Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

44. Minutes of a Cabinet Meeting, The White House, Washington, August 12, 1955, 9 a.m.¹

Washington, August 12, 1955, 9 a.m.

ATTENDANCE AT CABINET

• The President
• The Secretary of State
• The Honorable Andrew N. Overby, Assistant Secretary of the Treasury
• The Secretary of Defense
• The Attorney General
• The Honorable Norman R. Abrams, Assistant Postmaster General
• The Honorable Clarence A. Davis, Under Secretary of the Interior
• The Secretary of Agriculture
• The Secretary of Commerce
• The Secretary of Labor
• The Secretary of Health, Education and Welfare
• The Director, Bureau of the Budget
• The Director, Office of Defense Mobilization
• The Chairman, Civil Service Commission
• The Honorable Arthur Burns, Council of Economic Advisers
• The Honorable Henry Cabot Lodge, Jr., U.S. Representative to the UN
• The Honorable Harold E. Stassen
• The Honorable Sherman Adams
• The Honorable Wilton B. Persons
• The Honorable True Morse, Under Secretary of Agriculture
• The Honorable Joseph Dodge
• The Honorable Herbert Hoover, Jr., Under Secretary of State
• Dr. Gabriel Hauge
• Colonel A. J. Goodpaster
• Mr. Murray Snyder
• Mr. I. Jack Martin
• Mr. Bernard M. Shanley
• The Honorable Nelson Rockefeller
• Mr. Maxwell M. Rabb
• Mr. Bradley Patterson, Jr.

[Here follows discussion of the Hoover Commission’s recommendations on paperwork management.]

2. US. Policy With Respect to CCC Owned Cotton.

Mr. Benson opened the Cabinet’s second discussion of this subject by summarizing several points:

1. Reports from abroad indicate that the expansion of foreign cotton acreage has been made at the expense of needed food and feed crops and that this has adversely affected the diet of some of the countries involved.

2. The cotton world expects the United States to become more competitive. (The Secretary at this point read excerpts from a magazine article to prove his point.)

3. There is some opposition to Agriculture’s proposed course of action from some of the larger U.S. cotton producers—those who have spent a good deal of money to develop the foreign cotton industry.

4. We must let the world know that we are going to sell more competitively and fairly or else quit completely so that world markets will become stabilized.

5. A Canadian agent has recently said that he would buy four hundred thousand bales if the CCC would meet world prices. He has now gone to Mexico to make his purchase.

The Secretary of Agriculture said it was of course important that representatives of friendly nations be notified in advance of our intentions. He thought it was important that the announcement of this marketing policy be made when the world cotton markets themselves are not open. Ideally we should announce our policy this afternoon since both European and U.S. markets are closed. If necessary the announcement could come tomorrow.

The President mentioned that he had a telegram from Representative Martin² warning that if we sold cotton more cheaply than CCC prices we must put quotas on cotton imports. Mr. Benson pointed out that such a small quantity is involved that quotas will not be justified. In answer to the President’s question whether this million bales would depress the market, the Secretary said it would hardly put a ripple in it. He pointed out that foreign millers are even now getting cotton more cheaply from foreign growers than from the U.S.

Secretary Weeks reminded his colleagues that S. 2702, sponsored by Senator Eastland and sixty others, specifically calls for the imposition of quotas and that it is the understanding in the South that quotas will be a part of this “package.” He warned of the misunderstanding when manufacturing people think that quotas are part of what is involved and we do not. He said he was sympathetic with Agriculture’s desire to get rid of the surplus cotton, but that it is not really just to have foreign manufacturers given a better price on cotton than our own Government gives to domestic manufacturers. Secretary Weeks suggested that we wait until Congress comes back; we might get something helpful and beneficial all around—perhaps changing the pattern of supports.

Secretary Weeks also made the suggestion that we sell cotton at world prices to domestic manufacturers provided that they guarantee that the product of that cotton is sold only in the export market.

Secretary Benson said that this could not be done without new legislation and added that the Department of Agriculture would not look with disfavor on such legislation. He felt that the course of action advocated by Senator Eastland went too far but he was convinced that if we move now we have a better chance of getting some reasonable legislation. We are offering a small quantity in a market which is already below our domestic price.

