14. Memorandum of Discussion at the 273d Meeting of the National Security Council, Washington, January 18, 19561

[Here follow a paragraph listing the participants at the meeting and items 1–2.]

3. Significant World Developments Affecting U.S. Security

[Here follows discussion of unrelated subjects.]

At this point in the discussion Secretary Dulles said he had some observations which could probably be made either at this point or in connection with the next item on the agenda; namely, U.S. Economic Assistance for Asia. The President suggested that Secretary Dulles state what he wished at this point.

Secretary Dulles said that the essence of his remarks would be to point out that the United States had very largely failed to appreciate the impact on the underdeveloped areas of the world of the phenomenon of Russia’s rapid industrialization. This transformation of Russia from an agrarian to a modern industrial state was an historical event of absolutely first class importance. It challenged the industrial and political supremacy that up until now the West could maintain over the underdeveloped nations of the world. Now, however, these nations and especially those in Asia were being enormously impressed with the transformation which had been accomplished by the Soviet Union. The prestige of the “Great American Experiment” which had begun a hundred years ago was being diminished in the light of the “Great Russian Experiment” which had been achieved in some 30 years. Moreover, continued [Page 65] Secretary Dulles, these underdeveloped countries either forget or are indifferent to the terrible cruelties and hardships which have accompanied the transformation of the Russian state. All they see are the results of Russia’s industrialization and all they want is for the Russians to show them how they too can achieve it. We can ill afford to ignore the enormous impact on Asians and other underdeveloped areas which the Russians have made. It constitutes a very serious problem which we are not adequately meeting at the present time although the assistance program which we are about to present to the Congress will certainly help. In conclusion of his statement. Secretary Dulles warned that if the United States failed to solve this problem, the Soviet Union would end by dominating all of Asia.

Secretary Humphrey said he thought he understood what Secretary Dulles meant. Nevertheless, he did not see how we can expect in the future anything but continued Soviet competition. Russia had very great natural resources. Much of it was in the Temperate Zone and the Russians were an industrious people. Inevitably, in the future, the Soviet Union will be a great competitor of the United States.

Secretary Dulles suggested that Secretary Humphrey was missing the point of his warning. The point was that the transformation of Russia had happened so rapidly and so dramatically that it had made an enormous impression upon the underdeveloped nations who sought an equally rapid change in their society.

Secretary Wilson went on to say that he was greatly worried because the industrial transformation of the Soviet Union had been the work of a totalitarian government. Ours, on the other hand, was the product of private and free enterprise. Secretary Humphrey said that we should not, accordingly, by virtue of our assistance programs create and maintain other government-controlled economies in the underdeveloped nations of Asia and Africa. To do this would be self-defeating for the United States.

The President reminded Secretary Humphrey that there were all kinds and degrees of socialized societies throughout the world. There was even some socialization in the United States itself. We did not need to fear a socialized state as something inimical to us in itself. Sweden was a highly socialized state and Norway only less so. Both were warm friends of the United States. What we must guard against is socialization which goes the whole way and uses totalitarian methods so that the state in question ultimately comes under the control of Moscow. If this should happen in enough instances, the United States itself would finally “go down the drain.”

Secretary Humphrey continued to express his anxiety lest we build up a whole series of images of Moscow in the backward countries we were assisting. Governor Stassen, however, strongly [Page 66] supported the views of Secretary Dulles that we should move at once on this problem. The important thing was to back private enterprise as much as possible in the countries we were assisting. It was for this reason, said Governor Stassen, that he had been so concerned with assistance to build up the Tata enterprises in India. Secretary Humphrey said that of course he was not arguing that we should sit still and do nothing. We should, however, move in the direction of freedom of the individual and private enterprise in the countries we were assisting rather than to support government control of industry.

