292. Minutes of the Cabinet Meeting0

[Here follow a list of participants and discussion of unrelated subjects.]

Oil Import Program (CP 59–93)1—Adm. Strauss reviewed the long history of this question, then stated that noncompliance by a few companies had tended to demoralize those that did comply to the extent that some of the latter now intended to withdraw from the voluntary program. He also stated that the Executive Order restricting Government purchases from noncompliers had not fulfilled its purpose.2 Further complicating the program were increased imports of finished petroleum products and the advent of many new importers desiring to share in the program. Finally, there had been some advice from the Justice Department that there needed to be reference to the Anti-Trust Act should coordination of the companies’ activities be extended further. Mr. Rogers immediately stated that Justice had intended only to make clear that it could give no assurance against serious litigation developing.

Adm. Strauss then noted the OCDM finding that increased imports could constitute a threat to national security,3 followed by Cabinet Committee recommendation of its new program which he described in detail.

He concluded with the recommendation that the Cabinet Committee be discharged of its responsibilities and that the Secretary of the Interior take over the operation of the new mandatory program.

With regard to residual fuel oil, included for the first time in the program, Adm. Strauss made clear that no reduction in volume was contemplated and that there would be frequent opportunities for review to prevent any shortage from developing in those areas dependent upon residual fuel oil. Mr. Herter set forth State Department’s serious reservation as to including residual because of its heavy impact on Venezuela. He noted that imports for the past few months were unusually high, above the 1957 level, that Mexico was coming into this picture, and that there could be serious question as to whether the [Page 592] defense essentiality concept could be applied to residual. He also hoped that in the administration of this program a very sharp eye would be kept on the price factor.

Sec. Seaton assured him that this would be done because of its bearing on the national economy as a whole. Mr. Seaton thought that the impact of the program would be to prevent prices from falling further, thus firming them up, rather than raising them—although some small increases might occur in particular products. Much of this would depend on the actions of the State regulatory bodies as to limitations of production.

The Attorney General expected that the new program would be attacked in the courts and that there would be serious problems in the defense of the Government’s position. Accordingly, to facilitate this defense, he hoped that the basic papers from Defense to OCDM, and OCDM to the President, would be drawn up with a view to making the strongest possible case. This could best include, he thought, any specific estimates that the Defense Department could make as to requirements, resources, etc.

The President recalled the traditional Defense Department position as to the essentiality of having a strong domestic oil industry, also the fact that the law specified “threatened” to injure rather than actual injury. On the other hand, the President noted, there was a school of thought which held that our oil resources should be conserved in peacetime by freely admitting foreign oil, thus preserving necessarily limited resources for wartime. However, he thought, this school must recognize in the new techniques for making war that an existing healthy industry was more necessary than one which could only be developed over a period of years. He felt there had to be incentive for continuing exploration for new reserves.

In response to Mr. Rogers’ suggestion, Gov. Hoegh said he would consult further with him, particularly as to the full report that is being prepared.

Amb. Lodge foresaw possible repercussions in the UN where questions already exist as to the full solidarity of South American support for some of our positions.

Mr. Herter noted State Department efforts to explain to the Venezuelans that failure to act on the part of the Administration might result in the imposition of more stringent regulations by the Congress.

The President inquired as to the possibilities of some accommodation of Venezuela’s needs through the way in which specific quotas are handled. Adm. Strauss did not see much possibility of telling the oil companies what kind of oil they could import or from where, since only seventeen companies are engaged in importing residual oil. Mr. Mueller asserted again that Venezuela will not be cut back except in relation to the unusually high past two months.

[Page 593]

The President stated his interest in the unity of the American continent, and wished it were possible to act in unity with Canada on this particular item.

Mr. Anderson noted again the provisions for frequent review so as to avoid hardship, then stated the great expectation there is that the coal industry would force protective legislation if the Administration did not include residual in the program. This expectation was concurred in by the Vice President. Mr. Benson again mentioned the impact on Canada. Adm. Strauss assured there would be no damage to Canada since the 1957 levels were being retained. He pointed out also that Canadian oil actually profits from American oil policy since it could not compete in the American market if all foreign oil were admitted freely.

The President expressed his concern over the tendencies of special interests in the United States to press almost irresistibly for special programs like this and wool and cotton, etc., in conflict with the basic requirement on the United States to promote increased trade in the world. While he did not wish to be pessimistic about the nature of free government, he did want to caution about the troubles that might develop from too many cases of this sort.

LAM
  1. Source: Eisenhower Library, White House Office Files, Cabinet Secretariat. Confidential. Drafted by Minnich.
  2. On March 10, President Eisenhower issued Proclamation No. 3279 adjusting and regulating imports of crude oil and its principal products into the United States and creating a mandatory system of controls on oil imports. For the proclamation, see American Foreign Policy: Current Documents, 1959, pp. 1455–1461. For a statement by the President upon signing the proclamation, see ibid., pp. 1461–1462.
  3. See footnote 1, Document 277.
  4. See footnote 1, Document 286.