The President then pointed out that we say we are not going to break the world market and then asked when even a part of those million bales is going to move. Only if the price goes down, he thought. Secretary Benson then pointed out that the consumption of cotton is rather low in some countries; very little of the type and grade of cotton involved here is consumed in this country; Agriculture believes that some of this grade of cotton will be consumed in areas which have not consumed cotton before.

Ambassador Lodge asked whether we will get the legislation we are hoping for and the Secretary of Agriculture answered him by saying that we will have a much better chance if we make this move now. Mr. Lodge suggested that we start to embark on this course of action without making any announcement and simply wait for queries from the press. Mr. Benson said this was such a sensitive matter we had to say something. Mr. Stassen suggested using only the first paragraph of the suggested press release in CP–34³ and the President questioned why CP–34 was so long. Mr. Hoover emphasized that we had to make a fairly full statement since every word we said would be examined with the utmost care in the cotton markets of the world. We should even risk saying too much, but we must try to answer all the questions and criticisms which would arise.

The President reflected that the bicycle decision was a hard one too; we are not going to buy bicycles but we are going to insist that foreign countries buy our cotton. Is this not inconsistent? Logically, he said, any increase in import duties for bicycles is crazy but we get emotional about it. Mr. Benson pointed out that there is a lot of emotion about cotton too. The President said that he of course sympathized with Mr. Benson’s argument. Mr. Hoover pointed out that cotton is sold in exchanges where the laws of supply and demand apply particularly severely; bicycles are different, not being sold in that way. The President rejoined that the principle involved was the same. The President referred to the first paragraph in the proposed press release, “no more than a million bales”, and asked whether this will look like a limitation or will it scare people to death. Mr. Benson answered that it will be a notice to the world that the trend of foreign cotton acreage expansion at our expense had better stop since if it does not all our foreign markets will be taken away from us.

It was suggested that a statement be inserted that “under the law the Secretary of Agriculture has the authority” to do so and so—in other words to quote the law. Mr. Benson pointed out that people in the cotton business know the law well. The President reminded him that the rest of the world does not. The President also suggested that the gradual nature of this sale should be emphasized in the press release, perhaps in the third paragraph.

The Secretary of Defense asked why anybody buys any of our cotton. Mr. Benson said the answer to that was that our cotton is of exceptionally good quality.

The President said that we have got to take some action on this subject but predicted that the question of quotas would start to hit us right in the face if the world cotton market should start to break. If the price differential is now three cents and then becomes four or five cents how can we duck the problem of quotas? The Attorney General suggested that our answer be that, in the coming January, we will go over with the Congress the basic question of support prices.

Ambassador Lodge then asked about consultation with the legislative leaders and Secretary Benson assured him that they will be called and consulted.

Mr. Wilson wanted to be assured that the Secretary of Agriculture had the clear legal right to take this course of action. Mr. Benson so assured him and the President commented that while he was responsible for what the Executive Branch does, Mr. Benson actually had the authority under the law. This selling program, however, does not start until after the first of the year. Mr. Wilson wondered whether this course of action would endanger the three and one-half million bales of existing exports; to add on the one hand and cut down on the other hand wouldn’t get us very far. Mr. Benson pointed out that we cannot say for sure and that we may not even sell a million bales at all. The President stated that if we find we have made a mistake we can always reverse ourselves. He pointed out that he is never too proud to admit it when he is wrong. Mr. Stassen wondered whether the market may have already discounted the probability of our taking this course of action and pointed out that consumption went up in Asia last year. Mr. Benson added that our own consumption had been decreasing and Mr. Stassen attributed this to the use we are making of synthetics.

The Secretary of State said that he was acquiescing in the proposed course of action but did want to point out that unless this operation does bring world prices down it will not stop foreign planting. Foreign planting can perhaps better be slowed down by talking with representatives of some of the countries involved. No such talks have been held yet since the Executive Branch has not until now been in a position to say: stop your planting and we will not dump our cotton. Only if world prices go down will the course of action proposed in CP-34 put a damper on foreign cotton planting. The President said he wasn’t so sure; that these other countries know that all this cotton is here ready to sell. This might make them reflect. Mr. Dulles pointed out that we haven’t, however, sold any of this cotton for years and foreign countries know it. But if we should start now a second dilemma arises: while it is true that the foreign textile millers have been getting cotton below the price that the U.S. millers pay, this has not been done as a result of the latters own government’s action. Now the U.S. miller sees his own government selling this cotton at a lower price to his competitors and this has a new psychological impact. The proposed course of action would of course increase rather than decrease the demand for quotas from U.S. manufacturers. This he said was his best judgment of the situation but he was willing to defer to the course of action proposed.

