U 1-74. General note.

This section presents statistics on the balance of international payments and the international investment position of the United States. Separate tables show the value of U.S. direct investments in foreign countries and of foreign direct investments in the United States, both by area and industry groups. The balance of international payments shows the economic transactions between residents of the United States and those of all other areas of the world during a stated time period. The international investment position indicates the value of U.S. investments abroad and of foreign investments in the United States at specified points of time. The change in the international investment position of the United States results partly from the movement of foreign and U.S. capital, as presented in the balance of international payments, and partly from other factors, such as changes in the valuation of assets or liabilities, including changes in the market value of securities, defaults, expropriations, writeoffs, and reinvested earnings of subsidiaries operating abroad and of foreign subsidiaries operating in the United States. U.S. direct investments in foreign countries include all foreign enterprises whose voting stock is owned to the extent of at least 25 percent by U.S. organizations or individuals, or in the management of which Americans have an important voice. In addition, they include unincorporated foreign branches or other direct foreign operations of U.S. interests, including mining claims, oil concessions, and other property held for business purposes such as real estate. Similarly, foreign direct investments in the United States cover U.S. business enterprises, including real estate investments, in which there was a foreign interest or ownership of 25 percent or more.

In all the series of this section, international organizations, such as the International Monetary Fund, the International Bank for Reconstruction and Development, and the United Nations, though located within the United States, are considered extra-territorial. Consequently, transactions between the United States and these organizations are considered international transactions of the United States, while transactions between them and foreign countries do not enter the balance of payments of the United States. U.S. holdings of their obligations and U.S. liabilities to them are part of the U.S. investment position.

U 1-25. Balance of international payments, 1790-1970.

Source: U.S. Office of Business Economics, 1790-1918 (except series U 24, 1874-1900), unpublished data; series U 24, 1874-1900, U.S. Department of the Treasury, Annual Report, Director of the Mint, 1921, p. 130. U.S. Bureau of Economic Analysis (formerly Office of Business Economics), 1919-1945, Balance of Payments Statistical Supplement, 1958, pp. 10–13; 1946–1970, Survey oj Current Business, June 1970, p. 34; October 1972, pp. 26-27; June 1972, pp. 26 and 30. Basically the figures for 1790-1918 are from publications by private authors; therefore, they are unofficial figures. However, the figures, as shown by these authors, have been rearranged and adjusted, and in some cases supplemented, for this volume by the former U.S. Office of Business Economics (OBE). The reclassified figures fit into the concepts and framework currently used in the official balance of payments statements prepared by OBE.

The original figures are from the following private publications:

1790-1860, Douglass C. North, "The United States Balance of Payments, 1790-1860," Studies in Income and Wealth, Princeton University Press, vol. 24, 1960; 1861-1900, Matthew Simon, "The United States Balance of Payments, 1861-1900," Studies in Income and Wealth, Princeton University Press, vol. 24, 1960; and 1901-1918 (with the exception of exports and imports of merchandise trade and silver), Paul D. Dickens, "The Transitional Period of American International Financing, 1897-1914" (unpublished doctoral dissertation, George Washington University, 1933), and C. J. Bullock, John H. Williams, and Rufus S. Tucker, "The Balance of Trade of the United States," Review of Economic Statistics, July 1919. Data on merchandise trade and silver for 1901-1918 were taken from Department of Commerce, Monthly Summary of Foreign Commerce, various issues.

The estimates for 1901-1918 were revised primarily to make them consistent with, and to link them to, data prepared for subsequent years. The revised estimates were published by Raymond W. Goldsmith in Study of Savings in the United States, Princeton University Press, 1956, vol. 1, pp. 1078, 1080, 1081, 1084, and 1086.

