AS THE Economic Cooperation Administration entered its twentieth month (November 1949) of a planned four-year existence, the total sum committed to financing imports of ECA participating countries amounted to over $7 billion. In the early stages of this period effective aid was accelerating, but the original plan for the program as a whole called for a gradual reduction. The appropriation for fiscal 1950 was in fact 25 per cent below that for the first ECA year (April 1948–March 1949). Since indications are that termination of the program must be regarded as inevitable, the possible significance of the diminution and end of the program should be assessed from the point of view of both the imports of the participating countries and the exports of the United States.

Abstract

AS THE Economic Cooperation Administration entered its twentieth month (November 1949) of a planned four-year existence, the total sum committed to financing imports of ECA participating countries amounted to over $7 billion. In the early stages of this period effective aid was accelerating, but the original plan for the program as a whole called for a gradual reduction. The appropriation for fiscal 1950 was in fact 25 per cent below that for the first ECA year (April 1948–March 1949). Since indications are that termination of the program must be regarded as inevitable, the possible significance of the diminution and end of the program should be assessed from the point of view of both the imports of the participating countries and the exports of the United States.

AS THE Economic Cooperation Administration entered its twentieth month (November 1949) of a planned four-year existence, the total sum committed to financing imports of ECA participating countries amounted to over $7 billion. In the early stages of this period effective aid was accelerating, but the original plan for the program as a whole called for a gradual reduction. The appropriation for fiscal 1950 was in fact 25 per cent below that for the first ECA year (April 1948–March 1949). Since indications are that termination of the program must be regarded as inevitable, the possible significance of the diminution and end of the program should be assessed from the point of view of both the imports of the participating countries and the exports of the United States.

Underlying this study is the judgment that ECA aid can be interpreted most intelligently if it is regarded as designed to aid European recovery by financing the planned deficit of the participating countries vis-à-vis the Western Hemisphere. Any such plan must, of course, have implications for particular U. S. exports and the industries producing them, but this is, in general, regarded as a secondary question. Because aid in any form can be regarded as freeing dollar earnings and domestic resources for alternative uses, no attempt is made to judge the extent to which ECA commodities themselves have contributed to economic recovery and elimination of the deficit with the Western Hemisphere.

Certain aspects of closely related problems have been neglected. The most striking is the possible effects of cessation of the program on the balance of payments positions of countries supplying goods which ECA has permitted participating countries to purchase offshore. Similarly, no attempt has been made to analyze in detail the impact of ECA on the structure of world trade or to discover to what extent goods shipped by ECA could have been obtained from other sources. In addition, the effect of the availability of ECA funds in reducing the pressure on European countries to export to the United States has not been explored.

Problems of the Analysis

Analytical difficulties

Since the main purpose of this paper is to lay a basis for a judgment of the effects of the diminution or end of the ECA program, certain questions arise as to what the historical record implies about the future. The first essential is to explore the various ways in which the problem could be attacked and to indicate the pitfalls involved in interpreting the data. Most of the difficulties are associated with the problem of attempting to estimate the marginal elements in the ECA program, and the effect of a reduction in total dollar availabilities on what is now considered marginal.

The data available, which cover the fourteen months, April 1948–May 1949, could be used in several ways: (1) The percentages of the participating countries’ imports of particular commodities financed by ECA could be used as a direct indication of what commodities will disappear from European imports when ECA aid ends; (2) the pro-portions of ECA-financed shipments included in total imports could indicate to what extent goods will have to be obtained from non-U. S. dollar sources when ECA aid is ended, or, barring this, the increase in dollar deficits which will result; (3) ECA exports in comparison with total U. S. exports could be used to show the importance of ECA in the maintenance of U. S. exports and, possibly, the prospective drop in U. S. exports when the program diminishes or ends; (4) offshore procurement data could be used to show the extent to which ECA has financed the participating countries’ deficit with the entire Western Hemisphere, the amounts of ECA-financed goods which have been shipped from offshore sources when they could have been obtained in the United States, and the extent to which supplies obtained from offshore sources may be purchased without dollars when the ECA program ends.

To measure the effects of the cessation or gradual diminution of ECA aid, some assumption must be made with regard to the total dollar supplies of the recipient countries. At the one extreme, it could be assumed that the end of ECA will reduce the U. S. dollar supplies of the participating countries by the amount of ECA aid received; that is, if 1948 is compared with 1953, dollar availabilities in 1953 will be the same as in 1948 except for the loss of ECA aid. At the other extreme, it could be assumed that as ECA aid diminishes the dollar supplies of the recipient countries would be unaffected and that there would be no need to cut imports presently financed by ECA. This could occur in at least two ways: by the expansion of the dollar earnings of the recipient countries, or by the emergence of new forms of aid.

It is doubtful whether either of these extreme assumptions is likely to fit the facts at the end of the ECA program. It seems more reasonable to expect some position between the two extremes, with some expansion of participant countries’ dollar earnings, the continuation of a smaller amount of official aid for making U. S. dollar payments, but also a compulsion to cut back dollar imports by a significant amount. It is impossible, however, to judge exactly how much dollar earnings will expand to offset cuts in ECA. Thus, most of the following analysis is based on the assumption that reductions in ECA aid will have equivalent effects on the total dollar supplies of the ERP countries. In any case, the analysis can be adjusted without too much effort to take account of any expansion of dollar earnings.

A problem that arises is whether the importance of ECA aid in financing imports of particular commodities can be measured by the percentages of total imports financed by ECA in the period under review. These percentages in fact do not indicate either what the position would have been without ECA or what will happen as ECA aid diminishes. The end of the program would not necessarily eliminate those goods being financed by ECA, because imports of other commodities might be sacrificed, or, more likely, the relative amounts of imports might vary as total dollar expenditures declined. Similar reasoning applies to what happened in the fourteen-month period under discussion. Hence, percentage comparisons of the extent of ECA aid for particular commodities are misleading as a basis for predicting the impact on the commodity structure of imports of the elimination or reduction of ECA aid.

If the total volume of imports has to be reduced, there is likely to be considerable shifting from one commodity to another. The fact that ECA has financed a large proportion of the imports of any commodity therefore gives little or no indication of the probable volume of imports of that commodity after the end of ECA. The percentage calculations do indicate, however, something about the historical record. They show what goods ECA has financed and thus the importance of ECA aid to both U. S. exporters and the participating countries. In addition, they reveal something about the attitudes guiding the administration of ECA, since ECA shipments may be interpreted merely as evidence that the recipient country regards ECA as willing to finance that particular commodity.

If no predictions of the effects of the end of ECA on the imports of the participant countries can be based on the percentages of imports of particular commodities financed by ECA, can any use be made of a comparison of ECA aid with participating countries’ imports? In view of the substitutability of imports, the total amount of ECA aid seems to be the most relevant fact. This amount could usefully be compared with national income or total imports. A comparison with the former would indicate the importance of ECA in terms of the total supply of goods or services, while a comparison with the latter would show the role of ECA in supplying imports and thus indicate the amount of contraction likely at the end of ECA.

