Foreign Relations of the United States, 1955–1957, National Security Policy, Volume XIX

86. Memorandum of Discussion at the 293d and 294th Meetings of the National Security Council, Washington, August 16 and August 17, 1956¹

Washington, August 16 and August 17, 1956

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

1. The Fiscal and Budgetary Outlook Through FY 1959 (NSC 5609;² Memo for NSC from Executive Secretary, subject: “Status of National Security Programs and Fiscal and Budgetary Outlook Through FY 1959”, dated June 13, 1956³)

Mr. Anderson introduced Items 1 and 2 together. He said that the presentations today and tomorrow were designed to give the Council the clearest possible view of the annual cost and projected trend, over the next three years, of programs developed in the departments to carry out the objectives in NSC 5602/1⁴ and in related NSC papers. He recalled that on June 4 the President had directed that the annual status reports include an estimated projection of each program, through FY 1959, deemed appropriate to meet approved national security objectives. Thus each agency has described what it believes to be necessary to carry out its particular policy objective; but the total requirement for all these programs had not heretofore been matched against total resources available.

Mr. Anderson also recalled that the President requested Treasury and Budget, on the basis of agency figures, to prepare a report on the entire fiscal and budgetary outlook through FY 1959, to enable the Council to reappraise the emphasis to be given the various elements of national strategy.

Mr. Anderson noted that on June 15 the Council had considered a proposed continental defense policy (NSC 5606) which would have involved raising the current annual expenditure of $3 billion to nearly $12 billion by FY 1960. The Council had deferred action on continental defense pending consideration of the 3-year projections of all national security programs without awaiting the Fall status reports.⁵

Mr. Anderson said that the 3-year projections were embodied in NSC 5609, except for the military program, which would be presented orally. Today all programs except the mutual security and military would be presented in order in which they appeared in NSC 5609.

Mr. Anderson noted that NSC 5609 was not accompanied by Planning Board recommendations. It was thought that Council discussion of the presentations would be guidance for such future review of policies and relative emphasis as might be directed in the light of the presentations. Mr. Anderson then called on the Director, Bureau of the Budget, for the first presentation.

The Director, Bureau of the Budget, presented the fiscal and budgetary outlook through FY 1959.

The President noted that the Director had indicated that the military figures used in his presentation had not been screened by the Secretary of Defense. The President said the cart was before the horse, and wondered why it should be necessary for the National Security Council to go over estimates which the Secretary of Defense had not screened. Mr. Anderson said that this meeting had been called so that subsequent steps in preparing national security programs could be related to the guidance which would be forthcoming in the discussion here. This guidance would indicate the relative emphasis to be placed on various programs before the estimates were in final form. The President wondered whether such guidance could be forthcoming until the Secretary of Defense had coordinated the military estimates. He said there must be some duplication in the estimates submitted by the Services. Mr. Anderson said that programs developed in the Services are related to NSC objectives, and pointed out that a breakdown would show not only the Service estimates, but the areas and functions to which the programs were related. Thus the further steps to be taken in programming could take into account the President’s broad concepts of national strategy indicated in the light of the current trends and estimates.

Secretary Humphrey felt it would be useful to consider the broad trend of expenditures. A proposed increase of $10 billion based on present programs would seem to indicate that it was time for the Council to realize that the fiscal trend following the adoption of national security programs was always upward. This group, he said, advises the President.———⁶ The President, interrupting, said that the Council did not advise him as to whether we should buy a new aircraft carrier or a new airfield. Yet the Service estimates might include both.

Mr. Anderson noted that the presentations on today’s agenda had been called for as a result of the Council’s consideration of the continental defense paper. The $12 billion figure in the latter paper was the basis for the Council’s decision on June 15 to consider 3-year projections in the Council on all programs related to national security objectives before acting on the continental defense paper.

The President said that as far as the Council was concerned there were not three Defense Departments, but only one. He still wondered why the Council should tackle the Service estimates.

Secretary Humphrey said that basic NSC policies were pushing us into this kind of thing. He felt that these policies needed review.

Secretary Wilson said he had earlier in the week raised the question whether a Council meeting on this subject was necessary, because Defense had little more to present than it had presented previously.

