Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

S/P–NSC Files, Lot 61 D 167²

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

top secret

[ Washington ,] January 3, 1951.

Subject: NSC 97—A National Petroleum Program³

Discussion:

The Department of Defense in its letter of December 27, 1950 (NSC 97—Tab A) states that a “National Petroleum Program” is necessary, and urges that it be developed immediately. The practical purpose of the program would be to assure adequate supplies of oil in the event of a major war. It is generally agreed that the problem would be acute if Middle East oil supplies should be lost.

Previous suggestions of the Defense Department for a national petroleum program have led to interdepartmental discussions seeking agreement on a broad statement of petroleum policy. These discussions were ineffectual. Moreover, all policy statements prepared so far have suffered from the defect of being so general as to be of limited value in dealing with petroleum planning in the present international situation. The most ambitious and recent attempt was that of the NSRB Interdepartmental Staff Group (ISG) in May 1949 (Tab B).⁴ One of the ISG conclusions, without dissent, was that “the preparation at any given moment of a comprehensive policy statement covering all aspects of petroleum policy is a practical impossibility”.

In the opinion of ITP, NEA, and ARA, it would be useless at this time to attempt to develop, as in the past, a comprehensive statement of a national petroleum policy. What is needed, and overdue, is the assignment to the Petroleum Administration for Defense of primary responsibility to initiate the development, with other interested agencies, chiefly State, Defense, and Commerce, of the specific programs necessary to insure adequate supplies of petroleum for the Western Powers in the event of a major war in the near future. It is believed that this, in fact, is what the Defense Department is mainly concerned about at the present time.

Since allied requirements of oil cannot be supplied exclusively from the United States, it is essential to decide promptly on the kind and extent of international collaboration in planning for adequate supplies of petroleum.

Judging from past experience, efforts may be made to limit responsibility for planning to a single agency, to the United States alone, or at most to a United States-United Kingdom effort. The Department is generally opposed to such limitations, believing that other agencies are less conscious of the foreign relations aspects of petroleum planning and that collaboration with principal producing and consuming countries is essential.

Recommendations:

1. It is recommended that you support strongly the proposal for prompt development of a program to insure adequate petroleum supplies for an allied war effort.

2. It is recommended that an interdepartmental committee, including at least the Petroleum Administration for Defense, State, Defense, and Commerce Departments, be established to meet immediately to consider the policy questions involved in recommendation 1, and to report promptly to NSC the principal policy problems involved and their solutions.⁵

3. It is recommended that you oppose any final limitation of responsibility for the scope or development of the petroleum program to a single United States agency, to the United States alone, or to a United States-United Kingdom effort.

Concurrences:

ITP—Messrs. Brown⁶ and Leddy⁷

E—Mr. Schaetzel⁸

NEA—Mr. McGhee⁹ in substance, Mr. Howard¹⁰

ARA—Mr. Corliss,¹¹ and Mr. White¹² in substance

OSA—Messrs. At wood¹³ and Krieg¹⁴

2. Serial file of memoranda relating to National Security Council questions for the years 1950–1961, as maintained by the Policy Planning Staff.

3. NSC 97, “A National Petroleum Program,” December 28, 1950, is printed in Foreign Relations, 1950, vol.i, p. 489. It is comprised of a letter from Robert A. Lovett, Acting Secretary of Defense, to the National Security Council, and a note by James S. Lay, Jr., Executive Secretary of the National Security Council, indicating that at the direction of the President, the report had ‘been referred to Charles E. Wilson, Director of Defense Mobilization, for the development of a national petroleum policy providing for the supply of requirements in the event of major war.

   Assistant Secretary Thorp prepared the present paper in light of a memorandum of January 2 by Philip C. Jessup, Ambassador at Large, informing Thorp that NSC 97 had been placed on the agenda for the NSC meeting of January 4, and that Secretary Acheson needed a briefing memorandum. (S/P–NSC Files, Lot 61 D 167) No evidence has been found in the Department of State files to indicate formal NSC action on this subject on January 4. However, the source text of the present memorandum bears the following notation by Walter N. Walmsley, Jr., Alternate Department of State Representative on the Senior Staff of the National Security Council: “Pres. on Jan. 4(?) ref’d 97 to ODM to develop program. Being handled there by Fred Searles (189x553).” Searles was an Assistant to the Director of ODM.

4. Not printed.

5. On April 3, 1951, the Secretary of the Interior, Oscar L. Chapman, sent Secretary Acheson a letter, in which he proposed to create a Foreign Petroleum Committee to counsel and advise the Petroleum Administration for Defense regarding problems affecting foreign petroleum supply. Secretary Chapman wished to have representatives of the Department of State, Department of Defense, Department of Commerce, the Economic Cooperation Administration, the Office of Defense Mobilization, the Defense Production Administration, and the National Production Authority sit on the committee. (800.2553/4–351)

   The Under Secretary of State, James E. Webb, replied to Secretary Chapman’s letter on April 16, 1951, and informed the Secretary of the Interior that the State Department representative on the Foreign Petroleum Committee would be Harold F. Linder, Deputy Assistant Secretary of State for Economic Affairs, and that his alternate would be Edwin G. Moline, Acting Chief of the Petroleum policy Staff (800.2553/4–351).

   The Foreign Petroleum Committee held its first meeting on April 25, 1951. The committee minutes are located in E/ITR Files, Lot 57 D 294, Box 348.

6. Winthrop G. Brown, Director, Office of International Trade Policy.
7. John M. Leddy, Deputy Director, Office of International Trade Policy.
8. J. Robert Schaetzel, Special Assistant to the Assistant Secretary of State for Economic Affairs.
9. George C. McGhee, Assistant Secretary of State for Near Eastern, South Asian, and African Affairs.
10. Presumably John B. Howard, Regional Planning Adviser, Bureau of Near Eastern, South Asian, and African Affairs.
11. James C. Corliss, Assistant Economic and Finance Adviser, Bureau of Inter-American Affairs.
12. Ivan B. White, Economic and Finance Adviser, Bureau of Inter-American Affairs.
13. Rollin S. Atwood, Deputy Director, Office of South American Affairs, Bureau of Inter-American Affairs.
14. William L. Krieg, Officer in Charge, North and West Coast Affairs, Office of South American Affairs, Bureau of Inter-American Affairs.