Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

Eisenhower Library, Eisenhower papers, Whitman file

No. 414
Memorandum of Discussion at the 181st Meeting of the National Security Council, Washington, January 21, 1954¹

top secret
eyes only

Washington, January 21, 1954

Present at the 181st Meeting of the National Security Council were the President of the United States, presiding; the Secretary of State; the Acting Secretary of Defense; the Director, Foreign Operations Administration; the Director, Office of Defense Mobilization. The Vice President did not attend the meeting because of his absence from the city. Also present were the Secretary of the Treasury; the Attorney General (for Item 6); Mr. Morrison for the Director, Bureau of the Budget; the U.S. Representative to the United Nations; the Under Secretary of State; the Acting Secretary of the Army and Adm. Duncan for the Secretary of the Navy (for Item 4); the Chairman, Joint Chiefs of Staff; Gen. Bolte for the Chief of Staff, U.S. Army; the Chief of Staff, U.S. Air Force; and Commandant, U.S. Marine Corps (for Item 4); Judge Barnes, Assistant Attorney General, and Mr. Herbert Hoover, Jr., Department of State (for Item 6); the Director of Central Intelligence; the Assistant to the President; Robert Cutler and C. D. Jackson, Special Assistants to the President; the Deputy 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.

[Here follows discussion of items 1–5, the meeting of the four Foreign Ministers in Berlin, United States policy on Berlin, significant world developments affecting United States security, United States objectives and courses of action with respect to Southeast Asia, and United States objectives and courses of action with respect to Indonesia.]

6. United States Policy Toward Iran (NSC 5402; NSC Actions Nos. 1015 and 766-a)²

Mr. Cutler summarized the Council’s action of the previous week with respect to the desirability from a national security point of view that United States oil companies participate in an international consortium to purchase Iranian oil. He then indicated that at the present meeting the Under Secretary of State would present a proposed Iranian consortium plan, and the Attorney General would present an opinion that the participation of U.S. oil companies in the aforementioned plan would not be in violation of the anti-trust laws. Mr. Cutler then called on Mr. Hoover to describe the proposed Iranian consortium plan.

Mr. Hoover read two memoranda dated January 21, the first entitled “National Security Council Action on the Iranian Oil Settlement” and the second “The Iranian Oil Situation”³ (copies filed in the minutes of the 181st NSC meeting). Thereafter, Mr. Hoover outlined the most significant points in the proposed Iranian consortium plan (copy filed in the minutes of the 181st NSC meeting).⁴

At the conclusion of Mr. Hoover’s presentation, Mr. Cutler called on Admiral Radford for his requested statement on the importance to national defense of the above plan from the viewpoint of the Department of Defense.⁵

Admiral Radford said that it was almost impossible to overestimate the importance of an Iranian oil settlement from the point of view of national security. The Middle East was the one area in the world where we have made no progress in creating reasonable defense arrangements against Soviet imperialism. It was therefore all the more important to keep Iran on the side of the free world. The key to doing so was an oil settlement. We must get the British to go along with us in our plan to achieve this settlement.

At the conclusion of Admiral Radford’s statement, Mr. Cutler called on the Attorney General for his opinion as to the legality of the proposed Iranian consortium plan.⁶

The Attorney General stated that this opinion, which had already been sent to the President,⁷ had been prepared by Judge Barnes and that it gave full clearance to the consortium plan as regards the legality of purchases of Iranian oil. This clearance did not extend, however, to sales of Iranian oil. The Attorney General also noted that the opinion in question relied very heavily on the decision at last week’s Council meeting, which Mr. Cutler had mentioned at the outset of the discussion.

The Attorney General then referred to the pending litigation against the American oil companies, and noted that the so-called cartel suit would continue to be prosecuted by the Department of Justice.

Mr. Cutler asked Secretary Smith what form of Council action was required in the circumstances and in the light of the reports which had been presented to the Council by Mr. Hoover and by the Attorney General.

Secretary Smith replied that all that was necessary would be that the record show that the Council had noted the proposed Iranian consortium plan together with the Attorney General’s opinion as to its legality. But the Attorney General interrupted to say that he wished to make a statement to the Council with regard to the civil suit against the oil companies, which would, of course, still stand.

