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Sovereignty E Staple tapes

Tapery

currency markets
government sector.

Under “U.S. assets abroad,”

official reserve assets are entered in the amount of

-$607 million.

The U.S. monetary authorities purchased foreign assets in that amount, and U.S. foreign exchange reserves increased.

Under “Foreign assets in the U.S.,” foreign official assets in the United States appear in the amount of +$6,336 million. United States liabilities to foreign central banks increased in that amount.

The net of these two figures is +$5,729 million, a net increase in liabilities.

If we exclude these items from the balance of payments, we shall find that the net balance of the remaining accounts is -$5,729 million, a measure indicating a deficit in the U.S. balance of payments.

We can say that this deficit of $5,729 million was “financed” by a net increase in liabilities of the United States to foreign official agencies.

gap
The balance figure of -$5,729 million, which excludes only official transactions, is usually referred to as the “overall balance.” In this balance, official reserves are considered to be the buffer account which bridges the created by discrepancies between the levels of supply of and demand for foreign exchange.

When supply of foreign exchange exceeds demand for foreign exchange in the overall balance, foreign reserves increase. When demand for foreign currencies exceeds supply of these currencies, as in the computations above, official reserves decline, or the countries’ liabilities increase to meet the gap.

In our case, the increase in U.S. liabilities to foreign official agencies was the major factor compensating for the deficit in the overall balance. Of course, these differences between supply and demand and adjustments through changes in reserves and liabilities exist only to the extent that authorities insist on a fixed exchange rate. If exchange rates were allowed to float freely, official reserves would not be needed to bridge any gap. There would be no gap. The exchange rate would change, instead.

In many countries the overall balance is considered a good measure of the aggregate forces in the exchange market. In the case of the United States, this balance measure may not be adequate because of the special position of the U.S. dollar, which is a large component of the exchange reserves of many countries. The increase in U.S. liabilities held by foreign

official agencies shown in Exhibit 6.1 may have been due to a desire of these authorities to maintain a larger proportion of their foreign e change reserves in securities issued by the United States government. By contrast, official liabilities of other countries-particularly developing countries-usually grow in order to bridge the gap created by an excess

Expression of one thing in constitution is necessarily exclusion of things not ex- pressed, and this is especially true of con- stitutional provisions declaratory in their nature. Page v. Allen, 98 D. 272.

5. Construction by United States supreme court. Decisions of supremo court of United States upou all questions of constitutional law are conclusive and binding on state courts. Larrabee v. Talbot, 46 D. 637.
   Conclusions of that court upon construc- tion of federal constitution, if clearly ascer tained, will be followed by stato courts. Frey v. Kirk, 23 D. 5S1; Brigham v. Ilemler- son, 48 D. 610.
   Decisions of supreme court that statute of stato violates constitution of United States must bo followed by stato courts. Linn v. Bank of Ill., 25 D. 71.
   6.
   Sovereignty.-Term “sovereignty” is used to express suprome political author ity of independent state or nation, and whatever rights are essential to existence of this authority aro rights of sovereignty, nu right to declaro war, make peaco, levy taxes, and take privato property for public uso. Moore v. Smaw, 79 D. 123.
   Right of sovereignty is vested in people, and is exercised through joint action of their federal and state governments. To federal government is delegated exercise of certain rights or powers of sovereignty; and exer cise of all other rights of sovereignty, except as expressly prohibited, is revested to people of respectivo states, or vested by them in their local varnments
6. Powers romaining in the states. People of a state are entitled to all rights which formerly belonged to the king by his prerogative. Lansing v. Smith, 21 15. 89.
   States upon outoring Mission-rotaiment att their original power and sovereignty, except such as was surrendered to federal govern inent, or they were expressly prohibited from exercising by United States constitu tion. Subject to these exceptions, they were independent commonwealtlis, and exclusivo judges of what is just and proper for their own safety, welfaro, and happiness. Filair v. Ridgely, 97 D. 249. S. P., People v. Cole man, 60 D. 581; Com. v. Erie R’y Co. etc., 1 R. 399.
   Prior to adoption of federal constitution, atates possessed unlimited and unrestricted novereignty, and retained same ever after- ward, except so far as they granted powers to general government, or prohibited them. elves from doing certain acts. Every state reserved to itself exclusive right of regulat ing its own internal government and police, Bir. Ridgely, 97 1. 248.
   Grant of power to Congress excludes right of stato over same subject only when grant is in express terms exclusive authority to

2. When take effect.-Constitution is not operative until after its adoption by peo- ple, and does not change any rights, duties, requirements, or obligations that were cre ated by or depondent upon any territorial act, until it has receivol such sanction. Parker. Smith, 74 1). 749.
   New constitution does not, it seeins, super- sede prior constitution until put in opera- tion by legislature. Cuculluv. Louisiana Ins. Co., 10 D. 199.

3. Supremacy of constitutions. – Constitution of state is an instrument of re- straint and limitation. State v. Reidl, 35 1.44. Constitution is supreme law of land, is of binding force and obligation upon all depart- ments of governinent, fixes their powers, and limits bounds within which they must: act. It is fixod, permanent, uncontrollable, and transcendant in its naturo and opera tion, and can be changed or revoked only by powor that made it, the people. Rison v. Furr, 87 D. 52.

4. Canons of construction. In construing constitutions, no word is to bo rojected or disregarded which may have material bearing on rights of citizous, and such construction should be given as will best protect private rights. Thompson v. Grand Gulf etc. Co., 34 15. 81.
   Statutes and constitutions must be con- strued with reference to common law, and so as to make no change not expressly declared. McGinnis v. Stute, 49 D. 697.
   Words must be construed in proper tech- nical sense in statutes und constitutions, unless contrary intention appears. Ib. Constitution is always to be understood in its plain, untechnical sense. Puge v. Allen, 98 D. 272.
   When meaning of any one provision of in- strument is obscure, uncertain, or ambigu ous, other parts of same instrument may be resorted to for purpose of illustrating its meaning and explaining ambiguity. Morgan v. Dudley, 68 D. 735.
   In construction of written constitutions, courts are to ho governed by purpose of framors. Brodhead v. Milwaukee, 88 D. 711. Contemporaneous construction of consti tution, of long duration, continually prac ticed, under and through which many rights have been acquired, ought not to be aliaken but upon ground of manifest error and cogent necessity. Harrison v. State, 85 D. 59. S. P., Bruce v. Schuyler, 46 1). 447.
   Whero framers of now constitution adopt provision substantially same as one contained in former constitution, to which certain con struction has been givon, they are presumed to have intended that it should have same meaning which it had under former constitu tion. Alorgan v. Dudley, 68 D. 735; People v. Coleman, 60 D. 581.