Eisenhower Library, Eisenhower papers, Whitman file

Memorandum of Discussion at the 194th Meeting of the National Security Council on Thursday, April 29, 19541

top secret
eyes only

The following were present at the 194th Meeting of the Council: The President of the United States, presiding; the Vice President of the United States; the Acting Secretary of State; the Acting Secretary of Defense; the Director, Foreign Operations Administration; and the Director, Office of Defense Mobilization. Also present were Elbert P. Tuttle for the Secretary of the Treasury; Stanley N. Barnes for the Attorney General (Items 2 and 3); Samuel W. Anderson for the Secretary of Commerce (Item 1); the Acting Director, Bureau of the Budget; the Chairman, Atomic Energy Commission (Item 4); the Administrator, Reconstruction Finance Corporation (Item 1); the Chairman, Council of Economic Advisers (Item 4); the Chairman, Joint Chiefs of Staff; the Director of Central Intelligence; [Page 1154] Robert Cutler, Special Assistant to the President; the Deputy Assistant to the President (Items 1, 7 and 8); the White House Staff Secretary; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

There follows a summary of the discussion at the meeting and the main points taken.

1. U.S. Rubber Policy (NSC 54172)

After Mr. Cutler’s analysis of the report, including the recommendations by the Planning Board with respect to feasible forms of assistance to the natural rubber producing countries, the President was the first member of the Council to express an opinion. He inquired whether paragraph 2–a, which called for U.S. assistance to improve the efficiency of the natural rubber countries, would not in fact complicate the problem by increasing the amount of natural rubber on the market.

The President’s query resulted in a discussion of the alleged forthcoming world shortage of natural rubber. Secretary Kyes said he doubted whether such a shortage was in prospect. Secretary Anderson said that the world rubber study group predicted a tight situation in natural rubber by 1960. This estimate, he said, assumed full-scale operation of the synthetic rubber plants in the United States.

With respect to paragraph 3, supported by the State Department only and calling for an increase in the price of synthetic rubber by two cents a pound as a means of providing immediate relief to the natural rubber producing countries, Secretary Smith said, “We withdraw in the face of determined opposition.” Nevertheless, said Secretary Smith, it was hardly possible to overemphasize the importance of finding some practical alternative to this course of action, since there would be severe disappointment at the Ceylon meeting3 if the United States was compelled to take an essentially negative position with respect to the difficulties of Indonesia and Malaya. The political repercussions could be serious, and Secretary Smith suggested certain slight amendments to paragraph 2 which were designed to make the position of our delegate at Colombo somewhat easier.

Secretary Kyes then said that he wished to make a suggestion which might be practical. He believed it would be possible to get American rubber companies to agree to use a natural-synthetic [Page 1155] rubber mix with 5% less synthetic rubber than was currently being used. This would not only relieve the 70,000 pounds of natural rubber overhang, but would put an end to the decline in the price of natural rubber.

Mr. Robbins pointed out that there was already a trend toward a greater use of natural rubber and that the price actually was moving up slightly. Secretary Kyes said that he was not aware of this, and that in his conversations with rubber manufacturers, had got no such information. He furthermore believed that using 5% less synthetic rubber in the mix would not adversely affect the Government’s chances of selling the synthetic rubber plants. Mr. Robbins expressed doubts as to the validity of this opinion.

Mr. Flemming pointed out that one of the courses of action which was to be explored was the direct purchase of rubber by the United States. He noted that the stockpile objective for this commodity—namely, 1,230,000 long tons—had been reached. This stockpile constituted a two-year supply on the basis of an 80–20 mix between synthetic and natural rubber. Was there any valid reason against providing for more natural rubber in the stockpile than was possible under the 80–20 ratio?

Secretary Kyes said he could see no reason why the ratio could not be changed to 70–30, and Secretary Smith thought a 50–50 mix should be sought.

Governor Stassen said he believed Secretary Kyes’ suggestion was sound and practical, but that it ought to be a Government policy to get the price of rubber up to 25 cents. We could hold the price there with relatively little cost to the United States, and provide real assistance to Indonesia and Malaya.

Mr. Robbins expressed the opinion that while Secretary Kyes’ suggestion might prove effective over the long run, the immediate result would be a lowering of the price of synthetic rubber. In this event the Government would be obliged either to close down some of its synthetic rubber plants or increase their inventories of synthetic rubber.

Mr. Cutler suggested that the suggestions made by Secretary Kyes and Mr. Flemming not be accepted by the Council at this time, but be referred to the Planning Board for further study along with the other possible courses of action to be explored by the Planning Board and listed in paragraph 4 of the report. Mr. Cutler’s suggestion was accepted by the Council.

The President asked the indulgence of the Council, but said that he could not refrain from reemphasizing the invariable difficulties the United States stored up for itself by telling other nations they should not trade with Communist China. He felt that this whole problem deserved special study. Our current policy was completely [Page 1156] negative, since it amounted to telling non-Communist nations that they should not trade with Communist nations, while at the same time ourselves refusing to buy their staple products. The President said he believed that a skillful use of trade was the best hope for peace, and that the United States was being very shortsighted in its attempts to hurt the enemy by stifling trade with him.

Governor Stassen commented that in the current negotiations with Great Britain and France, reviewing the International Lists of items which should be controlled in East-West trade, rubber was almost certainly going to be released from export control. Only thus could we induce our allies to continue really strategic materials, such as nickel, on the list of controlled commodities.

The National Security Council:

Discussed the subject and adopted the interim statement contained in NSC 5417, subject to the following changes:
Paragraph 2-a: Insert “sympathetically” after “willingness”; insert “precise” before “commitment”; and delete “precise” before “means”.
Delete paragraph 3 and the footnote thereto, which was withdrawn by the Department of State, and renumber paragraph 4 as 3.
Paragraph 4: Add to subparagraph b the following: “, possibly as a result of an increased stockpile objective based upon a revision of the current ratio of natural to synthetic rubber contemplated for wartime use.”
Add a new subparagraph e as follows:

e. Persuading U.S. rubber companies to increase the percentage of natural rubber currently used in making tires, in order to increase the demand for natural rubber.”

Directed the NSC Planning Board to study further, in the light of the Council discussion, the possible U.S. courses of action mentioned in paragraph 4 of the interim statement in NSC 5417, as amended in a above.

Note: NSC 5417, as amended and approved by the President as interim policy, subsequently circulated as NSC 5417/1 and referred to the Secretary of State for appropriate action pursuant to paragraph 2 thereof.

[Here follows discussion of United States policy toward Iran, organizational arrangements for internal security, defense mobilization planning assumptions, the program of the United Nations to stop aggression, United States objectives in the event of general war with the Soviet bloc, significant world developments affecting United States security, and reports on the Geneva Conference and the Indochina situation.]

  1. This memorandum of discussion was prepared on Apr. 30 by Deputy Executive Secretary of the National Security Council Gleason.
  2. Not printed; except for the changes made at the NSC meeting herein recorded, NSC 5417, dated Apr. 22, 1954, was the same as NSC 5417/1, infra.
  3. Regarding the subjects to be discussed during the Colombo meeting of the International Rubber Study Group scheduled for May, see telegram 1668 from London, Oct. 17, 1953, p. 1027.