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

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

[Extracts]

Report to the National Security Council by the Executive Secretary (Lay)

top secret

Washington, December 8, 1950.

Annexes to NSC 68/3¹

United States Objectives and Programs for National Security

Annex No. 1, The U.S. Military Programs

(It is understood that this Annex will be made available by the Department of Defense prior to the Council meeting on Thursday, December 14, 1950)²

Annex No. 2, The Foreign Military and Economic Assistance Programs

Part A, Estimates for MDAP, Fiscal Years 1951 Through 1955 (Prepared by the Department of State, in consultation with the Department of Defense and the Economic Cooperation Administration, and approved interdepartmentally at the FMACC level.)

Part B, Anticipated U.S. Foreign Grants and Loan Assistance (Prepared by the Department of State and the Economic Cooperation Administration)

Appendix to Annex No. 2, The ECA Information Program (Prepared by the Economic Cooperation Administration)

Annex No. 3, The Civil Defense Program³ (Prepared by the National Security Resources Board)

Annex No. 4, The United States Stockpile Program (Prepared by the National Security Resources Board)

Annex No. 5, The Foreign Information Programs (Prepared by the Department of State)

Annex No. 6, Foreign Intelligence and Related Activities (Prepared by the Central Intelligence Agency, with the concurrence of the Intelligence Advisory Committee)

Annex No. 7, The Internal Security Program⁴ (Prepared by the Interdepartmental Intelligence Conference and the Interdepartmental Committee on Internal Security

Annex No. 2

The Foreign Military and Economic Assistance Programs

part a. estimates for mdap, fiscal years 1951 through 1955^*

(Prepared in the Department of State, in consultation with the Department of Defense and the Economic Cooperation Administration, and approved interdepartmentally at the FMACC level)

1. The estimates of appropriation requirements for military aid to all countries and economic support for NATO countries for Fiscal Years 1951, 1952, 1953, 1954 and 1955 include (a) the costs of furnishing military equipment, supplies and training to the countries determined to be eligible for grant assistance under the Mutual Defense Assistance Act and (b) the costs of programs calling for both a vastly expanded European production of military equipment (additional military production program) and the raising of larger forces in the European NAT countries. The estimates given below do not include the costs of certain emergency foreign military assistance programs, such as the cost of equipping and organizing a Korean military establishment. These estimates take into account recent price increases of military equipment. Progress in the technological field will require continuous review of existing programs and the possible adoption of new ones. The approximate amount and distribution of obligations by years for increasing the defensive military strength of selected countries in the free world are indicated in Table 1.⁵

2. A more detailed breakdown of the estimated costs of meeting the requirements of the Medium Term Defense Plan (MTDP) for the European NAT countries (and Western Germany) together with the estimated United States assistance needed to meet those requirements is given in Table 2.⁶ Estimated total costs of the MTDP requirements for Western Europe are $57.40 billion for the four fiscal years 1952–1955, inclusive. As indicated in more detail below, these are United States estimates of requirements costs which will be subject to refinement as the European NAT countries furnish information on their costs of meeting their requirements under the MTDP. The estimated amount of resources which the European NAT countries could mobilize and devote to defense needs is about $45.00 billion, assuming the United States continues to furnish general economic support at rates averaging almost $2.0 billion a year. From this total should be deducted about $5.0 billion or more for essential defense expenditures of such countries as the United Kingdom and France in areas outside the North Atlantic Treaty area. In order to close this gap between requirements for NAT defense and available resources which could be devoted to defense in Western Europe, it is estimated that about $25.40 billion of United States assistance is required between fiscal year 1952 and fiscal year 1955. The form of this required assistance is flexible within limits. In Table 2, it is estimated that United States assistance in the form of military equipment and training (items 2c and 6) will be $17.59 billion and in the form of general economic support for European military production and increased forces will be $7.81 million, or roughly in the ratio of 2 to 1. The extent to which the form of United States assistance could and should vary as between armament and economic support depends on a number of political, military and economic factors, including the overriding need for trained and organized European forces, the promptness with which European industry is mobilized for war production, the flexibility and expansibility of the war industries in both the United States and Western Europe, and the extent to which the United States industry can and should be called upon to meet the armament requirements of this country and a major portion of those of the MDAP countries. The estimated division given above is believed to be practicable on the basis of present information, but can and should be varied as circumstances require. The basis of the estimates are explained below.

3. The estimates of the costs of raising, maintaining and equipping the European NAT combat forces are based on the requirements of the Medium Term Defense Plan (MTDP) as developed by the NAT Regional Planning Groups and approved by the Defense Committee. The size and composition of the forces required for the defense of the European NAT area are those set forth in document 28 of the Defense Committee (dated October 28, 1950). The equipment costs were based on these forces equipped in accordance with modified United States standards, after adjustments were made for equipment on hand together with that equipment included in the fiscal year 1950 MDA Program. This will provide initial armament maintenance parts and ammunition. The equipment costs for capital equipment and maintenance parts and replacement for that capital equipment (items 1(a) and a portion of item 1(b) of Table 2) were based upon current United States prices. The gross cost of maintenance and expansion of European NAT forces (major portion of 1(b) of Table 2) was estimated on the basis of current aggregate costs of supporting troops (estimated at a one to one ratio) in the country of recruitment. No allowance was made either for the deployment of forces in countries other than the country of recruitment. The costs of stationing troops outside the North Atlantic area are not included in the estimates of requirements for the European NAT countries under the MTDP.

4. The estimated cost of armament to be furnished from the United States (item 2(a) of Table 2) in the form of capital equipment represents about 60 percent of the cost in terms of current United States prices of meeting the aggregate capital equipment deficiencies of the European NAT forces of a size and composition called for under the MTDP and equipped according to modified United States standards. It is assumed that the European NAT countries (and Western Germany) would produce or procure about 40 percent of their estimated equipment deficiencies. The estimated cost of maintenance and replacement equipment (item 2(b) of Table 2) was based on the assumption that the United States would furnish 16 percent of the gross maintenance requirements in fiscal year 1952 (item 1(b), Table 2), 14 percent in fiscal year 1953, 12 percent in fiscal year 1954 and 10 percent in fiscal year 1955. The 16 percent factor for fiscal year 1952 represents about 60 percent of the total rates for maintenance parts and replacement equipment for equipment on hand. Thereafter, it is assumed the armament industry of Western Europe will supply an increasing portion of current maintenance and replacement requirements for the equipment on hand.

5. The time-phasing of equipment requirements and of the estimated cost of furnishing armament from the United States was related to estimates of production lead time required to obtain the needed capital equipment from current production both in the United States and in the Western European countries. With respect to the United States, it was assumed that our industrial mobilization base would be broadened to accommodate the procurement by the Department of Defense for the needs of the United States armed forces as well as those of the MDAP countries with an over-all shortening of production lead times in fiscal years 1953 and 1954. It is estimated that the capital equipment to be procured in the United States will be produced in time to meet the time-phased force requirements of the European NAT countries. It is assumed that with respect to the balance of European armament requirements, the industry of Western Europe will keep pace with American industry. The estimated costs of supporting European forces (item 1(b), except for maintenance parts and replacement equipment which are time-phased in relation to armament production) follow the time-phased requirements for the expansion of European NAT forces.

