Memorandum by the Secretary of Defense (Johnson) to the Secretary of State

top secret

Subject: Suggested Policy Guidance for U.S. Representatives in South African Atomic Energy Board Discussions.

I have given thought to the prospective meeting between representatives of the Combined Development Agency and the South African Atomic Energy Board looking toward an agreement to provide uranium ore from South African mines. From the standpoint of national defense, the importance of arriving at an early agreement [Page 543] to provide an alternate source of uranium ore in addition to the Belgian Congo needs no amplification.
The various recent disturbing disclosures related to the atomic energy field and the uncertainties of the future are compelling reasons for making positive that the results achieved through negotiations with the South Africans are precisely tailored to meet U.S. needs. Accordingly, I am suggesting below certain policy guidance for U.S. negotiators which, from a national defense point of view, appear logical, sound and reasonable.
Negotiations with the South Africans to take place in an atmosphere of a straight business transaction between the U.S. and the Union of South Africa only.
Due consideration be given to the capital investments of the U.S. in this project and to U.S. funds expended in research and development with the end in view that third countries will not unduly profit by such U.S. expenditures. Some relationship should exist between the price of ore charged to third countries and the U.S. investments which rendered a proffer of such ore feasible.
No inherent right exists for third country participation in questions relating to allocation of ore.
The Belgian agreement is separate and distinct, and in no way acts as a precedent for these negotiations.
Ore will be stockpiled in the U.S.
I am forwarding a copy of this memorandum to the Acting Chairman, Atomic Energy Commission, for his information.
Louis Johnson