Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

13. Minutes of the Cabinet Meeting⁰

July 25, 1958, 9 a.m.

[Here follows a list of 38 persons, including President Eisenhower, Vice President Nixon, Secretaries Dulles, Anderson, McElroy, Seaton, Benson, Weeks, Mitchell, and Folsom, Attorney General Rogers, Postmaster General Summerfield, Director of Central Intelligence Dulles, Under Secretary Dillon, and Special Assistant to the President Randall. The first two items of discussion concerned unrelated subjects.]

Soviet Economic Offensive-Mr. Allen Dulles stated that Soviet trade with the world had risen 500%-a big percentage partially because of the low starting point-since 1954. Since February 1956, he said, an interdepartmental working group had been watching developments and reporting every two weeks. He offered to provide these reports to any interested Cabinet member not already receiving them.

Mr. Dulles briefly sketched Soviet trade and grant programs in recent years, particularly with six countries-Egypt, Syria, Yugoslavia, Afghanistan, India, and Indonesia. China and other satellite countries joined the Soviet in these programs. He noted that the Communists are particularly effective in dealing with one crop countries and are willing to do so at great cost to themselves if the political benefits seem large enough. Thus, the Communists could take actions that the private businesses of a profit economy are not geared to take.

Mr. Dulles asserted that the Free World faces a quite dangerous situation in the Soviet capacity to dislocate established markets; for instance, they could deliver oil to Western Europe, undercutting other sources. Also they are tending to bite heavily into the markets for certain products in developed countries-as, for instance, aluminum.

Mr. Dulles pointed out that the Russians do not have a most effective trade mechanism on which to base these efforts since they do not have an established international currency, the ruble being practically worthless except behind the Iron Curtain.

Mr. Randall emphasized that practically all foreign policy matters are related to the solution of this problem and that the solution could not be expected from any single “dramatic” move. He stated that the mutual security program continued to be a most important weapon in this.

Organizationally, Mr. Randall said, steps had been taken to establish in Mr. Dillon’s office the focal point for new ideas in this area.¹ Also, Sec. Weeks had asked the Business Advisory Council to look into the problem and had proceeded to set up a strong Committee which will be ready perhaps by September to forward a report to the Cabinet. Mr. Randall asked that all agencies give the Committee complete cooperation. He emphasized that this Committee does not free the Government of its responsibility. On a request from Mr. McElroy, Mr. Randall said that he would circulate a memorandum on the membership and work of the Committee.²

Mr. Dillon said that the United States would not attempt to compete with Russia in every country on a dollar for dollar basis although in India both Russia and the United States are pursuing large programs. He took note of the project in Afghanistan for construction of a university at Kabul which would be a useful and visible program. He referred briefly to prospects of programs for Indonesia and Yemen.

In addition to our reciprocal trade and mutual security programs, Mr. Dillon said, we have now undertaken to give better training to technicians going abroad, to find ways better to use private enterprise as an antidote to the Soviet salesmanship of State enterprise, and to discover a better handling of commodity trading in the world so as to be helpful to underdeveloped countries that depend upon selling basic commodities. Commodity trading, he stated, is a different problem for each commodity, as witness coffee, lead and zinc, tin, aluminum. On tin and aluminum, the solution may be (though we do not desire it) in some sort of international body although it is not likely that the Soviet would join such.

Mr. Dillon concluded by noting that the State Department organization is probably not adequate for handling this matter, hence recommended changes may soon be brought forward.

[Here follow the remaining items of discussion.]

LAM

0. Source: Eisenhower Library, Whitman File, Cabinet Series. Confidential. Drafted by Minnich. For another portion of this meeting, see Document 222.
1. Randall had urged in a May 13 memorandum to Assistant to the President Sherman Adams that responsibility for the development of action programs in this area should rest with Dillon. (Eisenhower Library, White House Office Files, Cabinet Secretariat Records) Robert P. Terrill was assigned to Dillon’s office in June with this area of responsibility. (Randall Diary, June 9 entry; ibid.) In April 1959, the position of Special Assistant for Communist Economic Affairs was created in the Office of the Under Secretary of State for Economic Affairs, later in the Office of the Under Secretary of State.
2. A July 2 memorandum from Randall to the Council on Foreign Economic Policy enclosed an interim report on the membership and work of the committee. (Ibid., CFEP Chairman Records, Papers Series, CFEP Memoranda)