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Download (Pdf) FEDERAL ESE8V BULLETIN APRIL 1951 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis EDITORIAL COMMITTEE ELLIOTT THURSTON WOODLIEF THOMAS WINFIELD W. RIEFLER RALPH A. YOUNG SUSAN S. BURR The Federal Reserve BULLETIN is issued monthly under the direction of the staff editorial committee. This committee is responsible for interpretations and opinions expressed, except in official statements and signed articles. CONTENTS PAGE Trends in International Trade and Payments. 363-376 Statement by Chairman Martin on His Taking Oath of Office, April 2, 1951. 377 Voluntary Credit Restraint Committees 378-384 Selected Preliminary Results of the 1951 Survey of Consumer Finances. 385-388 Law Department 389-392 Current Events and Announcements 393-394 National Summary of Business Conditions. 395-396 Financial, Industrial, Commercial Statistics, U. S. (See p. 397 for list of tables). 397-455 International Financial Statistics (See p. 457 for list of tables) 457-475 Board of Governors and Star!; Open Market Committee and StafT; Federal Advisory Council 476 Senior Officers of Federal Reserve Banks; Managing Officers of Branches. 477 Federal Reserve Publications 478-479 Map of Federal Reserve Districts 480 Subscription Price of Bulletin A copy of the Federal Reserve BULLETIN is sent to each member bank without charge. The subscription price in the United States and its possessions, Bolivia, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, Guatemala, Haiti, Republic of Honduras, Mexico, Newfoundland (in- cluding Labrador), Nicaragua, Panama, Paraguay, Peru, El Salvador, Uruguay, and Venezuela is $2.00 per annum or 20 cents per copy; elsewhere, $2.60 per annum or 25 cents per copy. Group sub- scriptions in the United States for 10 or more copies to one address, 15 cents per copy per month, or $1.50 for 12 months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BULLETIN VOLUME 37 April 1951 NUMBER 4 TRENDS IN INTERNATIONAL TRADE AND PAYMENTS Patterns of world trade and payments gold and dollar reserves, which had reached have altered greatly during the past two low levels in 1949. In practically all in- years, as expanding world demands have dustrial countries production, employment, pressed more heavily upon productive ca- and incomes were rising. Under these con- pacity. Among the most consistent trends ditions the sharp change in the outlook for has been the growth of European foreign rearmament following the Communist ag- trade, which is shown in the chart. Recov- gression in Korea produced a new surge of ery of industrial and agricultural produc- demand around the world, for both raw ma- tion in Western Europe has been accom- terials and finished manufactures. panied by a remarkable expansion of intra- IMPORTS AND EXPORTS OF E R P COUNTRIES European trade and by a fairly steady rise VOLUME AT 1948 PRICES in European imports from overseas areas BILLIONS OF DOLLARS QUARTERLY BILLIONS OF DOLLARS other than the United States. Since the business recession in the first half of 1949, United States imports from all areas have also increased. Larger payments by the major in- dustrial countries have resulted in higher in- comes and greater availability of foreign ex- change in other countries—developments that have contributed to the recent acceleration in the rise of European exports, and also to an increase in United States exports. The over-all decline in United States ex- ports after mid-1947, which was due partly to the increasing severity of import con- trols in other countries in 1948 and 1949 and partly to European recovery, came to an end early last year. Although the competitive NOTE.—Based on Economic Cooperation Administration data for dollar value of ERP trade (imports, c.i.f., exports, f.o.b.) position of European goods was improved and quantity indexes for intra-ERP and other trade, and on Department of Commerce unit value indexes for United States by the devaluations of sterling and other exports to ERP countries. Fourth quarter 1950 partly esti- currencies in 1949, demands for United mated by Federal Reserve. States products remained very strong. During the past year settlements of bal- By June 1950 many countries had made ances in the payments among countries have considerable progress in reconstituting their been made in a variety of ways. The United APRIL 1951 363 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TRENDS IN INTERNATIONAL TRADE AND PAYMENTS States transferred to other countries in 1950 UNITED STATES BALANCE OF PAYMENTS gold and dollar assets amounting to 3.6 bil- [In billions of dollars] lion dollars. As the table shows, nearly Calendar year 1950 Fourth half of this total was added to the holdings quarter Item 1950 All ERP of countries outside Western Europe, either areas coun- Other1 tries through their direct transactions with the Goods, Services; and Private United States or through the net transfers Donations of dollars to them from European countries. Exports of goods and services. 