169. Memorandum of Discussion at the 297th Meeting of the National Security Council, Washington, September 20, 19561

[Here follow a paragraph listing the participants at the meeting and agenda items 1–4.]

5. U.S. Objectives and Courses of Action in Korea (NSC 5514; Progress Report, dated July 18, 1956 by the Operations Coordinating Board on NSC 5514)2

Mr. Jackson said that he would omit the usual summary of the Progress Report on our policy in Korea because the members of the Council were doubtless familiar enough with it. He pointed out that perhaps the essence of the problem with respect to this country was the large size of the U.S. assistance programs. These amounted to some 800 million dollars in Fiscal Year 1957. In closing he reminded the National Security Council of its directive to the NSC Planning Board to review U.S. policy toward Korea in the light of the findings of the Prochnow Committee.3

The President commented with a sigh that we were surely spending an awful lot of money in Korea. Secretary Wilson added that he had very much hoped to reverse the direction of our spending in Korea downward instead of upward. Indeed he had had the level down to 700 million in 1955 but the levels were now pushing up again. Admiral Radford reminded Secretary Wilson that the small [Page 310] reduction in 1955 was accounted for by the fact that the ROK armed forces were then living off military matériel which we had given to them. We knew nevertheless that when this materiel was gone, the levels of our expenditures in Korea would again have to go up.

Secretary Wilson then alluded to the success of the ROK reserve program. The success of this program, he thought, might enable us to cut back a little on the size of the regular forces of the Republic of Korea and thus ease the burden on the Korean economy.

Turning to Admiral Radford the President inquired whether he and his people in the Pentagon had taken a look at the situation in Korea lately. Admiral Radford replied that the Joint Chiefs of Staff had this situation constantly under review. In point of fact, the ROK authorities did not wish to cut back in any military area. They are even now complaining that they need to modernize their air force, to acquire additional naval vessels and even to modernize their army.

Secretary Hoover then cited the problem posed by Section 13–d of the armistice agreement in Korea. He warned that in sending armaments to Korea we were stretching to the absolute limit the definitions under Paragraph 13–d. Certainly we could not augment the size of the South Korean armed forces or give these forces entirely new weapons without a plain violation of Section 13–d. Such a violation was bound to cause trouble with our allies and with the UN. Accordingly, we should certainly not try to follow such a course of action without a very careful look at the consequences.

The President observed that it seemed to him that the poorer a country was, the larger the army it seemed to want. It was high time to remember the words of wisdom of people like Clausewitz. The strongest limits to the desire of a man to go to war were set by the forces at his disposal. We have really got to sit down and determine the likelihood of an armed attack on South Korea. While it was obvious that the United States must keep token forces in South Korea, the President believed that Syngman Rhee was insisting on too large forces.

Secretary Wilson said that certainly if the South Koreans now set out to obtain a large air force, it would really “bust them” financially. Admiral Radford pointed out that the North Korean air force was already very large and modern. The President said of course someone else was providing the North Koreans with their air force. Admiral Radford went on to say that the North Koreans were maintaining their pressure on the Republic of Korea very successfully. There was indeed a great deal of infiltration into South Korea. On the other side of the picture, said Secretary Wilson, the South Koreans are not above working on the United States in every way to induce us to shell out more money.

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Governor Stassen reminded the Council that the power plants which had been developing since the end of hostilities were now about ready to function. This would mean a great boost to South Korean industry and would enable industry to absorb the manpower of a number of South Korean regular divisions. He therefore suggested that in the course of the next year we should be able to cut down the size of the regular South Korean army by some five divisions putting these divisions into reserve and allowing the manpower to be diverted to industry.

The President said he thought Governor Stassen’s idea sounded very good. Secretary Wilson observed that at any rate we must not allow the United States to get frozen in its position with respect to Korea. He added that there was no real way to cut U.S. expenses except by reducing the size of the armed forces of South Korea. Secretary Wilson also believed that we should try to get more of our own U.S. forces out of Korea although we should probably have to leave one U.S. division there.

