Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

271. Memorandum of a Conference With the President, White House, Washington, July 29, 1957, 9:30 a.m.¹

Washington, July 29, 1957, 9:30 a.m.

OTHERS PRESENT

• Mr. Gordon Gray
• Mr. Minnich

Mr. Gray referred to the Symington hearings on stockpiling.² He said that the Administration, in its testimony, would not attempt to avoid disclosing the three-year basis now in force for stockpiling. He expected that the hearings would pursue the question as to why and how the former five-year policy had been altered after having been set by the President and Cabinet Committee in 1954. The President agreed that it would be in order for Mr. Gray to point out that appropriate further consideration had been given to the matter, that the change had been fully coordinated and approved by the President.

Mr. Gray then raised the problem connected with the rights of several aluminum companies as set forth in contracts signed in 1951 to offer quantities of aluminum to the Government at market prices. Mr. Gray made clear that this provision had been put into contracts at a time when the Government felt it necessary to encourage expansion of aluminum production and the companies needed some assurances for the future. As a sort of quid pro quo, the Government had the right to call on the companies to supply it with necessary quantities of aluminum.

In response to the President’s question, Mr. Gray stated that these rights would expire mostly in FY 1958 but that in some instances they might continue until December 1958.

Mr. Gray stated that he had to appear before a Joint Committee on July 30th to discuss this matter and how the Government would handle the situation. Mr. Gray indicated that the current budget would not permit Government purchase of these offerings for the stockpile at this time, particularly in view of the change from a five-year base to a three-year base with the three-year level already attained.

Mr. Gray noted a belief by some officials that the Government should reject these offerings and let the aluminum companies go to court to seek fulfillment of the contract provision if they so desired. His own feeling was that the Government should continue to discuss this matter with the companies, seeking some mutually satisfactory adjustment of the contract.

The President felt that Mr. Gray should make a straightforward presentation to the Committee, stressing the changed situation between 1951 and 1957, and particularly the changed basis for estimating our probable requirements in the event of war. The President could not see at the moment how the aluminum could be bought if it were not budgeted, yet he did not want the Government to lay itself open to a charge of bad faith by an out-of-hand rejection. He believed discussions with the companies should continue.

[Here follows discussion of unrelated subjects.]

L.A. Minnich, Jr.³

1. Source: Eisenhower Library, Whitman File, Miscellaneous Records. Secret. Drafted by Minnich.
2. Senator Stuart Symington was a member of the Armed Services Committee and Chairman of the Subcommittee on National Stockpile and Naval Petroleum Reserves.
3. Printed from a copy that bears this typed signature.