In addition to being useful for historical interpretation, the commodity data also provide some clues to the problems which will face the participating countries at the end of the program. To the extent that ECA has financed supplies of particular commodities, the problem will be to discover alternative nondollar sources of these commodities. Moreover, if currencies are inconvertible, the sources must be such that imports from them can be financed without use of gold or dollar reserves; that is, participating countries must either have a bilateral surplus or be members of a currency system in which supplies of the currency of the new country of origin can be obtained from nondollar earnings. Investigation of the extent to which supplies now financed by ECA can be obtained from such alternative sources would presumably indicate the significance of the effects on imports of the end of the ECA program. Again, however, the commodities financed by ECA are not peculiar in any sense, though with the present pressure to shift imports in order to avoid depletion of exchange reserves, the current maintenance, at least by some countries, of imports not financed by ECA may be taken to indicate that they cannot be shifted. If it is assumed that those goods now being financed from dollar earnings are not available elsewhere, the removal of ECA aid would require that commodities at present financed by ECA be secured from other sources. In any case, however, if any imports from the United States, whether financed by ECA or not, could be shifted to nondollar sources, the impact on imports of the end of ECA would be softened. For those countries where ECA aid supplies an important part of total imports, an analysis of the possibility of substituting goods from nondollar sources for ECA commodities would by itself cover the major part of this problem.

A comparison of ECA shipments with total U. S. exports to the participating countries reveals the importance of ECA in supporting the export of particular commodities or, conversely, in financing recipient countries’ imports from the United States. It cannot be assumed, however, that as ECA aid diminishes total U. S. exports will fall by the amount presently financed by ECA. The import demands of the ECA countries are likely to develop a new commodity composition when it is necessary to reduce their total volume, and, in addition, demands for U. S. exports are likely to remain strongest for those commodities for which alternative sources of supply are least attractive. Thus interpretation of the possible effect of the end of ECA on U. S. exports depends upon a judgment of both the relative essentiality of ECA exports in the total dollar imports of the participating countries, and the prospect of substituting nondollar for dollar sources, assuming the continuance of inconvertibility. The former can be treated as constant only if total dollar supplies of the participant countries do not diminish, while the latter requires detailed investigation for each commodity.

Offshore procurement statistics can be used to assess the extent to which ECA has helped to finance the deficits of participating countries with the Western Hemisphere, other than the United States, and its role in financing particular imports, notably petroleum, from other areas. To the extent that offshore sources have supplied an important part of participating countries’ imports, ECA has both supplied dollars to the country of origin and helped participating countries to maintain contact with non-U. S. sources of supply. Data on offshore procurement also show to what extent ECA has financed the export from non-U. S. sources of goods that are available for export from the United States. Since U. S. supplies substantially increased during the fourteen-month period under review, care must be used in interpreting the statistics in this regard. In a certain sense, while offshore purchases are not necessarily of the same commodities that would have been bought if ECA-financed purchases had been confined to the United States, they would indicate to what extent non-U. S. dollar sources have been substituted for U. S. dollar sources under the ECA program. Within limits this is the case, as offshore procurement by participant countries within the sterling area or among the participating countries usually indicates dependence on non-U. S. dollar sources of supply. The statistics are, however, somewhat misleading in this regard, because a large proportion of these purchases took place in the early months of the program. A further difficulty is that a substantial portion of offshore procurement has been from hard currency sources such as Canada, Cuba, and certain Latin American countries. The problem therefore remains of assessing the extent to which these supplies can be obtained from nondollar sources as ECA aid diminishes or ends, or, alternatively, how intractable the balance of payments problems of participating countries vis-à-vis these sources will be.

With these difficulties in mind, total imports of the European countries, total U. S. exports to those countries, and ECA shipments from both the United States and offshore sources will be compared. Comparisons will be made both for the aggregates and for a number of commodity groups. In making the comparisons, however, certain statistical difficulties must be recognized.

Statistical limitations

The main statistical difficulties which apply to all the figures presented in the analysis are indicated in this section, while the difficulties peculiar to a particular country are discussed in the individual country sections below.1 Most of the data used cover the 14 months from April 1948 through May 1949. This raises the question of how representative this period is. In order to determine whether the time period affects the conclusions, the percentage importance of ECA shipments in total imports for various periods was investigated. A comparison of percentages for a 12-month, a 14-month, and a 16-month period shows no significant differences in the proportion of ECA goods to total imports (Table 1). The greatest change introduced by lengthening the period surveyed from 14 to 16 months was one percentage point. When the 14-month period is compared with the 12-month period, the greatest change is again one percentage point. Thus, given the margin of error involved in the statistics, use of data for 14 months does not seem to bias the conclusions to any significant extent.

Table 1.

ECA Shipments as a Percentage of Total Imports, by Countries, for Different Periods

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A more important statistical limitation is that imports are shown on a c.i.f. basis, while ECA-paid shipments and U. S. exports are valued f.o.b. Thus, before a comparison is made with European imports, both ECA shipments and U. S. exports should be adjusted upward by the amount of transportation costs. In the discussion below of the total program, ECA-paid shipments are adjusted by 10 per cent when they are compared with European imports, but no adjustment is necessary when they are compared with U. S. exports.

The fact that ECA-paid shipments as reported to ECA lag behind the actual movement of goods introduces a further error. A tentative estimate puts paid shipments at about four fifths of the value of the actual movement of goods during the period under review. This estimate does not apply to individual countries or commodities, but only to the total. Because of this, the data undoubtedly show a downward bias in estimating ECA’s importance both in the imports of participant countries and in U. S. exports. The lag does not, however, affect the relation between ECA exports from the United States and those from offshore, or the relative importance of the two sources as suppliers of the imports of participating countries.

Another limitation is associated with the conversion into U. S. dollars of the import data of individual countries. In most cases, the selling rate for U. S. dollars was used, even though this may have involved some upward bias in the total value of imports. But for the three countries which presented the greatest conversion problems—France, Italy, and the Bizone—this difficulty was avoided by obtaining data expressed in U. S. dollars.

Finally, considerable difficulty was encountered in classifying ECA shipments, European imports, and U. S. exports in similar commodity groups. The data for each country are presented as uniformly as possible in this regard, but the divergent categories listed in the original sources made some arbitrary decisions inevitable.

The proportion of ECA-paid shipments included in total imports of, and in U. S. exports to, individual recipient countries are given below in tables accompanying the discussion by countries. In most cases, the commodity groups shown account for some 80 to 100 per cent of the total imports of the individual countries and some 83 to 93 per cent of U. S. exports to those countries. Hence, it seems unlikely that the addition of the excluded data would modify the conclusions reached.

The Over-all Program

Aggregate country data

Total ECA-financed shipments from April 1948 through May 1949 accounted for 12 per cent of total imports of the participating countries (Table 2).2 When the countries’ imports from the United States alone are considered, ECA shipments accounted for half. If Sweden and Turkey, which received relatively small amounts of ECA aid, are excluded, and Bizone Germany included, ECA aid amounted to 13 per cent of total imports. Furthermore, if 10 per cent is deducted from total imports to convert them to an f.o.b. basis, and 25 per cent is added to ECA-paid shipments to correct for their lag behind the actual movement of goods, the percentage is raised from 13 to about 18 per cent. If ECA-paid shipments are adjusted upward to represent actual movements of goods, such shipments comprise about 63 per cent of total U. S. exports to recipient countries. The 18 per cent and 63 per cent figures indicate the extent of ECA financing in the 14-month period, and thus show the importance of ECA for the participating countries and the United States. Moreover, the effects of diminished ECA aid can be interpreted directly in terms of the percentage financed by ECA. As 18 per cent is a substantial part of total imports and 63 per cent a substantial part of imports from the United States, diminution and eventual elimination of ECA aid are bound to have significant effects even though the countries reduce their least essential imports. Since ECA aid has, however, varied from less than 1 per cent to 34 per cent of imports of individual countries, ECA has been of differing importance to the participating countries.

Table 2.

Total Imports, Imports from the United States,1and ECA-Paid Shipments, by Participating Countries, April 1948–May 19492

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As measured by U. S. exports to country indicated.