The President then said to Admiral Radford that this was a problem for him and his people to take a hand in and to look at in terms of what we could profitably have there by way of force levels. Our views might have to be modified later by what we could get the South Koreans to agree to but the first step was to determine what we ourselves should do from the standpoint of our own advantage. Admiral Radford replied that of course one problem involved here was keeping our control of the very large armed forces in South Korea. There was now very little of a UN flavor to these forces. Recently the South Koreans had asked that a South Korean be named as Deputy UN Commander. This problem would of course be aggravated if we now reduced our own U.S. contribution to the armies in South Korea. The President agreed that this indeed was a problem. He pointed out that in addition to our own troops we were also putting 800 million dollars into South Korea each year. We could certainly expect that as a result the South Koreans could go along with us in solving some of these problems.

Secretary Wilson stated that there was yet another piece to the overall problem. A recommendation had recently been received from General Taylor to move the U.S. forces out of Korea and station them in Japan. This recommendation had appealed neither to Secretary Wilson nor to Admiral Radford. In point of fact, of course, the Japanese want us to remove our forces from Japan. At this point the President once again re-emphasized his view on the unfortunate repercussions which were bound to occur when we stationed our forces for long periods in foreign countries. The result was only hatred. The President added that he was more disposed to get our U.S. forces out of Japan than out of Korea. Admiral Radford pointed out that as of [Page 312] the present time, we have practically nothing but service troops in Japan. The First Cavalry Division was so split up that it could hardly be described as a fighting unit. To make matters worse, said Secretary Hoover, we are encountering a great difficulty maintaining our position in Okinawa. The President said he too was very much afraid that the Okinawa situation would soon rise up to smack us in the face. He then repeated his desire for a report from the Joint Chiefs of Staff recommending what we should do about Korea over the next two years. This should set forth what we conceive to be the minimum forces which our interests dictate we should keep in Korea even though we should later on have to modify this figure. The President said he was personally convinced that we did not need as many men as were now under arms in South Korea. Our policy might well fall of its own weight if we were obliged to put 800 million dollars each year into a single small country like Korea.

Secretary Wilson repeated his view that in the case of Korea the United States was backing a loser. Secretary Hoover informed the Council that the State Department was presently considering the possibility of converting some of the South Korean troops into work battalions as an intermediate step. Secretary Wilson inquired what these battalions would work at? Secretary Hoover replied, on roads, hospitals, public works and the like. Secretary Wilson asked whether the United States would be expected to put up the money for such projects?

Governor Stassen then introduced the problem of total overseas dollar expenditures and the balance of payments situation which he said was becoming very serious for the United States.

Secretary Humphrey warned that when Admiral Radford and the Joint Chiefs of Staff took their look at the Korean situation, they could not look at it in a vacuum. It was costing the United States a billion dollars annually to support our forces overseas and we had got to find some way to cut a billion dollars off of our overseas expenditures very soon. It was this sum which was dragging us down. Nevertheless, what we needed to do here with respect to Korea must also be considered in the light of what we want to do in other parts of the world. Certainly we were getting to the point where we have got to take a look at where all this money was going. Secretary Humphrey insisted that we could not control domestic inflation simply by recourse to a tight money policy if we continue to spend a billion dollars a year in support of our overseas forces. We were actually going to be faced soon with serious inflation. While the rest of the world was getting better with respect to its financial situation, the United States was getting steadily worse. This problem was extremely serious and it had been neglected by the Administration.

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Secretary Wilson insisted that not all of this expenditure was to be laid at the door of the Defense Department. Secretary Humphrey agreed that not all of it but only about three-fourths of it was the responsibility of Defense. Secretary Wilson replied that nevertheless this expenditure was going to rise still higher if we did not change our policies with respect to Korea and similar places. Secretary Humphrey went on to insist that this problem had a monetary aspect as well as a foreign policy aspect. The United States must retain its economic strength at home if it ever expected to keep its friends and allies abroad. These people stick only with a winner. If we seem to be a loser, they will run away from us so fast we won’t be able to see them. We are now living in a fool’s paradise and have been doing so for the last six, eight or ten months.