The Attorney General was critical of the behavior of the oil companies, in particular because they had thus far refused to submit to the Department of Justice documents which were essential to the case. Although two Judges had found that the companies were under obligation to submit these documents, the judgment had been appealed and the companies were now engaged in a delaying action. Accordingly, the Attorney General suggested that participation of the American oil companies in the proposed Iranian consortium plan should be made contingent upon their willingness to turn over these documents.

Secretary Smith said that the first question in his mind was whether the companies would be willing to participate in the new plan if surrender of these documents were made a condition. Secretary Smith was reasonably sure that the companies could expect no immediate profit from the new plan, and that their participation in it would be motivated, at the outset at least, only by concern for the national security.

Secretary Humphrey added that he felt it undesirable for the National Security Council to let itself become involved in this aspect of the oil problem.

The President expressed strong agreement with the views of Secretaries Smith and Humphrey, and insisted that the problems of the cartel suit and the new consortium be kept wholly separate and distinct. The companies were entering into this plan out of concern for the security of the United States, and the President did not think it advisable to place on the companies the condition of surrendering the documents.

The Attorney General said that he accepted the President’s views readily, but he did wish to point out that considerations of national security would require that in due course the Government get hold of the documents in question if we were ever to achieve a final settlement of the problem occasioned by the impact of the anti-trust laws on American companies operating in foreign countries exclusively. The Attorney General reminded the Council that it had directed him to investigate this problem, and that American companies could not be expected to undertake foreign operations deemed by the Government to be in the interests of the national security if such operations, though exclusively abroad, involved them in violation of the anti-trust laws.

The Attorney General then went into the question of publicity regarding the new plan. Secretary Smith thought that no publicity should be given the new plan until final arrangements for its implementation had been completed. The President and Mr. Hoover agreed with Secretary Smith, the President adding that determination of the appropriate time should rest with the Secretary of State.

The President also expressed his desire that the Council record indicate that there was no relation whatsoever between the consortium plan and the cartel suit. While the heads of many of the oil companies were his personal friends, he did not propose to allow the American people to be gouged by the price-fixing practices of the oil cartel.

The Attorney General said that he believed it to be prudent to take this matter up immediately with the majority and minority leaders in Congress, so that a clear understanding of the purposes of the Administration could be offered at once. The President expressed agreement with this suggestion.

The National Security Council:⁸

a. Noted a memorandum entitled “A Proposed Iranian Consortium Plan” by the Department of State, as presented by Mr. Herbert Hoover, Jr.

b. Noted a statement emphasizing the importance to national defense of the above Plan from the viewpoint of the Department of Defense, as presented by the Chairman, Joint Chiefs of Staff.

c. Noted an opinion requested of the Attorney General as to the legality of the above Plan.

d. Noted that the President, upon the advice of the National Security Council contained in NSC Action No. 1015, authorizes and directs the Secretary of State, at an appropriate time, to inform:

(1) The appropriate American petroleum companies (a) of the advice of the National Security Council contained in NSC Action No. 1015; (b) of the contents of the proposed Iranian Consortium Plan; and (c) of the opinion of the Attorney General regarding this Plan.

(2) Such other persons, including appropriate members of Congress, and foreign governments as are appropriate, of this Plan.

e. Noted that the pending civil action in the so-called oil cartel case instituted pursuant to NSC Action No. 766–a is an entirely separate matter from the proposed Iranian Consortium Plan, and will continue to be prosecuted by the Department of Justice.

Note: The action in d above subsequently transmitted to the Secretary of State for appropriate implementation.

[Here follows discussion of item 7, United States policy towards Finland.]

S. Everett Gleason

1. Drafted by Gleason on Jan. 22.
2. For text of NSC 5402, see Document 403. For text of NSC Action No. 1015, see footnote 3, Document 408. For text of NSC Action No. 766-a, see footnote 2, Document 358.
3. Document 412 and supra.
4. Reference is to the attachment to Document 411.
5. Not found in Department of State files.
6. Reference is to Document 411.
7. Reference is to Attorney General Brownell’s letter to the President, Jan. 21, see footnote 1, Document 411.

8. Paragraphs a–e and the Note constitute NSC Action No. 1021. (S/S–NSC (Miscellaneous) files, lot 66 D 95, “Record of Actions by the NSC, 1954”)

   NSC Executive Secretary Lay formally transmitted the responsibility for action in paragraph d to the Secretary of State for appropriate implementation on Jan. 25. (S/P–NSC files, lot 61 D 167, “Iran (NSC 175 and 5402)”)