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

40. Memorandum of Discussion at the 348th Meeting of the National Security Council, Washington, December 12, 1957¹

Washington, December 12, 1957

[Here follow a paragraph listing the participants at the meeting and item 1.]

2. U.S. Security Effort Overseas, FY 1958 and FY 1959 (NSC Action No. 1812;² NSC 5707/8;³ Memo for NSC from Executive Secretary, subject: “U.S. Security Effort Overseas, FY 1957”, dated November 29, 1957;⁴ Memo for NSC from Executive Secretary, subject: “U.S. Security Effort Overseas, FY 1958 and FY 1959”, dated December 9, 1957)⁵

Mr. Cutler delivered a report on the U.S. Security Effort Overseas, FY 1958 and FY 1959, following an outline (copy of which is attached⁶ to this memorandum). When Mr. Cutler had reached his discussion of trends which could be perceived after analysis of the charts and data which he had presented, the President expressed surprise that we were apparently asking for less money for the mutual security programs in FY 1959 than we had earlier agreed that we needed.

With respect to Mr. Cutler’s comments on the development loan fund, The Vice President inquired whether we had not previously argued, in defense of this development loan fund, that it involved an increased trend toward loans for foreign assistance coupled with a decrease in grant assistance.

(At this point the President temporarily left the meeting.)

The Vice President continued by pointing out that we must make this point clear to the Congress because the totals for our military and economic assistance remained about the same, and this would require explanation to the Congress.

Mr. James Smith, the Director of ICA, predicted that loans would probably be down in the next fiscal year, and that grants would remain about the same.

(At this point Secretary Dulles also left the meeting.)

Mr. Cutler then said that Mr. Smith wished to make a statement at this point. Mr. Smith explained that he wished to speak to the economic rather than the military side of the mutual security program. He pointed out Khrushchev’s challenge to the United States some three weeks ago, and Khrushchev’s statement that the Soviet Union would soon surpass the United States in competition in the field of peaceful production. There was clear evidence, continued Mr. Smith, that Khrushchev has put this program to work. After citing various instances of Soviet assistance and activities in the underdeveloped countries, Mr. Smith also pointed out the role of Communist China and the Satellites. He also listed briefly what assistance was being given by the Soviet Union to non-Satellite nations in terms of credits or other forms of assistance. He believed that this economic competition from the Soviet Bloc posed a very serious challenge to the United States and the Free World. He accordingly said he strongly supported the figures just presented by Mr. Cutler for the Mutual Security Program for FYs 1957, 1958 and 1959. Beyond this, Mr. Smith recommended that the United States call for the establishment of a long-term international economic corps for peace, whose function would be to assist the less-developed nations. The National Security Council must respond to the challenge offered by Khrushchev.

When Mr. Smith had finished his statement, Mr. Cutler reverted to the question he had posed at the end of his presentation—namely, the desirability of asking the Department of Defense and the Joint Chiefs of Staff to undertake a study with respect to our military assistance programs in the period 1960–65. He first asked Secretary Quarles to comment on the desirability of such a study.

Secretary Quarles replied that the United States must certainly look ahead, but that there were very great uncertainties in so doing. For example, we do not know what the Soviets will be doing in the period 1960–65, although whatever they did would obviously affect what we do. Another factor was the progressive improvement in the economies of our allies and, accordingly, of the portion of the burden which these allies could take over from the United States. Perhaps the best way to approach such a study as that proposed by Mr. Cutler would be to do it in terms of a probable range. In any event, the Department of Defense would do its best in what would certainly be a very complicated task.

Mr. Cutler pointed out that of course he did not expect complete accuracy in a study covering future years, but was seeking only general orders of magnitude. He then asked Admiral Burke, as Acting Chairman of the Joint Chiefs of Staff, for his views on the feasibility of the proposed study.

Admiral Burke pointed out that it would be very hard for the Joint Chiefs of Staff to produce anything very meaningful. The assumptions chosen for such a study would almost certainly provide the answer to the problem. In order to make a meaningful study we would have to know more than we possibly could know about a great many factors.

In view of Admiral Burke’s comments, Mr. Cutler wondered whether, instead of calling for the study he proposed, the Council could ask the Department of Defense and the Joint Chiefs of Staff to tell the Council what might be accomplished in the way of a useful study.

The Vice President expressed doubts that anything useful could be anticipated from the study proposed, and went on to state that it had occurred to him, in looking at the charts and the data which Mr. Cutler had used, that the matter of greatest concern to the United States in the future was where emphasis should be placed as between military and economic assistance. In the first place, said The Vice President, it seemed clear to him that the Soviet Union was now placing much more emphasis on economic programs than it had previously done. From our own standpoint, we must not allow ourselves to be so obsessed with the patterns of the past that we were incapable of changing the pattern and changing the emphasis. The Vice President believed that we must give much more thought and attention to economic assistance and, wherever possible, less to military assistance. He added that of course in certain countries, like Korea and other areas where the Chiefs of Staff felt that military aid was needed at a high level, we could not change this emphasis. On the other hand, there seemed to be areas where we could increase our economic assistance, and in general economic assistance was less costly than military assistance.

