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

230. Memorandum of Discussion at the 388th Meeting of the National Security Council⁰

December 3, 1958, 2:30–4:35 p.m. ¹

[Here follows a paragraph listing the participants at the meeting.]

1. U.S. Security Effort Overseas, FY 1958 and FY 1959 [here follows a list of references]

The Special Assistant to the President explained the background of the written report by the Joint Chiefs of Staff on the reference subject reminding the Council that last May it had asked for a report from the Joint Chiefs of Staff on the kind of force posture (missions, major force levels, and major types of armament by service) which the Chiefs thought would be desirable as of June 30, 1962, for those nations receiving the major part of our military assistance. Mr. Gray also noted certain facts of particular interest which the Planning Board had discussed when the Joint Chiefs of Staff report had been considered. He then suggested that unless Secretary McElroy or General Twining had some comment to make on the report that the Council, in view of the heavy agenda to follow, merely note the report. (A copy of Mr. Gray’s briefing note is filed in the Minutes of the Meeting and another is attached to this Memorandum.)²

Secretary McElroy said he had no further comment to make but General Twining³ said he would like at this time to explain the procedures by which the Joint Chiefs of Staff currently formulated force levels in connection with the military assistance program because the difficulty apparently lies not so much in the process itself but in a general lack of understanding of how it works. Forthwith General Twining read a statement on the subject, a copy of which is filed in the Minutes of the Meeting.⁴ The chief objective in General Twining’s statement was to emphasize that in the latter part of the process political and economic factors, for example the capability of the economy of the country to which military assistance is provided by the U.S. to support the force levels determined to be desirable by the U.S., have to be considered. He also stressed the view of the Joint Chiefs of Staff that when U.S. military assistance is used primarily for a political purpose in a foreign nation rather than for strictly military purposes, the Joint Chiefs of Staff desire this fact to be clearly identified both in discussions in the National Security Council and in the discussions of the military assistance program in the U.S. Congress.

Mr. Gray pointed out that further discussions of this subject were scheduled between officers of the Joint Chiefs of Staff and officers of Under Secretary Dillon’s office in Mr. Dillon’s capacity as Coordinator of the Mutual Security Program. The subject would also be treated, he was sure, by the President’s newly appointed committee headed by General Draper.⁵

The President pointed out that it was very difficult indeed to distinguish between political and military reasons for providing U.S. military assistance to friendly foreign powers. In essence, continued the President, military assistance was merely a tool of U.S political or national security policy. General Twining stated that he agreed generally with the President’s view but that there were instances such as Ethiopia where our military assistance could be clearly distinguished as given for purely political reasons.

Mr. Gray commented that the subject of the discussion was one of the issues singled out by the NSC Planning Board in its discussion paper⁶ as an issue which ought to be discussed at this meeting by the National Security Council. He then read the statement of the issue from the Planning Board paper together with the comment of the Planning Board which reads as follows:

“The U.S. should concentrate military aid programs on military objectives on a priority basis, using, wherever feasible, other means to accomplish political objectives. Where in exceptional cases national security objectives necessitate providing military assistance for primarily political purposes, the U.S. should provide that kind of military assistance which would be most useful militarily and least detrimental economically while still being consistent with our political purposes.”

When Mr. Gray had concluded his statement, the President reverted to General Twining’s observation about Ethiopia as an example of military assistance given for purely political purposes. [1 line of source text not declassified] He was, however, concerned about Ethiopia as a part of Africa. If we were to lose Ethiopia, this might well be the beginning of a process by which we might ultimately lose large parts of the rest of Africa. Accordingly, he repeated that the differentiation between giving aid for military and political purposes was very hard to make and constituted a distinction without a difference so far as the general problem of U.S. national security was concerned. He added that he did not actually object to making the distinction as General Twining proposed.

Secretary Dillon commented that from the point of view of his people, it was better to play down the distinction between military assistance given for political and for military purposes especially when it came to dealing with the U.S. Congress. The President indicated that he was well aware of the fact that many members of Congress regarded U.S. assistance to foreign nations, given for political or economic reasons, to be simply “a give-away”. It was far from a give-away. Such assistance made a vital contribution to the overall national security of the U.S., however difficult it was to make Congress understand this fact.

