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United States Recessions and Selected Imports*
Published online by Cambridge University Press: 07 November 2014
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The sheer size of the United States economy makes it vitally important to much of the rest of the world. Indeed cyclical and structural changes within it may have more profound effects on foreigners than on Americans. Foreigners are understandably concerned about their vulnerability, and it is clear that this problem has for some time been recognized by economists and policy-makers everywhere.
In particular, since the experiences of the 1930's, United States recessions have assumed the ominous role of an economic plague capable of rapidly and seriously debilitating productive activity in many countries. The principal cause of this debilitation is the curtailment of United States imports. Only if economic activity is maintained at reasonably high levels in the United States does this problem appear to be manageable. An optimistic view of the possibility of avoiding deep depression is widespread, and it is supported by the record of the past twelve years; but less severe or “normal” cyclical activity is something we must live with, and recessions of the magnitudes of those of 1948-9, 1953-4, and 1957-8 may be capable of sufficiently strong “side effects” on imports to cause serious difficulty in other countries. That this danger has been a principal theme of international economics in the post-war period is reflected in recent commentaries on its failure to materialize in 1957-8. The discovery that recession in the United States need not seriously depress imports is perhaps the most surprising feature of the 1957-8 downswing.
- Type
- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 25 , Issue 2 , May 1959 , pp. 180 - 189
- Copyright
- Copyright © Canadian Political Science Association 1959
Footnotes
*
The author wishes to thank Professor Don D. Humphrey of Duke University for advice in connection with this paper.
References
1 E.g., “… we believe that in future the real danger to the economic stability of the rest of the world lies in recession originating in the United States; …” United Nations, Dept. of Economic Affairs, Measures for International Economic Stability (New York, 1951), 6.Google Scholar
2 “In economies heavily dependent on foreign trade, it is clear that exports are an autonomous factor influencing the level of activity in much the same manner as investment, and of at least the same, and probably of much greater importance.” Polak, J. J., An International Economic System (Chicago, 1953)Google Scholar, Preface. This study found that the volume of world trade fell by 25 per cent between 1929 and 1932. Of this decline, 15 per cent is attributed to events in the United States, 12 per cent to a reduction in imports to the United States, and 3 per cent to the reduction of capital outflow from the United States. Ibid., 168.
3 “It is now generally accepted that the major countries have both the will and the means to avoid deep and prolonged depressions.” U.N., Measures for International Economic Stability, 3.
4 Ten years ago a mild recession was the cause of grave alarm. “In 1949 there was a weakening of U.S. demand, and for a few weeks the rest of the world wondered whether it was going bankrupt.” Marjolin, Robert, Europe and the United States in the World Economy (Durham, N.C., 1953), 94.Google Scholar The 1953-4 recession, in contrast, did not cause general international consternation although it was about as severe as the 1948-9 down turn: “In spite of our general conclusion that the 1953-54 recession had a sizeable and detrimental import effect, from the point of view of the outside world, it certainly produced no international payments crisis. However, … this was more because of the strength of the position of the outside world, especially of Western Europe, and because of the stabilizing effects of private capital movements than because of the weakness of the external trade effects of the recession.” Zassenhaus, Herbert K., “Direct Effects of a United States Recession on Imports: Expectations and Events,” Review of Economics and Statistics, XXXVII, no. 3, 08, 1955, 231, 233, 251.Google Scholar Yet while the rest of the world as a whole did not tremble, and while growing external strength was in evidence in spite of the American recession, these conclusions do not hold for the sterling area, the non-sterling Far East, and several Latin American countries.
5 Humphrey, Don D., American Imports (New York, 1955), 39.Google Scholar
6 Ibid., 41.
7 Imports of each commodity exceeded $100 million in 1957.
8 Data on imports of sawmill products are used for comparison with data on domestic lumber production.
9 U.S. Dept. of Commerce, Office of Business Economics, Business Statistics (biennial supplement to Survey of Current Business), and Survey of Current Business. The following notes apply to comparisons made between domestic production and imports: (a) Domestic aluminum production refers to primary production; imports are crude metal and alloys, plus plates, sheets, bars, etc. (b) Domestic copper production refers to primary refinery production from domestic ores; imports are the total of refined, unrefined, and scrap, (c) Domestic zinc production refers to mine production of recoverable zinc; imports are ores and concentrates plus metal (slab, blocks).
10 Whisky excepted owing to the 18th Amendment.
11 This point and probable future developments are discussed in Royal Commission on Canada's Economic Prospects, Final Report (Ottawa, 1957), 199.Google Scholar
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14 “United States Foreign Policy and Petroleum,” 239.
15 A comparison between 1953 and 1954 is omitted deliberately. See Table I, note k.
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17 This generalization does not appear to be true in the case of copper, in which the secular growth of imports in relation to domestic production has been small.
18 Examining the inter-war period, Brecher and Reisman found that the prime causal influence on Canadian cycles came from the United States. Other forces were operative, both external and internal, and the net result was less severe downswings, especially in 1920-1 and 1937-8, than in the United States. Brecher, Irving and Reisman, S. S., Canada–United States Economic Relations (Ottawa, 1957), 43.Google Scholar
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20 These writers observe (Canada–United States Economic Relations) that between 1948 and 1949 there was a slight rise in exports of Canadian merchandise to the United States. Between the third quarter of 1953 and the second quarter of 1954 Canadian exports of merchandise to the United States declined by only 2.9 per cent compared with a 10.1 per cent drop in U.S. manufacturing output.
21 U.S. Dept. of Commerce, Bureau of the Census, Report no. FT 120, United States Imports of Merchandise for Consumption (Washington, D.C., 05, 1958), 9.Google Scholar
22 Ibid., for calendar years 1953, 1954.
23 At that time United States imports of petroleum from Canada were still of minor importance, being valued at about $8 million per year.
24 In August, 1954, iron ore began to move from the Quebec-Labrador deposits to the United States.
25 Gibson, J. Douglas, “The Changing Influence of the United States on the Canadian Economy,” this Journal, XXII, no. 4, 11, 1956, 433.Google Scholar