Eisenhower Library, Eisenhower papers, Whitman file

No. 167
Memorandum of Discussion at the 183d Meeting of the National Security Council, Washington, February 4, 19541

top secret
eyes only


The following were present at the 183rd Meeting of the Council: The President of the United States, presiding; the Vice President of the United States; the Acting Secretary of State; the Secretary of Defense; the Director, Foreign Operations Administration; the Director, Office of Defense Mobilization. Also present were the Secretary of the Treasury; the Secretary of Commerce (for Item 2); the Acting Director, Bureau of the Budget; the Chairman, Atomic Energy Commission (for Item 2); the Chairman, Joint Chiefs of Staff (for Items 3 and 4); the Director of Central Intelligence; the Assistant to the President; Robert Cutler, Special Assistant to the President; Mr. Max Lehrer, Department of Defense (for Item 3); the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

Following is a summary of the discussion at the meeting and the chief points taken.

. . . . . . .

3. United States Objectives and Courses of Action With Respect to Formosa and the Chinese National Government (Memo for NSC from Executive Secretary, same subject, dated January 26, 1954; NSC 146/2)

(Admiral Radford entered the meeting at this point.)

Mr. Cutler commenced to brief the Council on the complicated problem which was involved in paragraph 12-a,2 which he read in its entirety as a description of the missions originally contemplated for the Chinese Nationalist forces on Formosa. Before he could complete his presentation, the President inquired of Admiral Radford why U.S. logistic and other support was thought to be requisite to defend the island against amphibious assault by the Chinese Communists. It seemed to him, said the President, that a force of the size contemplated in paragraph 12–a ought by itself to be able to resist such an attack.

Admiral Radford replied that of course the Chinese Communists had been preparing an assault on Formosa prior to their intervention [Page 356] in the Korean war, and that this had been prevented by the orders issued to the United States Seventh Fleet. If this fleet had not been interposed, and if the Chinese Communists had been willing to accept the sacrifices involved, Admiral Radford believed that they could have got ashore on Formosa and ultimately have secured the whole island. This was true four years ago and it would still be true today if American forces were not interposed, since the Chinese Communists had such a great logistical advantage over the Chinese Nationalists in the shape of men and junks to transport them.

The President queried whether a few destroyers would not have a “field day” with the thousands of junks transporting the Communist assault force. Admiral Radford admitted that this was right, but that nevertheless if U.S. support were withdrawn, Formosa would fall in time to the Communists despite the presently strengthened position of the Nationalist forces on the island. Furthermore, Admiral Radford indicated that it was extremely difficult to sink junks. Indeed, the United States Navy had been practicing methods of destroying them at Pearl Harbor, and had concluded that they were extremely difficult to dispose of by any method.

The President agreed that this disposed of his argument, and Mr. Cutler resumed his analysis of the problem presented by paragraph 12–a (copy included in the minutes of the meeting).3 It was the conclusion of the Planning Board, said Mr. Cutler, that there were three possible solutions among which the Council could choose. First, it could reduce the missions and force levels to goals which could be accomplished by Fiscal Year 1956 with reduced funds now estimated to be presently and hereafter available. Second, it could accept the JCS revision of the Formosa program; keep the missions of the Chinese Nationalist forces the same, but stretch out the attainment of the goals over a period beyond Fiscal Year 1956. Third, the Council could accept the JCS revision of the program; keep the missions the same; and either invade other programs for the necessary funds to permit completion by Fiscal Year 1956 or else ask for a supplemental appropriation for the necessary funds to permit completion by Fiscal Year 1956. In sum, said Mr. Cutler, the real issue is one of priority among programs at a time when appropriations and expenditures are being reduced.

After the conclusion of his briefing, Mr. Cutler called on Mr. Max Lehrer, of the Department of Defense, to present to the Council the financial problem involved in paragraph 12-a. This presentation [Page 357] was made with the assistance of a chart entitled “Formosa Matériel Program”.4

At the conclusion of Mr. Lehrer’s presentation, Secretary Wilson said that he had been able to take only a quick look at the Formosa program earlier in the morning, but that this look was sufficient to indicate that the Council had a very big problem on its hands. At the very least, we were going to be short $150 million on the new program for Formosa. Secretary Wilson had grave doubts as to the wisdom of the program, and believed that a reappraisal should be made. He furthermore raised two additional points. First, the long-range effect on the Formosan economy of the extensive military program which was being envisaged. Secondly, the question whether there was sufficient manpower in Formosa to assure replacements for such a large military force.

