14. National Security Council Report1

NSC 5507/2


Note by the Executive Secretary to the National Security Council


  • A. Memo for NSC from Mr. Cutler, subject: “Development of Nuclear Power”, dated December 11, 1953
  • B. NSC Actions Nos. 985, 1202, 1326, 1351
  • C. NSC 5507 and NSC 5507/12

The National Security Council, Mr. H. Chapman Rose for the Secretary of the Treasury, the Director, Bureau of the Budget, and the Chairman, Atomic Energy Commission, at the 240th Council meeting on March 10, 1955, adopted the statement of policy on the subject contained in NSC 5507/1, subject to the amendments thereto which are set forth in NSC Action No. 1351–b.

The President has this date approved the statement of policy in NSC 5507/1, as amended and adopted by the Council and enclosed herewith as NSC 5507/2, and directs its implementation by the Secretary of State and the Chairman, Atomic Energy Commission, advising with the Operations Coordinating Board in order to ensure that proposed actions in the field result in maximum psychological advantages to the United States.

The enclosed statement of policy, as adopted and approved, supersedes the statement of policy (paragraph 7 of NSC 149/2) as transmitted by the reference memorandum of December 11, 1953, and NSC 5431/1.3


James S. Lay, Jr.4


General Considerations


1. On April 29, 1953, the President approved the first statement of national policy on the development of atomic power for peaceful purposes. The basic concept of that statement is still valid as modified below:

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The early development of atomic power by the United States is a prerequisite to maintaining our lead in the Atomic field. Such development should be carried forward as rapidly as the interests of the United States dictate, seeking private financing wherever possible.5

Peaceful Uses of Atomic Energy

2. The national resource represented by U.S. atomic facilities and technology can be a great asset in the effort to promote a peaceful world compatible with a free and dynamic American society. U.S. determination to promote the peaceful uses of atomic energy, with calculated emphasis on a peaceful atomic power program abroad as well as at home, can generate free world respect and support for the constructive purposes of U.S. foreign policy. Such a program will strengthen American world leadership and disprove the Communists’ propaganda charges that the U.S. is concerned solely with the destructive uses of the atom. Atomic energy, which has become the foremost symbol of man’s inventive capacities, can also become the symbol of a strong but peaceful and purposeful America.

3. World acceptance of U.S. leadership in the peaceful use of atomic power may be endangered by USSR and possibly by UK activities in the near future. To preserve for the U.S. the essential psychological and political attributes of its leadership in this field makes important the acceleration6 of U.S. programs and early tangible action in the international field.

The Priority of Military Needs

4. Programs for the peaceful utilization of fissionable materials must be harmonized with military needs. Requirements for U.S. fissionable material (not of weapons quality) for research reactor programs will not cause any significant diversion of that material or of trained personnel from the U.S. nuclear weapons program. As for power reactors likely to be built in the next five years, limited utilization of U.S. raw and fissionable materials is already acceptable. As the U.S. reserve of nuclear weapons increases, such materials may be increasingly devoted to power production.

Statutory Provisions

5. The Atomic Energy Act of 1954 permits cooperation with other countries or groups of countries in atomic power development. When U.S. fissionable material or classified information is involved, such [Page 48] cooperation must be in accordance with statutory procedures which include negotiation of “Agreements for Cooperation” between the U.S. and other nations. In order to enter into an “Agreement for Cooperation”, the President must determine that “the proposed agreement will promote and will not constitute an unreasonable risk to the common defense and security.”

6. Under the Atomic Energy Act of 1954, activities abroad by U.S. individuals, industry, and private institutions in the atomic energy field require prior arrangements or authorizations by the U.S. Government.

