Mr. Willis C. Armstrong, Adviser, Division of Commercial Policy, to the Deputy Director, Office of International Trade Policy (Martin)1


Dear Ed: The EWP group finished the basic paper of conclusions and recommendations subsequent to your departure and I transmitted it to the appropriate people.2

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On November 211 conferred with Mr. Wood3 and outlined the extent of our work to date. November 22 brought a statement by the President in the newspapers to the effect that he did not see any reason to stop shipment of machinery to Russia at the present time. This was an unprepared press conference statement.4 On November 23 the newspapers carried a telegram which Mr. Stassen5 had sent to the President in which he repeated a demand made previously in four speeches to the effect that shipments of “hard” goods to Russia and its satellites be terminated. He advanced a series of six arguments as to why this should be done. Subsequently, the President apparently asked Mr. Lovett for his recommendations with respect to this question. On November 24 Mr. Wood and I were asked to appear at a Policy Planning Staff meeting to discuss the problem. There was a full ventilation [Page 510] of all aspects of the matter and we were of the opinion that the facts which we presented were being given the most serious consideration by Mr. Kennan and his associates. I was asked to prepare a chart which would show the small extent of trade with the satellites and the U.S.S.R. and with the assistance of Central Services I did so. It is quite a good chart and I shall try to find a copy to enclose with this letter.

On November 25 Paul Nitze6 made a suggestion at Lovett’s staff meeting to the effect that the United States should take action to screen all exports to countries maintaining a complete state monopoly of their foreign trade, so as to assure itself of the justification of the requirement that such transactions be of a commercial character. Win7 and I argued in a memorandum that this would be in contravention of the spirit of the ITO Charter and that at any rate it would not fool anybody.

The Policy Planning Staff’s paper8 was prepared during the week of December 1–7 and I did not get an opportunity to see it until it had been completed. During the course of its preparation I furnished a considerable amount of data concerning our treaties and executive agreements with the countries of Eastern Europe to Mr. Savage,9 the Secretary of the Staff. On December 6 Messrs. Clayton10 and Thorp, Win Brown and I had a discussion of the Kennan paper, and agreed that we were not in accord with its conclusions.

The Kennan paper is a long document and is quite involved in its reasoning. Unfortunately, I do not have a copy of it. Copies of these documents seem to be difficult to secure. It ends up basically with the Commerce proposal made to the National Security Council for a control of all exports to Europe on an individual license basis.11 It dismisses trade with Russia and the satellites as being of little importance in terms of our own national security. It does not ascribe great importance to our imports of manganese, chrome and other materials from the U.S.S.R., although available figures seem to indicate that we obtained in the first nine months of 1947 31% of our imported manganese, 47% of our imported chrome, and 57 of our imported platinum from the U.S.S.R. Figures for the third quarter of 1947 show total Soviet exports to the U.S. as running well ahead of Soviet imports from the U.S. in terms of dollar value.

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The Kennan paper indicates that it accepts the Commerce statement to the effect that from an administrative standpoint it is much easier to control exports on an individual shipment basis to Europe than by increasing the number of goods on the positive list. It in general endorses our paper but then proceeds to add to it the Commerce proposal. The result is, in all frankness, quite confusing. The EWP group reviewed the paper at a meeting on December 8 and concluded that it did not like it for a number of reasons. Mr. Thorp sent a memorandum to Mr. Lovett outlining a number of very persuasive reasons why the extension of the positive list was superior as a method of control to the Commerce proposal. Mr. Thorp also talked to Mr. Blaisdell12 and obtained the impression from him that he was definitely not in accord with the Commerce proposal, which of course comes from McIntyre. Brown and I have added our comments to Mr. Thorp’s and have suggested that the Kennan proposal is not an alternative between control by area and control by commodity, but a matter of adding control by area to control by commodity which will be necessary in any event. The political people in our group were considerably disturbed over the Kennan proposal because of the credence it would give to the Communist attitude on the Marshall Plan.

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Willis C. Armstrong
  1. Edwin McCammon Martin was serving as a member of the United States Delegation to the Fifth Session of the Council of Foreign Ministers, held at London, November 25–December 12, 1947.
  2. The paper under reference here, EWP D–9/i, November 19, 1947, is included as Attachment A to document PPS/17, November 26, 1947, p. 498.
  3. C. Tyler Wood, Deputy to Assistant Secretary of State Thorp.
  4. For the text of President Truman’s news conference of November 21 under reference here, see Public Papers of the Presidents of the United States: Harry Truman, 1947 (Washington, Government Printing Office, 1963), pp. 500–502.
  5. Harold L. Stassen, former Governor of Minnesota and candidate for President of the United States.
  6. Paul H. Nitze, Deputy to Assistant Secretary of State Thorp.
  7. Winthrop G. Brown, Chief, Division of Commercial Policy.
  8. The reference here is presumably to document PPS/17, November 26, p. 489.
  9. Carlton Savage, Executive Secretary, Policy Planning Staff.
  10. William L. Clayton, Adviser to the Secretary of State.
  11. The paper under reference here is included as Attachment B to document PPS/17, November 26, 1947, p. 506.
  12. Thomas C. Blaisdell, Jr., Director, Office of International Trade, Department of Commerce.