Dollar Shortage

August 10, 1949

Report Outline
The Dollar Crisis and European Recovery
Postwar Measures to Relieve Dollar Deficit
Attacks on Current Policies; Alternative Remedies
Special Focus

The Dollar Crisis and European Recovery

The widened gap between imports and exports in Western Europe's trade with the Western Hemisphere and the drop of $260 million in Britain's gold and dollar reserves during the second quarter of 1949 are forcing American and European governments to review again the postwar tangle in international trade. A sterling conference held by finance ministers of the British Commonwealth in London in July resulted in a decision to attempt reduction of imports from the dollar area by 25 per cent. The Organization for European Economic Cooperation, meeting this month in Paris, is weighing a British request for a substantial increase in Marshall Plan aid. Great Britain, Canada, and the United States will hold cabinet level conferences in Washington early in September in preparation for the Sept. 13 meeting of directors of the International Monetary Fund.

The year 1948 was “in all respects a year of remarkable progress,” in the opinion of the Economic Commission for Europe. Considerable gains in industrial and agricultural production throughout Western Europe were accompanied by a 30 per cent increase in the volume of overseas exports and a seven per cent reduction in imports. The United Kingdom even began to show a small export surplus in its balance of payments. Had the rate of growth of exports from Europe as a whole been maintained (assuming the prices and level of imports of 1948), E. C. E. estimated that the value of exports would equal the value of imports by the end of 1950.

In the first quarter of 1949, however, European exports to the United States and Canada fell off 12 per cent, while European imports from North America rose 10 per cent. This meant an increase in the quarterly deficit of the ten major exporting countries of Western Europe in their trade with the United States and Canada from $794 million in the last three months of 1948 to $949 million in the first three months of 1949. Increased production in Europe was more than offset by a decline in American demand for imports, due to the general decrease in economic activity. Preliminary reports indicate that Europe's trade difficulties were aggravated during the April-June quarter of this year.

ISSUE TRACKER for Related Reports
U.S. Dollar and Inflation
Oct. 2008  The Troubled Dollar
Feb. 13, 1998  Deflation Fears
Mar. 13, 1987  Dollar Diplomacy
Oct. 14, 1983  Strong Dollar's Return
Jul. 11, 1980  Coping with Inflation
May 16, 1980  Measuring Inflation
Dec. 07, 1979  Federal Reserve's Inflation Fight
Jun. 09, 1978  Dollar Problems Abroad
Sep. 20, 1974  Inflation and Job Security
Feb. 26, 1969  Money Supply in Inflation
Feb. 14, 1968  Gold Policies and Production
Dec. 15, 1965  Anti-Inflation Policies in America and Britain
Mar. 15, 1965  World Monetary Reform
Dec. 02, 1964  Silver and the Coin Shortage
Oct. 17, 1962  Gold Stock and the Balance of Payments
Dec. 15, 1960  Gold and the Dollar
Oct. 10, 1956  Old-Age Annuities in Time of Inflation
Jan. 17, 1951  Credit Control in Inflation
Aug. 10, 1949  Dollar Shortage
Oct. 04, 1943  Stabilization of Exchanges
Jan. 21, 1941  Safeguards Against Monetary Inflation
Mar. 25, 1940  United States Gold in International Relations
Dec. 14, 1937  Four Years of the Silver Program
Oct. 04, 1934  Inflation in Europe and the United States
Jan. 30, 1934  Dollar Depreciation and Devaluation
Sep. 05, 1933  Stabilization of the Dollar
May 29, 1933  Invalidation of the Gold Clause
Mar. 15, 1933  Inflation of the Currency
Oct. 25, 1924  Bank Rate and Credit Control Federal Reserve Policies and the Defaltion Issue
BROWSE RELATED TOPICS:
Currency
International Finance