The Department of Commerce began its series in 1922, later extending the data backward to cover 1919-1921. Data for quarterly U.S. international transactions, total and with individual regions of the rest of the world, are available currently in the March, June, September, and December issues of the Survey of Current Business. The balance of payments statement reflects all the exchanges of goods, services, gold, and capital claims between residents of the United States and residents of all other areas of the world. Since 1919, residents of the United States comprise residents of conterminous United States, Alaska, Hawaii, Puerto Rico, American Samoa, and Virgin Islands. Beginning 1940, residents of the Panama Canal Zone are also included. As noted above, international organizations are not regarded as residents of the United States.

Transactions entering into the balance of payments are divided into four categories-goods and services, unilateral transfers, capital movements, and transactions in U.S. official reserve assets. The balance of payments statement is built on a double entry system, whereby, in principle, every transaction is recorded both as a debit and a credit. Debits represent increases in assets or decreases in liabilities, and credits represent decreases in assets or increases in liabilities. Thus, an export of merchandise in return for a check drawn on a foreign account in a bank in this country results in a credit for the export (a reduction in an asset) and a debit for the reduction in foreign-held bank deposits (a reduction in a liability). Unilateral transfers to foreign countries (payments) are debits (as are expense items in accounting), and unilateral transfers from foreign countries (receipts) are credits (as are income items in accounting). While all transactions have a debit and credit phase which are necessarily equal, both sides are not estimated simultaneously nor from the same sources; hence, the possibility of error. The resulting discrepancy, referred to as "errors and omissions," series U 25, is given a plus or minus sign, depending upon which is necessary to make the accounts balance.

The procedure generally followed by North and Simon in their studies was to estimate receipts and payments on account of merchandise trade, transportation, travel, interest, dividends, and remittances. The authors then assumed that the balance indicated net flows of U.S. and foreign capital. For 1790-1900, series U 18-23

represents this balance which, of course, includes any errors and omissions in the estimates.

Data on exports and imports of merchandise used in the study by North are reported to include gold and silver prior to 1821 (see Statistical Abstract of the United States, 1957, p. 890). A separate estimate, however, was made by North for net movements of gold, because he concluded on the basis of his research that specie movements were in fact not included in the merchandise trade figures prior to 1821. (See "The United States Balance of Payments, 1790–1860,” pp. 24-25.) This estimate is included in series U 2 and U 9. Although the annual amounts are small, varying from net exports of $1 million to $2.5 million to net imports of $1 million to $4 million, the residual item, or net movement of capital, may be in error by the same amount.

North indicates that the reliability of the data on exports prior to 1820 is doubtful and that data on imports are incomplete. The paucity of information also made the estimates for other transactions for this period considerably less satisfactory than for subsequent years. Consequently, North suggests that 5-year averages may be more reliable than the annual data. Such averages are included in his study.

For the classification and contents of series U 1-25, 1900-1918, see Raymond W. Goldsmith, cited above. Three transactions have been entered which did not appear in this study. See text below for series U 17 and U 18.

For methods of estimating later data, see Balance of Payments of the United States, 1949–1951, a supplement to the Survey of Current Business, Office of Business Economics. Continued changes and improvements in the methods of collecting data have been made and the figures have become progressively more reliable over time. For an evaluation of data for recent years, see Report of the Review Committee for Balance of Payments Statistics to the Bureau of the Budget, The Balance of Payments Statistics of the United States: A Review and Appraisal, April 1965.

U 2 and U 9, merchandise. The estimates for ship sales for 1790-1900 are included in exports, series U 2. For 1790-1819, the net export or import of specie is included in series U 2 or U 9, respectively. The gross movements of specie were not available. For 1820-1860, exports of specie are included in series U 2 and imports in series U 9. Exports and imports of gold for 1861-1873, of nonmonetary gold for 1874-1900, and of silver for 1861-1900 are included in series U 2 and U 9, respectively.