Mr. Allen Dulles pointed out that it was going to be very hard for the United States to compete with cheap Soviet money as had been shown by our attitude toward a loan to the Tata interests in India. The President said that there was perhaps one comforting thought that might be drawn from this gloomy picture. A country which has developed some degree of industrialization is much more prone to revolt than a country which still is based on a primitive agrarian economy. History proved this point. Governor Stassen added that a country which has developed a reasonable degree of industrialization is much more likely to evolve than a country whose economy remains basically agrarian. Secretary Wilson added his opinion that the best thing that Russia could do for the United States would be to manufacture and distribute five million automobiles to the citizens of the U.S.S.R.

Mr. Streibert said that he felt constrained to point out that in our dealings with the Asian people, we were concerned with ideas just as much as with pure economics. The Soviets had been assiduously and successfully planting in Asia the idea that Communism was the wave of the future and that capitalism was dying. Mr. Streibert believed that we would derive more profit from our aid programs if we kept in mind, in connection with them, the need of supporting the ideals of free enterprise and enlightened capitalism. We must not minimize the impact of ideas on the minds of the people of Asia.

Mr. Allen Dulles pointed out that regrettable as it might be, most of the free countries of Asia have such primitive societies and governments that there is no private enterprise which can be developed and supported by U.S. assistance programs. Agreeing with Mr. Dulles, the President observed that of course we have got to start with what we have got. We must try to bring the patient along. We cannot let these Asian nations go down the drain and be swallowed up by the Soviet Union while we are engaged in a campaign to promote the ideals of free enterprise.

The Vice President observed that from the point of view of his experience in the Asian countries, there was one point worth bearing [Page 67] in mind. One or another of the great powers is certainly going to develop the backward nations of Asia. Unless, therefore, the United States assists these countries (trying as far as possible to develop private enterprise), the Soviets will do it instead. If this latter happens, the assisted country first becomes an economic satellite of the Soviet Union and shortly thereafter a political and military satellite. The Vice President concluded by stating his agreement with the President that the United States would have to work in Asia with what it found there. This might mean that we would have to assist in the development of government-controlled enterprise rather than to work with a free enterprise system as we would naturally prefer.

After this discussion Mr. Allen Dulles indicated that there were one or two more points to be covered in his intelligence briefing. He wished to point out that the Soviet foreign assistance program would henceforth be run by a semi-autonomous office directly under the U.S.S.R. Council of Ministers. Mr. Dulles believed that this step was of great significance.

Mr. Dulles also pointed out that the Soviet Ambassador to Brussels had at last “wangled” an invitation from the Belgian Government to make a tour of the Belgian Congo. Mr. Dulles thought that Admiral Strauss would be particularly interested in this development.

After Mr. Dulles had commented briefly on Soviet offers of economic assistance to Libya, the Sudan, and to the Latin American Republics, the President said he wished to put a question to the National Security Council. Why did the United States not send high-level missions of our own country to visit the same countries that had been visited by these Soviet missions? We could show how good we were in this fashion and correct the false impression given by the Soviet visitors.

As the final item in his intelligence briefing, Mr. Allen Dulles said that there were widely confirmed reports that the Soviet Union was trying to use Finland as a lever to create a Scandinavian Federation. The Soviet objective was evidently to get Denmark and Norway out of NATO and Mr. Dulles doubted whether this maneuver would attain the objective.

The National Security Council: 2

Noted and discussed an oral briefing on the subject by the Director of Central Intelligence with specific reference to the recent trade and technical assistance agreements between Yugoslavia and [Page 68] the Soviet bloc, the whereabouts of Marshal Bulganin, the basic features of the latest Soviet 5-year plan, the recent Soviet approaches to the underdeveloped countries of Asia, Africa, the Middle East and Latin America, and to current Soviet maneuvers designed to create a Scandinavian Federation outside of NATO.
Noted and discussed a statement by the Secretary of State on the importance of adequately appreciating and dealing with the serious challenge which Soviet industrial progress posed for the United States with respect to the Soviet impact upon, and avenues to penetration of, the underdeveloped countries of the world, particularly in Asia.

[Here follow items 4–6.]

S. Everett Gleason
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared on January 19 by Gleason.
  2. Paragraphs a–b that follow constitute NSC Action No. 1505. (Department of State, S/SNSC Files: Lot 66 D 95, Records of Action by the National Security Council, 1956)