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The National Advisory Council on International Monetary and Financial Problems, of which the Secretary of the Treasury is the chairman, continued in accordance with its statutory authority to coordinate the policies and operations of the representatives of the United States on the international financial institutions, and of all agencies of the Government which make or participate in making foreign loans or which engage in foreign financial, exchange, or monetary transactions.

Secretary Anderson, in his capacity as U.S. Governor of the InterAmerican Development Bank, headed the U.S. Delegation to the First Meeting of the Board of Governors of that Bank, held in San Salvador, El Salvador, in February 1960. (See exhibit 30.) He was accompanied by Under Secretary of State Douglas Dillon as the U.S. Alternate Governor, and Assistant Secretary of the Treasury T. Graydon Upton, Assistant Secretary of State Roy R. Rubottom, and General Robert Cutler (U.S. Executive Director of the InterAmerican Bank) in the capacity of Temporary Alternate Governors. The delegation also included other members of the National Advisory Council on International Monetary and Financial Problems and a member of the Council of Economic Advisers.

In his capacity as U.S. Governor of the International Monetary Fund, the International Bank for Reconstruction and Development, and the International Finance Corporation, Secretary Anderson headed the U.S. Delegation to the Annual Meeting of the Boards of Governors of these institutions held in Washington in September 1960. The delegation included Under Secretary of State Douglas Dillon, who was the Alternate U.S. Governor, and Under Secretary of the Treasury for Monetary Affairs Julian B. Baird, Assistant Secretary of the Treasury T. Graydon Upton (U.S. Executive Director of the International Bank), and Special Assistant to the Secretary of the Treasury Frank A. Southard, Jr. (U.S. Executive Director of the Fund) as Temporary Alternate Governors. The delegation also included members of the House Banking and Currency Committee, other members of the National Advisory Council on International Monetary and Financial Problems, a member of the White House Office, a member of the Council of Economic Advisers, and the President of the Federal Reserve Bank of New York.

On September 28, 1960, Secretary Anderson addressed the meeting of the Governors of the International Monetary Fund in connection with the discussion of the Fund's Annual Report. (See exhibit 33.) The Secretary reviewed a number of the aspects of the international economic and financial situation as well as the course of economic and financial events in the United States and the U.S. balance of payments. During his discussion he stressed again, as he had at the

annual meeting in 1959, the importance for all countries to achieve over time a reasonable balance in their international transactions and he pointed, in particular, to the necessity at this time for the strong surplus countries to take adequate steps to facilitate the movement of international capital on longer terms to the less-developed areas of the world.

The U.S. balance of payments and gold and dollar movements 1

Recorded U.S. payments abroad in the fiscal year 1960 amounted to $29.3 billion, the highest figure to date and an increase of $1.5 billion over fiscal 1959 (excluding the $1.4 billion transferred in fiscal 1959 to the International Monetary Fund for the increase in the U.S. quota). Most of the increase in total payments resulted from higher nonmilitary merchandise imports, which rose by $1.4 billion to $15.5 billion, a record high amount. Payments to foreigners for nonmilitary services rose by about $500 million to $5.4 billion, reflecting among other things larger expenditures for travel and transportation and higher payments to foreign holders of U.S. securities. On the other hand, our military expenditures of $3.0 billion for the support of our forces abroad were $200 million lower than in the previous year; U.S. Government net nonmilitary grants and loans and other capital outflow (exclusive of the U.S. payment in 1959 to the International Monetary Fund) were reduced by about $250 million, to $2.3 billion. This reduction resulted in part from higher repayments and prepayments by foreign countries on their indebtedness to the U.S. Government in fiscal 1960 as compared with fiscal 1959. Finally, U.S. net private capital outflow remained constant at $2.3 billion, and net remittances and pensions totaled about $800 million, roughly $50 million above those of fiscal 1959.

