chapter  12
Germany's Persistent Balance-of-Payments Disequilibrium Revisited
Pages 30

From the publication of the Department of Commerce's The United States in the World Economy (written by Hal B. Lary in 1943) until about 1957, when Donald MacDougall's The World Dollar Problem appeared, there was continuous discussion of the US balance-of-payments surplus, known popularly as the 'dollar shortage.' Many found the term offensive. I was told, for example, that if I had entitled my book on the subject 'Persistent Disequilibrium in the United States Balance of Payments' instead of The Dollar Shortage, it would have received a friendlier reception. Perhaps, but the early 1950s were a period when most economists believed in automatic equilibrating mechanisms in economics, in contrast to the present when disequilibrium is known to exist, possibly even to persist, and is thought worthy of study. Once stung, twice shy, however, and I entitle this chapter in the more mouthfilling fashion rather than call it 'Deutsche-mark Shortage,' despite my view that the positive disequilibria which persisted in the foreign-exchange markets for the dollar then and the Deutsche mark now have strong points of resemblance. Nor am I prepared to abandon the position with respect to the dollar which I took twenty-seven years ago in The Dollar Shortage, despite the fact that time eroded it — perhaps more quickly than I anticipated, though it was never suggested that the dollar shortage was permanent.