Significance of Atomic Power

7. a. Power plays a tremendous role in the increase of productivity. If the world economy is to expand, ever-increasing supplies of fuels for power will be needed. In many areas the high cost of power production, the prospect of future depletion of fossil fuels, and the utilization of the best hydro-electric sites make the development of alternate sources of energy imperative. For these reasons, rather than for immediate economic benefits, atomic power is attractive.

b. Atomic power can provide a major extension of available energy resources and will, in particular, have early value for areas with heavy demand and high-cost fuel (like the UK). Power shortages and high power costs in industrialized nations like Japan and Italy and in less highly developed nations like Brazil may well make them economically attractive locations for power reactors.

c. The ultimate economy of atomic power can be determined only as technological and engineering problems are solved. The development of economically competitive atomic power, through present techniques, will not revolutionize the world economy. In underdeveloped areas, the availability of atomic power will not ease the basic problem of finding capital for economic development. Atomic power plants will not make obsolete modern efficient hydroelectric and steam electric plants at any early date.7 The principal causes for high power cost to the consumer are the transportation and production of fuel, old inefficient plants, small units which are less efficient and economical than large plants, low rates of use with resultant high unit cost of power, high cost of investment capital, and power distributing systems. As opposed to a new conventional plant, an atomic plant would be advantageous with respect primarily8 to the cost of transportation and production of fuel. In technologically advanced countries these [Page 49] facts are recognized. In some less advanced countries there is a tendency to view U.S. proposals for international sharing of benefits of atomic power as a panacea for basic economic ills.

Types and Sizes of Atomic Power Reactors

8. Atomic power reactors are of various types, depending upon the nature and enrichment of the fuel, the nature of the moderator and coolant, etc. The power output of atomic power reactors may range from about 1,000 kilowatts up to several hundred thousand kilowatts. For convenience, atomic power reactors producing 1,000–20,000 kilowatts are defined as “small-output” and atomic power reactors producing 50,000 kilowatts or more are defined as “large-output”.

9. Generally speaking, the larger the output of the reactor the smaller the capital cost per kilowatt; therefore, large-output reactors offer the most promising approach to achieving economic electrical power. With the exception of its work on the Army package power reactor (1,500 kilowatts), which is a specialized (air-transportable) form of small-output reactor for military use, AEC has logically concentrated its developmental efforts upon large-output reactors.

Reasons for Interest in Small-output Power Reactors

10. A small-output reactor produces higher-cost power than a large-output reactor. However, its construction cost is much less than that for a large-output reactor (say, $4–$10 million9 for a 10,000 KW reactor vs. $50 million plus for a 100,000 KW reactor). So long as the economics of power reactors are uncertain, or in areas where power demand is small, small-output power reactors may be attractive in that they may provide the means of securing psychological advantage in international cooperation at a much lower cost per installation than for large-output power reactors.

Present Status of U.S. Reactor Programs (Research and Power)

11. Research reactors are not designed for production of power for civilian purposes. Research reactors are useful for research, medical, and related purposes, and for training personnel in reactor operation. Most research reactors presently available in the U.S. use small amounts of fissionable material of weapons quality, but research reactors can be designed to use small amounts of non-weapons quality fissionable material. Research reactors and the supporting training and information programs are a natural step in the development of any nation’s capability to utilize atomic power when it becomes economically attractive.

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12. Power Reactors of any type can be built either for a large output or a small output of civilian power. Presently authorized U.S. programs for power reactors are unlikely to produce economically competitive atomic power for a decade or more, except in a few power-short or high-cost areas. However, a technological advance or break-through anywhere might appreciably shorten the time scale. Furthermore, if the presently authorized U.S. program should be expanded as proposed in the President’s FY 1956 Budget, it might be possible to achieve competitive atomic power by 1960.

13. a. A private utility company, with the assistance of the U.S. Government, is now building at Shippingport, Pa., a large-output power reactor for experimental purposes, rather than to produce economic atomic power. The power output will initially be supported in part by the U.S. Government. The reasons for building this prototype in the U.S. include private capital participation, convenience, safety, security, and the avoidance of unfortunate repercussions from difficulties with an insufficiently tested power reactor abroad.10

b. Besides the successful submarine power reactors, one type of which now powers the USS Nautilus and another type of which is operating at the West Milton plant and will also power the USS Seawolf,11 the only prototype of a small-output power reactor presently authorized by the U.S. is the Army package power reactor designed to meet unique military specifications. This reactor is not designed to produce power for civilian purposes, but might be adapted to civilian use.

