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FINES will be charged if book is returned after the date stamped below. tries ,.., ‘3“- ? 5‘ ‘5“ “ff. \ ~ ; - 03.2.2 0,4 THE EISENHOWER ADMINISTRATION AND CHANGES IN U.S. EMBARGO POLICY TOWARD CHINA 1953-1958 By Simei Qing A THESIS Submitted to Michigan State University in partial fu fillment of the requirements for the degree of MASTER OF ARI Department of History 1986 Copyright by SIMEI QING 1986 ABSTRACT THE EISENHOWER ADMINISTRATION AND CHANGES IN U.S. EMBARGO POLICY TOWARD CHINA 1953-1958 By Simei Qing From 1953 to 1958, President Eisenhower wanted to open trading relationship with People's Republic of China. He considered a relaxation of U.S. embargo policy toward China as a means to strengthen the economies of U.S. allies and an instrument to wean China away from the Soviet Union. But he could not escape domestic pres- sures to the contrary or overcome the resistance of much of the rest of his administration. This thesis is to examine how President Eisenhower formed his ideas and why he could not carry out his plan. This thesis is based mainly on archival materials. Most of them recently opened. ACKNOWLEDGMENTS Hearty thanks to my adviser Dr. Warren I. Cohen. The topic and basic ideas of this thesis belong to him. For the last two years, I benefited so much from his most valuable instructions on my study of Sine—American rela- tions. I am grateful for his sophisticated analysis of American diplomacy, his sincere understanding of Chinese perceptions, and his intellectual integrity in seeking historical truth. Hearty thanks to Dr. Sullivan. I benefited very much from his excellent instructions on historiography. I tried to use the approaches I learnt in his class in this thesis. I am very sorry he is going to retire. I hope I can continue learning from him after he retires. ii TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . 1 CHAPTER I. PRESIDENT EISENHOWER AND HIS CABINET'S VIEWS ON U.S. EMBARGO POLICY TOWARD CHINA . . . . . . . . . . 2 I. President Eisenhower' 3 Views on the U. S. Embargo Policy Toward China . . . . . . . . 2 II. The Cabinet's Views on U.S. Embargo Toward China . . . . . . . 8 II. THE EISENHOWER ADMINISTRATION AND CHANGES IN U.S. EMBARGO POLICY TO— WARD CHINA-—IN THE CONTEXT OF U.S. ALLIES'PRESSURES . . . . . . . . . . . 16 I. U.S. Embargo Policy, 1948- 1955 - A Short Survey . . . . . 16 II. Japan's Pressure for Relaxa- tion of China Trade Control and the Eisenhower Adminis- tration's Response . . . . . . . 18 III. British Pressures for Elimin- ation of China Differential and the Eisenhower Adminis- tration's Response . . . . . . . 26 IV. Canada's Pressure to Relax Restriction on Trade with China and the Eisenhower Administration's Response . . . 48 V. Summary . . . . . . . . . . . . 50 iii TABLE OF CONTENTS (Continued . . .) CHAPTER III. THE U.S. BILATERAL TRADE CONTROL WITH CHINA--THE EISENHOWER ADMINISTRATION AND CONGRESSIONAL PRESSURES . . . . . . . . I. McCarthy Hearings and Their Impact on the U.S. Embargo Policy toward China, 1953-1954 II. The McClellen Committee's Hearings and Their Impact on the U.S. Embargo Policy Toward China, 1956 . . . . . . . . . . III. The Eisenhower Administration Decided to Hold Back on U.S. Trade with China, 1958 IV. Summary CONCLUSION NOTES BIBLIOGRAPHY iv Page 53 53 57 63 69 73 75 9O INTRODUCTION After the Korean War, particularly after the MacArthur hearings in 1951, the Truman Administration gave up any hope of coming to terms with the People's Republic of China. Instead, it took an uncompromising position with respect to future relations with the Chinese Communists. Nonetheless, the idea of reaching accommoda— tion.with Beijing reappeared in the Eisenhower White House. In the 1950's, especially from 1954 to 1958, there were important changes in U.S. embargo policy toward China. During this period, step-by-step, the Eisenhower Administration accepted decisions by the allies to ease curbs on their trade with the PRC. In 1958, for the first time since the Korean War, the U.S. agreed that any of its allies could sell the Chinese everything they sold the Soviet Union. Also in 1958, for the first time since the Korean War, the U.S. made exceptions to its legal restric- tions, under the Wartime Trading with the Enemy Act, for Canadian subsidiaries of American firms who accepted orders from the PRC. How did these changes occur in this period? And why did these important changes not lead to the final breakdown of barriers to U.S. trade with China? CHAPTER I PRESIDENT EISENHOWER AND HIS CABINET'S VIEWS ON U.S. EMBARGO POLICY TOWARD CHINA I. President Eisenhower's Views on U.S. Embargo Policy toward China. President Eisenhower's ideas on U.S. embargo policy toward China were an integrated part of his over- all conceptions of American national security. Then, what was his concept of American national security? Was there any difference between his concep- tion and that of Truman? What was the relationship be- tween his ideas on U.S. embargo policy toward China and his perceptions of American national security? 1. Under the Truman Administration, emphasis on national security policy was heavily directed towards building up the military strength of the U.S. and its allies at a rapid rate, "to a state of readiness on a specified D—day on the premise that at such time the West should be ready to meet the greatest threat of aggression by the Soviets."1 Thus Truman's foreign eco- nomic policy was characterized in large part by huge amount of U.S. financial aid in a "give away" program to support the establishment of military strength in 2 3 Western countries. It was assumed that the U.S. had no choice but to build up Western military defenses around the Russian and Chinese land mass, to readiness at the earliest possible moment, whatever the cost financially to the U.S. However, President Eisenhower's conception of national security recognized the necessity of preserving in the U.S. a sound, strong economy, and that further continuance of a high rate of Federal spending in excess of Federal income, at a time of heavy taxation, would weaken and eventually destroy that economy. For him, there was not only the external threat to American national security posed by the Soviets and Sine-Soviet alliance, but also the internal threat posed by the long continu- ance and magnitude of Federal spending. This concept recognized that while the U.S. must have adequate secur- ity, it could not obtain security if it continued drain- ing its economy. To reduce the drain of continuing grants-in-aid to its allies on its economy, the U.S. thus dropped emphasis on getting ready for a global war by some speci- fied D-date; instead, it emphasized an ability to mobil- ize rapidly in Western countries before a "floating D- 3 which encouraged the allies to develop "a self- dayH , supporting economy”, "capable of providing their own military strength”, with limited U.S. aid. According to 4 Eisenhower, in ”a true collective system of defense”, ”it is very vital for us to do the things necessary to enable our allies to develop their own economies in a way that could support the military program we urged 4 Hence American donation diplomacy must upon them." end, he argued: If at the end of seven years after W.W.II, and 33 billion dollars of foreign aid, the central problem is as far from solution as it is today, I think something has been wrong in our thinking. Certainly we must find a substitute for the purely temporary business of bolstering the free nations through annual handouts. This gets neither permanent results nor real friends."5 The substitute, in Eisenhower's view, was mainly a liberalization of world trade, including a reduction of the U.S. tariff on its allies products, and reestab- lishment of East-West trade; plus a "foreign aid program" to meet the most urgent financial needs of U.S. allies. In this way, he said, he hoped "to get for America more security with fewer dollars."6 With this new concept of American national secur- ity, President Eisenhower did not consider the U.S. embargo policy toward China as beneficial to the West, economically and politically. 2. According to President Eisenhower, to set up "a strong and self-supporting economic system" among U.S. allies, it was a necessity for some of them to trade with China. 5 First, trade patterns of certain U.S. allies such as Japan, were so long established that they had already developed into historic trade habits on which their economies were heavily dependent.7 In Japan's case, unlike Truman, who insisted to incorporate Japan's economy into the U.S. economic system, Eisenhower maintained that in part at least the solution of Japanese economic problems should lie in trade between Japan and China. The alternative, he feared, would be endless subsidiza- tion of the Japanese economy by the American taxpayer. He believed that "the effort to dam up permanently the natural currents of trade, particularly between such areas as Japan and the neighboring Asian mainland, would be defeated."9 Second, Eisenhower noted that some of U.S. allies in Western Europe were in great economic difficulty; with U.S. aid, they had weathered the first chaotic after- math of W.W.II only to discover that the rebuilt industry and revived agriculture could not find more markets for their growing output. A part of their problem.was, of course, still in the field of domestic economic policy, but, Eisenhower pointed out, the key to the solution of most of their difficulties lay in an expanding world market, including the market in China. He thus favored a "on general plan of moving most of the restrictions Western trade with the Reds." He said, "Many of the nations in the free world have to trade 'with Communists, 6 if they are to survive economically, and therefore the items on the strategic list should be held to an absolute minimum."10 With his new concept of American national secur- ity, Eisenhower asserted that since the maintenance of China trade control would damage certain U.S. allies' economies, and the forces and facilities they provided would be thus subtracted from the common defense, and since the U.S. would have to, either expand vastly its own military effort, or put many more U.S. dollars into these countries' economies, the continuance of China trade control would not be beneficial to American national security. Generally, Eisenhower's position was that since commerce between the West and the Chinese Communists provided certain advantages for both, the U.S. should not keep its eye solely on that part of the trading that helped the Communists. Rather, he held that American policy should be guided by consideration of the net advantage. Where such trade in non-strategic goods brought a net advantage to the West, it should be allowed.11 3. Politically, Eisenhower considered a relaxa- tion of U.S. embargo policy toward China as an effec- tive instrument to deal with the external threat posed by Sino-Soviet alliance, a means to wean China away 7 from Russia. And a weakening of the Sine-Soviet alliance, for him, would basically change the structure of the balance of power in favor of the U.S. "The greatest defeat. . . that the Western world has taken in this long contest” between West and East, Eisenhower asserted, "has been the communization of 12 He was therefore not convinced that the vital China." interests of the U.S. were best served by a hostile policy toward China. He had serious doubts as to whether Russia and China were natural allies. He speculated on whether Soviet interests lay primarily in Europe and the Middle East rather than in the Orient. Therefore, he asked, would it not be the best policy in the long run for the U.S. to try to pull China away from Russia rather than drive the Chinese ever deeper into an unnatural alliance unfriendly to the U.S.?13 How could the U.S. strain the Sine-Soviet alliance? By an embargo policy, by a naval blockade of China? No. He said at his first cabinet meeting in 1953, "They say: 'blockade them'. And frequently all a blockade does is to drive them over 14 to communism and they have got to stay there." It was naive, he told a meeting of the White House Staff, to suppose that Chinese Communists could be defeated simply by the blocking of this trade. Instead, greatly to the detriment of the free world, it would compel China to rely to a greater extent on Russia15 for the products it needed: 8 "The last thing you can do is to begin to do things that force all these Communists, . . to depend on Moscow for the rest of their lives."l6 He argued at a cabinet meeting: "How are you going to keep them interested in you? If you trade with them, you have got something pulling their interest your way. You are not going to keep them looking toward us and trying to get out from under that umbrella unless you give something in the way of inducement to come out. You just cannot preach abstraction to a man who has to turn for his daily living in some other direction."l7 In short, President Eisenhower considered a relax— ation of U.S. embargo policy toward China as a most use- ful instrument to strengthen the U.S. allies economically and to split the Sine-Soviet alliance politically. He did not yet form a new theory on U.S. trade policy toward China; but he did offer a new approach to this issue. Now the question is: Was his new approach shared by his cabinet? II. The Cabinet's Views on U.S. Embargo Policy Toward China. The cabinet shared the President's conceptions of American national security, but did not share his ideas on U.S. embargo policy toward China. Its approach to this issue was more intimately connected with the U.S. Far East policy, the major concern of which.was "to cope with the emergence of a Communist China and its alliance with the Soviets."17 They maintained, with the Sino- Soviet alliance, "the total power structure in the Far 9 18 "Russian influence, has East" was ”radically altered"; been abruptly advanced southward to areas in which neither the Czars nor the Soviets have hitherto had more than passing influence--China south of the wall, China 19 For the south of the Yangtze, and Southeast Asia." cabinet, "the only way by which a significant change in the present world balance of power would even theoret- ically be possible at this time would be through a split ”20 But between the Soviet Union and Communist China. how to Split the alliance? ”Whether given pressures would tend to solidify the Sino—Soviet relationship or the 21 That was the question posed to the cabinet reverse?” by the CIA. Most members of the cabinet did not believe that a relaxation of U.S. embargo policy toward China could reach the goal. On the contrary, they insisted, only with a maximum pressure, with a much stricter trade control imposed on China than on the U.S.S.R., could the U.S. split the alliance in the long run. 1. Why did most members of the cabinet regard a stricter embargo policy toward China a weapon to split the