TOWARD A WORLD PAYMENTS SYSTEM: A REVIEW ARTICLE

Abstract

THE TWO RECENT WORKS by C. P. Kindleberger (K) and R. Triffin (T) have many common features.2 Both are collected papers, memoranda and letters to editors written over a span of a quarter of a century which started with dollar shortage and ended with dollar glut. Both cover a broad range of topics from the technical discussion of balance of payments statistics and the forward exchange market to crystal ball gazing into the future of international monetary order. In general, both tend to be broad gauged and policy oriented, and both derive their results from lessons of history and empirical observations. Since each of the contributions was originally written as a self-contained unit for one purpose or another, there is inevitably a considerable amount of repetition involved if one attempts to read the essays seriatim. It also becomes difficult to keep track of the changing positions of the authors. Moreover, the absence of an index in T's book makes it almost impossible to trace his views on certain subjects without having to read or re-read the whole book. It can be said, however, that both books are marked by a colorful and lively style, lucid exposition, and touches of humor scattered throughout. The main themes which both books have in common are the changing role of the dollar in international finance, European economic integration, world liquidity, and balance of payments adjustments. The points of view of the authors are nevertheless sufficiently different as to invite comments. It may be most instructive to look at the highlights of each book in the context of current international monetary issues. 1. From Dollar Shortage to Dollar Glut. The United States balance of payments has been and still is a topic of great concern internationally. In the postwar period we have seen the situation of the dollar change from shortage to glut. The change was predicted by few, and it is noteworthy that T was one of the first. As early as December, 1952 he registered his skepticism over some extreme forms of the dollar gap theory, such as the conclusion that the differential rate of productivity growth in Western Europe and in the United States could only be met by ever-increasing controls and discrimination. He pointed out that the European dollar gap in 1947-52 was not due to deficit on the current account of the Western European countries, but to the financing of the deficits of overseas areas which amounted to $4-5 billion in the 6 year period. It was nevertheless stated in the Randall report on January, 1954, that