10. Memorandum of Discussion at the 235th Meeting of the National Security Council, Washington, February 3, 19551

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

2. Future United States Economic Assistance for Asia (NSC 5506;2 NSC Action No. 1233; Memo for NSC from Executive Secretary, same subject, dated February 2, 19553)

Mr. Cutler made a brief introductory statement with respect to NSC 5506, and then requested Mr. Dodge, Chairman of the Council on Foreign Economic Policy, to brief the Council on the content of the proposed new policy on economic assistance for Asia. This Mr. Dodge did in considerable detail, reading or summarizing the report in its totality.

When Mr. Dodge had finished his extensive briefing, the President remarked to him that he had read a letter this morning from an individual who decried the constant employment by the United States of the thesis that our economic assistance to other nations was being offered solely on the basis of anti-Communism. This man’s arguments, said the President, had seemed very sound to him, and yet, in paragraph 5 on page 2 of the current report, it was stated as a general principle that “Future United States economic assistance to Asia should be regarded as only one part of the development of an overall world program to strengthen the forces of freedom against Communist advances.” Of course, this was the case, said the President, but we shouldn’t keep reiterating it in public. Instead, the basis of our aid should be the principle of partnership with other nations.

Mr. Dodge said that he agreed with the President’s view, but pointed out that NSC 5506 was of course a classified document for internal use in the Government.

After a discussion and explanation by Mr. Dodge of the finance and cost tables at the end of the report, Mr. Cutler undertook to explain why the Planning Board had given consideration to this report in two sessions prior to Council consideration at this meeting. This was in effect, he said, standard procedure, since the Planning Board was expected to look at all papers before they went to the Council. In fact, it was essential for the Planning Board to resolve a question [Page 27] raised by Mr. Dodge’s Council in the cover note to NSC 5506. Certain members of the Planning Board, continued Mr. Cutler, were less happy than others about the conclusions reached in this report. They were worried as to whether the CFEP might interfere with the proper integration of economic factors into our total national security policy. They had, however, made no formal recommendations on this subject, nor had they given any formal expression to their doubts as to whether the factors of U.S. leadership and of the urgency of aid to free Asian nations had been sufficiently reflected in NSC 5506.4

Mr. Rockefeller expressed the opinion that it would be most worthwhile now to hear from Mr. Dodge whether the authors of NSC 5506 believed that the scope and size of the program for economic assistance to free Asia was sufficient to achieve the stated objective of NSC 5506—namely, “to convince the peoples of Asia that their economic aspirations can be more surely and rapidly achieved as members of the free world than by adherence to the Communist system.”

Mr. Dodge did not directly answer Mr. Rockefeller’s question, but pointed out that the magnitude of U.S. economic assistance must always be measured against the ability of the recipient country to absorb this assistance effectively. In many areas of Asia large hunks of aid could not be successfully injected and digested. Mr. Dodge pointed out that Governor Stassen had made the judgment that the program set forth in NSC 5506 constituted the minimum program capable of achieving our objectives. Governor Stassen confirmed this statement.

There then ensued a discussion of the great difficulty which was encountered in the effort to make a rational breakdown between developmental assistance, direct forces support, military assistance, and technical assistance. The President agreed that his own experience indicated the impossibility of making clear distinctions among these various categories of assistance. What we must remember, however, said the President, was that we were actually spending our money in the interests of strengthening the national security of the United States throughout the world.

Dr. Flemming then inquired whether NSC 5506 was intended to include any reference to U.S. programs of information and exchange. Mr. Cutler said that our policy with respect to these programs was included in NSC 5501. Such programs were not, however, excluded from the present report.

[Page 28]

Dr. Flemming went on to say that he would nevertheless like to have the Council note that we desire to step up such education, exchange and information programs. Furthermore, he thought it would be extremely useful if the Council could be given a report from the Bureau of the Budget as to what we were actually doing to step up these programs. Both the President and Governor Stassen assured Dr. Flemming that these programs were being stepped up considerably.

Mr. Allen Dulles said that he wanted to call the Council’s attention to the importance of paragraph 14, which read:

“In determining the level of U.S. assistance, the magnitude and effectiveness of Communist bloc economic programs in Asia must be considered.”

Mr. Dulles noted that Communist China has undertaken a very dynamic economic program. While, to be sure, China had started virtually from scratch, the program looked like a lot even if, to judge from our standards, it wasn’t. Accordingly, this program in Communist China must be carefully watched for its effect on those Asian nations bordering on Communist China. It was likely to have a great appeal to such nations.

The President said that he found it very difficult to believe that anyone who had lived in China for any considerable period of time could have any real fear that China could achieve a high degree of industrialization within any short period of time. The real danger in Communist China was that its economy would be supported by and used by the Soviet Union. Mr. Dulles replied that he was not thinking of Communist China so much as a danger to the United States, but rather the appeal that its economic program was making to nations such as India.

The National Security Council:5

Discussed the reference report on the subject (NSC 5506), as prepared by the NSC Ad Hoc Committee on Asian Economic Policy and as recommended by the Council on Foreign Economic Policy, in the light of the views of the Joint Chiefs of Staff transmitted by the reference memorandum.
Agreed that NSC 5506 was consistent with the provisions of paragraphs 6–c and 6–e of NSC 5429/5, which accordingly require no revision; and that the implementation of NSC 5506 should conform to the provisions of Basic National Security Policy (NSC 5501).
Adopted the proposed U.S. position on the subject contained in NSC 5506, subject to the addition of “Nepal” to the list of countries in the footnote on page 1 of NSC 5506.
Requested the Bureau of the Budget to submit a report on the status of funds available or projected for world-wide U.S. education and exchange programs.

Note: NSC 5506, as amended and adopted, approved by the President, and referred to the Operations Coordinating Board as the coordinating agency designated by the President. The action in d above subsequently transmitted to the Director, Bureau of the Budget.

[Here follow the remaining agenda items.]

S. Everett Gleason
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Gleason on February 4.
  2. Document 7.
  3. Not printed. It transmitted to the NSC a memorandum from the Joint Chiefs of Staff to Secretary Wilson dated February 1, in which the JCS approved those aspects of NSC 5506 having military implications but reserved the right to comment further on the fiscal year 1956 military aid programs tentatively set forth in Table I to that paper. (Department of State, S/P–NSC Files: Lot 62 D 1, NSC 5506)
  4. In a memorandum to Under Secretary Hoover, February 2, Assistant Secretary Waugh stated in part that as a result of NSC Planning Board discussions Cutler on February 1 had asked the CFEP on behalf of the Board “whether the paper adequately reflected the sense of urgency implied in NSC 5429/5, Paragraph 6c. The CFEP decided that it did.” (Ibid., S/S–NSC Files: Lot 63 D 351, NSC 5506)
  5. Paragraphs a–d and the Note that follow constitute NSC Action No. 1318, approved by the President on February 5. (Ibid., S/S–NSC (Miscellaneous) Files, Lot 66 D 95)