Sino-Soviet alliance? The multilateral trade controls of this disparate nature, they knew, could not prevent China from getting the Western goods she wanted in the Soviet market, which were transported either in Eastern European vessels or lO overland via the Trans-Siberian Railroad. However, the cabinet pointed out that these stricter export controls, together with the U.S. import controls, "limited China's imports by increasing transport costs and procurement difficulties and by depriving China of its U.S. markets.”22 These effects in the aggregate probably represented an annual loss to China of roughly $200 million of which one half, or $100 million, was due to the denial of the U.S. market to China through U.S. import controls. If this $200 million were to become available, they said, "it would be sufficient to enable China to increase its im- ports of capital goods by as much as 50%, a considerable contribution to China's industrial growth."23 With this loss to her industrialization, they were convinced, China had to turn to the Soviets for more help, thus becoming a heavier burden for the U.S.S.R. The Naval Intelligence Agency happily told the cabinet that strained relations had already begun to emerge between the Soviets and the PRC "due to differences arising directly from foreign trade difficulties."24 "The U.S.S.R. has required Poland to provide cer- tain shipping and related services to Communist China which have worked to the financial detriment of the Poles. For example, it was reported in July 1953 that China was 18 months in arrears to Poland for trade, shipping, and harbor fees, and offered payment only in low value Chinese goods which the Poles found difficult to market. ll In this connection, it is reported China is press- ing and increasing her demands on the U.S.S.R. for indus- trial help, and that even with aid from the satellites the U.S.S.R. has been unable to satisfy these demands."25 That is why Walter Robertson, the Assistant Secretary of State, said: "For us, removing obstacles to trade with mainland China, . . . would be folly. We believe that. . . by refraining from coming forward with those things the U.S.S.R. cannot or will not supply, we may best contribute to a realization on Chinese Communists' part of 26 what actually is entailed in the Soviet embrace.” And he further asserted: ”The policy of keeping Communist China under the feasible maximum of pressures would appear to be the best means of generating an internal crisis (which would be favorable to a Sine-Soviet rputure) by the frustration of her economic schemes. . ."27 And the Commerce Department also claimed that ”the prob- ability that failure of the U.S.S.R. or of China to meet its current and future commitment to the other for goods or services could become a significant cause of Sino- . . o "28 Sov1et fr1ct1on. As for the President's arguments that a relax- ation might wean China away from the U.S.S.R., the CIA presented its estimate that "The concessions of an economic and prestige nature involved in a relaxation of Western trade controls would not, at least for the next few years, have any significant effect upon China's internal political situation, its foreign policies, or its basic relationship to the U.S.S.R."29 12 Moreover, the Bureau of Far Eastern Affairs of the State Department maintained that the relaxation could further strengthen the Sine-Soviet alliance: "A policy of small, kindly concessions on the part of the West would tend not to pro- duce, but to prevent a split,” since in this way, the U.S. only "helped strengthen the CCP's negotiation position with respect to the U.S.S.R,” thus could enable it "to obtain more concessions from the U.S.S.R. and further to better its position." 30 Finally, many officials in the cabinet mentioned that the failure of Western efforts to come to terms with CCP in 1949, "when the Western powers, including the U.S., had obviously reconciled themselves to the defeat of the Nationalists and the supremacy of the Communists in China, and were making gestures of accommodation," afforded ”evidence of the CCP's lack of desire for a political settlement with the U.S."31 Therefore, the NSC agreed to a continuance of the stricter China trade controls: "There is no evidence that lesser con- cessions of an economic and prestige nature would induce the Chinese Communists. . . to alter the deep ideological hostility to the U.S. or destroy the Sino-Soviet alliance."32 Instead, the U.S. must "through economic restrictions and through persuasion of its allies to exercise similar restrictions, impose difficulties and delays upon the CCP's efforts to achieve industrial— ization and oblige the U.S.S.R. to continue to carry the burden of assisting Communist 33 China", thus finally splitting their alliance. 13 2. Even this policy of maximum pressures on the PRC, for the cabinet, appeared unlikely to bring about a break in the Sino-Soviet front in the foreseeable future.34 For the NSC, the potential difficulties of the Sino- Soviet connection "will stem primarily from the internal workings of the partnership and only secondarily from the "35 nature of external pressures. And the internal workings of the partnership, according to Sec. Dulles, "might take "36 Before the final split 100 years to assort themselves. of this alliance, how could the U.S. rebuild the structure of the balance of power in the Far East in favor of the U.S.? This is "to maintain the off-shore defense posi- tions (Japan, Ruykyus, Taiwan, the Phillipines, Australia ' and New Zealand)."37 And in this connection, the U.S. embargo policy toward China was regarded by the cabinet as a psychological symbol to show the U.S. firmness in supporting the off-shore countries around the PRC. "The Western rim of the Pacific was extremely vital to the U.S.", Secretary Dulles always said, "If we lost the chain of position in the Western Pacific, it would be almost as bad as if we lost the Atlantic "38 positions. However, "many governments and peoples of this region are 'fence-sitters'," who, as the American Embassy in Taiwan warned, "watch carefully the firmness or softness of American policy toward Communist China."39 14 "Their greatest fear," in the JCS' words, "is the possibil- ity of a change in U.S. policy which indicates a lack of resolution"40 in resisting the PRC. Thus any slight hint of U.S. accommodation with the PRC, not to mention a for- mal relaxation of U.S. embargo policy, "would gravely undermine anti-Communist morale and strength throughout the 41 critical areas" In this regard, Secretary Dulles asserted, "The psychological factors are more important than the commercial ones."42 Specifically, in the off-shore defense program, the U.S. embargo policy toward China was a part of U.S. 43 On the one hand, the U.S. did not two China's policy: want Chiang Kai-shek to attack mainland China without U.S. concurrence; on the other hand, the U.S. wanted to make a ”tough gesture" to mainland China, to prevent it from.tak- ing Taiwan: "This might be merely a war of nerves," Secretary Dulles said, and "the Chinese Communists would continue to exert pressures until they found the point where we would have to react by shooting."44 In short, within the cabinet, there was an agree- ment that a stricter U.S. embargo policy toward China must be maintained, both as an effective means to split the Sino-Soviet alliance in the long run, and before the final split, as a psychological symbol of the U.S. firm— ness in supporting the off-shore chains encircling the PRC, particularly Taiwan. 3% 7': ‘k 15 It is obvious that President Eisenhower's approach to the U.S. embargo policy toward China was quite different from that of his cabinet. With his team style of leadership, he did not impose his own ideas upon the cabinet. He accepted some of the cabinet members' argu- ments, compromised with them on the others, and formally approved all NSC decisions on this issue. But, it did not mean that he gave up all his approaches. And he was prepared to ease curbs on Western trade with China, when he had opportunities. Such opportunities arose when the major allies of the U.S. urged strongly to remove the restrictions on their trade with the People's Republic of China. CHAPTER II . THE EISENHOWER ADMINISTRATION AND CHANGES IN U.S. EMBARGO POLICY TOWARD CHINA - IN THE CONTEXT OF U.S. ALLIES' PRESSURES I. U.S. Embargo Policy, 1948-1953 — A Short Survey As the Cold War itensified in 1948 and 49, the U.S. began to put its "economic equivalent of political contain- ment” into effect. The basic purpose of the economic containment was to reinforce the overall containment policy by depriving the Soviet Union of military and strategic goods, which, it was believed, would keep the U.S.S.R. in a position of relative military and economic inferiority. A mere American prohibition policy was obviously insufficient, so the Truman Administration began to take actions to obtain the cooperation of Western allies in the strategic embargo policy. A first stepinvolved a series of negotiations with the other principal Western allies regarding a collective embargo of strategic exports to the East. Discussions in this regard culminated in November 1949 with the establishment of COCOM (Consultative Group Coordinating Committee). Each item on the COCOM list of embargoed exports to the Socialist countries had to be agreed to unanimously, and exceptions to the embargo likewise had to receive unanimous approval. A second step l6 17 was taken in connection with the pressure of the U.S. for the establishment of separate machinery within the COCOM framework to coordinate a more extensive embargo on trade with Asian Communist countries. As a result, an addi- tional coordinating committee, "CHINCOM", was set up in September 1952. "CHINCOM" established a much broader ex- port control list for China and North Korea that came to be known as the "China Differential." A third step_was a U.S.-Japanese bilateral agreement, also in September 1952, which required that Japan should maintain export controls toward China at a level even higher than the "CHINCOM" levels. The scope of the Western strategic embargo list was expanded significantly in the several years after the establishment of COCOM, primarily as a result of increased allied unity following the outbreak of Korean War. But as this conflict came to an end in 1953, allied pressure upon the U.S. to reduce the embargo's coverage became in- tense. The year 1953 not only marked the end of the war in Korea, but also was characterized by Russia's increased willingness to trade with the West. Furthermore, most of the industrialized world had been dragging through a recession, and evidence began to appear that the West's embargo policy was becoming increasingly costly to the cooperating nations. This undoubtedly became even more evident to the Western Europeans as many of the post-war domestic supply bottlenecks began to disappear, and these 18 economies became increasingly outward looking. Finally, Marshall Plan aid was terminated in 1953, and the sanc- tions incorporated in this program for forcing compliance with the U.S. embargo policy ended with it. All these led to negotiations in late 1953 and early 1959 between the U.S. and fourteen other nations, resulting in consider- able relaxation of restrictions previously imposed on shipments of strategic goods to the U.S.S.R. However, this relaxation, the U.S. representatives in the COCOM insisted, should not apply to China. But Japan and Great Britain particularly were not satisfied with this insistence, and began to press for relaxation on their trade with the People's Republic of China. II. Japan's Pressure for Relaxation of China Trade Control and the Eisenhower Administration's Response 1. For many decades before 1949, Japan's trade and industry were integrated with that of the Chinese mainland. Japan's prewar trade with Asiatic countries accounted for 65 percent of its total trade volume, over half of which was represented by trade with China. However, because of the international embargo policy toward the PRC, Japan eas obliged to purchase iron ore, coking coal, salt and other essential raw materials in the U.S. and South American markets, via the Panama l9 Canal and Pacific Ocean. The Japanese export capacity was thus greatly reduced, as the President of Japanese Federation of Economic Organizations bitterly complained, "no amount of industrial effort and reliance on low- cost labor could bring the price of manufactured pro- 1 And ducts down to a competitive world market level.” the high tariff of the U.S. further hindered the export of Japanese products. The Japanese were thus forced to turn to the markets of non-dollar areas for most of their products. Therefore, the new Japanese trade pattern-- to import raw materials from far away dollar areas and to export most of manufactured goods to non-dollar areas-- caused essential difficulties in balancing its dollar account. Although the year 1952 saw highest post-war record in the export trade for Japan, still the balance for the year was a deficit of $800,000,000. Such a deficit was barely balanced by the dollar receipts from special U.S. procurement demand in Korea and those from the U.S. forces garrisoned in Japan. In 1953, the Japanese trade deficit continued soaring, to over almost a billion dollars; and its foreign exchange reserve was reduced by $300 million. In other words, the Korean War was in fact the chief source of the fragile stability for the Japanese economy. And with the close of the Korean War, a real fear began to occur in Japan that a slump for Japan's economy might well follow. Ending it would oblige the Japanese to seek alternative outlets for the goods that 20 went to bolster the U.S. war efforts over the previous three years. The most natural source of such outlets was of course the Asian mainland, with the traditional Chinese market the most obvious and most desirable. Hence the idea that "Japan must trade more with Communist China--it is natural, it is inevitable"2 was affirmed by such figures as Hisaakira Kano, spokesman for Japan's most powerful industrial group. The Japan Machin- ery Industry Association and the Iron and Steel Associa- tion representing Japanese Machinery and Steel Industries, presented to the government demands, claiming that "It is an important mission for the government "to take " since "there measures promptly to promote China trade, is no way to tide over the present difficult situation un- less measures are taken for resumption of full-scale trade with Red China in the export of iron and steel goods and machinery."3 Indeed, in the general industrial circles in Japan, "The call for China trade is desperate," "the demand for China trade contains a sort of hysteria,"4 a Japanese heavy industries newspaper noted. The business community asserted Japan should "object" to the "imposition" by the U.S. of "stricter embargoes for Japan against trade with Communist China than for