ....... .............................
M in in g a n d s m e lt in g _ __ _ _________
P e tr o le u m _______________
P u b li c u tilitie s _____ _ __ __ __ __ ____
M is c e lla n e o u s ......... ...... ................... .
K . . . ......................

T o ta l
in co m e

P re fe rre d
d iv i­
dends

A ll a r e a s, t o t a l 1..... .............................

S te rlin g a re a

B ra n c h
inc om e

I n te r e s t

C om m on
d iv i­
d en ds

T o ta l

........... ......

.5

.2

40.8

41.5

13.0

54.5

M a n u f a c tu r in g ____ ________ ____
D is tr ib u tio n ______________ ____
M in in g a n d s m e lt in g _ _ _ _ _ _ _ _ _ _ _ _ _ _
P e tr o le u m ....... ........ ...... .........
M isc e lla n e o u s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

.1

.2

17.7
10.1
1 .2
9. 6
2 .3

18.0
10 1
1. 2
9. 9
2 .4

3 .3
1.3

21.3

.8

3 .2

4 .7

80.2

97.7

3 .3

101.0

1 .7

35.5
2.4
1.5
23. 7
4. 6
6. 2
6. 2

38.9
2 .6
5. 3
24.6

2 .2
1.1

41.1
3 .8

(2)
7 .9
.2

1. 2
.8
.1
.6
.2

A m e ric a n R e p u b li c s ............... ............ ......

21.3

1 .2

54.0

76.4

165.2

241.7

M a n u f a c tu r in g _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
D is tr ib u tio n _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
A g r ic u ltu r e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1.7
.1
2 .3
.7
.1
16.3
.1

15.5
3 .5
7.5
5. 7
16.5
4 .3
1.1

17.2
3 .6
10.0
6 4
16.7
21.3
1.3

4.6
11.3
18.4

21.7
14.9
28.4

90.4
3.9
4.1

107.2
25.1
5 .4

p>

6 .6

6 .6

14.2

20.8

p)

.7
.3
1.8
2 6
1.2

.7
.3
1 8

.6

1.3
1 i

8.8

1.2

4.1

«
.3
.1

C a n a d a 12.__________________ ____
M a n u f a c tu r in g . _____ __________
D is t r i b u t i o n ._____ ________ _____

1.7
.2
2 .6
.1

M in in g a n d s m e l t i n g ..........................

P e tr o le u m .................... .............. .........
P u b lic u ti litie s _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____
M is c e lla n e o u s ______ ______ ______
O th e r

........................ ............. ....... ......

M a n u fa c tu ri n g _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

M isc e lla n e o u s ________ __________

«

12.8

(? )

«
«

p)

p)
p)

.2
.1
.7
.1

24. 7

14 7
6.6

6 .6

5.3

1 I n d u s tr y to ta ls in c lu d e o n ly th e in co m e s h o w n b y in d u s tr ie s in e a ch a rea . I n d u s tr ie s n o t s h o w n s e p a ­
r a te ly in e a c h a r e a a r e in c lu d e d in M isc e lla n eo u s for t h a t a r e a a n d in th e to ta l of a ll a re a s, i. e., A g ric u ltu r e
in c o m e from “ O th e r ” is in c lu d e d in M isc e lla n e o u s fo r t h a t a re a a n d in to ta l M isce llan eo u s.
2 L ess t h a n $50,000.
ot e D e ta il w ill n o t n e c e ssa rily a d d to to ta ls b ec a u se of ro u n d in g .

N

—

*

212

Tabl e XIX.—I n c o m

e

1

'p a id

on

fo r e ig n

in v e s tm e n ts

in

th e

S ta te s ,

U n ite d

by

c o u n tr ie s , 1 9 4 2 -1 + 5 .

[I n m illio n s of d ollars]
A re a a n d c o u n try

1942

1943

1944

1945

A ll a re a s, t o t a l _ __ __ __ __ __ __ __ _ _______ ________________

158.6

155.2

161.6

167.6

S te rlin g a r e a -------- ------------ --------- ------------- ------------------

49.0

43.4

46.3

47.1

A u s t r a l i a _________ _______ . ____ ____ . ______ ____
B r itis h d e p e n d e n c ie s in A m e r ic a ------- ------------- ------

.2
.7
.6
2 .9
43.2
1.3

.2
.6
.8
.3
39.8
1.6

.2
.6
.6
1.7
42.1
1.0

.2
.6
.6
1.6
42.5
1.5

36.8

33.5

32.3

34.9

8.1

8 .3

U n io n of S o u th A fric a ............ .......................... .......................
O th e r ste rlin g a r e a __________

_____ _________ ______

8 .0
A r g e n tin a -----------

-------

------------- ------------- -------

C h i l e _______ _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____ __________
M e x ic o -.. _____________ _ _ _ _ _ _ _ _ _ _ _ _ _____ _______
P a n a m a , R e p u b li c o f------ ----------- ------ ----------------------V e n e z u e la _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __________ __________
O th e r A m e ric a n R e p u b l i c s - . _ _ _ _______
__________

B e lg iu m - ----------- -----------------------------------------------C h i n a ----------- ------------ -------------------- ------- ------ -----F r a n c e . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -- N e t h e r l a n d s --------- - ------------ ------------------ ------- ------N e th e r la n d s d e p e n d e n c ie s in A m e r ic a -------------- ------ -----P h ilip p in e s . -------- --------- -----------------------------------S w e d e n ______ ____ ___________ . . . -----------------------S w itz e r la n d _ __ __ __ __ __ __ __ _ _ __ _ ___________
A ll o t h e r ----------------------- ------- ------------- ------- - -------U n k n o w n 2.......... ........................ ........................ ........ .........

2 .0
.3
.4
.9
.7
1.8
.6
1.3

2.2
.4
.4
.9
.8
1.9
.6
1.3

1.8
.4
.4
.9
.8
2 .2
.2
1.4

1.9
.4
.4
.9
.8
2 .2
.2
1.6

64.8

69.9

74.9

77.3

1.0
1.8
4 .3
20.1
6 .2
1.8
2 .4
16.9
6 .6
3.8

1.2
2.5
5 .0
19.9
7.9
1.9
1.7
17.9
7 .6
4 .2

.7
2 .8
5 .9
19.1
9 .5
1.9
1.4
19.3
7 .0
7.1

.7
5. 6
5 .9
19.2
9.4
1.7
1. 5
19.4
6 .2
7 .8

\ N e t in c o m e a f te r p a y m e n t of w ith h o ld in g ta x e s a n d c o r p o ra te in c o m e ta x e s o n b ra n c h e a rn in g s .
2 P a y m e n ts e n te re d u n d e r “ U n k n o w n ” a n d in c lu d e d in th e to ta l for “ O th e r ” c a n n o t b e id e n ti fie d a n d
m a y in c lu d e p a y m e n ts to c o u n trie s in e a c h of th e o th e r a re a s.

Not e—De ta il w ill n o t n e c e s s a r ily a d d to t o ta ls b e c a u s e o f r o u n d i n g .

►

213

Tabl e X X .— U n ited

S ta te s p u rcha ses o f fo reig n ca p ita l issu es o ffered in th e
U n ited S ta te s in 19^0-Ji5
[V a lu es in th o u s a n d s of d ollars]
P u r p o se *

Y ear

Issu e a n d c lass of se c u rity
N ew
c a p ita l

1940
1941

R a te

T erm

P ercent

Y ears

R efu n d ­
in g

P u b li c ly offered:
G o v e rn m e n t:
P a n a m a : R e p u b lic of, S ec u re d R e f u n d in g
4,000

3 y*

26

C o r p o ra te :
P a n a m a : P a n a m a C oc a-C ola B o ttlin g C o.,
422
1942

Offerin g
p ric e 3

103.00
12 50

P u b li c ly o ffered:
C o r p o ra te :
C a n a d a : C a m illa C a n a d ia n M in in g C o rp .,
125
P r iv a te ly o ffered:
G o v e rn m e n t:
C an ad a:
5,800

¡P

3
n . a.

n . a.

4,500

2 > A -3

1-5

n . a.

5
10
15

100 00

3

6H

15

100.00

5
10
5
10
5

n . a.

15,000
H y d ro -E le c tric P o w e r C o m m issio n of
1943

P u b li c ly o ffered:
G o v e rn m e n t:
C an ad a:

27,600
29.000
29.000

D o ..................... . .............................
D o - _ ___ _____ _____ ____ _ _ _ _ _

C o rp o ra te :
C a n a d a : S te e p R o c k Ir o n M in e s , L im it e d ,

2, 250
P r iv a te ly offered:
G o v e rn m e n t:
C an ad a:
I ly d r o - E le c tr ic P o w e r. C o m m issio n of
D o _______ _ __ __ __ __ _________
D o _ __ __ __ __ __ __ __ __ __ __ __ __ _
D o _ __ __ __ __ __ __ __ __ __ __ __ __ _
C o rp o ra te :
C a n a d a : C a n a d ia n P a c ific R a ilw a y C o.,
1944

P u b li c ly offered:
G o v e rn m e n t:
C an ad a:
P ro v in c e of N e w B ru n s w ic k , D e b e n P r iv a te l y offered:
G o v e rn m e n t:
C an ad a:

P ro v in c e of B r itis h C o lu m b ia , D e b e n H y d ro -E le c tric P o w e r C o m m issio n of
D o ............................... . .................. .
D o ________ ______ __________ _

C o rp o ra te :
C an ad a:
C a n a d ia n P a c ific R a ilw a y C o., E q u ip -

A lu m in u m C o m p a n y of C a n a d a , F ir s t
M o rtg a g e S in k in g F u n d B o n d s,
F r a s e r C o m p a n ie s, L td ., F ir s t M o rtU n ite d F u e l In v e s tm e n ts L td ., Series
C a n a d ia n P a c ific R a ilw a y C o ., C o l­
la te ra l B o n d s --------------- ------ ------S e e fo o tn o t e s a t e n d o f ta b le .