4.1 14.4 4.5 9.9 2 Goods . 3 1 10 7 3 4 7.2 Besides international transfers of dollars and Services 0.9 3.7 1.0 2.6 gold, payments in sterling played a major Imports of goods and services. 3.5 12.1 2.8 9.4 Goods 2 2.8 9.3 1.3 8.0 role in the financing of world trade. Settle- Services 0.7 2.9 1.5 1.4 ments among Western European countries Balance on goods and services.. 0.6 2.2 1.7 0.5 Private donations (deduct).... 0.1 0.4 0.3 0.2 in the second half of 1950 were made Balance on goods, services, and through the European Payments Union set private donations 0.5 1.8 1.5 0.3 Capital and U. S. Government up with United States backing. Bilateral Grants (minus indicates net arrangements under which central banks financing provided) U. S. Government grants and or governments lend or hold balances in loans, net —/ / -4.3 -3.4 -0.9 MDAP —0 3 -0 5 —0 5 -0 1 other currencies became less important in Other —0 8 -3.8 -2.9 -0.9 1950, but were still used for settlements be- U. S. private capital -0.2 -1.1 -0.3 -0.8 Errors and omissions, and in- tween some of the Latin American coun- terarea transfers of dollars.. -0.1 0.0 +0.3 -0.3 Foreign countries' capital assets, tries and the Continental European coun- net +0.9 +3.6 +1.9 +1.7 Purchases of gold from tries. The fact that the Continental Euro- United States +0.8 +1.7 + 1.4 +0.4 Increase in short- and long- pean countries, as a group, continued to have term dollar assets +0.1 +1.9 +0.5 +1.3 deficits in their transactions with most other Excluding transfers under MDAP: areas constituted one obstacle to the termi- Exports of goods and serv- ices 3.8 13.8 4.0 9.8 Balance on goods and nation of these bilateral arrangements. services 0.3 1.7 1.3 0.4 Balance on goods, services, Continental Europe has not attained equi- and private donations... 0.2 1.3 1.0 0.2 librium in its balance of payments with the 1 Includes international institutions: U. S. Government grants, —0.1; "interarea transfers," —0.1 (excess of transfers to Bank for rest of the world, and it is expected that re- International Settlements as agent for EPU over other net transfers from international institutions); and capital assets, +0.2. armament will place new burdens on the 2 Differs from trade statistics used in other tables because of adjustments, such as for U. S. Government purchases, sales, and economies of this area in 1951. The im- transfers. NOTE.—Derived from Department of Commerce data, pre- provement in these countries' reserves in liminary. Details may not add to totals because of rounding. Transfers under the Mutual Defense Assistance Program (MDAP) 1950 would not have been possible without cannot be allocated between goods and services, nor between areas in detail, except approximately between the ERP countries as a group and the rest of the world on the basis of expenditures under continued aid from the United States Title III of the Mutual Defense Assistance Act. through the European Recovery Program. The United Kingdom, unlike the Conti- The United States balance of payments nental countries, had an over-all surplus in in early 1951 was apparently following the its balance of payments in 1950. Much of general pattern of the last quarter of 1950. the rise in its gold and dollar reserves, how- Imports were somewhat higher, while ab- ever, resulted from United States aid and normal capital movements in response to from large transfers by other members of temporary incentives, which were not large the sterling area in exchange for additions in the last quarter, almost disappeared after to their holdings of sterling reserves. the end of 1950. In the October-Decem- 364 FEDERAL RESERVE BULLETIN Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TRENDS IN INTERNATIONAL TRADE AND PAYMENTS ber quarter United States exports of goods very strong, as world demands for industrial and services, apart from those covered by products can no longer be met from in- the Mutual Defense Assistance Program, creasing output in other countries to the ex- amounted to 3.8 billion dollars, and exceeded tent that was possible in 1949 and the first imports of goods and services and private part of 1950. Uncertainties as to the trend donations by only 200 million dollars, as is of nonmilitary exports relate chiefly to supply shown at the bottom of the table.
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