Foreign Relations of the United States, 1952–1954, National Security Affairs, Volume II, Part 1

Eisenhower Library, Eisenhower papers, Whitman file

Memorandum of Discussion at the 219th Meeting of the National Security Council, Tuesday, October 26, 1954¹

[Extract]

top secret
eyes only

October 26, 1954

Present at the 219th Meeting of the National Security Council were the following: The President of the United States, presiding; Herbert Hoover, Jr., for the Secretary of State; the Secretary of Defense; the Acting Director, Foreign Operations Administration; and the Director, Office of Defense Mobilization. Also present were the Secretary of the Treasury; William F. Tompkins for the Attorney General (Item 3); the Chairman, Atomic Energy Commission (Items 1 and 3); the Director, Bureau of the Budget; the Chairman, Council of Economic Advisers; the Director, U.S. Information Agency; the Secretaries of the Army, the Navy, and the Air Force; Assistant Secretary of Defense Pike; the Chairman, Joint Chiefs of Staff; the Chief of Staff, U.S. Army; the Chief of Naval Operations; the Chief of Staff, U.S. Air Force; General Pate for the Commandant, U.S. Marine Corps; the Director of Central Intelligence; Robert Cutler, Special Assistant to the President; the White House Staff Secretary; Bryce Harlow, Administrative Assistant to the President; 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.

. . . . . . .

3. Guidelines for Mobilization (Memos for NSC from Executive Secretary, same subject, dated October 5 and 25, 1954; NSC 5422/2; NSC 162/2)²

Mr. Cutler briefed the Council thoroughly on the long and involved background of the present paper, and noted that he had received the views of Secretary Wilson and the Joint Chiefs of Staff only last evening. He read Secretary Wilson’s memorandum, which pointed out the difficulty of the problem and called for further study. The Joint Chiefs of Staff had undertaken to rewrite the Planning Board’s draft, and Mr. Cutler said he was obliged to admit that, with respect to format and presentation, the JCS draft was an improvement on that of the Planning Board. With this view Dr. Flemming expressed concurrence. In any case, continued Mr. Cutler, the views of the Joint Chiefs of Staff must have caused some pain to Secretary Wilson, in view of the fact that in at least three significant instances their views were closer to those of the ODM than they were to those of the Secretary of Defense.

At the conclusion of Mr. Cutler’s extensive briefing (copy filed in the Minutes of the meeting³), the President’s attention was invited to subparagraph 34–a of the Planning Board draft,⁴ which called for acceleration of measures for dispersal to safer areas of important production capacity or, where that was infeasible, for provision of alternative production sources in safer areas. The President inquired as to the meaning of this statement. Did it imply physically moving defense plants from dangerous areas to safer areas, or did it simply mean increased tax amortization to business men who will undertake in the future to build defense plants in safe areas? Dr. Flemming replied that the latter was the primary purport of this subparagraph.

Secretary Wilson said that we had “got the cart before the horse” on the entire problem of mobilization guidelines. A great deal more work needed to be done, especially within the Joint Chiefs of Staff organization, before a reasonable policy could emerge. Moreover, in truth, there was disagreement among the Chiefs of Staff themselves. Finally, the present paper was based on incorrect military assumptions.

The President reacted with some surprise to Secretary Wilson’s criticism of the report, and observed that after all of our bitter experience in two world wars, he had supposed that we could have reached agreement on the basic structure of our mobilization policy. But here was Secretary Wilson proposing that we go back and restudy all of these fundamentals.

Dr. Flemming said he wished to go back to the President’s initial question, and observed that up to the present time the Government had made use of tax amortization as an inducement to new builders who would erect their plants in conformity with the Government’s dispersal standards. From now on out, however, we wish to extend this inducement to manufacturers whose plants are now producing in danger areas and who wish to move to safer areas. Can we provide rapid tax amortization privileges to such individuals?

The President said this seemed sound to him, but Secretary Humphrey interposed that he didn’t believe it was as simple as that. Much depended on what the United States could afford to do, since we must strike a balance between what we would like to do and the money we had available.