6. In fiscal and budgetary terms, items 1 and 2 in Table 2 are expressed in and time-phased according to obligations. Actual expenditures, including the call upon available resources in the economy of the United States and Western Europe, would come at a later period. The estimated amount of resources which Western Europe could make available for defense purposes (item 4, Table 2) is on a current or an expenditure basis. Since estimated available resources (mobilizable in Western Europe plus those furnished by the United States) are only slightly in excess of time-phased requirements, an unanticipated peaking of defense expenditures in a given year would run into basic resource shortages. Furthermore, the longer the European NAT countries delay in raising forces and placing contracts for armament, the greater will be the likelihood of losing resources for defense use in the early years of the defense effort and encountering resource shortages in the later years. In addition to the difficulties of measuring the incidence of defense burdens by countries is not known in detail, although the required studies are underway in the NAT organization. It is probable that these studies will indicate that assigned defense tasks will not be distributed by countries in accordance with economic and financial capabilities to sustain those tasks. Additional resources will be needed from external sources. Although account has been taken of the possibilities of transfers of resources among European NAT countries, it is expected that unmanageable defense burdens which fall on certain European NAT countries will have to be compensated in part by additional United States assistance. For all these reasons, it has been deemed necessary to anticipate supplementary and justifiable requirements for United States assistance either in the form of armaments or economic aid, in addition to that needed to meet anticipated dollar balance of payments deficits. The amount of aid in other than armaments is $7.81 billion for the four fiscal years (item 7 Table 2).

7. All United States projected aid to the European NAT countries (and Western Germany) is included in Annex 1. However, certain countries are not directly associated with the defense program for the NAT community, but nevertheless will require continued economic aid to sustain their economies. These countries include, at least in fiscal 1952, Austria, Greece, Iceland, Ireland, Sweden, Trieste and Turkey. Aid for this latter group is included in Part B of this annex. United States aid will also be needed in support of European international economic institutions, such as the European Payments Union, the Schuman Plan, and the Program of Trade Liberalization. The total aid figures in Part A and in Part B of this annex for European countries include such funds as may be required for these institutions although the specific amount needed for this purpose has not yet been determined.

8. Greece, Turkey and Iran, on the southern periphery of the Soviet Bloc, are the recipients of military aid under Title II of the Mutual Defense Assistance Act. The tense international situation requires continuation of measures to maintain and, as practicable, increase the military potential of these countries which are among those likely to be the targets of further Soviet aggression and which are in an area whose security is of vital concern to the security of the United States.

9. The danger of satellite states engaging in hostilities against Greece counsels against the reduction of Greek forces under arms as was contemplated at the beginning of fiscal year 1951. Increased military supplies and economic assistance from the United States are essential to maintain these forces and to prepare them with the type of equipment needed to defend themselves.

10. Notwithstanding the marked effect of American military aid already rendered, the numerically strong Turkish armed forces still lack adequate military equipment, supplies and training needed to attain the level of combat effectiveness deemed essential for that country. In order to attain combat effectiveness of the Turkish Forces, it is essential that the United States support the establishment and training of a non-commissioned officers corps in the Turkish Forces.

11. It is necessary to maintain a steady flow of military supplies to Iran in support of the forces required to maintain internal order in that country and to give the Government and people confidence in their ability to do so. The Iranian Forces should be adequate to discharge delaying action in the event of Soviet aggression in order to permit the withdrawal of the Shah and Government, with some forces, to the southern mountains in accordance with the Iranian military plans and to permit implementation of a demolition program.

12. The five-year program recommended under Title II for Greece, Turkey and Iran (in millions) is as follows:

1951	1952	1953	1954	1955
$325.9	$271.3	$287.4	$262.4	$242.2

13. The foregoing estimates for Title II are based upon the following assumptions:

(a) That the international situation will not appreciably improve during the course of the five-year period, but that actual hostilities, either localized or general, will not commence, or the likelihood of hostilities will not substantially increase. In case of a more imminent danger of conflict, or of hostilities in any form in the general area, the aid requirements would require adjustment in light of circumstances prevailing at the time.

(b) That common-use items for the Greek armed forces will be provided in toto from the Greek economy, or, in regard to foreign exchange costs, by funds appropriated for the general economic support of Greece.

(c) That the size of the Greek, Turkish and Iranian forces will not be increased appreciably during the period.

(d) That the achievement of United States objectives in the Near East and South Asia will not require the furnishing of military assistance on a grant basis to countries other than those presently eligible for grant assistance under the Mutual Defense Assistance Act.

14. The Far East. The estimated requirements for military assistance on a grant basis to countries in the general area of China, including the Philippines and Formosa but excluding Korea, are given below:

Fiscal Year	Estimated Requirements (in million dollars)
1951	$375.0
1952	560.0
1953	467.4
1954	383.6
1955	358.7

15. Indo-China. This country is the key to the control of the mainland of Southeast Asia. Its loss would represent a major strategic reversal for the United States and its allies and concurrently a great increase in the political, economic and military power of the enemy. The preservation of Indo-China from Communist encroachment depends upon the success with which the military, economic and political programs are concomitantly prosecuted. The military program will fail unless the political and economic programs are a success and vice versa. The immediate purpose of the political program is to secure for Bao Dai the support of Indo-Chinese nationalists sentiment. Even if this is achieved, Communist-inspired guerrilla operations will continue until a successful military program has been completed.

The success of the military operation depends upon the French who must prosecute it successfully. We are confronted by the dilemma between this fact and the fact that the more political concessions the French make the less they have to fight for in Indo-China. They, nevertheless, should receive such aid as the United States and the United Kingdom can contribute.

The cardinal point of the United States policy in Southeast Asia is that Indochina must not be permitted to fall before the Communist pressure which is not [sic] symbolized internally by Ho Chi Minh’s movement, and externally by Chinese Communist troops on the Tonkin frontier. If Indochina is overrrun by the Communists, all of the Southeast Asian mainland would rapidly succumb. The strategic loss to the West and the resultant gain to the East would certainly make far more difficult our efforts to contain Communism elsewhere in the world.

To achieve our objective, it is recognized that a strong nationalist anti-Communist counter-force must be developed in that area. The nucleus of such a movement in Indo-China is represented by the three Associated States of which the State of Vietnam is the largest. These governments must be supported and strengthened in every possible manner, politically, militarily and economically.

The United States Military Aid Program for Indo-China is designed to help in the establishment of national armies, national guard and police forces for the three States and to supply American military equipment to the Army of the French Union.

The governments of the Associated States are being assisted in their efforts to develop their national armies in order to resist Communist fifth column and terrorist activities from within.

16. Korea. Any projection of probable military assistance requirements for Korea for the post-hostilities period must be based upon factors which cannot yet be assessed. The chief factors determining the amount, character and timing of military assistance to Korea include (a) the extent to which the UN will participate in any program of military assistance to Korea; (b) the magnitude of the internal security problem, including guerrilla operations; (c) the extent to which the Chinese Communists and the Soviet Union support and abet the guerrilla operations and border incursions; and (d) the necessary size of Korean military forces to insure the internal security and prevent border incursions.

17. Formosa. On June 27, 1950, the President ordered the Seventh Fleet to prevent any attack on Formosa. As a corollary to this action, the President called upon the Chinese Government on Formosa to cease all air and sea operations against the mainland. The President stated that the determination of the future status of Formosa must await the restoration of security in the Pacific, a peace settlement with Japan, or consideration by the United Nations. The implementation of these directives of the President requires the furnishing of military equipment and training assistance to the Chinese Government forces on Formosa to enable them to defend the island and to assist the Seventh Fleet in rendering the island area secure.

