Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

302. Memorandum From Secretary of Commerce Hodges to Secretary of State Rusk and Secretary of Defense McNamara⁰

Washington, September 18, 1961.

The recent 90-1 vote in the House, approving Resolution 403 for investigation of export control administration (copy of Resolution attached), the recently announced hearings by the Senate Internal Security Subcommittee,¹ and the favorable report by the House Commerce Committee on H.R. 8465 providing for embargo of trade with Cuba² all reflect the very strong sentiment in Congress—and the country—against trade with Soviet bloc countries. The comments of House members on H. Res. 403 are recorded on pages 17433 through 17444 of the Congressional Record.

The precise tactics utilized in bringing about adoption of the Kitchin Resolution can, perhaps, be correctly interpreted as motivated in some measure by “political antagonisms” or “recrimination” against the Administration—perhaps influenced by the Rules Committee battle early in this session of Congress; and perhaps influenced by other factors such as the redistricting of a Congressional District in North Carolina to the disadvantage of the present incumbent who introduced Resolution No. 403.

Having acknowledged the probable influence of these political factors, I would now set them to one side. It would be a very serious mistake for us to attribute this development in the Congress to purely “political factors.” We should now dwell on what I consider to be the crux of the case so far as the Administration is concerned; that is, the facts and merits regarding the administration of the Export Control Act during the past several months.

So far as announced formal policy on exports to Soviet bloc countries, the Administration has pretty much continued to “do business as usual,” notwithstanding the Berlin developments. We have continued to author-ize exports of non-strategic goods to the Soviet Union and her satellites with the only announced policy change in recent months having to do with subsidized agricultural products, a decision which was made prior to the present Berlin crisis.

Our unannounced policy has been stricter than we have told the Congress and the public. Congressman Bloomfield (page 17444 of the Record) makes the categorical statement we are actually shipping subsidized agricultural products. Even though we are not, Secretary Rusk and I in conference with various Congressmen refused to say we would not ship. As Secretary Rusk will recall, I felt weeks ago we should announce publicly that we would not ship subsidized agricultural products to the Soviet bloc. However, we have withheld such an announcement in view of our negotiating problems with NATO allies as well as with the Russians. We must recognize that our decision not to announce that we would definitely not ship subsidized agricultural commodities to the Soviet bloc countries has contributed to the Congressional sentiment with regard to trade with these countries.³

Unfortunately, our continued “announced” policy on exports has not made sense to the average citizen who hears about it and reacts to what he hears—comparing our export policy with the Berlin developments and the action taken in recent weeks to strengthen our military forces.

As you know, we have been more critical recently in our review of license applications. We have cut down on our specific approvals, with the knowledge and approval of the President. We have authorized shipment of subsidized agricultural commodities to Poland, but this has been under express statutory authority of Congress (Public Law 480).⁴ We have in the last few days held up all licenses for Poland and Yugoslavia, also at present on an unannounced basis.

We expect in the Department of Commerce to keep on being very critical of approval of export licenses unless and until the international situation greatly improves, or the Review Board and the President decide otherwise.

Assuming the continuance of the present international crisis with no appreciable worsening or improvement, I think we should consider whether we should advise the President to decide and announce within the next two or three weeks, that no licenses for export of goods to Soviet bloc countries will be approved “for the time being.”⁵ If there is an appreciable worsening in the international situation, then such a decision and announcement should not be delayed for two or three weeks. I am aware of the understanding recently reached by the four-power working group on a series of countermeasures to be taken individually by any of the countries as a response to any one of a series of harassments by the Soviets.⁶ Under this understanding, the countermeasure is supposed to match the harassment in degree of impact. To me, this approach leaves us in the position of merely “reacting” to whatever strings the Soviets wish to pull at a given time. I recognize that we must give careful regard to our relations with the NATO allies, to their own trade policies, and to the great desirability of trying to obtain unity of action among the Western allies. It may be that resolute and determined action on the part of the United States (at the highest level) against continued trade with Soviet bloc countries would have a compelling influence with our NATO allies beyond what is now assumed, but on this point I must, of course, defer to the State Department.