The data for 1901-1918 include merchandise trade proper, silver, and nonmonetary gold. The basic data on merchandise trade for 1919-1970 are the official trade statistics published until 1965 in Foreign Commerce and Navigation and since then in the foreign trade reports of the Bureau of the Census. For 1919-1970, adjustments in both exports and imports have been made to correct for known overvaluation or undervaluation, to exclude noncommercial items, to include an estimate for unrecorded trade, and to adjust for certain differences in territorial coverage, e.g., to exclude the trade with the Panama Canal Zone, beginning with 1940. For World War II and early postwar years, data on Government purchases were substituted for certain import data. For Government-financed transfers of merchandise, the figures based on fiscal records were used instead of the figures appearing in the recorded export statistics. For the years after World War I and World War II, sales and other transfers of surplus property located abroad were added to recorded export statistics. Prior to 1946, series U 2 also includes the transfers with or without compensation to allied countries of military equipment, including that purchased abroad under the Mutual Defense Assistance Program. A small amount of services connected with these transfers was also included. Series U 2 and U 9 include nonmonetary movements of gold. For the treatment of gold, see series U 24 below.

U 3 and U 10, transportation. For 1790-1819, series U 3 represents gross earnings on freight carried in U.S. ships. Some adjustment was made to eliminate earnings from ships carrying U.S. imports.

For 1820-1860, series U 3 includes earnings by U.S. ships from carrying U.S. exports and from carrying freight between foreign ports. It also includes American port charges paid by foreign ships. Transportation payments, series U 10, consist of freight payments to foreign ships for carrying U.S. imports, and expenditures of American ships in foreign ports. Port expenditures and receipts are estimated as a percentage of freight earnings by American and foreign ships, respectively. (Fare payments to American ships by immigrants are included in the estimate for immigrant funds. See discussion of series U 16, private unilateral transactions. For fare payments of tourists, see discussion of travel, series U 4 and U 11.) For 1861-1900, series U 3 includes ocean freight earnings from carrying U.S. exports and from carrying freight between foreign ports, and port expenditures in the United States of the foreign merchant marine and of passenger steamships. The estimates for the years 1871-1900 also include earnings from carrying overland freight. Payments for transportation, series U 10, includes ocean freight payments on U.S. imports, and expenditures in foreign ports by the U.S. merchant marine. Passenger fares are included in the travel account (series U 4 and U 11). The data for 1900-1918 include receipts and payments on account of ocean freight, and port charges. For 1916-1918, payments for charter hire were added.

For 1919-1970, the transportation category includes international freight, fares and shipboard expenses of travelers, revenues and expenditures resulting from the charter of vessels and the rental of freight cars, and the expenses of U.S. transportation companies abroad and foreign transportation companies in the United States. The data cover air and surface transportation.

U 4 and U 11, travel. For 1790-1819, no estimate was made for international travel expenditures. For 1820-1860, series U 4 includes tourist expenditures in the United States and their fare payments to American ships; series U 11 represents American tourist expenditures abroad. North assumed that American tourists going abroad and, for the most part, foreigners coming to the United States traveled on American ships during this period. The method employed in the source study for estimating tourism precludes the transfer of fare payments to the transportation account. For 1861-1900, series U 4 includes outlays of foreign travelers in the United States. It was assumed that alien travelers came to the United States on foreign lines and, therefore, no estimate was made for receipt of fares. Series U 11 includes payments abroad by American tourists for maintenance and for ocean fares. Simon assumed that the bulk of the travel during 1861-1900 was on foreign ships. The outlays for procurement of sundry items and luxury consumption goods were not included in his estimate for expenditures abroad by American tourists.

The data for 1900-1918 include fares paid to U.S. ships by foreign tourists and to foreign ships by U.S. tourists.

For 1919-1970, all expenditures made in the United States by foreign residents, except those of diplomats and other official personnel stationed here, are included in the travel receipts. Expenditures made in foreign countries by U.S. travelers for food, lodging, amusements, gifts, and other personal purchases constitute travel payments. Expenditures for transportation within or between foreign countries when purchased abroad are, in general, included as travel expenditures. However, passenger fares for overseas transportation to the ultimate destination (even if the ticket permits stopovers enroute) when paid to foreign carriers by U.S. residents, and when paid to U.S. carriers by foreign residents, are included in the transportation account.

