Eisenhower Library, Eisenhower papers, Whitman file
Memorandum of Discussion at the 223d Meeting of the National Security Council on Tuesday, November 9, 19541
eyes only
Present at the 223rd meeting of the National Security Council were the President of the United States, presiding; Under Secretary Hoover for the Secretary of State; the Secretary of Defense; the Director, Foreign Operations Administration; and the Director, Office of Defense Mobilization. Others present were the Secretary of the Treasury; the Attorney General (for Items 2 and 3); the Director, Bureau of the Budget; the Director, U.S. Information Agency; Assistant Attorney General Barnes (for Item 3); the General Counsel, Department of Defense (for Item 2); Thomas J. Donegan, Special Assistant to the Attorney General (for Item 2); the Acting Chairman, Joint Chiefs of Staff; Assistant Director Botkin, Office of Defense Mobilization (for Item 5); the Director of Central Intelligence; Robert Cutler, Special Assistant to the President; Robert R. Bowie, Department of State; the NSC Representative on Internal Security; 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.
[Here follows discussion of the redeployment of United States forces in Trieste and a uniform clearance program for individuals other than full-time federal employees who required access to classified information.]
[Page 1376]3. Anti-Trust Laws Affecting Activities Outside the U.S. (NSC Actions Nos. 766–c and 1200;2 Memo for NSC from Executive Secretary, same subject, dated November 1, 19543)
In the course of his briefing, Mr. Cutler indicated that the final report based on the findings of the large committee which had been assembled in the Department of Justice would be ready in January 1955. In the present interim report Judge Barnes would attempt to guess the results of the findings of the committee. Mr. Cutler then invited Judge Barnes to play the part of Cassandra, but to confine his prognostications to fifteen minutes.
Judge Barnes at the outset stressed the fact that his remarks were indeed prognostications and should not be considered firm predictions. He then proceeded to summarize his guess as to the decisions which would be reached in the final report.
At the conclusion of Judge Barnes’ oral statement, Mr. Cutler said that as he understood it, and despite the fact that he had not practiced law for ten years, the present report does not indicate the likelihood that the Attorney General would suggest any basic changes in the fundamental anti-trust laws such as the Sherman Act. Nevertheless, as far as he could see and understand the law, Mr. Cutler said that certain activities conducted by American companies, though wholly overseas, would have at least some impact on United States foreign and domestic commerce. Accordingly, the Department of Justice could reach out and claim to control such activities outside the United States. The Attorney General does not propose to try to change the basic law which permits such control. As a result, each time that the Department of Justice determines that it should proceed into litigation with such a United States company, it will first have to come to the National Security Council to see whether or not the national security is involved.
The Attorney General said that Mr. Cutler’s idea was correct, but that he himself would phrase the matter differently. We would not, continued the Attorney General, probably try to change the Sherman Act, but we can get the flexibility we desire from the point of view of the national security by simply amending the Defense Production Act. In very close cases, moreover, Justice would not move against such an American company without consulting the Departments of State and Defense.
The President commented that the only instances in which the National Security Council (as opposed to the Cabinet) has any interest [Page 1377] in these anti-trust cases is when considerations of national security are involved in them. It is for this reason that the Attorney General must go along with the idea that when national security issues are plainly involved, he is on safe ground in not suing the company in question for breach of the anti-trust laws. The Attorney General replied that this was indeed the spirit of the present report.
Secretary Humphrey expressed the belief that the Attorney General should try somehow to eliminate from the law provisions which applied to the conduct of operations by American companies conducted entirely overseas. In other words, the Department of Justice should move against such American companies only if the practices they followed overseas had a very direct effect on U.S. commerce. The NSC should be called upon to exercise its discretion just as little as possible. Secretary Hoover agreed in general with Secretary Humphrey, and said there should be some specific protection for these American companies in the law if possible.
Secretary Wilson said he assumed that the Attorney General in his deliberations would also consider such problems as patents, know-how, and management. He said he saw a great need for clarification of the anti-trust laws. Many business men simply did not know the legal and correct thing to do.
Secretary Humphrey said he could assure the Attorney General that we all realized how very dangerous it would be to attempt to change the nation’s basic anti-trust laws, but that we all recognized the changed world which had come about since these laws were enacted. Accordingly, a clarification was necessary.
Dr. Flemming pointed out that the Defense Production Act would expire on June 30, 1955, at which time it would be necessary to ask for an extension and revision of the law. He hoped that he would have timely guidance from the Department of Justice with respect to amending the present Act.
Governor Stassen thought that if the fundamental anti-trust laws were not to be changed, it would certainly be necessary to formulate new legislation to deal with the problem of American corporations conducting business entirely outside of U.S. territory. Both the Attorney General and the Secretary of the Treasury thought that the point made by Governor Stassen could be covered by recourse to amending the Defense Production Act. They repeated their view of the dangers of resorting to the current expedient of asking the President to decide whether or not to invoke the antitrust law against such an American corporation on the basis of an NSC recommendation involving considerations of national security.
The President expressed the opinion that it would be desirable for the National Security Council to provide the Attorney General [Page 1378] with a study of the kind of changes that the United States would be facing in this area in the coming years. This would provide the Attorney General with a basis for developing new anti-trust legislation which would not only assist the legitimate activities of American firms, but have the added advantage of helping the economies of friendly foreign nations. The Attorney General said that he would be delighted to receive such suggestions and studies from the Treasury Department and the Foreign Operations Administration. Governor Stassen suggested the addition of the Department of Commerce, and went on to say that it might be useful if a representative group of American business men engaged in operations outside the United States could be brought together to explain their problems to the Department of Justice.
Judge Barnes pointed out that 70 agreements dealing with this problem had already been approved under the Defense Production Act. Secretary Hoover, however, noted that the provisions of the Defense Production Act applied only to critical and strategic materials. Its terms of reference should therefore be expanded.
Mr. Cutler inquired whether this issue could be covered in new legislation to be presented at the next session of Congress in the interest of carrying out the recommendations of the Randall Committee.4 The Attorney General replied by suggesting possible procedure for drafting new legislation and sending it up for consideration by the Congress at the new session in January.
The National Security Council:
- a.
- Noted and discussed a preliminary report on the subject by Assistant Attorney General Barnes transmitted by the reference memorandum.
- b.
- Requested the Attorney General to consider the possibility of appropriate legislation which would clarify and encourage the conduct of operations by U.S. companies outside of U.S. territory when such operations are in the U.S. interest and do not substantially affect U.S. foreign and domestic commerce.5
Note: The action in b above subsequently transmitted to the Attorney General.
[Here follow a briefing by the Director of Central Intelligence on significant world developments affecting United States security and discussion of reports on electromagnetic communications, United States policy toward Iran and Finland, and the status of National Security Council projects as of November 1.]
- Prepared on Nov. 10 by Deputy Executive Secretary of the NSC Gleason.↩
- Regarding NSC Action No. 766–c, see the memorandum of discussion at the 140th meeting of the National Security Council, Apr. 22, 1953, p. 1351. Regarding NSC Action No. 1200, see the memorandum of discussion at the 210th meeting of the National Security Council, Aug. 12, 1954, p. 1365.↩
- This memorandum transmitted to the NSC Barnes’ report of Oct. 29, supra.↩
- The Commission on Foreign Economic Policy, established in Aug. 1953 and headed by Clarence B. Randall, issued its report on Jan. 23, 1954. For documentation regarding the report, see pp. 49 ff.↩
- This action was designated NSC Action No. 1263. (S/S–NSC (Miscellaneous) files, lot 66 D 95, “Record of Actions”)↩