Western Europe."5 But the government of Yoshida Shigeru was reluc- tant to facilitate the expansion of Japanese trade with the PRC despite pressures from business Community. And 21 the business community's demand for relaxation of China trade controls thus spilled over into the 1953 election campaign, and was itensified by the formation of a supra- partisan "Dietman's League for the Promotion of Sino- l Japanese Trade,‘ which became the largest organization in the Diet with its over 300 members, consisting of 70-odd conservative liberals, 40-odd progressives, and all members of the left-wing Socialist party, to press for 6 The director of this the reopening of the China trade. League Mr. Zkada, who had headed the Liberal Party's Foreign Policy Study Group as well as its anti-Communist Action Group claimed: "Because of Japan's long-standing economic ties with the Mainland, trade with Communist , China is a necessity for the country, and it is the duty of Diet members to pressure the govern- ment into making the U.S. understand Japan's position." The goal of the Diet's League, he declared, "is to do its utmost to expand this trade by exerting pressure on the government to relax existing controls at least to the CHINCOM levels."8 When the new Hatoyama Cabinet was set up, it immediately took the lead in encouraging China trade. Beyond purely economic considerations, enlarged trade with mainland China was desired by the new cabinet as an essential stepping stone toward a politically independ- ent Japan. For the new Foreign Minister Shigemitsui, broader relations with China on the part of West were 22 inevitable, and Japan was particularly well-qualified to act as a "bridge"9. And a more c00perative relationship between the U.S. and the PRC with Japan as a mediator, "could possibly effect a change in Communist China's alignment with the U.S.S.R." In the process of mediat- ing between the U.S. and China, Japan could ”reassert her 10 Certain Diet members who had inti- leadership in Asia." mate connections with the Cabinet, advocated on the floor of the Diet that Japan should remain aloof from the East- West struggle, and when the fighting was over, move and pick up the pieces. And the relaxation of China trade controls should be the first step in this direction.11 With these economic and political considerations, the Hatoyama Cabinet began to push hard to ask for elimina- tion of the bilateral U.S.-Japanese agreement. 2. The State Department officials were very suspicious of the political orientation of the demand, considering the Japanese plan of serving as a go-between as detri- mental to U.S. national interests in Asia. However, at the same time, they were deeply concerned with the econo- mic situation in Japan. As Secretary of State Dulles said: "The Japanese are now running an adverse trade balance of some 1,000 million dollars. They have survived only because due to the Korean War we have made heavy purchases in Japan. . . This could not go on for long without disaster." He said, he did want "to emphasize the extreme importance. . . of finding areas for Japanese trade."12 23 But trade with China? No. He urged the further opening of the American market for Japanese goods. He knew Japanese imports would ”disrupt U.S. domestic markets,‘ and that "there just are not any Japanese goods which we want." Still, the Secretary of State insisted: ' "We might have to take goods which we did not want unless we want to put Japanese industry at the service of the U.S.S.R. and Communist China to assist them to bring up their military strength." 13 He asked that the tariff negotiations with Japan begin as soon as possible. He called for the support of all agen- cies in the Cabinet "to overcome the major difficulties "14 -- the resistance to Japanese goods in the U.S. He main- tained that the interests of individual industries which would be hurt by the importation of Japanese goods, ”must be weighed against the overall national interests."15 The Commerce Department however, qu not enthusi— astic about opening more domestic markets to Japanese pro- ducts. It reported, according to its investigation, some domestic industries had already been hurt too much by the limited import of Japanese goods. For instance, in the cotton textile industry, because of the competition, "total employment has declined from 1,252,000 in 1947 to 982,000 in April 1954." And in hand—made glass industry, because of the competition, "employment has declined near- ly 40% since 1947. Workers are on a reduced weekly-hour basis and the take-home pay of those in this industry has been greatly cut." The situation became more serious 24 since "in many instances entire communities are dependent "16 The Assistant upon the Handmade Glassware Industry. Secretary of Commerce Loshair Teetor pointed out that all the damages the Japanese importation caused in the past were not based on fair competition: "One fact is predomi- nant" in this competition, that is "the low wages paid in Japan" in comparison with the high wage levels enjoyed 17 by American laborers." Indeed, the Commerce Department did not want to relax China trade controls, but it did not want to open more domestic markets either. Secretary Dulles had to admit: "There is little 18 future for Japanese products in the U.S." And he 19 Why should the turned more and more to Southeast Asia. U.S. put 75 percent of its defense expenditure in that area? because, the Secretary stated, ”One of the serious consequences of the loss of Southeast Asia would be its effect on Japan."20 "If we could salvage a substantial part of Southeast Asia there would be the possibility of "21 developing Japanese trade with that area. Unfortunat— ely, Dulles said, this plan could not be carried out in a short time, since "the Japanese had left bad memories in Southeast Asia and would not be welcomed back easily."22 The JCS, on the one hand, urged to find Japan "sufficient access to raw materials and markets to support an independent Japanese economy thus assuring "23 the base for her rearmament. On the other hand, they ‘were resolutely opposed to the resumption of Sine-Japanese 25 trade, fearing that it "will produce a heightened sensi- tivity on the part of Japan to Communist pressure."24 While the Cabinet was deciding, the Japanese economy continued deteriorating. In March 1954, the American Embassy in Tokyo warned that "A serious economic crisis may develop as early as this summer as a result of the continuing deterioration in Japan's foreign exchange "25 The Embassy warned about strong leftist and position. neutralist elements in Japan who were actively advocating accommodation with the U.S.S.R. and the PRC to further promote trade with the Communists.26 The President advised his Cabinet to offer con- cessions to the Japanese. "No single action would solve the Japanese economic problem," he commented at a Cabinet meeting in August 1954, "but a variety of approaches must be made": "It is an absolute fallacy to say that there should be no East-West trade. Instead, some Japanese trade with her Communist neigh- bors should be encouraged and would set up influences behind the iron curtain,"27 which "would hurt Russia rather than help the Soviets because it would turn Peiping away from Moscow and create a friction between the Communist countries."28 Being aware that Japan's economic situation was in- timately tied to its political stability and its ability to stand firm in the off-shore chains, and unable to find alternatives quickly to the Chinese market, the Cabinet had to accept the President's proposal. They admitted: 26 "It would be reasonable to meet the Japanese requests because of Japan's need for enlarged export markets, because Communist China represents a nearby export market and source of raw materials, because availability of a Communist Chinese market might ease the pressure of Japanese exports on Free World markets,” and because "U.S. expenditures in Japan are of a temporary nature."29 In August 1954, the NSC decided: "The NSC agreed to release Japan, gradually, as appropriate, from its obligation under the U.S.-Japanese bilateral agreement to maintain export controls at a higher level than the CHINCOM level.”30 III. British Pressures for Elimination of China Differ- ential and the Eisenhower Administration's Response 1. In Great Britain, both the Labor Party and Con- servative Party considered relaxation of China trade controls as an integrated part of British national policy of accommodation with the PRC, although both parties' approach to accommodation was different. For the Labor Party, the policy of accommodation was mainly based on their perceptions of the nature of the PRC and thus their confidence in Chinese Titoism. To some of the Laborites, the PRC was a great improvement upon what had gone before for the Chinese people. Regardless of whether the PRC was hostile to the West, or represented an ideology alien to the British, they were willing to welcome it since, for them, it was a better alternative as far as the welfare of Chinese was 31 concerned. To many other Laborites, Communism was 27 not considered a good thing for the Chinese at the time; but they thought, Communism in Asia might be ”objectiv- ely a liberating force which may well provide the kind of authoritarian regime that in Western Europe was the immediate successor to feudalism and the necessary pre- 32 There were still other lude to political democracy." Laborites who saw in the PRC two opposing tendencies: "On the one hand, rational thought, good administration and respect for the common man; on the other hand, unreasoning faith in dogma, bureaucracy and contempt for the individual. . . The development of China is likely to take completely differ- ent paths according to which tendency predominates."33 It was thus their conviction that the West should do its utmost to see that the former tendency in China prevailed. Generally speaking, for Laborites, the nature of the PRC was not that of Communist power versus Western power, but that of nationalism versus imperialism. In their View, the CCP were simply "agrarian-democrats."34 Therefore, many Laborites, particularly the Labor leadership, believed that "China if properly handled could in the long run be separated from Moscow."35 In Mr. Attlee's words, "There is a strong mixture of Chinese nationalism in their Communist attitude." So "there is a chance of Titoism". Was it wise, the Prime Minister asked in his talk with American officials in December 1950, "to follow a policy which without being effective against China leaves her with Russia as her 28 only friend?"36 Mr. Bevin declared in May 1950 that "We all ought now to cooperate to give China a chance."37 Even after the break of Korean War, he expressed to the House of Commons his conviction that Britain should seek to keep China in association with the other nations of the world so that she should not feel forced to align 38 A hostile herself permanently with the Soviet Union. attitude toward the PRC, particularly the multilateral China trade controls, in the opinion of the Labor leader- ship, only had the effect of driving the Chinese further and more irrevocably into the Soviet arms, and the trade weapon was not being put to its best possible use as a means "to tempt China into a more independent stance vis-a-vis Moscow."39 In the heat of Korean War, although the Labor leadership agreed to adopt a hard-line policy against the PRC, including adopting the multilateral embargo policy, still they strongly desired that as soon as the Korean War ended, the British should go back to its accommodation policy and reopen its trade with China. For the Conservatives, the international world was primarily a scene of power politics, and the nature of the PRC was never viewed in terms of nationalism versus imperialism, but in terms of Communist power poli- tics. For them, that the CCP called themselves Communists ‘was sufficient; the Conservatives assigned a great role 29 to Moscow, believing the CCP movement to be simply pro- jections of Soviet influence. An assumption that a hostile government should be welcomed provided it betters the lot of its own people or it represents a right direction in the historical process, forms no part of Tory heritage. With a few exceptions, the Conservatives had but little sympathy toward the rise of post-war Asian nationalism, and notably of the behavior of a proud and ancient people in violent reaction against the century-old dominance of the Western powers. In China they merely saw a vast shift in the world balance of power in favor of the Soviets. However, they could not bring themselves to support a hostile policy against the PRC. Like the Laborites, the Conservatives also advo- cated accommodation with China. A hostile policy against China, to many Conserva- tives, meant a very unstable relationship between British and the PRC, and which might raise the nightmare possibil- ity of Western involvement in a land war with China and of Soviet moves in Europe and the Middle East to take advant- age of such involvement. Indeed Churchill declared that nothing could be more foolish than for Western armies to be swallowed up in the vast spaces of China. For Conserv- atives, British national priorities in international politics inevitably put Europe first, the Middle East second, and Southeast Asia and the Far East third, 30 particularly in view of the drastic decline of British military and economic strength after W.W.II. Therefore they considered stability in the Far East best suited British interests. A war with China would leave Europe and the Middle East vulnerable to Soviet pressure--a con- sideration which was also shared by the Labor leadership, but which weighed most heavily, although not exclusively, with the Conservatives. And a true stable settlement with the PRC, to many Conservatives, was not one imposed and maintained by armed forces, or by an encirclement of the PRC, but by an equitable arrangement in which dissatisfaction on both sides should be reduced to a minimum, no matter how much Conservatives disliked the nature and ideology of the Chinese Communists. They claimed one of the Conserv- atives' beliefs in international order was that: "Human society are likely to differ in their social structure and in their political outlook for as long ahead as the most far- sighted of us can foresee. Any idea that we can solve the problems of war and peace by trying to persuade them all to think alike-- even if we believe that our own way of thinking is demonstrably correct--can only precipitate conflict and not avert it. The problem of peace is to discover a means whereby differently minded nations can avoid war, not to invent a formula to which all nations to prove their rightmindedness must necessarily subscribe."40 Thus many Conservatives were inclined to the view that in the resolving of the Far Eastern issues, the PRC also should be given adequate satisfaction or territorial guaran- tees . 