policy - The Black Vault

THE 8DM CORPORATION
fron 1945 to 1964 was $35 billion. While balance-of-payments deficits
(which averaged $1.5 billion per year from 1950 to 1956) were seen in the
1950s as d logical and not-to-be-worried-about consequence of the US's
constructive international r'ole,
by the early 1960s other countries, and
especially France, sensed that the US was becoming seriously overextended
and began demanding gold for th:?ir accumulated dollars.
And indeed, the US's international position had changed dramatically
since the war.
Despite the fact that US foreign aid benefitted the
US as well as its recipients (by creating marKets for US exports, adding to
the ovei-seas investment opportunities of US firms, etc.), the size of
post-war aid programs inevitably put a certain amount of strain oii the
system, especially with regard te the balance of payments. During the
20 years following the war the US spent, in all, some $67 billion on
military assistance and divect overseas military expenditures, and some
$77 billion on economic aid. At tne same time, the US share of overall
world trade shrank as Japan and countries ir. Western Europe vastly
increased their share. In 1948 the US share of world trade had been an
amazing 48 percent. By 1964 it was 25 percent and by 1969 it was only
IC percert US agricultural production continued to provide a product in
constant international demand, as it had since colonial times. Similarly,
US
production in certain high-technology a,-eas such as the computer and
aerospace industries miintairdd a clear, albeit diminishing, edge over
foreign competition. But in the middle range of manufactures US industries
found it
-i 33 percent.
increasingly difficult to compete against foreign concerns, with,
for example, the US share of world steel production falling during the
20 years after the wr prom 57 percent to 22 percent and the US share of
automobile production fall'ing during the same period from 75 percent to
"One of the Kennedy administration's first actions was to announce
a package of measures desioned to correct US balance-of-payments problems,
problems reflected by the international gold crisis in October i960 and,
over the last three Eisenhower years, a drop in US gold reserves of $8.75
billion. The Kennedy prescription was to decrease government spending
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