18. Thailand. The objective of United States military assistance to Thailand is to enable that Government to carry through its announced intention to resisting Communist encroachment. Since the threat to Thailand has not yet developed to severe proportions, there is an opportunity to modernize and train the Thai forces to resist Communist encroachment.

19. The Philippines. The United States has a unique responsibility in the Philippines because of a half century of American sovereignty over the islands. In addition, the Philippines furnish important bases and facilities for the United States forces. A serious internal security problem exists in the islands. The solution calls for military and economic assistance as well as political guidance. With respect to military aid, it is recommended that equipment be furnished to equip expanded security forces and to modernize and train the present forces. Greater emphasis is also being given to the training of the Philippine army.

20. Indonesia. The basic objective of the military assistance program for Indonesia is to strengthen the constabulary to enable it to perform effectively its function of maintaining law and order under the authority of the central government. This objective includes the prevention of smuggling activities in Indonesian waters.

21. The Other American Republics. The inter-American community is a source of both immediate and reserve political and economic strength. Its military strength is limited although not negligible. Its military manpower and the equipment presently available are essential to the maintenance of internal security in the other American states. Properly trained and equipped, the manpower of these countries could be used to maintain the security of lines of communication in the inter-American area and possibly to contribute forces to overseas operations. Although a specific estimate of training requirements and urgent equipment needs has not been included in the estimates given above, it is believed that nominal amounts of funds should be made available, when and if circumstances require, to meet training and selected equipment requirements of the other American states in accordance with the policies laid down in NSC 56/2.⁷

[Here follow Table 1, “Estimated Costs of Meeting United States Objectives Under the Mutual Defense Assistance Programs,” and Table 2, “Estimated Costs to the United States of Assisting the European NAT Countries (and Western Germany) to Meet their Requirements under the Medium Term Defense Plan.”]

part b. anticipated u.s. foreign grant and loan assistance^†

(Prepared by the Department of State and the Economic Cooperation Administration)

1. The estimates given in table 3⁸ below of foreign grant and loan assistance were made on the assumption that we shall not be engaged in a major war, but that the Soviet Union will intensify its efforts to extend the orbit of its influence and control. Our objective in providing economic aid is to create situations of political and economic strength in the free world especially in critical areas whose present weakness may invite Soviet thrusts. However, as a consequence of increased demands on U.S. resources resulting from a military defense program that may require expenditures at a rate of $50 billion a year, claims on U.S. resources for foreign aid have been limited to programs that will meet most urgent and immediate needs. These programs have therefore been restricted to those fulfilling three broad purposes: (1) investment to increase the production and facilitate the distribution of critical materials directly needed for defense, (2) aid to strengthen the defense effort of our allies, and (3) aid to enable governments which are or can be expected to become friendly members of the free world to win the confidence and support of their own peoples as a solid foundation for political stability and national independence. To reduce the drain on U.S. resources, aid programs have been held to the minimum believed necessary to effect these purposes.

2. The basic task in Europe now is to build up the combined defenses of the European nations without seriously endangering thereby their economic strength. All U.S. military end-item and economic aid to assist in achieving this objective is included in Annex I. However, certain countries are not directly associated with the defense program for the NAT community but nevertheless will require continued economic aid to sustain their economies. These include, at least in fiscal 1952 the following countries: Austria, Greece, Iceland, Ireland, Sweden, Trieste and Turkey. Aid for this latter group is included in Annex II. U.S. aid will also be needed in support of European international economic institutions such as the European Payments Union, the Schuman Plan, and the program of trade liberalization. The total aid figures in Annex I and in Annex II for O.E.E.C. countries include such funds as may be required for these institutions although the specific amount needed for this purpose has not yet been determined.

3. The primary task in other areas is to assist them to make progress toward meeting the aspirations and demands of their people for the satisfaction of their basic needs, to enable the governments thereby to command allegiance and support, and to maximize the output of materials essential to the continued strength of the free world.

4. In determining whether and to what extent to provide U.S. Government assistance in any given area, account has been taken of aid likely to be made available by the IBRD and other sources, and of increased dollar earnings that should result from expanded U.S. imports, upward price movements, and U.S. troop expenditures abroad. Aid has been scheduled in the form of U.S. Government loans for development projects normally regarded as bankable where it appears that recipients can carry additional dollar debt. Aid has been scheduled in the form of grants for technical assistance projects, including associated supplies and equipment required to make the technical assistance projects effective. In certain exceptional cases, grant aid has been scheduled for capital investment projects as well. This has been done only in the case of countries of great strategic importance to us, for which loans and investments cannot be contemplated in the near future and which, in the absence of certain capital goods, would experience rapid economic deterioration and political instability.

Making available funds for carrying out the foreign aid programs outlined below will not in and of itself achieve the foreign policy results desired. It will be necessary that the essential supplies, many of which may be in short supply, be assured both for shipment under the aid programs and for shipment for essential purposes where the foreign countries themselves are able to furnish the necessary funds. To accomplish this purpose as well as to minimize the drain on the U.S. economy in the form of non-essential exports careful examination will be necessary of the scope of our export controls and the policies under which they operate.

[Here follows Table 3, “Actual and Anticipated U.S. Government Grant and Loan Aid.”]

notes⁹

Western Europe: The estimates for Western Europe are still in discussion among ECA, the Department of Defense, and the State Department.

Yugoslavia: Yugoslavia’s disaffection from the Soviet Bloc has subjected her economy to severe strains because of abruptly severed trade relations with Cominform countries, heavy defense expenditures, and the greater need to succeed as a Communist state in rapid industrialization. It is in the U.S. interest that Yugoslavia remain outside the Soviet Bloc and maintain a viable economy.

To assist Yugoslavia to overcome the effects of the recent severe drought, grant aid of $64 million will be needed for expenditure in fiscal 1951. However, because certain government agencies are providing immediate food relief for Yugoslavia out of their existing appropriations, Congress will be asked to appropriate only $38 million. It is possible that, in consequence of the drought, further grant funds will be needed in 1952.

The IBRD rather than the Eximbank is expected to provide further loan funds for Yugoslavia’s economic development.

Latin America: The program of economic assistance which is projected for Latin America is primarily one of production for defense purposes. The objectives are to increase the availability of critical materials which the U.S. will need for industrial and defense output, to maintain production of food and other items at a level adequate to meet the essential requirements of western Europe from this traditional source of supply, and to develop production which will minimize the dependence of Latin American States on imported food and other essential supplies in case of emergency. In addition, it will be necessary to speed up the construction of the Inter-American Highway. …

Increased U.S. procurement and higher raw material prices will increase Latin America’s dollar receipts and her capacity to service further dollar debt. Consequently the major part of U.S. assistance to Latin America is scheduled in the form of loan aid (largely for transportation, fuel and power facilities). It is estimated that Latin America will require foreign capital for investment at a rate of about $350 million a year, of which the International Bank may be able to finance about $125 million a year, leaving about $225 million a year for U.S. Government loans.

Grant aid for Latin America includes $64 million over four years for completion of the Inter-American Highway, and about $28 million a year for an expanded technical assistance program, with particular stress on aid to increase indigenous food production.

Japan and the Ryukyus: The estimates of budgetary requirements for Japan and the Ryukyu Islands represent, for fiscal year 1951, funds actually made available for obligation; for fiscal year 1952, figures recently submitted by the Department of the Army to the Bureau of the Budget; and for other years, tentative projections by the Department of the Army.

