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

Minutes of the Cabinet Meeting Held at the White House, 9:05 a.m., December 17, 1954

confidential

Washington, December 17, 1954, 9:05 a.m.

• The following were present:
• The President
• Vice President Nixon
• Under Sec. of State Hoover(for Sec. Dulles)
• Under Sec. of Treasury Folsom(for Sec. Humphrey)
• Sec. Wilson
• Mr. Brownell
• Mr. Summerfield
• Sec. McKay
• Sec. Benson, and Asst. Sec. Earl Butz
• Sec. Weeks
• Sec. Mitchell
• Sec. Hobby
• Director Hughes, and Deputy Director Brundage, in part
• Dr. D. A. FitzGerald (for Gov. Stassen)
• Dr. Flemming
• Chairman Young
• Dr. Arthur Burns
• Under Sec. of Commerce Murray, in part
• Arthur Page, in part
• Arthur Schier, in part
• Prof. Ernest W. Williams, Jr., in part
• Richard Hall, in part
• Under Sec. of Interior Davis, in part
• Under Sec. State Saltzman, in part
• John W. Macy, Jr., CSC, in part
• Henry Duflon, CSC, in part
• Director Allen Dulles, CIA, in part
• Hon. Clarence Francis, in part
• Gov. Adams
• Mr. Shanley
• Mr. Rockefeller
• Dr. Hauge
• Gen. Cutler
• Mr. Lambie
• Mr. Morgan
• Mr. Martin
• Col. Goodpaster
• Mr. Rabb

The President opened the meeting with a reference to the traditional practices of wedge-driving which he believed would undoubtedly be intensified in the months ahead. He stated his desire to avoid anything that would serve to gag Cabinet members. He hoped, however, that Cabinet members would merely laugh at any wedge-driving efforts. He also recalled the success the Cabinet had had thus far in resolving differences of opinion by discussion in a friendly fashion.

[Here follow a discussion of transportation policy and an interim report to the President on national water policy.]

P.L. 480 Program (CP–8)¹—Mr. Francis summarized the material in CP–8 and set the question as one of whether the program was overly cautious or overly liberal.

The President inquired as to how much money would be returned to the United States through these operations. Mr. Francis believed only about 10 percent would come back in dollars. Mr. Francis then pointed out, and Mr. Hoover noted agreement, that this program had not been set up as a means of saving money on other programs. Mr. Hoover commented at length on the many difficulties with which this program is fraught and he illustrated with details from the wheat-for-Brazil program and the added involvements caused by the negotiations between Argentina and Brazil.

Sec. Benson questioned whether the program as set up really carried out the intent of Congress, particularly in regard to improvement of trade. Mr. Francis believed it did.

Mr. Flemming asked about the extent to which Title I had been used for supplementary stockpiling of critical materials. The President commented on his desire to see the United States exchange perishables for durables. Mr. Francis said much more could be acquired for the stockpiling if the door were to be opened in his other paper. Mr. Benson produced some figures concerning stockpile acquisitions but it developed that this involved Title III and that ODM paid for the material in dollars.

CP–8 was then approved.

Foreign Sales of Agricultural Surplus Commodities (CP–9)²—Mr. Francis then set forth the State Department’s objection to the proposal for offering some 20 million pounds of butter on the world market on a bid basis. He recalled the protests made a year ago in regard to the similar program for cottonseed and linseed oil, and he emphasized that a favorable result had been obtained despite the pessimistic predictions, and that the market price was now rising without the threat of an overhanging surplus.

Mr. Benson believed this program would enable a testing of the world market price and that it was to be done in such a small quantity that there would be no danger of serious repercussions. In reply to the President, Mr. Butz pointed out that the effect of offering butter on a bid basis would probably result in a price offering of 38¢.

The President commented that the expected income from the sale of this amount was too small to risk the loss of good will on the part of our friends to whom the sale of their butter was a life and death matter. On the other hand, he believed that there must be some place in the world where our butter could be used without endangering our friends. In this connection, Mr. Hoover had no objection to the use of the P.L. 480 program. Mr. Benson emphasized that the current world price of 41¢ was undoubtedly too high because of governmental operations in the market, including our own government. Mr. Hoover requested time for the State Department to explore the matter with our allies involved. The President so directed, adding a comment that State should emphasize to our allies that the proposal was for experimental purposes and on a very limited basis.

Mr. Francis questioned how his Committee could dispose of surpluses except through programs such as this. The President emphasized the importance of other problems, such as world affairs, and commented that other members of our “family of nations” should not be compelled to pay for the domestic blunder of the United States when it got into the business of accumulating these surpluses.

Mr. Francis then presented CP–9. The President repeatedly emphasized his desire to exchange perishables for durables. Mr. Wilson wished to conduct barter operations, as did Mr. Weeks. Mr. Benson pointed out that the previous determination not to sell butter to Russia at a price lower than that paid by American housewives was obsolete now that our domestic price was much lower.

Mrs. Hobby emphasized the desirability of having any sales go to our friends rather than directly to Russia.

The discussion then turned to the phrasing of any announcements. When it appeared that publicity was not to be given to this decision, Mr. Francis emphasized that he could not keep the transaction secret and that the decision would have to be made in the knowledge that it would be public in the near future.

The Vice President commented that the whole problem of trade with the Iron Curtain countries was being increasingly recognized as one on which some progress had to be made. He recognized that the public relations problem would always exist but he felt that if the decision were to be in favor of a revised approach, the present was exactly the right time to begin making a little progress. He felt that controversy would surround the first step to be taken but that once the barrier had been broken further progress could be made without so great difficulty.

Mr. Wilson believed the action would be consistent with other more important decisions made as to the imminence of war.

The President noted that the United States undertakes spiritual, military, and material programs in foreign affairs. He believed that the standard of judgment in regard to such material programs as are undertaken should be essentially that of “net advantage”.

Mr. Hoover felt it necessary to note that this action by the United States would run in the opposite direction to the things we have been encouraging on other countries in the question of trade with Communist countries.³ Mr. Allen Dulles spoke to the same effect with regard to sales of rice to Communist China by Far Eastern countries.

The President commented that all facts in the matter did not seem to have been available for discussion, and he directed that the State Department examine the question more closely before any action was taken.

Sec. Benson questioned whether this outcome affected existing policy for selling soy beans for dollars to satellites of Russia. The President believed they should be sold to any country in the world for dollars or on a barter basis.

[Here follows discussion of other matters.]

1. “Review of P.L. 480 Decisions,” Dec. 15, p. 220.
2. “Policy Review of Dollar Sales to the Soviet Bloc,” Dec. 15, supra.
3. In a memorandum dated Dec. 16, 1954, Deputy Assistant Secretary for Economic Affairs Kalijarvi recommended to Acting Secretary of State Hoover that at the Dec. 17 Cabinet meeting “you reiterate the Department’s position with respect to this question [sale of agricultural surplus to the Soviet Union], namely, that there is no foreign policy obstacle to transactions in surplus commodities with Curtain countries; and that the public relations aspects of the problem in the U.S. are the primary concern of other agencies.” (411.0031/12–1654)