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War Economy

Restraint on Imports

Restraint on Imports

After being low in 1939, export prices rose steadily throughout the war years and, in spite of the disappointingly small increase in export volumes, the value of all wartime exports averaged a fifth higher than in the three pre-war years.

Import prices rose too. In fact they rose much more rapidly than export prices. However, until 1943, import volumes were very low, payments remained moderate, and there was a progressive improvement in the overseas assets of the banks, which had been at such a low level at the end of 1938. Annual imports throughout the war years averaged one-eighth less in volume than in the three pre-war years.

Though import licensing was severe, and, before Lend-Lease, shortages of hard currencies severely curtailed ordering in the United States and Canada, neither import controls nor lack of purchasing power should bear too much of the blame for the low rate of importing in the early war years. Supplies were restricted also by lack of shipping and by the inability of overseas suppliers to fill orders. These restrictions were often most embarrassing from the supply point of view, but the burden of import payments was considerably reduced by the slower inflow of imports.

In 1943, when a considerably increased supply of imports did become available, two-thirds of the extra goods came as Lend-Lease and did not involve payments for foreign exchange. Even in this year of record importing there was a small increase in the overseas assets of the banking system.