129. Letter From the Representative at the United Nations (Lodge) to the Secretary of State 1

Dear Foster : Many thanks for your letter of October 1st2 enclosing a table on dollar balances held by foreign countries. I have just received another table from your assistant, Mr. Greene, with supplementary information for the first half of 1957.

I am glad to see that the old bogey of the dollar gap which worried us so just after the war has been overcome. In 1949 this problem crippled our Allies. It is good to know that our various programs have helped them to get back on their feet. Their economic representatives to the United Nations say that their reserves of gold and dollars are still lower in proportion to their total trade than they were in the pre-war period. They are worried about what might happen if their sales to us go down. Perhaps this is because their build-up of liquid dollar holdings has been reversed during the past year.

I was also glad to see that there has been a net outflow of 10 billion dollars in private U.S. capital. This is the way to show what American free enterprise can do in promoting economic development in underdeveloped countries.

With best wishes.

Sincerely yours,

Cabot L .
  1. Source: Department of State, Central Files, 800.10/10–2957.
  2. In this letter Dulles wrote: “I recall we spoke about dollar balances. I think you will be interested in the enclosed table, which has been prepared for the NSC. Despite the favorable balance of current transactions, the net outflow of dollars from the United States has totaled $12.5 billion in the last seven years.” The tables he enclosed encompassed a somewhat narrower scope than the statistics forwarded to Lodge by Greene on October 24, supra .