European Capital Markets and Financial Intermediation by the United States

The balance of payments of the United States has undergone dramatic changes in 1968, and preliminary figures for the first quarter of 1969 suggest that so far these changes have not been reversed. Since early 1968, the surplus on merchandise trade — a traditional feature of the United States external accounts for more years than I can remember — has vanished; at the same time, the similarly traditional deficit on private capital account has turned into a surplus. Thus the United States has ceased to acquire long-term private assets; in fact, there has been a decline in the net long-term private claims of the United States economy over the rest of the world. This can also be put in a different way. In 1968, the surplus on current account has diminished to the point — $2 billion — where it hardly any longer covers grants and donations by the United States Government and private United States residents. Hence the conclusion that, for the first time since many years, there has been no increase in the net worth of the total sum of international assets held by the United States, long- and short-term.