The President said that earlier presentations by Defense had made it clear that the cost of everything was increasing. He said that every time a paper came up containing a proposed expenditure figure, such as $54 billion, the figure could later be quoted, and any reduction of the figure could be interpreted as a cut in national defense. He added that our military strength must be related to our economic strength, so that our national security programs can be continued for as long as necessary. But the question is, where do we get the money?

Secretary Humphrey felt that it was pertinent to examine what the basic policy papers require. He said a $10 billion increase in expenditures was obviously impossible, and a $2 billion increase was equally impossible. The expenditure trend was in the wrong direction; it should be down and not up. If expenditures increased he would have to resist proposals for tax reduction. If taxes were reduced, the reduction might be cancelled out two years hence by tax increases. The basic problem is: Should we follow the trend of taking on every program, or should we go back to the “new look” of three years ago, when the basis of our security was thought to be the deterrent striking power of the Air Force? All that an expenditure of $44 or $54 billion for national security buys is a one-year deterrent to war. At the end of each year we have to start over and buy another year’s deterrent; in effect, last year’s expenditure goes on the scrap heap. Our expenditures for national security each year are about equal to the assets of 25 of the largest corporations in the United States. These corporations, with assets of $54.6 billion, produce 95% of the country’s autos, half its steel, 82% of its telecommunications, 75% of its heavy electrical equipment, half of its freight car movements, and 35% of its agricultural machinery, and include also the New York, Chicago and Pacific Coast utility companies.

Secretary Humphrey felt we could not spend $44 to $54 billion every year over a period of years for unproductive purposes without destroying our economic system. If the Council did not effect some reductions, the Soviets might be able to defeat us without firing a shot, because our economy will suffer a depression. He felt that we had been led astray in matters of national security by scientists and by vested interests—military, political and business vested interests. Since it is difficult to make a big saving in any one year, we must start making savings immediately and get the job done by small bites. If expenditures were reduced to $42 or $38 billion while economic activity is increasing, then we could reduce taxes and absorb the consequences.

The President said we had a few very basic policies. For example, we wanted to retain our retaliatory power as a deterrent; we wanted to have a good continental defense as part of the deterrent; we wanted to support the military strength of our allies in Western Europe and Asia; and we wanted to ensure that friendly nations were able to make a living. If you eliminated these policies, he said, where would you be? The NSC establishes these basic policies, but does not say how much or what it will take to carry them out. However, we have to do some of these basic things or cease to exist. What we want to do is find a Spartan way to carry out our policies. The President said that the proper NSC decision should be on the character of the defense we need. It was then the job of the Department of Defense to tell us what gadgets we should have for that kind of defense. He did not know how much reduction the Secretary of Defense could effect in defense expenditures; until this was known, the Council had insufficient data on which to base conclusions.

Secretary Wilson said he wished to mention a number of points: (1) We have not changed our NATO commitments; (2) the rate at which we build up is important, because “speed-up” programs cost more; (3) the new look policy has not been clarified or completely accepted by the Army. Secretary Wilson said he received incredible estimates from the Services, and that the civilian Secretaries wanted to leave him “holding the bag”. He added that force levels should be considered also. A study had been made concerning the possible reduction of 800,000 men, and this had leaked out.

In connection with Secretary Wilson’s first point, the President said he would change NATO commitments if necessary, but so far he had wanted to avoid undercutting Adenauer. In regard to the third point, he thought probably the Navy hadn’t fully accepted the new look policy either. As far as the 800,000-man reduction was concerned, the President wondered whether it was wrong to hope that the forces would eventually total 2.5 million.

Secretary Wilson said it was not wrong to hope for a 2.5 million-man force, but no great reduction of 800,000 at one time was possible.

The President asked whether the Services should prepare programs based on JCS decisions in Puerto Rico.⁷Admiral Radford said this had been done. The President said he understood that under the Puerto Rico program we would be spending $38 to $40 billion on defense. Now the Services seemed to be saying that we should be spending $48 billion.