c. If it were desired quickly to construct a small-output power reactor for civilian use, an earlier completion date could be achieved by scaling down the Shippingport-type large-output power reactor than by adapting the Army package power reactor or one of the submarine reactors.12 However, construction of a small-output reactor by scaling down the large-output reactor before it is fully tested may involve high cost and difficult engineering problems. Nevertheless, these disadvantages should not preclude U.S. willingness to help foreign countries build such scaled-down reactors adaptable to their [Page 51] needs. At the same time, immediate efforts to develop other and better small-output reactors should be encouraged.13

Pros and Cons of Building Power Reactors Abroad

14. a. Because of the Soviet programs described below, it is desirable for the U.S. to cooperate in the near future, in the construction of one or more power reactors, either large- or small-output, in some foreign power-short area. Such an action should have great psychological advantages. However, it should be recognized that a power reactor built abroad at this time might operate irregularly or with lower performance and higher cost than predicted. Selecting a single location for a reactor without causing resentment among disappointed claimants would be difficult. (The estimated cost of building reactors and of the subsidies to operate them is indicated in the Financial Appendix.) Nevertheless, the advantages to the U.S. of continuing its leadership by helping in the construction abroad of one or more power reactors should outweigh the disadvantages.

b. Consequently, the U.S., on the basis of discussions with the countries concerned, should seek to identify at an early date locations for a limited number of power reactors abroad. This identification should especially take into account economic conditions and appeal to the imagination of the free world.

The Soviet Program

15. The Soviet Union is continuing its atomic developments at a rapid pace and is seeking to reduce the present superiority of the United States in the atomic field. It must be anticipated that the USSR will make the maximum use of atomic energy not only for military and industrial purposes, but also as political and psychological measures to gain the allegiance of the uncommitted areas of the world. Although the USSR faces technical problems similar to those faced by the U.S., in a relatively short time the USSR may offer a small-output atomic power reactor to a country such as India, Pakistan, or Burma. If the United States fails to exploit its atomic potential, politically and psychologically, the USSR could gain an important advantage in what is becoming a critical sector of the cold war struggle.

The U.S. Program

16. U.S. production capacities and efficiency in producing U–235 and, less importantly, in producing heavy water and processing spent fuel elements, give the U.S. the ability to maintain a commanding international position in the atomic power field.

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17. U.S. cooperation with other countries in advancing the peaceful uses of atomic energy should be both bilateral under “Agreements for Cooperation” under Section 123 of the Atomic Energy Act of 1954, and multilateral through an International Atomic Energy Agency as proposed by the President on December 8, 1953.

18. a. The U.S. has already earmarked 100 kg. of fissionable material for eventual use by other countries for peaceful purposes. The U.S. is now negotiating bilateral “Agreements for Cooperation” with Belgium, the UK, and Canada covering the general field of power reactor technology. A number of other countries have indicated varying degrees of interest in bilateral “Agreements for Cooperation”.

b. Negotiations for establishment of an International Atomic Energy Agency are now in progress. To fulfill the expectations aroused by the President’s speech, the Agency should be active in the field of atomic power as well as in the fields of research reactors, training, isotopes and exchange of information. The U.S. would make available only declassified information to the Agency, because it would be an international body with a broad membership. But in order to give the Agency the necessary support, the U.S. should make available power reactor information as rapidly as it can be declassified. If U.S. participation in a satisfactory International Atomic Energy Agency is negotiated, the U.S. will in time also find it necessary to make available fissionable material to support the work of the Agency in the field of atomic power. It is now tentatively planned that, if the USSR participates in the Agency, any materials allocated by the USSR, the U.S. and other participants will be transferred to the Agency and held in an Agency pool.

19. During the interim period of a year or longer while the treaty for an International Agency is being negotiated and the consent of the Senate sought, the U.S. should proceed vigorously with direct actions to demonstrate its resolve to assist other nations and maintain its world leadership in peaceful uses of atomic energy. Some of these activities might in due course be taken over by the International Agency.