The assumptions underlying them, particularly those relating to Japan’s foreign trade prospects, are on the whole conservative. Should her foreign exchange earnings exceed the estimates, however, the more favorable economic position that would result from the projected level of aid in fiscal year 1952 would not be inconsistent with objectives of U.S. policy toward Japan.

The Defense Department is considering a partial pay-as-you-go arrangement to begin on July 1, 1951. If that arrangement is established, it would obviate the need for any GARIOA appropriation for economic aid to Japan, although GARIOA funds for administrative expenses and the reorientation program might continue to be needed.

South East Asia (including Formosa): The objective of U.S. aid is to strengthen the present moderate and Western-oriented governments in this area, to increase internal support for these governments, and to give effective evidence at the grass roots of U.S. Government constructive interest in the local welfare.

The amount of aid actually required will depend on the direction and pace of current political and military developments. The estimates assume that there will be no serious political degeneration in the countries concerned and that those countries which are now suffering military and guerilla operations will become gradually pacified.

The grant aid program for STEM countries is substantially a continuation of the program recommended by the Griffin Mission and recently initiated under ECA. It embraces rehabilitation and development projects with strong emphasis on technical assistance and associated supplies and equipment for direct implementation of technical assistance projects, as well as consumer goods needed to raise local revenues for rehabilitation projects without embarrassment to the fiscal systems of the countries concerned. The projects cover a wide range, but particular emphasis is placed on health, agriculture, and transport.

U.S. Government loan assistance is provided for longer-term capital investment projects in Indonesia and Burma which have capacity to service further indebtedness. Thailand’s needs for long-term capital investment will probably be met by the International Bank. Malayan needs should logically be the responsibility of the U.K.

The estimates for Formosa are projected on “as is” assumptions regarding Formosa’s membership in the free world, its present status, and its military burden. The general political outlook in the Far East and the fact of U.N. consideration of Formosa’s further status render the latter two of the above assumptions highly speculative. Aid estimates now prepared for Formosa taper off in the later years, reflecting the assumption that increased productivity would enable the island to carry a greater portion of the burden resulting from a high level of Chinese military expenditures.

Korea: The studies of the damage to and requirements of the Korean economy in consequence of the hostilities have not been completed, and it will be many months before reliable figures can be obtained.

Estimates thus far compiled by ECA indicate that the total cost of foreign aid for reconstructing and restoring the Korean economy would be somewhat less than $1 billion. The capacity of the Korean economy to absorb imports requiring foreign financing is probably limited to $150 million per year. The absorptive capacity would be greater in the initial years, however, since a substantial portion of total requirements is for relief-type goods. The annual costs set forth are projected only through fiscal year 1955, but assistance beyond that date may be required if the country is to become self-sustaining.

It is assumed that the U.S. will bear 65 to 70 percent of the costs of a United Nations program.

Philippines: The payments and expenditures of the United States in the Philippines have supported the economy of that country since liberation from the Japanese forces. Without such assistance the large trade deficit and budgetary deficit would have resulted in a serious economic crisis and inevitable large-scale support of the Communists. However, a substantial part of U.S. aid funds was made available to meet war damage claims and consequently was not used in such a way as to encourage increased production. The program projected above is designed to assist in the development of resources of the Philippines required to achieve viability and stability which are essential if the Philippines are to resist Communist pressure.

A minimum program designed to achieve viability will have to be based primarily on agricultural development but some increase in industrialization is justified. Among the principal goals of such a program would be (a) self-sufficiency in rice, corn, fish, vegetables and fruit; (b) increased sugar production for export to at least the U.S. quota total level and abaca production to the 1940 level; (c) modernization of selected mines and determination of location and extent of mineral resources; (d) expanded facilities for processing ores, wood and agricultural products; (e) expanded hydro-electric power for the production of nitrogen fertilizer and for other purposes; (f) expansion of small-scale industry, and (g) improvement of general and vocational education and further improvement of public health to the extent required to provide the basis for economic development. In addition, if any economic development program is to proceed with reasonable prospects of success in the Philippines, it will be necessary that (h) the Government’s budget be balanced by raising revenues substantially, and (i) that popular support among the agrarian population be enlisted by improving agricultural credit facilities, providing for land resettlement and redistribution, etc.

There is no immediate prospect of any substantial flow of private capital into the Philippines and it would appear that the economy is not strong enough to support loans for the minimum development required to achieve viability. With grant funds available for this purpose over the next few years, it is considered that public loan capital and private equity capital could then start to flow into the Philippines to support the type of development required for long-term stability.

New Zealand: New Zealand is not a member of the International Bank and will probably need Eximbank assistance to expand productive capacity. Aid to New Zealand is aid in the common defense effort.

Near East: This area because of its location for international transportation and its oil production is of vital importance to the U.S.

Iran is more insistently under the pressure of Soviet proximity and interest than perhaps any other country. There is ferment and unrest in the neighboring Arab States. Immigration into Israel of Jews presently residing in Moslem States continues unabated and with it heavy economic burdens for the State of Israel. In addition there remain several hundreds of thousands of unsettled Arab refugees from the war between the Arab States and Israel.

The U.S. is already committed to assist in the resettlement of Arab refugees. In the case of Iran, it is desirable that the U.S. render effective assistance as tangible evidence to the government and the people of American interest in the preservation of the country’s independence and to strengthen both the ability and the will to resist Soviet aggression and communist subversion. It is necessary in the Arab States to provide assistance that will give some forward momentum to these static economies. In the case of Israel, it is in the U.S. interest that this new State receive the technical and financial aid which it will need to cope with its many difficult problems and discharge its international responsibilities.

In addition to aid for the settlement of Arab refugees, the grant aid scheduled for this area is intended to cover the cost of an enlarged program of technical assistance and associated supplies and equipment, ranging from specific projects at the village level for the improvement of health, sanitation and education facilities, training in agricultural techniques and the provision of seed, tools and fertilizer, to broad survey and diagnostic missions.

Loan assistance is provided for capital investment projects in Israel, Iran, Lebanon, Saudi Arabia and possibly Egypt. (It may become necessary to increase the grant component for the Near East area if Iran is unable to secure loan assistance for necessary development projects.)

Africa: The bulk of the assistance for this continent is intended for the African dependent territories. The purpose of both the grant and loan aid is to expand and develop the production of strategic materials and associated improvements in transportation, power and port facilities, as well as indigenous food, fiber and other essential raw material production so as to increase and maintain the internal economic development of the African territories and their contribution to the Western European economies. The program is a continuation and expansion through the years 1952–55 of activities already underway in the ECA.

Western Europe’s 1949 imports from overseas dependencies, largely in Africa, amounted roughly to about $2.5 billion in value. U.S. imports from these areas come to about $400 million in value. Raw material and food exports from these territories included rubber, palm oil, sisal, hemp, hides and skins, cork, copra, vegetables, fruits, cereals, sugar and dairy products.

It is anticipated that the aid will be made available through and in cooperation with the European colonial powers. If carefully administered the program should contribute not only to the objectives cited above but should also have the effect of increasing employment, productivity, and economic and political stability throughout Africa.

Aid has been scheduled in the form of loans to the extent that loan aid appears feasible.

Small amounts of aid have been scheduled for the independent countries of Africa, largely for technical assistance.

