This chart reflects the sharp escalation in world food and crude oil prices which occurred in 1973. Between 1963 and the fourth quarter of 1972 world food and crude oil prices remained fairly stable. There was even a decline in crude oil prices in 1971. Beginning in the first quarter of 1973, both indexes began to take off. Higher food prices were the result of poor crops in the U.S.S.R., Australia, Argentina and India. There was also a reduced peanut crop in Africa, failure of the Peruvian anchovy catch and a rice shortfall throughout Asia. The United States sold the Soviet Union 18 million tons of grain out of a total purchase by the U.S.S.R. of 28 million tons.

In contrast to food prices, world prices in petroleum escalated because of man-made causes. By joint action the OPEC nations increased crude prices by between 300 and 400 percent within 1 year. The average price for Persian Gulf crude increased from $2.59 in January, 1973 to $11.65 in January, 1974.

On a worldwide basis our trade improved dramatically in 1973 reaching a surplus of $800 million. Our current account which includes trade services and government transfers showed a surplus of $2.7 billion in 1973 as compared to $8.4 billion in 1972. Our overall balance of payments, excluding short-term capital, showed a surplus of $2 billion in 1973 compared with a deficit of $9.8 billion in 1972. Our relations with the European Community showed a trade surplus of $1.3 billion f.o.b. basis but a current account deficit of $2.1 billion and an overall deficit of $1.8 billion. Our large deficit items with the Europeans are military-$1.8 billion net; tourism-$1.4 billion net. Our overall position with Japan improved dramatically. In 1972 we had an overall deficit with Japan of $4.1 billion. This was reduced to less than $50 million in 1973 even though we maintained a trade deficit of $1.3 billion and a current account deficit of $1.7 billion. Japanese private investment in the United States increased rapidly and eliminated most of our overall deficit with Japan. The relation with Canada shows an overall deficit of $600 million with a trade deficit of $1.8 billion. Investment income from Canada totaled $2.5 billion in 1973.