Secretary McElroy expressed agreement with the views of Secretary Dillon and went on to say that the Joint Chiefs of Staff were not making any strong recommendation in favor of a distinction between aid given for political as opposed to military assistance, except insofar as it concerned the officials around this table.

The President advised all concerned that when they went to Congress to get appropriations for military assistance for political purposes or to get economic assistance, they should simply describe all such assistance as national security assistance.

The Vice President expressed his agreement with this suggestion and added his conviction that Secretary Dillon’s point was very wisely taken. As far as possible in dealing with Congress political assistance to foreign nations should be tied into military assistance. Congress was as generous in providing funds for military assistance as it was niggardly in providing funds for assistance for political purposes.

The National Security Council: ⁷

a. Noted and discussed the report on the subject prepared by the Joint Chiefs of Staff, pursuant to NSC Action No. 1908–b (transmitted by the reference memorandum of September 2, 1958).

b. Noted and discussed an oral statement by the Chairman, Joint Chiefs of Staff, outlining the procedures currently employed in formulating force levels in connection with the Military Assistance Program.

c. Noted in connection with b above, the President’s view that political factors are involved in all military assistance programs and must be taken into account in their formulation.

2. Status of National Security Programs on June 30, 1958: The Mutual Security Program (NSC 5819)⁸

Mr. Gray pointed out that this item on the agenda was closely related to the previous one and would consist initially of a presentation on the annual Mutual Security Status Report as of June 30, 1958. It was his understanding, said Mr. Gray, that the presentation would be led off by Under Secretary Dillon as Coordinator of the Mutual Security Program. Mr. Dillon would be followed in turn by Assistant Secretary of Defense Irwin on the Military Assistance Program. He in turn would be followed by Mr. James Smith, Director of the International Cooperation Administration who would outline those parts of the Mutual Security Program which were the direct responsibility of ICA. The last speaker would be Mr. Dempster McIntosh, Managing Director of the Development Loan Fund.

At the conclusion of these formal presentations, Mr. Gray added that the Council would take up the series of policy issues on the Mutual Security Program which had been prepared by the Planning Board and which had been circulated to the National Security Council in advance of the meeting (a copy of Mr. Gray’s briefing note is filed in the Minutes of the Meeting and another is attached to this Memorandum).⁹

The presentations followed the order outlined by Mr. Gray and copies of each of the aforementioned reports are filed in the Minutes of the Meeting.

The National Security Council: ¹⁰

Noted and discussed the report on the status of the Mutual Security Program on June 30, 1958, prepared by the Departments of State and Defense (transmitted as Part 2 of NSC 5819); as summarized orally at the meeting by the Acting Secretary of State in his capacity as Coordinator of the Mutual Security Program, the Director of the International Cooperation Administration, the Managing Director of the Development Loan Fund and the Assistant Secretary of Defense (International Security Affairs).

3. Policy Issues Relating to the Mutual Security Program (NSC 5819, Part 2; Memo to NSC from the Executive Secretary, same subject, dated December 1, 1958)

When the formal presentations were concluded, Mr. Gray directed the Council’s attention to the statements of the seven most important issues which the Planning Board believed desirable for the Council to discuss in the light of these presentations. The first issue, he pointed out, concerned the level of military aid deliveries. Using a chart which indicated the decline of carry-over funds for military assistance, Mr. Gray pointed out that while there had been good program management to have reduced the huge carry-over which existed in 1953, the reduction can no longer continue. For FY 1959 the Congress had voted 1.5 billion in new appropriations; we are actually spending about 2.4 billion. Accordingly, we have come to the point where we must either fail to meet approved program requirements or obtain an increase in the annual funds from the Congress. In presenting this issue Mr. Gray emphasized that he was not suggesting that the Council reach a decision today but was merely warning that our former flexibility in our military assistance program is about over.

Secretary McElroy confirmed Mr. Gray’s warning by indicating that the minimum lead time we now have in military assistance deliveries is down to about a year. Accordingly, we were about at the end of the road unless we proceeded to reduce deliveries under the Military Assistance Program.