Secretary Wilson said he had suggested to the Joint Chiefs of Staff that their Puerto Rico estimate was low, since it did not take full account of the increasing cost of weapons and of research and development. He thought it would be impossible to maintain 2,850,000 men with expenditures of $48 to $40 [$50?] billion. He felt that forces must be reduced if expenditures were to be cut. He added that Defense was about to make a complete review of its projections. However, he was worried about a “leak” in a political year.

The President said that political year or not, we could not let people run wild before Congress.

Secretary Humphrey said that in Washington we hear the vested interests speak, but around the country the people are bitter about big expenditures.

The National Security Council:⁸

Noted and discussed a presentation on the subject by the Treasury Department and the Bureau of the Budget, on Section A of NSC 5609.

2. Trends in National Security Programs Through FY 1959 (NSC 5609; NSC 5610;⁹ Memo for NSC from Executive Secretary, subject: “Status of National Security Programs and Fiscal and Budgetary Outlook Through FY 1959”, dated June 13, 1956; NSC Action No. 1574)

Mr. Anderson said that $10 billion of the $54 billion total was attributable to elements of national security policy other than the defense program. Presentations would now be made on these other programs, beginning with the Atomic Energy Program.

The Atomic Energy Program was presented by the Chairman, Atomic Energy Commission.

At the conclusion of Admiral Strauss’ presentation, Secretary Wilson said that Government activities appear to have a life of their own: they double in ten years, or, if the advice of scientists is accepted, in two years. He had stopped development of nuclear aircraft once, but now the project was going again and would waste a lot of money. It was even proposed that a plane weighing 600,000 pounds be built, although it would in his opinion be of little use as a weapon.

[2 sentences (54 words) not declassified]Secretary Humphrey wondered whether we weren’t building nuclear weapons beyond the requirements. Admiral Strauss said the large increase in numbers was due to building a great many small weapons which would be widely dispersed. He felt that nuclear weapons were the least expensive weapons in our arsenal. Admiral Strauss added that of course at some time we would have to put on the brakes.

Admiral Radford agreed that the numbers of nuclear weapons had increased because of emphasis on smaller weapons and wide dispersal. He added that this spring we had trouble in Congress resisting a bigger program. Secretary Humphrey said we must get accustomed to fighting the pressure of vested interests which wanted larger programs. Admiral Radford said we were dealing with great intangibles; we must make guesses and take calculated risks. The President said the time would come when we would have to fight Congress to get enough money. He was sure that the present period, when the Congress gives us more than we want, would be of short duration. The President said he remembered the time when Congress wouldn’t permit one division to stay in Korea, despite the pleas of the military, and look what happened. The President said that of course there was no exact answer to some of these problems, but that we did want to find out where money was being wasted.

Secretary Hoover asked how much nuclear material now being used for military purposes could be used for peaceful purposes if a disarmament agreement should be concluded. Admiral Strauss replied that all the nuclear material was intact, there being no perceptible deterioration in our lifetime, so that it could be used for peaceful purposes in the future.

Secretary Wilson wondered why it was necessary to push the program of atomic power plants, and thought that perhaps some indirect subsidization was involved. In response to a question from Secretary Wilson, Admiral Strauss said the time was not far off, perhaps only five years away, when atomic power reactors could compete economically in high-cost areas with power plants using fossil fuel.

The Mobilization Program was presented by the Director, Office of Defense Mobilization.

Secretary Wilson asked whether the titanium program was not being pushed too hard. He said we couldn’t do the proper job for the country if highly scientific things were pushed without regard to cost. Secretary Humphrey said research could be ruinous if it got out of hand. Secretary Wilson thought that some of the ideas behind the stockpile were as dead as NATO commitments. He felt we wouldn’t need materials for a long war in this nuclear age, and that the whole mobilization program should be reviewed. Considerable money was being wasted on an outdated mobilization base concept. Dr. Flemming said that some of his programs were based upon military requirements, and that he would be glad to take another look at them in the light of the revised military programs. He added that the program he had presented reflected modifications in mobilization policy agreed on by the Council two or three months ago.

The Civil Defense Program was presented by the Federal Civil Defense Administrator.

At the conclusion of Governor Peterson’s presentation, the President asked whether there were any comments, or whether everyone was scared to death. He asked Mr. Allen Dulles what the USSR was doing in civil defense. Mr. Dulles replied that he didn’t think the Soviets were doing very much, but he would look into the question.

