Gold Stock and the Balance of Payments

October 17, 1962

Report Outline
Drive to Reinforce Confidence in Dollar
Gold Reserve and U.S. Monetary Policy
Plans for Increasing Monetary Liquidity
Special Focus

Drive to Reinforce Confidence in Dollar

Confidence in the American dollar, at a low ebb a year ago, has been increasing steadily in recent months. President Kennedy and Treasury Department officials have stated firmly and repeatedly that the dollar will not be devalued, and their assurances have been reinforced by a substantial reduction of the deficit this country has been running in its international accounts. No gold left the country in the four weeks ended Oct. 10. However, the gold stock of the United States has declined by $822 million so far this year—an amount almost equal to the total of $877 million for the entire year 1961. To guard against renewal of the outflow of gold and further buttress the dollar, monetary and fiscal authorities are making all possible efforts to wipe out the balance of payments deficit without at the same time unleashing deflationary pressures that might bring on a new recession.

Indications of Increased Confidence in Dollar

The latest annual meeting of the governors of the International Monetary Fund and the International Bank for Reconstruction and Development (World Bank) afforded striking evidence of faith in the dollar. Per Jacobsson, managing director of I.M.F., had asserted on Sept. 11, six days before the meeting opened in Washington, that Americans “ought to have great confidence in the dollar and recognize it, as other countries do, as the main currency of the world.” He added: “I think Americans ought to begin to regard these outflows of gold with equanimity.”

Jacobsson and other I.M.F. officials noted that the dollar had remained stable despite last spring's stock market slump and steel price controversy. It was pointed out also that wage increases in Western Europe since 1960—25 per cent in West Germany, 19 per cent in France, and 9 per cent in Great Britain, as compared with only 5 per cent in the United States—had far exceeded productivity increases. This inflationary trend in Europe promises to make it easier for American exporters to compete in foreign markets and harder for European exporters to compete in United States markets, thus aiding American efforts to eliminate the payments deficit.

ISSUE TRACKER for Related Reports
U.S. Dollar and Inflation
Jul. 19, 2019  The Future of Cash
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
International Finance