214

2,000
5.000
4,500
3.000
1,185
18,000

21/2
3

2Vt

3
2H
2%
2%

3

98.50

¿$-10

4

99.38
98. 71

3Vt
2%

3
6-9
4

100. 00
100 00

4.000
8.000

2
i lA

1M-3

1,000
2,000
2,000

m
m
iH

26, 000

2%

26, 250

3H

30

7,000

3M

20

5, 500
9,150

2%
3 -3 %

3.000
6,453
3,334

2M

n . a.

2

% - lQ

1,200

3%

7-12

7,125

3 'A

5-30

101.87

n. a

Tabl e

X X

.—

U n ite d

S ta te s p u r c h a s e s o f fo r e ig n

U n ite d

S ta te s in

1 9 4 0 -4 5

c a p ita l is s u e s o ffe re d in

th e

— C o n tin u e d

[V a lu es in th o u s a n d s o f dollars]
P u r p o se 1
Is su e a n d c lass of s e c u ri ty

Y ear

1945

N ew
c a p ita l

R a te

T erm

R efu n d ­
in g

P u b li c ly offe re d;
G o v e rn m e n t:
C an ad a:

Offerin g
p ric e 3

P ercent

Y ears

15.000
26,093

2
2 ^ -3 K

5
6-15

100.00
98. 59

4,500
15.000

2M
iM

1-3

99. 75
100.00

P ro v in c e of N e w B ru n s w ic k , D e b e n C o rp o r a te :
M e xico :
L a C o n s o lid a d a ,

S.

A .,

6 -p e rc e n t

I n d u s tr i a E lé c tr ic a d e M e x ic o , S . A .,
C u b a : E x p re so A ereo I n te r- A m e ric a n o , S.

2,700

16.00

4,500

23.00

800

2.50

P r iv a te l y o ffered:
G o v e rn m e n t:
C an ad a:

2,386
2,039
50,000

C o rp o r a te :
C an ad a:
S h a w in ig a n W a te r a n d P o w e r C o.,
F i r s t M o rtg a g e a n d C o lla te r a l T r u s t

1 B o n d s sh o w n a t p a r v a lu e s, s h a r e s a t offe re d v a lu e s .

300

20.000
3,700

2
4

99. 525

25

101.00

1-10
20

100.00
101.50

25.000

C a n a d ia n P a c ific R a ilw a y C o ., E q u ip C u b a : C u b a n T e le p h o n e C o ., D e b e n tu re s A

4
3-5
16

2
2 ^ -3 K
4

B efore u n d e r w r ite r 's c o m m issio n s.

2 B o n d s in p e rc e n t of p a r v a lu e , sh a re s a t p ric e p e r sh a re .

3 A b o n u s of c o m m o n sto c k of u n k n o w n a m o u n t w a s t ie d in w ith th e sa le of d e b e n tu re s.
4 D ir e c t in v e s tm e n t,
n . a . N o t a v a ila b le .

N .—

ot e O n ly p u b li c ly a n n o u n c e d p r iv a te p la c e m e n ts a r e in c lu d e d .
c o m p a n ie s t a k e n b y t h e p a r e n t c o m p a n y a r e n o t in c lu d e d .

Ta bl e

X X I .— M a r k e t v a l u e

S e c u r itie s of d ire c t-in v e st m e n t

o f A m e r ic a n in v e s tm e n ts i n
1 9 4 0 - 1 9 4 5 , a n d p a r v a lu e , 1 9 4 5

fo r e ig n

d o lla r

bo n d s,

[Y e ar-en d d a ta ; in m illio n s of dollars]
M a r k e t v a lu e
A re a a n d c o u n try
1940
T o t a l . ....... ........... .......................... ........ 1,445.0

1941

1942

1943

1944

1945

P ar
v a lu e ,
1945

1,561.9

1,591.1

1,650.6

2,019. 6

1,220.4 1,238.0

1,446.2 1, 510.0

C a n a d a .............. ........ .................. .................... 1,161.2

1,173.6

1,262.8

1,250.0

1,165.6

151.4

158.7

200.0

227.9

221.0

236.1

469.7

17.4
13.7
2.1
1.6
9.2
.6
.5
.7
6 .6
.8
124.8
46.0
1.6
35.7
18.8
13.5
.03
3.0
6 .2

19.9
16.2
2.3
1.4
11.6
.3
.5
.7
8 .0
2.1
127.2
46.8
2.5
34.8
16.2
15.6
.02
3 .0
8 .3

20.9
16.6
2.6
1.7
14.8
.5
.9
.8
8 .8
3 .8
164.3
48.9
4 .4
46.9
28.6
20.8
.03
4.9
9 .8

21.0
15.9
3.1
2.0
18.6
.6
2.0
.8
9.1
6.1
188.3
49.7
5.1
64.1
28.8
22.7
.03
7.6
10.3

17.4
11.9
3.1
2 .4
18.5
.9
1.5
.1
9 .5
6.5
185.1
49.2
4.0
61.4
24.6
27.8
.1
7 .4
10.6

15.2
9 .7
3 .3
2.2
20.9
1.0
2.1
.4
9.7
7.7
200.0
50.3
5.7
65.1
24.8
31.1
.1
10.9
12.0

15.9
10.4
3 .2
2.3
50.1
2.9
4 .6
.8
9.7
32.1
403.7
51.4
38.4
111.6
86.2
63.1
.9
38.4
13.7

A m e ric a n R e p u b li c s . ......... ............... - ..........
W e st I n d ie s .......... ......................................
C u b a ................. ........ .............. ........
D o m in ic a n R e p u b li c ........ .................
H a i t i _ __ __ __ __ __ __ __ __ __ __ _ _ _ _ _ _
C e n tr a l A m e ric a a n d M e x ic o _ __ __ __ __ _
C o s ta R ic a ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____
E l S a lv a d o r........................... ..............
G u a te m a la ____________ ____ ____
P a n a m a ----------- ----------- ------------M e x ic o .......................... ........... ...........
S o u th A m e ric a .................. ........... ........ .
A rg e n ti n a ....... ................. ............. ......
B o liv ia ............. - .................. ......... ......
B ra z il_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _______ ___
C h ile _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
C o lo m b ia ....... ................ ........ ........... E c u a d o r ................... - ........................ P e r u ------ ----------------- ---------------U r u g u a y . . - ---------- --------------------S e e fo o tn o t e s a t e n d o f ta b le .

215

Ta bl e

X X I .'— M a r k e t v a l u e o f A m e r i c a n i n v e s t m e n t s i n f o r e i g n
1940-1945, a n d p a r v a l u e , 1 9 4 5 — C o ntinued

d o lla r

M a r k e t v a lu e
A re a a n d c o u n try
1940

1941

68.0

49.2

.3
2.6
.2
.1
.02
8 .2
.3
.2
.9
2.3
31.5
.4
1.0
8 .2
6 .8
.5
.2

.2
3 .6
.2
.2
.02
10.9
.3
.06
.7
.4
12.4
.8
1.4
5 .5
6 .8
1.6
.2

U . S. S . R .2........... ....................... ............ Y u g o sla v ia ............. ......... . ........................

3 .6
.7

A fric a ( L ib e r ia ) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _______

E u ro p e ______________

_ _ _ _ _ _ _ _ _ _ _ - --

1942

1943

1944

1945

36.7

37.3

46.1

101.1

5.0

5 .2

5.5

6.1

.3

.7
.07
12.8
.3

1.2
.08
26.4
.3
.4
.8
.6

b onds,

Par
v a lu e ,
1945

278.6

.9
.4

.9
.4

.8
.08
21.4
.3
.3
.7
.4

.7

.8

.8

.9

12. Ì
1.4

12.4
2 .4

11. 4
3.1

11.9
2.6
48.0

2. 5
5 .6
2 .6
1.3
.4
27.8
.3
.8
.8
.6
104.3
6.1
14.3
23.4
11.4
16.8
3.0
48.0

3 .3
.6

2 .8
.8

1.3

1.3

1.8

8 .6

1.5

1.4

1.2

1 .2

1.0

.6

.7

A s ia ................ ....................... .................. .........

34.3

31.7

12.0

12.4

12.9

13.1

57.3

C h in a ..... ...................... ............ . ..............

.5
22.7
11.1

.5
21.1
10.1

.5

.5

.5

.5

P h ilip p in e s ........... ........... .........................

11.5

11.9

12.4

12.6

5.1
41.4
10.8

O c e an ia (A u s tr a lia ) _ __ __ __ _ ____ ________

28.6

31.6

39.7

45.1

47.3

49.7

47.7

B e lg iu m _ __ __ __ __ __ __ __ __ __ __ _ __ _ _
C z e c h o slo v a k ia ...... ..................... ............ D e n m a r k .... ............ ............. .....................
E ir e ---------- -------------- --------------------F in la n d ----- ------ ----------------------------F ra n c e -------------------- -------- ------------G r e e c e ............................. ........ - ........ ........
N o r w a y .......... ...................... ............... .
P o la n d _____________________ ____

12.0
.3

1 B o n d s issu e d in 1945.
2 B o n d s r e tir e d in 1943.

Not e.—T h e m a r k e t v a lu e of b o n d s of fo rm e r e n e m y c o u n trie s in

b e e n zero.

