279. Editorial Note

On May 1, at the 364th Meeting of the National Security Council, the President and the Council discussed, as item 2, “Basic National Security Policy.” Included in the discussion was consideration of an interagency disagreement over the wording of a paragraph in draft NSC 5810, “Basic National Security Policy,” April 14, 1958, dealing with U.S. policy toward international commodities. The memorandum of discussion of the meeting by S. Everett Gleason, May 2, reads as follows:

“General Cutler next directed the Council’s attention to the first of five splits of view to be resolved by the Council. All these splits dealt with foreign economic matters. The first occurred on page 12, in paragraph 27–d, reading as follows:

“‘d. Because many less developed nations depend for economic growth on exports of a few basic commodities, their development programs are adversely affected by large fluctuations in prices of such commodities. If necessary for political reasons, the United States should, on occasion, join in a multilateral examination of price, production, and demand trends which might help to promote readjustments between supply and demand and reduce price fluctuations. [But the United States should not discuss the making of, or participate in, any international commodity agreement without the specific approval of the President.]*

“‘* Treasury-Commerce proposal.’

“General Cutler pointed out that Mr. Randall had called attention to the fact that the CFEP, on October 11, 1955, generally disapproved of international commodity agreements, and that CFEP policy requires interagency policy-level approval before such an agreement may be discussed with a foreign nation. Neither of these points was reflected in paragraph 27–d, and Mr. Randall believed that the whole subparagraph should be deleted until present policy in this regard is first modified by the CFEP. Accordingly, General Cutler suggested that the subparagraph be deleted and its substance referred to the CFEP for action.

“Secretary Dulles said that there was a statement made, he believed, at the 1957 conference at Buenos Aires which was based on the President’s approved policy with respect to the problem of international commodity agreements and related matters. He therefore suggested that since this statement had been approved by the President, it should be inserted in NSC 5810 in place of the present subparagraph 27–d.

“General Cutler asked Secretary Dulles if it were not possible to send the substance of this subparagraph to the CFEP for consideration by that body as having jurisdiction in this field. Secretary Dulles said he could not understand why this was necessary, inasmuch as the policy statement he was referring to had already been made by the President. Secretary Anderson suggested that decision should be delayed so that we could determine whether what was said at Buenos [Page 564] Aires on this matter in 1957 continued to be what we still believed to be wise policy. Secretary Dulles said he had no intention of going beyond what we had said at Buenos Aires, and handed the President a copy of the Buenos Aires statement. The President then suggested that the substance of subparagraph 27–d be transmitted to the CFEP together with Secretary Dulles’ statement made at Buenos Aires. Secretary Dulles said he merely wanted to state that any severe inhibition such as proposed by Treasury and Commerce in the bracketed portion of subparagraph 27–d, against even considering or discussing international commodity agreements with our Latin American friends, would have catastrophic repercussions throughout Latin America. The President agreed that this was true, but also warned against the danger of price-fixing as an actual U.S. course of action. Secretary Anderson also expressed great concern about the problem, but likewise agreed that we could not certainly state that we would not even discuss it with our Latin American neighbors. The President added that extreme care must be taken with regard to the wording of the policy guidance on this problem.” (Eisenhower Library, Whitman File, NSC Records; brackets in the source text)

The statement to which Secretary Dulles referred was made by President Eisenhower in connection with the Economic Conference of American States, which met at Buenos Aires, August 15–September 4, 1957. President Eisenhower’s statement, released at Newport, Rhode Island, September 4, endorsed “cooperation on the problems of basic commodities,” language which was included in the Economic Declaration of Buenos Aires, September 2. Eisenhower’s statement and the full text of the Economic Declaration of Buenos Aires are in Department of State Bulletin, September 30, 1957, pages 539–541.

The Council adopted NSC 5810 with the deletion of paragraph 27–d and referred it and the alternative language proposed by Secretary Dulles to the Council on Foreign Economic Policy for a review of existing policy on international commodity agreements. For the portion of the discussion on trade with Communist China, see Document 327.

At its meeting on May 20, the Council on Foreign Economic Policy took up consideration of U.S. participation in commodity agreements. The specific issue was whether the Department of State should participate in an international study group to examine coffee problems, to encourage coffee-producing countries to develop sound national production and marketing policies, and to recommend measures to be taken by those countries to that end. While the Council on Foreign Economic Policy worried that such a group might recommend an international commodity agreement as a possible solution to the coffee problem, the Council approved U.S. participation in the study group and possible discussion of an international commodity agreement, but only as an exception to established policy. The Council also urged the Department of State representatives to take every precaution [Page 565] not to imply, either directly or indirectly, that the United States would participate in or police such an agreement. (Minutes of CFEP meeting, May 20; ibid., CFEP Chairman Records, CFEP Minutes, 1958)

Writing in his journal for May 21, Randall noted that this decision was made because of the drastic effects on Latin American economies of the severe fall in the price of coffee. While Randall himself “would fight to the death” U.S. participation in an international commodities agreement, he realized that the Department of State would have to participate in coffee discussions without committing itself to “the cartel concept.” (Ibid., Randall Journals, CFEP, 1958, vol. VIII)