And the broadest measure of the trade deficit, the balance of payments on current account, hit an all-time high of $140 billion.

Indeed, during the last few years, the surplus on the balance of payments on current account in relation to the world economy has shown a significant fall.

Of the first-quarter deficit in the balance of payments on current account, according to a Fed spokesman, "substantially less than half" was due to foreign central bank intervention.

But yesterday, after the announcement of a record deficit of $41.1 billion in the nation's balance of payments on current account in the second quarter, the securities markets fell and the dollar dropped.

While the American trade figures have improved, many economists are still fearful of the persistence of large deficits in the more comprehensive balance of payments on current account, which includes services and interest payments.

Mr. Mori points out that the United States deficit in the balance of payments on current account is equal to the deficiency of United States savings relative to domestic investment.

The combination in recent years of a floating pound and a weak balance of payments on current account had made it necessary to attract short term funds on capital account by maintaining high interest rates.

He does not deny that the American-dominated international system has been malfunctioning since the early 1970's, as demonstrated by the big United States deficit in its balance of payments on current account; this now amounts to more than 3 percent of gross national product.

The fundamental difficulty, nevertheless, was that contemporaries had not 'foreseen.that the balance of payments on current account and the change in the gold and dollar reserves would bear little relationship to one another[Cairncross, 1985, 79]; in particular there was a heavy outflow of capital to the sterling area.

He regards the increase in the American budget deficit since 1981, the last year the United States had a surplus in its balance of payments on current account, as a factor in the trade deficit, but finds it only half as important as the fall in the personal savings rate since 1981.