1. Minutes of the Cabinet Meeting0

[Here follows a list of 34 persons, including President Eisenhower, Vice President Nixon, Secretary of State John Foster Dulles, Secretary of the Treasury Robert B. Anderson, Secretary of Defense Neil H. McElroy, Attorney General William P. Rogers, Postmaster General Arthur E. Summerfield, Secretary of the Interior Fred A. Seaton, Secretary of Agriculture Ezra Taft Benson, Secretary of Commerce Sinclair Weeks, Secretary of Labor James P. Mitchell, Secretary of Health, Education, and Welfare Marion B. Folsom, and Representative to the United Nations Henry Cabot Lodge. The first item of discussion concerned an unrelated subject.]

Russian Economic Threat-Sec. Dulles described at length the possibility and dangers of economic warfare that might be initiated by the Russians, particularly in view of Mr. Khrushchev’s remark last fall declaring economic war.1 He suggested the Administration quickly initiate a study of this potential and means of counteracting it.2 He cited the advantage that a Communist dictatorship has over a “profit” economy through dumping goods or providing them at a price below cost so as to eliminate competitors and dominate various national markets. This menace might not materialize, he thought, should domestic pressures on the Russian government require greater use of resources at home.

The President noted how Russia could make its approaches to needy countries under the guise of giving assistance, then exploit the country once it had established economic control. The Vice President contrasted the smooth, quick actions of Russia with our own slowness necessitated by coordination between the Executive and Legislative [Page 2] branches and among agencies within the Executive branch. Sec. Weeks took some comfort from the failure of Communist economies thus far to evidence an ability to develop high standards of living. Sec. Anderson saw need for initiating the study quickly since Russia had the power to offer attractive shopping lists and thus lead other nations to break contracts they might have with us, as particularly some Arab states.

The President and Amb. Lodge commented on the need for associating more citizens of other lands in our business establishments abroad as a means of increasing their interest.

Sec. Dulles noted ironically how the Russians deliberately refrain from telling their own people about the attractive economic offers they make to other governments, such as Egypt.

The President noted the willingness of the country to ignore the cost of weapons in time of a shooting war and even to curtail certain freedoms. He felt that an economic war should also be considered gravely and that adequate provision for winning it must be made.

The President directed that a preliminary plan quickly be drawn up for accomplishing the major study that would be necessary, and the Vice President said he would follow through with interested members of the Cabinet.3

[Here follow the remaining items of discussion.]

LAM
  1. Source: Eisenhower Library, Whitman File, Cabinet Series. No classification marking. Drafted by Assistant Staff Secretary L. Arthur Minnich, Jr.
  2. Reference is apparently to a speech given on November 6, 1957, by Soviet Communist Party First Secretary Nikita S. Khrushchev before the Supreme Soviet, calling for peaceful coexistence and peaceful competition between socialist and capitalist countries; for excerpts, see American Foreign Policy: Current Documents, 1957, pp. 729–730.
  3. A memorandum by Dulles of a conversation on January 8 with Nixon reads in part: “I discussed with the Vice President the desirability of establishing a Cabinet level group to study possible Soviet economic warfare. He fully agreed.” (Eisenhower Library, Dulles Papers, Vice President Nixon)
  4. The record of action on this item is dated January 14. (Ibid.)