U 5, U 6, and U 13, income on investments. For 1790-1900, series U 13 represents net payments of income on investments by the United States. The income was computed by applying an assumed yield rate to the net indebtedness of the United States.

For 1900-1918, separate estimates were made for receipts and payments. Series U 5 for 1915-1918 includes income on private and Government war loans. See Goldsmith, cited above, p. 1078.

For 1919-1970, income includes all interest, dividends, and branch

profits effectively paid or credited during the period, after payment of all taxes in the country in which the payer of income resides.

Private income, series U 5, for 1919-1970 includes interest, dividends, and branch profits from direct investments, and interest and dividends received from holdings of foreign bonds by residents in the United States, from stocks issued by foreign corporations which are not U.S. direct investments, from loans by banks and other financial or commercial organizations, from miscellaneous assets such as commercial real estate, insurance policies, commercial claims of various kinds, trusts and estates, and mortgages. Reinvested earnings, or the parent company's equity in the undistributed earnings on common stock of foreign subsidiary companies, are not included except for 1919-1929. Reinvested earnings are, however, regularly tabulated and used for computing changes in the international investment position of the United States.

Government income, series U 6, for 1919-1970 includes interest received by the U.S. Government on long- and short-term loans and other investments.

Income payments, series U 13, for 1919-1970 include payments of interest, dividends, and branch profits by foreign direct investment companies in the United States, interest and dividend payments to foreign holders of other American bonds and stocks (including U.S. Government securities), and payments of income on various miscellaneous assets such as estates and trusts.

U 7 and U 14, other transactions. Marine insurance and brokers' commissions constitute series U 14 for 1790-1819. No estimate was made for these transactions between 1820 and 1860. For 18611900, series U 7 consists of receipts on marine insurance; series U 14 comprises payments for marine insurance and net payments for brokers' commissions.

For 1900-1918, no estimates were made.

For 1919-1970, the coverage of miscellaneous service items has expanded and now includes receipts and payments from insurance transactions, communications, management services, motion picture and other royalties; receipts from fees of American engineering, construction, and consulting firms, from foreign contracts, from foreign governments in the United States, and expenditures of U.S. Government agencies abroad, except expenditures by the Department of Defense. The latter is included in series U 12, while receipts from abroad by the military agencies are included in series U 2.

U 12, military expenditures. This item includes direct outlays by the military agencies in dollars and in foreign currencies, as well as expenditures in the foreign economies by troops, civilian personnel of the military agencies, and post exchanges. It does not include expenditures of deutsche marks received from the Federal Republic of Germany or of yen received from Japan for the support of Allied and U.S. Forces stationed in the respective countries. Offshore procurement under military assistance programs and the purchase of goods and services to be transferred to other foreign countries under aid programs are included in the expenditures by military agencies.

U 16–17, unilateral transfers, net. No estimate was made prior to 1820 for series U 16. For 1820-1860, series U 16 represents the excess of funds brought into the United States by immigrants and their fare payments to American shipping companies over the amounts remitted abroad after their arrival in this country. For 18611916, series U 16 consists of the immigrant remittances and funds carried by immigrants into the country (+) and out (-). The estimate for immigrant remittances includes remittances through banks and an estimate for outlays by U.S. residents for prepayment of passage for friends and relatives planning to emigrate to the United States. For 1917 and subsequent years, remittances in cash and kind by religious, educational, and charitable institutions are also included. For series U 17, the entries of $0.6 million for 1794-1796 represent annual payments to the Barbary pirates. The payment of $11.2 million in 1803 was to France for the purchase of Louisiana Territory. The United States acquired sovereignty over this territory in 1803 and issued bonds for the amount of the purchase. These

