THE TERMS OF REFERENCE of this report1 were to ascertain the causes of the imbalance of international payments from which the world has recently been suffering. Since “causes” include policy decisions, which may be criticized from various points of view, it has been thought better in this first approach to limit the enquiry to ascertaining the changes that have in fact occurred in the pattern of international payments. In most of the report this has been narrowed to the differences between the pattern as it existed in the period 1950-mid 1952, or in 1950–51, and the pattern of 1936–38.
It must not be taken to be implied that none of the changes revealed would have taken place if World War II had not occurred. Nor is it implied that any of the changes that have taken place are undesirable. Furthermore, the report must not be taken necessarily to imply any pointers for future policy. For instance, if it appears that a particular factor has been responsible for a big dislocation, it does not follow that a remedy should be found by operating on that factor; the best remedy may lie in introducing offsetting forces by operating on other factors. The relevance of the report for policy consists only in the contribution it may make to a better understanding of the quantitative importance of the various forces that have been at work.
It will be observed that gold plays rather a large part in the analysis of the changes in pattern that have occurred. The author of this report came to his work with no preconception on this matter. Indeed, it was only halfway through his work that the full significance of the changed position of gold was borne in upon him; from this point forward there was no choice but to place emphasis on gold, since there was no other way of describing the larger changes of pattern that have taken place.
The report is necessarily confined to major items of change. It could also be used as a framework for consideration of the smaller items and of policy development.