The President wondered how far we could go until we reached a state of complete futility. He knew the United States could withstand a heavy attack, but he didn’t know how much it could take. With reference to the figure of $13 billion for shelters, the President thought it would be easy to spend $113 billion on this program if we provided really good shelters. In thinking about this problem, he continued, we always reach the point of realizing that an attack on any such scale as contemplated in Governor Peterson’s presentation would result in the paralysis of both sides. He felt the problem was virtually unsolvable. Secretary Wilson reported that someone had said we don’t know what weapons will be used in World War III, but in World War IV everyone will have to use rocks.

Dr. Flemming asked whether there had been any consideration of combining shelters with structures having a peacetime use. Governor Peterson said that the Swedish pattern of building great underground shelters which were also used as garages, had been studied. The $13 billion estimate for shelters might be reduced if shelter construction could be made a joint undertaking with private business. He admitted that shelters cost a great deal of money, but said that it would not be of much use to spend $40 billion for military forces when they could not defend the people of the United States. His conclusion was that war is obsolete and military forces are obsolete, and he thought perhaps the world was losing its sanity. The President said that everyone could agree with the latter conclusion.

Secretary Humphrey said that perhaps shelter construction should be financed by a voluntary tax, with only the sums voluntarily collected being spent. Governor Peterson asked whether anyone would be willing to apply this principle to military programs.

The President said he considered the psychological effects on the people of nuclear weapons developments to be very important. Governor Peterson recalled that a study of this problem was underway.¹⁰

The USIA Program was presented by the Acting Director, U.S. Information Agency.

Director Brundage said he assumed the estimates presented would be reviewed later. The President said that all of these figures would be reviewed through normal budgetary processes.

The Internal Security Program was presented by the Acting Chairman, Interdepartmental Intelligence Conference, as to investigative aspects, and by the Chairman, Interdepartmental Committee on Internal Security, as to the remaining aspects. There was no discussion of this program.

The Foreign Intelligence Program was presented by the Director of Central Intelligence.

[2 paragraphs (9 lines of source text) not declassified]

At this point the President wondered whether the meeting tomorrow should be a meeting of the Council or a small meeting in his office of those most directly concerned with the military programs. He thought perhaps it was not appropriate to have a Council meeting on the military programs until the figures became Secretary Wilson’s figures. Mr. Anderson pointed out that not only the military program, but also the mutual security program, was on tomorrow’s agenda.

Secretary Humphrey asked whether the departments that had made presentations should not review their programs. The President said that none of the programs presented were approved by the Council. He said the agencies devised programs to accomplish basic policy, priced them out, and then tried to get the money from Budget. Then both the agency and the Budget Bureau came to the President. If a policy question was involved, it was referred to the National Security Council. If not, the President decided. The President hoped that no one was laboring under the impression that the programs presented this morning were approved.

Secretary Humphrey said we should start with last year’s expenditure figure and decide how much to reduce from that point. Some such measuring device must be adopted, else there was no limit to the expansion of programs.

The President noted that both the AEC and ODM presentations had revealed large expenditures based on military requirements. Secretary Wilson thought that many agencies sought to base their programs on military requirements as a justification for expansion. He recalled that after the Korean war military expenditures had been reduced by $8 billion, while other expenditures had increased by $6 billion.

The President at this point referred to Secretary Humphrey’s earlier statement that certain governmental expenditures were annually equal to the assets of 25 big corporations. The President thought this analogy striking, but was not sure of its relevance to the problem at hand. Moreover, continued the President, many government expenditures are not unproductive, but go to building up assets such as roads, hospitals and schools.

Secretary Wilson said that the military costs should be given a good looking-over again. Economies possible three years ago might not be possible now, however. The President said that before Korea, military expenditures were $12 to $13 billion a year. Now we had gone up to a new norm in military expenditure, and Congress was temporarily making political hay by giving the Administration more money than it asked for. Secretary Wilson said that each Service wanted to build itself up into the biggest in terms of promotion, prestige, etc. The President said they don’t think of it that way; each Service thinks it can do the job best. Secretary Wilson said he didn’t think events in the world would have turned out differently in recent years if our military program had been 50% greater. The President agreed that once we reach a certain level of deterrence, we don’t need to continue to build up.

