ÆäÀÌÁö À̹ÌÁö
PDF
ePub

As of September 30, 1952, estimated gold reserves of the world, apart from the Soviet Union, amounted to $36.2 billion, an increase of some $200 million since March 31, 1952. United States gold holdings increased by about $100 million during the same period, and total United States gold stocks of $23.5 billion on September 30 constituted about 65 percent of total gold reserves, exceeding by almost 100 percent the $11.8 billion of reserves required against currency in circulation and deposits of Federal Reserve banks. Neither of these ratios changed appreciably from the preceding period. TABLE VIII.-Estimated world gold reserves (excluding U. S. S. R.), Dec. 31, 1945, to Sept. 30, 1952

[blocks in formation]

1 Includes international organizations.

Source: Board of Governors, Federal Reserve System.

III. ACTIVITIES OF THE COUNCIL FROM APRIL 1 TO SEPTEMBER 30, 1952 (OTHER THAN THOSE RELATING TO THE INTERNATIONAL MONETARY FUND AND THE INTERNATIONAL BANK)

UNITED STATES FOREIGN AID PROGRAM FOR FISCAL 1953

Member agencies of the National Advisory Council, during the 6-month period ended September 30, 1952, reviewed the financial policy aspects of the fiscal 1953 Mutual Security Program. The Council gave special consideration to the requirement in section 522 of the Mutual Security Act of 1951 that of the assistance authorized under the Act to be provided under the terms of the Economic Cooperation Act of 1948, as amended, "as great an amount (in no event less than 10 per centum) as possible shall be provided on credit terms." 10 The Council considered that in view of the existing debts of the cooperating European countries and the purpose of the aid, it would be unwise to provide aid on a loan basis. Where assistance to European countries is in support of the defense effort of these countries, it was considered especially unwise to require them to assume a debt burden for part of such aid. With respect to programs for economic development, the Council reaffirmed its position that where countries

10 The total amount of aid subject to this provision was approximately $1.6 billion under all titles of the 1951 Act. Nine European countries-Denmark, France, Germany, Iceland, Italy, the Netherlands, Norway, Turkey, and the United Kingdom-received $165.3 million in the form of loans during fiscal 1952.

are in a position to service loans, and the projects are of the appropriate type, the loans should be made by the established lending institutions. Consistent with these views, the Council urged that the provisions of section 522 should not be extended to the fiscal 1953 foreign aid program. The mandatory loan provisions of the Mutual Security Act of 1951 were not retained in the new Act.

The Mutual Security Act of 1952

The period under review marked the beginning of the second year of the Mutual Security Program as well as the third year of Korean hostilities. On June 20, 1952, the President signed the Mutual Security Act of 1952, which authorized continuation of the Mutual Security Program, under which approximately 90 percent of current foreign aid is furnished. To enable the President to effectuate the provisions of this Act, the Congress on July 15, 1952, made available about $6.0 billion for foreign aid during fiscal 1953, exclusive of unexpended program funds of prior years. The more important financial provisions of the legislation have been discussed in the preceding section.

European program

MSA/ECA ALLOTMENTS

For the period April 3, 1948-September 30, 1952, MSA/ECA allotments to participating European countries aggregated $13.5 billion-an increase of approximately $1.4 billion over the total as of September 30, 1951. About 10 percent of the aid allotted to date has been on a loan basis requiring repayment in dollars. Included in the current total are allotments of $261.6 million made available to MSA/ECA from Mutual Defense Assistance Program (MDAP) funds. Direct grant aid of $10.4 billion comprised over three-fourths of total allotments, with conditional aid ($1.5 billion), loans ($1.3 billion), and aid via EPU ($0.3 billion) accounting for the balance.

In the following table, total allotments through September 30, 1952, are analyzed by country and type of aid. Of the total, over one-half ($7.2 billion) constituted direct grant aid to four countries: France, the United Kingdom, Italy, and the Federal Republic of Germany.

Far East program

Data on the Far East program relate to MSA/ECA allotments beginning with the enactment of the China Area Aid Act," approved by the President on June 5, 1950. As of September 30, 1952, total allotments under this program, including funds allotted for technical assistance as well as for commodities and ocean freight, amounted to $375 million, over one-half for China (Formosa). As in the European program, the Far East program also includes funds made available to the Economic Cooperation Administration (ECA) in June 1950 from the Mutual Defense Assistance Program. As of July 1, 1952, the programs for Burma and Indonesia were transferred from the Mutual Security Agency (MSA) to the administrative supervision of the Technical Cooperation Administration (TCA) and obligations entered into by MSA in connection with these programs will be discharged by TCA.

1 Title II, Public Law No. 535, 81st Cong., 2d soss.

TABLE IX.-MSA/ECA allotments to European countries, Apr. 3, 1948-Sept. 30, 1952, by type of aid

[blocks in formation]

1 Excludes GARIOA and funds for special programs, such as technical assistance, strategic materials, and relief shipments. Includes allotments from MDAP funds totaling $261.6 million. Includes allotments for overseas territory development.

Excludes $30 million in conditional aid programed for offshore purchases in Belgium by France ($14 million), the Netherlands ($9 million), and the United Kingdom ($7 million). The amounts for each of the 3 countries making these purchases in Belgium are shown as grant aid for these countries.

* MSA/ECA obligation pursuant to agreement with the United Kingdom of July 7, 1950.