31 Moreover, the Conservative leadership as well as many Conservative businessmen accepted the argument of the Labor leadership that the policy of accommodation with the PRC could generate a rift between the Sino- Soviet alliance. For instance, in 1954, the China Association-~One of the most important organizations of the British firms engaging in China trade--reported that the consideration of splitting Sino-Soviet alliance was widely shared in British businessmen's thinking on China trade controls.41 In Eden-Eisenhower talks of 1956, Prime Minister Eden argued that with a policy of accommo- dation, particularly a relaxation of China trade controls, the West might draw a wedge into the Sine-Soviet alliance.42 Therefore, it was the British Conservative govern- ment's belief that it would help keep the stabilization in the Far East and split the Sine-Soviet alliance to ease the curbs on strategic trade regulation, thus best serving the British national interests in international power politics. But, unlike the Labor leadership, the British Conservative government was more willing to keep in step with the United States in relaxing the multi- lateral embargo policy against China. The British govern- ment did not want to take any independent action on this issue until the pressures for relaxation from the British business community and Parliament became stronger and stronger. 32 2. Why were the British business community and Parliament so anxious to relax China trade controls? Western Europe as a whole, was heavily dependent on foreign trade. In the 1950's, its imports or exports constituted about 10 percent of the national income, as against 4 percent in the case of the U.S. The dependency was the more critical since it was concentrated in basic foods and raw materials. Western Europe normally depended on imports for about 20 percent of its food supplies. The country most dependent on food imports was the United Kingdom, whose domestic agriculture produced only 42 percent of its food requirements; more than half of its food supply was imported from overseas. Most of these Western European countries were net exporters of machinery and textile products; this export trade was essential to keep their balanced economic development. Since 1953, the economic situation in Britain had worsened. The previous sizable balance of payments surplus disappeared and dollar reserves dropped by $900,000,000 to the low level of over $2 billion in 1954. Balance of payments difficulties arose primarily from the failure of exports to match the massive increase in increase. In 1955, the balance of trade showed a further deterioration, and the Governor of the Bank of England warned that the dollar reserves were only just above what was thought the danger—mark -- $2,000 million.43 33 The British government thus set out a proposal: "Trade, not aid," asking the U.S. to liberalize its import policy. And the British business community was deeply disturbed when the report came that the U.S. Congress might tighten the import policy, requiring the President to accept tariff commission escape clause recommendations except when national security was involved. This would make it almost impossible in the future for the President of the United States to reject recommendations for duty increases on important U.K. manufactured products, since most such products had little national security sig— nificance. Such a result of course would hit a wide range of U.K. exporters to the U.S. This, American Ambassador Aldrich warned, "might change the whole direc- 44 And it did. tion of British commercial policy.” ”The British industrial and trading circles are casting more and more interested glances towards the mark- ets of the East," "All eyes are now turned to Peking,"45 a neutralist French newspaper reported at that time. And it was true. In 1953, compared with 1952, Britain's ex— ports to China increased from $1.8 million to $8.7 million; Hong Kong's exports to China rose from $29 million to $63.7 million. Britain's imports from China rose from $4.5 million to $10.9 million and those of other British overseas territories increased from $89.7 million to $120.3 million.46 34 Even with this increase, British trade with China was only a very small proportion of British world trade. But the British business community regarded this trade as "a very valuable contribution"47 to United Kingdom economy. First, British imports from China were mainly tung oil and dried and tinned eggs, "both essential for the British food manufacturing industry and unobtainable from other non- dollar sources."48 Moreover, some British industrialists were very optimistic about the potential of Chinese markets, believing that Chinese markets could provide annual con- tracts of between{ 50 million and £100 million for British 49 Although many other British industrialists industry. had only modest estimates of the potential of Chinese markets, they felt, as the Federation of British Industries pointed out, the opportunities in China, "if neglected by the United Kingdom, will be seized by our competitors."50 And the competition in China among the Western suppliers was remarkable: "British, West German, French, Japanese,... feel triumph when they manage to conclude a contract with Communist China," a West German reporter described at the time, "and they feel jealous and worried, if somebody else "51 The British business community's manages to do the same. pressure for entering Chinese market thus came to be moti— vated more and more by anxieties lest Britain be left be- hind in the race for the Chinese market. Finally, there was widespread concern for Hong Kong, which depended on 35 China for its main supplies of food. The Governor of Hong Kong declared in November, 1954 that it was of vital importance to the island that the embargo should be lifted or at least eased.52 The British businessmen told the government in Hong Kong that they felt about the strategic regulations "much as a man would feel if you were to give him a knife and tell him that it was in his interests to go and cut his own throat."53 The Hong Kong and Shanghai Banking Corporation had been especially critical of the extension to the colony of the Korean War controls. It was argued that China trade controls had disrupted con- tracts already negotiated, produced a good deal of uncer- tainty and confusion, upset the industry of the colony by depriving it of raw materials, and jeopardized the liveli- hood of workers and the functions of the port.54 Hence a strong current of disapproval of British government policy on China trade controls prevailed among the British industrialists. And the business community's desire for relaxation of strategic trade regulation showed most keenly at Westminster. In the Parliamentary debates, the traditional, long—standing nature of Anglo-Chinese commerce was empha- sized, as a Laborite peer claimed in the House of Lord: This country has an old, traditional and valuable market in China which we hope one day to regain. . . I hope that Her Majesty's govern- ment will then be well prepared to knock off quickly these artificial restrictions and allow 36 our merchants and traders to get busy. . This is a great market, and we cannot afford to neglect it in the future.55 And the low level of Sino-British trade was linked with specific cases of decline or serious problems in British industry. For instance, Sir Harold Wilson, the former Socialist President of the Board of Trade, maintained: There seems no reason at all, why. . . we should not be free to ship tinplate to China to help our depressed tinplate industry, or why there should be any further control on rubber shipments or why we should refuse penicillin and other healing drugs to the East.56 Lord Seraboligi told the Parliament, his constituents in Hull strongly urged that, In the constituency of Hull, in the past, we brought in soya beans from Manchuria and crushed them into the most valuable edible oil. This country is short of edible oil, . . . and we cannot afford to buy the quantity of fats that we should like. . . in dollar market. If we could again bring in soya beans there would be more work for my old constituents in Hull. . .57 Many members of Parliament pointed out that export licenses were refused for the exporr to China even of pumps for coal mines, stationary engines, electric coal drills, etc., making a total of-ElO million worth of general industrial machinery. The licenses were denied because they were "58 regarded as "strategic. Both Conservatives and Labor- ites in Parliament were deeply worried that: We have lost very heavily from these embargoes at a time when our economic situation is not bright," and "when our export trade is vital to the existence of this country." The China market would surely "help to maintain the not too 59 certain chances of full employment in this country. 37 Therefore the members of Parliament from both parties strongly urged the government to break free from the com- mercial policy of Americans, as Sir Walter Fletcher, a resolute anti-Communist Conservative at Westminster, claimed: So far the policy of the government has been one of willingness to listen too much to American requests for restriction and control and has engendered in our government suspicion of every move of the commercial community. In the issue of strategic trade controls, the policy must be that of Whitehall and not Washington.60 The Conservative government had to take into con- sideration the possibility that if the British economic situation was deteriorating, while strategic trade con- trols still existed, the opposition party at Westminster could seriously threaten the government's power position. The British government more and more resolutely pushed the Eisenhower administration to relax the multi- lateral embargo policy against China. 3. While British pressures to relax China trade con- trols were building up, within the U.S. government, no agreement could be reached on whether the U.S. should take actions to force the British to maintain the "China Differential." In Europe, the U.S. military and diplomatic repre- sentatives were almost unanimous in their opinion that no pressures should be exerted and that "The U.S. would have 38 to approve a sizable reduction in the Differential if multilateral controls are to be preserved."60 Joe Walstrom, Director, Office of Security Trade Controls, U.S. Mission to NATO, told Washington, "The great majority of CHINCOM members felt they could not make further concessions on 'China Differential', since they found it increasingly difficult to defend vis-a—vis public opinion in their own countries." The pressures from business community in these countries were so strong that these governments simply did not know how to explain to their own Parliaments and exporters why the "China Differential" must be kept.61 Winthrop Brown, the American Minister for Economic Affairs in London, pointed out that for him, the wise course for the U.S. to take, "is to agree to abandon the China Differential by stages and to confine the negotiations, not to the question of whether the Differential should or should not be preserved, but to the question of over how long a period and by what stages it should be dissolved. Only in this way, he said, might the U.S. keep at least a symbolic differential."62 However, in Washington, the Defense Department and the JCS demanded that the U.S. bring as much pressure as possible to bear upon British to keep the China Differen- tial. "From a strictly military point of View," the JCS maintained, any relaxation of "China Differential" would cause "the gravest probability that the Pacific off- shore island chain will fall under Communist domination," and the U.S. would suffer "a complete loss of the balance 39 63 Therefore, the U.S. of power in favor of Communists." should not be afraid of the risk inherent in the strong pressures the U.S. would exert upon British, the U.S. should not always "defer to the counsel of the most "64 Otherwise, the U.S. could cautious among our allies. never protect its national security in the Far East. The State Department's position was that "to ask a country to apply the China Differential was a political H decision Secretary Dulles said the State Department was surely ”not prepared to ask the allies for such a decision." Moreover, the State Department recognized that "many of the other free countries are much more dependent upon foreign trade than is the U.S.,"65 hence, "our allies' budget problems are even more acute than ours and are no longer being relieved by such U.S. liberality as to put $30 billion of economic aid into Europe during the six 1."66 years 1946-5 Therefore, "perhaps some minor adjust- ments are inevitable" on the issue of China Differential ”in order to maintain the essentials."67 As for the Commerce Department it was deeply con- cerned with the impact of a relaxation of China Differen— tial on American business community. The Commerce Depart- ment agreed with the Defense Department and the JCS, calling for continued pressure upon the British because of "the discrimination against American businessmen which resulted from the fact that we maintained a complete 40 embargo against Communist China while other countries per- mit their businessmen to conduct trade within certain 68 limits." The Commerce Department pointed out this had already caused grave troubles for certain U.S. industries. For instance, the American Brush Manufacturers Association protested that while, "the prohibition of trade with China keeps hogs bristle that is needed for the manufacture of the best brushes out of this country, brushes which are made of China hog bristles are imported into the U.S. from England. . ."69 With the high quality and cheap China hog bristles, British brushes were easily "underselling the American brush "70 The Association complained bitterly, ”We are "71 market. now living under the specter of economic ruin. It is clear that although the government officials shared a common approach to U.S. embargo policy toward China, the specific consideration or perception of this issue in different executive branches, made it impossible for them to agree on how to react to the British demands. 