The President expressed the opinion that we were spending a lot more money abroad two years ago than we are now spending. Secretary Humphrey denied this and said there was not much difference. The deficit had been pretty consistently a billion dollars each year. Speaking not in terms of authorization but of actual money “taken out of your pants” there wasn’t a difference of more than perhaps a 100 million dollars a year between the Eisenhower Administration and the last Truman year.

Governor Stassen expressed the opinion that both the President and the Secretary of the Treasury were right in their contentions. The Free World was greatly in need of some of our gold back in 1953. It was now, however, getting too much of a claim on it and it was time to reverse directions.

Mr. Jackson assured Secretary Humphrey that the Council recognized the problem which he had set forth but he said he wished to put a question to Secretary Humphrey. How do we proceed to try to deal with the problem of our military and economic assistance? Should we deal with it on a specific area basis or do we try to deal with it first on a world-wide basis? Secretary Humphrey replied that in his opinion the way to proceed was to agree on the precise amount of money that we can afford to spend overseas and then adjust individual area programs in terms of this overall amount. Instead of this procedure, what we are now doing is simply spending what we think it is nice and useful to spend overseas. Mr. Jackson again pressed Secretary Humphrey for an opinion as to the right governmental procedure with which we ought to tackle this problem. Secretary Humphrey repeated his opinion that we should start with what we think we can afford and work backward from this point. This is the way you ran a private business or a family financially.

The President pointed out to Secretary Humphrey that of course if your very existence was at stake, you would pay out a lot more money than you estimate you could afford. This was true even in the [Page 314] case of a private family. The President went on to say that Korea would provide a very good laboratory case to assist us in determining what we should do about our expenditures on a world-wide basis. In fact he felt that the specific area approach was about the only effective way to try to solve the problem of our expenditures overseas. Secretary Humphrey commented that we had still got to balance what we did in Korea with what we propose to do in Indo-China and other such places. The President said that our target at any rate should be to try to reduce our overseas expenditures by the sum of one billion dollars.

Secretary Wilson then expressed his willingness to take on the assignment that the President had requested and said that he would kick up a good enough paper for the Council to talk from.

Governor Stassen closed the discussion by stating his opinion that the National Security Council should have before it a study of the balance of payments problem. He pointed out that we had been giving a lot of consideration recently to the problem of the Federal budget. We had not given enough time and thought as to how we should handle the problem of our world balance of payments.

The National Security Council:4

Noted and discussed the reference Progress Report on the subject by the Operations Coordinating Board.
Noted the President’s request that the Joint Chiefs of Staff prepare a report to the Council as to the minimum level of U.S. and Republic of Korea forces which it would be in U.S. interests to maintain in Korea over the next two years.
Noted that the NSC Planning Board, pursuant to NSC Action No. 1486–e,5 would review the policy on Korea in NSC 5514, in the light of the study on that country by the Interdepartmental Committee on Certain U.S. Aid Programs circulated in NSC 5610,6 and of the report by the Joint Chiefs of Staff pursuant to b above.

Note: The action in b above, as approved by the President, subsequently circulated to the Secretary of Defense for appropriate action by the Joint Chiefs of Staff.

S. Everett Gleason
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Gleason.
  2. Documents 24 and 162.
  3. See Document 155.
  4. Paragraphs a–c and the Note constitute NSC Action No. 1607, which was approved by President Eisenhower on September 25. (Department of State, S/SNSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
  5. See vol. x, p. 62, footnote 14.
  6. NSC 5610, “Report by the Interdepartmental Committee on Certain U.S. Aid Programs,” August 3, 1956, is in Department of State, S/SNSC Files: Lot 63 D 351, NSC 5610 Series, and ibid., OFD Files: Lot 59 D 620.