In any event, we come back to our own responsibilities in administering the Export Control Act. We, of course, want to (1) make decisions on specific license applications which are not now and will not later prove to be against the national interest; and (2) apart from the actual merits of individual decisions, we must try to administer the law in such a way as not to lose necessary confidence and support of the Congress and the public.

If we lose necessary Congressional and public support of the manner in which the Export Control Act is administered, it will do us little practical good later to believe that “we nevertheless were right!” The Export Control Act expires June 30, 1962. It has regularly been enacted and extended for two-year periods. There is already definite danger that some drastic and undesirable changes will be made in the law at the next session which could have the effect of greatly restricting desirable flexibility now permitted under this statute.

With respect to hearings on export control administration before either the House Committee or a Senate Committee, it is important that our three Departments coordinate our testimony, and I assume each of us is designating an individual as liaison for our Department on this matter.

Copy of this memorandum is being sent to the President for his information.

Luther H. Hodges

0. Source: Department of State, Central Files, 460.509/9-2061. Confidential. Attached to the source text is a 2-page cover memorandum from Harold C. Vedeler (EE) to Thompson (U), September 20, recommending peaceful trade with the Soviet bloc and resumption of trade licenses for Poland and Yugoslavia.
1. H. Res. 403, 87th Cong., introduced by Representative A. Paul Kitchin (D.-N.C.) on August 3 and approved on September 7, created a select committee to investigate administration of the Export Control Act of 1949. It is not attached to the source text, but a copy is attached to a letter from Acting Assistant Secretary of State for Congressional Relations John S. Hoghland 2d to Kitchin, Chairman of the House Select Committee on Export Control, October 9. (Ibid., 460.119/9-2861)
2. H.R. 8465, 87th Cong., introduced by Representative Paul G. Rogers (D.-Fla.) on August 2. In hearings before the House Interstate and Foreign Commerce Committee, August 29 and September 1, the cigar manufacturers of Tampa and the Department of State opposed the bill. The Committee reported the bill to the House of Representatives on September 14 (H. Rept. 1182, 87th Cong.) where it passed by voice vote on September 15, but the Senate did not act on it.
3. At an unofficial session of the Export Control Review Board on August 15, with the President’s Special Assistant for National Security Affairs McGeorge Bundy, and Secretary of Agriculture Freeman present, Secretary of Commerce Hodges, Secretary of State Rusk, and Secretary of Defense McNamara decided not to license the export of subsidized agricultural commodities to the Soviet bloc and not to announce this decision. They also decided to exercise extreme care in granting licenses for exports to the Soviet bloc in order to be certain that exports would be clearly non-strategic. (Memorandum from Behrman to Borton and Hockersmith, August 16; Washington National Records Center, RG 40, Department of Commerce, Executive Secretariat Files: FRC 69 A 6828, Office of the Secretary, Commerce, International Affairs, Export Controls)
4. Reference is to the Agricultural Trade and Development Assistance Act, approved July 10, 1954, as amended, commonly known as P.L. 480; 7 USC 1691 et seq.
5. In a memorandum of September 22 to Secretary of State Rusk, via George W. Ball, Under Secretary of State for Economic Affairs, and to Secretary of Defense McNamara, via George Roberts Vance, General Counsel, Secretary of Commerce Hodges stated his “understanding of the President’s statement to us in the White House 9/22/61 that we should hold up until further notice on granting export licenses for possible shipments to Poland, Yugoslavia.” (Kennedy Library, National Security Files, Kaysen Series, Trade Policy, East-West Trade)
6. Reference is to countermeasures for meeting the threat to West Berlin; documentation on the Berlin crisis is in volumes XIV and XV.