The President asked about the size of our cotton imports and Secretary Weeks said about six percent of our production is exported and one percent of our production is imported; in other words we are exporting six times as much as we import. Mr. Weeks then read from the draft bill to which he had referred earlier and from which it was evident that the southern Senators are just as much interested in quotas as they are in the sale of cotton. General Persons pointed out that from the talks he had had with some of the Senators concerned they are not so much afraid of what is being imported now but they have a deep-seated fear of future Japanese import competition. Secretaries Benson and Weeks confirmed this impression. Mr. Benson commented that there was even some leeway in that bill which would indicate that the Senators do not feel too strongly about this.

The President asked about the new Japanese trade agreement. Dr. Hauge replied that this agreement has in it provisions for an absolutely bare minimum of textile imports; these provisions had to be in there, else there would have been no agreement and even no negotiations with the Japanese. There were some reductions made in the tariffs on lower grades of cotton. The Tariff Commission concurred in them.

The President said we have four months to see what happens. If the market settles down in those four months we can let one hundred thousand bales a month out. Mr. Benson thought that the market would probably firm up following this announcement. He said the buying has almost stopped now. Mr. Dulles added that foreign planting will not stop. The President said perhaps we must explain to them that if they keep on expanding, this problem is simply going to get more serious. The Secretary of State, however, asked if we were really in a position to do anything more than talk this way. The President thought that we could show the foreign countries involved how gingerly we were going about this course of action and we would suggest they be equally careful. The Secretary of State emphasized that he wasn’t worried about what people will say but about what might happen. Secretary Wilson commented that somebody has simply got to be squeezed out of this business, but Mr. Dulles asked “How?”

The President summed up by stating that there were so many views we had better try something and see what happens. We are not going to make any attempt to restore our original market position back to the time when we sold so many million bales. Mr. Stassen commented that the sixth paragraph looks as though we might be saying just that. Mr. Benson asked how much time the State Department needed for consultations with the foreign governments interested. The Secretary of State asked for 24 hours and suggested that the announcement be made at noon on Saturday, August 13th. Secretary Benson made a suggestion about the procedure of consultation and the President asked that he discuss this with the State Department. The President then requested that the proposed press release be gone over again very carefully. General Persons asked that Secretaries Weeks and Benson should be sure to talk with Representative Martin on the phone about this decision. Ambassador Lodge suggested that we not only notify the Congressional leaders but have conversations with each of them and make clear to them that we expect them to help us out of this dilemma in the future. The President said we should emphasize we are taking the best course of action we know how. The Secretary of State cautioned against making too flat a statement about prospective legislation which we expect next year and Mr. Benson referred him to the language of the two closing paragraphs of the press release. The President commented that we should plan to take up legislation next year which would allow U.S. producers to buy cotton for export only (Mr. Weeks’ suggestion). Mr. Benson said that perhaps we could do what Secretary Weeks suggested administratively but we are not sure without further checking. Dr. Hauge asked whether enough analysis had really been made of this course of action—which amounts really to a major policy departure. The President closed the discussion by commenting wryly that this was one of those problems about which no matter what one does is wrong.

Governor Adams, at the end of the Cabinet meeting, reminded his colleagues that Secretary Benson was in charge of this release on cotton and any current questions coming to anyone else on this subject should be referred to Secretary Benson.

[Here follows discussion of the Attorney General’s report on investigations, the rental of limousines for government officials, Administration policy regarding the Immigration and Naturalization Act, United States economic goals and policies, and management training for career people in government.]

Bradley H. Patterson, Jr.

1. Source: Eisenhower Library, Whitman File, Cabinet Meetings. Confidential. Prepared by Patterson.
2. Joseph W. Martin (R–Mass.), House Minority Leader.
3. Cabinet Paper 34 contained a policy statement, “The Cotton Problem and First Steps Toward Solution,” as well as a suggested press release.