bonds carried an interest rate of 6 percent per year and were redeemed between 1812-1823. The interest during this period amounted to $8.2 million, $5.6 million of which was paid in the first 10 years. (See E. M. Douglas, Boundaries, Areas, Geographic Centers and Altitudes of the United States and the Several States, Washington, D.C., 1930.) Presumably the interest is included in the estimate for income payments, series U 13. The entries of $5.5 million for 1836-1838 represent receipts by the U.S. Government from France on behalf of American citizens in satisfaction of claims for indemnities arising from the Napoleonic wars. (See J. T. Adams, ed., Dictionary of American History, Scribner's, New York, 1940, vol. II, p. 348.) Interest of $0.5 million ($0.3, $0.1, and $0.1 million for 1836-1838, respectively) is included. In 1848, at the end of the Mexican War, the United States and Mexico signed the treaty of GuadelupeHidalgo which gave to the United States the present States of Arizona, New Mexico, California, Nevada, Utah, and Colorado west of the Rockies. The payment by the United States of $15 million for this territory, plus interest of $1.4 million, is represented by the entries for 1849-1852. These entries were referred to in the study, "United States Balance of Payments, 1790-1860," as indemnity payments and entered in the capital account. The entries for 1854-1856, aggregating $10 million, represent the Gadsden purchase. Russia, in March 1867, agreed to sell Alaska to the United States for $7.2 million in gold. The United States took possession in fiscal year 1868, but payment was not made until fiscal year 1869. During the Civil War, Great Britain had sold to the Confederate States ships which were used as privateers to sink the Union ships. An international tribunal in 1873 held Great Britain liable to the extent of $15.5 million. Payment was made to the United States in 1873, as indemnity on behalf of its citizens. The treaty of peace with Spain in 1898, as a result of which the Philippines, Guam, and Puerto Rico were ceded to the United States, stipulated a payment to Spain of $20 million.

The figures for series U 17 include two transactions which are not included in Goldsmith's Study of Saving . . ., mentioned earlier for the 1900-1918 period. In 1904, the U.S. Government paid $10 million to the Republic of Panama for lease of the Panama Canal, and in 1917, the United States bought the Virgin Islands from Denmark for $25 million. These transactions appear in series U 17. For 1919-1970, series U 17 consists of Government transfers of goods, services, or cash, in both dollars and foreign currencies, for which payment by the foreign country has not been made, is not expected, or has not been specified, less reverse lend-lease, counterpart funds on certain foreign-aid programs, and other receipts. Series U 17 also includes Government payments of pensions, receipts or payments for idemnities, intangible rights, or other considerations. U 18–23, U.S. capital flows, net, and foreign capital flows, net. For 1790-1900, the data for series U 18 and U 23 represent the net flow of U.S. and foreign capital, and were estimated as residuals, to balance the other items in the balance of payments. Consequently, they reflect errors and omissions in the estimates of the other items. For some of these years, particularly 1861-1900, the data shown here differ from those in the source studies because of adjustments in some of the other series. For 1900-1918, see Goldsmith, cited above, pp. 1080-1081.

In 1904, the figure for series U 18 includes the payment by the U.S. Government of $40 million for the original Panama Canal Company. This transaction was not included in Goldsmith's Study of Saving.

For 1919-1970, the data for series U 18-21 represent changes in assets or in investments of the United States abroad. The long-term transactions represent shifts in capital claims of indefinite maturity or of a stated original maturity of more than one year from the date of issuance. Short-term transactions represent changes in claims on foreigners with a maturity of one year or less. For 1919-1970, series U 18 (long-term) includes disbursements of foreign loans, net of repayments, by all U.S. Government agencies, whether made in dollars or in foreign currencies. Also included are movements of

capital related to the operation by the U.S. Government of productive facilities abroad, and U.S. capital contributions to international organizations such as the International Monetary Fund, the International Bank for Reconstruction and Development, and the International Finance Corporation. Loan operations between these organizations and foreign countries are not included since such organizations are regarded as foreign entities in the U.S. balance of payments. Loans made by private banks and guaranteed by the Export-Import Bank are included in series U 20. Real property purchased by the Government for administrative purposes is included in series U 14, other transactions, while all expenditures of religious, educational, and charitable institutions are included in series U 16, unilateral transfers, even if they involve the purchase of fixed assets. For 1919-1970, series U 18 (short-term) includes changes in the U.S. Government short-term claims arising from holdings of foreign currencies (received as a counterpart to foreign grants or through sales of agricultural and other surplus products), deposits abroad, and various advances.

