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

Eisenhower Library, Eisenhower papers. Whitman file

Memorandum of Discussion at the 148th Meeting of the National Security Council on Thursday, June 4, 1953¹

top secret
eyes only

June 4, 1953

The following were present at the 148th meeting of the Council: The President of the United States, presiding; the Vice President of the United States; the Secretary of State; the Deputy Secretary of Defense; the Director for Mutual Security. Also present were the Secretary of the Treasury; the Attorney General (for Items 2 and 3); the Director of Defense Mobilization; the Director, Bureau of the Budget; the Acting Chairman, Atomic Energy Commission (for Item 2); the Acting Secretary of Commerce (for Items 4 and 5); the Secretary of the Army (for Item 2); the Secretary of the Navy (for Item 2); H. Lee White for the Secretary of the Air Force (for Item 2); Lt. Gen. Idwal H. Edwards, Chairman, Special Evaluation Subcommittee of the NSC (for Item 2); Walter S. Delany, Office of the Director for Mutual Security (for Item 4); Kenneth R. Hansen, Office of the Director for Mutual Security (for Item 4); General Collins for the Chairman, Joint Chiefs of Staff; the Director of Central Intelligence; the Deputy Director of Central Intelligence (for Item 2); Lt. Gen. Harold R. Bull, Central Intelligence Agency (for Item 2); Robert Cutler, Special Assistant to the President; Lewis L. Strauss, Special Assistant to the President; C. D. Jackson, Special Assistant to the President; the NSC Representative on Internal Security (for Item 2); Marshall Chadwell, Central Intelligence Agency (for Item 2); Herbert Miller, Central Intelligence Agency (for Item 2); Herbert Blackman, Department of Commerce (for Items 4 and 5); the Military Liaison Officer; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

[Here follows discussion of the military situation in Korea, Soviet atomic energy capabilities, the Soviet capability to inflict direct injury on the United States up to July 1, 1955, and United States policy toward Latin America.]

4. Review of Economic Defense Policy (NSC 152;² NSC 104/2)

Mr. Cutler introduced NSC 152, pointing out that this was an example of a new way in which the Planning Board might submit alternative policies for Council choice, after which the Planning Board would prepare a definitive policy statement covering the alternative chosen.

Mr. Stassen circulated and read a brief summary of the four alternatives presented. He stated that this was basically a question of how to deal with our friends, since the Soviets were obviously using east-west trade as a means of dividing us from our allies. He pointed out that the choices of policy with regard to Communist China were directly related to the armistice in Korea. If the Council adopted Alternative 4, we would be moving along with our friends on the basis of the net advantage from east-west trade. If we adopted Alternative 3 we will be moving with the attitude expressed by various members of Congress. In this connection Mr. Stassen pointed out that any policy adopted involves the possibility of Congressional action along these lines.

At Mr. Stassen’s request, Mr. Hansen summarized the present policy. He noted that negotiations with our allies in this field are limited to consideration of the military application of various strategic items. There is now no forum for working out a planned trading pattern with our allies, although specific trade agreements are usually discussed in COCOM before being signed. He also said that the area of least progress is in the enforcement of agreed controls, especially over transit shipments.

Mr. Stassen said that Alternative 4 could be adopted without new legislation, but it would involve a vigorous fight against crippling amendments by members of Congress.

The President asked which side had lost most on our discontinuance of all China trade, in view of the fact that we were receiving stockpile items.

Mr. Hansen answered that we gain the most because our stockpile goals in those items have been largely attained.

The President repeated his view that the real basis for policy should be who gets the best of the trade. He said that this is the way we do it in war—we don’t send men to get killed unless we feel that we will come out ahead on the operation.

Secretary Dulles thought that our policy toward China and Europe were two different things. On China, he believed we should keep our economic embargo, since it appeared to be causing the Communist Chinese economic suffering and might be one reason why they wanted an armistice. On the other hand, if we get an armistice, Secretary Dulles said “all hell will break loose.” We must, therefore, keep some pressure on for the political negotiations. We have very few such pressures, and holding back trade would be one we could exert. This, however, will be very difficult to get our allies to go along with.

In answer to the President’s question as to why our allies want to trade with Communist China, Secretary Dulles said that they get paid for the trade in sorely needed dollars and food.

With respect to the European satellites, Secretary Dulles noted that we have kept our allies’ trade under control by the threat of cutting off aid. However, since we are cutting down on that aid, this will make it more difficult to keep control on such trade, and we will have lost a means of pressure on our allies. Therefore, Secretary Dulles thought that, as we cut down on our aid, we should let our allies have greater freedom to trade with the satellites, while still keeping out top strategic items.

In answer to Secretary Kyes, Mr. Stassen said that we are getting most of our manganese now from India.

The President said this was one good reason why we must keep on helping India.

Secretary Humphrey expressed his firm conviction that we have got to have some east-west trade, since it is impossible to stop it.

Mr. Stassen recommended that the Council adopt Alternative 4 except for holding tight on China. In fact, if we do not get an armistice in Korea, we may even want to tighten the embargo or initiate a blockade. He cited the difference, in France and other countries, between agreed governmental policy and the actual application of controls in the field, particularly by private firms.

Secretary Williams said that Commerce was prepared to go along with Mr. Stassen’s recommendation, but questioned the timing of such a modification of policy in view of the Korean negotiations and the impending Bermuda Conference. He thought such a modification might be interpreted as a weakening of our policy, and might therefore be postponed.

Mr. Cutler explained that, after the Council adopted Alternative 4, it would take the Planning Board at least a month to submit firm policy recommendations.

Secretary Dulles expressed his desire to get the maximum diplomatic benefit from any change in policy.

Secretary Kyes said that his staff had wanted Alternative 1, but that he thought Alternative 4 made more sense.

The National Security Council:

a. Discussed the alternative policies on the subject in the light of the reference report (NSC 152).

b. Directed the NSC Planning Board to study and prepare recommendations, including timing, for Council consideration along the following lines of policy:

(1) Maintain present policy regarding Communist China and Korea.

(2) Move toward Alternative 4 in NSC 152 regarding other Soviet bloc countries.

[Here follows discussion of the sale of strategic arms abroad, the position of the United States with respect to the Communist threat to Italy, the Greek offer of additional troops for Korea, and the NSC status of projects.]

1. This memorandum of discussion was prepared on June 5 by Deputy Executive Secretary of the NSC Gleason.
2. Dated May 25, 1953, p. 968.