Tabl e XXII.—R e c o n c i l i a t i o n

th e y e a rs 1942-45 is c o n sid e re d to h a v e

o f e s tim a te s o f U n ite d S ta te s lo n g -te r m in v e s tm e n ts
a b ro a d , 1 9 4 0 -4 5

[In m illio n s of dollars]
I te m

1941

1942

1943

1944

11, 390
11, 310

12,110
11,635

12, 665
12,175

13,195
12,575

13,700
12,930

7, 340
+291
+ 1 82
+47
+12

7, 525
+ 296
+ 183
+53
+10

7,740
+ 244
+ 178
+24
+17

7,845
+ 306
+ 172
+82
+38

7,960
+ 449
+ 156
+ 229
+54

+50
-1 0 6
-7 8
-2 8
n . a.
7,525

+50
-8 1
-6 7
-1 4
n . a.
7, 740

+25
-1 3 9
-1 2 1
-1 8
n . a.
7,845

+14
-1 9 1
-1 0 5
-8 6
-1 2
7, 960

+10
-2 8 9
-1 6 8
-1 1 2
-9
8,120

4,105

3, 970

4,110

4,435

4, 730

4, 970

1,685

1,445
+59
+4

1,445
+ 124
+25

1,510
+ 2 42
+ 118

1, 560
+ 164
+84

1,590
+ 243
+ 159

+55
-5 9
-5 9

+99
-5 9
-5 9

+ 124
-1 9 2
-1 9 2

+80
-1 3 4
-1 3 4

+84
-1 8 3
-1 8 3

1,445

1, 510

1, 560

1, 590

1,650

1940

U n ite d S ta te s in v e s tm e n ts a b ro a d , b e g in n in g of y e a r . . - 11,420
P r iv a te , b e g in n in g of y e a r , ..... ..................... . . . 11,385
D ir e c t in v e s tm e n ts (b ook v a lu e ), b e g in n in g of
y e a r -------- ------------ ---------------------------7, 280
. ___________
+ 184
A d d itio n s, to t a l _______
R e in v e s te d e a r n in g s _____________ _ __ _
+42
C a p it a l o u tflo w o n in te rc o m p a n y a c c o u n t+85
N e w in v e s tm e n ts ......................... ...
—
+7
I n v e s tm e n ts of foreign re sid e n ts m ig ra tin g
to th e U n ite d S ta te s _____ _ _______
+50
D e d u c tio n s, t o t a l ______________________
-1 2 4
C a p it a l inflow o n in te rc o m p a n v a c c o u n t - -9 1
L iq u id a tio n s (cash r e c e ip ts )___________
-3 3
K n o w n losses o n l iq u id a tio n s __________
n . a.
D ir e c t in v e s tm e n ts (b ook v a lu e ), e n d of y e a r .— 7,340
P o rtfo lio in v e s tm e n ts ( m a r k e t v a lu e ), beginn in g of y e a r — ____ ___________________
U n ite d S ta te s h o ld in g s of foreign d o lla r
b o n d s, b e g in n in g of y e a r _ _ _ _ _ _ _ _ _ _ _ _
A d d itio n s , t o t a l 1 ____ _________
N e w is s u e s 2_ _ _ — ___________
N e t in cre ase d u e to rise in m a r k e t
D e d u c tio n s , t o t a l 1_______________
A m o r tiz a tio n 2_ .............................
N e t d ec rea se d u e to d e c lin e in
U n ite d S ta te s h o ld in g s of fo re ig n d o lla r
b o n d s, e n d of y e a r , _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
S e e fo o tn o t e s a t e n d o f ta b le .

216

-2 4 0
-4 2

1945

-1 9 8
1,445

Tabl e XXII.—R e co n cilia tio n

o f e stim a te s o f U n ited S ta te s lo ng -term in v e s tm e n ts
abroad, 1940-45 — C o n t i n u e d

I te m
U n ite d S ta te s in v e s tm e n ts a b ro a d , b e g in n in g of
y e a r—C o n tin u e d
P r iv a te , b e g in n in g of y e a r—C o n ti n u e d
P o r tfo lio in v e s tm e n ts ( m a r k e t v a lu e ) , beg in n in g o f y e a r—C o n ti n u e d
O th e r p ortfo lio in v e s tm e n ts , b e g in n in g of
y e a r __________ ____ _________ _____
A d d it io n s , to t a l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
N e t U n ite d S ta te s p u r c h a se s of
N e t in c rea se d u e to rise in m a r k e t
p ric e _______ _______ _______
I n v e s tm e n t of fo re ig n re sid e n ts
m ig ra tin g to th e U n ite d S ta te s ..
D e d u c tio n s, to t a l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
N e t U n ite d S ta te s sales of foreign

1940

1941

1942

1943

1944

2,420
+ 156

2,525
+ 140

2,665
+ 260

2, 925
+ 245

3,170
+ 214

3 ,3 8 0
+525

+25

+99

+ 125

+ 119

+263:

+21
+25

+25
+10

+53
+18

+73
+7

+80

+ 139
+ 108

+ 110
-5 1

+80

+90

+40

+15
-4

+15

2, 525

2,665

2,925

3,170

3, 970
11,310
35
+51
-6
80
11,390

4,110
11,635
80
+381
+14
475
12,110

4, 435
12,175
475
+10
+5
490
12, 665

4, 730
12,575
490
+ 1 24

1945

—19
N e t re d u c tio n d u e to d e c lin e in
-3 2
O th e r p ortfo lio in v e s tm e n ts , e n d of y e a r . .
P o rtfo lio in v e s tm e n ts ( m a r k e t v a lu e ), e n d of
y e a r _____________ ________ _ __ __ __ __ _
P r iv a te , e n d of y e a r_______________ _ __ __ __ __
U . S. G o v e rn m e n t, b e g in n in g of y e a r ..... ..............
N e t b a la n c e of p a y m e n ts m o v e m e n t....... ........
O th e r c h a n g e s ___ __________ _ _ _ _ _ _ _ _ _ _ _ _
U . S . G o v e rn m e n t, e n d of y e a r ......................... .
U n ite d S ta te s in v e s tm e n ts a b ro a d , e n d of y e a r _____

620
13,195

-4
3,380

3, 905

4,970
12,930
620
+ 163
-1 3
770
13,700

5,555
13,675
770
+898
-8 3
1,585
15, 260

1 T r a d in g in o u ts ta n d in g issu es is in c lu d e d in “ O th e r p ortfo lio in v e s tm e n ts .” S u c h tr a n s a c ti o n s a s
r e p o rt e d c a n n o t b e seg re g a te d b e tw e e n b o n d s p a y a b le in d o lla rs a n d se c u ritie s p a y a b le in foreign c u rre n c ie s .
2 E x c lu siv e of issu es of d ir e c t in v e s tm e n t c o m p a n ie s.
n . a . N o t a v a ila b le .

Ta bl e

X X I I I .— R e c o n c i l i a t i o n o f e s t i m a t e s o f f o r e i g n l o n g - t e r m i n v e s t m e n t s i n t h e
U n ite d S ta te s , 1 9 4 0 - 4 5

[ I n m illio n s of d ollars]
I te m
F o r e ig n in v e s tm e n ts in th e U n ite d S ta te s , b e g in n in g
of y e a r ............ ........ .................... ...... ............. ............
P r iv a te o b lig a tio n s, b e g in n in g of y e a r _______ _
D ir e c t in v e s tm e n ts (b o o k v a lu e ) , b e g in n in g
of y e a r __________ _________ . . . _______ _
_
A d d it io n s , to t a l _____________________
R e i n v e s te d e a r n in g s ______________
In c re a se in e q u ity in in su ra n c e co m ­
p a n i e s ............ ............ .......................
D e d u c ti o n s, t o t a l ___ _______ _______
L iq u id a tio n s __________ _________
V e s tin g b y A lie n P r o p e r ty C u s to d ia n .
I n v e s tm e n ts of foreign re sid e n ts m i­
g ra tin g to th e U n ite d S ta te s ______
O t h e r . . . ................................................ .
D ir e c t in v e s tm e n ts (b o ok v a lu e ) , e n d of y e a r .
P o rtfo lio in v e s tm e n ts ( m a r k e t v a lu e ) , b eg in ­
n in g o f y e a r __ ____ ___ ____ _____ ____
A d d it io n s , t o t a l . ....... . ................... .............
P u r c h a s e s of U n ite d S ta te s s e c u r itie s 1.
N e t in c rea se d u e to rise in m a r k e t
p r ic e .................................... . . . .........
O th e r ch a n g e s a n d a d ju s tm e n ts ........ .

1940

1941

1942

1943

1944

8, 845
8, 695

8, 250
8,100

7,350
7, 200

7,425
7, 275

7, 770
7, 570

8, 2907,865

2, 900
+54
+ n

2,875
+21
+21

2, 700
+36
+31

2,615
+62
+42

2,605
+55
+43

2, 630
+62
+ 4 2:

+43
-7 9
-4

-1 9 6
-1 3 8

+5
-1 2 1

+20
-7 2

+20
-1 7

-1 5

-7 5

-9 6

-5 2

+12
-3 0
-1 1
-4

-2 5

-2 0

-1 5

1945

-2

2,875

-5 0
-8
2,700

2,615

2,605

2,630

2,675

5,795
+ 6 58
+ 5 06

5,225
+ 3 44
+ 3 20

4, 500
+ 4 66
+ 260

4, 660
+ 7 98
+ 3 43

4, 965
+ 832
+ 426

5, 235
+ 1 ,3 4 6
+490

+ 4 53
+2

+856

+24

+ 205
+i

+ 406

+ 1 52

S ee f o o tn o te s a t en d o f ta b le .