For 1919-1970, the shifts in capital claims in series U 19 and U 20 refer not only to securities (stocks, bonds, mortgages, etc.) but also to real property (farms, branch factories, and real estate). Series U 19 consists of net purchases of stocks in, and of changes in, net claims by U.S. parent companies against foreign incorporated companies in the management of which U.S. companies have an important voice, and net changes in the equity in foreign branches of U.S. companies. Series U 20, other private long-term capital movements, consists of U.S. purchases of newly issued foreign securities, amortizations of foreign bonds, net transactions in outstanding foreign securities, and net changes in long-term claims reported by U.S. banks (including loans made by private banks and guaranteed by the Export-Import Bank) and other commercial enterprises.

Series U 21 includes changes in bank deposits, brokerage and commercial balances, and uncollected bills.

For 1919-1970, the data for series U 22-23 represent changes in liabilities of the United States to residents of foreign countries, or changes in assets held in the United States by residents of foreign countries. Series U 22 represents shifts in foreign claims on the United States with an original maturity of more than one year, including changes in the investments of foreign corporations in their branches and subsidiaries in the United States, and transactions by foreigners in the U.S. public debt obligations. Series U 23 represents shifts in the liabilities of the U.S. Government and of private individuals and institutions with an original maturity of one year or less. Foreign short-term claims on the U.S. Government include deposits with the Treasury and other Government agencies and changes in foreign holdings of U.S. Government short-term obligations. Foreign short-term claims on private Americans include foreign deposits in U.S. banks, changes in holdings of privately issued short-term securities, and other commercial liabilities. The data also include an estimate of movements of U.S. currency and coins.

U 24, transactions in U.S. official reserve assets, net. This entry measures net changes in the official reserve assets of the United States, which consist of U.S. holdings of monetary gold, special drawing rights (SDR), convertible foreign currencies, and gold tranche position in the International Monetary Fund (IMF).

Monetary gold includes the U.S. gold stock held by the U.S. Treasury and the Exchange Stabilization Fund. (On December 9, 1974, Treasury acquired all gold held by the Exchange Stabilization Fund.) The transactions also included gold sold to the United States by the IMF with the right to repurchase, and gold deposited by the IMF to mitigate the impact on the U.S. gold stock of foreign purchases for gold subscription to the IMF under quota increases. Special drawing rights are international reserve assets created through amendments to the Articles of Agreement of the IMF to provide orderly and adequate growth in international liquidity. Thus far (1974) there have been three annual allocations to the United States and other participating nations made on January 1, of 1970, 1971, and 1972. U.S. holdings of special drawing rights in the Special

Drawing Account in the IMF include allocations and acquisitions, net of use. Convertible foreign currencies represent Treasury and Federal Reserve System holdings of convertible foreign currencies in U.S. dollar equivalents. The U.S. gold tranche position in the IMF represents the amount that the United States could purchase in foreign currencies automatically if needed; it is equivalent to the U.S. quota in the IMF minus the Fund's holdings of U.S. dollars.

U 25, errors and omissions. As indicated above, this is the residual item which has been given the sign (+ or−) necessary to make the statement balance. It compensates for missing data, possible errors in the estimates, as well as for seasonal and other leads and lags in the reporting of the debt and credit phases of transactions which are compensating over a period of time.

U 26-39. International investment position of the United States, 1843-1970.

Source: 1843-1914, Cleona Lewis, America's Stake in International Investments, The Brookings Institution, Washington, D.C., 1938 (copyright). 1919–1945, U.S. Office of Business Economics, various publications. 1946-1970, U.S. Bureau of Economic Analysis (formerly Office of Business Economics), Balance of Payments Statistical Supplement, Revised Edition; and Survey of Current Business, August 1963 and 1964, September 1965 and 1966, and October 19681972.

