S/S–NSC Files, Lot 66 D 148

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


Subject: National Security Council Agenda for February 21, 1951, Item No. 2—Defense Production Policy—ODM Doc. 4, dated February 1.1


The above policy paper is to be resubmitted by the Director of the Defense Mobilization for consideration by the Council.


The Secretary should agree with the general recommendations and conclusions of ODM#4 but should point out that the discussion in that paper does not appear to give adequate consideration to the necessity for maintaining the basic economic health of friendly countries as well as of the United States. While this domestic bias does not materially affect the specific recommendations of that paper it may be symptomatic of a trend of thinking that could endanger the defense effort and solidarity of the free world.

The Secretary should agree with the inference in paragraph 7 of the document as to the desirability of “a reasonable export program” but should take the occasion to point out that our export programs for commodities in short supply cannot be expected to be reasonable: (a) so long as export quotas are imposed on commodities the domestic consumption of which is not restricted, nor (b) so long as the United States limits exports through quotas but provides no positive mechanism, such as export allocations, to enable foreign countries to purchase the full amounts of their quotas.


ODM Document #4 is devoted primarily to an exhortation against excessive expansion of production facilities which will exceed the materials available for consumption and to outlining a policy in favor of the prompt imposition of adequate controls at present in order to prevent the need for more stringent controls at a later date. The document holds forth the hope that, with such a program it will be possible to relax controls as soon as the approved military program has been achieved.

The effects of the paper, from the point of view of foreign policy, are defects of omission. For example:

  • Paragraph 3 gives second priority to “facilities and provisions for raw materials” without any reference to the fact that the most essential facilities will, in many cases, be outside U.S. borders.
  • Paragraph 4 refers to the need for stockpiling enough materials to “sustain a civilian economy sufficient to support a full war effort” without reference to the need for sustaining the economy of countries expected to be our allies.
  • Paragraph 6 refers again to “a healthy standard of living for the American people”, with a similar failure to mention the standards of friendly countries.

In a number of cases, the United States has imposed export quotas on commodities before the imposition of any restrictions on domestic use. Friendly countries have been particularly disturbed by the size of our export quotas for sulphur and cotton, neither of which is under domestic allocation. Some countries are also becoming increasingly disturbed by the inability to obtain the acceptance of orders by American manufacturers, even where the commodity is not subject to export restrictions. If the U.S. is to maintain a reasonable export program in order that scarce materials may be used where they will make the most effective contribution to the world defense effort we are going to have to recognize that certain exports are essential from the point of view of our own military and political strength.

  1. Ante, p. 40.