Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

PSB files, lot 62 D 333, “PSB D–28”

Paper Prepared by the Planning Panel on PSB D–28¹

secret

Washington, January 14, 1953.

Progress Report on PSB D–28—Psychological Strategy Plan for Economic Security Vis-à-Vis the Soviet Orbit

1. The Board approved the terms of reference² for this plan 24 June, 1952.

2. The two analyses called for in the terms of reference were completed by the Office of Intelligence Research, Department of State.³ These were:

(a) The factors which create resistance to U.S. economic security objectives vis-à-vis the Soviet Orbit.

(b) The extent of Soviet economic exploitation of the captive countries and the vulnerability created thereby.

These analyses have been given wide circulation and were made available to the Voice of America and Radio Free Europe.

3. Mr. John Haskell, Vice-president of the New York Stock Exchange, a consultant to the Director of PSB, sounded out the views of public opinion leaders and businessmen in the U.K., Belgium, France, Switzerland and Germany with respect to the psychological aspects of current East-West trade policies. His findings⁴ were circulated without comment to interested U.S. officials.

4. At the fourth meeting of the planning panel⁵ it was agreed that no effective psychological strategy could be developed until Mr. Harriman’s Economic Defense Advisory Committee reached a policy decision on the question of what the U.S. could tell foreign governments regarding our position on non-strategic trade with the Orbit.

5. These matters were discussed at the U.S. Economic Defense Officers meeting held in Paris in November.⁶ Subsequently it has become agreed policy that U.S. trade control objectives can best be realized by indirection rather than by a U.S. propaganda campaign, which probably would be regarded by the foreign governments and peoples as unwarranted intervention. It is also agreed that an indirect information program will be most likely to succeed if the U.S. can convincingly demonstrate that it does not oppose the expansion of non-strategic East-West trade and is in the process of reducing U.S. trade barriers. This will be difficult to accomplish since it was also agreed that any statement wherein the U.S. set forth that it would not oppose the expansion of non-strategic East-West trade must at the same time call attention to (a) Soviet political motives in trade; (b) the fact that non-strategic trade should not create dangerous dependency upon Eastern markets or sources of supply; (c) that the Soviet Orbit not be permitted to use trade as a means of extracting strategic goods from the free world.

6. The panel unanimously agrees that the USSR is vulnerable to psychological attack because of its exploitation of the captive economies and its opposition to the expansion of peaceful, nonstrategic trade. A PSB staff paper,⁷ prepared earlier with this point in mind was discussed, but no agreement has been reached. The staff paper recommends that the Soviet position in captive Europe be attacked by a concerted and highly publicized offer by the Western Governments to export to captive Europe approximately $400 million worth of consumer goods and other non-strategic items.

The paper develops the argument that since these goods are now available on the open market in Western Europe with no export control, it is clear that, though the people of captive Europe are eager for more consumer goods, since they are not being purchased the USSR is obviously opposed to such trade. A highly publicized offer to expand trade in non-strategic goods, rejected by the USSR as was the Marshall Plan, would be calculated to expose the falseness of Soviet propaganda on behalf of peaceful trade, and would provide the West with a weapon for constant attack behind the Iron Curtain the paper concluded.

Questions have been raised regarding a possible negative Congressional reaction, and there is some feeling that this psychological strategy would be very difficult to negotiate with the other Western European Governments since they are still interested in peaceful trade with the Orbit countries and may oppose a psychological attack because future economic relations may be considered more important than propaganda gains. It was also felt that a non-strategic trade offer at the present time might create confusion in the public mind of Western Europe regarding the importance attached to the strategic trade controls since some Western European Governments have not yet made public their policies regarding the control of strategic trade.

1. This paper, circulated under cover of a memorandum by Alan G. Kirk, the Acting Director of the PSB, to Under Secretary of State Bruce, Deputy Secretary of Defense Foster, Director of Central Intelligence Smith, General Willard C. Young of the JCS, and Director of Mutual Security Harriman, apparently ended the involvement of the PSB in economic defense activities. According to a memorandum of Mar. 9, 1953, by George A. Morgan, the new Acting Director of the PSB, to Under Secretary of State Smith, Morgan planned to disband the panel concerned with PSB D–28, “as it has been impossible to obtain agreement on certain basic issues”. Although Morgan left open the possibility of reviving the panel once these “basic issues” had been resolved at a higher level, there is no evidence in the Department of State files that it was ever revived. (PSB files, lot 62 D 333, “PSB D–28”)

2. Not printed; the terms of reference, designated PSB D–28 and provided with the code name “Plumage”, set forth as the objectives of the project the following:

   • “a. To increase the degree of acceptance in the Free World of U.S. economic security objectives vis-à-vis the Soviet orbit.
   • “b. To weaken the Soviet control over the orbit countries by capitalizing on and obstructing Soviet economic exploitation of captive Europe and China through psychological operations.” (PSB files, lot 62 D 333, “PSB D–28”)

3. Not found in Department of State files.
4. Not found in Department of State files.
5. No records of the meetings of the planning panel have been found in Department of State files.
6. According to a circular airgram of Nov. 14, 1952, the meeting under reference was to convene on Nov. 17 and last for four or five days. (460.009/11–1452) None of the reporting from Paris, either in telegraphic or despatch form, for the days or weeks succeeding that date contains any further reference to the meeting.
7. This is presumably a reference to a draft Staff Report of Feb. 20, 1952, not printed.