Admiral Burke commented that the Joint Chiefs of Staff would agree with the point made by The Vice President. The latter went on to observe that if we were not very careful in our analysis of the facts and figures which had been presented today, there was danger that we would continue in our old ruts and be unwilling to try out any new paths. The economic side, he said, was the wave of the future.

Mr. Allen Dulles confirmed the view that the Soviets were shifting emphasis to economic from military assistance. He added that in many underdeveloped countries—such as Egypt and Syria—the receipt of armament had reached, so to speak, the saturation point. Such countries had already received larger armaments than they could effectively support or use.

Secretary Quarks commented that, along the lines suggested by The Vice President, and as one analyzed our military assistance programs, one finds that a large part of the pressure for military assistance from foreign countries derived from local tensions and local conditions rather than as a response to our great problem of containing Communism. To Secretary Quarles this meant that the United States should make a greater effort to quiet down local tensions. If we succeeded in doing this we would be able to cut down on our military assistance programs and increase the amounts available for economic assistance.

The Vice President commented that another factor which had always tended to emphasize our military assistance programs over our economic assistance programs, was the comparative ease of selling our policy of military assistance to the American people and the Congress, and the difficulty of selling our program of economic aid.

At this point Mr. Cutler suggested that the Council request the Department of Defense and the Joint Chiefs of Staff to see what they could suggest in the way of a study and report to the Council before they actually undertake any study.

Secretary Herter pointed out that in the UN today the United States was going to propose a greatly expanded technical assistance fund for economic development.

(The President returned to the meeting at this time, 10:30 a.m.)

Mr. George Allen, Director of the U.S. Information Agency, said he felt that many people in the world believe that all our answers to world problems are military answers. This was a mistaken view which we must nevertheless correct. At present we give too many opportunities to Soviet propaganda describing us as warmongers. To illustrate his point, Mr. Allen read excerpts from a speech which was being made today by the Secretary of Labor. Mr. Allen pointed out that he was far from insisting that the public relations factor was the governing factor; but it was certainly an important factor.

The President commented that in terms of our setting forth our military capabilities before the world, we were damned if we did and damned if we didn’t. He was not sure that Mr. Allen’s point was correct. The problem was how to inform our own people in a logical way of our military capabilities, without at the same time scaring our allies to death.

Mr. Allen replied that there was even an unfortunate impression going around abroad that the President was going to the forthcoming NATO meeting in order to beg our allies to permit us to station atomic weapons on their soil. The President answered that this, of course, was completely erroneous. We were only trying to assure our allies of our support if they were attacked.

The Vice President, addressing the President, said that the President could give assurance on the score of our strength in very short order at the NATO meeting. But it also seemed to The Vice President that the great appeal that the President exerts in the world today is that he was considered to be a man of peace. Accordingly, The Vice President thought that the President’s greatest contribution would consist in a re-affirmation of the peaceful objectives and purposes of the United States. Mr. Allen said that he could not agree more.

The National Security Council:⁷

a. Noted and discussed an oral presentation on the subject by the Special Assistant to the President for National Security Affairs; in the light of the enclosures to the reference memoranda of November 29 and December 9, 1957, and of the statement of issues regarding the Mutual Security Program which had been raised by Mr. Hollister, copies of which were distributed at the meeting.

b. Noted that the Department of Defense and the Joint Chiefs of Staff would consider and report to the Council on the feasibility of making a study along the lines suggested at the meeting by the Special Assistant to the President for National Security Affairs. Taking into account the tremendous changes in weapons technology and the resulting problem of modernization and provision of advanced weapons, the suggested study would (on the assumption of a continuation of present basic policy) review the missions, force levels and equipment programs for the nations receiving U.S. military assistance in the period 1960–65, and estimate the general order of magnitude of the probable costs thereof.

c. Noted an oral statement by the Director, International Cooperation Administration, on the need for the United States to respond to the Khrushchev challenge in “the peaceful field of trade”, and the Director’s proposal to call on all of the nations of the world to establish a substantially more effective international economic corps for peace. (This proposal will subsequently be submitted in writing for appropriate consideration.)

Note: The action in b above, as approved by the President, subsequently transmitted to the Secretary of Defense for implementation.

The action in c above subsequently transmitted to the Director, ICA, for submission of a written proposal.

[Here follow items 3 and 4.]

S. Everett Gleason

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret; Eyes Only. Prepared on December 13 by Gleason.
2. NSC Action No. 1812, concerning the U.S. security effort overseas during fiscal year 1957, was taken at the 342d meeting of the National Security Council, October 31, and approved by the President the same day. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council, 1957)
3. NSC 5707/8, “Basic National Security Policy,” June 3, 1957, was approved by the President, June 3.
4. Not found in Department of State files.
5. Not printed. (Department of State, NSC Files: Lot 67 D 543, NSC 5707 Series)
6. Not printed.
7. Paragraphs a–c that follow constitute NSC Action No. 1828. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council, 1957)