Recorded foreign payments in the United States for goods and services amounted to $25.4 billion in fiscal 1960, only about $650 million less than the record of 1957, and represented an increase of $2.5 billion over 1959. About $2.1 billion of this increase was in the form of larger U.S. nonmilitary merchandise exports, which rose to $18.0 billion. Most of the remaining portion of the rise in U.S. receipts was from increased income on direct investments abroad and from higher travel and transportation receipts. In addition, foreign net long-term investments in the United States more than doubled, amounting to about $625 million in fiscal 1960.

Transactions unaccounted for fell sharply from over $600 million in 1959 to slightly over $100 million in 1960, reflecting, it is believed, a substantial outflow of foreign and United States capital.

1 Figures for 1960 are preliminary. Differences between 1959 figures published in the 1959 Annual Report and those cited in this section result from revisions made during the year.

These figures exclude net transfers of military supplies and services financed by U.S. Government military grant aid.

The United States has as its continuing and essential objective the attainment of reasonable equilibrium in our balance of payments. A basic requisite in our program for realizing this objective is the maintenance of confidence in the dollar, both here and abroad, through resolute adherence to sound domestic and foreign economic and financial policies. Within this broad framework, the Government has adopted a number of measures designed specifically to deal with the balance-of-payments problem. These include expanding our export insurance facilities and other steps as part of an overall program of encouraging U.S. producers to sell more products abroad. We have also urged other countries to eliminate discrimination against our goods and to follow liberal commercial policies with respect to imports generally. Under various programs financed by U.S. Government funds, U.S. agencies are placing primary emphasis on the financing of U.S. goods and services. As a means of dealing with the imbalance in international payments arising from the continuing payments surpluses of other industrial countries, and with the problem of financing economic development in the less-developed areas of the free world, the United States has urged the other industrial countries to increase their flow of long-term capital to those areas.

All the transactions between the United States and the rest of the world during fiscal 1960 resulted in a recorded gain by foreigners of $3.1 billion in gold and liquid dollar assets, compared with a recorded gain of $3.9 billion in fiscal 1959 (excluding the U.S. subscription to the International Monetary Fund). In accordance with the U.S. policy of buying and selling gold at $35 per fine ounce (exclusive of handling charges) in transactions with foreign governments, central banks, and under certain conditions international institutions, for the settlement of international balances and other legitimate monetary purposes, net monetary sales of gold during the fiscal year amounted to $342 million. (See table 103.) This compared with net monetary gold sales of $1,661 million in the fiscal year 1959.1

2

The gold and liquid dollar assets of foreign countries (excluding gold holdings of the U.S.S.R., other Eastern European countries, and China Mainland) amounted to an estimated $37.9 billion on June 30, 1960, comprising $36.3 billion in official gold reserves and official and private holdings of short-term dollar assets held with banks in the United States, and $1.6 billion in U.S. Government bonds and notes. The total represented an increase of $2.4 billion over the estimated $35.5 billion held on June 30, 1959. See (table 104.) Western European countries and their dependencies gained $2.0 billion, of which more than half accrued to the Federal Republic of Germany.

1 During July-September 1960, net monetary gold sales amounted to $632 million.

2 Includes official gold reserves, and official and private holdings with banks in the United States of shortterm dollar assets and U.S. Government bonds and notes.

Japanese holdings rose by about $340 million, accounting for most of the $460 million gained by Asia. Canadian holdings rose by $330 million, African countries gained roughly $75 million, and Oceanic holdings increased by about $70 million. Latin American holdings declined by $450 million, of which $400 million was accounted for by Venezuela.

The gold and liquid dollar assets of international institutions rose by $1.4 billion during the year, amounting to $6.6 billion as of June 30, 1960.