20. Maximum psychological advantage should continue to be taken from the substantial actions of the U.S. in this field. The timing of release of declassified atomic energy information can be made a political and psychological asset to the U.S.

21. The U.S. should also constantly explore further possible ways of utilizing its atomic potential to its maximum political and psychological advantage (for example, applications of industrial radiation, nuclear propulsion, etc.).

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22. In the interests of national security, U.S. programs for development of the peaceful uses of atomic energy should be directed toward:

Maintaining U.S. leadership in the field, particularly in the development and application of atomic power.
Using such U.S. leadership to promote cohesion within the free world and to forestall successful Soviet exploitation of the peaceful uses of atomic energy to attract the allegiance of the uncommitted peoples of the world.
Increasing progress in developing and applying the peaceful uses of atomic energy in free nations abroad.
Assuring continued U.S. access to foreign uranium and thorium supplies.
Preventing the diversion to non-peaceful uses of any fissionable materials provided to other countries.

23. U.S. programs for development of the peaceful uses of atomic energy should be carried forward as rapidly as the interests of the United States dictate, seeking private financing wherever possible.14

Courses of Action

24. As part of an over-all U.S. effort to develop the peaceful uses of atomic energy:

Accelerate the early development of atomic power by the United States.
Continue activities in the development and application of research reactors.
Furnish limited amounts of raw and fissionable materials (not of weapons quality) required to effectuate “Agreements for Cooperation” (subject to military requirements for such materials, and recognizing that completion of construction abroad of only a few large-scale reactors is likely before 1960)

25. Carry forward the development of the peaceful uses of atomic energy as rapidly as the interests of the United States dictate, seeking private financing wherever possible.15

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26. Utilize the U.S. information program and participation in appropriate international conferences (e.g., the 1955 International Conference) to stress the benefits which might accrue from the development of atomic power, while making clear the problems associated therewith.

27. Initiate a program of U.S. assistance to other countries in construction of power reactors. To this end:

Continue current bilateral negotiation of “Agreements for Cooperation” with Canada, the UK and Belgium, which will cover, inter alia, the exchange of information on power reactor technology.
Make an early announcement of U.S. readiness to enter into discussions relating to cooperation with other countries in their power reactor planning and programs.
Enter into discussions with other free world countries responding to paragraph b above, looking toward “Agreements for Cooperation” which will cover exchange of power reactor information, and provide in accordance with paragraph 24–c above for the sale or lease or (where sale or lease does not serve the best over-all interests of the U.S.) other transfer of atomic materials or equipment.16 In such discussions, seek opportunities for maximum U.S. cooperation in those power reactor projects abroad which offer political and psychological advantages.
Assistance to foreign governments involving U.S. Government grants in connection with the construction and operation of power reactors shall be in accordance with policies governing U.S. foreign assistance programs and from funds provided for such programs. Beginning with the FY 1957 budget, any foreign assistance funds required for this purpose should be specifically sought.17
Design and construct in the U.S. as soon as possible, within the acceleration program as proposed in the FY 1956 budget, a small-output civilian power reactor in the 10,000 KW range, as a step toward constructing small-output power reactors most promising for use abroad.18
In furtherance of this policy and in accordance with Sec. 142 of the Atomic Energy Act of 1954, continue the declassification of information on nuclear reactor technology, as security considerations will permit.
Encourage and facilitate participation of U.S. individuals, industry and private institutions in atomic power activities abroad, such encouragement to include governmental arrangements and authorizations as required by the Atomic Energy Act of 1954.

28. Make an urgent study, including estimates of cost and time of completion, of installing at the earliest possible date a nuclear reactor propulsion unit in a U.S. merchant ship, which ship might travel throughout the free world to dramatize the U.S. program for developing peaceful uses of atomic energy.19

29. Initiate a program of aid in construction of research reactors in selected countries, under “Agreements for Cooperation” which will cover exchange of information, and provide, in accordance with paragraph 24–c above, for the sale, lease, or other transfer (whichever is in the best over-all interests of the U.S.) of atomic materials and equipment.

