Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 2

S/P–NSC files, lot 61 D 167, “Indonesia (NSC 171 Series)”

No. 302
Memorandum by the Assistant Secretaries of State for Far Eastern Affairs (Robertson) and Economic Affairs (Waugh) to the Secretary of State

secret

[Washington,] December 7, 1954.

Subject:

• NSC Consideration on December 9, 1954 of OCB Letter on NSC 5417/3 (United States Rubber Policy—Tab A)¹

Discussion:

1. On October 18 [14], 1954 the NSC adopted the recommendations of the OCB approving a program to improve the Indonesian smallholder rubber situation.² The NSC approval was subject to a determination by the Secretary of the Treasury that the program will not adversely affect the sale of U.S. Government-owned synthetic rubber plants.

2. The Rubber Producing Facilities Disposal Commission took the position that official action to aid Indonesian rubber production might be interpreted as a Government move inimical to synthetic rubber production and, therefore, harmful to the disposal of the synthetic rubber plants and Secretary Humphrey suggested that the Indonesian program be delayed for approximately six months.

3. The OCB has transmitted to the NSC a statement indicating that the Treasury recommendation is acceptable and that the Department will not within a six months period from November 3, 1954 take definitive action or make commitments in response to a specific request from Indonesia without further reference to the OCB.

4. The Department would be obliged to talk to the Indonesians about their needs for assistance to smallholder rubber since the United States, on the basis of NSC action, stated publicly in May 1954 that it would consider sympathetically proposals for assisting the natural rubber industry.

5. The legislation governing disposal³ requires that Congress take final action on the Disposal Commission’s plan within 60 legislative days from the date of submission and that the plan be submitted by January 27, 1955. Therefore, this action should come well within the six months delay requested by Secretary Humphrey.

Recommendations:

1. That you concur in the view expressed by the OCB. (Enclosure 3—Tab A)

2. That you state that the Department considers the successful disposal of the Government’s synthetic rubber plants important to our foreign policy objectives in Southeast Asia.

3. That you state that the implementation of the Indonesian rubber program is also of significant importance to our objectives in Southeast Asia and that the Treasury’s recommendation, the disposal of the synthetic rubber plants, and the implementation of the Indonesia rubber program are not incompatible with each other.

4. That you indicate that the Department may wish to raise this problem again in May 1955 if the disposal program is not completed by then.⁴

1. The letter from the Operations Coordinating Board to the National Security Council was dated Nov. 30; its content is summarized in numbered paragraph 3 of this memorandum.
2. See Document 299.
3. See footnote 2, Document 249.

4. The memorandum of discussion at the NSC meeting of Dec. 9 indicates that there was no detailed discussion of NSC 5417/3; it merely records the following decision, which was taken as NSC Action No. 1284:

   “The National Security Council:

   • “a. Discussed the subject on the basis of the recommendation of the Secretary of the Treasury and the views of the Operations Coordinating Board, transmitted by the reference memorandum.
   • “b. Agreed that specific implementation of NSC 5417/3 should be suspended for approximately six months.
   • “c. Agreed that the Operations Coordinating Board should reconsider the implementation of NSC 5417/3 in approximately six months in the light of the situation then existing, for Council consideration after May 1, 1955.

   “Note: The actions in b and c above, as approved by the President, subsequently transmitted to the Operations Coordinating Board.” (Eisenhower Library, Eisenhower papers, Whitman file)