The President observed that the Joint Chiefs of Staff have reached the point where they are simply going to have to decide whether another new missile program or another aircraft program was or was not more important than provision of financial support for our Military Assistance Program. This would be unquestionably a hard decision involving among other things a terrible domestic political problem because of the fact that our politicians do not like to see us spend money for these assistance programs. The President said that, compared to some of the less essential U.S. military programs, the Military Assistance Program represented a better investment of funds for our national security. To illustrate his point of view, the President then cited the case of Pakistan. Here was a nation divided into two geographical parts by India and a nation which was weak from the military, political and economic point of view. Military assistance to Pakistan in the President’s view was of very doubtful value beyond the provision of such assistance as would be required to cope with local security for Pakistan. What Pakistan really needed was more economic assistance. To make matters worse the fact that we provide military assistance to Pakistan scares India to death. The President indicated that he wished the Joint Chiefs of Staff to look carefully into the problem of providing military assistance for Pakistan. Secretary Dillon pointed out that this subject was already being carefully considered and the President accordingly dropped his request on the Joint Chiefs of Staff.

The President then asked Mr. James Smith the number of employees in his International Cooperation Administration. Mr. Smith replied that the ICA had about 10,000 people overseas. The President then asked Mr. Smith how many employees there were in this country. Mr. Smith said he could not provide this figure at the moment.

The President then observed that in all our discussions of the problem of underdeveloped countries and the kind of assistance which we could effectively provide them, we had not faced up to what was really the most serious problem, namely, that of exploding population growths. As far as he could see, continued the President, the only solution to this problem throughout the world was finding an effective two cent contraceptive. Otherwise no matter what we do, as these reports indicate, we keep falling behind in our efforts to raise the standard of living in so many parts of the world where it is desperately low. In connection with his argument the President cited Germaine Tillion’s recently published volume on Algeria. Indeed an explosive increase in population could be predicted for our own country as well as for the less developed areas of the world.

Secretary Dillon observed that when he had been at the Colombo Plan meeting¹¹ he had had a discussion with a high Indian official in the United Nations economic and social organization. The Indian official informed Dillon that he had been preparing a report on the problem of exploding population rates and was at least himself an ardent believer in the necessity of the widespread use of contraceptives if the problem of over-population was ever to be solved. The President added that certainly something drastic had to be done to solve this problem. He certainly did not know how to get started on this solution and he furthermore could not himself get it started. If there were any ideas on how to deal with the problem, they should certainly be brought to this table.

The Vice President remarked that when the new Draper Committee begins its study of foreign assistance it would be essential to tackle the basic problem of whether U.S. policy is actually running against the tide of affairs in the world. It was a genuine question whether or not the U.S. could continue to try to promote democracy and free enterprise, in the forms we understand these systems, in the underdeveloped countries. It comes down essentially to this: we may have to reconsider whether or not we must not learn to go along and play ball with political and economic institutions in these underdeveloped countries which resemble less the kind of system that works in the U.S. but rather systems which are moving in the direction of nationalized economies.

The President stated that whenever he and Secretary Dulles got together and had an opportunity to philosophize, they always came back to the fundamental question, namely, whether free government in this world is going to be able in the future to hold out against ruthless dictatorships. That, said the President, was our basic problem. The Vice President returned to his point and cited Sukarno’s guided democracy as constituting a concrete illustration of what he had meant in his remark about the U.S. running against the tide in many of the less developed areas of the world.

Secretary Anderson then warned the Council that in the next session of the Congress this is what we were going to have to be talking about in terms of increasing FY 1959 or FY 1960 financial commitments of the U.S. in the various categories of foreign assistance. As Secretary Anderson outlined these commitments they reached a magnitude of some ten billion dollars. In concluding Secretary Anderson expressed his great anxiety about the effect of such commitments on the problem of the flow of dollars from the U.S. abroad which was already in his view serious enough. The Director of the Budget added to the commitments outlined by the Secretary of the Treasury items concerning the Export-Import Bank and PL–480. In Mr. Stans’ view this brought the total up to some eleven billion dollars in a single year. Were we not thus trying, asked Mr. Stans, to fill a completely bottomless pit?