In this and following tables, dots indicate that data are not available and a dash indicates either that a figure is zero or less than half the final digit shown, or that the item called for does not exist.

Bizone and Greece are not included in the totals. Totals may not equal sums of items because of rounding.

Although ECA-paid shipments, on the basis of the adjustments made above, accounted for about 18 per cent of total imports of the participating countries in the period under review, they were quite small when compared with national incomes. The percentages of ECA shipments to national income were as follows: United Kingdom, 3; France, 3; Italy, 4; Netherlands, 6; Belgium, 2; Denmark, 3; and Norway, 4.3 But the significance of ECA-financed imports to these countries was much greater than is suggested by these figures, since they consisted for the most part of goods which could not be produced at home or obtained from soft currency countries in adequate quantity and which were necessary to complement domestic production.

The unadjusted figures in Table 2 show that ECA shipments as a percentage of total imports and as a percentage of imports from the United States were larger for Austria than for any other country. Other countries for which ECA shipments accounted for over 10 per cent of total imports were France, Bizone Germany, Italy, Netherlands, and the United Kingdom. For the following countries, ECA-paid shipments from the United States accounted for over 50 per cent of total U. S. exports to those countries: Austria, Denmark, France, Eire, Italy, and the United Kingdom, (See Chart 1.)

Chart 1.
Chart 1.

ECA-Paid Shipments as Percentages of Total Imports, Imports from the United States, and National Income, by Participating Countries1

Citation: IMF Staff Papers 1950, 001; 10.5089/9781451959994.024.A004

1 Both ECA-paid shipments from the United States as percentages of participating country imports from the United States (measured by U. S. exports) and total ECA-paid shipments (f. o. b.) as percentages of total imports (c. i. f.) are based on data for April 1948–May 1949. Total ECA-paid shipments as percentages of national income in 1948 are based on data for April 1948–March 1949.

The high percentages of total imports financed by ECA are a direct measure of the importance of ECA in financing imports. Therefore, it is evident that diminution and cessation of the ECA program will have substantial effects on most of the participating countries even in terms of total imports. The high percentages of U. S. exports financed by ECA are a direct indication of the substantial decline in imports from the United States which will be necessary for all participating countries except Sweden and Turkey. As would be expected, the decline in imports from the United States at the end of the program will be proportionately greater than the decline in total imports, although this is less the case for Italy and the United Kingdom than for the other countries. As long as it is assumed that dollar earnings will not expand to offset the decline in ECA aid, these percentages also indicate the amount of imports which will have to be shifted to nondollar sources if the imports are to continue. Both the relative and absolute amounts are large enough in most cases to show that the financing of these imports even from nondollar sources is likely to create serious balance of payments problems. The problem will be greatest for Austria, France, Italy, and the Bizone, but the balance of payments positions of the participant countries vis-à-vis the soft currency countries will determine whether the problem can be easily solved. Offshore sources provided 41 per cent and the United States 59 per cent of total ECA supplies; that is, 5 per cent and 7 per cent respectively of total imports of the recipient countries. As shown in Table 2, ECA shipments, from both the United States and offshore, as proportions of total imports, were higher for Austria than for any other country. The table also shows that the proportion of ECA shipments from the United States was high for France and Italy, and that offshore sources were important for the United Kingdom. The United Kingdom and Sweden were the only countries whose proportions of total imports were higher for offshore shipments than for those from the United States, while, at the other extreme, Italy’s ECA imports from the United States were slightly more than five times as large as offshore supplies, and the very small amount of ECA aid received by Turkey came entirely from the United States.

This division of ECA aid between the two sources of supply must be regarded first as a product of ECA’s willingness to aid the financing of deficits with countries other than the United States. Second, it resulted in part from the particular import needs of the participating countries. When countries needed goods not available in the United States either because they were not produced there or were in short supply, ECA financed shipments from offshore sources. A high percentage of imports from offshore sources indicates that a country’s import structure was comprised largely of such commodities. Denmark’s imports of feeding stuffs and of petroleum, and Belgium’s imports of petroleum and of sugar, are cases in point. Third, the importance of offshore procurement was sometimes a result of the attempt by ECA to maintain traditional trade channels and to ease the dollar position of particular supplying countries. This is most striking in the ECA financing of substantial Canadian exports to the United Kingdom. Fourth, the ECA provision that goods are not to be purchased offshore at prices higher than those for the same goods in the United States has tended to restrict to U. S. sources ECA purchases of some commodities. This factor may have tended to restrict certain offshore purchases, but its effects are difficult to isolate. For the remainder of the program, the first and third factors may well continue to be no more or no less important than in the past. The second factor, however, will probably change, particularly in view of the fact that most agricultural commodities are likely to be in excess supply in the United States. Some changes may occur in the fourth factor, if prices of commodities from offshore sources fall below U. S. prices, either because of lowered production costs or as a result of the 1949 currency devaluations, or a combination of both.

The last column in Table 2, which compares ECA shipments from offshore sources with total U. S. exports to the participating countries, shows that ECA offshore purchases amounted to 35 per cent of total U. S. exports. As ECA aid might have been restricted to the financing of U. S. exports, these figures indicate that offshore purchases had a substantial effect on U. S. exports of certain commodities to European countries. The extreme example is the United Kingdom, where total U. S. exports were almost equalled by ECA offshore shipments, the latter being equal to 92 per cent of the former. Other countries for which ECA offshore shipments were important as a percentage of total U. S. exports were Austria, Denmark, France, the Netherlands, and Norway. While the aggregate figures do not permit any conclusions concerning the extent to which foreign sources of particular commodities have supplied goods which the United States was also exporting, the amounts involved are large enough to indicate that this may be substantial. The individual country analysis below will illustrate the magnitudes involved.

While offshore purchases undoubtedly affected the distribution of the commodity trade of the United States and other countries with Europe and the composition and direction of U. S. exports, they could not significantly affect the extent of ECA influence on the aggregate amount of U. S. exports. It may be presumed that countries in which offshore purchases were made did, for the most part, have a dollar payments problem of their own. Their imports from the United States would, without offshore purchases, have necessarily been reduced sharply, perhaps to an amount nearly equivalent to offshore purchases.

Aggregate commodity data

The proportion of the total imports of certain commodities which have been financed by ECA is an important aspect of total ECA aid. (See Chart 2.) In the 14 months under review agricultural commodities (including cotton, wool, and tobacco) accounted for 57 per cent of ECA-paid shipments, which covered 18 per cent of total imports of these commodities for the participating countries. Thus the dependence of those countries on ECA for agricultural supplies, and ECA’s willingness to finance these commodities, are clearly demonstrated. It must be observed, of course, that ECA financing of such imports has aided reconstruction by permitting the concentration of productive resources on capital-goods output. This is particularly true for highly industrialized countries, such as the United Kingdom, which are able to produce a large proportion of their own capital goods. For some countries, as the program has progressed more emphasis has been placed on ECA-financed imports of industrial commodities. Under the assumption that agricultural production will improve, this change in emphasis will probably continue. Although agricultural supplies bulked largest both in total ECA shipments and in imports of the recipient countries, the proportion of total imports financed by ECA was larger for certain other commodity groups. ECA-paid shipments accounted for almost one fourth of the countries’ imports of coal and petroleum. For the other commodity groups, however, ECA was considerably less important; it accounted for only about 13 per cent of chemicals, machinery, and metals.

Chart 2.
Chart 2.

Total Imports of Participating Countries, Imports from the United States, and ECA-Paid Shipments, by Principal Commodities1

Citation: IMF Staff Papers 1950, 001; 10.5089/9781451959994.024.A004

1 Based on data for April 1948–May 1949. Imports from the United States are measured by U. S. exports to the participating countries.

