Due to the consistent response of commodity trade to variations in American growth, we have shown that with every long swing in United States history the components of the balance of payments have responded in a systematic fashion. Every Kuznets cycle upswing can be characterized as one of increasing tradebalance deficit (or deteriorating surplus) and of increasing capital inflow (or decreasing capital outflow). There is no exception to this generalization over the period 1820-1913. Similarly, we have seen that every Kuznets cycle downswing is typified by an improvement in the trade balance and by a reduction in the rate of capital inflow (or an increasing rate of capital outflow). This evidence in itself reflects astonishing historical consistency.
Given the fact that net capital flows partially offset the widely fluctuating trade balance and imparted some stability to the balance of payments, what was the net effect of the American long swing on our payments position? Did fluctuations in net