178. Telephone Conversation Between President Johnson and Secretary of Defense McNamara 1

LBJ: Bob?

RSM: Yes, Mr. President.

LBJ: How did things go this afternoon?

RSM: Well, we didn’t have any meetings. They kept postponing all afternoon and, obviously, didn’t know what they wanted to do. Finally—so we cancelled our meetings with them. And we weren’t much better off than they were. Every one of us has got a different idea of what ought to be done. Then about 6 O’clock, Von Hassel called and asked if he could come over. I just arrived home from talking to him and he said that the Chancellor hasn’t decided yet what to do but Von Hassel said he wanted to give me his ideas. Now, I think he was sent in—

LBJ: Sure, sure.

RSM: … to float this. But the net of it all is that it’s a terribly complicated thing. And the net of it is that they would fulfill the present offset agreement, but it would lag along awhile. They would use various means that I’m sure Joe [Fowler] wouldn’t like but which, on balance, I think you could say fulfill the present offset agreement. And I think that one of our objections must be to put ourselves in a position to say to Mansfield they did fulfill it, even though it’s by hocus-pocus. But, in any event, that’s the first part. Secondly, for the future …

LBJ: Didn’t say how?

RSM: Pardon me?

LBJ: Didn’t say how?

RSM: Yes, they …

LBJ: Is he talking about prepaying this loan and stuff?

RSM: Well, that’s one of the items. I said, well, we couldn’t accept that, and so they’ve got an alternative. But—

LBJ: What is it, buying?

RSM: Well, they take. … they say that our Federal Reserve is holding—let me see now—there are short-term obligations which they would convert to medium term to the extent of 250 million this year and, depending upon that 214, either 178 next year or 250 next year and then [Page 434]an additional about 112 the following year. In addition, they would increase their defense budget, which, for ’67, starting January 1, is presently planned at 18–1/2 billion marks. They’d increase it by one billion marks, which is another 250 million. And out of all of this, they’d get enough to pay off. As far as the orders go, they would slip those six months and fulfill the order commitment by June 30 of next year. So, in a sense, I think there is a lot of negotiating on the details, but I think we can work out a satisfactory arrangement on the present offset, at least that would be satisfactory to me and, I think, Joe would probably accept it grudgingly ultimately. On the future—

LBJ: What would it do to our balance of payments this year?

RSM: Well—

LBJ: We’re short 650 now on account of them.

RSM: That’s right.

LBJ: How much would we be short if their proposal went through, three or four hundred?

RSM: Well, yes, about that. We’d get …

LBJ: About half of that?

RSM: There’s a hundred-odd million that we seem to be in dispute on figures. I’ve got to straighten that out tonight. But then there is another 250 that we’d get this year, and the rest would come in next year, unless there was a 120 million or so slop-over into the following year. They say the Bundesbank is limited on the amount of conversions of short into mediums that they can take.

Then they say they don’t want any more 2-year agreements. They’d like a 5-year agreement for the future, and they can only, in effect, offset 350 million. They’d purchase 350 million a year from us and pay for it on a specified schedule. The purchases would start next year—if I understood this correctly—and run for the 5 years through 1971, and the payments would start the following year and run through 1972, 350 a year, which is less than half of what we’ll spend because, as their price level rises and as our military salaries rise, our foreign exchange costs go up. They have averaged 725 million a year, we believe, in ’65 and ’66. We think they’ll average for the next 5 years, 850 million, and of the 850 million, they would offset only 350.

LBJ: Uh huh.

RSM: Now, I think we can reduce that 850 some.

LBJ: How much, when you pull all your troops out of there? Just suppose that you decided that we couldn’t afford it—

RSM: Right.

LBJ:—we had to move them back—

RSM: Right, right.

[Page 435]

LBJ:—we could get them back with all your—

RSM: Yeah.

LBJ:—modern transportation and everything pretty quick, couldn’t you?

RSM: Well, this is where we get lots of controversy, Mr. President. I believe we could. Of course, if we were going to pull them all out, it would be quite a difficult movement back because we just have—I’ve forgotten the tonnage—something like a million tons of equipment would be in Germany. We’ve had 750,000 tons in Germany and 750,000 tons in France, if I recall correctly, and that’s a tremendous quantity of stuff to move. But what we’d do, if we pulled them all out—which I think is such an extreme situation, I can hardly visualize it—but if we did, we’d leave practically all the equipment there, and we’d have to hire some Germans to oil it and maintain it, and then we’d have to run exercises periodically, putting the troops back in so we’d get some skill at it. I think it’s inconceivable to pull them all out, but if we did, it would take a month to get them back, which is far beyond the limits of what others consider reasonable warning time. It might take a month and a half to get them back. If, on the other hand, we pulled, let’s say, 55,000 out, plus half the Air Force, I think we could get those back easily in 2 weeks. And it’s inconceivable to me that the Russians would go from a period of calmness to a full invasion of Germany in less than 2 weeks. I just don’t think it could be done.

So from a military point of view, Mr. President, I think substantial force adjustments are justified. Unless we handle it right, however, there would be a terrible political cost. And that’s our problem.

LBJ: Well, how do we handle that right?

RSM: Well, I don’t know. I think tonight and tomorrow we ought to—

LBJ: Looks like to me, we ought to take advantage of this opportunity to make him tell us that he cannot afford to have our troops there.

RSM:—and he wants our troops out. That’s what I think we ought to do, Mr. President. That’s right. That’s exactly right. And I worked on Hassel some in Paris on this exact point.2 And that’s why they’ve been saying in the press recently that they think, conceivably, we can take some out. But today, they began taking the line that they didn’t think we ought to take any out until 1969 or ’70. Schroeder asked me if we couldn’t get you to make a statement to Erhard to that effect during the meetings, and I said that I was almost certain you wouldn’t be willing to make that [Page 436]decision at this time. That you would want the tripartite group to examine that. Then this afternoon—

LBJ: Are you coming tonight?3

RSM: Pardon me?

LBJ: Are you coming tonight?

RSM: Yes.

LBJ: Maybe I can sit next to you (?). Mrs. Johnson called to remind you that if they arrive on time, it would be 7:50, and it’s now 7:45!

RSM: I know it.

LBJ: Goodnight.

RSM: I haven’t even dressed. I just walked in the door—

LBJ: You can be as late as you want to, because we’re upstairs, you know, [inaudible]—

RSM: Yeah, oh, that’s right.

  1. Source: Johnson Library, Recordings and Transcripts, Recording of Telephone Conversation Between President Johnson and McNamara, September 26, 1966, 7:40 p.m., Tape F66.26, Side B, PNO 1. Secret. The transcript was prepared by the Office of the Historian specifically for this volume.
  2. At the July 26 meeting of the NATO Nuclear Planning Working Group; see Foreign Relations, 1964–1968, vol. XIII, Document 189.
  3. President Johnson was hosting a State dinner in honor of Chancellor Erhard.