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

9. Memorandum of Discussion at the 267th Meeting of the National Security Council, Camp David, Maryland, November 21, 1955¹

Maryland, November 21, 1955

[Here follows a paragraph listing the participants at the meeting.]

1. Significant World Developments Affecting U.S. Security

The Director of Central Intelligence referred briefly to growing Communist pressures on Berlin, and to the likelihood that new French elections would now be postponed from December to some time between January and March, 1956.

Mr. Allen Dulles then referred to the question asked by The Vice President at the previous meeting of the National Security Council, as to why, with much smaller resources than were made available by the U.S., the Soviet programs for assistance to underdeveloped countries seemed to make a more substantial impact on the governments and peoples of these countries than the larger U.S. programs. Mr. Dulles asked the President’s permission to read his answer to The Vice President’s question. He singled out the issue of the former colonial status of many of the underdeveloped countries as providing part of the explanation. Another part was the inferiority complex which many of these countries displayed in their dealings with the United States. Mr. Dulles then pointed out that the Communists were very astute in their approach to the governments of these backward states. They were careful to refrain from the use of such adjectives as “backward” and “underdeveloped”. Moreover, they had more flexibility than the U.S. in their approach. They were not required to ask for a quid pro quo in return for their assistance. Nor were they hampered by legislation such as our Battle Act.² They were willing to accept almost any kind of repayment, including repayment in soft currencies, which they then used to develop their subversive program in the country in question.

Mr. Dulles also pointed out that large elements in the new world-wide Soviet program of assistance to underdeveloped countries consisted at this time of promises rather than of actual deliveries. Beyond this, in explanation of the Soviet success, Mr. Dulles said that the Soviet program took account of the special circumstances which existed in a particular underdeveloped country. The pattern of trade also played a role; for example, the Soviets appeared happy to help Burma dispose of its consistent rice surpluses. Finally, and perhaps most important, Mr. Dulles restated the thesis that many of these underdeveloped countries had been enormously impressed by what the Soviet Union had accomplished, virtually unaided, in developing its industrialization over a very brief period of time. Since this success was largely attributed to the Communist system, the governments of many underdeveloped countries drew the deduction that a Communist system would likewise prove most efficient in accomplishing their own industrialization. It was also plain that many of these countries believed that they could play off Soviet and U.S. assistance against one another.

Mr. Dulles concluded his remarks on this subject by pointing out how difficult it was to impress on the states in question the dangers of Soviet penetration through the agency of alleged assistance programs.

Mr. Dulles concluded his intelligence briefing with remarks on the difficult situations confronting the governments of the ABC powers in Latin America.

The National Security Council:³

Noted and discussed an oral briefing on the subject by the Director of Central Intelligence, with specific reference to the situation in Berlin; developments in the French electoral situation; the Soviet assistance program to underdeveloped countries; new rail communications between the Soviet Union and Communist China; and the situations in Brazil, Argentina and Chile.

2. Report by the Secretary of State

[Here follows Dulles’ report on the Geneva Conference, Germany and NATO, the Baghdad Pact meeting, and his visits to Spain, Italy, and Yugoslavia.]

Secretary Wilson said that he had a certain number of things to talk about, but he was not sure that this was the time to bring them up. Important budgetary decisions would have to be made in the next three weeks.

The President, in response to Secretary Wilson’s statement, said that it would be well to bear in mind the old adage, “Be not the first by which the new is tried, nor yet the last to put the old aside.” While, said the President, he could see a lot in what Secretary Wilson and Admiral Radford had said to him the last time they saw him in the hospital at Denver, he was still convinced that the Administration had the means at hand to make budgetary cuts in the Defense Department if we actually had the courage to go ahead and make these cuts. For example, continued the President, do we really need to have as much air and sea lift as we think we need to have in order to transport our forces rapidly to various trouble spots?

Secretary Wilson then said that what troubled him with respect to our national security policy, was the fact that we had taken on such a “lot of losers” as allies and clients—for example, Korea, Formosa, and Indochina. The Near East, in Secretary Wilson’s opinion, was on the contrary an area of real value to the United States which some day might become self-supporting.

Secretary Hoover alluded to the fact that in a very few days the over-all ceiling figures for the foreign aid item in the FY 1957 budget must be determined. Would the President care to make any comments on the general level of our foreign assistance programs for FY 1957?

The President replied that he had one idea at least on this subject. When Mr. Hollister had finally figured out what he thought he really needed, he ought to ask for $500 million extra. Our foreign assistance programs were, in the President’s opinion, “the cheapest insurance in the world”. The want of a few million bucks had put the United States into a war in Korea. Accordingly, the President counselled that we keep a fund handy and available into which we could move rapidly if an emergency need arose. Mr. Hollister commented that he had been trying to achieve the President’s objective by setting aside reserve funds in the present operations of his agency, and that he had been much criticized for so doing.

Director Hughes commented that the Administration might possibly get by with a much smaller budget for foreign aid if we could somehow achieve greater flexibility in the implementation of our foreign aid program.

Secretary Wilson observed that it was the view of the Joint Chiefs of Staff that a figure of $2.7 billion was going to be needed in FY 1957 if we were to maintain our military assistance program at approximately present levels. Indeed, it was the view of Admiral Radford that this was insufficient, and that we ought to go up to a figure of $3.4 billion. Secretary Wilson said that he himself was inclined to feel that a figure of $3 billion might perhaps be the best.