The President observed that there was at least some hopeful evidence that some of our more prosperous allied countries are beginning to move in to help us in dealing with the problem of meeting the aspirations of the underdeveloped countries. Moreover, said the President, in considering such matters he always came back to the problem that if we do not ourselves provide for assistance to underdeveloped countries, what conceivable alternative is there which provides any hope of solution? In other words, said the President, this problem was not only a dollar problem.

Mr. Gray intervened at this point to indicate that the problem which the Council had just been discussing was in fact the 7th issue which the Planning Board had believed the Council should discuss. This issue, continued Mr. Gray, concerned the relationship between mutual security and the U.S. contribution to international organizations. What offsets, if any, should be made in the Mutual Security Program in view of the planned increase in the U.S. quotas for the International Bank for Reconstruction and Development and the International Monetary Fund, proposed U.S. contributions to new multilateral organizations, and a potential contribution to the International Development Association. It had been the view of the Planning Board that maximum offsets should be made in the Mutual Security Program consistent with U.S. policy objectives.

Secretary Dillon commented that in administering the Mutual Security Program we have already agreed among ourselves that this recommendation should be followed as far as possible. Unhappily experience indicated that you could not always reduce the size of the Mutual Security Program through resort to these offsets.

Mr. Gray then raised the second issue which the Planning Board thought the Council should discuss and which concerned the inadequacies of the current flow of capital to achieve economic development objectives overseas. After reading the alternatives which it seemed to the Planning Board were open to the U.S., Mr. Gray emphasized the extreme difficulties involved in either alternative, that of continuing the effort to achieve the desired economic development in underdeveloped countries even though the task seemed hopeless in the light of experience or else recognizing that the achievement of all these objectives everywhere is unrealistic and re-examining our aid program with a view to concentrating on selected areas.

The President, reacting to the pessimistic views which had been expressed, observed that perhaps it would be more realistic to put up the white flag now to judge from the way that Mr. Gray and members of the National Security Council had been talking here today. Mr. Gray replied by stating that he still felt that the objectives of National Security Council policy for economic development in the underdeveloped countries of the Free World were too broad. Perhaps concentrating on a selective basis would provide an answer.

The President was clearly not impressed by this argument and said that the question of selectivity was not relevant. After all, continued the President, we had been studying this problem of foreign aid for years. As the President saw it, if we were to single out one or two countries in a given area for continued assistance and abandon our programs for all the other countries in that area, then the country or countries which we have actually selected will ultimately be out-flanked and overwhelmed by the forces opposed to the U.S. It was the Soviets who, because they were on the offensive, were in the perfect position to make use of a policy of selectivity in their assistance programs. So again we face the problem of how to deal with the issue of exploding populations world-wide. Equally important with a practical solution of this problem was the necessity that the United States provide moral and spiritual support and moral and spiritual power in these countries. What was really essential to a solution of this problem was a spiritual Renaissance in the whole western world.

Secretary Anderson added that we must also teach the underdeveloped peoples all around the world that if they wanted to raise their standards of living they must make up their minds that they could not do it overnight in one long leap. The process of raising standards must go on slowly and methodically and within the human capacities of the peoples of these underdeveloped countries. There was no sense in providing them with plants and installations which they could boast produced more of this or more of that than any other similar plant in the world if it was beyond their capacities effectively to run such an industrial plant or dam or other installation. In reply to Secretary Anderson, the President asked the question whether the Soviet emissary in one of these underdeveloped countries was not certain to point out to the people of that country what enormous strides the U.S.S.R. had made in the course of some forty years. The achievements of the Soviet Union obviously have a tremendous appeal for the underdeveloped peoples.

Secretary Dillon said it was some comfort to note a considerable degree of skepticism in India of the great strides towards industrialization now being made by Communist China at such terrible cost to human values which the Indians cherished. The President observed that the statistics seemed to suggest that this all was an impossible problem to solve unless we can do something to change human nature and human habits. Mr. Smith informed the President that the ICA was presently attempting to grapple with the problem of over-population in so many parts of the world.