South Asia: The situation in the Indian Sub-Continent is one involving de facto economic deterioration to date and the prospect of continuing future deterioration as population growth outruns prospective Increases in productivity. Continuing future deterioration appears inescapable unless external aid can be injected to reverse the trends that are now so clearly discernible. Reversal of these trends is an imperative vital interest of the U.S. India and Pakistan are of determinative importance in the pattern of Asian political relations. The present governments of India and Pakistan are moderate in policy and friendly to the West, and they continue to command the support of the wide majority of their people. However, support is giving way to apathy, and organized parties on the extreme right (fanatic religious groups) and the extreme left are gaining strength as economic conditions continue to deteriorate. These adverse political and economic trends might be arrested now by a U.S. aid program, directed primarily toward improvement In agricultural productivity. If these adverse trends are allowed to gain strength, however, a situation might be created which—like that in China—could only be redressed through an effort lying beyond our capabilities. An aid program should also serve to demonstrate our interest in the welfare and aspirations of the people of this area and thereby tend to align them more closely with us in the face of Communist threats or blandishments.

The program proposed is about half of the deficit not covered by other sources envisaged by the countries concerned in connection with the development plans put forward at the Columbo Conference. While it will not support these plans in full, it will give impetus to the process of economic development in those countries.

It is not supposed that the aid program as scheduled for this area would of itself bring about significant increases in living standards. It is hoped, however, that beyond the arrest of economic deterioration and consequent political instability during the next few critical years, the recipient countries at the end of such a program would have established an environment that would encourage a maximum utilization of domestic savings and a reasonable flow of outside investment capital for further developmental activities.

Technical Assistance: The estimates represent the anticipated contribution of Point IV funds to the UN Technical Assistance Program, the OAS and other international organizations.

Appendix to Annex No. 2

the eca information program^‡

(Prepared by the Economic Cooperation Administration)

The Economic Cooperation Administration has been instructed by Congress (Public Law 535—81st Congress)¹⁰ “to give full and continuous publicity through the press, radio, and all other available media, so as to inform the peoples of the participating countries regarding the assistance, including its purpose, source and character, furnished by the American taxpayer.”

The Economic Cooperation Administration is therefore charged with a direct responsibility for conducting a foreign information program with regard to one specific aspect of the foreign policy of the United States. The great majority of its information work consists of thoroughly informing the people of the Marshall Plan countries of the achievements and objectives of the Plan.

While conducting this information program, the Economic Cooperation Administration, in order to promote the success of the Marshall Plan, is involved in many aspects of the international information program carried on by the Department of State. It particularly is involved in information designed:

a) To promote will and energy on the part of peoples whose governments are recipients of Economic Cooperation Administration’s assistance,

b) To promote understanding of the nature of Soviet Communism and to encourage attitudes hostile to it in the countries involved,

c) To promote through the exploitation of traditions, loyalties, hopes and fears the closer economic association of the nations of Europe,

d) To promote a sense of urgency and sacrifice for the cooperative and collaborative defense of the free world.

The foreign information program of the Economic Cooperation Administration has been, and still is most vigorously conducted in the sixteen countries of western Europe which are recipients of Economic Cooperation Administration assistance. Foreign information services are being developed in the countries of Southeast Asia where the Economic Cooperation Administration is administering programs.

From the beginning, the Economic Cooperation Administration has decentralized the operations of its foreign information program. The largest information operation is in the Office of the ECA Special Representative in Paris. That office assists the Mission information officers, particularly those in countries without counterpart funds or which are backward in informational media techniques. It also functions on a Western Europe-wide basis to produce, in the various media, materials showing the overall achievements and objectives of the Marshall Plan in all the Western European members.

The ECA Mission in each participating country has an American information officer, generally one or two assistants, and a high-quality local staff composed of nationals (generally ex-newspaper and radio men) of the country concerned.

The ECA has also operated on the principle of vigorous participation by indigenous governments and peoples. It has paid close attention to organized labor in Europe, especially in countries like France and Italy where the Communists still control the largest labor confederations. It has labor information officers in the majority of the Missions.

ECA produces the bulk of its information materials in the country in which it is operating and distributes these through its own facilities, the facilities of the United States Information Service and indigenous channels. It employs all media—press, radio, exhibits, movies, contests, sound and projection trucks, wall posters, toy balloons, leaflets, booklets, games, signs on ECA projects and even troubadours in Sicily.

In conformity with NSC 59/1,¹¹ the ECA foreign information program is coordinated with other foreign information activities of the United States Government in support of national objectives. Policy coordination is assured through the participation of the representative of the ECA on the Interdepartmental Foreign Information Organization. It is further assured by the activities of committees set up in the capital of each nation in which the ECA is functioning. These committees consist of the Public Affairs Officer, the ECA Information Officer, the ECA Labor Information Officer, an administrative officer of the ECA Mission and an administrative officer of the Embassy. Their task is to discuss the information activities of USIS and ECA in that country and to work out joint projects where possible. Such joint projects are financed with ECA counterpart funds.

The ECA Information Officer is required to provide ECA Washington with usable material—press and magazine stories, radio programs and movies—which can be circulated on this side so that the American taxpayer may know what becomes of the money he contributes to the Marshall Plan.

About fourth-fifths of the cost of ECA’s overseas information program is paid from counterpart funds.

[Here follows Annex No. 3, “The Civil Defense Program,” prepared by the National Security Resources Board.]

Annex No. 4¹²

The United States Stockpile Program

(Prepared by the National Security Resources Board)

1. The stockpile program is intended to provide the United States with strategic and critical materials essential for the prosecution of a 5-year war. Stockpile objectives are the difference between essential wartime requirements on the one hand and wartime U.S. domestic production and imports from accessible sources on the other.

2. These estimates are based on information developed by interagency commodity committees and approved by the Interdepartmental Stockpile Committee on which are represented State, Interior, Commerce, Agriculture, ECA, GSA, and Munitions Board, and to which the Resources Board, Budget, AEC, Army, Navy, Air Force, and RDB send observers.

3. Due to the changes in the current military program and an anticipated acceleration in current military procurement over and above that contemplated in the September version of Annex 1,¹³ although no change is expected in the objectives, it will be necessary to revise the phasing of stockpile objectives. The stockpiling program as presented here is intended to be kept flexible and can be readily revised as to phasing to reflect changes in current requirements, material on hand, materials available, and strategic assumptions. It should be noted that the actual rate of acquisition of stockpile materials is the subject of constant study and review. Changes may be made in the acquisition rate of various materials from time to time depending upon current availability weighed against demand of the current military and war-supporting requirements.

3. [sic] In addition, stockpile objectives themselves are undergoing constant review, particularly in the light of such questions as substitution of other less critical materials, tests of necessity, and changes in military specifications. As results of the above studies become available, stockpile objectives themselves are subject to the possibility of change, upward or downward. The program presented here is the best considered opinion of all those concerned of what is essential and required for our defense preparedness.

4. Estimated requirements for funds include only those necessary for the acquisition of materials, and do not include expenditures for administration, handling, storage, and rotation. They are based on the following assumptions:

(a) General war may start at any time. For the sake of planning, however, June 30, 1954 is taken as the date by which minimum stockpiles must be on hand physically within the continental United States. (The more materials stockpiled before 1954, the greater the national security. However, for some few materials, it will be physically impossible to complete stockpiles by 1954.)

(b) September 30, 1950 price levels (for purposes of comparison, funds and expenditures on June 30, 1950 levels are also included).

(c) Effective controls as authorized by the Defense Production Act of 1950 to channel strategic and critical materials to military programs, essential war-supporting programs, and the national stockpile.

