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Twenty-one Home Governments: The twenty-one home governments voluntarily combined, at about the time the Marshall Plan was inaugurated, to help themselves and each other, receiving all their financial support from their own national treasuries. Their common slogan states that, "Understanding: Through Travel Is the Passport to Peace" and in that eight-word assertion! there is more solid sense than can often be found in political speeches of? great length.
In contrast, France and West Germany have relied more heavily on tax sharing, in which a given share of national tax receipts is allocated to local governments. The funds may be used by the local governments as they choose. This has the advantage of fiscal flexibility for local governments but offers less assurance that national programs will be carried out on at least a minimal scale in every locality.
The U. S. Treasury thus sells and buys gold, at the established price, in transactions with foreign governments and central banks for legitimate monetary purposes. To protect the U. S. gold base—which became very narrow during the second half of the 1960's as a result of the large and prolonged balance-of-payments deficits and the resulting overabundance of dollars in the hands of foreign governments—demand for gold was tempered as governments voluntarily refrained from converting dollars into gold. The convertibility of dollars thus became nominal in that governments holding the largest amounts of dollars had little choice but to refrain, for non-monetary reasons, from exercising it. |
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