Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

Eisenhower Library, Eisenhower papers, Whitman file

Memorandum of Discussion at the 198th Meeting of the National Security Council on Thursday, May 20, 1954¹

top secret
eyes only

May 20, 1954

Present at the 198th Meeting of the Council were the President of the United States, presiding; the Vice President of the United States (presiding for part of Items 1 and 8); the Secretary of State; the Acting Secretary of Defense; the Director, Foreign Operations Administration; and the Director, Office of Defense Mobilization. Also present were the Secretary of the Treasury; the Secretary of Commerce (for Item 6); the Director, Bureau of the Budget; the Chairman, Atomic Energy Commission (for Items 1, 2, 3, 4 and 5); the Federal Civil Defense Administrator (for Items 1, 4 and 5); the Chairman, Council of Economic Advisers (for Items 1, 2 and 3); Mr. Milton for the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force (for Items 1, 2 and 3); the Deputy Director, Bureau of the Budget; Assistant Secretary of Commerce Anderson and Marshall Smith, Department of Commerce (for Item 6); Admiral Delany, Foreign Operations Administration; the Chairman, Joint Chiefs of Staff; the Chief of Staff, U.S. Army, the Chief of Naval Operations, the Chief of Staff, U.S. Air Force, and the Commandant, U.S. Marine Corps (for Items 1, 2 and 3); the NSC Planning Board (for Items 1, 2 and 3), as follows: Mr. Bowie, Department of State; Mr. Tuttle, Department of the Treasury; Gen. Bonesteel, Department of Defense; Mr. McDonnell, Department of Justice; Gen. Porter, FOA; Mr. Elliott, ODM; Mr. Reid, Bureau of the Budget; Mr. Snapp, AEC; General Gerhart, JCS; Mr. Amory, CIA; and Mr. Staats, OCB. The following were also present: the Director of Central Intelligence; Mr. Cutler, Special Assistant to the President; Gen. Persons, Deputy Assistant to the President; Gen. Carroll, White House Staff Secretary; Mr. Harlow, Administrative Assistant to the President; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

There follows a summary of the discussion at the meeting and the main points taken.

[Here follows discussion of the fiscal outlook, the NATO alert procedure, factors affecting military operations in Indochina, radio security, and a nationwide civil defense exercise.]

6. Economic Defense: Review of International Control Lists (NSC Action No. 1121; Memo for NSC from Executive Secretary, same subject, dated May 18, 1954; NSC 152/3²)

Mr. Cutler briefed the Council on the past history of this problem and on last week’s action. He then called on Governor Stassen to make his report and recommendation as to the United States position on critical items which had been requested at last week’s meeting.

Governor Stassen summarized the conclusions of the written report and his recommendations with respect to natural rubber, railroad rails, ball and roller bearings, the quota on merchant ships, petroleum products, electric power, etc. After some discussion the Council agreed to accept these recommendations.

The President then inquired of Governor Stassen as to how far the United States position in this controversy was influenced by domestic political factors and how much by considerations of national security. Governor Stassen said that while both entered into the formulation of our position, the strategic factor was predominant. One notable exception was scrap iron, which had such heavy political overtones in Congress that we were continuing to embargo it. Governor Stassen also warned the Council again that the Administration was certain to be criticized in Congress for agreeing to any relaxation of the International Control Lists. In this connection he referred to his exchange of words with Senator McCarthy.

The President then inquired as to the actual content of the trade between the free world and the Soviet bloc. Were our allies getting from the Russians any commodities that they really needed? Were they getting anything but Russian gold? Admiral DeLany replied that until recently the Russians had been delivering mainly timber, food grains, and gold; but in recent months the pattern of trade had shifted. The Russians were paying for much of their imports with gold and Russian grain exports had ceased. Various other commodities, such as manganese, were still being exported by the Soviet bloc.

Mr. Cutler then asked Secretary Weeks if he wished to comment. Secretary Weeks replied that he did wish to inquire about ten or a dozen items which the United States had agreed to delete from the International Control Lists and about which the Department of Commerce was not very happy from the point of view of national defense. Secretary Weeks supposed, however, that it was too late to do anything about these items at this time. Governor Stassen replied that it was too late unless there were very significant reasons for reversing our previous position. He reminded Secretary Weeks that the items deleted in negotiations with the British and French had first been agreed to by a U.S. interdepartmental committee.

