Many residents of this country, some of them recent immigrants, send gifts of money to relatives abroad. If individuals in the United States acquire balances worth $1 million that US. banks have held in foreign banks and then transfer these balances to relatives overseas, there must be a credit entry of $1 million showing the decrease in U.S. private short-term claims on foreigners. This transaction differs from the other transactions analyzed in that US. residents obtain nothing of material value in return for the asset given up. Yet if the books are to balance, there must be a debit entry of $1 million. The bookkeeping convention followed in such cases is to debit an account called "Unilateral transfers" (line 10). In the official US. balance-of-payments presentation, this account is divided into several subsidiary accounts, some of which are used to record grants by the federal government under the foreign aid programs. These foreign aid grants, of course, have been much larger than gifts by private individuals.
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