Foreign Relations of the United States, 1949, National Security Affairs, Foreign Economic Policy, Volume I

S/P–NSC Files: Lot 62D1: NSC 33 Series¹

The Chairman of the National Security Resources Board (Steelman) to the Secretary of State

top secret

Washington, June 17, 1949.

My Dear Mr. Secretary: The attached staff paper, designated NSRB Doc. 114, and entitled “First Compilation of Basic U.S. Security Resources Assumptions,” is presented for your information as a progress report.

The background of this first report is explained fully in a memorandum to me, dated June 1, 1949, from Mr. Daniel Cox Fahey, Jr., of the NSRB staff, who served as chairman of the interdepartmental group established to assist the NSRB in the preparation of this report. Mr. Fahey’s communication is attached as the covering memorandum to this document and includes a list of all agency designees.

Mr. Edwin M. Martin of your staff was designated, by your letter of November 15, 1948,² as your representative in this effort, in accordance with our request, and is in a position to advise you concerning the formulation of this first compilation of Basic Security Resources Assumptions.

The document is being hand carried to you by our Security Officer. Because of the security implications inherent in the document, it is requested that if possible it be returned within one week. Arrangements will be initiated through our Security Officer to that end.

Sincerely yours,

John R. Steelman

[Enclosure]

Memorandum to the Chairman of the National Security Resources Board (Steelman)

top secret

[Washington,] June 1, 1949.

Subject: Background Information on Basic Security Resources Assumptions.

1. During October 1948, the Chairman of the National Security Resources Board, in a letter to the National Security Council, pointed out that integrated basic security resources assumptions in the politico-military and in the domestic and foreign economic fields were a prerequisite to effective mobilization planning by the NSRB (NSC 33³). The Chairman of this Board proposed that the NSC assume responsibility for the formulation, continuing review and revision of such basic assumptions. This proposal was favorably considered by the NSC (NSC Action 135⁴), but with the proviso that the NSRB should assume responsibility for the sponsorship and monitorship of such assumptions.

2. The Chairman of this Board requested and obtained the designation of seventeen representatives from other departments and agencies to assist the NSRB Staff designee in the formulation, review and revision of security resources assumptions. (See Annex to this memorandum.) Sufficient progress has been made to warrant presentation of a first compilation of the results of this effort to the NSRB and the NSC. Integration of the points of view of the several designees has been effected through consultation by the NSRB Staff designee. It should be noted that the assumptions contained in this first compilation do not have formal agency concurrences, but have nevertheless received some degree of coordination within the agencies concerned, and do stem from the considered judgment of each of the designees in the respective areas of their special competence. The assumptions themselves are stated in the briefest possible form. For most of them, analyses are attached as appendices.

3. Insofar as the Staff of the NSRB is concerned, this document should be strictly limited to key members of the Staff. For NSRB purposes, the document will be used as a basis for the formulation of more detailed planning assumptions for each of the many areas of mobilization planning, such as steel, aluminum, copper, petroleum, manpower, transportation, communications, civilian defense, etc. It is considered that these basic assumptions will, if used in this manner, assist the Board and the Staffs of cooperating agencies in developing coordinated plans for resources mobilization.

4. Insofar as the Staffs of the Departments represented on this Board are concerned, it is urged that the availability of this document be strictly limited. However, the facilities of the NSRB Staff are available to appropriate members of the Staffs of the Departments represented on this Board, should the occasion arise where the application or interpretation of these basic assumptions may be helpful in the resolution of problems faced by them. Possibly the Departments represented on the Board may care to avail themselves of the facilities of the NSRB Staff concerned with Assumptions just as the specialists on the NSRB Staff, for each of the several areas of mobilization planning, will relate their planning activities to these basic assumptions.

5. The Chairman of the NSRB (under NSC Action 135) should assume responsibility for taking appropriate steps to insure review and revision of this first compilation of basic security assumptions. In order that significant changes in national or international affairs may be promptly reflected in appropriate additions or modifications to the first compilation of assumptions, it is considered desirable to retain the simple organizational relationships that have thus far been established.

