HUNGARIAN ANALYSIS OF THE WESTERN ECONOMIC SITUATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00246A048900160001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: August 3, 2010
• Sequence Number: 1
• Publication Date: June 8, 1959
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
This material contains information affecting the National Defense of the United States within the meaning of the Espionage Laws, Title
18, U.S.C. Secs. 793 and 794, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law.
SUBJECT Hungarian Analysis of the
Western Economic Situation
DATE OF
INFO.
PLACE &
DATE ACQ.
REPORT
DATE DISTR.
NO. PAGES 1
REFERENCES
Hungarian analysis of the Western economic situa-
tion. This analysis by the Main Department of Market and Business
Research, Hungarian Chamber of Commerce, is titled "The Main Trends
of the Capitalist Economic Situation," and is divided into three
sections: "The Economic Situation in the United States," "The
Sluggishness of the West European Economic Upswing," and "Several
International Trade Questions and Foreign Exchange Problems." The
report also touches the dollar shortage throughout the world, the
status of several foreign currencies, West European integration
and the Common Market, and the growth of East-West trade. The report
concludes that "the increase of economic relations among cpuntries
of various social orders is a legitimate and inevitable process,
which is being given impetus by the current decline in the capitalist
economy." The task "of all the socialist countries, including Hungary,
is to promote and accelerate this process."
STATE
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The report, titled "The Main Trends of the Capitalist Economic SM
Situation," is divided into three main sections: "The Economic Situation
in the U.S.A." "The Sluggishness of the West European Economic Upswing,"
and "Several International Trade Questions and Foreign Exchange Problems."
The report states that "The capitalist 3conomies are going through a
difficult period now in the early s>er months of 1958," and that the
following factors define the situation:
1. "The overproduction slump developing in the US coincides with
the economic sluggishness apparent in the countries of Western Europe.
2. "The factors and tendencies retarding the 'normal' course of
the overproduction slump -- chiefly government economic measures and the
inflation-- will prolong the slump.
3. "In recent years, the rift has deepened between the industrially
mature nations and the weak row-materials-producing nations and is,
under present circumstances, intensifying the market problem and is
leading to the stagnation and reduction of international trade.
4. "Because of the US slump and the general decline in the rate
of growth of the capitalist economy, world economic power reAAtions
are shifting in favor of the socialist countries, where productive forces
are constantly developing, it
In respect to the economic situation in the US, the report lists
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all the symptoms of the "slump," e.g., a decrease in industrial production,
investments, imports, and profits, and increased unemployment, attributing
them to "the relative lag in the buying power of the broad masses of
the working class behind the abundance of commodities."
"However," the report continues, "besides the usual criteria for
the overproduction slump, there are other factors which differentiate
this present slump cycle from previous ones and which will affect its
development, three of which are: the movement of fixed capital; increased
interference of the government in the economy; and the inflationary
process."
The report then discusses private investment cycles in the US
since World War II, and furnisnes several tables "based on data from
various issues of the Survey of Current Business." The first table,
"The Formation of Investments in US Private Enterprise," shows gross
investments and fixed-capital investments, from 1954 to 1957, in
billions of dollars. A second table, "Fixed Capital Investments in
the US," provides quarterly figures for 'psi 1955-1957 in billions
of dollars. A third table, "Industrial Production, Personal Consumption,
and Public Purchasing in the US," gives 1954-1957 indexes for all
three of the subject elements. A fourth table, "Industrial Production
in the Ni" gives monthly indexes for the period January 1956 through
April 1958, based on data from the March-April 195b issues of the
Financial Times, as well as on data from various issues of the Survey
of Current Business. The final table in the first section of the
report cites no source and deals with "The Formation of Wholesale and
Consumer Price Levels in the US." Each table is followed by an analysis
and discussion of the tabular data, and the first section of the report
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is concluded with the following L ; It is therefore evident that
nowadays not only are the upswings of the American capitalist ec?nev
burdened with inflation, but even the slumps are distorted b v the
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inflationary trend and made more difficult to overcome."
The second section of the report, dealing with the economy of Western
Europe, discusses %the slackening of the tempo of the 4-year industrial
boom which became perceptible in 1957 and developed increasingly more
in the first months of 1958." The report says that, although the slow-
down was not a consequence of the "overproduction slump" in the US, its
basic causes and characteristics were "essentially of the same nature
as those of the American Recession," and that the investment boom in
Western Europe was accompanied by inflation "Just as it was in America."
Several tables are shown under the following titles: 1) "Western
European Industrial Production in 1956 and 1957," based on figures from
Bulletin Statistiques of the OEEC, No 2, 1958, 2) "Several Main Economic
Indicators for Western Europe," 1954-1957, from the same source, 3) "Fixed
Capital Investments of the English Processing Industry," 1956-1957, source
The times Review of Industry, June 1958, 4) "Fixed Capital Investments
in the German Federal Republic," 1950-1957, no source cited, and 5) "Per-
centage Increase in Production of Investment and Consumer Goods in the
German Federal Republic, Compare to Preceding Years," no source given.
The final section of the report, concerned t th international
trade and foreign exchange, contains a table, based on figures from the
UNO Monthly Bulletin of Statistics, April 1958, Le Commerce Internationale
en 1956 (GATT), June 1957, Stati3tiques Generale as l'OEEC, May 1958,
and the London and Cambridge Economic Bulletin, June 1958, to snow "the
decline in the rate of increase of the capitalist world economy."
A second table , titled "Combined Gold and Foreign Exchange Reserves
of the Capitalist Countries" and based on figures from International
Financial Statistics, a publication of the International Monetary Fund,
compares 1957 reserves and imports with those of 1937 and shows %that in
20 years, world t "trade has expanded over twice as fast as the total
monetary reserves necessary for the settlement of international payments."
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The report says that "One of the main causes of the declining rate of
international trade and the balance-disturbances in the capitalist
world economy is the uneven economic development which is evident in
the increasing difference between prices and wages in the individual
countries and in the uneven distribution of gold and foreign exchange
reserves."
The report next discusses the dollar shortage in the world, the status
of several foreign currencies, West European integration and the Common
Market, and the rapid growth of trade between the East:,
particularly Communist China, and the West. The report concludes, "All
this shows that the increase of economic relations among countries of
various social orders is a legitimate and inevitable process, which is
being given impetus by the current decline in the a`psz capitalist
economy. An important task of the economic policies of all the socialist
countries, including Hung^ry, is to promote and accelerate this process."
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