Mr. Cutler then suggested to the President and the Council that they direct their attention to the substantive changes proposed by the Joint Chiefs of Staff.⁵ In the first instance they had proposed the deletion in part of subparagraph 34–a and the total deletion of subparagraph 34–b. Dr. Flemming stated that he would gladly agree with the view of the Joint Chiefs of Staff on both these subparagraphs, since the course of action called for therein anticipated the completion of the studies called for in subparagraph 34–e. Dr. Flemming added that all the major issues involved in our mobilization policy could be squarely met if the Council concentrated on the guidance suggested in paragraph 34 as a whole.

Secretary Humphrey expressed his very great anxiety over the loss of revenue to the Treasury from extensive tax amortizations. Was Dr. Flemming proposing, for example, to abandon all the existing defense plants in Detroit and rebuild them somewhere in West Virginia, with half the costs of such rebuilding to be borne by the Government? Could we actually afford to do anything on this scale?

Dr. Flemming replied that he welcomed having the issue stated so clearly by Secretary Humphrey. He said that he was not campaigning to get people out of Detroit, but if the National Security Council really meant business about dispersing critical defense plants, and if the Government took seriously the threat posed to our production base by estimated Soviet capabilities, then the Government certainly ought to be willing to provide an incentive which would induce Detroit manufacturers to move to safer areas.

Secretary Humphrey said that if you went down the list and selected industrial plants which were producing military items which were truly in short supply, and then if you could get somebody to build a new plant in a dispersed area, he believed it was then OK for the Government to pay half the cost for the erection of a new plant. On the other hand, it was the height of folly to tell every manufacturer of defense materials who wants to move his plant that the Government would pay half the costs. We simply couldn’t afford anything like this, and that was what Dr. Flemming was proposing.

Dr. Flemming replied that it seemed at least better to him for private investment to build these new defense plants rather than to resort to the only other alternative, which was to have the Government build the plants. He repeated that the whole issue boiled down to the question of how seriously the Government was taking its dispersal program for critical defense production facilities.

Secretary Humphrey said that the truth of the matter was that a whole lot of business men were trying to get their plants built with the Government paying half the cost.

Secretary Wilson again insisted that the Council should start all over again on its study of mobilization policy, in view of such factors as lack of agreement on requirements, timing, and what might actually happen in a third world war. Not least of all the shortcomings of the present report was the fact that it had nothing to say about civilian requirements, although this was a limitation on production that must certainly be taken into account in formulating an adequate mobilization policy. Also, said Secretary Wilson, it was a serious mistake to talk about this mobilization problem only in terms and in measurements of money. This was wrong, for one thing, because the cost of many military end items, such as tanks, is steadily coming down. Timing also was a great factor. During the Korean war we had produced large numbers of tanks and planes that simply weren’t any good. Now, however, production of these items was in pretty good shape, and you could actually duplicate your production of them if you really knew what your requirements were and what you needed to make to be ready for a future war.

The President again expressed surprise at Secretary Wilson’s argument. He pointed out that recently, at his request, the Department of Defense had furnished him, for use in a speech, our exact requirements for 1100 major military end items. If we keep recomputing these requirements year after year, the President said, how will we ever get anywhere near our mobilization goals?

Dr. Flemming said he agreed heartily with Secretary Wilson’s contention that we needed to bring our mobilization requirements up to date on a continuing basis. Defense and ODM have already agreed on a procedure for doing just this.

Secretary Wilson said that we were really very confused on whether or not we ought to keep production lines in being when there was no call for their products. As he saw it, he said, we were spending our money in this field for six main categories: (1) for maintenance of the existing level of forces; (2) modernization plans; (3) research and development; (4) stockpiling end items; (5) increase of capacity, including dispersion; and (6) improvement of bases and housing. More and more of us, he said, are coming to think that the first six months of a third world war would be the crucial phase. All this has a great bearing on the issue now before the NSC.