6. It is contemplated that revisions or additions to this first compilation of basic assumptions will be presented as subsequent progress reports to the NSRB, the NSC, and the President for their information.

7. This document has not been distributed to those assisting the NSRB Staff designee, although they have all seen the portions of special interest and concern to them.

Daniel Cox Fahey, Jr.

Annex

Agency Designees on Basic Security Resources Assumptions

Central Intelligence Agency	—L. L. Montague
National Military Establishment (Office of the Secretary of Defense)	—N. E. Halaby*
Munitions Board	—Colonel E. J. O’Neill
Research and Development Board	—S. D. Cornell†
Joint Staff	—Mai. Gen. W. E. Todd
Council of Economic Advisers	—Paul T. Homan
Economic Cooperation Administration	—James A. McCullough‡
	Walter A. Woodruff§
Atomic Energy Commission	—James T. Bray
Bureau of the Budget	—Wilbert G. Fritz
Federal Reserve Board	—Frank R. Garfield
	Kenneth Williams
Federal Bureau of Investigation	—L. Whitson
Department of State	—Edwin M. Martin
Department of Commerce	—William H. Shaw
Department of Agriculture	—Oris V. Wells
Department of the Interior	—James Boyd
Department of the Treasury	—Robert P. Mayo
Department of Labor	—Charles D. Stewart
National Security Resources Board	—Daniel Cox Fahey, Jr.

[Subenclosure]

Staff Paper Prepared for the National Security Resources Board and the National Security Council by an Interdepartmental Working Group

top secret

[Washington, June 1, 1949.]

Basic U.S. Security Resources Assumptions

First Compilation

Note: For purposes of this document an assumption is defined as a supposition without proof, stemming from the considered judgment of competent authority, based upon probable, but not conclusive evidence.

i. assumed probabilities of war and the timing thereof—through 1952

1. The US vs the USSR:

Note: See Appendix A⁵ for analysis.

a. The only appreciable danger of war before 1953 is that of war with the USSR.

b. The present Soviet regime is essentially and implacably hostile toward the United States.

(1) No change in the character of the Soviet regime is to be expected during this period.

(2) Although the regime may alter its tactics from time to time, for reasons of expediency, its ultimate objectives will remain unchanged.

c. The USSR has an overwhelming preponderance of immediately available military power on the Eurasian continent and a consequent ability to resort to war at any time as a means of imposing its will in that area. The principal deterrent is the superior war potential of the United States.

d. A deliberate Soviet resort to war before 1953 is improbable. Moreover, the USSR is likely to exercise care to avoid an unintended outbreak of hostilities with the United States.

e. The USSR, however, will endeavor to accomplish its own purposes, and to frustrate U.S. efforts to stabilize the situation, by every political, economic, and psychological means at its disposal, including the threat to resort to military force.

(1) The “cold war” will continue.

(2) Any Soviet resort to negotiation will have as its object, not an equitable and enduring settlement, but tactical advantage in the “cold war”.

f. No change in existing power alignments is probable.

(1) The USSR cannot extend the area of its domination in Europe and the Near East by political or subversive means, but only by the use of military force at probably unacceptable risk of war with the United States.

(2) The USSR can maintain its domination of Eastern Europe by force of arms without risk of war.