5. Overall dollar figures are given below, and quantitative details for eleven of the most important materials are in the attached table. About 70 materials are being stockpiled.

(a) The acquisition of minimum stockpile objectives by mid-1954 will require, at September 30, 1950 prices, the appropriation of $4.1 billion new obligational authority, in addition to authorizations that have already been enacted. These funds will be obligated and expended in accordance with the following schedule:

	FY’51	FY’52	FY’53	FY’54	After FY’54
	(Billions of Dollars—September 30, 1950 prices)
Obligation	1.8	1.0	1.0	0.3
Expenditure	0.2§	1.6	1.0	0.8	0.5

6. At September 30, 1950 prices, and with present authorizations, the stockpile has $2.0 billion worth of materials on hand, $1.5 billion worth financed for delivery after fiscal year 1951.

7. At June 30, 1950 prices, and with present authorizations, the stockpile has $1.7 billion worth of materials on hand, $1.3 billion worth financed for delivery in fiscal year 1951, and $0.3 billion worth financed for delivery after fiscal year 1951.

[Here follow two tables indicating proposed acquisitions of major items from Fiscal Year 1951 through Fiscal Year 1954 and after.]

Annex No. 5

The Foreign Information Programs¹⁴

(Prepared by the Department of State)

[Here follow Table A, “The Information and Educational Exchange Program,” and Table B, “Other State Department Information Programs.”]

1. The Task of Information and Educational Exchange. The frustration of the design of the Kremlin will result primarily from concrete decisions taken and vigorous measures executed in the political, military and economic fields by the people and the governments of the free world under the leadership of the United States. The task of the United States foreign information and educational exchange programs is to assure that the psychological implications of these actions are, first, fully developed and second, effectively conveyed to the minds and the emotions of groups and individuals who may importantly influence governmental action and popular attitudes in other nations and among other peoples,

2. The Basis of Cooperation and Resistance. Governmental action and popular attitudes will be influenced along lines favorable to the achievement of United States objectives through recognition of the interests shared by the people and the Government of the United States and other governments and peoples. The Charter of the United Nations reflects these basic interests.

Recognition of common interests does not require agreement with regard to religious practices, cultural traditions, social forms, political institutions or economic arrangements. The United States is bound by its principles to respect differences between its own internal arrangements and those of others.

The United States and other peoples and nations share common interests which information and exchange programs can cultivate, in:

a. National freedom, including both the desire for recognized status in international affairs and the desire to maintain characteristic indigenous cultures.

b. Peace and security against external aggression.

c. Social advancement, economic progress and human welfare, under governments responsive to popular aspirations.

d. Effective international relationships to serve these ends.

Identity of interest among the nations and peoples of the free world will not be meaningful as an abstraction but only as revealed in the daily life of groups and individuals. It must be regarded as an invigorating and heartening factor in their efforts to achieve freedom, opportunity and security.

These shared interests provide a psychological basis both for constructive collaboration among peoples and nations and for creating and maintaining resistance to Soviet Communism.

3. The Development of Psychological Resistance. The development and maintenance of psychological resistance to the design of the Kremlin calls for continuous and highly detailed exposure of the ways in which Soviet Communism threatens the interest shared by other peoples and nations. These may be revealed in the contradiction between the deeds and the words of the Kremlin, between the ideals proclaimed abroad and the conditions of poverty, oppression and terror prevailing within the Soviet Union and its satellites and between the professions of peace and the facts of massive armed force and of imperial aggression. By concrete example of what Soviet Communism has done within its orbit and intends to do wherever its agents seize authority, the myth can be destroyed that it stands for national freedom, international peace, social progress, economic development and human betterment.

Exposure of the nature, the intentions and the capabilities of the Soviet Union is part of a program to induce peoples and nations outside its sphere:

a. To face up to the fact that Soviet Communism is the implacable enemy of all free nations and peoples and of their common aspirations.

b. To participate in effective actions to deter or, if necessary to repel direct or indirect aggression by the Soviet Union and its satellites.

c. To sacrifice leisure and comforts in order to resist Soviet Communism.

d. To maintain efficient governments, stable economies and the disciplines required to support resistance to Soviet Communism.

e. To prevent the infiltration of agents of Soviet Communism into the armed forces, the government, labor unions, educational institutions, press and radio and other key organizations and to bring about the elimination of those already in such positions.

f. To cooperate with other nations and peoples in a spirit of accommodation for mutually desired ends.

g. To carry on these actions for as long as necessary to frustrate the design of the Kremlin.

The United States will be unrealistic if it expects all peoples and all nations outside the sphere of the Kremlin to respond in the same way and to the same extent to the stimuli of shared interests. Nations and peoples have interests additional to these shared with the United States; these will also shape their attitudes and govern their actions. Propaganda that fails to take account of this diversity in the world will not only misrepresent United States policy but over-reach itself. In some cases, political, economic, and military considerations will require that propaganda endeavor to bring about as full as possible correspondence between the commitments and the actions of another nation or people with the commitments and the actions taken by the United States. In others, the United States can afford to be satisfied if the other nation or people only decline to associate themselves with the Soviet Union.

The peoples under the domination of the Soviet Union are potential allies whose hope for ultimate liberation should be nourished . . . . This is particularly true of intellectuals in governments and out, of many in the armed services and of a large part of the peasantry. To the degree to which, while refraining from premature action, they identify their interests with those of the free world, the internal structure of Soviet Communism will be weakened, its controls strained and its aggressive possibilities restricted. Combined with the knowledge that the United States and its associates are building military strength capable of defending the free world against Soviet aggression, the knowledge that the people of the USSR and its satellites are unreliable subjects might incline the Kremlin eventually to choose courses of accommodation that would avoid a war threatening its own power and the security of the motherland.

4. The Development of a Sense of Urgency. In the situation that now exists, the development of psychological resistance must, to contribute effectively to defending wide areas of freedom against aggression and occupation, take place within a relatively short time. To accomplish this, information programs must expose and explain the relationship of Soviet military capabilities to the aggressive nature and intent of Soviet Communism. Careful consideration should be given to making public at an appropriate time the atomic capabilities of the USSR.

5. The Development of Confidence and Hope. Effective psychological resistance to Soviet Communism cannot, however, be expected to grow and to flourish as the result solely of arousing hatred of its intentions and fear of its capabilities. Hatred and fear alone may inspire, not stubborn and active resistance, but a withdrawal into “neutralism” and a resignation to despair. A hardy psychological resistance must rise from, and constantly refresh, confidence and hope.

Confidence and hope in the future will be inspired in other peoples to the degree that they are convinced, emotionally and intellectually, that:

a. The means of accomplishing a successful military defense against Soviet aggression are or will shortly be at hand.

b. The frustration of the design of the Kremlin will advance their legitimate aspirations, notably the achievement of national freedom and a large degree of economic independence.

c. Their right to share in shaping the future will not be measured only by their material capabilities but by recognition of their cultural traditions, indigenous institutions and national character.

d. They are regarded as full partners in a common undertaking.

e. The endeavor to frustrate the design of the Kremlin is not an effort to maintain or to restore a status quo but is a step in the development of evolutionary arrangements among and between nations giving an enhanced degree of political stability, economic progress, social development and international order.

Although Soviet Communism currently is the greatest threat to the fulfillment of the legitimate aspirations of peoples seeking freedom, many of the conditions against which free nations and peoples are obliged to contend did not originate with any particular system but have been exploited by Soviet Communism for its own advantage.