3. While the Cabinet members' opinions remained divided, President Eisenhower pushed ahead to ease curbs on the allies' trade with China. The First Phase: September, 54 - January, 56 In September 1954, the U.K. Ambassador in Manila told the representative of the State Department that he would be instructed shortly, before the British Parliament 41 reconvened, to open discussions with the U.S. government on the question of relaxing China trade controls. And the NSC told the U.S. negotiators "No change in the hold- the-line course of action is to be expected from the NSC."72 In October 1955, before the Foreign Ministers' meeting, the British again proposed to discuss the "China Differential", but the NSC again refused to talk about this topic at the meeting.73 In December 1955, Secretary Dulles told Eisenhower that no more concessions could be expected from the British on the China Differential: "The British now present us with the prospect of total dis- "74 The integration of the multilateral control system. Cabinet had agreed to discuss it with the British at the forthcoming Eisenhower-Eden talks, but still maintained that "China Differential" should be kept. Concessions might be made only if necessary "to preserve the multi- lateral system." The U.S. would "offer to acquiesce only in a minimum adjustment whereby 19 items would be dropped from the multilateral China embargo list."75 The President began to show openly that he was not in complete agreement with his Cabinet. At the Eisenhower-Eden talks (January 31 - February l,'56) he told Eden that the 19 items, which his Cabinet had approved for decontrol, in his view, were surely not sufficient to negotiate with the British government. In the course of negotiations, when Under Secretary of State Mr. Prochnow 42 tried to persuade Eden, "the net gain” in a relaxation of the Differential "would be greater for the Chinese Commun— ists, the President commented immediately that, "We are trying hard to help IndoChina, Burma and other countries ' in Southeast Asia,‘ and a relaxation of trade control "might help them economically if they are able to sell to Communists various raw materials." When Secretary Dulles advised Eden, "it would be very important to avoid any in- dication that there has been a change in policy," the President remarked, "Surely we cannot say that we made a flat decision in 1952 that cannot be altered in any 1."76 In the Eisenhower—Eden communique, instead of detai calling for a maintenance of the China trade controls, it was announced that ”the restrictions on trade with Commun- ist China are to be reviewed in the light of changing con- ditions"77 by both governments. The Second Phase: February56 - Jannary 57 At the request of the President, an interdepart- mental agency Council of Foreign Economic Policy (CFEP) began to examine a list of items submitted by the British for decontrol and to review U.S. embargo policy toward China. But the CFEP members were so divided that no agreement could be reached. Although the State Department was a little more willing than others to give certain minor concessions, it was blocked from time to time by the Defense and the Commerce Departments. Moreover, some 43 officials of the State Department surely did not want to go all the way to meet the British demands. Walter Robertson, the Assistant Secretary of State said, he was "shocked" at Eden's position on trade with China: "A position without principle as illustrated by Eden's remark that 'nobody was ever hurt by trading and making a few dollars."'78 Hence, for almost the whole year, the CFEP members debating, deciding, could not make a decision; and with the Presidential election coming nearer, they decided to put off making the final decision until after the election. In December 1956, right after the election, Economic Defense Advisory Committee (EDAC) suggested to the CFEP that the U.S. should exert pressures to bring out an overall tightening of multilateral trade control against China, offering participation in an early CHINCOM Consultative Group meeting to achieve this objective.79 President Eisenhower was deeply disturbed. He made it clear to Mr. Randall, Chairman of CFEP, and to members of the NSC that he believed "controls over trade with the Communist China should be liberalized rather than (1."80 He suggested the CFEP make changes in U.S. tightene embargo policy toward China to meet British demands. The CFEP then began to modify the U.S. embargo policy, admitting that "the compelling considerations that favored liberalization of multilateral China trade control included, 44 "The fact that the President's trade program as a whole contemplates gradual reduction of trade barriers everywhere;” And "The likelihood that the entire control mechanism will disintegrate unless the U.S. makes a substantial concession to the wishes of its allies."81 The CFEP decided to provide for "a substantial reduction" in the CHINCOM list, while continuing the existing U.S. bilateral controls. The new policy would retain a "meaningful China Differential,” but one much less than the existing China Differential.82 In February 1957, the NSC approved the new U.S. embargo policy toward China. For the first time since it was established, the "China Differential" was eased. The Third Phase: May 57 - August 58 However, the new policy, as London Economist pointed out, still fell far short of the desires and in- tentions of British, Japanese, French and others, and failed to meet their demand for complete abolition of 83 China Differential. On May 15, Secretary Dulles received a strong memorandum from Foreign Minister Selwyn Lloyd, pointing out that the British would "have to gain greater freedom in respect to China trade and do so quickly because of the Parliamentary situation." Lloyd told Dulles that, in Britain, "There was rising criticism of the U.S. in areas where there was unemployment, which was ascribed rightly or wrongly, to U.S. 45 refusal to let them trade with China."84 Secretary Dulles suggested that the President send a mess- age to Prime Minister Harold Macmillan, to the effect that the U.S. could not go all the way to meet the British and that the British must go further to meet the U.S. Eisenhower indicated that "Basically, the CCP and the U.S.S.R. should be treated alike in thismatter."85 Still, he sent his message on May 16, protesting against the proposed move and asking Macmillan to reconsider this decision. Knowing that Eisenhower's apprehensions were "chiefly caused by the strong feeling in the U.S. Congress," Macmillan replied on May 21: "This Chinese business has become al- most as much an obsession with us as it appears to be with your Congress. . . You say that if we get what we want the Chinese will only switch their trade from one item to another. That may very likely prove true, but traders never think like that. Each individual firm and industry believes that it can increase its own sales, and of course, in our country, which only lives by exports, this is quite an important factor.'86 In another letter to Eisenhower, Macmillan asserted: "The commercial interests of our two countries are not at all alike. We live by exports-~and by exports alone. So I feel that we cannot any longer maintain the exist- ing differential between Russia and Chinese trade and we shall be making a statement to this effect in Parliament tomorrow."87 Eisenhower told Macmillan: "As an individual I agree with you that there is very little of profit in the matter of China differential either for your country or for any other. 46 We understand your predicament and even though we may be compelled, in the final result, to differ sharply in our official positions."88 On May 29, 1957, the British government declared in Parliament that it had decided to abolish the differ- ential controls on strategic exports to China. The Defense Department and the JCS became furious at this decision. They urged Eisenhower to retaliate, including "the application of Battle Act, Export Control Act and Trading with the Enemy Act restrictions on trade with certain of our allies in response to their widened trade with Communist China."89 The Defense Department insisted, "limited sanc- tion" against British was absolutely necessary: "Limited sanctions, carefully selected for maximum effect with minimum disruption to mutual security program and political relations, are justified and would result in a net security advantage."9O But President Eisenhower firmly supported the British decision on abolition of China Differential. He held a news conference and declared, "Now there is a very great division of opinion in America, about the value of trade with Communists. There is one school of thought that thinks any trade with the Communist countries is bound to be to their benefit; whereas there is another school of thought that thinks that the Yankee,. is a very fine trader, and that we got to be a great country by trade, and they assert that trade in itself is the greatest weapon in the hands of a diplomat, and if skillfully used, it can be used as a very great instrument of governmental policy" 47 About the China Differential, he continued, "The supporting argument is that it is foolish to say China cannot have something, since you ship it to Russia and can go on through. The opposing argument is that they have to use their transportation space to get it, that costs them some money. Another supporting argument is that Japan, must make a living. She cannot trade all around the world because too many people have some kind of bars. Here in this country, there is constant agitation to set up bars against textiles and light machinery. . Where is she going to trade? Japan should be allowed to trade somewhere and therefore, we ought to liberalize the trade with China. The other side say, if you let that happen, you are going to have Japan communized...” The President concluded, ”Now, frankly, I am of the school that believes that trade, in the long run, cannot be stopped. . Whether we should eliminate this Differential, frankly, I do not see as much advant- age in maintaining the Differential as some people do. . ."91 Later, Macmillan wrote that, "Largely due to the President's influence this Chinese affair, which had caused me much concern, was not elevated by the American government or press into a great issue."92 The technical experts of the two countries began to get together and talk over revision of the forbidden lists, with a view to bringing them closer together. The talk was followed by five months of negotiation in Paris within a fifteen-nation Consultative Group. In June 1958, this group finally agreed on dras- tic relaxation of the COCOM and the CHINCOM lists of strategic items, and decided to merge the two lists into one. In other words, henceforth it would be alright with 48 the U.S. for any of its allies to sell China everything they sold to the U.S.S.R. IV. Canada's Pressure to Relax Restriction on Trade with China and the Eisenhower Administration's Response In June 1957, the Progressive Conservative Party regained power in Canada after 30 years. Since it failed to win a majority in the House of Commons, it was in a vulnerable position. The Conservatives were anxious to call a new election in the next spring, which might give them a working majority. And before the new election, the government was eager to enhance the Conservatives' popular appeal by making certain changes in U.S.- Canadian economic relations. Progress along this line would be very popular with the Canadians. There had al- ready been lots of criticism in Canada of U.S. dominance in Canadian industry and U.S. high tariffs on Canadian products. The Conservative government was particularly concerned with the problem of unemployment, which was ex- pected to be more serious than usual the coming winter. An increasing unemployment would surely kill Conservative Party chances in the next election, because the Conserva- tives were closely associated with the Depression in the 1930's.93 In early 1958, when a recession hit the Canadian economy, Chinese trading agents made an inquiry to the American Ford Motor Company's subsidiary in Canada, about 49 buying 1,000 automobiles or trucks. Inhibited by the Trading-With-Enemy Act which was applied not only to American corporations but to subsidiaries in foreign countries as well, Ford of Canada refused to fill the order from the PRC. Since this coincided with layoffs in the Canadian automobile industry, the firm's refusal made the Canadian government very angry, and it was considered an example of American extraterritorial interference. Secretary Dulles complained: "This was picked up and used in Canada quite a little bit politically as indicating the U.S. was attempting to give extraterritorial effect to its policies to the damage of Canadian economy because. . . presumably it would have improved Canadian economy and reduced unemployment if such an order could have been accepted." He warned the Canadian government that the Chinese Commun- ists dangled an order before the Canadians only to damage the ordinarily excellent relations between the U.S. and its Northern neighbor. He said he seriously doubted if the Red Chinese could ever put cash on the barrelhead.l94 But many Canadians, including Gordon Churchill, Minister of Trade, and James Moir, President of the Royal Bank of Canada--the biggest and most conservative financial institution in Canada-—thought otherwise. They were go- ing all out to have the order filled and to further expand Canadian trade with China. Prime Minister John Diefenbaker chose to proclaim their grievances to the U.S., regard- ing loud proclamation as the only way of gaining attention 50 south of the border. The Conservative government thought the policy of the former Liberal government of speaking softly and privately to Washington was bankrupt.95 Hence, when Eisenhower visited Canada in July 1958, Diefenbaker told him directly that Canada must not be treated as an extension of the U.S. market, and the case of the Ford Company's refusal to let its Canadian subsidi- ary consider the sale of 1,000 automobiles to Chinese was cited as an example. Donald Fleming, Minister of Finance, announced that it was Canada's intention that "Canadian law and Canadian law alone is to prevail over persons or corporations carrying on business in Canada."96 President Eisenhower agreed to make an appropriate concession. His principal concession to Diefenbaker at his Ottawa talks was that the U.S. would make exceptions to its legal restrictions, under the Wartime Trading with the Enemy Act, for Canadian subsidiaries of American firms which got orders from the PRC.97 V. Summary In 1958, the Eisenhower administration finally accepted the allies' decision to relax substantially the multilateral China trade control system. How did the important changes in U.S. embargo policy toward China happen in this period? First, the U.S. allies' domestic economics and politics set down certain forceful limitations on these 51 countries' concessions to the embargo policy, which their governments could not go beyond. Second, the Cabinet in Washington had to give in to the allies'pressures, because when insisting on ”China Differential," the Cabinet members could not offer effec- tive alternatives to the China markets to solve the allies' economic problems; and when the allies' pressures increased, they could not remain unified on how to res- pond, due to the specific consideration in different department. Third, most important, the President was highly responsive to the pressures of U.S. allies. According to his concept of national security, it was of vital import- ance for the U.S. to set up self-supporting economies in these countries; their economic difficulties which resulted partly from U.S. embargo policy, only proved what he thought about the whole trade control system; and the allies' pressures strengthened his position in the Cabinet, offering him opportunities to carry out his plans. In the middle of 1958, the changes in U.S. embargo policy made the prospects for increased trade be- tween China and West "take on their rosiest hue since the onset of the Cold War ten years ago," the New York Times wrote; and another newspaper The Los Angeles Times said, "It can now be expected that the Eisenhower administration decided to accept as inevitable the gradual break- down of all barriers to free world trade with Communist China." 