Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

Eisenhower Library, Eisenhower papers, Whitman file, Administration series

Paper Prepared by the Interagency Committee on Agricultural Surplus Disposal¹

confidential

[Washington,]December 15, 1954.

Policy Review of Dollar Sales to the Soviet Bloc of Agricultural Surplus Commodities

Problems:

1. Should the United States sell agricultural surplus to friendly countries for dollars at world prices with the knowledge that such produce would find its way to the Soviet Bloc?

2. Should the United States sell agricultural surplus to the Soviet Bloc for dollars at world prices?

Discussion:

Opportunities continue for disposing of substantial quantities of surplus, mainly butter, with final destination the Soviet Bloc. These are proposals by friendly countries to buy for dollars at market prices. Some are offers of brokerage for shipment to the Soviet or Satellites; some to take commodities for reworking and transshipment; some to consume totally within the friendly country, releasing local produce for shipment behind the Curtain.

A previous concensus of the Cabinet (January 15, 1954) was to deny a license to export butter to the U.S.S.R. The reasons, appearing in the aide-mémoire, were: (a) we should not sell this commodity at a loss; (b) there might be adverse public reaction if the U.S. sold butter to Russia at a price below that paid by American housewives.

If reason (a) is controlling, this avenue of possible disposal is blocked, inasmuch as the cost price to the CCC tends to be above world market prices for the same commodity, because of the operation of domestic price supports.

If, however, reason (a) alone would not preclude such sales in the absence of other reasons, it may be that the introduction into the transaction of a friendly third country (which stands to benefit by it) could have an effect on reason (b).

The Department of Agriculture has been unable to devise a politically feasible plan or one not involving risk of ruinous cost for domestic disposal of butter surpluses.

The Interagency Committee on Agricultural Surplus Disposal (ICASD) feels that the policy on this question should be reviewed. It is the Committee’s opinion, in respect of reason (b) above, that the judgment of the American people can be relied on if a full and honest disclosure of the situation is made.

Recommendations:

1. (a) That the President approve in principle the sale for dollars at competitive prices of surplus agricultural commodities to friendly countries, even though such commodities may ultimately go to the Soviet bloc or be available to it;

(b) that the President authorize the agencies concerned to proceed to negotiate such transactions as presently offer or as may offer and can be negotiated within 90 days from this date and authorize the Secretary of Commerce to issue export licenses therefor; and

(c) that the Chairman of the Interagency Committee on Agricultural Surplus Disposal be directed to report to the Cabinet at the end of that period the nature of such transactions, together with an estimate of their effects at home and abroad.

2. If the first recommendation is accepted, the Committee proposes that the idea of direct sales to the Soviet Bloc for dollars (but not for gold) be entertained and recommends that the President approve such sales on the same basis as described in the first recommendation. The Treasury Department and the Bureau of the Budget reserve their positions on this recommendation.

1. Distributed to members of the Cabinet as a Cabinet Paper, designated CP–9, under cover of a memorandum by Secretary to the Cabinet Maxwell M. Rabb, dated Dec. 15, 1954, not printed.