(3) Communist domination of China is conceded, but years will be required to consolidate it.

g. In these circumstances, with international tension acute and both sides preparing against the contingency of war, there is continuing danger of an undesired outbreak of hostilities through miscalculation by either side.

h. The U.S. will probably not consider the present risk of war sufficiently great to undertake the building up of its armed forces much above the levels presently authorized or the conversion of industrial facilities to war production.

ii. assumed conditions short of war—through 1952

1. External U.S. politico-military objectives and outlook:

Note: See Appendix B for analysis.

a. The U.S. will continue its efforts toward the attainment of a peaceful world family of nations. Increasing U.S. participation in world affairs is probable.

b. The net foreign investment, including all government aid and loans and private investment, will probably continue at a high level.

c. Basic U.S. objectives vis-à-vis Russia will remain substantially unchanged—tempered only by positive indications of a more reasonable Russian approach.

d. Continuing military aid in the form of dollars, equipment and raw materials to selected nations is probable.

e. Economic and military aid to Western Europe and Eastern Mediterranean areas will probably have a continuing priority over economic and military aid to Pacific-Asiatic areas.

2. U.S. internal economic conditions:

Note: See Appendix C for analysis.

a. A marked inflation is improbable.

b. There is a possibility of substantial recession, but a severe depression, of the type that began in 1929, is improbable.

c. The ending of the post-war boom has created some tendency toward lower levels of economic activity—which appear likely to continue.

d. A gradual increase from two to three percent annually in the aggregate industrial potential is probable.

3. Critical and strategic materials:

Note: See Appendix D for analysis.

a. The present list of critical and strategic materials prepared by the Munitions Board will remain substantially the same.

iii. assumed conditions in the event of war—through 1952

1. Internal Security of the U.S.:

Note: Assumptions a and b that follow were initiated by a member of the Joint Staff based upon best available intelligence estimates. They were received in NSRB on December 31, 1948, and reviewed with representatives of the NME and CIA on April 1, 1949. No supporting analysis on paras a, b, and d is available.

a. The use of mass destruction weapons (atomic, BW, chemical), on a major scale against the continental U.S. is improbable.

b. Any air attacks on the continental U.S. would be on a small scale and sporadic. The total lack of capability of the Soviet Union to mount a successful large scale overseas amphibious-airborne assault combines with the foregoing to insure that areas within the continental U.S. would not become active theaters of operation.

c. (An assessment of the U.S. internal security from the standpoint of enemy subversive activity and/or sabotage is currently under consideration by the MB Staff, CIA, FBI, and the Joint Staff.)

d. In the light of paras a and b above, civilian defense manpower requirements, during this period, will probably not be significant.

2. Potential enemies, allies, and neutrals—without reference to subsequent political and military developments:

Note: See Appendix E for analysis.

a. Probable enemies:
(1)	USSR	(5)	Rumania	(9)	Communist China
(2)	Poland	(6)	Bulgaria	(10)	North Korea
(3)	Czechoslovakia	(7)	Albania
(4)	Hungary	(8)	Outer Mongolia
b. Marginal areas:
(1)	Finland	(3)	Austria	(5)	Sinkiang
(2)	Germany	(4)	Yugoslavia	(6)	Non-Communist China
c. Allied and associated states:
(1)	Participants in the Rio Treaty:
	Dominican Republic		Cuba		Peru
	El Salvador		Costa Rica		Colombia
	Bolivia		Venezuela		Mexico
	Guatemala		Chile		Haiti
	Panama		Honduras		Argentina
	Paraguay		Uruguay		Brazil
(2)	Participants in the Atlantic Pact (with their colonial possessions):
	Canada		Netherlands		Iceland
	United Kingdom		Luxemburg		Portugal
	France		Norway		Italy
	Belgium		Denmark
(3)	Other recipients of U.S. military aid:
	Greece		Iran		Korea
	Turkey		Philippines
(4)	British Dominions:
	South Africa		Australia
	Ceylon		New Zealand
(5)	British Arab allies:
	Egypt		Transjordan		Iraq
d. Other potential allies:
(1)	Ireland	(4)	Ethiopia	(7)	Lebanon
(2)	Spain	(5)	Saudia Arabia	(8)	Japan
(3)	Liberia	(6)	Syria
e. Probable neutrals:
(1)	Sweden	(5)	Afghanistan	(9)	Burma
(2)	Switzerland	(6)	Pakistan	(10)	Siam
(3)	Israel	(7)	India
(4)	Yemen	(8)	Tibet

