Eisenhower Library, Eisenhower papers, Whitman file
Memorandum of Discussion at the 137th Meeting of the National Security Council on Wednesday, March 18, 19531
eyes only
Present at the 137th meeting of the Council were the President of the United States, presiding; the Vice President of the United States; the Under Secretary of State; the Secretary of Defense, and the Director for Mutual Security. Also present were the Secretary of the Treasury; the Secretary of Commerce (for Items 1 and 2); the Director, Bureau of the Budget; the Chairman, Joint Chiefs of Staff; the Administrative Assistant to the President for National Security Matters; the Special Assistant to the President for Cold War Operations; the Military Liaison Officer; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC. Various staff members from the Department of State, the Department of Defense, the Department of Commerce, DMS, MSA, and CIA, were also present to assist their principals during the discussion of Items 1 and 10.
There follows a general account of the main positions taken and the chief points made at this meeting.
1. U.S. Policies and Programs in the Economic Field Which May Affect the War Potential of the Soviet Bloc (Progress Report, dated January 19, 1953, by the Secretary of State and the Director for Mutual Security on NSC 104/2)2
Mr. Cutler introduced the first item on the agenda, and informed the Council that the Director for Mutual Security would brief them on the reference Progress Report, with the assistance of a briefing team which would answer detailed questions.
With the assistance of charts, Governor Stassen proceeded to summarize the written report which he had distributed to them at the beginning of the meeting. The major issues covered by Governor [Page 940] Stassen’s briefing included levels of general (strategic and non-strategic) trade between the free world and the Soviet bloc; the trade of certain specified countries with the Soviets; an index of volume of trade between Eastern Europe and Western Europe prior to World War II and since the end of the war; merchant shipping involved in trade of all types with Communist China; licensing of strategic materials for export to the Soviet bloc by the European COCOM countries; and the problem of the so-called “prior commitments”. Governor Stassen’s presentation ended with a discussion based on charts of what seemed to him to represent the five major issues confronting the policy set forth in NSC 104/2.3
At the conclusion of Governor Stassen’s report, the President stated that while it had been very informative, it seemed to him that Governor Stassen had actually omitted discussion of what was by all odds the most important issue as regards this policy, namely, which side was benefitting most from east-west trade—the free world or the Soviet bloc? The President expressed the opinion that the distinction between strategic and non-strategic materials no longer made very much sense in the kind of world in which we live and in the kind of wars in which we were involved. He went on to say that the various items included in east-west trade and its general level of a few millions of dollars, did not strike him as having any great importance or significance. He could not refrain from stating that he thought it little less than crazy to waste as much talent on this problem as was represented by the individuals in this room who were devoting themselves to the problem. The President did admit, however, that of course there was the law of the land (Battle Act).
Continuing, the President stated that in his view the very best weapon in the hands of a modern diplomat was trade. If we continued to pressure our European allies to the point which we seemed prepared to do under this policy, we might very well confront a situation of virtual isolation. In short, the President said, he simply could not agree with the general philosophy underlying NSC 104/2 as it had been presented in Governor Stassen’s briefing. It would be impossible to win any war with such severe restrictions placed on our allies, and especially a cold war. The President very forcefully insisted, for example, that the Danes had got to have Polish coal. On the subject of coal he went on to say that if European production could be increased by 50%, “we’d be in the clover.” Coal was the secret of much of the difficulty faced by the free nations in their dealings with the Soviet orbit.
[Page 941]In response to the President’s statement, Governor Stassen stated that each of the countries involved in trade with the Soviet Union within the framework of NSC 104/2, was absolutely convinced that it was getting the best of the bargain vis-à-vis the Soviet bloc. Each of these nations was likewise convinced that continuation of its present trade with the Soviet bloc was vital to the maintenance of economic health.
The President expressed no surprise at these assertions, and said that he himself would not object if the United States could advantageously purchase Soviet manganese.
It was pointed out, in response to a question from the President, that the very tiny figure for United States imports from the Soviet Union covered caviar, furs, and such luxury items.
Secretary Wilson expressed some skepticism with respect to the general position taken by the President toward Governor Stassen’s briefing.
Secretary Weeks specifically called attention to the heavy increase in the shipment of anti-biotics manufactured in this country to Western European nations which in turn shipped them to the Soviet bloc. He felt that in view of the war in Korea, anti-biotics fell definitely into the classification of strategic items, and their treatment might require a different approach than that suggested by the President.
In response to Secretary Weeks’ statement, the President said that he would like to ask Secretary Weeks a very simple question: Do you want to adopt, as Secretary of Commerce, a policy of supplying to the free world nations all the materials which they are now obliged to import from the Soviet bloc?
Secretary Weeks did not answer the President’s question, but again pointed out that with respect to anti-biotics the situation might be different if there were not a war in Korea and if it were not likely that these drugs were being shipped to Korea.
The President then restated his general position on the subject of east-west trade and United States trade policies with respect to its European allies. The standard of living in most of the countries of Europe was, from his own observation, “too damned low.” We cannot permit our national policies to lower that standard of living still further if we want to keep these nations on our side in the struggle with the Soviet Union. This was no theoretical matter to him, said the President; he had had ample opportunity to observe the low standards in French towns and villages during his sojourn in Europe. The whole attempt to restrict trade to the further detriment of these standards of living seemed to him foolish and impossible, although he was prepared to admit that the anti-biotics constituted [Page 942] a special case in view of their obvious use in the war in Korea.
There then ensued a brief discussion as to what, precisely, constituted strategic items. Among those pointed out besides anti-biotics were tankers, copper, certain types of machine tools, spare parts for various types of machinery, and bearings. Governor Stassen pointed out that by special methods which prevented the Soviet bloc from acquiring such items, it was certainly possible to delay the Soviet build-up for war.
Secretary Wilson agreed with the positions taken by Secretary Weeks and Governor Stassen, while Secretary Smith said that certainly in the majority of cases, though not including these and other strategic items, the advantage in east-west trade lay with the free world. The problem, said Secretary Smith, was nevertheless very complex, and it seemed to him that the Progress Report and the discussion in the Council pointed up the need for a really comprehensive view of the trade policy set forth in NSC 104/2 by the Senior NSC Staff. Such a review would enable us to make a clear distinction between the really critical items which should be embargoed, but which the Soviets should receive in as small quantity as possible, and less important materials.
There was general agreement with Secretary Smith’s suggestion, though Governor Stassen pointed out that the Department of Commerce should participate with the Senior NSC Staff in the proposed review.
The National Security Council:
- a.
- Noted and discussed an oral presentation on the subject made by the Director for Mutual Security with the assistance of the Economic Defense Advisory Committee, based on the reference Progress Report.
- b.
- Noted the President’s view that the basic question on this subject is whether the free world or the Soviet bloc is gaining the greater advantage from east-west trade.
- c.
- Directed the NSC Planning Board, with the participation of the Department of Commerce, to review the existing policy on this subject (NSC 104/2) and submit appropriate recommendations for Council consideration.
[Here follows discussion concerning United States civil aviation policy toward the Soviet Union and its satellites, NATO strategy, payment of United States forces in Korea in Korean currency, possible reductions in the United States atomic energy program, recommendations regarding the NSC, civil defense measures, significant world developments affecting United States security, policy toward Latin America, and general national security policy.]
- This memorandum of discussion was prepared on Mar. 19 by Deputy Executive Secretary of the National Security Council Gleason.↩
- Ante, p. 913.↩
- For text of NSC 104/2, see Foreign Relations, 1951, vol. i, p. 1059.↩