7 0 9 1 5 5 -4 8 -

15

217

Tabl e X X I I I .— R ec o n cilia tio n

o f e stim a te s o f fo reig n long -term in v e s tm e n ts in th e
U n ited S ta te s,
— C o n tin u e d
1941

1942

1943

1944

- 1 ,2 2 8
-7 4 7

- 1 ,0 6 9
-5 8 2

-3 0 6
-2 1 4

-4 9 3
-3 6 6

-5 6 2
-4 4 0

-2 8 6

-4 0 1
-8

—23

—12

—9

-1 9 5

-8 0
-6

-5 5
-2 9

—55
-4 9

-6 0
—50

—32
—42

5,225
8,100
150
n . a.
150
8, 250

4, 500
7, 200
150
n . a.
150
7,350

4, 660
7,275
150
n . a.
150
7,425

4,965
7, 570
150
+50
200
7,770

5,235
7,865
'200
+ 2 25
425
8, 290

5,827
8,502
425
+68
493
8,995

1940

I te m

1945

F o re ig n in v e s tm e n ts in th e U n ite d S ta te s , b e g in n in g
o f y e a r—C o n ti n u e d
P r iv a te o b lig a tio n s, b e g in n in g of y e a r—C o n .
P o rtfo lio in v e s tm e n ts (m a rk e t v a lu e ) , b e g in ­
n in g o f y e a r—C o n ti n u e d
S ales of U n ite d S ta te s se c u r itie s i 2_ _ _
N e t d e c rea se d u e to d ec lin e in m a r k e t

-7 5 4
-6 7 1

I n v e s tm e n ts of fo re ig n re si d e n ts m iP o rtfo lio in v e s tm e n ts ( m a r k e t v a lu e ) , e n d of
U . S. G o v e rn m e n t o b lig a tio n s, b e g in n in g of y e a r_.
N e t foreign p u r c h a se s ( + ) o r sales ( —) ! ...........
F o re ig n in v e s tm e n ts in th e U n ite d S ta te s, e n d of y e a r .

1 F o re ig n p u r c h a s e s a n d sales of U . S . G o v e rn m e n t lo n g - te r m se c u ritie s a r e e s ti m a te d b e g in n in g w ith
1943; p u r c h a se s a n d sales of b o th G o v e rn m e n t a n d p r iv a te o b lig a tio n s a r e in c l u d e d in th e b a la n c e of p a y ­
m e n ts a s p r iv a te tr a n sa c tio n s .
2 In c lu d e s a m o rt iz a tio n s e s ti m a te d a t $10 m illio n a n n u a lly ,
n . a . N o t a v a ila b le .

Ta bl e

X X IV .— G i f t s a n d o t h e r u n i l a t e r a l t r a n s f e r s , 1 9 4 0 - ^ 5
[In m illio n s o f d ollars]
1945

I te m

1940

1941

1942

1943

1944
T o ta l

T o fo re ig n c o u n trie s, to t a l - - .

P e r so n a l a n d in st i tu tion F ro m fo re ig n c o u n trie s, to ta l.

3,137

3,617

1,746

1,128

7,348
560
225

2,819
12

2,921
90
120

1,016
167
104

592
291
1

185

866

179

343

310

34

20

30

109

4

5

30

70

520

123

138

119

140
64

32

25

21

237

222

163

294

402

43 1,002

2,137

2,407

2, 591

1,039

995

493

640

1,997

2,287

2,444

1,010

960

456

18

322
40

95
45

75
45

100
47

19
10

24
11

25
12

32
14

59

O th e r G o v e rn m e n t reP e r sô n a l r e m itta n c e s _ _ _

9,628

14,690 15,911
1
40
20
200

932 6,954

C iv ilia n s u p p lie s d is tr ib O th e r G o v e rn m e n t

15,044 16,549

269 1,179 7,338

U N R R A ____________

F ir s t S ec on d T h i r d F o u r th
q u a r te r q u a r te r q u a r te r q u a r te r

59

43

1

218

Tabl e

X X V .— In te rn a tio n a l transactions o f the U nited S tates, private a n d Governm ent, 1 9 4 0 -4 5
[I n m illio n s o f d ollars]

1942

1941

1940

1944

1943

1945

T o ta l
I te m
P r i­
v a te

G ov­
ern ­
m ent

G ov­
ern ­
m ent

P ri­
v a te

G ov­
e rn ­
m ent

P ri­
v a te

P ri­
v a te

G ov­
ern ­
m ent

P r i­
v a te

G ovem ­
in e n t

P ri­
v a te

F ir s t q u a r te r

G ov­
ern ­
m ent

P ri­
v a te

G ov­
ern ­
m ent

S ec on d
q u a r te r
G ov­
ern ­
m ent

P ri­
v a te

F o u rth
q u a r te r

T h ird
q u a r te r

P ri­
v a te

G ov­
ern ­
m ent

P ri­
v a te

G ov­
ern ­
m ent

I . R e c e ip ts , t o t a l ------------------

5,733

47

6,187

1,023

4,824

8,253 3,956

17,760 4,614

19,871 5,214 14, 035 1,114

4,403 1,283

4, 952 1,254

2, 776 1,563

1,904

A . G oo ds a n d serv ic es, to ta l1. G o o d s ____________
2. I n c o m e o n i n v e s t m e n ts ......................
3. O th e r se r v ic e s _ __ __ _

5,310
4,102

45
22

5,901
4,559

995
784

4,542
3, 363

7,227 3,537
5, 824 2,401

15, 597 3, 997
12, 714 2, 776

17,441 4,675 11,398 1,034
732
14,193 3,412 8, 810

3,348 1,047
2,723
720

3,950
3,186

1,169
873

2, 281 1,425
1,670 1,087

1,819
1, 231

561
647
59
364

3
20

9
202

2

535
807
43
243

28

496
683
40
242

18
1,385
962
64

497
639
45
374

11
2,872
2,092
71

556
665
45
57?

16
3,232
2,362
68

539
724
47
492

16
2, 572
2, 544
93

122
180
10
70

7
618
1,029
26

145
182
11
225

2
762
984
18

124
172
12
73

5
606
481
14

148
190
14
124

2
586
50
35

207

2

165

28

155

64

331

71

338

68

462

93

70

26

195

18

73

14

124

35

21,964 5, 403 15, 606 1,209

4,901

1,378

5,435

1,360

3,179

C . L o n g -te rm c a p ita l, to ta l.
1. M o v e m e n t s o f
U nited States
c a p ita l in v e s te d
a b r o a d ............ ........
2. M o v e m e n t s o f fo re ig n c a p ita l in v e st-

157

78

43

234

2,928 10,231 3,410

20,322 4,190

2,982 2,719
2,201 2,106

5,377 3,400
3,321 2,707

87

I I . P a y m e n ts , to t a l _ __ __ __ __ _

4,104

240

4,547

2, 031

A . G oo ds a n d se rv ic es, to ta l.
1. G o o d s ..____ ______
2 . In c o m e o n in v e s tm e n t s __________
3. O th e r s e r v ic e s ...........
B . U n i la te r a l tr a n s f e rs ____
C . L o n g -te rm c a p ita l, to ta l.
1. M o v e m e n t s o f
United States
c a p ita l in v e s te d
a b r o a d ....... .............
2. M o v e m e n t s o f fo re ig n c a p ita l in v e st-

3,481
2,658

155
55

3,821
2,994

665
492

2,374
1,764

204
61Ç
237
386

6
94
32
53

181
646
222
504

6
167
957
409

152
458
163
391

7
774
7,175
74

146
467
294
397

13£

5c

98

408

22C

74

291

247

405

171

106

6
2,047
14, 75C
195

195

30

5, 586 3, 916
2,882 3,118

30
1,456

2,091

5, 508
2,711

838
676

1,851 1,004
816
843

1, 921 1,031
865
797

1,051 1,043
829
617

685
386

148
544
402
388

12
2,692
16,147
231

154
644
520
967

14
2,783
9,108
990

32
130
123
248

3
1,005
3,014
36

35
153
138
236

4
1,052
3, 479
35

36
198
119
210

3
431
1,627
501

51
163
140
273

4
295
988
418

328

231

813

99C

154

36

230

35

178

501

251

418

58

154

94

6

32

22

219

■= ■-

-

22 0

Tabl e

X X V .— In te rn a tio n a l tra n sa ctio n s o f the U nited States, p riva te a n d Governm ent, 194-0-45 — C o n tin u e d
[In m illio n s of d ollars]
1941

1940

1942

1945

1944

1943

T o ta l
Ite m
P r i­
v a te

I I I . E xc ess of re c e ip ts ( + ) o r
p a y m e n ts , to ta l_ _ _ _ _ _
__ + 1 , 629
A . G oo ds a n d se rv ic e s ___ + 1 , 829
B . U n i la te r a l t r a n s f e r s ___
-1 7 8
N e t goods a n d se rv ice s
a n d u n ila te r a l tr a n sfe rs ________ ____
+ 1 ,65 1
C . L o n g -te rm c a p i t a l . .........
-2 2
IV . N e t inflow ( + ) o r o u tflo w
( —)of fu n d s o n g o ld a n d sh o rtte r m c a p ita l a c c o u n t, to t a l __

