The Balance of International Payments of the United States in ...

The estimated sale of merchandise and services (exclusive of gold and silver transactions) by the United States to the rest of the world during 1937 amounted to $4,579,000,000, an increase of $1,036,000,000 over similar transactions in 1936. Estimated purchases of goods and services, which aggregated $4,603,000,000, showed an increase of $907,000,000 over those of the preceding year. The year's net imports of gold and silver (including reported earmarking operations) amounted to $1,469,000,000 as compared with $1,204,000,000 in 1936 and, as in other recent years, were closely related to the reported transfers of capital funds between the United States and foreign centers.

Only during the closing months of the year was there an absence of close correlation between reported gold movements and earmarking operations, on the one hand, and reported movements of short-term banking funds and of funds employed in securities transactions, on This circumstance was considerably influenced by the concentration of the major part of the year's merchandise export balance in the final quarter of the year. For the year as a whole, and particularly in the final quarter, the estimates of service items and the reported merchandise, gold, silver, and capital transactions were balanced by a comparatively large item, "Other transactions and residual," which include certain stabilization fund operations and other transactions not exactly reflected for balance-of-payments purposes in the reported figures, as well as possible errors and omissions in the estimated items.

Exclusive of gold, silver, and capital movements, the year's international transactions resulted in an excess of estimated dollar payments over estimated dollar receipts for the second consecutive year. Both merchandise and service transactions rose to levels during 1937 which were substantially higher than in the preceding year. As a result, however, of a gain in total receipts in 1937 from trade and service transactions (including interest and dividend items), which exceeded the increase in total payments made by this country under corresponding trade and service categories, the year's net payments on trade and service account were only $24,000,000 as compared with net payments of $153,000,000 in 1936.

Merchandise exports from the United States continued the upward trend of recent years at an accelerated rate during 1937, while the rate of increase in imports was quickened during the first half of the year and then diminished in the second half. Exports were valued at $3,345,000,000 and imports at $3,084,000,000, as compared with $2,456,000,000 and $2,423,000,000, respectively, in the preceding year. As a result of the year's rise of 36 percent in the value of exports and of 27 percent in that of imports, the total merchandise export and import trade of the United States during 1937 involved aggregate receipts and payments equal to two-thirds those of 1929 and more than twice those of 1932.

United States "exports" and "imports" of services rose substantially during 1937, although less in proportion than merchandise trade. Estimated receipts of American vessels from the carriage of United States exports, together with receipts from foreign sources of American railroads for freight transportation, amounted to $107,000,000 as compared with $68,000,000 in the preceding year. Payments to foreign vessels for the carriage of United States imports and to foreign railroads for freight services aggregated $210,000,000 as compared with $129,000,000 in 1936. These respective increases resulted largely from gains in ocean freight earnings which reflected not only the larger volume of foreign trade but also the rise in shipping rates which, in the case of vessels on time charter and on full cargo charter, fully doubled within a period of 6 months beginning with October 1936, and which continued upward until the sharp decline beginning in October 1937.

Estimated payments by United States tourists to foreigners for travel abroad during 1937 aggregated $594,000,000, as compared with $497,000,000 in 1936. This increase of $97,000,000 resulted in large part from a comparatively sharp increase in travel by residents of the United States in Canada-an increase which was reciprocated by a substantial growth in travel by Canadians in the United States. During 1937 the number of "tourist" automobiles entering Canada exceeded the total of the preceding year by nearly 500,000, thus indicating an increase in this class of visitors alone of close to 1,500,000 persons. The year's growth in expenditures by United States motor travelers in Canada was further influenced by a slight increase in average per capita expenditures. The number of travelers who entered Canada from this country by means other than motorcar in 1937 was 4,700,000, a figure considerably greater than the corresponding total for 1936.

Total expenditures resulting during 1937 from tourist traffic between the United States and Canada aggregated $382,000,000, of which $280,000,000 represented outlays by United States travelers in Canada, while $102,000,000 was expended by Canadians in this country. This form of "invisible" trade between the two principal North American countries involves a total expenditure which far exceeds that represented in the exchange of tourist accommodations between any other two countries. It is significant that in 1937 United States tourist expenditures in Canada were only about 5 percent less than in the peak year 1929, whereas total United States tourist outlays for all foreign travel in 1937 were still 28 percent below those of the peak figure of $821,000,000 reached in the same predepression year.

Although United States tourist travel in foreign countries during 1937 tended to emphasize Canada's special lure for American travelers, the year was featured by a marked growth in foreign travel generally. Departures of United States citizens for European destinations rose from approximately 169,000 in 1936 to more than 206,000 in 1937 despite unsettled political and economic conditions in certain areas. On the other hand, the troubled situation in certain important Far Eastern areas acted as a deterring influence upon United States travelers, with the result that citizen departures to Oriental ports fell slightly below those of 1936. Departures for Central American ports

in 1937 (exclusive of cruise travel) also fell slightly below those of the preceding year. Cruise travel, on the other hand, showed an appreciable increase, particularly to the West Indies. Air travel between the United States and foreign countries also continued to increase but has not yet become an important factor in total foreign expenditures by American travelers. Estimated expenditures by United States travelers in Mexico in 1937 continued their rise of the preceding year, largely as a result of the completion of the major link, extending from Juarez to Mexico City, in the Mexican section of the proposed Pan American Highway.