3. Potential battle areas as related to sources of strategic materials:

a. Potential battle areas are essentially those on or within the present perimeter of Soviet influence.

b. The U.S. and its potential allies will probably have effective commercial access to the Western Hemisphere and other parts of the world south of 20° N. (See Appendix F for the probable capabilities of our potential enemies for denying or limiting access of the U.S. and its principal allies to areas containing strategic materials.)

c. Commercial transportation risks within the Western Hemisphere and to other world areas south of 20° N. will probably not exceed .7% per month over the most vulnerable combined sea and air route to the various accessible areas. (See Appendix G for probable risks to accessible areas.)

d. Based on Assumptions b and c above, the potential production of critical and strategic materials from the Western Hemisphere, Africa (south of the equator), India, Australia, and New Zealand is sufficient to meet probable wartime requirements for all essential materials that cannot be supplied from U.S. domestic production or from planned stockpile withdrawals when present stockpile goals are reached. (See Appendix H for tabulations of commodities to which U.S. access is essential.)

e. Also based on Assumptions b and c above, the U.S. will probably have access to Southeastern Asia, Indonesia and the Philippines. The potential production of critical and strategic materials in these areas is sufficiently large, varied, and economically practical as to provide a desirable, though not essential, source of alternate supply for many critical and strategic materials. (See Appendix I for list of commodities by areas to which access by the U.S. is desirable as an alternate supply for many critical and strategic materials.)

4. Local interference with the production and movement of strategic materials of foreign origin:⁶

Note: The assumptions below relate only to the probability of local interference, by Communists or others, with the production and movement of the strategic materials listed in Appendices H and I. For supporting analysis, see Appendix J.

a. The USSR, through the apparatus of international Communism, has made extensive preparations to interfere with the production and movement of strategic materials required by the United States. It must be expected to exert to the full its capabilities in this regard in the event of war.

b. According to local circumstances, such interference might take the form of Communist seizure of local control, or of public disorder, work stoppage, slowdowns, or sabotage.

c. A significant possibility of local interference with the production or movement of listed commodities (not necessarily resulting in long term denial) is considered to exist in the following cases:

(1) Canada: iron ore, lead, lumber, pulpwood, zinc.

(2) Mexico: antimony, cadmium, copper, fluorspar, graphite, lead, manganese, mercury, mica, petroleum, zinc.

(3) Cuba: molasses and sugar, chromite, nickel oxide.

(4) Colombia: petroleum.

(5) Venezuela: petroleum.

(6) Ecuador: balsa, cocoa beans.

(7) Peru: lead, vanadium.

(8) Bolivia: antimony, lead, tin, tungsten.

(9) Chile: copper, crude iodine, sodium nitrates, iron ore.

(10) Brazil: castor beans, coffee, emetine, manganese, sisal.

(11) Argentina: beef, hides, skins.

(12) Sardinia: talc.

(13) Iraq: petroleum.

(14) Burma, Siam, Malaya: rubber, teak, tin.

(15) Indonesia: palm oil, pepper, quinine, rubber.

(16) China: antimony, duck feathers, hog bristles, tungsten.

d. With respect to other listed commodities, no significant interference is likely, although sporadic strikes and sabotage are probable.

5. Duration and character of war as related to requirements:

a. The weight of evidence at this time indicates a possible duration of at least five years. (See Appendix K for analysis.)

b. A war would, in its initial stages, conform to the general pattern of World War II weapons, tactics, and techniques as of the end of that war, with some modification toward an increased use of air power. (This assumption was initiated by a member of the Joint Staff and received by NSRB on January 3, 1949. No analysis is available.)

c. In the light of the requirements of present strategic plans, a total war effort would be required entailing the use of human, natural, and industrial resources in excess of those required during World War II. (See Appendix L for analysis.)

d. In the light of military requirements for present strategic plans (including preliminary estimates of the capabilities of the potential war-supporting economy) and present readiness measures, a maximum of two years will probably suffice to reach an average maximum production level, adequate for virtually all essential military and essential civilian purposes. Adequate production for many end items is probable in less than two years. (See Appendix M for analysis.)