G ov­
ern ­
m ent

P r i­
v a te

G ov­
ern ­
m ent

G ov­
ern ­
m ent

P ri­
v a te

G ov­
ern ­
m ent

P ri­
v a te

-1 9 3 + 1 , 640 - 1 ,0 0 8 + 1 ,8 9 6 - 1 , 978 + 546

P ri­
v a te

- 2 , 562 + 4 24

G ov­
ern ­
m ent

- 2 ,0 9 3

P ri­
v a te

- 1 8 9 - 1 ,5 7 1

P ri­
v a te

G ov­
ern ­
m ent

-9 5

-4 9 8

S ec on d
q u a r te r

P r i­
v a te

G ov­
ern ­
m ent

-9 5

-4 8 3

T h ir d
q u a r te r

P ri­
v a te

G ov­
e rn ­
m ent

-1 0 6

-4 0 3

+ 4 3 + 2 , 029 + 1 38 + 1 ,2 3 0
- 1 2 7 - 2 ,4 9 5 - 1 0 7 - 1 ,1 4 6

F o u rth
q u a r te r

P r i­
v a te

G ov­
ern ­
m ent

+ 1 07

-1 8 7

+ 3 8 2 + 1 ,1 3 4
-1 2 6
-9 3 8

- 1 1 0 + 2 ,0 8 0
-3 2
-1 7 9

+ 3 3 0 + 2 ,1 6 8 + 4 , 245 + 818 + 1 0, 220 + 5 97 + 1 1 ,8 5 5 + 759 + 5 , 890 + 196 + 1 ,4 9 7
-9 5 7
- 1 2 3 - 6 ,2 1 3 - 2 4 9 -1 2 ,6 5 8 - 3 5 7 - 1 3 , 785 - 4 7 3 - 6 , 564 - 1 1 3 - 1 ,9 8 5

- 1 4 2 + 1 , 901
—51
-2 6 1

- 6 2 7 + 2 , 045 - 1 , 968 + 5 6 9
-3 8 1
-1 4 9
-1 0
-2 3

- 2 , 438 + 2 4 0
- 1 2 4 + 1 84

- 1 ,9 3 0
-1 6 3

+83
-1 7 8

-4 8 8
-1 0

-8 4
-1 1

-4 6 6
-1 7

+31
-1 3 7

+84
-4 8 7

+ 256
-1 4 9

+ 196
-3 8 3

+ 612

+ 1 , 370 + 1 6 2

+ 1 , 544 + 442 + 1 , 446 + 183

+ 437

+ 1 60

+ 471

+ 1 48

+ 4 34

-4 9

+104

+ 1 ,54 1 - 4 , 254

-6 0 1

-5 0 7

-1 5 0

+ 2 40

+ 286
-4 7 5

A . N e t in c rea se (— ) o r decre ase ( + ) in U n ite d
- 4 , 243
B . N e t m o v e m e n t s of
U n ite d S ta te s sh o rtte r m c a p ita l a b ro a d . __ + 177
C . N e t m o v e m e n ts of fore ig n s h o rt- te rm c ap ita l in U n ite d S t a t e s .__ + 1 , 364
V . E rr o rs a n d o m issio n s_____

G ov­
ern ­
m ent

F ir s t q u a r te r

+ 1 , 277

-1 1

—719
+ 21

-1 0

+96

-6 2 2

+222

-2 4 6

+ 476

+ 7 57

+23
-2 1 1

8

+15

-8 5

+ 428 + 624

+ 598

+ 247

+34

-6 8
+262
-37

+ 1 80

+ 548

+ 1 ,3 5 0

-1 2

-6 7 4
-8 9 7

-8 6

-2 2 7

+40

+ 5 2 8 + 1 ,1 2 5

+ 1 43

- 128

+ 157

-4 9

-1 0 6

+306

+ 266

27

+10

+ 201

-1 4

+ 116

-9 5

-1 3 6

-6 9

+ 328

+32

+ 3 28

+87

+163

53

- 73

+25

Tabl e

X X V I . — In te rn a tio n a l tra nsactions o f the U n ited States, 1 9 1 9 -8 9
[M illio n s o f d ollars]

I te m
I . R e c e ip ts , to t a l --------------------------------------------------------A . G oods a n d se rv ic es, t o t a l . . ---- -------- - -------- ----------1. G o o d s . ----- ------------------ . .
------------ . .
3. O th e r se rv ic e s _ _ _ _ _ _ _ _ ____ _______ _ _____ ___ _
B . U n ila te r a l tr a n s f e r s ---- ------ ---------------------------------C . L o n g -te rm c a p ita l, t o t a l ------------------------------ ------1. M o v e m e n ts of U n ite d S ta te s c a p ita l in v e s te d a b r o a d .
2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in U n ite d
I I . P a y m e n ts , t o t a l . .............. ........... .................... . ................
A . G oo d s a n d se rv ic es, t o t a l ___ ____ ____ . . . ----------1. G o o d s .. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ ____ _
...
_____ __________ _____
3. O th e r se rv ic e s_ _ _ _ _ _ _
B . U n ila te r a l tr a n s f e r s ---- ---------- --------------- ------ -------C . L o n g -te rm c a p ita l, to ta l------- ------- ---------- ------------1. M o v e m e n ts of U n ite d S ta te s c a p ita l in v e s te d a b r o a d .
2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in U n ite d
S ta te s ________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1919

1920

1921

1922

1924

1923

1926

1925

1927

1928

1929

11,464

10, 983

5, 920

5, 219

6,090

6,344

6, 964

7,038

7,058

7,815

7,929

10, 784
8,891
719
■ IV174
276
404
404

10, 272
8,481
596
1,195
66
645
645

5, 512
4, 586
445
481
60
348
332

4, 961
3,929
670
362
65
193
166

5,494
4, 259
840
395
65
531
173

5,919
4, 741
762
416
72
353
148

6, 348
5, O il
912
425
47
569
248

6, 381
4,922
953
506
61
596
481

6,464
4,982
981
501
70
524
524

6,850
5,249
1,080
521
72
893
410

7,042
5, 347
1,139
556
78
809
431

16

27

358

205

321

115

483

378

10,352

9,146

4,869

5,358

5, 567

6,029

6, 823

7, 289

7,333

7, 601

7,398

5, 917
3, 995
130
1,792
1,319
3,116
2, 901

6, 750
5,384
120
1, 246
744
1,652
1,374

3.391
2, 572
105
714
568
910
890

3, 972
3,184
105
683
409
977
957

4,668
3,866
130
672
414
485
465

4, 577
3, 684
140
753
427
1, 025
1,005

5,272
4, 291
170
811
439
1,112
1,092

5, 564
4, 500
200
864
433
1,292
1,272

5,400
4,240
240
920
418
1, 515
1,465

5,483
4,159
275
1,049
427
1,691
1,671

5, 904
4,463
330
1, 111
445
1,049
1,029

215

278

20

20

20

20

20

20

50

20

20

I I I . E x c e ss of re c e ip ts ( + ) o r p a y m e n ts ( —), to t a l ------------------

+ 1 ,1 1 2

+ 1 ,8 3 7

+ 1 ,0 5 1

-1 3 9

+ 523

+ 315

+ 1 41

-2 5 1

-2 7 5

+ 2 14

+ 531

A . G oo ds a n d se rv ic e s -------- ------- ------ -- -----------------B . U n ila te r a l tr a n s f e r s ----- ----------------- ----------------—' N e t goo ds a n d se rv ic e s a n d u n ila te r a l tr a n s f e rs ....... ......
G . L o n g -te rm c a p ita l____ ............. ............. . . . . ------- . . .

+ 4 , 867
- 1 ,0 4 3
+ 3 , 824
- 2 , 712

+ 3 , 522
-6 7 8
+ 2 , 844
- 1 ,0 0 7

+ 2 ,1 2 1
-5 0 8
+ 1 , 613
-5 6 2

+989
-3 4 4
+645
-7 8 4

+ 826
-3 4 9
+ 477
+46

+ 1 , 342
-3 5 5
+ 987
-6 7 2

+ 1 , 076
-3 9 2
+684
-5 4 3

+ 8 17
-3 7 2
+ 445
-6 9 6

+ 1 , 064
-3 4 8
+ 716
-9 9 1

+ 1 ,3 6 7
-3 5 5
+ 1 ,0 1 2
-7 9 8

+ 1 ,1 3 8
-3 6 7
+ 771
-2 4 0

+ 166

+68

-7 3 5

-2 6 9

-3 4 8

+ 166

+68

-7 3 5

-2 6 9

IV . N e t in flo w ( + ) o r o u tflo w ( —) of f u n d s o n g old a n d sh o rtte r m c a p ita l a c c o u n t, t o t a l . . . . ----------------------- -----------A . N e t in c re a se ( —) o r d e c rea se ( + ) in U n ite d S ta te s gold
s t o c k . . __ ___________
. --------- ------------- . . .
B . N e t m o v e m e n t of U n ite d S ta te s sh o rt- te rm c a p ita l
0 . N e t m o v e m e n t of fo re ig n s h o rt- te rm c a p ita l in U n ite d
S ta te s _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
V . E rr o rs a n d o m issio n s...............................................................

- 1 , 278

- 1 , 905

-3 1 6

+408

.

