J. S. Govers Price 10 cent HE UNITED STATES, just as so many other countries, is faced with a serious balance-ofpayments problem-a problem which can be remedied only by an increase in United T States imports. Much has been said in the past months and years about our "favorable" balance of trade, but few realize the bald fact that the United States has been for a long time confronted with a real balance-of-payments difficulty. In 1948 the United States exported about 13 billion dollars' worth of goods and imported about 7 billion dollars' worth. The excess of our exports over imports, this dollar gap which we have heard so much Statistics on exports and imports of goods and services from 1914 through 1948 do not show a single year in which the United States had an import surplus. The total export surplus, however, has mounted up, year by year, to a total of just over 100 billion dollars. America's ability to produce in times of emergency, particularly during the first and second world wars, has been so great that we have been able to permit vast export surpluses. That fact has been fortunate for the world and for the United States. major national importance. They have not been to our advantage as consumers-for they have reduced the supply of goods which would otherwise have been available to us for consumption. Nor have they been to our advantage as taxpayers-for they have necessarily been financed by direct taxation and government borrowings, interest on which must come from taxes. But they have been to our advantage as citizens, for we have learned that the recovery and prosperity of other countries are essential to our national security and prosperity. The question is, what are we going to do about our balance of payments in the future? The European countries must rise to the needs of the present and future. But allowing for all the progress which can be made by them and other countries, a large gap still has to be closed by increasing out imports. So, if we hope for effective action on their part, we must ask ourselves, what are the courses of action open to us? Courses of Action Open to Us In the first place, some countries will probably continue to need our assistance for some years. They will need it so badly and so urgently that we will continue to provide assistance for reasons of our own national interest as well as needs abroad. However, we must use this instrument of foreign policy carefully and within the capacity of our resources. Secondly, for many years American businessmen will find attractive opportunities for investment abroad. To the extent that there is a net outflow of private investment funds, other countries will be enabled to purchase more in the market than they sell. 2 Finally, we can increase our imports and permit other countries to pay for a greatly increased portion of our exports to them. For a variety of reasons and in a variety of ways, we have over the past years made it difficult for people to pay us for the goods that we would like to sell them. Nevertheless, the lesson in national arithmetic is beginning to sink in. We are becoming increasingly aware of the good sense and, in fact, the absolute necessity of the United States making it possible for others to pay us for what we sell them. The major emphasis must in the long run fall on the fourth and final alternative increased imports into the United States. In 1925 and in 1926 we devoted almost 6 percent of our national income to imports. In 1929 we devoted 5 percent of our national income to imports. In those years we approached a balance and at a high level of trade. If we devoted this same percentage of our current national income to the same purpose, it would mean imports of about 12 billion dollars—or almost a doubling of our present imports and a solution of our problems. In 1937 the Marshall Plan countries and their dependencies sold us goods and services amounting to 2 percent of our gross national product. In 1948 they sold us only 1.2 percent. The difference in that eighttenths of one percent is about 2 billion dollars. There have been periods, therefore, when we have come near to a real balance of trade. We all need to keep that fact in mind when people say that any large increase in imports is out of the question. During the war and postwar periods we have consumed quantities of domestic raw materials. We are 4 |