The estimates for 1919-1945 are based on the following publications: (1) The United States in the World Economy, Office of Business Economics, Economic Series No. 23, Washington, D.C., 1943, p. 123; (2) The Balance of International Payments of the United States in 1931, Bureau of Foreign and Domestic Commerce, Trade Information Bulletin No. 803, Washington, D.C., 1932, pp. 44, 48, and 62; (3) Foreign Investments in the United States, Bureau of Foreign and Domestic Commerce, Washington, D.C., 1937, p. 5; (4) Cleona Lewis (see source above for 1843-1914); (5) International Transactions of the United States During the War 1940-45 (as revised), Office of Business Economics, Economic Series No. 65, 1948, p. 110.

In America's Stake in International Investments, direct investments are based on book value wherever possible; portfolio investments are calculated at par value for bonds and preferred stocks, and at market value for common stocks. Similar practices were followed in the estimates of the Department of Commerce for 1930, 1931, and 1935; miscellaneous portfolio investments for the same years were calculated at market values wherever possible. For 1940, 1945, and 1946-1970, the values of bonds and preferred stocks as well as of common stocks were calculated at market prices wherever possible. The estimates for these series prior to 1919 were prepared by compilers who used different valuation methods and whose data varied in completeness. While the estimates are therefore not homogeneous, they do present rough indications of the magnitudes involved.

U 40. International investment position of the United States (net liabilities), 1789-1900.

Source: 1789-1860, Douglass C. North, "The United States Balance of Payments, 1789-1860," cited in text for series U 1-25; and 1861-1900, Matthew Simon, "The United States Balance of Payments, 1861-1900," also cited in text for series U 1-25. (Copyright.)

In the source studies, a net liability of $60 million was estimated for 1789. For the following years, the changes were computed by adding the annual net international flow of capital which is the balancing item, series U 18-23, for exports and imports of goods, services, and unilateral transactions. For certain years, adjustments were made for defaults. Differences between the accumulating "net indebtedness" in the source studies and the data in series U 40 are due to adjustments incorporated in series U 1-25 as explained in the text for those series.

U 41-46. Value of direct investment in foreign countries, by area and industry groups, 1929–1970.

Source: See source for series U 26-39.

See also general note for series U 1–74, and text for series U 18–23.

U 47-74. Value of foreign direct investment in the United States, by area and industry, 1937-1970.

Source: U.S. Office of Business Economics, 1937-1961, Foreign Business Investments in the United States, 1962; 1962-1970, Survey of Current Business, various issues (usually September or October). The basic data for these series were derived from reports filed with the Department of Commerce by enterprises in the United States in which there was a foreign interest of 25 percent or more. Reports were required by law under section 8 of the Bretton Woods Agreements Act (59 Stat. 515, 22 U.S.C. 286f). Forms and instructions were mailed directly to lists of companies developed from tax records, news reports, previous census studies, and records of the Office of Business Economics.

In general, a report was required for every U.S. business enterprise, including real estate investments, in which a foreign person or organization owned 25 percent or more of the voting stock, and for similar interests in noncorporate enterprises. A report was required both when the 25 percent foreign interest was direct in a U.S. primary organization or was indirect in a subsidiary, called a secondary organization.

There were certain exemptions from filing a report, as follows: (a) If the value of total assets was less than $50,000, a report was required only for information identifying the reporter; (b) reports were not required from religious bodies, charitable organizations, or other nonprofit organizations in the United States; (c) reports were not required in connection with real or personal property acquired for personal use or occupancy.

The coverage is believed to be quite complete for substantial industrial investments. However, there are probably many small trading organizations and holdings of real estate not covered. extent of these investments is not believed to be significant.

The

It should be noted that this survey does not cover portfolio foreign holdings of U.S. corporate securities, or other miscellaneous investments here.