-1 3 7

-6

+ 326

+ 698

-1 1 0

-1 4 7

-3 1 5

-2 5 6

+ 100

-9 3

+ 1 13

+ 238

-1 4 3

-8 2

-1 0 9

-4 6

-3 6

-3 4 9

-2 3 1

-2 0 0

+49

+ 228

-6 0

+ 455

+ 934

-1 1 7

+196

-1 7 5

-1 7 8

-1 3 5

-7 5

-4 2 3

-1 0 4

-3 8 4

222

Tabl e

X X V I .— I n te r n a tio n a l tra n sa ctio n s o f th e U n ited S ta te s, 1919 -3 9 — C o n tin u e d
[ M illio n s o f d olla rs]

I te m
I. R e c e ip ts , to t a l ______ ____ ______ ______ ____________________

1930
..

1931

1932

1933

1934

1935

1936

1937

1938

1939

6,376

4, 324

2,841

2,754

3, 214

3,840

4,412

5,131

4,551

4,636

A . G oods a n d s e rv ic es, t o t a l ____ _ __ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
5,450
1. G o o d s.............
__________ ____ ______ _ _ _ _ _ ______
3,929
- 2. In c o m e o n i n v e s tm e n ts ._
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____ ______
1, 040
3. O th e r se rv ic e s ....... ........ ... ........... .................................................. -----B . U n ila te r a l tr a n s f e rs ___________ _ _ _ _ _ _ _ _ _ _ _ _ __ ................. .
58
C . L o n g -te rm c a p ita l, t o t a l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
. . . _________
868
782
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in v e s te d a b r o a d ,_______
2 . M o v e m e n ts o f fo re ig n c a p ita l in v e s te d in U n ite d S ta te s ______
86

3, 641
2, 494
766
~
381
36
647
561
86

2,474
1,667
527
280
17
350
350

2, 402
1,736
437
229
17
335
155
180

2,975
2, 238
437
300
20
219
219

3, 265
2,404
521
340
21
554
219
335

3, 539
2, 590
569
380
22
851
236
615

4, 553
3, 451
577
525
29
549
289
260

4,336
3,243
585
508
40
175
103
72

4,432
3,347
541
544
38
166
166

I I . P a y m e n ts , to ta l _______

___________________________________

5,907

3, 912

2, 415

2,487

2, 615

3,458

3, 728

4, 548

3, 345

3, 721

A . G oods a n d serv ic es, to t a l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ______ . . . ____ .
1. G oo d s____________ ____ __________ _ _ _ _ _ _ _ _ _ _ _ _ _ ____
f 2. In c o m e o n in v e s tm e n ts ___________ ____ ______________
3. O th e r se rv ic e s__________ ____ ___ ____ _____ ______ ____ .
____
B . U n ila te ra l tr a n sfe rs ___ . . . _ __ __ __ __ __ __ __ __ __ __ __ _
C . L o n g -te rm c a p ita l, to t a l __________________ _____ __________
1. M o v e m e n ts of U n ite d S ta te s c a p ita l in v e s te d a b r o a d _____ . .
..
2. M o v e m e n ts of fo re ig n c a p ita l in v e s te d in U n ite d S ta te s __

4,428
3,104
295
T,TED
390
1,089
1,069
20

3,137
2,120
220
797
343
432
412
20

2,079
1,343
135
— w
243
93
67
26

2, 056
1,510
115
431
213
218
20315

2,384
1, 763
135
~ '486
182
49.
34
15

3,157
2, 462
155
640
183
118
103
15

3,455
2, 546
270
639
199
74
59
15

4, 268
3,181
295
792
252
28
13
15

3, 056
2,173
200
683
211
78
63
15

3.377
2,409
230
738
205
139
53
86

I I I . E xcess of re c e ip ts ( + ) o r p a y m e n ts ( —), t o t a l . ......... .............. ...........

+ 469

+412

+ 426

+ 2 27

+ 629

+382

+ 684

+ 583

+ 1 , 206

+ 9 15

A . G oo ds a n d se rv ic e s_ _ _ . . . ___________________
. . . ___
B . U n ila te r a l tr a n s f e r s .. ____ _
_ _ _ _ _ _ _ _ _ _ _ _ . . . . ________
N e t goods a n d se rv ice s a n d u n ila te r a l tr a n s f e r s . . . . _ _ _ _____ _
C . L o n g -te rm c a p ita l____ ________________________ ____ . . . . . .

+ 1 , 022
-3 3 2
+ 6 90
-2 2 1

+504
-3 0 7
+ 197
+ 215

+ 395
-2 2 6
+ 169
+ 257

+ 3 46
-1 9 6
+ 150
i +77

+ 591
-1 6 2
+429
i +200

+ 108
-1 6 2
-5 4
+436

+84
-1 7 7
-9 3
+ 777

+ 285
-2 2 3
+621
+ 521

+ 1 , 280
-1 7 1
+ 1 ,1 0 9
+97

+ 1 , 055
-1 6 7
+ 888
+27

IV . N e t inflow ( + ) o r o u tflo w ( —) of f u n d s o n g o ld s h o rt- te rm c a p ita l
a c c o u n t, to ta l_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ _______

-7 8 9

-5 0 4

-4 9 9

-2 8 8

- 1 , 044

-7 5 0

-8 4 1

- 1 ,0 0 8

- 1 ,4 5 5

- 1 ,7 0 4

A. N e t in cre ase ( —) or d e c re a se ( + ) in U n ite d S ta te s g o ld s to c k ........
B . N e t m o v e m e n t of U n ite d S ta te s s h o rt- te rm c a p ita l a b r o a d ______
C . N e t m o v e m e n t of fo re ig n s h o rt- te rm c a p ita l in U n ite d S ta te s ____

-3 1 0
-1 9 1
-2 8 8

+ 133
+ 628
- 1 ,2 6 5

-5 3
+ 227
-6 7 3

+ 131
+35
-4 5 4

- 1 , 266
+96
+126

- 1 , 822
+424
+648

- 1 , 272
+55
+ 376

- 1 ,3 6 4
+45
+ 3 11

- 1 , 799
+27
+317

- 3 ,1 7 4
+211
+ 1 , 259

+ 320

+92

+73

+61

+415

+368

+157

+ 425

+ 249

+ 789

V . E rro rs a n d o m iss io n s ._______ _________ _______ _____ ________

1 T h e n e t lo n g -te rm c a p ita l tr a n s a c ti o n s fig u re fo r 1933 in c lu d e s $40,000,000, a n d t h a t fo r 1934 in c lu d e s $30,000,000, re p r e s e n tin g th e n e t tr a n s f e r of f u n d s in s e c u r ity a r b itr a g e
o p e ra tio n s. T h e se tr a n sa c ti o n s c a n n o t b e d iv id e d b e tw e e n d o m e s tic a n d fo re ig n s e c u ritie s in th e s e y e a rs.

*

F o r e ig n

F u n d s C o n tr o l

O n A p r il 1 0 , 1 9 4 0 , w h e n D e n m a r k a n d N o r w a y w e r e in v a d e d , E x e c u t iv e O rd er
N o . 8 3 8 9 w a s is s u e d
c o u n tr ie s

and

fr e e z in g

th e ir

a ll a s s e ts

n a tio n a ls .

T he

in

th e

U n ite d

s u c c e s s iv e

S t a t e s b e lo n g in g

in v a s io n s

of

o th e r

to

th o se

E u ropean

c o u n t r ie s w e r e a c c o m p a n ie d b y a d d it io n a l e x e c u t iv e o r d e r s , c u lm in a t in g o n J u n e
1 4 ,1 9 4 1 , in a n e x e c u t iv e o r d e r w h ic h f r o z e th e a s s e t s o f a ll th e r e s t o f c o n t in e n t a l
E u r o p e , b o th

th e a g g r e sso r a n d

th e n e u t r a l n a tio n s .

T he

r e g is tr a tio n

o f a ssets

in t h e U n it e d S t a t e s o f a ll f o r e ig n c o u n t r ie s , a s o f J u n e 1 ,1 9 4 0 , a n d J u n e 1 4 ,1 9 4 1 ,
w a s a ls o

r e q u ir e d b y t h e o r d e r o f J u n e 1 4 .1

S h o r tly

t h e r e a f te r fr e e z in g

ord ers

w e r e is s u e d c o v e r in g t h e a s s e t s o f C h in a a n d J a p a n a n d , s o m e w h a t la t e r , t h o s e
o f tir e v a r i o u s c o u n t r i e s o v e r r u n b y t h e J a p a n e s e .
In a c c o r d a n c e w ith th e o rd er
o f J u n e 1 4 , a l m o s t 6 0 0 ,0 0 0 r e p o r t s w e r e f ile d w h ic h in d i c a t e d t h a t t h e t o t a l f o r e i g n
sta k e

in

th e

U n ite d

S ta te s

a m o u n ted

to

about

$ 1 2 .7

b illio n .