The President then called for last year’s over-all figures, and when these had been supplied said that when the new figures were finally available they should be laid out on the table for discussion. Meanwhile he was extremely anxious to use up the backlog of funds available for foreign aid. It was such a big backlog.

[Here follows discussion of planned defense expenditures and the question of balancing the Federal budget.]

The Vice President then referred to the point earlier mentioned as to the need for flexibility in the execution of our foreign aid programs. He likewise pointed out the apparent flexibility of the similar Soviet programs, which had considerable impact although there was comparatively little money involved. Was there not, inquired The Vice President, a real possibility that as the Soviet program moved ahead the United States would be obliged to think in terms of a much larger foreign assistance program? While the concept of the balanced budget was fine, The Vice President wondered whether in actuality the State Department would not feel compelled to ask for larger expenditures in the field of foreign assistance.

In response, the President commented that gaining our objectives in this area was not always a matter of money. See what the Soviets had done with their shipment of arms to Egypt. While the President said he was ready to do anything sensible, he actually believed that we never emphasized sufficiently the contribution of our information service (USIA). The President believed that we could use a little more money for this activity much more effectively than we could use a lot more money on our foreign aid programs. And, asked the President, how about loans instead of grant aid? Amidst laughter, The Vice President pointed out that many of these loans hurt Secretary Humphrey just as much as grants.

At this point, Secretary Wilson raised again the problem that he had outlined at the previous meeting of the National Security Council—namely, the socializing process which we build up in foreign countries as a result of conferring our aid on the governments of the countries which were its recipients. Agreeing heartily with Secretary Wilson, Secretary Humphrey said that the Russians had not done 10% as much socializing in the world as the United States. Secretary Wilson added that this was, in his opinion, a very serious problem, and that our assistance conferred on governments rather than on individuals in foreign countries might ultimately prove to be self-defeating.

Secretary Dulles broke in on this phase of the discussion to say that he believed that there was merit in the point that The Vice President had made with respect to the likelihood of a need to increase the size of our foreign aid programs. The scene of the battle between the free world and the Communist world was shifting. The United States and the free world must be prepared henceforth to meet much more serious Soviet economic competition. On the other hand, we cannot let ourselves be placed in a position where we can be “busted” by being obliged to meet and cap every Soviet offer of assistance all over the world. Being obliged to equal or exceed each Soviet popularity bid would be hopeless for the United States.

The President, referring to Secretary Wilson’s concern over the socializing role of U.S. aid and assistance to foreign countries, said he felt compelled to point out that the fact that certain countries-such as Denmark, Norway and Sweden—were far more socialized than the U.S. (and, said the President, smiling, there’s a degree of socialization here also), did not mean that these countries were inimical to the United States. They were, indeed, among our best friends. Continuing, the President said the fact of the matter was that every foreign country could develop a government which, while more socialized than we might like, nevertheless succeeded in avoiding dictatorship and totalitarian methods. This was not necessarily a drawback from the U.S. point of view. Accordingly, the President indicated that he was not inclined to think that Secretary Wilson’s point was of critical importance to our policies at this time.

Secretary Humphrey said that what we ought to try to do was to stimulate private industry in those countries which were recipients of U.S. military and economic assistance. Admittedly, however, this was a very difficult course of action. At this point, Mr. Anderson reminded the Council that the whole subject of United States military assistance world-wide was scheduled for consideration by the National Security Council at the meeting to be held on December 8. The Vice President observed that when this subject was reported on to the National Security Council, he hoped that those making the presentation, and especially Mr. Hollister, could provide some idea of the balance between what the Soviets are doing in the field of foreign assistance compared to what the United States is doing. Such comparisons, directed to certain key countries, would be much more useful than the usual rundown on the status of our aid programs.

The National Security Council:⁴

a. Noted and discussed an oral report by the Secretary of State on:

(1) Aspects relating to the Foreign Ministers Conference of special interest to the National Security Council, with particular reference to Soviet actions at the Conference and the German situation.

2) His trips to Spain, Italy, and Yugoslavia.

3) His analysis of the Near Eastern situation.

b. Noted the President’s expressed conviction that European integration, with West Germany playing a part, would be a major contribution to world peace; that a unified Europe (achieved by strengthening and expanding into other areas the concepts of NATO, the Brussels Pact, and the Coal and Steel Community) would constitute a focus of power, in addition to the U.S. and USSR, which would greatly advance the material and moral well-being of European peoples and the security interests of the United States; that encouragement of this concept in speeches by Council participants would be an appropriate way of seeking the objective of European integration.

c. Discussed the general problems in the development of Fiscal Year 1957 programs for military assistance, economic aid, foreign information, and U.S. military forces; and agreed to continue discussion of these programs at Council meetings scheduled for December 8 and 12.

Note: The action in b above subsequently circulated to all Council participants.

S. Everett Gleason

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared on November 22 by Gleason.
2. Reference is to the Mutual Defense Assistance Control Act of 1951 (Public Law 213), sponsored by Congressman Laurie C. Battle of Alabama and enacted October 26, 1951. It provided for the suspension of U.S. economic aid to nations supplying strategic materials to Communist nations. For text, see 65 Stat. 644.
3. The paragraph that follows constitutes NSC Action No. 1479. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council, 1955)
4. Paragraphs a–c that follow constitute NSC Action No. 1480. (Ibid.)