Notes and Book Reviews

Abstract

One "pitfall" in balance of payments interpretation is that so-called "receipts" are not themselves receipts, but are entries giving rise to receipts, the particular forms of which are listed as "payments;" and, conversely, "payments" necessitate payments, which are given as "receipts." 1 A similar pitfall is in the labelling of the credit and debit sides of the United States balance of payments as "dollar use (by foreigners)" and "dollar supply (to foreigners)." 2 The unwary reader (which includes virtually all students and some oi their instructors), may well suppose that suck terms are literally descriptive. But such is not always (or, perhaps, even usually) the case, and when supposedly descriptive terms are in fact often not descriptive, they may confuse more than help." On an individual entry-by-entry basis, certainly not all United States debit items (that is, United States imports of goods, services, and claims, and United States gifts) provide dollars or even assets which can be liquidated into dollars. For example, a United States import of United Kingdom commodities may be purchased by reducing United States pound balances in English banks (rather than by increasing United Kingdom dollar balances in American banks), in which case no dollars or dollar assets are involved, so far as the English are concerned. The effect on the international debtorcreditor status of the United States is the same regardless of which of these alternative financing * Helpful comments on an earlier draft, some disagreeing but none disagreeable, were contributed by Walther Lederer, Edward C. Simmons, and Leland B. Yeager. 1 See Stephen Enke, "Some Balance of Payments Pitfalls," American Economic Review, XLI (March 1951), i6i64, and "Comment" of Robert L. Sammons, Ibid. (December I95I), 938-39. Sammons, then chief of the Balance of Payments Division in the Department of Commerce, agreed with Enke that "the terms receipts and payments . . . may be somewhat misleading," and "we dropped the terms . . . beginning with the figures presented in the (Survey of Current Business) issue of June 1950" (938). With minor exceptions, the terms were not utilized in the Survey for several years, but, beginning with the December 1956 issue, they have been used regularly, as they were prior to I950. The very term, "balance of payments," has been called into question, with "balance of international economic transactions" being suggested as an alternative. See John P. Powelson, Economic Accounting (New York, 1955), 378, and Charles N. Henning, International Finance (New York,