O f

th is

a m o u n t,

s o m e $ 6 b illio n w e r e a ffe c te d b y th e f r e e z in g c o n tr o ls , a s w e r e a n a d d it io n a l $ 2
b illio n o f g o ld u n d e r e a r m a r k a n d f o r e ig n s e c u r it ie s h e ld in t h is c o u n tr y f o r
fo r e ig n a c c o u n t.
O n D e c e m b e r 1 8 , 1 9 4 1 , t h e F ir s t W a r P o w e r s A c t, 1 9 4 1 , w a s a p p r o v e d g iv in g
th e P r e s id e n t b r o a d e r a u t h o r ity o v e r a ll fo r e ig n -o w n e d p r o p e r ty , in c lu d in g th e
p o w e r to v e s t su ch p r o p e r ty .
e r tie s w e r e v e s te d

U n d e r t h is a u th o r ity a la r g e n u m b e r o f A x is p r o p ­

b y t h e A lie n

w h ile o th e r s w e r e o p e r a te d

P ro p e rty

d u r in g

C u s to d ia n ; so m e h a v e b e e n

th e w a r

in

su ch

w ay

th e U n ite d S t a t e s w a r e ffo r t.
A t th e o u ts e t, F o r e ig n F u n d s C o n tr o l w a s d e s ig n e d to
a sse ts o f th e
c o u n tr ie s .

o c c u p ie d c o u n t r ie s c o u ld

T h e ord er

b e u sed

to

s e c u r ity ” a n d , o f c o u r se ,

th e

a im s

a v o w e d ly

a fte r

liq u id a te d ,

to m a te r ia lly

a s s is t

in s u r e t h a t n o n e o f t h e

fu r th e r

o f J u n e 14, 1941, h o w ev er, w a s

o f n a tio n a l d e fe n s e a n d

as

our

“ in

e n tr y

o f a g g resso r
th e

in te r e s t

in to

th e

F o r e ig n F u n d s C o n tr o l b e c a m e a p a r t o f e c o n o m ic w a r f a r e a g a in s t t h e A x is .

w ar
T he

c h ie f o b je c tiv e s o f th e C o n tr o l w e r e th e c o m p le te s e v e r a n c e o f a ll fin a n c ia l a n d
c o m m e r c ia l in te r c o u r s e , tr a d e , a n d c o m m u n ic a tio n , d ir e c t o r in d ir e c t , b e tw e e n
th e U n it e d S t a t e s a n d t h e A x is a n d A x is -d o m in a te d c o u n tr ie s , a n d o f tr a n s a c tio n s
b e tw e e n th e U n it e d S t a t e s a n d o th e r c o u n tr ie s
T h e s e o b je c tiv e s w e r e a c h ie v e d th r o u g h a s y s t e m

w h ic h m ig h t b e n e fit t h e A x is .
o f lic e n s e s , m a k in g e a c h t r a n s ­

a c t io n a ff e c tin g b lo c k e d a c c o u n ts s u b j e c t t o T r e a s u r y a p p r o v a l.
a d m in is te r e d

by

th e T r e a su r y

D e p a r tm e n t th ro u g h

th e

T h is s y s te m

F ed era l R eserve

w as

B anks

a n d t h e i n d i v i d u a l c o m m e r c i a l b a n k s . 12
B e c a u s e o f t h e b r o a d n a t u r e o f th e p r o h ib it io n s c o n ta in e d in th e f r e e z in g o r d e r
t h e r e w e r e m a n y t r a n s a c tio n s , n o t in a n y w a y in im ic a l to th e p u r p o s e s o f th e c o n ­
tr o l, f o r w h ic h it w a s d e e m e d u n d e s ir a b le t o r e q u ir e in d iv id u a l lic e n s e s . T o c o v e r
t h e s e tr a n s a c tio n s s e v e r a l g e n e r a l lic e n s e s w e r e is s u e d

to c o v e r t h e tr a n s a c tio n s

o f c o u n t r ie s in t h e “g e n e r a lly lic e n s e d t r a d e a r e a ,” s u c h a s t h e A m e r ic a n R e p u b ­
lic s , t h e B r it is h C o m m o n w e a lth , a n d t h e U n io n o f S o v ie t S o c ia lis t R e p u b lic s .
N o f u r t h e r lic e n s e w a s r e q u ir e d f o r n o r m a l t r a d e e v e n w it h n a t io n a ls o f b lo c k e d
c o u n tr ie s

in

th is

a r e a , u n le s s th e ir

nam es

appeared

on

th e

“P r o c la im e d

L is t o f

C e r ta in B lo c k e d N a t io n a ls .”
G e n e r a l lic e n s e s w e r e a ls o g r a n te d to t h e n e u tr a l E u r o p e a n c o u n tr ie s — S w e d e n ,
S w it z e r la n d , P o r t u g a l, a n d S p a in , c o v e r in g th e t r a n s a c t io n s o f t h e ir g o v e r n m e n ts
a n d th e ir n a tio n a ls .
v o lv e d g u a r a n te e d , in

T h e s e lic e n s e s w e r e g r a n te d a ft e r t h e g o v e r n m e n ts in ­
e ffe c t, t h a t th e p u r p o s e s o f F o r e ig n F u n d s C o n tr o l w o u ld

b e c a r r ie d o u t.
G e n e r a l lic e n s e s w e r e is s u e d to m o s t in d iv id u a l n a t io n a ls o f
b lo c k e d c o u n tr ie s w h o h a d b e e n liv in g in th e U n it e d S t a t e s f o r p e r io d s o f tim e ,
a n d a ls o to p e r m it c e r t a in t r a n s a c t io n s , s u c h a s a llo w in g a p e r s o n in t h e U n it e d
S t a t e s o w in g m o n e y to a b lo c k e d n a t io n a l to p a y in to a b lo c k e d a c c o u n t.
O n e o f t h e m o s t d iffic u lt p r o b le m s o f F o r e ig n F u n d s C o n tr o l in v o lv e d t h e
p o s s ib le d is p o s a l in t h e U n it e d S t a t e s b y t h e e n e m y o f lo o te d s e c u r it ie s a n d A m e r i­
can cu rrency.
tio n

of any

I n t h e c a s e o f r e g is te r e d s e c u r it ie s i t w a s r e q u ir e d t h a t t h e r e g is tr a ­

s e c u r ity

r e g is te r e d

c h a n g e d w it h o u t a lic e n s e .

in

th e

nam e

of a

T o m e e t t h e p r o b le m

b lo c k e d

n a t io n a l c o u ld

v id e d , b e g in n in g in J u n e 1 9 4 0 , t h a t a ll s e c u r it ie s e n te r in g t h e U n it e d
a n y fo r e ig n

c o u n tr y m u s t b e d e p o s ite d

in

a

F ed era l R eserve B a n k

r e le a s e d o n ly u p o n s a t is fa c to r y p r o o f t h a t t h e y w e r e fr e e fr o m
1
W a
2
of
W a

not be

o f b e a r e r s e c u r itie s , it w a s p r o ­
S ta te s fro m
and

c o u ld

be

a n y A x is ta in t.

U . S . T r e a s u r y D e p a r t m e n t , C e n s u s o f F o r e ig n -O w n e d A s s e t s i n t h e U n it e d S t a t e s ,
s h i n g t o n , D . C ., 1 9 4 5 .
F o r a d e ta ile d d is c u s s io n s e e r e p o r t o f th e U . S . T r e a s u r y D e p a r tm e n t, A d m in is tr a tio n
t h e W a r t im e F in a n c ia l a n d P r o p e r t y
C o n tr o ls o f th e U n ite d
S ta te s G o v er n m e n t,
s h i n g t o n , D . C ., 1 9 4 2 .

223

W it h r e s p e c t to A m e r ic a n c u r r e n c y t h e r e w a s a d u a l p r o b le m
e n tr y in to t h e U n ite d

S ta te s fo r th e u se h e r e o f th e A x is a n d

o f p r e v e n tin g it s

o f d e p r e c ia tin g

v a lu e a b r o a d s o th a t A x is h o ld in g s w o u ld b e o f r e d u c e d u s e fu ln e s s .
w a s a c h ie v e d

by

excep t

n o m in a l

fo r

a

b r o u g h t in to
fo r

a

c o n tr o l sy s te m
am ount

th e U n ite d

e x a m in a tio n

to

fo r

th a t

R u lin g

N o.

5 ).

fo r

p erson al

S t a te s m u s t b e d e p o s ite d

(G e n e r a l

w h e r e th e A m e r ic a n

s im ila r

c a r r ie d

In

s e c u r itie s

w ith

th e

d o lla r w a s c o m m o n ly u s e d , t h e

r e q u ir in g

e x p e n d itu r e s ,
a

case

its

T h e fo rm er
a ll

th a t,

cu rrency

F ed era l R eserve B a n k
of

A m e r ic a n

T reasu ry

R e p u b lic s

announced

th a t it

w o u ld e n te r t a in a p p lic a tio n s f o r th e r e le a s e o f c u r r e n c ie s fo r w a r d e d b y s u c h c o u n ­
t r ie s b u t w o u ld p e r m it i t to b e r e d e e m e d o n ly if A x is t a in t w e r e p r o v e d to b e
a b se n t.
D o lla r c u r r e n c y im p o r te d d ir e c t f r o m E u r o p e w a s p r e s u m e d to b e lo o t e d .
T he

e ffe c t

of

th ese

r e s tr ic tio n s

on

d o lla r -c u r r e n c y

m o v e m e n ts

w as

to

d ecrease

s u b s t a n tia lly th e v a lu e o f th e c u r r e n c y h o ld in g s o f t h e A x is a b r o a d .
A t t h e e n d o f 1 9 4 5 th e lib e r a t io n o f a ll f o r m e r ly o c c u p ie d a r e a s w a s f o llo w e d
b y G e n e r a l L ic e n s e N o . 9 4 , w h ic h r e m o v e d c o n tr o ls o v e r c u r r e n t tr a n s a c tio n s w ith
a ll b lo c k e d c o u n t r ie s e x c e p t G e r m a n y , J a p a n , P o r t u g a l, S p a in , S w e d e n , S w it z e r ­
la n d , L ie c h te n s t e in , a n d T a n g ie r .
F u r th e r , u n d e r G e n e r a l O rd er N o . 9 5 , a ls o
is s u e d in D e c e m b e r 1 9 4 5 , p r o v is io n w a s m a d e fo r th e u n fr e e z in g o f b lo c k e d a s s e t s
o f c e r ta in

c o u n tr ie s .