The United States was most important as a source of coal, supplying 15 per cent of the value of the participating countries’ total imports. It accounted for 12 per cent of imports of agricultural commodities, 12 per cent of machinery, and 10 per cent of chemicals. ECA shipments from offshore were particularly important for petroleum and metals. About 17 per cent of the countries’ petroleum imports were from offshore sources, compared with 8 per cent from the United States, while offshore shipments of metals were also twice as great as those from the United States.

ECA shipments from the United States accounted for a significant proportion of U. S. exports to the participating countries. Of total U. S. exports of coal, 85 per cent were ECA-financed; of agricultural commodities 79 per cent; of petroleum 59 per cent; of chemicals 45 per cent; and of machinery and metals, about 35 per cent each. These high percentages and the fact that they apply to commodities forming the bulk of U. S. exports indicate a serious contraction in U. S. exports as ECA aid diminishes.

The importance of ECA-financed offshore shipments is emphasized by a comparison of these shipments with U. S. exports of the commodity groups. The detailed figures in Table 3 suggest that ECA has operated to preserve trade channels and has purchased offshore commodities that have been in short supply in the United States. For instance, U. S. stocks of petroleum were low during much of the period under review, and the ECA legislation specifically instructed ECA to encourage offshore purchases of this commodity. Thus, while $218 million of petroleum was exported by the United States to participating countries from April 1948 to May 1949, an even greater amount was shipped from offshore sources. The large amount of offshore shipments of metals (equal to more than three quarters of total U. S. exports to these countries) is also compatible with the reasons advanced above. At the other extreme, it is not surprising that offshore purchases of machinery have been small compared with U. S. exports, inasmuch as the United States is the primary producer in this field.

Table 3.

Total Imports of Participating Countries, Imports from United States,1and ECA-Paid Shipments, by Commodities, April 1948–May 19492

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As measured by U. S. exports to participating countries.

All data for Greece, Sweden, Bizone Germany, French Zone of Germany, and Turkey are omitted.

Cotton, wool, and tobacco are included.

Country Studies

The following analysis attempts to apply to individual countries the reasoning developed above in terms of aggregate figures. This has been done in relation to the contribution of ECA both to total imports and to imports from the United States, and for as broad a collection of commodity groups as practicable. While no attempt has been made to predict the actual effects of the end of the ECA program, its main implications are indicated. For lack of data, the French Zone of Germany and Greece are not included. Sweden and Turkey are excluded because of the relatively small contribution of ECA to their total imports. The data are not adjusted for the differences between c.i.f. and f.o.b., nor for the lag of ECA shipments behind U. S. exports.

United Kingdom

In terms of the percentage of total imports financed by ECA, the United Kingdom ranks fifth among the participating countries, with paid shipments accounting for 11 per cent of total imports. Thus, in the absence of U. S. aid, imports would presumably have been 11 per cent less. Under the assumption that dollar earnings will not increase, either imports will have to be cut at the end of the program by almost $1 billion annually (about 3 per cent of the national income in 1948), or equivalent additional imports will have to be purchased from non-dollar sources. The proportions of total imports financed by ECA have been largest for grains, tobacco, nonferrous metals, machinery and equipment, petroleum, chemicals, sugar, and cotton (Table 4). Thus ECA has financed significant proportions of a variety of commodities each of which is essential to the U. K. economy. The group, however, is so diverse as to defy generalization. In fact, it would seem to indicate that ECA has not restricted its financing to any particular group, but has spread its assistance over almost the whole of U. K. imports.

Table 4.

United Kingdom: Total Imports, Imports from the United States,1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to United Kingdom.

The discrepancy between total imports from the United States and ECA-paid shipments from the United States is accounted for by the fact that a small proportion of these shipments was made to one or more of the United Kingdom’s overseas territories and included in ECA shipments.

Totals may not equal sums of items because of rounding.

ECA-paid shipments of agricultural commodities to the United Kingdom accounted for 57 per cent of total ECA-financed shipments to that country, or about the same as the average for the recipient countries as a whole, but more than for France, Belgium, and Denmark. This indicates that ECA has been willing to finance a large proportion of U. K. food imports, and that the United Kingdom has, in the present price and supply situation, been dependent upon dollar sources for a good many of these commodities. Moreover, ECA has been particularly willing to finance food supplies from non-United States sources. As a result, the United States, as a source of supply of ECA-financed shipments, has been less important for the United Kingdom than for any other participating country, and supplies from offshore sources (shown in Table 4) were considerably greater than those from the United States.

The list of commodities financed by ECA shows that ECA has facilitated the use of traditional trade channels. Of the important commodities purchased offshore, 77 per cent came from Canada, which has long been an important supplier for the United Kingdom. Off-shore purchases in Canada included 31 per cent of the United Kingdom’s imports of grains, 9 per cent of meats, 23 per cent of nonferrous metals, 9 per cent of pulp and paper, and 7 per cent of lumber. The only important U. K. offshore imports not coming from Canada were sugar and petroleum, accounting for 18 per cent and 10 per cent, respectively, of total imports of these commodities.

Latin America shipped 12 per cent of the offshore supplies, other ECA countries 8 per cent, and the Middle East 3 per cent, mainly petroleum. Thus the United Kingdom received at least 90 per cent of its total ECA supplies from hard currency areas. When ECA comes to an end, most of these imports will have to be shifted to nondollar sources or else financed in some alternative manner, if the United Kingdom is not to encounter an even more serious exchange problem.

Despite the fact that offshore shipments played the greater role (amounting to about 7 per cent of total U. K. imports), ECA shipments from the United States were almost 5 per cent of total U. K. imports of major items (Table 4), and were concentrated in relatively few groups. The United States supplied 10 per cent of total U. K. petroleum imports, 15 per cent each of cotton and chemicals, 20 per cent of machinery and equipment, and 28 per cent of tobacco. These five commodity groups alone account for 70 per cent of total ECA-paid shipments from the United States.

ECA shipments from the United States comprised 54 per cent of total U. S. exports to the United Kingdom from April 1948 to May 1949, and 58 per cent of the commodities shown in Table 4. Thus, the share of U. S. exports financed by ECA was larger for the United Kingdom than for any other country except France and Austria. The percentages for particular commodities varied widely. Virtually all U. S. exports of grains and dairy products were financed by ECA, 80 per cent of cotton, about 60 per cent of petroleum, about half of chemicals and pulp and paper, and about one third of fertilizer, nonferrous metals, iron and steel, textiles, and machinery and equipment. ECA shipments have thus been important in most of the categories which have typically dominated U. S. exports to the United Kingdom.

Offshore supplies amounted to 7 per cent of total U. K. imports, the highest proportion for any country except Austria. Compared with U. S. exports, ECA-financed shipments from offshore sources were much more important for the United Kingdom than for the other participating countries. For the commodities in Table 4, ECA shipments from offshore sources were double ECA exports from the United States, and, in fact, were 3 per cent larger than total U. S. exports to the United Kingdom. Large shipments of grains, sugar, and meats came entirely from offshore; offshore shipments of pulp and paper were over four times, of nonferrous metals almost three times, and of lumber more than twice total imports of those products from the United States. Since this merely indicates that Canada rather than the United States is the United Kingdom’s chief source of supply for most of these products, it implies no easing of the impact of the end of ECA, because the United Kingdom’s Canadian dollar deficit may prove to be as intractable as its U. S. dollar problem.