Friday, August 17, 1956

Mr. Anderson said that today’s meeting was a continuation of yesterday’s. The Council had heard presentations on all the national security programs except the mutual security and military programs. Today the latter two would be presented.

The Mutual Security Program was presented by the Director, International Cooperation Administration, and the Acting Assistant Secretary of Defense (ISA).

Secretary Humphrey said he didn’t understand how the figure given in the presentation for NATO ($1.8 billion) fitted into the regional figures. Mr. McGuire said that the NATO total had been made up separately because it was interesting; of course, it cut across regional lines—for example, it included Turkey and Greece—and therefore duplicated regional figures.

Mr. Anderson said he wished to clarify a point mentioned by Mr. Hollister. The presentations made yesterday had used expenditure, not program, figures. Director Brundage confirmed the accuracy of Mr. Anderson’s remark.

Secretary Wilson said that in listening to the mutual security presentation he had noted that the lead time for giving away dollars was not as great as the lead time for building planes.

Secretary Humphrey said he understood that the programs presented today, as well as those presented yesterday, were subject to budgetary review and were not being approved by the Council. The President said that was correct, but pointed out that Mr. Hollister had said that the mutual security program expenditures for the next few years were largely fixed because of the carry-over of unexpended funds.

Secretary Hoover pointed out that it was difficult to determine the foreign policy implications of our assistance programs when they had to be planned so far in advance. He understood that the FY 1959 programs were now being planned, although the situation might be entirely different in 1959. The President said it was difficult to make Congress see that our assistance programs ought to be carried on with the greatest possible flexibility and initiative.

Secretary Hoover said it was difficult to stop the assistance machine once it got started. He referred especially to Yugoslavia and Egypt. He said he had recently discovered that 14 Diesel locomotives were destined for Egypt, and unimaginable difficulty had been experienced in getting them out of the pipeline.

Secretary Humphrey asked whether it was not a fact that 75 to 80% of mutual security assistance goes to five places. Mr. Hollister said this was the case if NATO was considered one place. Secretary Humphrey said we were talking about Taiwan, Korea,NATO and Indochina for the most part. The President said that Korea was a particularly difficult case. If Communist Chinese forces were ever withdrawn from North Korea, we might be able to reduce our assistance to the Republic of Korea. Secretary Wilson said the Chinese Communists might leave North Korea if we didn’t support so many South Korean divisions, which were a big burden on the Korean economy. Secretary Hoover said North Korea might reduce its forces if Syngman Rhee would quit making so many “nasty noises”.

Secretary Humphrey then said he had discovered that no one in the United States knows or can find out how much U.S. money, in the form of grants, loans, etc., goes into any given country from all sources. This is embarrassing, especially since the recipient countries know how much they are getting. Secretary Wilson said we are fortunate that no scandals had developed. Secretary Humphrey said the situation was so confused that scandals could not be uncovered if they existed. The President said he believed that if our assistance programs were handled intelligently we would get our biggest bargain per dollar spent. He thought our aid programs were cheaper than buying obsolete military equipment.

The Military Program was presented by the Assistant Secretary of Defense (Comptroller) in the form of 31 charts.

In connection with comparative shipbuilding costs, Secretary Humphrey asked whether naval vessels had achieved an increase in fire power equivalent to the increase in their cost. Admiral Radford said the effective killing power of naval vessels had gone up more rapidly than their cost. Secretary Wilson wondered whether this was a good comparison. He said nuclear weapons could be loaded on old carriers and old planes. Admiral Radford agreed that World War II aircraft could carry nuclear weapons, but said they would soon be shot out of the air, probably before they had delivered the weapons.

The President wondered how big our aircraft carriers were going to get and why we proposed to put a nuclear reactor in a big vessel. Secretary Wilson said Congress had crowded him into doing this.

Following the presentation of a chart on the cost of putting an AAA battalion in the field, Secretary Wilson noted that the production of missiles was very expensive, much more so than aircraft production; because when you shot a missile it was gone, but you could continue to use the aircraft. The President said he thought the missile method of fighting a war was very inefficient, but we had to use that method for psychological if for no other reasons.