52 However, the Eisenhower administration held out on U.S. bilateral trade controls. Why did these major changes not bring a final breakdown of U.S. embargo policy toward China? CHAPTER III THE U.S. BILATERAL TRADE CONTROL WITH CHINA--THE EISENHOWER ADMINISTRATION AND CONGRESSIONAL PRESSURES I. McCarthy Hearings and their Impact on U.S. Embargo Policy toward China 1953-1954 1. Since early 1953, Senator McCarthy's Senate Permanent Subcommittee on Investigations began to charge the British and other U.S. allies of trading with China. The Subcommittee asked the Eisenhower administration to stop all Western trade with the PRC in any kind of goods, strategic or non-strategic. Subcommittee members even took actions, interfering in executive functions in viola- tion of U.S. Constitution, to negotiate with Greek owners of 242 merchant ships, allegedly participating in Western trade with China, to get an agreement whereby these ship owners promised never to engage in China trade. And the McCarthy Subcommittee's attack against the British won further strength when Assistant Secretary of Defense Mr. Nash testified before the Subcommittee that his Depart- ment's position was in complete harmony with the Subcom- mittee's: 53 54 "Defense believes that goods now being shipped by sea to Communist China by British and others constitute direct or indirect aid to Communist Chinese forces in Korea. The cooperation of our allies is not what we would like it to be." With respect to McCarthy's agreement with the Greek ship- owners, which offended certain Cabinet members and many allied governments, Nash said, if "it can be shown that agreement brought about a net advantage in cutting down allies' shipping to China, the Defense Department would applaud."l In the course of public hearings, McCarthy kept reminding American people that American soldiers were be- ing killed with materials supplied by America's allies.2 A hostile public opinion against British soon developed. This is shown clearly in a poll taken by Representative Thomas Martin among his constituents of Iowa: 92.61% of his constituents wanted to "apply more pressures on China through economic warfare"; 97.64% urged to "ask Britain to discontinue the delivery of rubber and other strategic materials to the Communist world"; and 89.69% asked to stop U.S. financial aid to the British if they continued 3 Hence both parties were eager to their trade with China. take a tougher posture against the British to win more votes in the next election. Mr. Clarke, Chairman of the Richmond Republican Committee, Virginia, explained that any soft nod on British-China trade might make the Republicans "lose their majority in the next election in 55 both the House and the Senate" in view of 4 the grass roots sentiment as I see it here.” Highly sensitive to the local political senti- ment, Congressmen of both parties all demanded a reduc- tion or even a cut off of U.S. aid to Britain. William Knowland claimed in the Senate, "The U.S. must cut off military and economic assistance unless the British do n5 what we want. The British Manchester Guardian was worried that the McCarthy hearings might so arouse American public with the allegation that American boys were killed with British materials as to "force the administration into a retreat."6 2. But President Eisenhower did not want to be forced into a retreat. He stressed the importance of "educating public opinion on the question of trade between the Free 7 He said that this World and the Communist countries." question might become increasingly acute as regards U.S. allies and that when it did, "certain well known elements in Congress will open up with their preposterous and dema- gogic question "Isn't it awful for our allies to trade with our enemies?" He thought that, "It would be a great pity not to antici- pate this, rather than get caught unprepared and have to fight a rear guard action with denials which, however well written. would not be as effective as action taken in advance."8 56 Therefore the President asked Henry Lodge, Jr., Ambassador to the U.N., to communicate with the State Department to set up certain standards for the education of the public. The first standard was the U.S. allies' much heavier dependence on foreign trade than that of the U.S. The second standard was the idea of "net advantage" in the allies' trade with China.9 However, when Lodge's letter arrived in the State Department, the reception was certainly not friendly. The Bureau of Far East Affairs said this letter was "mis- leading and contrary to NSC policy. It could be taken by some Western nations as encouragement to broaden their trade with Communist China when we are anxious to continue maximum feasible pressure on the Chinese Communists. " The Bureau of European Affairs said this letter "wasted the President's prestige because the case could be better and more carefully stated." The Office of Chinese Affairs complained that this letter would be interpreted by Senator MtCarthy as an open invitation to our allies to expand trade in non-strategic goods with Communist China.10 As for Secretary Dulles, he made a non-committal nod to the letter, praising the President's idea, which he declared "absolutely right," but also told Lodge that the State Department had already prepared some monographs on this topic and issued to the public, etc.11 57 Thus Ambassador Lodge's letter was buried in the files of the State Department. 3. In fact, in 1954 the President had to retreat, because he had to have the Mutual Security Bill passed in Congress. If the Congress turned down the Bill, he was afraid that British and other allies would not get the most necessary U.S. dollars to support their fragile economies and defense programs. The whole collective defense system might be in great danger. That is the reason why Harold Stasson, the director for Mutual Security Administration, sympathetic to British trade with China, advised the British at the Dulles-Eden talks in 1954: "The Mutual Security Bill in Congress was now at a crucial state, and the British must make concessions to U.S. embargo policy, so that it might help in getting us out of the jam we were in."12 And the NSC's decision in 1954 was as follows: "The U.S. embargo policy toward Communist China has had wide public and congressional supportuin this country,. . . relaxation of controls might create such public dissatisfaction in the U.S. as to impede the government's parti— cipation in a sound international economic defense program."13 II. The McClellan Committee's Hearings and their Impact on the U.S. Embargo Policy toward China, 1956 1. The announcement in the Eisenhower-Eden communique in February 1956, that the restrictions on trade with 58 China were to be reviewed provoked prompt expressions of opposition to any relaxation of China trade controls. 14 "Why beef up a known and remorseless enemy?" asked the New York News, the newspaper having the nation's largest circulation at the time. Representing the Hearst chain of newspapers, the New York Journal- American claimed that the administration's "seeming will- ingness" to relax China trade controls "needs reflection and debate."15 Other newspapers, scattered from New England to the Far West, expressed similar feelings. A nation—wide poll, taken in early February 1956, by the National Opinion Research Center, showed that 61% "disapproved of changing U.S. policy to permit Americans to trade with Communist Chinese;" only 32% approved a policy of "letting American businessmen sell goods to Com- munist China now.”16 Democrat Senator John McClellan's Government Operations Committee then began to hold hearings inter- mittently between February 15 and March 29, on East-West trade and China trade controls. Hearings were concerned with 1954 revision of the COCOM list. The McClellan's Committee admitted, however, that this was to be done with a view to turning off the green light to British efforts to relax China trade controls: "The investigation now assumes particular significance, because of recent efforts by our allies to persuade us to agree to the relaxation of embargo on shipments to Communist China. ." 59 The Committee stressed, "In a recent visit of Prime Minister Eden to the U.S., Great Britain asked that controls over shipments to Communist China be relaxed and the President of the U.S. has indicated that this proposal will be studied. . . It remains to be seen whether the Battle Act provisions will be invoked against this action."l8 When the opposition party controlled the Committee investigating the Republican administration's activities on East-West trade and China trade controls, the Republi- cans in the Congress offered no challenge. The Republican Minority Leader in the Senate, William Knowland, openly supported the Committee's right to investi- gate. Knowland believed that the administration's foreign policy should be "not merely going to be contain- ment, but ultimate liberation of Communist-held countries." He claimed that the Communists were using the plea for peaceful coexistence and trade with the West to gain time, so they could "take over country after country without risk. The Communists, he argued, would interpret every effort of West to trade with them as a sign of weakness—— and to show weakness to the Communists inevitably invites "19 Not only Knowland, but also many further aggression. other Republican Congressmen did not want to challenge the McClellan Committee's investigation. 1956 was an election year, both parties would not like to offend the public Opinion. In fact, the major charge of the McClellan Committee was that the Republican administration, by 60 nodding its approval of British trade with China, was ”soft toward Communism,” and that it was trying, or at least having the effect of helping the Communists.20 -- This is obviously a revenge on the Republicans since in 1952 campaign, the Republicans had charged that the Demo- crat administration was soft toward Communism! And like the McCarthy Subcommittee, the McClellan Committee also tried to bring strong pressure to bear upon the administration by the threat of reducing the financial aid to the British. Senator McClellan and other Democrats served notice in the Senate that they would not vote for the $4,900,000,000 asked by the administration, for aid to British and other allies "unless the whole matter was satisfactorily cleared up.’ They claimed, "If we are providing these funds to our allies for the purpose of helping them to develop their military power and strength as a defense against Communism, then, how inconsistent is it for the same allies, for the sake of trade and profit, to place in the hands of the Communist Bloc, the machines, materials and other essen- tials of the war potential in a war effort?"21 The New York Herald Tribune noted at the time, "Plainly the administration is in for trouble in the Senate on the whole foreign aid program because of what has been done. . . to satisfy allies' pressures for more trade with the enemy."22 2. President Eisenhower tried hard to resist this pressure from the Congress. He told the legislative leaders that he did not believe the 1954 embargo relaxation 61 was a mistake. He said that "this country could not absorb more European products at the end of Korean War and did not want to keep giving cash grants to sustain Europe." Trade including East-West trade became ”particularly necessary" to the health of allied econo- mies.23 The President also warned that a publicized in- vestigation of trade between the NATO governments and Russia and China could lead to serious problems for the allies: "If the desperate economic straits of some of the Western countries became known, the Soviets and Chinese could take advantage of the situation by either refusing to trade or by exacting more vigorous terms."24 3. However, in 1956, once again the Eisenhower admin- istration had to compromise. Secretary Dulles mentioned to Eisenhower "the difficulties being placed in the way of the passage of the Mutual Security Act" because of the McClellan hearings. He specifically referred to "the danger of possible res- trictive amendments which would prohibit aid to countries trading with the Communist Bloc."25 Surely, the President was most afraid of this consequence. And his fear was shared by Mr. Dodge, Chairman of the CFEP. He said that in view of the McClellan hearings, any position the U.S. might take on the modification of China trade controls "must receive especially careful consideration," because, 62 "Too hasty or ill-considered action could be used to embarrass the government program of assistance to other nations, not yet approved by the Congress."26 And he advised against discussing this issue with the allies until "every aspect of the U.S. position has been considered in terms of the need for a complete and successful public and Congressional justification."27 And the situation became more complicated than in 1953-54, due to the partisan politics of an election year, as Under-Secretary of State Mr. Hoover, Jr. pointed out, "The desire of certain committee members to engage in partisan politics, made it inadvisable to engage in a formal high— level negotiation looking toward a lowering of controls on strategic items. . ."28 Hence in 1956, when the allies' pressures became much stronger than ever before, the Cabinet faced a real dilemma: "If we do not acquiesce in some substantial relaxation of the control system, we may jeopard— ize the entire multilateral control system;” However, ”If we do acquiesce in any substantial relaxa- tion, such action may give rise to opposition in this country, particularly in Congress, which could affect the trade control system and jeopar- dize other programs contributing to the mutual defense effort."29 The Cabinet could not solve this dilemma until after the election of 1956, when the President instructed the CFEP to modify the U.S. embargo policy toward China. 