Foreign Relations of the United States, 1950, National Security Affairs; Foreign Economic Policy, Volume I

S/S–NSC Files: Lot 63D351: NSC 68 Series

Memorandum by the Director of the Policy Planning Staff (Nitze) to the Secretary of State

top secret

[Washington,] November 22, 1950.

Briefing for NSC Consideration of NSC 68/1, Annex 1¹

1. At this meeting it is necessary to decide, at a minimum, what is to be done in FY 1951, i.e., what supplemental appropriation is to be requested from the Congress.²

a. Fortunately, this does not appear to present a serious problem. The only controversial item is a reduction of $1.5 billion. The remainder of the reduction has been made because expenditures for the Korean war have not been as high as was expected and because of a bottle-neck in aircraft engines which limits aircraft procurement. The $1.5 billion seems to represent a real reduction in the war reserve of the Army.

b. The essential need is a prompt decision, in order that FY 1951 program as a whole can be pushed rapidly ahead. The Army feels that they might lose more by holding up the whole program than would be gained by deferring a decision in order to give more consideration to this one item of reduction.

c. Therefore, it seems wise for the Council to recommend to the President whatever figure is most acceptable to the Department of Defense for the supplemental appropriation for FY 1951. This presumably means a figure of the order of magnitude of $45 billion, as compared with the September 1 figure of approximately $54 billion.

2. With respect to FY 1952 and succeeding years, it is necessary to make a decision by December 15, the deadline set by the President. The problem is how to move forward to such a decision.

a. The first question is what is the recommendation of the Secretary of Defense? The papers which have been submitted do not make clear what is being recommended by whom, and what is the basis of the recommendation. It was stated at the Senior Staff that the JCS regard themselves as responsible for force and equipment requirements, but not for the supporting budgetary estimates, which, in their opinion, are the responsibility of the Secretary of Defense.

b. With respect to the size of the forces to be built up; it seems doubtful whether either the September 1 plan or the current revision provides forces which will be adequate to meet our responsibilities for our own defense, the defense of Western Europe, our UN commitments, and our other responsibilities. This is a basic doubt which the Department of State holds about all the planning which has been done to date.

c. The paper before us states that what is done in FY 1951 and FY 1952 will have an important bearing on what can be done later. The meaning of this statement is not wholly clear. Does it mean that if the plans for FY 1951 and FY 1952 outlined in the Appendices are adopted, it will not be possible to build up the forces called for in the September 1 plan for FY 1954, if such a build-up becomes necessary?

d. The paper before us states that the current revision is based on certain non-military considerations, but does not indicate what these considerations are or what weight was given to them. Can these considerations and their influence be specified?

(1) It appears that the current revision involves, in effect, a substitution of production capacity for war reserves. In other words, the basic change between this revision and the September 1 plan seems to be that the revised plan would provide a one-year war reserve by the end of FY 1956, while the September 1 plan would provide a one-year war reserve by the end of FY 1954. The question seems to be, therefore, what is the proper relation between war reserves in being and production capacity in light of Soviet capabilities, particularly Soviet atomic capabilities, for interfering with our production.

(2) It also appears that the current revision rests on certain assumptions regarding the number of men that can be maintained in military service and the length of service which is politically acceptable. The effect of these assumptions appears to have been a ceiling on manpower which would make it impossible to increase the forces above the 1952 level contemplated in the appendices.

e. Finally, and this is not a new problem, it is appalling to discover the enormous cost of providing these rather small forces. It raises the question whether anything can be done to put ourselves, so to speak, in a better competitive position in the military field. Is there anything which can be done, if necessary by radical measures, to reduce the extremely high cost of supporting combat units?

Paul H. Nitze

1. This briefing paper was drafted in preparation for the 72nd Meeting of the National Security Council, November 22. NSC Action No. 386, taken at that meeting, President Truman presiding, read as follows:

   “[The National Security Council] Agreed to advise the President that the Council, without prejudice to normal budgetary review of the cost estimates, considers the proposed military program for Fiscal Year 1951, enclosed with the reference memorandum dated November 20, to be generally consistent with the policies and objectives stated in NSC 68/2.

   Note: The above action subsequently submitted to the President. Mr. Blaisdell (for the Secretary of Commerce), the Acting Economic Cooperation Administrator, the Director, Bureau of the Budget, and the Chairman, Council of Economic Advisers, participated with the Council and the Secretary of the Treasury in the above action.” (S/S–NSC Files: Lot 66D95: NSC Actions)

   The “reference memorandum dated November 20” was Lay’s memorandum circulating Deputy Secretary of Defense Lovett’s memorandum of the same date; for text of the latter, see p. 416.

   NSC 68/1, Annex 1, “Military Programs,” September 21, is not printed. For NSC 68/3 and its annexes, December 8, see pp. 425 and 432, respectively.

2. Regarding President Truman’s request to Congress for additional defense appropriations, December 1, see the second editorial note, p. 420.