The President inquired of Secretary Wilson whether it was not true that all six of the points that he had raised had long since been decided on. Secretary Wilson replied that the decisions on them had been reached in 1951, and that the President would not be very happy now with the decisions which had been made at that time.

Mr. Cutler said that the point of the matter, and what really worried him most, were the facts and statistics set forth in the Planning Board’s paragraph 30.⁶ From an annual rate of deliveries of about $15 billion in the last quarter of FY 1957, it was estimated that should war commence at the end of that year, total hard goods deliveries in the first year of the war (with no reduction for bomb damage) would be $41 billion. Whereas from the total actual deliveries of $24 billion in FY 1954, it was estimated that if war had commenced at the end of that year, total hard goods deliveries in the first year of the war (with no reduction for bomb damage) would have been $55 billion. The difference, said Mr. Cutler, was quite alarming.

Admiral Radford commented that in his opinion the National Security Council was talking about the present paper some three weeks too soon. By the end of that interval a number of problems bearing on mobilization policy will have been solved, and the Council will also have the advantage of having received the report on the net capabilities of the Soviet Union to damage the United States.⁷

The President inquired whether it would not be possible to get this whole problem portrayed on a chart or charts which would show the situation mobilization-wise that we would be in on M-day and thereafter—what we will look like. The chart should also include the strategic concept on the basis of which “we are going to fight.”

Admiral Radford confessed that there was disagreement within the Joint Chiefs of Staff on the strategic aspects of war planning. He also expressed agreement with Secretary Wilson that money figures were often misleading in calculating mobilization requirements. For example, even if you had a great deal more money you couldn’t procure a great many more aircraft, for the simple reason that aircraft could not be stockpiled in any great number. By and large, said Admiral Radford, our armed forces were better off than ever before in peacetime history, and we had a better mobilization and better production base than we had ever had in peacetime.

With respect to Admiral Radford’s suggestion that the Council was premature in its consideration of the mobilization guidelines report, Mr. Cutler reminded the Council that it had embarked on this present exercise in March 1954 in order to have reached decisions which would be helpful in providing guidance for the formulation of the budget for the next Fiscal Year. Now here we are, on October 25; our task is still unfinished after six months, and there is not even a meeting of minds on how to complete it.

Dr. Flemming reiterated his conviction that appropriate budget guidance was actually provided by paragraph 34 of the Planning Board’s draft. Turning to subparagraph 34–a, he said he would like to underline the word “important” in the phrase “accelerate measures for dispersal to safer areas of important production capacity …”. He said if this directive were applied to a small number of critical end items, this would form the basis of a very practical program of dispersal. The President, however, remained skeptical, and asked Dr. Flemming how his proposal met the previously expressed objections of Secretary Humphrey. How, in other words, asked the President, can we meet this and avoid being blackjacked by some company which wished the Government to pay half the expenses of its new construction? Was one solution, continued the President, the possibility of offering tax amortization on a competitive basis? Secretary Wilson replied that this would certainly be complicated. The President replied that of course it would be complicated, but that it might be an answer to Secretary Humphrey’s legitimate fears.

Secretary Wilson then raised the question as to who should have jurisdiction over this problem, particularly as between himself and Dr. Flemming. Secretary Humphrey replied that obviously this was a joint responsibility of Defense and ODM. Secretary Wilson went on to say that what really worried him most in the mobilization picture was the aircraft industry. It was a very easy target for enemy action and it was an industry which was difficult to move. If we could find a practical answer as to what to do with this industry we would really have accomplished something useful. Similarly, the “missile business” is also a looming problem. For this reason Secretary Wilson said he believed it was better to try to approach this whole problem by pieces, item by item, rather than first trying to look at it as a whole.

Dr. Flemming said that he was quite agreeable to approaching the problem piece by piece. He said he also agreed with the President’s approach to subparagraph 34–a in terms of a competitive tax amortization offer. He concluded that he was willing to accept the JCS version of subparagraph 34–a and to agree with the Joint Chiefs to drop subparagraph 34–b entirely.