63 III. The Eisenhower Administration Decided to Hold Back on U.S. Trade with China, 1958 1. When the news appeared in the newspaper that the Eisenhower administration decided to ease curbs on the allies' trade with China, agreeing to the elimination of "China Differential," the Congress was disturbed again. In the Senate, William Knowland claimed that he felt 30 "extremely disappointed" at what the British had done, and he asked what the administration had in mind. Secretary Dulles told him that both the British Parliament and the government were "in a panic about their economy;"31 and Dulles assured him the U.S. would hold out on China trade, in spite of the concessions to the allies. In the House, Representative Mr. Lipscomb protested to the State Department and asked for a Congressional probe.32 In his speech delivered in the House of Representatives, July 1958, he declared, "We should never for a moment forget that. Communist trade is dedicated to one thing--the strengthening of the Communist strangle—hold over all the people it can manage to trap in its ideological snare. Any economic gains that might accrue to countries of the free world through trade with the Communists are bound to be illusory and short—lived.”33 In November 1958, a House Subcommittee left for the Orient to investigate reports that "strategic goods shipped to U.S. allies in the Far East were being consigned to Com- munist China." 64 2. With the collapse of the ”China Differential," one of the basic assumptions of U.S. embargo policy to- ward China-euabring maximum pressures to bear upon China to split the Sino-Soviet alliance-—could not work any longer. The Cabinet was confronted with a question: Should the U.S. give up its bilateral China trade control? What advantage could accrue to the U.S. from such relax— ation? The Cabinet discussed these questions again and again, taking into account the economic, political (domestic and foreign), military, and psychological factors involved, and their conclusion on U.S. trade with China was as follows: First of all, the economic implications of resump- tion of Sine-U.S. trade would be insignificant. According to the CFEP and the Commerce Department, American exports, after the relaxation, would probably range between $40 million and $70 million annually. Sales possibilities would exist mainly in iron and steel pro— ducts, where however, American goods "would not be very ' and also competitive," "Japan having a clear advantage;' in fertilizers, which "salability was always high for many American products in other world markets." In other words, no American products desperately needed China mark- ets, or were so competitive that they could receive much more profits there.34 65 As for American imports from China, it would be a little more than the exports, mainly comprising tung oil, tea, silk, hog bristles, cashmere, and handicrafts, etc. According to the CFEP and Commerce Department, al— though consumer selection would be broadened for certain commodities, yet, ”sizable imports of Communist China's low— priced consumer goods could inspire or provide additional impetus to pressures for increased U.S. tariff or import restrictions. The problem of low—priced consumer goods import competition with U.S. domestic produc- tion could become far more acute.”35 As for the potential of the China market, it was recognized that China ”might well represent an import- ant potential market for U.S. products;" however, the CFEP asserted, owing to the Sino-Soviet alliance, the U.S. could not fully tap the potential after the relaxation.36 Therefore the Cabinet maintained that the compara- tively low level of trade after the relaxation, ”would have no major impact on the American economy in terms of the balance of payments, providing employment, or supplying needed raw materials."37 Secondly, the impact of a resumption of Sino—U.S. trade upon the Sino-U.S.S.R. alliance would be insignifi- cant, also. Since China's gains from trading with the U.S. after the relaxation would be modest, the Cabinet was convinced that it would not constitute an impetus to expansion of China trade with the Western world, which would be so strong "as to materially affect China's dependence on the Soviet Union."38 66 Thirdly, the military and psychological effect of this relaxation upon the off-shore island countries, particularly Taiwan, would be "very serious." The Defense Department and the JCS stressed that "It would damage the power, prestige and influence of the U.S. in the entire Far East area;" and the Cabinet claimed that it would cause so much defection among the off-shore island chains that the U.S. would have to impose "an important additional burden to provide adequate military defense of the area,’ since the "off-shore defense program" was "a pillar of total U.S. policy toward Communist China."39 Fourthly, the impact of this resumption of Sino- U.S. trade upon the Congress would be "disastrous". It would be impossible for the administration to overcome the resistance of Congress to appropriate any money for mutual security costs or other administration programs!"0 In brief, the Cabinet decided to hold out on U.S. bilateral trade control with China. 3. What did Secretary Dulles think about U.S. trade with China in 1958? If under the strong pressures of the allies, Secretary Dulles' position on the allies' trade with China, became somehow closer to the President's, then in 1958, he became more and more tied to the Republican Right. In 67 word and deed, he seemed unable to articulate any purpose beyond preventing a further expansion of Communism. In part, his rigid posture seemed a response to the growing volume and vehemence of his critics: Since 1957, the attacks that beat down upon him from the Congress and the press were harsher and more relentless than ever be- fore. Moderates and Liberals were demanding new approaches to China and the Third World, but the Conservatives and the Republican Right still pressed for clearcut victory in the Cold War, demanding the ”unleashing Chiang Kai-shek" to attack the Mainland. Such diverse figures as Senator Hubert Humphrey and the columnist Joseph Alsop regularly called for his resignation. Caught in the crossfire, he seemed to conclude that relative safety was to be found with the Conservatives and the Right Wing. Accommodation of the Right thus was equated with personal survival. It also seemed consistent with his second fear--any relaxation of international tension would dangerously erode the al- ready diminished sense of cohesion and resolve among Western allies. Therefore, he took a much tougher atti- tude toward China issue, insisting on bilateral embargo policy toward China.l+1 3. What was the President's attitude in 1958? In 1958, the President was particularly eager to have Reciprocal Trade Act and Mutual Security Bill passed 68 in the Congress. The Act and the Bill were two of the cornerstones in the President's overall concept of American national security. In 1958, he wanted to give the Act five years instead of one year provision which, as a major part of his plan to free world trade, especially the trade among Western countries, he believed, would give European allies' economies much more stability.l'2 And he also proposed to have $700 million and $800 million increase in mutual security programf'3 Even approval of all this amount by the Congress, would still be $600 million short of his need. Therefore any cuts the Congress might make in the proposed increase in mutual security program, for the President, would have "most serious" effect upon U.S. national security.44 However in 1958, the situation in the Congress was not favorable at all for the passage of the Act and the Bill. The majority of Democrats were not enthusiastic about these programs. Eisenhower thought the chances of success in these two programs were that "once Republicans in the Congress forced the issues on the important points, the Democrats would have to give some support."45 "Unfortunately," the President complained, "political individualism had been developing among the Republican Congressmen,"who in Eisenhower's words, "were eager to run for the Congress only on their own individual platform, repudiating completely such administration's programs as the Reciprocal Trade Act and the Mutual Security Bill.”46 69 Eisenhower maintained that "the most vitally important” programs "for the long term good of the U.S. will be weakened or defeated by the political individualism of 47 Republican Congressmen." In order to overcome this trend, Eisenhower turned to Knowland, Judd, Bridges, etc. for help.48 Most of them belonged to the Republican Right, and were staunch supporters of Chiang Kai-shek. Eisenhower knew only too well that any further move toward a major change in U.S. biltateral trade policy with China, after his important concessions to the allies, would undoubtedly precipitate furious rows in the Congress, and particularly among the Republican Right. Such an out- come, the President feared, would permanently damage other most important programs for the national security. Consequently, in 1958, after making important changes on U.S. embargo policy toward China, President Eisenhower and his administration all refused to go further. IV. Summary Why did the Eisenhower Administration fail to breakdown barriers to U.S. trade with China? First, the Eisenhower administration was working in a Cold War atmosphere and a hostile public opinion to- ward the PRC. The President pointed out it was unfortunate that a climate had developed in the U.S., in which it was looked down upon as unAmerican to even debate the merits of recognition of the PRC, and that in this climate, the 70 U.S. had to adopt a "very rigid” policy toward the U.S. trade with China. Secondly, in the United States, there was not a strong and unified voice of American business community for relaxation of U.S. trade with China. Pressures for relaxation did exist among certain parts of American business community in the 1950's, particularly on the West Coast. The competition from Japanese shipping and export firms had a serious adverse effect on shipping and export interests on the Pacific Coast, and the latter felt that "formal resumption of trade with Communist China would help to alleviate the ”49 "Trade with the Far East means jobs, let's "50 situation. trade with China, such demand prevailed in some indus- tries in this area. But there was also strong opposition to the resump- tion of China trade in the U.S. business community. For instance, it was warned that "the domestic tung oil in- dustry would be bankrupted by dumping of vast quantities of Chinese tung oil on our market for a prolonged period "51 of time, although it was admitted that such imports could benefit certain "tung oil consuming interests, the brokers, and the importers."52 Compared with the allies' business community's voices for relaxation of embargo policy, the U.S. business circles were much weaker and more divergent, because the 71 U.S. as a whole was much less dependent on foreign trade, not living by exports. Therefore, the Cabinet remarked from time to time that, ”There has been increasing interest within the U.S. export-business community in the possibility of trade with Communist China. ." However, ”the interest evinced does not constitute a significant pressure on the U.S. government to lift the embargo."53 Thirdly, the Eisenhower administration was under the Congressional pressures on stopping all trade with China. The Congressional pressures were mainly reflec- tions of local political sentiments. In President Eisenhower's words, Congressional reactions to the embargo policy "reflect. . . a far greater concern for local poli- tical sentiment than for the welfare of the U.S. Each of them thinks of himself as intensely patriotic; but it does not take the average member long to conclude that his first duty to his country is to get himself re-elected.”54 In fact, because of the local electroal politics, the Congressmen had "a large investment of emotional and "55 and when political capital in their constituencies, there was apparent conflict between Presidential and local priorities, local priorities usually won out. And the Congress could bring great pressures to bear upon the administration by its legislative right to 72 appropriate money for Mutual Security Bill and other administration programs. Fourthly, the President and his Cabinet were all responsive to the Congressional pressures. For most members of the Cabinet, they won strength from the Congressional pressures when insisting on "China Differ- ential"; for the President, he had to bow to the pres- sures, to keep the Mutual Security Program and other programs going, which in his view, were "extremely import- ant for the U.S. national security."56 In short, the Eisenhower administration decided to hold out on bilateral embargo policy toward China mainly because of the strong pressures from the Congress; and the Congressional pressures in turn, were heavily in- fluenced by local sentiments, local electoral politics. CONCLUSION The following participants all contributed to the final formation of a new U.S. embargo policy toward China from 1953 to 1958: The President: Eisenhower advocated a relaxa- tion of U.S. embargo policy toward China, relating the relaxation to his overall conception of national secur- ity; regarding it as a means to strengthen the economies of allies and an instrument to wean China away from the Soviets. He asserted that U.S. would commit suicide by stubborn adherence to the purpose of achieving maximum immediate gain. The Cabinet: Most officials of the Cabinet supported a stricter U.S. embargo policy toward China, relating it to U.S. Far East policy, the central concern of which was to cope with the altered power structure resulted from the Sine-Soviet alliance. The Cabinet con- sidered "China Differential" as a weapon to split the Sine-Soviet alliance and a symbol to show U.S. firmness in the off—shore defense program around the PRC. The U.S. Allies: The allies urged the Eisenhower administration to relax multilateral embargo policy toward China. The allies' pressures for relaxation were mainly 73 fro mer 1181 74 from strong desires of business communities and Parlia- ments of these countries, and from their different national policies toward the PRC. The U.S. Congress: The U.S. Congress asked the Eisenhower administration to stop all trade between West and China, threatening to cut off U.S. aid to the allies who traded with China. The pressures for a complete P embargo against the PRC chiefly came from political senti- t ments of the constituencies, which in turn, was influenced by a hostile public opinion toward the PRC (as direct 1 impact of Korean War) and a lack of strong and unified I voice for relaxation among business community. It is obvious that none of these participants could reach the original goal of their own, but each of them exerted its specific influence on the shaping and reshaping of a new U.S. embargo policy toward China. The final formation of this policy, was in fact a compromise of all the desires from all these different participants. NOTES CHAPTER I l JFD papers, White House Memo Series, Box 8: DDE re U.S. basic foreign policy, 4/30/53. 