The increase during 1937 in payments to foreigners by United States tourists in oversea areas corresponded roughly to the rise in the number of travelers. Average steamship fares and dollar maintenance and travel costs showed no substantial changes in 1937 as compared with those of the preceding year. The growth in total tourist expenditures by American travelers from $497,000,000 in 1936 to $594,000,000 in 1937 and the estimated increase of foreign tourists' expenditures in the United States from $139,000,000 to $156,000,000 during the same period resulted in estimated net payments in 1937 by the United States on international tourist account of $438,000,000, as compared with $358,000,000 in 1936.

Noncommercial remittances to foreign countries by alien and other residents of the United States and institutional contributions were estimated at $205,000,000 in 1937 as compared with an upward revised total of $204,000,000 in 1936. Corresponding receipts by this country from foreign sources were estimated at $25,000,000 in 1937 and at $24,000,000 in the preceding year. Minor trade and service transactions (including receipts and payments by governmental agencies) involved aggregate estimated receipts of $338,000,000 and payments of $232,000,000 in 1937, as compared with corresponding estimates of $287,000,000 and $205,000,000, respectively, in 1936.

Estimated interest and dividend returns on American investments in foreign countries amounted to $608,000,000, an increase of $40,000,000 over the estimate for the preceding year. This increase applied entirely to direct investments and reflected improved industrial earnings of foreign subsidiaries and other foreign properties of American companies. Mining enterprises, particularly copper, yielded appreciably higher returns than in other recent years. Interest receipts on foreign bonds held in the United States continued the decline which has featured total interest payments by foreign borrowers since 1930. In contrast with the early years of the depression, however, defaults on interest were no longer a factor in this decline. A steady reduction, due to sinking fund and redemption purchases; continued repatriations (though in smaller volume); and conversions of outstanding issues at reduced interest rates have each by varying degrees contributed to a continued diminution in total annual interest receipts by United States bondholders. Receipts in 1937 from American short-term funds abroad were, as in other recent years, comparatively unimportant.

Payments made in this country on foreign-held investments in 1937 were estimated at $278,000,000, an increase of $40,000,000 over the estimate for 1936. This increase reflected primarily the combined effect of higher dividend rates per share paid by various companies and of further net accumulation of American common and preferred

shares by foreign investors, especially in the first quarter of the year. The increase was almost entirely accounted for by returns on foreign holdings of corporate shares, exclusive of the shares of American subsidiaries of foreign enterprises. Estimated payments by the latter, however, showed a slight increase as compared with 1936, while, owing to the absence of important changes in the total face value and interest status of foreign-held American bonds, estimated interest payments were left unchanged in 1937 at $22,000,000. In evaluating the international investment position of the United States it must be borne in mind that a substantial part of foreign-held "investments" in the United States consists of short-term banking funds (at the end of 1937 the reported total was $1,730,000,000) the yield on which is negligible.

Gold imports into the United States during 1937, amounting to $1,632,000,000, considerably exceeded gross receipts of $1,144,000,000 in 1936 and were not much less than the record inflow of $1,741,000,000 in 1935. Exports of gold were again small, but a reported net loss of gold through earmarking operations reduced the reported net inflow of gold to $1,386,000,000 in 1937, as compared with $1,030,000,000 in the preceding year.

As in other recent years, the correlation between the reported movements of gold and of capital funds was well defined in 1937, exception being made of the last quarter of the year. The net inflow of gold during the first quarter was $339,000,000, during the second quarter $651,000,000, and during the third quarter $394,000,000. The reports of the Treasury Department covering capital movements between the United States and foreign countries showed net inflows of capital amounting to $323,000,000 in January-March, to $630,000,000 in April-June, and to $351,000,000 in July-September. Thus, the inward movement both of gold and of capital funds was much greater during the second quarter and somewhat larger during the third quarter of 1937 than during the first quarter, and the respective amounts were closely comparable. In the fourth quarter of the year, however, the reported net movement of gold was virtually nil, while the outflow of capital reached large proportions and amounted to $500,000,000 for the 3 months.

Net silver imports during 1937 were valued at $83,000,000, as compared with $174,000,000 in 1936 and $336,000,000 in 1935. Total acquisitions of silver by the United States Treasury during 1937 were approximately 312,000,000 ounces, of which about 71,000,000 ounces came from domestic production. Net payments on reported gold and silver transactions during the year amounted to $1,469,000,000 as compared with $1,204,000,000 in 1936 and $2,075,000,000 in 1935.

The recorded net inflow of capital funds during 1937 aggregated slightly more than $800,000,000. The year's net inward movement of aggregate short-term banking and brokerage funds and funds employed in security transactions was somewhat smaller than in each of the 2 preceding years. This was the result not of a smaller rate of inflow during the first three quarters of the year but of an unusually heavy outward movement of short-term banking funds during the last quarter of the year which reduced outstanding short-term foreign liabilities of banks in the United States from $2,305,000,000 at the end of September to $1,730,000,000 by the end of the year. Owing to an increase during this period of $70,000,000 in the short-term foreign

« Previous Continue »

Books