Eisenhower Library, papers as President, Whitman file, NSC records

Memorandum of Discussion at the 137th Meeting of the National Security Council on Wednesday, March 18, 1953 1

top secret
eyes only

Present at the 137th meeting of the Council were the President of the United States, presiding; the Vice President of the United States; the Under Secretary of State; the Secretary of Defense, and the Director for Mutual Security. Also present were the Secretary of the Treasury; the Secretary of Commerce (for Items 1 and 2); the Director, Bureau of the Budget; the Chairman, Joint Chiefs of Staff; 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. Various staff members from the Department of State, the Department of Defense, the Department of Commerce, DMS, MSA, and CIA, were also present to assist their principals during the discussion of Items 1 and 10.

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

[Here follows discussion concerning United States economic policies which might affect the war potential of the Soviet bloc, civil aviation policy toward the USSR and its satellites, NATO strategy, and other matters not directly related to United States policy with respect to Latin America.]

9. United States objectives and courses of action with respect to Latin America (NSC 1442 and Annex to NSC 1443)

In introducing this report, Mr. Cutler read the objectives and summarized the courses of action set forth. He then suggested that, beginning with the Under Secretary of State,4 the members of the Council describe their reactions to this proposed policy.

Secretary Smith said that the paper had been prepared in some haste and represented a shotgun approach. It was, of course, very general, but would be followed by other reports dealing with specific countries which represented problems with regard to United States security interests.

[Page 3]

Turning then to the question of the costs of the programs set forth in the report, Secretary Smith said that he would not suffer great qualms if the $8 million budgeted for the Inter-American Highway were ultimately to be cut in half. Simply as a matter of tactics, however, Secretary Smith thought it would be wise if Congress did the cutting. As regards the Rama Road, he thought a cut inadvisable, and that every effort should be made to prevent any reduction of the proposed outlay of $25 million for economic assistance5 to Latin America in Fiscal Year 1954.

Secretary Smith also adverted briefly to plans in the State Department for stepping up visits of distinguished American citizens to the various Latin American republics.

Mr. Cutler interrupted to state that the President had been extremely pleased with the present report and was going to use some portions of it as the basis for his forthcoming Pan American Day speech.6

In commentary on this point, Secretary Smith said that he was sure that the Council as a whole was aware of the heavy psychological significance of any policy and program for Latin America.

General Bradley commented next on the military aspects of the policy statement. He noted that it involved no changes in the objectives set forth in the policy which it superseded, viz., NSC 56/2.7 As regarded military courses of action, the new paper omitted reference to accomplishments already recorded, but added three new items.

Asked for his views, Governor Stassen said that while on the whole he was pleased with the report, it failed to take account with sufficient force of one point that he felt to be of very great importance. It did not reflect the need for Latin American capitalists and business men to provide better treatment for their workers and to take a more progressive and responsible role in the development of the economies of their countries. He therefore suggested the insertion of a new paragraph which would cover this point.

Secondly, Governor Stassen said he felt that greater emphasis might likewise be placed on the problem of Latin American treatment of United States capital and investors. While perhaps less important than his first suggestion, a slight revision would cover this second point.

Secretary Wilson noted his concern to keep the Colombian battalion in service in Korea, and believed that the paper should cover the problem [Page 4]of compensation by the Colombian Government to the United States for services rendered in support of this battalion.8

Mr. Cutler assured Secretary Wilson that the staff was aware of this problem and that it would be taken up in the forthcoming policy statement on Korea9 as applying not only to Colombia but to other countries which had not paid the United States what was due it for logistic support of their forces.

It then became Secretary Humphrey’s turn to comment on the paper. He said that the Council would note the inclusion of the clause setting forth the standard Treasury position that policy statements such as this should not be given final approval until the costs of carrying out the proposed program in Latin America had been scrutinized in relationship to priorities in other areas. All the other major areas must be gone into, said the Secretary, before we finally go ahead on this or any other policy. Secretary Humphrey informed the Council that it had already proved necessary for the Export–Import Bank to advance $300 million to Brazil in order to enable it to pay for materials which it had purchased from private interests in the United States.10 This was a case, and a not very edifying one, of straight overbuying by the Brazilians. Unless something could be done to stop it, Secretary Humphrey warned, it would set the pattern for further expenditures and further requests for loans in the future.

In confirmation of these remarks, Secretary Smith added that the State Department expected the Brazilians to come back very shortly with another request on the Export–Import Bank, this time for $400 million.

Secretary Humphrey said that this sort of transaction obviously needed to be much more carefully policed by this Government in the future. It was already too late when he got a chance to acquaint himself with this most recent transaction involving the $300 million. These matters had very serious implications for the future, and it would be necessary for us to cut off in the near future.

Secretary Smith expressed general agreement with these views.

