358. Memorandum From the President’s Deputy Special Assistant for National Security Affairs (Kaysen) to President Kennedy0
Washington, September 19, 1962.
- Attached is the report of the Executive Stockpile Committee on the Barter Program. The nine recommendations, pages 4 through 6, go to the objective of limiting the use of barter to those occasions where surplus agricultural commodities can be usefully exchanged for items that are clearly needed. Recommendation 6 provides for a list of exceptions to the general rule that barter should not be used to acquire strategic and critical materials in excess of national stockpile objectives.
- These exceptions are appropriate and, aside from two, well-defined. These two (6 b. and 6 d.) raise some problems. Six d. provides for using barter instead of cash purchases when this can be done in such a way as to save dollar payments abroad. This is clearly a desirable objective. The recommendation would be improved, however, if it provided for consultation with the Treasury Department so that Treasury’s judgment as to whether in fact there was a real saving in our balance of payments would be available.
- Recommendation 6 b. raises more difficult questions. This provides for barter to acquire raw materials for processing in the U.S. which would help in maintaining the materials processing mobilization base and relieve areas of unemployment. Both these goals are extremely broad, and the recommendation provides no procedure for determining whether they will be achieved in any particular instance. We have alternative and usually more efficient methods for assisting areas of substantial unemployment. There is no defined standard for the materials processing mobilization base and in the absence of a defined standard, this paragraph could be used to justify almost any barter transaction.
- The objections to these two provisions were shared by the Bureau of the Budget and the Council of Economic Advisers. Ed McDermott, the Director of Office of Emergency Planning, would be perfectly agreeable to your making the suggested change in Recommendation 6 d. and reserving approval on 6 b. until further study. It is his judgment that such a directive would be sufficient to lead to the withdrawal of 6 b. by the other members of the Committee. Accordingly, I suggest that you send the attached memorandum to Mr. McDermott and the other members of the Executive Stockpile Committee.1