For the duration of the ECA program, the extent to which the United Kingdom can purchase in Canada goods which are also available in the United States is likely to be a continuing problem. This may be most acute for agricultural commodities where U. S. surpluses appear likely and the U. S. farm support policy points up the problem. Recently, this issue arose with regard to wheat, the commodity which in terms of dollar values has been the United Kingdom’s largest ECA import. Under the Act of Congress governing ECA policy, an agricultural commodity is ineligible for ECA financing from offshore sources if it is surplus in the United States. Wheat was generally regarded as surplus in the United States by the spring of 1949, although it had not been so declared, and ECA ceased the issue of procurement authorizations for further wheat shipments from Canada. However, in mid-September, ECA agreed to permit the United Kingdom to purchase $175 million of Canadian wheat in the present fiscal year, in order to alleviate the drain on British gold and dollar reserves. An associated agreement, however, provided for increased purchases of certain other agricultural commodities in the United States.

France

Statistical limitations make it impossible to present the data for France in the manner adopted for the other countries. First, the value of French imports, expressed in U. S. dollars, has been recorded for only the period July 1948 to June 1949. Furthermore, since the imports of metropolitan France cannot be classified in very great detail for this period, a comparison has been made in Table 5 between ECA exports and French imports by commodity groups. A detailed comparison by commodities is possible, however, for U. S. exports and ECA shipments to France (Table 6). Another limitation is that ECA-paid shipments include shipments to the overseas territories; while data are available which show total ECA shipments excluding those to the overseas territories, shipments from offshore sources to these territories cannot be distinguished.

Table 5.

France: Total Imports1and ECA-Paid Shipments,2by Commodities

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These data cover the period July 1948-June 1949. They include imports from Dependent Overseas Territories.

These data cover the period April 1948-June 1949.

Totals may not equal sums of items because of rounding.

Table 6.

France and Dependent Overseas Territories: Imports from the United States1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to France.

Totals may not equal sums of items because of rounding.

ECA-paid shipments to metropolitan France from April 1948 to June 1949 were equal to about 23 per cent of total imports from July 1948 to June 1949 (Table 5), or a rate of about 3 per cent of the 1948 national income. Dependence on foreign aid for about one fifth of total imports indicates the over-all importance of the ECA program to France. Table 5 shows how outstandingly important ECA shipments of nonagricultural commodities have been to France, with 76 per cent of total ECA shipments being of this kind. Of France’s imports of agricultural commodities (equivalent in all to $1,212.6 million) 63 per cent came from its overseas territories, while ECA-paid shipments accounted for 15 per cent. ECA financed 44 per cent of coal imports, 38 per cent each of petroleum and of metals, 32 per cent of machinery and equipment, and 23 per cent of textiles, including raw cotton. These figures illustrate France’s dependence on its over-seas territories as a source of foodstuffs, and its dependence on ECA financing for both its heavy investment program and its fuel imports. With some expansion of domestic production or increased imports from overseas territories, the end of ECA should not have too serious consequences for France’s total agricultural supplies. For coal, petroleum, and machinery, however, the end of ECA will create a serious problem of shifting these imports to other sources, or else diverting other products from dollar sources so as to free dollars for the purchase of these essential commodities.

In order to permit as detailed a commodity comparison as possible, U. S. exports and ECA shipments from the U. S. and offshore sources are shown in Table 6. Both ECA shipments and U. S. exports for the period April 1948 to May 1949 include shipments to French overseas territories. ECA-financed shipments from the United States amounted to 63 per cent of total U. S. exports to France and overseas territories, and 69 per cent of the commodities shown in the table. Thus, the part of U. S. exports accounted for by ECA was larger for France than for any other country except Austria, and the end of ECA will have a sharp effect on French imports from the United States. Some 95 per cent of U. S. exports of fats and oils, coal, and nonferrous metals were financed by ECA, 90 per cent of cotton, over 80 per cent of feeding stuffs and tobacco, more than 65 per cent of petroleum, dairy products, and chemicals, and about 35 per cent of iron and steel products and machinery. Hence, ECA has played a very important role for a wide variety of commodities, and the end of the program would seem to imply a drastic and proportional cut in almost all U. S. exports to France. Unlike many other countries where a few ECA-financed commodities tend to dominate U. S. exports, there seems little possibility for France to cut back imports of other commodities to maintain the volume of those presently being financed by ECA.

Offshore purchases of commodities as a percentage of U. S. exports were larger for France than for any other country except the United Kingdom and Denmark. Offshore purchases from April 1948 to May 1949 amounted to 30 per cent of the principal exports to France from the United States (Table 6). Because of supply limitations in the United States, purchases of sugar were almost entirely from offshore; offshore purchases of petroleum were twice the petroleum exports from the United States, nonferrous metals two and one half times, and fats and oils and coal slightly more than a third of U. S. exports. As in other countries, these offshore purchases have probably not been made at the expense of U. S. suppliers inasmuch as the commodities were in short supply in the United States during part of the period under review. It can reasonably be expected, however, that offshore shipments of some of these will diminish as supplies continue to ease in the United States. This is particularly true for fats and oils. The cumulative total of procurement authorizations designating the United States as country of origin doubled between December 1948 and August 1949, while those designating other areas remained constant. In any case, since there would seem little prospect of shifting imports of sugar, petroleum, and fats and oils to nondollar sources as the volume of ECA aid diminishes, France will be faced with the problem of cutting back imports either of these products or of other commodities shipped from the United States or other dollar sources. Of the $227 million of ECA supplies coming from offshore sources, $30 million came from Canada, $73 million from Latin America, $44 million from participaing countries, and $80 million from “other” countries (mostly petroleum from the Middle East). Thus, although offshore purchases were large for France, less than half came from hard currency areas. The maintenance of her offshore purchases at the end of ECA would there-fore seem to present a lesser problem for France than, for instance, the United Kingdom. The validity of this conclusion, however, will depend to a great extent on supply conditions in the Middle East oil areas. It presupposes that oil will be available from British companies and payable in sterling; if this should not be so, and if France had to purchase oil for U. S. dollars, her position would be weaker.

Italy

ECA-paid shipments to Italy, which received the third largest amount of ECA aid, accounted for 18 per cent of Italy’s total imports from April 1948 to May 1949, and were 4 per cent of national income in 1948. ECA-paid shipments amounted to one fifth of the imports listed in Table 7 (covering 88 per cent of all Italian imports). They provided more than 25 per cent of Italy’s imports of grains and other foods, petroleum, coal, and raw cotton (which together comprise 63 per cent of all imports shown in the table), and more than 10 per cent of imports of fats and oils, nonferrous metals, and chemicals. ECA shipments of grains to Italy were larger than those to any other country except the United Kingdom, and shipments of petroleum, coal, and cotton larger than those to any other country except the United Kingdom and France. Hence, the variety of Italy’s imports which were financed by ECA was not so great as in France. But even so, ECA shipments accounted for more than one quarter of the four commodity groups which, combined, were 63 per cent of total imports. This difference results mainly from the different commodity composition of the imports of France and Italy. The fact that over half of Italy’s imports are of four commodities does, however, indicate the limited possibilities that Italy has for finding nondollar sources be-cause, other things being equal, the fewer the number of imports (and the larger the proportion coming from dollar markets) the more difficult it is to find alternative sources of supply.

Table 7.

Italy: Total Imports, Imports from the United States,1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to Italy.

Principally grains.

Totals may not equal sums of items because of rounding.

The United States as a source of ECA-paid shipments has been relatively more important for Italy than for any other country except Austria, accounting for 15 per cent of total Italian imports from April 1948 to May 1949, and for 17 per cent of the commodities shown in Table 7. ECA-paid shipments of agricultural commodities were almost exclusively from the United States, as well as 80 per cent of the coal, virtually all chemicals and drugs, and all shipments of machinery and tobacco.