Secretary Humphrey said that he had one final suggestion to make with regard to United States relations with the Latin American states, particularly in the economic sphere. He felt sure that if we could find a few first-rate business men and send them as our ambassadors to the key Latin American nations, it would do far more good than any amount of money we could dole out.

The President expressed general sympathy with this idea, and Secretary Weeks added that from his own experience as a private business [Page 5]man in Latin America, the efforts of private enterprise needed to be backed up much more strongly than in the past by the Department of State.

This subject, said Secretary Humphrey, brought in the question of tax incentives which formed part of the present report. He felt that tax incentives came logically after and not before you had achieved real stability of American investment. Tax incentives would never induce American investors to invest in Latin America until there was far greater assurance that the investment was reasonably safe.

With this the President expressed hearty agreement, and noted that he had “jumped” the Mexican Ambassador11 recently on this very point. The Ambassador had replied that the Mexican Constitution itself guaranteed compensation for the expropriation of foreign investments, and that his country was guiltless.

Secretary Smith said that he felt that our people interested in Latin America should go after management contracts instead of following the traditional approach to investment in Latin America. He felt sure that this was a more effective way of doing business profitably in Latin America without giving rise to the problems which so often resulted in nationalization.

Secretary Humphrey expressed some skepticism of this approach, and reverted to his point that the way to get the job done was to send business men as ambassadors to the other American republics.

The National Security Council: 12

a.
Adopted the statement of policy contained in NSC 144 subject to the following changes:

Paragraph 5-d: Change the second sentence13 to read:

“This does not preclude multilateral action through the inter-American system. …"

Paragraph 7: Add a new sub-paragraph f, reading:

f. Undertaking a thorough study of the means by which we can assist Latin American capital to play a more vigorous and responsible role in economic development of the area.”

Paragraph 12: Change the first sentence14 to read:

“In support of the course of action in paragraph 11, the United States should provide military assistance to Latin America consistent [Page 6]with the agreed plans of the Inter-American Defense Board and other bilateral or multilateral military agreements to which the United States is a party.”15

b.
Noted the President’s approval of NSC 144 as amended, and his statement that this approval did not constitute an endorsement of any specific program of military and economic assistance for Latin America, which will be subject to review in the light of (1) the priority of financing of present and proposed programs for Latin America in relation to programs for other foreign areas and to programs for domestic security, and (2) the overall objective of achieving a balanced Federal budget.

Note: NSC 144 as amended subsequently circulated as NSC 144/1.

[Here follows discussion relating to review of basic national security policies (item 10), which is printed with the documentation concerning the mutual security program in volume I, and NSC status of projects.]

  1. This memorandum was drawn up by S. Everett Gleason, the Deputy Executive Secretary of the NSC, on Mar. 19.
  2. The text of NSC 144, dated Mar. 4, 1953, is identical to that of NSC 144/1, dated Mar. 18, 1953, printed infra, with the exception of the changes adopted as a result of this meeting.
  3. The referenced annex to NSC 144 is an NSC Staff Study, dated Mar. 6, 1953, not printed, which contains a general discussion of the basic considerations affecting U.S. relations with Latin America, alternate lines of policy which the United States might pursue toward Latin America, and the courses of action recommended in NSC 144. A copy of the Staff Study is contained in S/SNSC files, lot 63 D 351.
  4. Walter B. Smith.
  5. For documentation relating to this subject, see pp. 186 ff.
  6. For text of President Eisenhower’s address delivered at the Pan American Union in Washington, Apr. 12, 1953, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1953 (Washington, 1960), pp. 563–564.
  7. NSC 56/2, a report titled “United States Policy Toward Inter-American Military Collaboration,” dated May 18, 1950, and approved by President Truman on the following day, is printed in Foreign Relations, 1950, vol. i, p. 628.
  8. For documentation on this subject, see pp. 769 ff.
  9. Apparent reference to NSC 170/1, a report on “U.S. Objectives and Courses of Action in Korea,” dated Nov. 20, 1953, and approved by President Eisenhower on the same date; it is printed in volume xv, Part 2.
  10. Regarding this loan, see Mr. Mann’s memorandum, Feb. 20, 1953, p. 606.
  11. Rafael de la Colina.
  12. Paragraphs a and b constitute NSC Action No. 746.
  13. The text of the referenced sentence reads as follows:

    “This does not preclude multilateral action through the inter-American system or unilateral action if necessary to protect overriding United States security interests.”

  14. The text of the referenced sentence reads as follows:

    “In support of the course of action in paragraph 11, the United States should provide military assistance to Latin America consistent with the agreed plans of the Inter-American Defense Board and bi-lateral military agreements made thereunder.”

  15. For documentation relating to U.S. policy regarding hemisphere defense, provision of armaments, and military assistance to other American republics, see pp. 116 ff.