Governor Stassen agreed with Secretary Wilson that if we proposed to step up the levels of the military forces on Formosa, and if we were to convert a number of squadrons to jet planes, additional economic aid would be required to offset the serious drain on the economy of Formosa.

Admiral Radford commented that the history of U.S. aid to Formosa was a decidedly confusing one. He indicated that he had been unable to take part in the discussions with the Joint Chiefs of Staff which had led to their proposal to revise upwards the force levels of the armed forces on the island. Though he had signed the JCS report, Admiral Radford went on to say that had he been present at the discussion he would have recommended a reduction rather than an increase in the levels for the Chinese Nationalist Air Force, since in his view ground forces were the most important element for the defense of Formosa. Accordingly, if we had to take reductions these should be at the expense of the air element. This, said Admiral Radford, was in accordance with the general policy of the United States, which was to create and develop indigenous forces capable of defending themselves against aggression.

The President inquired whether the Chinese Nationalists had made any plans to provide replacements after the first five months of a war. Admiral Radford replied that such plans had been made and that the Nationalist Government was also planning on the possibility of raising armed forces to the number of 500,000 in the event of war. Secretary Wilson expressed doubts as to the capability of the Nationalists to do this with a population of only nine million.

After discussion of this issue, chiefly between Admiral Radford and Secretary Wilson, the latter said that he had two further observations [Page 358] to make. In the first place, he was sure that if we proposed to equip the Chinese Nationalist forces with our most modern weapons, this would require a build-up of U.S. technicians to teach the Chinese how to use these weapons. Secondly, in his view it was about time that the United States showed some caution with respect to the number of Orientals we proposed to take responsibility for. All this, said Secretary Wilson, added to his conviction that our policy toward Formosa needed a complete new look. After this was made, and we had finally decided just how much money to put into the program, we must not let these funds be sucked out for other purposes, as was currently the case for Indochina, etc., etc.

Governor Stassen interposed to point out that as yet nothing whatsoever had been taken from the Formosa program, and that FOA would certainly take nothing in the future without the concurrence of State and Defense. He admitted, however, that a decision would have to be made as to what would have to be diverted from this program in future years. For the present, however, plenty of money was authorized and plenty of matériel was already in the stockpiles.

Admiral Radford agreed that our stockpiles were overflowing with matériel, much of which could not be delivered because the principal recipient countries were not able to take in more, and accordingly the necessary matériel could be provided to Formosa from the overall stockpile. Actually, continued Admiral Radford, the situation just referred to had reached a point where the Joint Chiefs of Staff felt it essential to undertake a complete review of our whole military assistance program. It was also desirable to review U.S. strategy as to the development and maintenance of a position of strength in the Far East.

The President commented that as it seemed to him, Indochina was our first concern in the Far East and Formosa came next. Admiral Radford reminded the President that Korea was still a problem, and Secretary Wilson warned that the Chinese Nationalist forces on Formosa were not so flexible and available for operations elsewhere as we’d like to think. We couldn’t put them into Korea, and it was doubtful whether they could ever be used in Indochina. This was further evidence of the need for a review of the Formosa situation.

Secretary Smith stated that if the Council had now agreed to take a new look at the Formosa policy, he would like to suggest a few points. He said that he was in agreement that the Planning Board was correct in its presentation of the three alternatives open to the Council with respect to the Formosa program. The State Department felt that the military missions set forth in paragraph [Page 359] 12–a were adequate to support our policy and should not be scaled down. Accordingly, the first of the three alternatives was unacceptable. The second alternative—namely, to seek a supplementary appropriation—seemed impractical. The third alternative—stretching out the attainment of the goals—was the best.

Mr. Hughes5 said that he felt obliged to say that there was plenty of funding money in the Formosa program. The meat of the problem was in the expenditures.