30. Continue training and educational exchange activities, such as reactor training courses for foreign scientists.

31. Take the necessary steps to proceed with the organization of an International Atomic Energy Agency which will be brought into an appropriate relationship with the United Nations.

32. If U.S. participation in a satisfactory International Atomic Energy Agency is negotiated, utilize and support such Agency as an instrumentality in the field of atomic power as well as in the fields of training, information, isotopes and research reactors, and be prepared to support its operations with limited amounts of fissionable material.

33. To safeguard against diversion of fissionable materials to non-peaceful uses, ordinarily require:

Chemical processing of used fuel elements in U.S. facilities or under acceptable international arrangements.
Adequate provision for production accounting, inspection, and other techniques.20

  1. Source: Department of State, S/SNSC Files: Lot 63 D 351, NSC 5507 Series. Secret.
  2. References A–C are identified in the NSC memorandum of discussion, supra.
  3. For text of NSC 149/2, April 29, 1953, see Foreign Relations, 1952–1954, vol. II, Part 1, pp. 305316. Regarding NSC 5431/1, see footnote 2, supra.
  4. Printed from a copy that bears this typed signature.
  5. This last sentence is a revision of NSC 5507/1, which reads: “Without jeopardizing such early development, it should be carried forward to the maximum extent possible through private, not government, financing.”
  6. The word “immediate” coming just before “acceleration” in NSC 5507/1 was deleted in NSC 5507/2.
  7. The words “at an early date” were added to NSC 5507/2.
  8. The word “primarily” was substituted for “only” in NSC 5507/1.
  9. “$4–$10 million” was substituted for “$10 million plus” in NSC 5507/1.
  10. Paragraph 13–a was a revision of NSC 5507/1, which reads:

    “The U.S. Government is now building at Shippingport, Pa., a large-output power reactor for experimental purposes, rather than to produce economic atomic power. The power output will be subsidized in part by the U.S. Government. The reasons for building this prototype in the U.S. include convenience, safety, security, and the avoidance of unfortunate repercussions from difficulties with an insufficiently tested power reactor abroad.”

  11. The entire preceding portion of this sentence was added to NSC 5507/2.
  12. The words “or one of the submarine reactors” were added to NSC 5507/2.
  13. The words “should be encouraged” were substituted for “must be undertaken” in NSC 5507/1.
  14. Paragraph 23 was a revision of NSC 5507/1, which reads:

    “In developing the peaceful uses of atomic energy, private rather than government financing should be used to the maximum extent possible without jeopardizing the early development of atomic power.”

  15. Paragraph 25 was a revision of NSC 5507/1, which reads:

    “Encourage the private financing of the development of atomic power to the maximum extent possible without jeopardizing the early development of such power.”

  16. Following the words “paragraph 24–c above,” NSC 5507/1 reads: “for the sale, lease, or other transfer (whichever is in the best over-all interests of the U.S.) of atomic materials or equipment.” The next sentence was in brackets in NSC 5507/1 and deleted in NSC 5507/2: “Other than in exceptionally compelling circumstances, any transfer by the U.S. to foreign governments of such materials or equipment should be by sale or lease.” This bracketed sentence had been proposed by the Department of the Treasury and the Bureau of the Budget.
  17. Paragraph 27–d of NSC 5507/1 contained an additional sentence as follows: “[Determine by August 31, 1955, the selected free world countries for which such assistance will be required in FY 1957.]” A footnote to this bracketed sentence indicates: “State, Treasury, Budget and AEC propose deletion.”
  18. In NSC 5507/1 this entire subparagraph was bracketed and a footnote indicated that the AEC proposed deletion of the subparagraph. For a later revision of subparagraph 27–e, see Document 114.
  19. This entire paragraph was not contained in NSC 5507/1. Subsequent paragraphs in NSC 5507/2 were renumbered so that each was one number more than the corresponding paragraph in NSC 5507/1.
  20. A 2-page financial appendix to NSC 5507/2, including one table listing estimated expenditures for peaceful uses of atomic energy for fiscal years 1955 through 1959, is not printed. (Department of State, S/S-NSC Files: Lot 63 D 351, NSC 5507 Series)