6. The Role of the United States. The degree to which other peoples and nations develop and maintain confidence in themselves and the free society of which they are or hope to be a part will depend in critical measure upon their confidence in the United States. Circumstances and events have thrust upon the United States leadership in world affairs. The role is difficult and uncomfortable. It requires patience and self-restraint. Its rewards are not invariably understanding, much less gratitude. The United States cannot escape the responsibilities of the role, but it can and should avoid being arbitrary, domineering and condescending. It should endeavor to speak through deeds as well as by words. It should desire that others than itself advertise its virtues. It should seek to exercise authority through willing concurrence rather than enforced compliance.

To inspire confidence in its own intentions and capabilities, the United States must convince other peoples and nations that:

a. It regards the arming of itself and the free world as the shield behind which it pursues its objectives of safeguarding freedom, maintaining peace, furthering human welfare and bulwarking international order.

b. It does not regard war with the Soviet Union as inevitable.

c. It is not in its character to wage aggressive or preventive war, although it will resist aggression with vigor, resource and will and with confident assurance of ultimate success.

d. All its actions in the international field are in conformity with the principles of the Charter of the United Nations.

e. The United States always stands ready to consider in appropriate forums concrete proposals put forward by the USSR which contain any promise of diminishing international tension and which do not involve compromise of the basic principles of the United States and the free world. At the same time, the United States believes that general discussions with the USSR will be fruitful to the extent that the United States and the free world possess strength on a scale providing authority and flexibility in negotiations.

f. It has the will and the means to make hard decisions and execute necessary plans at sacrifice and cost without creating political or economic instability.

g. Notwithstanding necessary partial curtailments of assistance for purely economic purposes, it regards the development of strong indigenous economies in other areas of the world as an indispensable element in its foreign policy.

h. It has no imperial ambitions.

i. It contemplates the wide distribution of power in the world among peoples and nations, large and small, all responsive to suitable and effective international authority.

j. It is determined that in building up its military strength it shall not undermine its basic principles, its respect for individual liberty, its hatred of political oppression, its opposition to totalitarian practices, its love of justice.

The people and the Government of the United States can not fail to be aware that, in the future even more than in the past, their reliability, their character and their devotion to sound principle will be judged not only by what they do directly in the name of foreign policy but also by how they manage their affairs and deal with each other in their domestic relations. Other peoples will not be impressed only by factories put into operation in the United States and armed forces created. They will also be impressed by the quality of the educational system, the support given to cultural institutions, the rise or fall of crime rates, the measure of social justice for various groups and individuals, the degree of self- and group-discipline shown in the pursuit of the national purpose and by other tests of the vigor and scope of the nation’s civic virtue.

In order to correct constantly recurring misunderstanding and misconceptions about the United States, which are often more damaging, particularly among basically well-disposed foreign peoples, than the lies of Soviet propagandists, the need continues for making widely known abroad the nature of the people, the history and the institutions of the United States. The objective is not to boast the virtues of the United States or to induce other peoples to adopt its institutions, political, economic or social. The objective rather is to create understanding of how Americans live and work, how richly various is their society, how their institutions function and what are the goals of the national life. Such understanding is an essential basis for the judgment of other peoples of the character of the decisions now taken and the actions flowing from them.

The confidence and hope that the United States can communicate to other peoples and nations can only be as great as their confidence in themselves and their hope for their own future. In view of the demands that are now to be made upon them, they are entitled to:

a. As full revelation of the facts concerning the peril in which they and the rest of the free world stand as considerations of military security will permit.

b. A thorough exposition of the reasoning behind the program for a build-up of strength.

c. Continuous information concerning the progress of the program and its impact on the world.

d. Maximum care in the formulation and coordination of official statements so that these contribute neither to confusion at home nor to the propaganda advantage of Soviet Communism abroad.

7. The Instrumentalities. Statements by the President, the Secretary of State and other responsible civilian and military authorities, the utterances of congressional leaders and private citizens, declarations by leaders of friendly nations and peoples in the United Nations and elsewhere, together with concrete actions taken in the political, diplomatic, military and economic field will constitute much of the content of the information programs. The wide diffusion, correct understanding and meaningful impact of these statements and actions will require:

a. Concentration of effort in the psychological field within nations and among peoples that are

(1) …,

(2) possible targets of forceful aggression by Soviet Communism,

(3) under constant harassment by the propaganda and the agents of Soviet Communism,

(4) vulnerable strategically and psychologically,

(5) sensitive because of internal conditions to communist propaganda.

b. Concentration of effort on those groups and individuals having the greatest influence over governmental action and popular attitudes.

c. Determination of the media—radio, press, motion pictures, books and the exchange of persons—most effective in reaching these target groups and shaping their use to assure the utmost impact.

8. The Target Areas. Nations and peoples will shift from one category to another as the international situation itself changes. Thirty-seven nations and areas in Europe, the Far East, the Near and Middle East and Latin America are now considered to require urgent attention. Only eight nations, for the most part in the Western Hemisphere, are now considered to require no special attention. The remainder fall into categories between these two.

9. The Target Groups. The groups and individuals deemed to have the greatest influence in these areas vary with prevailing political institutions, social forms, cultural traditions and educational levels. Where governmental power is largely controlled and transmitted by authoritarian devices, intellectuals and governmental officials constitute the most important targets. In areas in which political power has passed largely under popular control, these groups are still important for the influence, disproportionate to their numbers, that they wield in the press, the universities and the council chambers. At the other extreme, the power and influence, if only passive, of the peasantry and the urban proletariat, even in areas where illiteracy is high and popular government does not exist, must be taken into account. A given population will most effectively and most practically be reached through concentration on those elements broadly representative of it. Labor and youth are groups newly emerging in power and influence in many areas; they are also groups whose attitude may determine the character of national action in a time of crisis. They therefore have a special importance, and they represent roughly half of the groups on which especial effort is to be concentrated in all areas.

10. The Choice of Methods and Techniques. The sharp definition of the target areas and target groups calls for equally sharp focusing of the available media—radio, press and publications, motion pictures, books and other cultural materials and the exchange of persons—on those targets.

Because radio broadcasting, despite jamming, is the only medium now capable of reaching large audiences inside the Iron Curtain, the rapid construction of relay and transmitting facilities enabling broadcasts to be heard on medium as well as shortwave is essential. In order to reach important segments of the population in critical areas, broadcasting languages will be increased to include tongues and dialects prevalent in the Soviet Union and Central Asia. In addition, small low-cost receiving sets are to be distributed by appropriate agencies behind the Iron Curtain and in areas outside it, notably Korea, where sets are few.

The full potentialities of other media will be similarly developed. Emphasis in the field of publications will fall on the production of leaflets, pamphlets, picture books and magazines specifically designed to appeal to youth, labor, community leaders and intellectuals. Filmstrips, posters and pictorial exhibits and displays will be directed at the same audiences. By arrangement with the motion picture industry, newsreels will be produced for and widely distributed to foreign exhibitors, and equipment will be made available for the wider showing of documentaries produced by the Government. The exchange of persons program involves bringing upwards of three thousand individuals to the United States annually, with heavy emphasis on labor leaders, youth groups, professional and community leaders and public officials. Additional information centers will be established, especially in small communities, and efforts will be made to encourage and to support comparable indigenous centers. The impact of these centers will be increased by the wide distribution of books translated from English, assistance and support given to the teaching of English and the distribution of books and other cultural materials to indigenous institutions.

