The Post-War International Cycle

The problem of outstanding importance in post-war international economics has been the persistence of balance of payments difficulties over a wide area, often briefly though inadequately described as the problem of the ‘dollar shortage’. But a problem of perhaps equal interest is that of the post-war international cycle. The last six years have shown cyclical movements in international trade and reserves of great severity, even though the domestic economies of all countries, including the United States, have evidenced a remarkable stability around a rising trend. Chart 1 brings together three series on which attention is focused in this connection. The first one, gross national product in the United States, shows a persistently increasing movement, with only minor periods when the movement is either horizontal or very slightly declining. The second series, U.S. commodity imports, shows a much more evident cyclical movement, with notable reductions in 1949 and 1951 and a smaller dip in 1947. The third series, net gold and dollar surplus or deficit of the United Kingdom on the whole sterling area account, gives evidence of three very clear troughs: in 1947, in 1949 and in 1951–52.