Conversely, the proportion of ECA offshore purchases was smaller for Italy than for many of the other recipient countries (viz., Austria, Denmark, France, the Bizone, and the United Kingdom). Such purchases accounted for only 3 per cent of Italy’s imports from April 1948 through May 1949. As for other countries, however, offshore sources were important in ECA-financed shipments of petroleum, accounting for 23 per cent of Italian imports. Also important were offshore shipments of nonferrous metals, which amounted to 13 per cent of Italy’s imports. In summary, offshore purchases of petroleum, nonferrous metals, and coal were 80 per cent of total offshore imports and 84 per cent of ECA shipments of the same commodities from the United States. Italy’s offshore purchases, although not large, were mainly from nondollar sources. Canada supplied $1 million of the shipments, Latin America, $13 million, the participant countries, $16 million, and “other” countries (mostly Middle East petroleum suppliers), $23 million. As for France, the inclusion of the Middle East oil areas in nondollar sources presupposes oil supplies available from British companies, payable in sterling.

ECA shipments from the United States accounted for about one half of U. S. exports to Italy—about the same proportion as the average for all the participating countries. Of greatest importance in U. S. exports were ECA shipments of grains, coal, cotton, and nonferrous metals, but there was no ECA financing of U. S. exports of dairy products, fertilizer, motor vehicles, or wool (Table 7). This illustrates again the varying significance of ECA aid for U. S. exports, although of the commodities for which there was no ECA aid, only motor vehicles were exported to Italy in substantial volume. But as ECA aid was important for exports of quite a variety of U. S. exports, the end of the program is likely to curtail these particular commodities unless some of the other U. S. exports for which ECA has not been important (such as machinery and hides and skins, or the 7 per cent not included in Table 7) can be shifted to nondollar sources.

As total offshore purchases were equal to only 10 per cent of U. S. exports, offshore suppliers have not been important competitors of U. S. exporters. This reflects the general unimportance, already noted, of offshore purchases for Italy. For only three commodities—petroleum, nonferrous metals, and hides and skins—were offshore shipments significant in comparison with supplies from the United States. At least two of these were in short supply in the United States during part of the period considered. For other countries, offshore purchases of the same commodities which Italy bought entirely from the United States with ECA funds (e.g., grains, fats and oils, pulp and paper) are of considerable importance.

Bizone Germany

In assessing the extent of ECA aid to Bizone Germany, the statistical difficulties encountered were greater than for any other country. The greatest difficulty was that of classifying the commodity groups of Bizonal imports as reported in the trade statistics of the Joint Export-Import Agency (JEIA), a U. S.-British agency instituted in order to coordinate foreign trade policy for the Bizone. JEIA classifies Bizone imports into Category “A” (those financed by foreign aid) and Category “B” (those financed by exports of the Bizone). Category “A” imports are shown in broad commodity groups, while those in Category “B” are shown in groups not unlike those used in the trade statistics of other countries. Although the classification of Category “A” imports in a form suitable for comparison with ECA and U. S. exports necessitated somewhat arbitrary decisions, it is believed that no significant error was introduced on this account. As U. S. export statistics do not show separate data for each zone of Germany, the data for the Bizone are shown without comparison with U. S. exports.

Total U. S. aid to Bizone Germany (ECA and army civilian supplies) for the period April 1948 to May 1949 amounted to an estimated $915 million, or 49 per cent of total Bizonal imports of $1,854 million. Aid to the Bizone from the United Kingdom has not been large, although its inclusion would show an even greater dependence on foreign aid for financing imports. As only 14 per cent of total Bizonal imports was derived from ECA, a discussion of ECA by itself avoids a large part of the adjustment problem that would be posed by the cessation of all U. S. aid. Moreover, when discussing ECA shipments of particular commodities, it must be remembered that without ECA the same shipments might have been financed either by the occupation authorities or through use of earnings from exports.

ECA-paid shipments accounted for 14 per cent of Bizonal imports from April 1948 to May 1949, and for 15 per cent of the commodities shown in Table 8. Hence the Bizone ranks fourth in the proportion of total imports financed by ECA. ECA accounted for 14 per cent of food imports, this rather small amount being made possible by large food shipments under the army civilian supply program. Total Bizone food imports amounted to over $1 billion for this period. ECA was, however, considerably more important in Bizonal imports of other commodities, accounting for 51 per cent of machinery and vehicles, 45 per cent of hides, skins, and leather, 90 per cent of tobacco, and for about 25 per cent of textiles (including cotton) and of metals. Thus ECA aid has played a role of varied importance in the different commodity groups, ranging from almost 90 per cent of tobacco imports to less than 1 per cent of chemicals. Unless the commodity composition of imports is to change radically, the diminution of ECA aid will necessitate considerable shifting of expenditure of dollars earned from exports.

Table 8.

Bizone Germany: Total Imports and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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Totals may not equal sums of items because of rounding.

Almost 80 per cent of ECA shipments to the Bizone from April 1948 to May 1949 were from the United States. These included all shipments of grains, nonmetallic minerals, chemicals, machinery and vehicles, and by far the greatest part of shipments of textiles (including cotton), iron and steel products and nonferrous metals, and tobacco. This dependence on the United States is an indication, in part, of the importance of U. S. aid in total Bizone imports. The end of ECA and the removal of occupation controls could reasonably be expected to result in less dependence on the United States as the dominant source of these commodities, although this, in part, may reflect the disruption of trade channels resulting from the war and the trade policies of the 1930’s. However, the fact that U. S. supplies have dominated ECA shipments of most of these commodities (e.g., cotton, tobacco, and machinery) to other participating countries indicates that the United States is the chief source of supply, and this may be expected to continue to be the case.

Although offshore shipments accounted for only 4 per cent of total Bizonal imports, they were important for fats and oils, meat, and hides, skins, and leather (Table 8). As there were substantial shipments of the same commodities from the United States, offshore supplies are best interpreted as a supplement to U. S. exports of materials which were somewhat short in the United States during part of the period. For only one commodity, fertilizers, were ECA-financed shipments exclusively from offshore, but these amounted to only $4 million, or less than 1 per cent of Bizonal imports of this commodity. The greater part of offshore supplies came from nondollar areas. Canada supplied $6 million; Latin America $19 million; participating countries $28 million; and “other” countries $9 million. Thus the dollar earnings involved in financing these offshore supplies at the end of the program do not seem to amount to a substantial sum.

Netherlands

The proportion of imports financed by ECA was smaller for the Netherlands (11 per cent) than for many of the other participating countries (viz., Austria, France, Bizone Germany, and Italy). However, in relation to the national income in 1948 it was larger than for any other country, amounting to roughly 6 per cent, a fact which indicates that the end of the program may be expected to require far-reaching adjustments. ECA-paid shipments of agricultural products, which were 57 per cent of total ECA aid, amounted to 23 per cent of the Netherlands imports of agricultural commodities (60 per cent of grains) shown in Table 9. In the industrial products group, ECA contributed fairly significant amounts of Netherlands imports of petroleum, coal, and nonferrous metals. For half of the commodities in the table, however, ECA shipments were less than 10 per cent of total imports. Hence, the diminution and end of ECA aid could mean rather widespread, but not too substantial, cuts in a number of imports, depending upon the allocation of Dutch dollar earnings as the total supply of dollars decreases. Moreover, the fairly equal distribution of ECA aid among particular commodities implies that ECA has not insisted upon the use of its funds to finance any particular imports. The funds seem to have been used to increase all imports except grains by about the same amount. This suggests that, in comparison with other participating countries, the increase in total dollar availabilities resulting from ECA had no marked effect on the relative allocation of dollar spending.