Mr. Cutler then read to the Council a draft statement of a communication to the U.S. delegation in the trilateral negotiations which the Department of Commerce proposed to send. He asked Secretary Weeks thereafter to explain the purpose of the communication. Secretary Weeks replied that Commerce believed that such a message to our delegates would put them on notice formally to work actively to obtain support for the U.S. position by the representatives of the other nations at COCOM.

Governor Stassen indicated his view that in its present form it would be a mistake to send this communication. Particularly, it would constitute bad tactics to threaten the British with the Battle Act and a cutting off of assistance if they did not agree with the U.S. position.

Secretary Weeks said he saw Governor Stassen’s point, but he did not wish the United States to be “traded down” too far by the British. This would involve serious defense implications, and he believed that our delegates should be made to realize the necessity of fighting for the U.S. point of view.

Acting Secretary of Defense Anderson said that the Defense Department would not want to do anything which would cut off aid from our NATO allies.

The President repeated his familiar view that the negotiations should be conducted on the basis of the “net advantage” to ourselves and our allies, and expressed doubt as to whether this concept was clearly in the minds of those present. The President went on to ask the members of the Council to try to place themselves in the position of the British, who were in desperate need of relief after years of struggle and privation. It would be most unfortunate, he thought, if the United States pressed the British to a point where, in desperation, they determined to go it alone in their trade with the USSR or to a point where, indeed, they might decide to quit their alliance with the United States and join India in a neutralist position.

Secretary Weeks said that of course he was all for expanding international trade, but not to the point of building up the war potential of the Soviet Union.

Governor Stassen then stated that he would gladly agree to join in a statement of guidance to the U.S. delegation which would urge them to be tough but which would follow the lines of the discussion and omit any threat of the Battle Act.

The National Security Council:

a. Discussed the subject on the basis of the report by the Foreign Operations Administration transmitted by the reference memorandum and the oral remarks of the Director, Foreign Operations Administration, and agreed that:

(1) Natural rubber should remain on International Control List III (Watch List).

(2) Railroad rails under 70 pounds should be decontrolled.

(3) Ball and roller bearings should retain their present control status pending further discussions in September.

(4) The International Control List II quota on merchant ships of less than 15 knots speed should be not more than 150,000 gross registered tons.

(5) Crude petroleum, fuel oils other than distillate fuels, and motor gasoline, as well as aviation gasoline and blending agents therefor, should remain on International Control List I (embargo).

(6) Electric power equipment of 10,000 KW and over should remain on International Control List I (embargo), and such equipment of 5,000 to 10,000 KW should be subject to international quantitative control (International Control List II).

(7) The United States should maintain that deletion of items from the International Control Lists should be by unanimous agreement.

b. Discussed a draft message to the U.S. delegation to COCOM, proposed by the Department of Commerce, and noted that the Director, Foreign Operations Administration, would prepare and coordinate with other interested agencies a revised message in the light of the discussion at the meeting.

Note: The above actions, as approved by the President, subsequently transmitted to the Director, Foreign Operations Administration, for appropriate action.

[Here follows discussion of the assignment of United States aircraft technicians to Indochina and regional groupings in Southeast Asia.]

1. This memorandum of discussion was prepared on May 21 by Deputy Executive Secretary of the National Security Council Gleason.
2. NSC Action No. 1121 consisted of the directives issued by the NSC meeting of May 13, 1954, as recorded in the memorandum of discussion, supra. The memorandum by Lay, May 18, was prepared pursuant to directive c of that action and transmitted to the members of the NSC reports on the results of ACEP–EDAC deliberations on natural rubber, petroleum, bearings, and railway transportation items; a note on the rule of unanimity in COCOM; and reports on the status of discussions on shipping controls, the status of “last ditch” items in the review of the International Lists, and the retention of quantitative controls over items dropped from the embargo list. (S/S–NSC files, lot 63 D 351, NSC 152 Series). For text of NSC 152/3 as revised, see p. 1207.