The time set for the end of the meeting was now approaching and Mr. Gray asked the President if he could at least briefly outline the remaining three issues which the Planning Board had singled out as worthy of Council discussion. The first of these was the 4th issue concerning the nature of future U.S. military assistance to NATO. Was the need to achieve the MC–70 force goals regarded by us as so compelling that we should give all feasible support to their achievement even if this means reducing military assistance programs in other parts of the world? Secretary McElroy commented at some length, with respect to this issue, on the fact that the U.S. alone could not be expected to carry additional burdens in NATO while other NATO countries were tending to reduce their own contributions. Secretary Dillon made the added point that up until the present the U.S. has not had a very clear and precise idea of the total cost of meeting the MC–70 goals. The first step was therefore to clarify this cost.

Mr. Gray, noting that the 5th issue had already been discussed in the Council in connection with the Council’s discussion of the first item on the agenda, briefly set forth the final issue raised by the Planning Board, namely, the relationship between military assistance and the overseas internal security programs. Was it realistic to expect that the overseas internal security program (OISP) would permit any substantial reduction in military assistance funds in the foreseeable future? In any event, were the merits of OISP on its own sufficient to justify continuation of present types of programs, including provision of equipment where appropriate?

In further comment Mr. Gray suggested that the Council request a review of the OISP program by the Operations Coordinating Board reporting the appropriate portions of such a review to the National Security Council. Mr. Gray’s recommendation was accepted.

The President closed the meeting with the remark “Well, is there any bright news around here?”

The National Security Council: ¹²

a. Noted and discussed the statement of issues relating to the Mutual Security Program, prepared by the NSC Planning Board, and transmitted by the reference memorandum of December 1.

b. Requested the Operations Coordinating Board to review the Overseas Internal Security Program (OISP) with respect to:

(1) The validity of the policy stated in the following portions of paragraph 19 of the Basic National Security Policy (NSC 5810/ 1),¹³ reporting the results of this review to the Council:

“To the extent possible without sacrifice of U.S. security, the United States should seek to reduce requirements for military assistance by encouraging selected recipient nations (principally non-European) * * *¹⁴ (b) to emphasize police and constabulary type forces for internal security purposes in lieu of large indigenous military establishments.”

(2) Certain operational matters raised in the Status Report on the Mutual Security Program.

Note: The action in b above, as approved by the President, subsequently transmitted to the Operation Coordinating Board.

S. Everett Gleason

0. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Gleason on December 5.
1. The time of the meeting is taken from the President’s Appointment Books. (Ibid.)
2. Gray’s briefing note is not printed. The JCS report was sent to NSC members under cover of a September 2 memorandum from Lay. (Ibid., Whitman File, NSC Records) Regarding the May 8 NSC decision, incorporated in NSC Action No. 1908, to request the report, see Document 218. The Planning Board discussed the JCS report on October 21. (Record of meeting of the NSC Planning Board; Department of State, S/P–NSC Files: Lot 62 D 1)
3. General Nathan F. Twining, USAF, Chairman of the Joint Chiefs of Staff.
4. Not printed. (Eisenhower Library, Special Assistant for National Security Affairs Records, National Security Council Series, Administrative Subseries)
5. See Document 228.
6. “Policy Issues Relating to the Mutual Security Program,” sent to NSC members under cover of a December 1 memorandum from Lay. (Department of State, S/P–NSC Files: Lot 62 D 1)
7. Paragraphs a-c constitute NSC Action No. 2010. (Ibid., S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
8. “Status of National Security Programs on June 30, 1958,” Part 2, dated September 15, addressed the Mutual Security Program. (Ibid., S/S–NSC Files: Lot 63 D 351)
9. Regarding the Planning Board paper, see footnote 6 above. Gray’s briefing note is not printed.
10. The following paragraph constitutes NSC Action No. 2011. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
11. Dillon was Deputy Chairman of the U.S. Delegation to the Ministerial Meeting of the Consultative Committee on Cooperative Economic Development in South and Southeast Asia (Colombo Plan), held in Seattle, Washington, November 10–13.
12. Paragraphs a and b and the note that follows constitute NSC Action No. 2012. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
13. This report, “Basic National Security Policy,” May 5, is scheduled for publication in volume III.
14. Asterisks in the source text.