Table 9.

Netherlands: Total Imports, Imports from the United States,1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to the Netherlands.

Shipments to Indonesia excluded.

Totals may not equal sums of items because of rounding.

The United States has been the chief source of ECA-financed shipments of agricultural products (except meats), and has supplied all ECA shipments of iron and steel, cotton, pulp and paper, machinery, and vehicles. Offshore sources, however, have been more important in Netherlands imports of many other commodities. Total offshore shipments accounted for only 3 per cent of total imports, but the percentages for some commodities (e.g., fertilizer, petroleum, coal, and fabricated basic textiles) were higher. Again, these were also the commodities procured offshore by most of the other countries. About half of the Netherlands offshore supplies were from nondollar sources; Canada supplied $13 million, Latin America, $24 million, participating countries, $15 million, and “other” countries, $24 million. Thus, under the assumption that the Netherlands will be able to finance payment to soft currency countries, offshore supplies could be continued with little difficulty at the end of the program.

For the Netherlands, the role of ECA shipments from the United States in U. S. exports approximates the average of 50 per cent for all participating countries. ECA shipments from the United States accounted for virtually all U. S. exports of grains, and about three fourths of U. S. exports of fats and oils, fertilizers, and lumber and manufactures. With the end of the program, a considerable impact on total U. S. exports, and probably on exports of these particular commodities, can be expected unless the dollar earnings of the Netherlands or its dependent territories rise substantially.

Offshore purchases amounted to 17 per cent of total U. S. exports to the Netherlands; and for about two thirds of the commodities shown in Table 9, there were shipments from both offshore and the United States. Shipments from offshore sources were almost equal to, or greater than, U. S. exports of animals and animal products, fertilizer, petroleum, coal, and fabricated basic textiles. In part, this resulted from supply difficulties in the United States, but it also seems to have resulted from the rather wide distribution of ECA aid which enabled the Netherlands to increase all imports by roughly the same amount.

Austria

Certain statistical difficulties in addition to those discussed above (see Statistical limitations, pp. 76-77) arise in reviewing the extent of ECA aid to Austria. As the statistics in Table 10 include about 98 per cent of ECA shipments to Austria and 88 per cent of total Austrian imports classified on a similar commodity basis, the omissions here involve no significant error. A more serious error, however, is probably introduced by the use of the then official exchange rate of 10.14 schillings per U. S. dollar for the conversion of Austrian imports. Since a substantial number of transactions took place at a depreciated rate, conversion at the official rate overstates the value of total imports and introduces some distortion in their commodity distribution. Although this error is probably substantial, there is no means of estimating its possible magnitude. In part, its effects are minimized, how-ever, by the means used to calculate the total value of Austrian imports. This was done by adding commercial imports as reported in official Austrian sources to ECA-paid shipments. The former, which included ECA coal shipments, were converted at the official rate, while the latter were total ECA shipments minus coal as reported in U. S. dollars. By this procedure, the U. S. dollar value of all ECA shipments (about one third of total imports) was obtained without distortion.

Table 10.

Austria: Total Imports, Imports from the United States,1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S exports to Austria.

Totals may not equal Totals may not equal sums of items because of rounding.

ECA shipments accounted for 34 per cent of total Austrian imports from April 1948 to May 1949, and almost 37 per cent of the commodities shown in Table 10. Thus, the ECA-financed proportion of imports was larger for Austria than for any other country. ECA shipments accounted for over 56 per cent of Austrian imports of agricultural commodities. Within this total, however, there was a wide range of variation: from 82 per cent for grain imports to 7 per cent for imports of dairy products. The main impact of the ECA program has been in agriculture, but this would be expected as imports of farm products comprised almost half of the total of Austrian imports shown in Table 10. This is a striking demonstration that up to the present time ECA funds have not been used directly to finance industrial development to any significant extent. Furthermore, the trend, as indicated by procurement authorizations at the end of August 1949, is toward even greater emphasis on agricultural products. About 70 per cent of these authorizations were for agricultural commodities, against 56 per cent of total shipments to the end of May. This leaves only 30 per cent for the industrial goods category, which includes materials as well as capital goods.

ECA aid has also been of considerable importance in financing coal imports. ECA shipments amounted to $21 million and accounted for 22 per cent of total imports of this commodity. Apart from coal, how-ever, ECA supplies of industrial goods were not large, the most important in absolute terms being metals ($6 million) and chemicals ($6 million). While the proportions of total imports of fertilizer and of hides, skins, and furs financed by ECA were large, the absolute amounts were negligible.

The United States supplied the bulk of ECA supplies going to Austria, and accounted for over 95 per cent of such shipments of grains, meat, fruits and vegetables, dairy products, cotton, wool, tobacco, and lumber. For grains, fats and oils, and cotton, these shipments accounted for more than 40 per cent of the total of each of these imports. While offshore procurement accounted for only one quarter of total ECA-paid shipments, non-U. S. sources supplied large shares of ECA shipments to Austria of particular commodities, such as sugar, fats and oils, coal, and metals. In some instances, these shipments were a significant proportion of total imports. For example, 44 per cent of sugar and 22 per cent of coal imports were from off-shore suppliers.

ECA shipments as a proportion of U. S. exports were larger for Austria than for any other participating country. As ECA shipments from the United States accounted for 71 per cent of total U. S. exports to Austria, the bolstering effect to U. S. exports to Austria of the foreign aid program is clear. ECA financed all the U. S. exports of seven commodities, the most important of which are fats and oils and cotton. The absolute amount of financing of these commodities, how-ever, was exceeded by the financing of grains despite the fact that almost one fifth of total grain exports was financed by other means. ECA played no part in financing U. S. exports to Austria of sugar, coal, pulp and paper, and textiles. There were private shipments of coal, textiles, and sugar from the United States, but ECA aid was restricted to financing these goods from offshore sources. The sum involved, however, was not large.

ECA financed substantial exports to Austria originating in offshore sources. Of the total, participating countries supplied $25 million, “other” countries $13 million, Latin America $10 million, and Canada $4 million. Over half of the total was supplied by the Bizone ($15 million), Poland ($9 million), and Cuba ($7 million). Thus under the offshore procurement program, about $40 million of supplies has already been diverted to nondollar sources of supply, and at the end of the program will not require additional dollar financing. To this extent the impact of the end of ECA will be softened. The dollar earnings of the supplying countries will, however, decrease by the same amount, with indirect effects on total U. S. exports.

Considerable purchases were made offshore of the same commodities that were exported from the United States, and some exports from offshore were a significant percentage of U. S. exports of the same product, e.g., fats and oils, metals, and feeding stuffs (Table 10). This dependence on offshore sources for commodities exported from the United States may reflect supply limitations there, price and quality differentials, or the attempt by ECA to facilitate the maintenance of well-established trade channels. In any case, this type of export is to be clearly differentiated from such exports as sugar, which the United States buys offshore mainly because of supply considerations. This distinction is of particular importance because it provides a basis for estimating how far offshore purchases are likely to decline as supply conditions in the United States continue to improve. It also suggests the limits likely to be imposed upon participating countries in attempting, as the offshore program is curtailed, to maintain the same commodity structure of imports. Furthermore, it is an indication, assuming no supply difficulties, of the extent to which Austria might divert its source of supply for imports from the United States to offshore sources.