Direct foreign investments in the United States included the following U.S. business enterprises for which reports were required: (1) A U.S. corporation in which 25 percent or more of the voting stock was owned directly or indirectly by a foreign person or organization; (2) branches of foreign corporations resident in the United States; (3) partnerships and proprietorships resident in the United States in which 25 percent or more ownership was held by a foreign person or organization; (4) U.S. enterprises held as part of an estate or trust created under the laws of the United States in which foreign beneficial owners held an interest of 25 percent or more; (5) real estate and other real property, including leaseholds, acquired for commercial purposes, in which an interest of 25 percent or more was held by a foreign person or organization.

These series cover the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Panama Canal Zone, and outlying areas of the United States.

Each reporter or foreign-owned U.S. company was classified by the country of the foreign parent organization. Secondary reporters or subsidiaries of the primary organization were given the same country classification as the primary.

The major areas for classification were Canada, United Kingdom, other Western Europe, Latin American Republics, Asia, Africa, and Australia. The investment was generally quite small for countries in Asia, Africa, or Latin America.

The Standard Industrial Classification (SIC) issued by the then Bureau of the Budget was the basic guide used for classifying reporters by industry. However, certain departures were made in

connection with grouping certain industries into major divisions. This change in grouping consisted, for the most part, in shifting certain industries to major divisions on the basis of their relationship or integration of operations. For example, reporters engaged in petroleum production and others engaged in petroleum refining were classified under petroleum as a major industrial division. The SIC had no such classification and production is included under mining (not shown separately here) and refining under manufacturing. Similarly, other integrated operations of oil companies were included under petroleum.

Frequently a reporter was engaged in more than one business activity, especially in those cases where the report furnished was a consolidation of several companies in different lines of business. Such a report was classified according to the basic activity involved. Reporters who were primarily holding companies of U.S. operating companies were classified according to the industry of the operating companies.

U 75-186. U.S. Government foreign grants and credits, by country, 1945-1970.

Source: U.S. Bureau of Economic Analysis, unpublished summary of data published in more detail in "Foreign Aid by the United States Government, 1940-1951," a 1952 supplement to the Survey of Current Business, and in the periodic report, Foreign Grants and Credits by the United States Government.

The following text was excerpted from Annual Report of the Bretton Woods Agreement Act (Communication from the Chairman, National Advisory Council on International Monetary and Financial Policies), 93d Congress, 1st session, House Doc. No. 93-34, pp. 120-122. These series were compiled by the Bureau of Economic Analysis from information made available by agencies operating the grant, credit, and other assistance programs, and include some estimates for transactions not yet recorded on the operating agencies' books. Items based on estimates have been adjusted or qualified on the basis of information received to the date of preparation of these series, but in some instances are subject to future adjustments.

The data on credits are comparable, with minor exceptions, to those appearing in Foreign Credits by the United States Government, a semiannual publication of the Department of the Treasury, in which a detailed enumeration of every active foreign credit of the U.S. Government, showing its current status, is presented.

The data are divided into three categories-grants, credits, and other assistance through net accumulation of foreign currency claims under programs for the sale of agricultural commodities. The Government's capital investments in, or contributions to, the international financial institutions constitute an additional measure taken by this Government to promote foreign economic recovery and development. Payments to these institutions do not result in immediate equivalent aid to foreign countries. Use of available dollar funds is largely determined by the managements of the institutions, in some instances subject to certain controls which can be exercised by the U.S. Government. Changes in the procedures for disbursing the U.S. Government contributions, initiated in 1965, have retarded such actual Government payments to agree more closely with the actual disbursement of assistance by the international institution to the foreign country.

Grants are transfers for which no payment is expected, or which at most involve an obligation on the part of the receiver to extend aid to the United States or other countries to achieve a common objective. Credits are loan disbursements or transfers under other agreements which give rise to specific obligations to repay, over a period of years, usually with interest. Other assistance represents the transfer of U.S. farm products in exchange for foreign currencies (plus-since the enactment of Public Law 87-128-principal and interest collections in foreign currencies for credits extended under the farm products sales program) less the Government's disbursements of the currencies as grants, credits, or for purchases. The net acquisition of currencies