The President reverted to his earlier idea that the best way to get all of this more clearly before the minds of the Council members was to present it visually instead of wholly in a written report. Secretary Humphrey agreed, and called also for confining the illustrations to a small number of specific items, such as aircraft. The President went on to say that what he wanted was a picture of the problem that we were trying to solve, and he felt that such a picture could readily be presented by an effective and imaginative staff officer.

Dr. Flemming went through the remainder of paragraph 34 and pointed out that the Net Capabilities Evaluation Subcommittee’s report would be very helpful in carrying out subparagraph c. With respect to subparagraph d, he felt this to be a statement of principle which is altogether valid, even if certain safeguards were needed. As to subparagraph e, he said he did not see how he could possibly avoid making the kind of studies called for in this subparagraph.

Secretary Humphrey took issue with Dr. Flemming on subparagraph 34–d, and said he strongly preferred a program of converting existing plants making peacetime materials to quite different production of war materials, as opposed to the creation of large numbers of stand-by plants. Nothing, said Secretary Humphrey, grows obsolete so rapidly as stand-by plants.

Mr. Cutler then summarized the discussion and suggested an action for adoption by the Council which was in effect to adopt the JCS version tentatively and subject to reexamination at a meeting of the Council on December 3. Secretary Wilson and the President agreed with this proposed action. Mr. Hughes, however, pointed out that one sentence in the JCS paragraph 28 disturbed him. This read: “The funds necessary to implement the mobilization program should not be in lieu of but in addition to those funds necessary to support and maintain the forces in being.” Written as it was, without any qualification, it seemed a dangerous invitation to spend money. The President said that of course we did not want to throw money around and permanently damage our economy. On the other hand, we had to be willing to spend enough to save our lives, and he still stood strongly by the concept of doing what we needed to do “over the long haul”. It was therefore agreeable to him to amend this sentence by the addition of the phrase “Subject to decisions on the budget,” at the beginning of the last sentence of paragraph 28.

The National Security Council:⁸

a. Discussed the reference memorandum of October 5 on the subject in the light of the views of the Joint Chiefs of Staff transmitted by the reference memorandum of October 25.

b. Tentatively adopted the statement of policy proposed by the Joint Chiefs of Staff in the enclosure to the reference memorandum of October 25, subject to:

(1) Addition of the words “Subject to decisions on the Budget,” at the beginning of the last sentence of paragraph 28.

(2) Further consideration in connection with the current review of basic policy after a visual presentation by the Department of Defense and the Office of Defense Mobilization, at the Council meeting on December 3, 1954,⁹ of the status of the mobilization base for the most critical categories of military end items through Fiscal Year 1957, after taking into account the forthcoming report of the Net Capabilities Evaluation Subcommittee.

Note: The statement of policy on the subject, as tentatively adopted and approved by the President in accordance with b above, subsequently circulated as Section III of NSC 5422/2. The action in b–(2) above subsequently transmitted to the Secretary of Defense and the Director, Office of Defense Mobilization.

S. Everett Gleason

1. Drafted by Deputy Executive Secretary Gleason on Oct. 27.
2. The memoranda are printed on pp. 731 and 759. For text of NSC 5422/2, Aug. 7, 1954, and NSC 162/2, Oct. 30, 1953, see pp. 715 and 577, respectively.
3. Briefing copy not found. For information on minutes of NSC meetings, see footnote 1, p. 394.
4. Reference is to the enclosure to the Oct. 5 memorandum by Lay to the NSC, p. 732.
5. Reference is to the Appendix to the Oct. 25 memorandum by Lay to the NSC, supra.
6. Reference is to the enclosure to the Oct. 5 memorandum by Lay to the NSC, p. 732.
7. Reference is presumably to NIE–11–4–54, “Soviet Capabilities and Probable Courses of Action Through Mid-1959”, dated Sept. 14, 1954, scheduled for publication in volume viii.
8. Paragraphs a–b constitute NSC Action No. 1254. (S/S–NSC (Miscellaneous) files, lot 66 D 95, “NSC Records of Action”)
9. “Guidelines for Mobilization” was not discussed by the NSC during the remainder of 1954.