6. Degree of control over U.S. economy:

Note: See Appendix N for analysis.

a. More stringent controls on the use of manpower, materials, facilities, and services—and more stringent fiscal controls—than those in effect during World War II are probable.

iv. assumed conditions in the event of war–1953 through 1965

1. Capabilities of the USSR against the U.S.:

Note: Subparas a, b, and c were initiated by a member of the Joint Staff and received by NSRB on February 18, 1949. They were prepared in consultation with the three Services, R&DB, and the Armed Forces Special Weapons Project. These subparas were reviewed with representatives of the NME and CIA on April 1, 1949. No analysis of these assumptions is available.

a. The USSR will be able to launch limited attacks against the U.S. with conventional explosives, biological, and chemical warfare. This capability will increase in the latter part of this period.

b. The USSR may be capable of launching attacks against the U.S. with atomic weapons during the period 1953–1955. After 1955, the Soviets will probably have the capability of launching effective attacks of this nature.

c. The use of long range guided missiles against the U.S. is considered unlikely during the entire period. Minor attacks with V–1 and V–2 type missiles launched from submarines against coastal targets and attacks with air-to-surf ace guided missiles, are within Soviet capabilities and will become an increasing threat throughout this period.

2. Capabilities of the U.S.:

Note: Subpara 2 a was initiated by a member of the Joint Staff and received by NSRB on February 18, 1949. It was prepared in consultation with the three Services, R&DB, and the Armed Forces Special Weapons Project. Subpara 2b was initiated by the MB Staff and concurred in by R&DB and AEC. It was received by NSRB on January 17, 1949. Subparas a and b were reviewed with representatives of the NME on April 1, 1949. No analysis of these assumptions is available.

a. Development of defensive measures in comparison with offensive capabilities of potential enemies will make reasonable security for critical areas within the U.S. possible.

b. The U.S. will be capable of delivering effective quantities of mass destruction weapons (e.g., atomic, bacteriological, and chemical agents) at ranges of 4500 nautical miles or more by:

(1) Inhabited aircraft—by 1951;

(2) Inhabited aircraft launching guided missiles of 100 mile range or more—by 1956–1958;

(3) Guided missiles of 4500 nautical mile range—by 1958–1961.

3. Future requirements:

a. Any war during this period will require substantially more industrial manpower, industrial facilities, and raw materials than those required during World War II. (See Appendix O for analysis.)

b. The ratio of non-military to military manpower requirements will probably increase.

c. Civilian defense manpower requirements will probably increase substantially over those of World War II.

1. Serial and subject files of National Security Council documents and correspondence and related Department of State material for the years 1948–1961, retired by the Policy Planning Staff.
2. Not printed.
3. For text of NSC 33, a report by the Chairman of the National Security Resources, Board titled “Outline of Basic United States Security Resources Assumptions, 1948 through 1952, and 1953 through 1965,” October 13, 1948, see Foreign Relations, 1948, vol. i, Part 2, p. 636.
4. This decision was taken at the 25th Meeting of the Council, October 21, 1948. (S/S–NSC Files: Lot 66D95).
5. Replaced Robert Blum 6/7/49 [Footnote in source text.]
6. Replaced Robert F. Rinehart 2/18/49 [Footnote in source text.]
7. Replaced Arthur Smithies 6/9/49 [Footnote in source text.]
8. Replaced James A. McCullough 6/9/49 [Footnote in source text.]
5. The appendices to this staff paper, Appendices A–O, are not printed.
6. Paragraph 4 of Part III is dated May 27, whereas all other component parts of the body of the study (Parts I–IV) are dated May 6.