Belgium-Luxembourg

Belgium-Luxembourg’s position in the European Recovery Program is noteworthy not so much on account of the absolute magnitude of the aid received, as for the fact that most ECA aid is extended on the condition that Belgium export a corresponding amount of goods to other participating countries. Hence, of the $250 million of aid to Belgium recommended by the OEEC (Organization for European Economic Cooperation) for the fiscal year 1949, $208 million was matched by Belgian exports to other participating countries. This arrangement permits Belgium to finance imports from the Western Hemisphere while exporting goods which are needed by other participating countries.

ECA-paid shipments accounted for 7 per cent of total Belgian imports for the period April 1948 to May 1949, and for 9 per cent of the commodities shown in Table 11, which make up 74 per cent of Belgium’s total imports. Compared with other countries, the shares both of total imports and of imports of particular commodities financed by ECA are small. The most important commodities of which ECA financed a large share were grains, petroleum products, and motor vehicles (Table 11). ECA also financed one quarter of Belgian imports of fats and oils and of tobacco, and over half of the sugar imports. The relatively large shares reflect the fact that these are dollar imports. Of the remainder, the ECA share was less than 10 per cent, although some ECA shipments were made of all but one of the commodities listed in the table.

Table 11.

Belgium-Luxembourg: Total Imports, Imports from the United States,1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to Belgium-Luxembourg.

Totals may not equal sums of items because of rounding.

The United States has supplied 82 per cent of the ECA-financed shipments to Belgium shown in Table 11. These include most ECA shipments of grains and meats, and all ECA shipments of fats and oils, dairy products, fertilizers, cotton, chemicals, iron and steel, paper and products, lumber, machinery and equipment, motor vehicles, and tobacco. Shipments from offshore amounted to only 2 per cent of total imports, and consisted chiefly of two products—sugar and petroleum—both unobtainable from domestic sources or in short supply in the United States. Offshore shipments of these two commodities amounted to 56 per cent of Belgium’s total imports of sugar and to 17 per cent of total petroleum imports. The other commodities from off-shore sources (grains, meats, coal, nonferrous metals, and vehicles) total less than $5 million. Belgian purchases of offshore supplies were from the following areas: Canada $8 million, Latin America $16 million, participating countries $5 million, and “other” countries (mostly petroleum from the Middle East) $7 million. Thus, Belgian offshore purchases from nondollar sources were less than one third of total offshore procurement, which further emphasizes the hard currency problem which Belgium will face at the end of the ECA program.

ECA did not finance so large a share of U. S. exports to Belgium-Luxembourg as to Austria and other participating countries (viz., Denmark, France, Italy, the Netherlands, and the United Kingdom). It accounted, however, for 38 per cent of total U. S. exports, and 42 per cent of the commodities shown in Table 11. ECA was of special importance in total U. S. exports of agricultural products, particularly grains, fats and oils, and meats. ECA shipments accounted for at least half of total U. S. exports of motor vehicles, lumber, and coal, and for more than two fifths of iron and steel exports.

ECA offshore purchases of the same commodities exported by the United States, while not large for Belgium, were relatively important for sugar, petroleum, and coal. This is further evidence of the relative unimportance of offshore purchases of most commodities for Belgium. For sugar, coal, and petroleum, the ratios of Belgian offshore purchases to purchases from the United States were, respectively, 7:1, nearly 2:1, and 1:1. However, as these commodities are either not typically exported from the United States or were in short supply during the period considered, offshore purchases cannot be considered to have been at the expense of U. S. suppliers. This also implies that ECA has been financing trade to maintain it in its customary channels and has been contributing to the financing of the deficits of the participating countries with the Western Hemisphere as a whole. Judging by the limited amount of offshore purchases, however, there seems little prospect of Belgium shifting the source of the bulk of its ECA-financed imports away from the United States at the end of the program.

Denmark

ECA shipments accounted for almost 9 per cent of total Danish imports from April 1948 to May 1949, and for 11 per cent of the commodities shown in Table 12. The most important of these, in absolute terms, were petroleum, feeding stuffs, and grains, which together accounted for 20 per cent of the Danish imports shown in the table. In addition, ECA financed 60 per cent of cotton and one third of tobacco imports. However, as ECA financed more than 15 per cent of total imports of only five out of twenty commodities, the commodity range of ECA aid was clearly narrow.

Table 12.

Denmark: Total Imports, Imports from the United States1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to Denmark.

Totals may not equal sums of items because of rounding.

ECA shipments from the United States were 56 per cent of all ECA-financed shipments to Denmark from April 1948 to May 1949. Such shipments of grain accounted for 22 per cent of total Danish imports, fats and oils 8 per cent, feeding stuffs 11 per cent, petroleum 11 per cent, raw cotton 60 per cent, motor vehicles 15 per cent, and tobacco 33 per cent. Of most of these commodities, however, there were also shipments from offshore sources to supplement supplies of U. S. goods. The importance of offshore procurement in ECA aid was greater for Denmark than for any other country except the United Kingdom and Sweden. There were large offshore shipments, even larger than those from the United States, of feeding stuffs, petroleum, and nonferrous metals (Table 12); and shipments of fats and oils from sources other than the United States were also important. The importance of off-shore sources in Danish ECA imports resulted from a number of factors—domestic shortages in the United States (e.g., petroleum), the maintenance of long-standing trade patterns (e.g., feeding stuffs), and the attempt to stimulate intra-European trade prior to the implementation of the payments agreement (e.g., coal). The ECA-financed commodities shipped from the United States are those characteristically imported by Denmark from that source. Like the Nether-lands, Denmark received about half her offshore supplies from non-dollar sources. Canada supplied $5 million, Latin America $13 million, participating countries $14 million, and other countries $4 million. To the extent that Denmark can increase her imports, particularly of petroleum and feeding stuffs, from nondollar sources, her position at the end of ECA will be improved, but this will depend upon supply conditions in these areas.

ECA-paid shipments accounted for over half of U. S. exports to Denmark from April 1948 to May 1949. They accounted for all U. S. exports of feeding stuffs, 91 per cent of grains, 78 per cent of fats and oils, 68 per cent of petroleum, 72 per cent of cotton, and 77 per cent of tobacco. In fact, ECA accounted for a high percentage of all but one of the U. S. exports to Denmark shown in Table 12. This indicates how important ECA has been in maintaining the volume of U. S. exports to Denmark, and implies a severe contraction in most, if not all, exports at the end of the program, unless dollar earnings expand.

Offshore purchases by ECA were equal to 42 per cent of total U. S. exports to Denmark. In all instances these shipments were of commodities also supplied by U. S. exporters. Especially important were offshore shipments of feeding stuffs, which were one and three quarter times those from the United States, petroleum and nonferrous metals, almost one and one half times, and fats and oils, almost two thirds those from the United States. Most of these commodities, however, were in short supply in the United States during the period, so that they may be expected to play a smaller role as the program continues.

Norway, Eire, and Iceland

The proportions of imports accounted for by ECA aid averaged less for Norway, Eire, and Iceland than for the other recipients of ECA aid examined in this paper. ECA shipments were approximately 6 per cent of the total imports of these countries during the period April 1948 to May 1949. Although of little importance in the aggregate, they comprised a significant proportion of certain imports. For Norway, 43 per cent of grains and 76 per cent of tobacco imports were financed by ECA; for Eire, 28 per cent of grains and 46 per cent of tobacco; and for Iceland, 50 per cent of feeding stuffs (see Tables 13, 14, and 15).

Table 13.

Norway: Total Imports, Imports from the United States1and ECA-Paid Shipments, by Commodities, April 1948–May 1949

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As measured by U. S. exports to Norway.

Totals may not equal sums of items because of rounding.