Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 2

Eisenhower Library, Eisenhower papers, Whitman file

No. 783
Minutes of Cabinet Meeting

[Extract]

¹

confidential

[Washington,] August 6, 1954—10 a.m.

. . . . . . .

The President opened the discussion, after a brief silent prayer, with a suggestion that the Cabinet might meet for lunch once a month without having an agenda. Such a meeting would be for the purposes of general open discussion unless any member had an urgent item of business, which could be attended to formally.

Japanese Trade—Sec. Dulles introduced lengthy consideration of the need for negotiating international trade agreements favoring Japan, with a review of the importance of Japan to the free world. Communist efforts to win over Japan by economic proposals, and the extremely dangerous current economic position of that country. He indicated that there was little future for Japanese products in the United States, and that the solution lay in developing markets for Japan in presently underdeveloped areas such as Southeast Asia. Since such development is necessarily long-term, interim measures would be needed. He then cited the major responsibility held by the United States as a result of past events and the need for the entire Administration rather than just the State Department to effect a workable program.

The President commented that no single action would solve the Japanese economic problem but that a variety of approaches must be made. He suggested that it was an absolute fallacy to say that there should be no East-West trade. Instead, some Japanese trade with her Communist neighbors might be encouraged and would set up influences behind the iron curtain detrimental to Communism. Such trade, of course, would have to be closely watched.

The Attorney General inquired as to our policy concerning Japanese armed forces. Mr. Dulles indicated that they were being increased now that the security agreements had been signed and that some of our own divisions presently in Japan could be redeployed. The President immediately noted that redeployment would increase the economic problem since it would take dollars out of Japan.

Assistant Secretary Anderson of Commerce² explained a series of charts highlighting the Japanese economic problems. They included statistics concerning size and density of population, insufficiency of food production, comparisons of foreign trade pre–1940 and now and in terms of geographic areas of the world, types of imports and exports, trade deficit and the foreign exchange situation. He then proceeded to indicate that a solution of the problem depended upon greater austerity within Japan by returning to the mid-1930’s standard of living, increasing exports through participation in GATT (General Agreement on Tariff [Tariffs] and Trade),³ a larger shipping program, modernization of industry and elimination of certain unfair trade practices. It would also require U.S. effort with regard to including Japan in GATT, giving a maximum of economic and military aid, making grants or loans of agricultural surpluses for local currency, and accomplishing an interim GARIOA (Government and Relief in Occupied Areas) settlement. Finally, other nations in the free world would have to participate by increasing their imports of Japanese goods and limiting their reparations demands.

The President then emphasized the need for making the attack on this problem on a broad front, and he asked all Cabinet members to review this material for the purpose of contributing new ideas and also the urgency of working this subject into their public addresses. He indicated the controversy which would arise in connection with foreign economic policy legislation in the coming year and stressed that to bar all competitive products would result, in the long run, in the disaster of war.

Sec. Weeks⁴ stated his understanding of the problem and points of view expressed but wanted to call attention to the drastic differential in wage scales. He urged that Japan if taken into GATT should be subject to the customary peril point and escape clauses. He preferred an examination of alternative methods such as military aid, quotas, etc. The President commented that he desired such ideas to be expressed and then went on to warn that Japan had to make its already low wages even lower—and that if forced too far, Japan would become ripe for Communism. Gov. Stassen pointed to the need for distributing action over many fields as his FOA mission to Japan was already attempting. He stated that U.S. exports to Japan would suffer if the Japanese cannot export their own products, and he singled out the trade relationship involving Southern purchases of New England products with money derived from the sale of cotton to Japan. Sec. Humphrey believed the emphasis should be put on spreading Japanese exports throughout the world rather than having the U.S. carry the burden of buying Japanese goods. He emphasized unemployment within the U.S. and the dislocation caused by Japanese products such as electrical equipment.

The President agreed and again stated that the U.S. must prevent the development of a situation in Japan which would result in a Communist take-over.

In a discussion of the timing of the GATT negotiations, Sec. Dulles described the elaborate procedures and the need for giving notice of intent by September 1st in order to allow a Presidential proclamation of the results by the middle of June. Sec. Weeks asked if the declaration of intent could be postponed until November 1st. Messrs. Dulles and Anderson agreed that it could not.⁵

Sec. Dulles concluded the discussion by placing emphasis on the importance of public addresses and he requested Mr. Hagerty to distribute to the Cabinet pertinent addresses made by the President. He believed it quite possible to sell the necessary program to the American people, particularly since the President and he had successfully convinced the Ways and Means Committee of the need for several similar essential items.

. . . . . . .

L. A. Minnich, Jr.

1. Part of the omitted material is a list of persons present (29).
2. Samuel W. Anderson, Assistant Secretary of Commerce.
3. For documentation concerning U.S. support for Japanese participation in the GATT, see vol. i, Part 1, pp. 114 ff.
4. Sinclair Weeks, Secretary of Commerce.
5. Minutes of the Cabinet meeting held on Aug. 13 at Camp David indicate that the President acceded to a request from Secretary Weeks for further review of the time at which items to be negotiated with Japan would be submitted to the Tariff Commission. (Minutes drafted by Minnich, Eisenhower Library, Eisenhower papers, Whitman file)