Strong as a Dollar

Meeting in Washington last week, representatives of the 82 nations that belong to the International Monetary Fund found something new to worry about. Only a few months ago, many of them had been fearful that the U.S. dollar was growing too weak to maintain its role as the major world trading currency. Now, they agreed, the dollar had gotten strong again--in fact, some thought, dangerously strong.

In the first half of this year, thanks to increased exports and decreased Government spending abroad, the U.S. balance-of-payments deficit ran at an annual rate of $1.5 billion v. 1960's record $3.9 billion. By next year, predicted IMF Director Per Jacobsson, the U.S. payments deficit will have disappeared entirely. This alarmed many of the European delegates, who were keenly aware that the more than $20 billion that has flowed out of the U.S. into other nations since 1952 has been a major instrument in financing the expansion of world trade. If the flow is reversed, they fear the result might be to stifle further trade expansion.

Curiously enough, it did not seem to occur to the Europeans that trade expansion could also be financed by an outflow of the $15 billion in gold and foreign currency that Common Market nations have piled up in a decade of U.S. deficits.

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