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TABLE 46.-Postwar foreign loans by Latin-American countries-Continued

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TABLE 47.-Postwar foreign credits by private British lenders

Country

Amount

Dollar

Date

Description of credit

Austria..

equivalent
in
Mil.ofdol.

6 November 1946. To finance Austrian purchase of wool from Australia or

Czechoslovakia...............

4 March 1946..

France.

United Kingdom, processed wool to be delivered by Austrian factories to United Kingdom interests for sale. For raw material imports; arranged by principal Czechoslovak banks and guaranteed by National Bank of Czechoslovakia to be renewed from year to year.

50 January 1947. For French woolen industry; revolving credit with all

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London banks participating.

For raw material imports. Exchange risks guaranteed by Bank of France.

For purchase of certain raw materials of sterling.area origin.

Cidino construction firm received amount for construction of hydroelectric plant near Costa.

1. Gift contributions:

TABLE 48.-Swedish contributions to the reconstruction of other countries

(a) Government appropriations for

[Million kronor]

help to refugees in Sweden (Sw. kronor).
relief work abroad (partly in Sw. kronor).

165

132

contributions according to the Washington Agreement of 1946 (not yet disbursed).. 125

422

(b) Private contributions: Financial aid to relief work abroad (about)..

Total (about).

2. Credits granted before or in close connection with the cessation of hostilities.

500

922

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1 Credits extended against receipts of sterling, tied up for a period to be settled at a later date. The amounts are quoted on the basis of the exchange rates prevailing in 1945.

TABLE 48.-Swedish contributions to the reconstruction of other countries-Con. 3. Credits granted during the postwar period:

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4. Reciprocal overdraft facilities within the framework of general payments agreements:

Mutual overdraft facilities

Belgium

100

Denmark..

30

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Source: Memorandum on The Long-Run Economic Outlook from the Board of Directors of Sveriges Riksbank to the King-In-Council, dated Oct. 17, 1947, pp. 14 to 16, inclusive, Stockholm, 1947.

TABLE 49.-Postwar foreign loans and advances by Switzerland

[Amounts authorized in millions of Swiss francs]

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1 Mostly credits under payments agreements, to be utilized within from 1 to 5 years; repayment terms have in general been left for later negotiation.

3 Original credit of 250,000,000 and raised August 1946.

Original credit of 50,000,000 reduced.

Credit expressed as 15,000,000 pounds sterling.

$85 percent guaranteed by the Swiss Confederation, duration 5 years.

CHAPTER VI. PROBLEM OF SERVICING THE DEBT

This chapter is limited to a discussion of the problem raised by item 17 of the proposed Senate Resolution 103-the problem of servicing the debt.

Item 17. What changes are necessary in this country's import tariffs to make possible the repayment of the loans and investments already made and contemplated by the United States and by private interests?

It is impossible to state in precise quantitative terms the effect of tariff changes on the flow of imports. Tariff reductions, by augmenting the outflow of dollars, increase the ability of foreign countries to meet interest and amortization payments on external obligations. However, the problem of servicing such obligations is not one of tariffs alone, nor should the effects of tariff changes be considered in isolation from other factors bearing on the international transactions of the United States. The most favorable conditions for debt service include not only the reduction of tariffs but related objectives of United States economic policy, notably:

1. The continuance of conditions of high employment in the United States and of normal long-term growth of the economy.

2. The recovery and expansion of European production and foreign trade.

3. The recovery of devastated areas elsewhere in the world and the development of relatively unindustrialized areas.

4. A reduction in the obstacles to the freer flow of goods and capital across national boundaries.

5. The continuing investment abroad of a small percentage of United States net savings.

There are two possible means by which foreign countries can service their debts to the United States: First, by utilizing their existing gold and dollar assets; and, second, by acquiring additional foreign exchange. The acquisition of additional dollars by the outside world. depends on the ability of foreign countries to market goods and services in this country and to attract United States capital. Individual countries can undertake measures to increase their foreign exchange earnings by stimulating exports and decreasing imports, but it is only by an over-all increase in dollar disbursements by the United States that foreign countries as a whole can increase their dollar receipts and service their external debts without sacrificing imports of goods and services from this country.

Consideration should be given, among other factors, to prospective population growth, which will add to the need for expansion of production and foreign trade in many countries and will, where excessive, hamper their efforts to achieve the necessary balance in their international payments.

176

1

PROBABLE VOLUME OF DEBT SERVICE

As of the end of 1946 American private investments in and obligations due from foreign countries, plus those due to this Government other than World War I debts, amounted to $21,260,000,000. At that time commitments had been made which when utilized will add $5,100,000,000 to that figure. During 1946 the investment income received in the United States from foreign countries amounted to $611,000,000; preliminary estimates indicate that the 1947 total was about $200,000,000 higher. Of the 1946 receipts about $21,000,000 was interest from obligations due to the Government. Receipts from the latter will increase on the basis of present commitments to a peak of about $200,000,000 in 1951-52. Receipts on private investments are particularly difficult to forecast. However, it is estimated that total investment income received in 1952 will probably be between $800,000,000 and $1,000,000,000—excluding income on any loans not yet committed as of December 1, 1947.

Existing contracts require annual repayments (amounting in 1952 to $250,000,000) of principal on the debt due this Government. To this must be added about $160,000,000 of repayments of private portfolio investments. In 1952, therefore, foreign countries should be paying to the United States as service (interest and amortization) on loans and investments about $1,200,000,000 to $1,400,000,000. Additional loans in connection with the European recovery program will add to these amounts.

CONCLUSION

If the conditions stated above as the objectives of United States economic policy are realized, it is reasonable to expect that the magnitude of our imports, tourist expenditures, and capital exports will be such as to provide enough dollars to enable the world to pay for a high level of dollar imports and to service existing and contemplated foreign investment. Under these conditions, any adjustments which foreign countries as a whole might be required to make to insure payment of interest and amortization would entail little sacrifice. However, failure to realize any of the foregoing objectives would make such expectations less reasonable.

1 Department of Commerce, Survey of Current Business, March 1947, International Transactions of the United States in 1946.

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