These undertakings will be fully effective only if they are carried out with close regard for local interests, tastes, prejudices and habits. Hence, programming and production will be carried out largely in the field, with the assistance of highly qualified local personnel under competent American supervision. This applies to pamphlets, leaflets and exhibits, to the production of local radio programs, to the local production of films, to the management of information and community centers, to the translation of books and to arrangements for the exchange of persons.

No less important is the consideration that a point can quickly be reached at which overt official propaganda becomes self-defeating. Even the friendliest government and people will not welcome or long support a heavy influx of information materials and personnel bearing the label of the United States Government. A basic consideration therefore is that to the maximum possible extent the production and distribution of information materials and the conduct of information activities should be carried out by indigenous personnel and indigenous institutions. This means the maximum utilization of local personnel, the provision of equipment and materials to indigenous organizations, including governments, and the encouragement and support of bi- and multi-national indigenous bodies. It involves full cooperation with and support of the information activities of likeminded governments, of such regional organizations as the North Atlantic Treaty Organization and of the United Nations. In the exchange of persons, it means that maximum cooperation should be sought from labor, business, civic and other community organizations in the United States for the reception and care of foreign visitors.

11. Investigation and Research. The penetration of the Iron Curtain presents a special problem. A group of social and natural scientists have already been engaged to investigate every possible method of getting information into the Soviet world. This investigation will include every scheme thus far put forward, no matter how unlikely or unprofitable it may appear to be. Included in their tasks, but by no means confined to this one problem, will be a thorough exploration of all possible means to combat the Soviet jamming of VOA programs.

The studies normally carried on concerning the effectiveness of various media and various propaganda themes are to be supplemented by regional investigations involving not only the basic aspirations of other peoples, but also the symbols to which they respond.

12. Allocation of Funds. By far the larger part of the projected appropriations will be utilized for the construction of broadcasting facilities designed to increase the range of the broadcasts and the ease of their reception, the establishment of local production centers and the staffing of them with competent highly qualified local and American supervising personnel and the expansion of USIE staffs, particularly by the addition of personnel skilled in developing fruitful relationships with priority target groups and of producing materials and programs of special interest to them.

The expansion of physical facilities, particularly the relay bases and medium-wave transmitters abroad, will take place on a large scale in 1951 and 1952 and will come to its peak early in the fiscal year 1953, at which time the information programs will have at their disposal facilities and equipment capable of meeting the now fore-seen demands upon it. The rate and extent of the development of the information and educational exchange programs to meet the requirements of the existing situation will depend upon the removal of restrictions and conditions that now prevent maximum operational flexibility and the granting of certain additional authority. The radio facilities expansion proposed requires the successful solution of the problems, one, of obtaining necessary frequencies by a review of present and projected facilities; two, of acquisition of sites for overseas relay bases; three, of obtaining within the Government suitable priorities for research and intelligence.

13. Coordination Within the Government and with Other Governments. The effective execution of these programs will require extensive coordination within the Government and with other governments. The organization established within the Department of State pursuant to NSC 59/1 provides a mechanism for coordination among the Department of State, the Department of Defense, the Joint Chiefs of Staff, the Economic Cooperation Administration and the Central Intelligence Agency in international informational matters.^║ The establishment of the information section in the North Atlantic Treaty Council provides the mechanism for close coordination of the international information activities of the nations parties to this treaty. Coordination between the United States and other governments is provided for in an instruction of the Department of State authorizing close coordination with the Government of the United Kingdom, and other governments as may be agreed, in a broad range of information activity.

Inasmuch as the success of these coordinated activities will require extensive activity in the international information field by all available resources, and particularly by governments other than that of the United States, other governments need to be encouraged to develop and to maintain vigorous international information activities.

Coordination with private agencies in the United States, including a wide range of business, professional, civic, labor and youth organizations and representatives of foreign groups, in the production, utilization and dissemination of materials and in the exchange of persons is carried on in accordance with the provisions of Public Law 402.¹⁵

Annex No. 6¹⁶

Foreign Intelligence and Related Activities

(Prepared by the Central Intelligence Agency, with the concurrence of the Intelligence Advisory Committee)

1. It is axiomatic that the situation appreciated in NSC 68 and the policy proposed to meet it require the improvement and intensification of U.S. foreign intelligence and related activities, as a safeguard against political or military surprise, and as essential to the conduct of the affirmative program envisaged.

2. The Director of Central Intelligence and Intelligence Advisory Committee have taken and are taking action directed toward the improvement and intensification of foreign intelligence and related activities. For reasons of security, the specific programs undertaken and contemplated, and their budgetary requirements, are not set forth here. It has been determined, however, that even the substantially increased budgets now projected would be inconsiderable in relation to the grand total of the other programs projected in this report.

[Here follows Annex No. 7, “The Internal Security Program,” prepared by the Interdepartmental Intelligence Conference and the Interdepartmental Committee on Internal Security.]

1. The annexes to NSC 68/3 consist of revised versions of the annexes to NSC 68/1, September 21, none of which is printed. Annexes 1–7 of NSC 68/3 correspond as to subject to Annexes 1–7 of NSC 68/1, although the titles differed slightly. However, NSC 68/1 was also accompanied by three annexes not included either in original or revised form in the annexes of NSC 68/3. The three were Annex 8, “Long-Term Political and Economic Framework,” prepared in the Economic Cooperation Administration and the Council of Economic Advisers (regarding Annex 8, see Policy Planning Staff study of November 10, and footnote 2 thereto, p. 404); Annex 9, “Organizations for Coordinating National Security Policies and Programs,” prepared in the Bureau of the Budget; and Annex 10, “The Economic Implications of the Proposed Programs: Required Fiscal, Budgetary and other Economic Policies,” prepared in the CEA. NSC 68/1 was also accompanied by an Appendix to Annex 10, “Technical Assumptions and Analysis Underlying the Economic Projections for 1950–1955,” also prepared in the CEA. It should be noted that an undated and much abbreviated version of NSC 68/1, Annex 10, is included in NSC 68/3 as Appendix “B”, p. 427.
2. See memorandum by Secretary of Defense Marshall to the President and enclosures thereto, December 14, p. 474.
3. Not printed.
4. Not printed.
5. These estimates cover both aid in the form of armaments, and economic support for the European NAT countries and Western Germany. Economic aid requirements of the other European countries, not members of NAT, are given in Part B Annex No. 2. [Footnote in the source text.]
5. Not reproduced.
6. Not reproduced.
7. Of May 18, p. 628.
8. Economic aid requirements for European NAT countries and Western Germany are given in Part A of this annex. [Footnote in the source text.]
8. Not reproduced herein.
9. These notes accompanied Table 3.
10. See also Annex No. 5. [Footnote in the source text.]
10. The Foreign Economic Assistance Act of 1950 (64 Stat. 198).
11. NSC 59/1, a report by the National Security Council, March 9, 1950, on “The Foreign Information Program and Psychological Warfare Planning,” is not printed.
12. Dated December 7, 1950.
13. Not printed.
14. See par, below. [Footnote in the source text.]
14. Additional documentation on this subject is scheduled for publication in volume iv.
15. See also the Appendix to Annex No. 2, The ECA Information Program. [Footnote in the source text.]
15. Public Law 402, 80th Cong., 2nd sess., the United States Information and Educational Exchange Act of 1948 (the Smith–Mundt Act) (62 Stat. 6).
16. Dated December 1, 1950.