U.S.: Narrowing the Gap

Along with his glowing expectations for the domestic economy (see above). Treasury Secretary Dillon last week voiced cautious optimism about the U.S.'s position in the world economy. After running up an $11.2 billion balance-of-payments deficit in the last three years, the U.S. this year is narrowing the gap. Preliminary figures indicate that for the first six months of 1961, the overall deficit will run only $600 million v. $1.3 billion for the same period last year. In the so-called "basic balance of payments" (which excludes short-term capital flow), the U.S. will probably show a net surplus of $400 million for the first half of this year.

With new strength in the balance-of-payments situation, U.S. gold holdings, which declined by $1.7 billion in 1960, have actually increased by $123 million in the last three weeks. The improvement was not the result of Government action; it grew out of the classic remedy of increased exports and decreased imports. In fact, the only external aid for U.S. gold came unintentionally from Russia, which in recent months has sold an esti mated $250 million worth of gold in Western Europe. Most of the Soviet gold was bought by European central banks, which thus increased their gold holdings without having to draw on the U.S. supply.

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