Foreign Relations of the United States, 1952–1954, National Security Affairs, Volume II, Part 2

Eisenhower Library, Eisenhower papers, Whitman file

Memorandum of Discussion at the 136th Meeting of the National Security Council, Wednesday, March 11, 1953¹

[Extract]

top secret
eyes only

March 11, 1953

Present at the 136th meeting of the Council were the President of the United States, presiding; the Vice President of the United States; the Secretary of State; the Secretary of Defense; and the Director for Mutual Security. Also present were the Secretary of the Treasury; the Director, Bureau of the Budget; the Chairman, Atomic Energy Commission (for Item 1 only); General Collins for the Chairman, Joint Chiefs of Staff; the Director of Central Intelligence; the Administrative Assistant to the President for National Security Matters; the Special Assistant to the President for Cold War Operations; the Military Liaison Officer; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

There follows a general account of the main positions taken and the chief points made at this meeting.

1. The Development of Practical Nuclear Power (NSC 145)²

At Mr. Cutler’s request, Chairman Dean expanded on the contents of NSC 145, and explained to the Council why he regarded the proposals therein as of very great importance. He noted that the Atomic Energy Act of 1946 reposed responsibility for the development of atomic power for peaceful purposes in the Commission. It had been impossible to do very much in this area in the past, but in the course of the next five years Chairman Dean anticipated intensive development of power reactors, and NSC 145 represented a policy and the outlines of a program for that period.

Chairman Dean also explained the requirement of the Atomic Energy Act for a report to Congress by the AEC at such time as the development of practical nuclear power seemed feasible. He did not believe, however, that the time had yet come for such a formal report to the Congress. He proposed instead that the Commission should express the views outlined in NSC 145 to the Joint Congressional Committee orally in the course of hearings next month.

At the conclusion of Chairman Dean’s statement, the President expressed the view that there was no use in the Commission talking to Congress until it had placed at least an informal written report, on the anticipated development of the next five years in this area, in the hands of the Congress. If this were done, the interested parts of the Executive branch could examine the written report of the Commission and thereafter follow the order and procedure which had been laid down for the Commission in the Act of 1946. The President stressed that this written report would not be final or complete, but would at least set forth the anticipated development of practical nuclear power.

Secretary Wilson said that it certainly seemed to him that the proposals set forth in NSC 145 were crowding things a bit, and the President noted that in various conversations on this subject with industrial leaders he had noted a general desire on their part to produce plutonium and thereafter to sell it to the Government at a certain price. This amounted to an indirect subsidy. The President likewise warned that the program outlined in NSC 145 still had important defense implications, and for that reason he felt that the AEC should as far as possible at the present time follow the course laid down in Section 7 (b) of the Act of 1946.

Secretary Wilson, reverting to his earlier statement that we were pushing things too fast, suggested delay for another six months before we followed any course of action in this field, which would amount to Government subsidization of industry.

There then ensued a discussion as to the probable size of a Government subsidy to private industry in this field over a period of some ten years. The President estimated that the subsidy would probably amount to $100,000,000.

Mr. Dodge expressed the opinion that in any event the AEC should not talk at this time to the Congress about any specific program for interesting private industry in the production of nuclear power. He was inclined to think that the President’s estimate of $100,000,000 might be low, and he also anticipated that there will be demands at once for a subsidy of perhaps $10,000,000 in the 1954 budget.

Commenting on this discussion, the President made it clear that he was in disagreement not with the Commission’s conclusions in NSC 145, but with the manner in which it proposed to present its policy and program to the Congress. Such a policy and program the President believed should be presented not merely by the Commission but by the whole Executive branch of the Government, including of course the Bureau of the Budget.

Secretary Dulles then inquired of Chairman Dean what activities were being undertaken by other countries in the development of nuclear power for peaceful purposes.

Chairman Dean replied that little or nothing was known about any programs in the Soviet Union, but that very strong incentives in this direction had developed in the United Kingdom and in Canada, and, to a lesser extent, in other smaller countries.

Secretary Dulles said that it would look very bad if the United States lagged behind the others.

Chairman Dean expressed strong agreement with the Secretary of State, but then reverted to the subject of subsidy, pointing out that the objective of the current AEC proposal was to encourage risk capital, and he did not feel that there was need to fear excessive subsidies.

The President, however, stuck to his point, and stated that in a recent conversation with Mr. Charles Thomas (President of the Monsanto Chemical Company) he had deduced that there would have to be at least a subsidy in the shape of a guaranteed Government price for purchases of plutonium from a private industrial concern. It was only on this or a similar basis that private capital would go ahead.

At this point in the discussion, Secretary Humphrey suggested that the problem presented in NSC 145 be handed to the recently established Consultants to the NSC, pointing out that Mr. Thomas was himself a member of this group.³

The President stated that these Consultants had a lot of other things to do, but Mr. Cutler interposed to say that the issue under discussion could be raised at the scheduled AEC briefing of these Consultants.

Mr. Cutler then reverted to the question of the psychological effects of such a program for the development of practical nuclear power as proposed in NSC 145. He also felt that the Council should look into the possibility of sharing knowledge in this area with the allies of the United States. On these points he requested the opinions of Chairman Dean and Secretary Dulles.

Secretary Dulles answered that he believed that the United States should assume leadership in this very important project.

The President then stated to the Council that it seemed to him that the most specific immediate problem was that of constructing a pilot plant for production of nuclear power.

