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Capital Account, Foreign Trade and Development Assistance: US Foreign Economic Policy in the 1960s

In: Before the Neoliberal Turn

Author

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  • Simone Selva

    (University of Naples – L’Orientale)

Abstract

This chapter pinpoints the US strategies to restore balance of payments equilibrium and the dollar’s strength in foreign exchange markets from the late 1950s through to the 1960s, and its linkage to the US gold policies. After a late 1950s unsuccessful attempt to restore international payments equilibrium focused on the capital account position that included high interest rates, credit restraint policies, and the squeezing of the money supply, the Kennedy administration turned its attention to the current account component. Against this backdrop the chapter pinpoints Washington’s commitment to reduce overseas US military expenditures and to increase foreign military sales, as well as pressures on capital-surplus European partners for early repayments of outstanding debts and to have them embark upon a string of trade liberalizations. All of these measures were aimed at reducing foreign holdings of dollars and convertible foreign currencies, and at averting the international run on US gold stocks and its harmful effects on the dollar’s convertibility into gold and its stability in foreign markets.

Suggested Citation

  • Simone Selva, 2017. "Capital Account, Foreign Trade and Development Assistance: US Foreign Economic Policy in the 1960s," Palgrave Studies in Economic History, in: Before the Neoliberal Turn, chapter 2, pages 19-89, Palgrave Macmillan.
    • Handle: RePEc:pal:palscp:978-1-137-57443-5_2
    DOI: 10.1057/978-1-137-57443-5_2
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