After presentation of a chart on the research and development program, Secretary Humphrey asked how anyone could intelligently supervise such an extensive research program. Secretary Wilson said he was working at it. Secretary Humphrey felt that the scientists these days showed a tendency to run wild.

After presentation of a chart on new weapons systems, the President asked if anyone really believed that a nuclear-powered bomber would be worth while in our time. Admiral Radford said no. Secretary Humphrey said that work on projects of this kind explained the shortage of scientists, which had recently received so much attention. Secretary Wilson said that recent scientific and technical advances had been so great that anything called research had become sacred. If he tried to cut down on research he was apt to “get the business”. Secretary Humphrey said that the Council must be prepared for criticism, but must go ahead and reduce programs where necessary. He added that some of the ideas in the Killian report would ruin us. The President said he felt that on the whole the Killian report had been a moderating influence. Some Congressmen were much more extreme. Secretary Wilson pointed out that he had held up the nuclear aircraft project three years ago. He felt now that it was foolish to go ahead until we had more evidence that nuclear propulsion of aircraft would work.

After presentation of a chart on guided missile systems, the President asked whether the three Services were competing in these programs. Mr. McNeil said that all three Services were involved in these programs, and that in some cases they were competing, especially in the cases of Nike–Talos and Matador–Redstone. Secretary Wilson said he would get into trouble if he tried to drop one of these projects. The President said we might have to get into trouble; in any case, it would be no worse than the Suez problem.

Following presentation of a chart on continental defense programs, Secretary Wilson said that considerable expense had been incurred in unifying continental air defense commands. He added that the whole program was so new and different, it was impossible to tell whether we were receiving our money’s worth. Admiral Radford said no one could tell how good the continental defense is until it is used against an attacking force.

Following presentation of a chart on the cost of airlifting a division, the President said he would be flatly against providing for the airlifting of any more divisions. He felt that some of the projects being undertaken now were unwise. Secretary Wilson said that the principal difficulty in defense programs was that there was no measuring-stick as to the wisdom or efficiency of the programs. In business, only those items which ultimately produced a profit were manufactured; but, of course, this measure was not available in national defense.

The National Security Council:¹¹

a. Noted and discussed the following presentations on the subject, based on reports contained in NSC 5609:

(1) 293rd Meeting:

(a) The Atomic Energy Program, by the Atomic Energy Commission.

(b) The Mobilization Program, by the Office of Defense Mobilization.

(c) The Civil Defense Program, by the Federal Civil Defense Administration.

(d) The USIA Program, by the U.S. Information Agency.

(e) The Foreign Intelligence Program, by the Central Intelligence Agency.

(f) The Internal Security Program, by the Interdepartmental Intelligence Conference and the Interdepartmental Committee on Internal Security.

(2) 294th Meeting:

The Mutual Security Program, by the Department of Defense and the International Cooperation Administration.

b. Noted and discussed a presentation on the subject by the Department of Defense with respect to the U.S. military program, as orally presented at the 294th meeting.

c. Noted that each of the departments and agencies responsible for the programs presented at these meetings would review its projected program and estimated expenditures, in the light of the fiscal and budgetary outlook and the discussion at these meetings, in connection with the preparation of its Fiscal Year 1958 budget requests for normal budgetary review.

Note: The action in c above, as approved by the President, subsequently transmitted to all responsible departments and agencies.

Marion W. Boggs

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared by Boggs on August 18.
2. See Document 84.
3. See footnote 14, Document 82.
4. Document 66.
5. See Document 82.
6. As on the source text. Presumably Boggs did not hear Humphrey’s comments.
7. Regarding the JCS decisions in Puerto Rico, see Documents 64, 65, and 73.
8. The paragraph that follows constitutes NSC Action No. 1594, approved by the President on August 26. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
9. NSC 5610, “Report by the Interdepartmental Committee on Certain U.S. Aid Programs,” dated August 3, is not printed. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5610 Series) For the NSC memorandum of discussion on NSC 5610, see vol. x, p. 124.
10. See Documents 95 and 96.
11. Paragraphs a–c and the Note that follow constitute NSC Action No. 1595, approved by the President on August 21. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)