B y

th e

end

o f M arch

1947

a ll c o u n tr ie s

e x c e p t P o r tu g a l,

S p a in , a n d T a n g ie r , w e r e g e n e r a lly lic e n s e d b o th a s to b lo c k e d a s s e t s a n d c u r r e n t
tr a n s a c tio n s .

N o te s to C h art 1 9 a n d T a b le 2 7
C hart 1 9
U n ite d

S t a t e s c o m m o n s t o c k s — M o o d y ’s s e r i e s f o r y i e l d

on 200 com m on

sto ck s,

y ea r end.
U n ite d S t a te s c o r p o r a te s to c k s h e ld b y fo r e ig n e r s — c o m p u te d o n b a s is o f a n n u a l
c o m p ila tio n o f d iv id e n d p a y m e n ts to fo r e ig n e r s a n d e s t im a t e s o f m a r k e t v a lu e
o f fo r e ig n

h o ld in g s

at year

en d s.

I n c lu d e s

b o th

com m on

and

p r efer red

is s u e s .

D a ta f o r 1 9 4 1 n o t a v a ila b le .
U n ite d S t a t e s d ir e c t in v e s t m e n ts a b r o a d , r e c e ip ts — r a tio o f in t e r e s t a n d d iv id e n d
r e c e ip ts

and

in c lu d in g

branch

U n ite d

e a r n in g s

S ta te s

to

in te r e s t

U n ite d
in

S ta te s

e q u ity

n e t w o r th , b o n d e d

in

in v e s tm e n ts

in d e b te d n e s s ,

com p an y a d v a n ces.
A ll U n it e d S t a t e s c o r p o r a tio n s , d iv id e n d s — d a t a f o r U n it e d
f ilin g b a la n c e s h e e t s w it h
m e n ts to n e t w o r th .
is

th e

ch an ge

in

abroad,

and

in te r ­

S t a t e s c o r p o r a tio n s

th e B u r e a u o f I n te r n a l R e v e n u e , r a tio o f d iv id e n d p a y ­

T h e s e r ie s h a s s e v e r a l d e fe c t s , t h e m o s t im p o r ta n t o f w h ic h

th e

num ber

o f c o n s o lid a te d

O n e e f fe c t o f in c r e a s e d c o n s o lid a t io n in

r e tu r n s

file d , p a r t ic u la r ly

in

th a t y e a r a p p ea r ed to h a v e b e en a

1942.
sh a rp

d r o p in th e d iv id e n d s -n e t w o r th r a tio a s in te r c o m p a n y d iv id e n d s w e r e e lim in a te d .
D a t a f o r 1 9 4 5 n o t a v a ila b le .
F o r e ig n d ir e c t in v e s t m e n ts

in

th e

U n ite d

S ta te s , p a y m e n ts — r a tio

of

in te r e s t

a n d d iv id e n d p a y m e n ts , a n d b r a n c h e a r n in g s , to f o r e ig n e q u ity in in v e s t m e n t in
th e U n ite d S t a te s a s e s tim a te d a t y e a r e n d s.
D a t a f o r 1 9 4 1 n o t a v a ila b le .
A ll U n it e d S t a t e s c o r p o r a t io n s , e a r n in g s — n e t p r o fit a f t e r t a x e s o f a ll c o r p o ­
r a t io n s filin g b a la n c e s h e e t s w it h th e B u r e a u o f I n t e r n a l R e v e n u e a s a p e r c e n ta g e
o f t h e n e t w o r th o f t h o s e c o r p o r a tio n s .
D a t a fo r 1 9 4 5 n o t a v a ila b le .
U n it e d S t a t e s d ir e c t in v e s t m e n ts a b r o a d , e a r n in g s — n e t in c o m e a f t e r
t a x e s o f a ll U n ite d S t a t e s d ir e c t in v e s t m e n ts
S t a t e s n e t e q u ity in t h o s e e n te r p r is e s .

abroad

as a

fo r e ig n

p e r c e n ta g e o f U n ite d

G e n e r a l 'N o te s .— 1 . I n s u r a n c e c o m p a n i e s a r e i n c l u d e d o n l y i n t h e d a t a r e f e r r i n g
to a ll U n it e d S t a t e s c o m p a n ie s .
2.

T h e e q u ity in

d ir e c t in v e s t m e n ts a b r o a d

u sed

in

c a lc u la tin g

y ie ld s is g r o s s

in th e s e n s e t h a t it in c lu d e s t h e e q u ity o f p a r e n t c o m p a n ie s w h ic h a r e in tu r n
fo r e ig n -c o n tr o lle d .
I n c o m e r e c e ip ts a n d p a y m e n ts a r e g r o s s in t h e s a m e s e n s e .

T a b le 2 7
T he

in te r n a tio n a l

in v e s tm e n t

p o s itio n

c o u n t r y ’s i n t e r n a t i o n a l a s s e t s a n d
U n it e d .S t a te s G o v e r n m e n t lo a n s .

of

th e

U n ite d

S ta te s

s u m m a r iz e s

th is

lia b ilit ie s o f a c o m m e r c ia l n a tu r e , in c lu d in g
T h e r e fo r e , p e r so n a l p r o p e r ty a n d r e a l e s ta te

h e ld b y in d iv id u a ls f o r n o n b u s in e s s u s e s a n d

t h e a s s e t s o f n o n p r o fit in s t it u t io n s

a r e e x c lu d e d .
M e r c h a n d is e in v e n t o r ie s a r e a ls o e x c lu d e d .
G o ld h o l d in g s , in c lu d ­
in g g o ld h e ld u n d e r e a r m a r k f o r f o r e ig n a c c o u n t, h a v e b e e n e x c lu d e d f r o m b o th
a s s e t s a n d lia b ilit ie s .

224

T h e v a lu e o f e n e m y p r o p e r ty in t h e U n it e d S t a t e s s e iz e d b y t h e A lie n P r o p e r ty
C u s to d ia n h a s b e e n e x c lu d e d fr o m f o r e ig n a s s e t s in t h is c o u n tr y a f t e r v e s tin g .
H ow ever,

U n ite d

S ta te s

p r o p e rty

in

en em y

c o u n tr ie s

is

in c lu d e d

at

prew ar

v a lu e s in t h e e s t im a t e s o f A m e r ic a n a s s e t s a b r o a d , e x c e p t f o r A m e r ic a n h o ld in g s
o f d o lla r b o n d s, w h ic h h a d a
m a r k e t v a lu e o f a b o u t $ 4 1 m illio n a t t h e e n d o f
1941.

T h e la t t e r a r e e x c lu d e d a f t e r 1 9 4 1 in a s m u c h a s s u c h b o n d s w e r e e x c lu d e d

fro m

tr a d in g p r iv ile g e s

been

m ade

fo r

w ar

on

th e

dam age

to

exchanges

in

th is

d ir e c t-in v e s tm e n t

co u n try .

e x c lu d e th e v a lu e o f m ilit a r y

in s ta lla tio n s a n d

a n d lia b ilitie s r e s u ltin g fr o m

fin a n c ia l t r a n s a c tio n s

I n s o fa r a s p o s s ib le th e e s t im a te s a r e b a s e d

N o

p r o p e r tie s .

r e d u c tio n s
A m e r ic a n

e q u ip m e n t b u t d o
o f th e

arm ed

have
a ssets

in c lu d e a s s e t s
fo r c e s.

o n t h e r e s id e n c e o f U n it e d

S ta te s

c itiz e n s a n d a lie n s o n y e a r e n d s .
T h e in v e s tm e n ts a b r o a d o f a ll r e s id e n ts o f th e
U n it e d S t a te s , b o th c itiz e n s a n d a lie n s , a r e in c lu d e d in th e v a lu e o f U n ite d S t a te s
in v e s t m e n ts a b r o a d , a n d th e a s s e t s in th e U n ite d S t a te s o f a ll fo r e ig n r e s id e n ts ,
b o th a lie n s a n d A m e r ic a n c itiz e n s liv in g a b r o a d , a r e in c lu d e d in fo r e ig n in v e s t ­
t

m e n ts in t h e U n it e d S ta te s .
D ir e c t in v e s tm e n ts a r e s h o w n a t b o o k v a lu e s , s to c k s a n d b o n d s a t m a r k e t v a lu e s ,
a n d a s s e ts a n d lia b ilit ie s o f th e U n ite d S ta te s G o v e r n m e n t a n d o th e r c la im s a t fa c e
o r s t a te d v a lu e s .
T h e e s t im a t e s f o r s e v e r a l ite m s a r e r a th e r a r b itr a r y , p a r tic u ­

J

l a r l y w it h r e s p e c t t o t h e e f f e c t s o f c h a n g e s in r e s id e n c e , w a r d a m a g e , t h e m o v e m e n t s o f U n it e d S t a t e s c u r r e n c y , a n d , in s o m e in s t a n c e s , c h a n g e s in m a r k e t p r ic e s
o f s e c u r itie s .

225

F orra

577

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