Total estimated world official gold holdings on June 30, 1960 (exclusive of the U.S.S.R., other Eastern European countries, and China Mainland) were $41.2 billion, of which the United States held $19.4 billion and international institutions held $2.5 billion. U.S. private foreign investments and public capital movements

Private investments.-During the calendar year 1959 the value of U.S. private investments abroad rose by $3.8 billion, amounting to $44.8 billion at the end of the year. U.S. direct investments abroad at the end of 1959 were valued at $29.7 billion, an increase of $2.5 billion during the year. Long-term portfolio investments amounted to $11.4 billion, about $1.2 billion higher than at the end of 1958. Short-term portfolio investments rose slightly during the year to $3.6 billion.

The addition by U.S. firms of about $2.5 billion to their investments in foreign subsidiaries and branches in 1959 was substantially larger than that during 1958, while remaining much below that of the peak year 1957 when very large petroleum investments were made. The direct investment flow to Canada, at about $800 million in 1959, was approximately $100 million higher than in 1958. Investments in Europe were greatly accelerated, rising by $300 million over the rate of the previous year to a record annual figure of $725 million. Direct investment activity in Latin America continued to be sizeable, rising $100 million to a total of $540 million for the year. Investments in manufacturing during 1959, mainly in Canada and Europe, amounted for the first time to over $1 billion, and accounted for a large part of the increased outflow of direct investment capital.

As interest rates in the U.S. capital market rose in 1959 from their low levels of the preceding year, U.S. net portfolio investment outflows fell to $1 billion from the record of $1.75 billion in 1958.

Foreign-owned long-term investments in the United States were valued at $16.7 billion at the end of 1959, reflecting gains in security prices as well as capital inflows and reinvestment of earnings. Inflows of foreign capital, representing principally foreign purchases of United States corporate securities, reached nearly $550 million during the

year, a postwar high. In addition, reinvested earnings approached $200 million for the year.

Foreign indebtedness to the U.S. Government.-As of June 30, 1960, the outstanding indebtedness of foreign countries to the U.S. Government under various loan and credit agreements concluded principally since the end of World War II amounted to $12.9 billion. (See table 110.) The total increase in this indebtedness during fiscal 1960 was only $67 million, compared with $616 million during 1959. Substantial repayments were made by foreign countries, principally European countries, including the full repayment by the United Kingdom of a $250 million Export-Import Bank loan before the commencement of the repayment schedule. The indebtedness of countries in most other areas increased. Disbursements under credits provided by the Development Loan Fund and pursuant to the Agricultural Trade Development and Assistance Act of 1954, as amended (Public Law 480, 83rd Congress) particularly in Asia, accounted for most of the increased indebtedness recorded during the period.

The Export-Import Bank.-The Export-Import Bank authorized 178 new credits totaling almost $500 million during the fiscal year and made 73 allocations of about $85 million under previously authorized credits. These credits, ranging from $3,000 to $40 million, were provided to assist in financing U.S. exports of goods and services in connection with economic development projects abroad as well as with individual transactions of U.S. exporters. At the end of the period active credits of the Bank amounted to $6,840 million, of which $1,570 million had not yet been disbursed, and the Bank's uncommitted lending authority was $2,131 million. The Bank had a gross income of $134 million during the fiscal year and paid to the Treasury $45.4 million in interest on money borrowed for Bank lending and $22.5 million in dividends on the capital stock of the Bank held by the Secretary of the Treasury.

Under the authority of section 104 (e) of Public Law 480, the Agricultural Trade Development and Assistance Act of 1954, as amended (7 U.S.C. 1704e), the Export-Import Bank makes loans for certain purposes in foreign currencies to U.S. or foreign business firms. During the fiscal year the Bank made foreign currency loans equivalent to about $33 million under this act, and since June 1958, when such currencies were first made available to the Bank, the Bank has authorized 118 credits in 17 foreign currencies equivalent to about $67 million.

The Export-Import Bank expanded its export credit guaranty operations during the year to cover the issuance of export guaranties of noncommercial or political risks involving sales to countries of the free world on credit terms up to 180 days. Under this program, which

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