After transfer of $4,923,000 from Trieste to Italy on a conditional aid basis to permit the purchase of wheat, under the International Wheat Agreement, by Italy for delivery to Trieste.

The bulk of this aid to the Federal Republic of Germany constitutes a claim against the German economy.

Includes aid to Indonesia prior to July 1, 1950.

Consists of an allotment of $350 million, obligated on Oct. 12, 1950, to be expended in connection with the operations of the Union and $11,395,000, the amount by which Sweden's conditional aid allotment for 1950-51 was decreased and contributed to the European Payments Union on Feb. 28, 1952, to offset the reduction in Sweden's grant to the Union.

NOTE.-Detail will not necessarily add to totals because of rounding.

Source: Mutual Security Agency.

TABLE X.-MSA/ECA allotments to Far East countries, June 5, 1950–Sept. 30, 1952

[blocks in formation]

1 Includes $5,900,000 made available from deobligations originating with ECA's China program prior to June 5, 1950.

2 Includes $745,000 made available from the Mutual Defense Assistance Program.

Reflects the transfer to the Technical Cooperation Administration of $14,154,000 allotted for assistance to Burma and $9,875,000 to Indonesia, representing the unexpended balances of funds allotted through June 30, 1952.

To be used for services provided by the U. S. Public Health Service in connection with health problems common to several countries; not assigned by specific country at this time.

Source: Mutual Security Agency.

COUNTERPART FUNDS

European program

Bilateral agreements between the United States and participating countries provide, inter alia, that each recipient of direct grant aid from the Mutual Security Agency (MSA) is obligated to deposit in a special account amounts of its local currency commensurate with the full dollar cost to the United States Government of the commodities or services furnished. These local currencies are called counterpart funds. In addition to direct grant aid from MSA, counterpart funds are required for initial grant balances under the European Payments Union as well as drawing rights exercised under the previous IntraEuropean Payments and Cooperation Agreements.

Counterpart funds are divided into two portions. Prior to the enactment of the Mutual Security Act of 1952,12 not less than 5 percent of counterpart funds was reserved for use by the United States Government for expenditures for strategic materials where available or for other local currency requirements. The remaining 95 percent was available for use by the depositing country for projects designed to promote economic development and internal financial stability. Under the new Act, the minimum amount available for use by the United States was increased to 10 percent of the counterpart deposited commensurate with dollar funds obligated on and after June 20, 1952. The remaining 90 percent was to be used for the purposes for which new funds were authorized, primarily for military assistance and defense support.

The Act also provides that the counterpart equivalent of $100,000,000 of dollar aid shall be used "to establish revolving funds which shall be available for making loans, and otherwise to carry out programs in furtherance of the objectives of section 516 of the Mutual Security Act of 1951."

During the period under review, the Council considered requests for release of counterpart funds in Greece, Belgium, the Netherlands, Austria, Yugoslavia, Turkey, the Federal Republic of Germany, the United Kingdom, Italy, and Iceland. As indicated in the following table, the equivalent of $9.0 billion was approved for withdrawal in Europe from April 1948 through September 30, 1952. For the postKorean period-July 1, 1950, through September 30, 1952-releases of counterpart amounted to the equivalent of $4.7 billion.

" Public Law No. 400, 82d Cong., 2d sess., approved June 20, 1952.

[blocks in formation]
[blocks in formation]

TABLE XI.-Status of European local currency counterpart fund accounts under Public Law 472, as amended, and Public Laws 84 and 389, as of Sept. 30, 1952 [Dollar equivalents of local currency, in millions of dollars]

[blocks in formation]

Balance
for use

from deposits under

Public

Total for use by recipient countries

[blocks in formation]
[blocks in formation]

by

recipient

countries

[blocks in formation]

1 Local currency is deposited in the special counterpart accounts at the agreed-upon rates in effect at the time the dollar funds were actually expended by MSA/ECA. Withdrawals of part of these local currency funds were made, however, at times when the conversion rates were different from those in effect at the time of deposit. The adjusted dollar equivalent of deposits represents the sum of withdrawals (calculated at the conversion rates in effect at the time of withdrawal) plus balances on hand (calculated at the current rate).

Includes only unencumbered portions of deposits for which MSA/ECA is responsible for approval of utilization.

Excludes the equivalent of $114 million transferred to the GARIOA counterpart account in Germany. Aid furnished from European program funds while Indonesia was a dependency of the Netherlands. On July 1, 1952, administration of the Indonesian program was transferred to the Technical Cooperation Administration. TCA has assumed responsibility for the utilization of Indonesian counterpart funds under the Act for International Development, as amended. (See table XII.)

Less than $50,000.

Source: Mutual Security Agency.

Far East program

The provisions of the Mutual Security Act of 1951 regarding counterpart funds apply with some variation to the Far East as well as to Europe. All Far East countries where MSA programs exist are required to deposit local currency in a special account from which withdrawals can be made for mutually agreed purposes. For most technical assistance, however, the counterpart requirement has been waived. Those countries not depositing counterpart commensurate with United States dollar grant expenditures put into their special accounts the local currency proceeds derived from the import and sale of MSA-financed goods and services. MSA reserves the right to require these countries to deposit additional local currency counterpart funds up to the full commensurate value of the grant aid furnished. The Far East recipient countries have agreed to make available from the special counterpart accounts the local currencies required to meet MSA administrative and operating expenses, although, unlike

« ÀÌÀü°è¼Ó »