The President suggested that, oddly enough, there was one additional alternative to the three which had been raised by the Planning Board. He noticed that the moment we perceive adverse economic trends in the United States—was the correct word “recession”? Secretary Humphrey assured the President, amid laughter, that the correct word was “transition”—as soon as we do this, in other words we always begin talking about some kind of public works program. Why couldn’t we consider a stepped-up program of military production if something were needed to prime the pump? We ought to be thinking about such possibilities every minute, and every agency and department should keep the problem in mind. To that end the President was asking Dr. Burns to confer with department and agency heads as to ways and means by which their programs could be constantly adjusted to meet varying economic trends. In any case, we should keep the possibility in mind that we stretch out our military assistance program if our economy seems to be in good shape, but we should be prepared to consider spending another five or six million dollars on this program around the world if economic conditions in the United States recommended it. The main thing was flexibility.

Secretary Wilson replied that any time the President told the Defense Department to spend more money he could do it for him. Tell us when you want the heat turned on and we’ll do it. With regard, however, to the specific recommendation for a review of the Formosa policy and force levels, Secretary Wilson recommended that this review be expanded to include the whole Pacific area. There were many problems in connection with Japan and the Philippines, and we must decide just how much we wish to invest in this area. Over the long haul, said Secretary Wilson, he didn’t hold much with our policy toward Formosa.

Secretary Humphrey said that he strongly supported Secretary Wilson’s opinion, and as for himself, he simply did not understand the nature of U.S. objectives in the Far East.

The President, after suggesting that Admiral Radford attempt to explain our objectives in the Far East to the Council at subsequent [Page 360] meetings, returned to the question of additional defense expenditures as a means of countering adverse economic trends in the United States. As for turning on the heat, he pointed out to Secretary Wilson that these expenditures must be directed or channeled to those areas in the country where unemployment was most serious.

Secretary Wilson, however, argued that this was wasteful and not necessary, since people could be readily prevailed upon to move from depressed areas to the cities where defense materials were being produced. He pointed out that there were actually more colored people in the city of Detroit at the present time than the entire population of the city when Secretary Wilson first moved there. He therefore could not wholly subscribe to the President’s view that, rather than add a new assembly line to a going plant, it should be our policy to channel orders and production to areas of heavy unemployment.

Secretary Humphrey said, without reference to the discussion between the President and Secretary Wilson, that he was in basic agreement with the President’s idea that stepping up the production of military end items was much to be preferred to some kind of PWA program.

Dr. Flemming noted that we were making decisions every day at the procurement level and that these decisions have a very real impact on employment. Accordingly, it was necessary to look ahead and see how to prevent unemployment in various areas of the country. A sensible instance of this kind of planning was the Navy’s decision to have a destroyer built at Quincy, Massachusetts, where unemployment is serious, even though the job could have cost less at yards in other parts of the country.

The President reiterated his desire for an integrated Government program flexible enough to be able and ready to deal with any decision. Each department and agency of the Executive branch must be aware of what other departments and agencies were doing.

The National Security Council:6

Referred subparagraph 12–a of NSC 146/2 back to the NSC Planning Board for review in the light of reconsideration by the Department of Defense of the Chinese Nationalist force levels and the size and timing of the U.S. military aid program for Formosa.
Requested the Department of Defense to review and report to the Council on U.S. strategy for developing a position of military strength in the Far East.
Requested the Department of Defense, in cooperation with the Foreign Operations Administration and the Bureau of the Budget, to study and report to the Council on a flexible program of providing U.S. military assistance to foreign nations in accordance with the availability of end items and relative priority among recipient nations.
Noted the President’s desire that all executive departments and agencies, including military planning in the Department of Defense, provide sufficient flexibility in their respective programs so that Federal expenditures can be appropriately and promptly directed toward preventing or countering adverse trends in the U.S. economy.

Note: The actions in b and c above subsequently transmitted to the Secretary of Defense for appropriate implementation.

. . . . . . .

S. Everett Gleason
  1. Dated Feb. 5 and prepared by Gleason.
  2. Paragraph 12–a of NSC 146/2, Document 150.
  3. Not attached to the source text.
  4. Not attached to the source text.
  5. Rowland R. Hughes, Acting Director, Bureau of the Budget.
  6. The lettered subparagraphs constitute NSC Action No. 1029. (S/SNSC (Miscellaneous) files, lot 65 D 95, “Record of Actions by the National Security Council, 1954”)