Secretary Humphrey expressed the opinion that it would be impossible for the Government to contemplate making any deal with private industry until such a pilot plant had actually been constructed. To do otherwise would simply be putting the cart before the horse. In Secretary Humphrey’s opinion, it would be OK if private capital could be induced to build such a pilot plant, but he had doubts about it if the Government was obliged to do it alone. Chairman Dean confirmed that it was the objective of the Commission’s report to induce private capital to build this pilot plant, but warned that it might nevertheless be necessary for the Government to offer some kind and degree of financial assistance. That, said Secretary Humphrey, was precisely what worried him.

The President then interposed to suggest a resumption of discussion of the psychological aspect of the plan in NSC 145. What would happen to the United States from the psychological point of view, he inquired, if news of this proposal got about the world and we were then unable to bring it off successfully? Clearly, such an effect would be disastrous, and to the President, the correct approach to the problem seemed plainly further investigation in a quiet way to explore the possibilities for success in the enterprise.

Secretary Humphrey agreed very emphatically with this view, and said that it was the very reason why it was necessary first to build a pilot plant. This would enable us to get the data and, on the basis of the results, to proceed further or not, as seemed indicated.

While not disagreeing with this position, Chairman Dean said he thought it ill-advised to limit ourselves to one Government-built pilot plant. We would get ahead much more rapidly with our problem if industry could be induced to participate in the construction of a pilot plant. This, however, would plainly require changes in the law as set forth in the Atomic Energy Act of 1946.

The President replied that he certainly saw no reason not to explore desirable changes in the law. Furthermore, he obviously welcomed the participation and the views of private industry. That was all clearly to the good. With which Secretary Humphrey agreed, provided the expense was also assumed by private industry.

Secretary Wilson, on the other hand, prophesied that private industry would not be much interested in any proposition of this sort for at least a couple of years if industry were not subsidized by the Government.

It seemed to be the consensus that subsidization was to be avoided. Whereupon the President suggested that the desirable action was to move toward modification of the current legislation in order to permit private capital to share in this enterprise if it could be induced to do so. Meanwhile he thought we should go ahead also on plans for a pilot plant.

Secretary Wilson expressed the belief that before the Government moved ahead to build any such pilot plant, it would be highly desirable to see some figures, computed by responsible people, on the relative costs to produce power by nuclear, in comparison to other, processes. He believed that it was foolish to go ahead with any expensive pilot plant until there was evidence that it could produce power at a sufficiently low cost to compete with other methods. At the present time, Secretary Wilson estimated that atomic power costs would be in the magnitude of ten times the cost of already available power. Why waste money this way when we need it so badly in other areas?

The President then inquired whether any member of the Council objected to steps being taken at once by way of proposing changes in the existing law to put private industry on notice as to possibilities open to it, but leaving out the pilot plant and the subsidy issue for the time being. No one, said the President, wants to put a halter on United States industry if the halter were no longer necessary. Indeed, the President went on to state, he could be persuaded to agree to at least some modest subsidy, perhaps $4,000,000, if as a result of changes in the law private industry should turn up with something promising in this field.

The discussion then turned to the form of a report to be presented to the President by the Atomic Energy Commission as to the desirable revisions in the law. Chairman Dean pointed out that in a very broad way the necessary changes had already been set forth in NSC 145, but that he could do it in greater detail if the President thought this useful.

General Collins stated that if the Council agreed to the preparation of such a report by the Commission, he desired to point out that the military felt that there were a number of other changes which should be made in the law when it was amended, notably changes which would enable this Government to share certain information in the atomic field with our allies in the interests of national security.

The President agreed that Chairman Dean’s report should contain not only proposed revisions in the law to encourage the development of practical nuclear power, but changes such as those suggested by General Collins and changes which might appear desirable at this time to other departments and agencies of the Government.

Chairman Dean agreed to canvass the other departments and agencies in order to include their recommendations in his report on desirable changes in the Atomic Energy Act of 1946.

The National Security Council:⁴

a. Discussed the reference report on the subject and agreed:

(1) To refer the report to the Consultants established by NSC Action No. 726–c, to obtain their views regarding the proposals set forth therein.⁵

(2) That, pending receipt of such views, no additional funds for a pilot plant should be authorized, other than the approximately $3,000,000 presently included in the Fiscal Years 1953 and 1954 budgets.

(3) That no subsidy to private enterprise should be contemplated, at least until further developmental work indicated the necessity therefor.

b. Noted the President’s desire that the Atomic Energy Commission submit to him, in non-technical language, those changes in the Atomic Energy Act which would appear desirable at the present time, both for the development of practical nuclear power and for other purposes, so that these changes may be considered by all interested departments and agencies.

Note: The action in b above subsequently transmitted to the Atomic Energy Commission for implementation.⁶

. . . . . . .

S. Everett Gleason

1. Prepared by Deputy Executive Secretary Gleason on Mar. 12.
2. Dated Mar. 6, p. 1121.
3. Regarding the establishment of a committee of civilian consultants to advise the NSC on the cost of basic national security policies, see the editorial note, p. 244.
4. Paragraphs a–b constitute NSC Action No. 733. (S/S–NSC files, lot 66 D 95, “NSC Actions”)
5. For the substance of NSC Action No. 726–c, see the editorial note, p. 244.
6. The Council at a special meeting on Mar. 31, discussed at length the question of nuclear power in the context of overall national security programs and their costs. For the memorandum of discussion at that meeting, see p. 264. Agreed policy on nuclear power and the amount to be allocated for the atomic energy program in general was included in NSC 149/2, “Basic National Security Policies in Relation to Their Costs”, Apr. 29, 1953; for text, see p. 305.