Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

660H.119/7–849

Memorandum by the Assistant Secretary of State for Economic Affairs (Thorp) to the Secretary of State

secret

[Washington,] July 8, 1949.

I refer to your memorandum of July 1 concerning your conversation with the Secretary of Defense about the blooming mill for Yugoslavia.¹ You have asked that the matter be reviewed, and that a report be made to you.

The question of approving the blooming mill has been before the appropriate agencies of the government since January 1949, and the project has been carefully considered by the Commerce Department, the National Military Establishment and the State Department. After the adoption of NSC 18/2² the State Department urged on many occasions, and through many channels, that the license for the mill be approved. The National Military Establishment has continually opposed the issuance of the license. The Department of Commerce did not take a firm position on the matter until May, when it presented the case to the so-called Operating Committee,³ in which the National Military Establishment, the State Department, and other agencies are represented. At the meeting of the Operating Committee the National Military Establishment opposed the license and the State Department favored it. The result of the discussion was to transmit the case to the Advisory Committee.⁴ The Advisory Committee discussed the matter on June 3, and the National Military Establishment was alone in opposing the Department. Mr. Blaisdell, Assistant Secretary of Commerce, who was Chairman at the meeting, indicated that he would recommend to the Secretary of Commerce⁵ that the license be approved. The State Department representative at the meeting, Mr. Martin,⁶ indicated that failure to secure favorable action, due to objections by the National Military Establishment, might require the State Department to refer the case to the staff of the National Security Council, as a matter of difference in the interpretation of the policy toward Yugoslavia laid down in NSC 18/2. It was indicated at the Advisory Committee meeting that the Secretary of Commerce might call other cabinet officers concerning the case. I therefore undertook to submit to the Undersecretary a memorandum dated June 9 outlining the problem.⁷ A copy of this memorandum is attached herewith.

The Department of Commerce informed the State Department on June 22 that the license for the blooming mill would be approved. Consequently the Department, with the concurrence of the Department of Commerce, cabled the Embassy in Belgrade and instructed the Embassy to advise the Yugoslav Government of the approval, given on the understanding that should unfavorable developments intervene prior to the time of shipment, the license might be revoked.⁸ The Embassy informed the Yugoslav Government accordingly on June 28,⁹ and on June 29 the Department informed the Yugoslav Embassy in Washington.¹⁰ Mr. Harriman was also notified, so that he could advise interested Western European governments.

The record does not indicate that any request was ever made by the Department for an opinion from the Joint Chiefs of Staff, although the Department is aware that the National Military Establishment has asked the Joint Chiefs for their views on the larger topic of general export policy toward Yugoslavia. Meanwhile, the National Military Establishment’s record has been one of continuous opposition to the blooming mill.

The Secretary of Commerce of course has sole legal authority to license or not to license this item and he may disregard the opposition of any agency.

The Department was confidentially informed on July 7 that a representative of the Continental Foundry Company, who was scheduled to pick up the approved license in the Department of Commerce on that date, was told by Mr. Blaisdell that the license would not be available at present. Under the circumstances in which the Department obtained this information I have thought it inappropriate to make any inquiry of Mr. Blaisdell. Thus we are not yet certain that the promised licensing action will occur.

I am of the opinion that further discussion of this matter at any lower levels would be fruitless. I would therefore urge that you undertake to settle it directly with Secretaries Johnson and Sawyer.

1. No record of the conversation between Secretary Acheson and Secretary of Defense Louis A. Johnson has been found in the files of the Department of State.
2. Not printed; see editorial note, p. 868.
3. The reference here appears to be to the special ad hoc Yugoslav Committee consisting of representatives of the Department of Commerce, the Department of State, the National Military Establishment, and the Atomic Energy Commission which was established on February 21, 1949, to examine pending Yugoslav export license applications.
4. The Secretary of Commerce’s inter-departmental Advisory Committee on Requirements.
5. Charles Sawyer, Secretary of Commerce.
6. Edwin McCammon Martin, Acting Director, Office of International Trade Policy, Department of State.
7. Ante, p. 898.
8. Telegram 323, June 23, to Belgrade, not printed (660H.119/6–2349).
9. Telegram 627, June 28, from Belgrade, not printed (660H.119/6–2849).
10. Memorandum of telephone conversation by Llewellyn E. Thompson, June 29, not printed (660H.119/6–2949).