2 1y, see: Ibid. To show the President's ideas more clear- 1953 Federal Budget Expenditures and Receipts Billibns of Dollars ___J\ l . Fixed Charges 13.6 Deficit 10.3 :3 \1 General Government National 1 57.7 68.7 Security_____j:> Expenditures / Receipts It is clear that to get a balanced budget, the most important cut in the expenditures was the part of "National Security", including U.S. defense expenditures and foreign aid programs. It is therefore absolutely necessary to encourage allies' trade expansion in order to cut down U.S. foreign aid program. 75 76 3DDE Papers, Dulles Series, Box 1. DDE's letter to Dulles, 6/20/52. 4DDE Papers, international series, Box 33. DDE's memo re U.S. security policy, 9/8/53. 5DDE Papers, Dulles series, Box 5. DDE's letter to JFD, 8/5/54. 6 2/5/53. 7DDE Papers, Diary series, Box 4, DDE's letter to Walter Judd, 3/6/55. DDE Papers, Diary series, Box 8. DDE diary, 8Robert Donovan, Eisenhower, p. 131. 9DDE Papers, Dulles series, Box 8. DDE letter to Dulles, 9/7/54. 10DDE Papers, White House Memo series, Box 12. DDE's conversation with Randall, 10/2/56. 11Robert Donovan, Eisenhower, p. 89. 12 1/6/53. 13 DDE Papers, Diary series, Box 9. DDE diary, Donovan, p. 133. lAIbid., p. 131. 151bid., p. 132. 16Minutes of Cabinet Meetings, 1/12/53. 17Ibid. 18Record of NSC, 11/18/53. 19Record of NSC, 2/8/54 20State Department Decimal File, Box 2861, RC 59, 611.93/11-2750. Memo re Far East Policy. 77 21State Department Decimal File, Box 1651, RC 59, 56.87/35-1605. Memo by CIA re China Policy. 22CFEP Records, Policy Papers Series, Box 12, CFEP 501/1. Memo re Economic Defense Policy and Program, 1/21/55. 23Ibid. 24State Department Decimal File, Box 3728, RG 59. 563.21/7107923. Naval Intelligence Agency Report re China trade controls. 25Ibid. 26State Department Decimal File, Box 1537, RC 59. 793.00/12-1354. Walter Robertson's memo re China policy 12/18/54. 27State Department Decimal File, Box 2056, RG 59. 506.21/11-3756. FE Briefing Paper re Communist China-- Policy and Problems 12/21/54. 28Record of NSC, 2/6/54. 29State Department Decimal File, Box 2066, 537.81/ 78—2068. CIA's memo re China trade control 9/13/54. 30State Department Decimal File, Box 2057, 738.21/ 64-5914. FE memo re China policy, 2/5/53. 31Record of NSC 11/6/53. About CCP's attitude, see Nancy Tucker: Pattern in Dust, Columbia University Press. 32Record of NSC 2/6/54. 33Record of NSC 4/8/54. 34State Department Decimal File, Box 3517, 637- 28/12-8537. Memo re Far East Policy 12/19/54. 35Record of NSC, 6/5/54. 78 36JFD Papers, General correspondence and Memo series, Box 5. JFD letter to Starzel re China 9/6/56. 37Record of NSC 4/8/53. 38Dulles Papers, Memo series, Box 1. JFD memo of conversation with DDE re China 6/14/55. 39State Department Decimal File, No. 400.93, Box 2537. Dispatch from American Embassy in Taiwan to State Department re Taiwan situation, 1/30/53. Taiwan's nervousness on U.S. China policy can be seen clearly in an- other dispatch of American Embassy in Taiwan, in which it was reported that "Among the most disturbing and unaccept- able ideas to the leaders" of Taiwan, "is the suggestion that 'Titoism' might appear in Red China" or that, through some soft gesture, "the Communist regimes in Moscow and Peiping might cleave asunder." Therefore, ”Secretary Dulles reported statement to the Congress that the unholy alliance between Communist Russia and Communist China could not be tolerated made the high officials in Taiwan greatly disturbed and discouraged," as a high official complained: ". . . I seemed to feel that the CCP regime would be tolerated once it broke with Soviet Russia. An open declaration of this principle, would have grave effects here." 40U.S. Joint Chiefs of Staff, Admiral Radford File (1953-57) 091 China (1956). Radford memo for the Secretary of Defense re China trade control 12/12/55. 41Defense-Executive Office, Central Decimal Files, 1953. G.R. 330, CD.O91.31. Secretary of Defense' memo for JCS 5/13/53, re U.S. Far East policy. 42JFD Papers, Memo series, Box 6. JFD memo of conversation with DDE, 2/8/55. 43Cf. Warren I. Cohen, "United States and China Since 1945," quoted in New Frontiers in American—East Asian Relations, p. 151. 44 10/30/58. Minutes of Cabinet Meeting, 3/11/55 and NOTES CHAPTER II 1State Department Central Decimal File No. 523.19, Box 1273, 493.9431/3-1154. Foreign Service Dispatch, American Embassy, Tokyo, re Japanese businessmen's com- ments on steps to develop trade with CCP, 3/11/59. 2Herbert Harris, "Trade: Russia's Real Secret Weapon” in Nation's Business, February 1954, p. 56. 3State Department, Office of Intelligence Research, No. 6649, 4/15/55. OIR re recent development and future prospects of Japanese trade with Communist China. 4Jukogyo Shimbun (Heavy Industries Newspaper) 4/29/53. ”New Cabinet must answer demand for trade with Red China." 5State Department Central Decimal File, File No. 523.19, Box 3521. 493.94/3-653. Foreign Service Dispatch, American Embassy, Tokyo 3/6/53 re magazine articles on China trade. 6State Department Central Decimal File No. 523.19, Box 3522, 493.9431/1-554. Foreign Service Dispatch, American Embassy, Tokyo 1/5/54 re views of leader of recent Diet-Industry Trade Mission to Peking. 7Ibid. Ikeda belonged to the Hatoyama bolt in the Liberal Party, whose views on China trade, according to American Embassy, "reflect to a certain extent pressures from industrial interests in his constituency, Yamagata Prefecture. 8State Department Foreign Service Dispatch, American Embassy Tokyo, 493.94/3-253 re Minutes of Diet Committee Meeting regarding trade with Communist China 3/2/53. 79 80 9State Department OIS Report, No. 5231, 8/23/55 re Foreign Minister Shigemitsy visit, policy toward Red China including China trade. lolbid. 11State Department Decimal File, No. 511.69, Box 1061, 611.93/6-954 CS/RA. Memo from CA to FE re Japanese scheme for mediating between the U.S. and China 6/9/54. 12JFD Papers. White House Memo Series. Memo of I' conversation with DDE 11/8/53. 13Minutes of Cabinet Meeting 12/5/53. 14Ibia., 1/5/54. “451-11. 2 ._ _.-_;- .' 15State Department Central Decimal File No. 511.21. Office memo, re urgency of tariff negotiations to increase Japan's trade 6/18/54. 16Commerce Department Decimal File No. 529.63, Box 738. R640(366). Memo Lothair Teebor to Weeks re domestic industries claiming hardship or threats of hardship because of competition of imports, 7/9/54. 17Ibid. 18JFD Papers, Correspondence series, Box 6. JFD letter to Dodge 7/29/54. lgIbid. 20JFD Papers, White House memo series, Box 10. Memo of conversation with DDE 3/8/54. lebid. 22JFD Papers, Correspondence series, Box 7. JFD letter to Jackson 5/5/54. 23JCS Chairman's File, RG 218. Memo for the Secretary of Defense re future course of action with res- pect to CHINCOM 6/8/54. 81 24Jcs Admiral Radford 1953-57. 091 China re China policy 2/8/54. 25State Department Foreign Service Dispatch, American Embassy Tokyo 5/9/54, re Japanese situation. 26Ibid., 6/2/54 re Japanese situation. 27Minutes of Cabinet Meeting 7/29/54. 281bid., 8/4/54. 29NSC 5429/5. Policy toward Far East 11/26/54. 30 Record of NSC, 8/20/54. 31John Lunaid: Britain and China, London, 1963, pp. 56-72. 32 Walter Z. Laqueur: Great Britain and the Rise of Chinese Communists, London, 1959, p. 162. 33Michael Lindon: Three Views of China, London, 1950, p. 92. 34Ibid., p. 109. 35House of Commons, Vol. 204, Column 25 (2/6/54). 36Foreign Relations of the United States (FRUS), 1952—54, VII, p. 1039. 37House of Commons, Vol. 180, 2/8/50. Column 72. 38Ibid., Vol. 188, Column 32 (10/8/50). 39Britain and China, p. 62. 40Michael Johnson: The Conservative Ideas, London, 1947, p. 82. 41 Warren Steele: Great Britain and the People's Republic of China (1949-1955), London, 1957, p. 182. 82 42DDE Papers, International Series, Box 82, DDE- Eden Talks 1/3/56-2/1/56. 43Harold Macmillan: Riding the Storm, pp. 91-120. 44State Department, Foreign Service Dispatch, American Embassy, London, 3/5/53, re British proposal ”Trade, not Aid“. 45Le Monde 11/5/53. "A Race for China Market." 46State Department, Office Memo from CA to FE re UN Report on Non-Communist Trade with Communist China, 2/15/54. 47Daily Telegraph 7/24/54. "America Misled About British Trade with China." 48 Ibid. 49The Director 2/54. "The Business Road to Peking." 50Ibid. 51Ibid. 52South China Morning Daily, Hong Kong 11/20/54. 53House of Lords, Hansard, Vol. 210, Column 72, 12/4/54. 54South China Morning Daily, Hong Kong 4/6/53. 55House of Lords, Hansard, Vol. 198, Column 32, 3/5/53. 56The Times, 9/8/53. 57House of Lords, Hansard, Vol. 201, Column 32, 9/9/54. 58House of Commons, Vol. 200, Column 26-29, 2/54. 83 59House of Lords, Vol. 218, Column 19, 6/3/56. 60House of Commons, Vol. 200, Column 24, 3/8/54. 61CFEP Records (1954-61). Policy Papers Series, Box 12, Randall Report re Randall trip to Europe, 8/9/56. 62Ibid. 63State Department Foreign Service Dispatch, American Embassy, London 6/3/56, re China Differential. 64OSD, Defense-Executive Office Central Decimal Files, G.R.330, Box 18 re China Differential, 8/23/55. 65JCS, Chairman's File, RG 218, Box 15. Radford re China trade control 2/7/56. 66JFD Papers, Correspondence series, Box 27. JFD letter to Radford, Chairman of JCS 4/ 8/56. 67JFD Papers, General Correspondence series, Box 29. JFD policy paper re U.S. national security 9/5/55. It should be noted that Secretary Dulles' posi- tion on this issue represented in part a compromise of opposing views in his department. On the one hand, Under—Secretary of State Mr.Bowie was "more sympathetic with CCP" (in Eisenhower's words), advocating to give more concessions to U.S. allies; on the other hand, however, CA and FE were anxious "to over- come the current trend within the administration of appeas- ing the CCP,” and urge to take a tougher posture toward the PRC on China trade control issues. 68Ibid. 691bid. 70Commerce Department, Central Decimal File. File No. 257.11, Box 89. Weeks' memo re China trade con- trol 4/5/56. 71'Commerce Department Decimal File. File No. 257. 11, Box 28. Letter from the American Brush Manufacturers' Association to Weeks, 2/5/54. 84 72Ibid. 731bid. 74White House Office, Office of the Special Assistant for National Security Affairs, NSC Series, Policy Papers Subseries, Box 12, NSC 5429/3, 9/29/54. 751bid., Box 13, NSC 5429/4, 9/15/55. 76JFD Papers, White House Memo Series. JFD memo of conversation with DDE, 12/8/55. 77CFEP 54-61. Policy Papers series, Box 9 re U.S. position at DDE-Eden talks, 12/28/55. 78DDE Papers, International series, Box 27. Memo re DDE-Eden talks 1/31/56-2/1/56. 79The New York Times 2/3/56. 80State Department Office Memo, Robertson to Dulles, re China trade controls 5/6/56. 81CFEP Records. Policy Paper series, Box 19. EDAC proposal re China Differential 12/25/56. 82DDE Papers, Confidential File, Box 63. DDE re China trade controls 1/2/57. 83CFEP records, 54-61. Policy Papers series, Box 8. Memo re modification of China trade control system 2/2/57. 84Ibid. 85Henry Varg: "U.S. new embargo policy" in London Economist 5/2/57. 86JFD Papers, Correspondence series, Box 29. Letter from Lloyd to Dulles 5/15/57. 87DDE Papers, Confidential File, Box 63. DDE re China trade control 5/16/57. 85 88Harold Macmillan, Riding the Storm, pp. 317— 318. 891bid. 90DDE Papers, Confidential File, Box 67. DDE letter to Macmillan 5/57. 91OSD Defense-Executive Office Central Decimal Files, G.R. 335, Box 18. Defense memo re British decision 6/2/57. 92JCs, Admiral Radford 981. China, Box 25. Radford memo re "limited sanction" 6/3/57. 93DDE Papers, Memo series, Box 59. DDE speech re British elimination of China Differential, 6/5/57. 9['Cf. London, The Times, June 1957, Oct. 1957. 95Dulles Papers, White House Memo series, memo of conversation with DDE 3/6/57. 96The Los Angeles Times, 7/12/58. 97DDE Papers (Ann Whitman File), International Series, Box 36, DDE Ottawa talks with Diefenbaker, 7/2/58. NOTES CHAPTER III 1OSD Defense Executive Office, Central Decimal Files, 1953 G.R. 330, Box 52. McCarthy hearing 5/4/53. 2The New York Times, 3/12/53. 3Congressional Record. Debates of the Slst Congress, Second Session 248825-46092. "Results of Questionnaire Mailed to First Congressional District of Iowa." The occupations listed by those replying were as follows: Farmer ................ 1,039 Labor ................ 1,149 Business ............... 735 Professional ........... 487 White Collar ........... 733 Miscellaneous ......... 777 In March 1955, Representative Walter Judd sent the Presi— dent a letter about the result of a poll among his con- stituents in Minnesota: "One very level—headed constituent sent me this poll with the following comment: The latest Minnesota poll will give pause to any administration people who are inclined to be fainthearted and overinfluenced by the Edens,. . . who are either blindly short-sighted or have axes of their own to grind." 4State Department Decimal File No. 511.67, Box 67. Calvitt Clarke's letter to JFD 12/8/53. 5Dulles Papers, White House Memo series, Box 1. Memo of dinner with Sir Winston Churchill 4/12/54. Churchill commented on Knowland's threat that: "This is certainly not a proper basis for a good relationship." 6Manchester Guardian 5/6/53. 7State Department Decimal File No. 511.67, Box 89, 493.009/2-1754, 2/17/54. Letter, Henry Cabot Lodge, Jr., to Dulles. 86 87 8Ibid. 9Ibid. 10State Department Decimal File No. 511.67, Box 89, FW 493.009/1-1954. Letter to R.V. Hennes to Smith 2/20/54. llIbid., letter, Dulles to Lodge 2/27/54. 12State Department Decimal File No. 511.29, Box 31. Dulles-Eden talks 1954. 13Records of NSC, 6/3/54. 14The New York News 2/5/56. 15The New York Journal-American 2/7/56. 16State Department Decimal File No. 511.29, Box 87. ”National Public Opinion re East-West Trade", February 1956. 17Congressional Record of 2/23/56, p. 2771. Senator McClellan speech re East-West trade and China trade controls. 18Ibid. 19DDE Papers, Legislative series, Box 6. DDE talks with legislative leaders, 4/18/56. 20Ibid. 21Congressional Record of 4/5/56, p. 8291. Senator McClellan speech re mutual security program. 22The New York Herald Tribune 3/5/56. "Easing of Red trade bans called’peril to aid plans," by David Lawrence. 23DDE Papers, Legislative series, Box 31. DDE talks with legislative leaders, 4/2/56. 88 24Ibid., 2/28/56. 25JFD Papers, White House Memo series, Box 19. Memo of conversation with DDE 5/27/56. 26CFEP Records, Policy Papers series, Box 10. Letter, Dodge to Prochnow 2/29/56. 271bid. 28JFD Papers, White House Memo series, Box 19. Memo of conversation with DDE 5/28/56. 29CFEP Records, 53-61, Policy Papers series, Box 8, CFEP 501/11, 7/23/56. 30The New York Times, 7/31/58. 31Dulles telephone talks with Knowland 8/2/58. 32The Congressional Record - Appendix 7/23/58. Lipscomb speech re China trade controls. 33Ibid. 34CFEP Records, 1953-61, Policy Papers series, CFEP 557/1, 8/13/57. Memo re study of all aspects of policy on U.S. trade with Communist China. Also, Commerce Department re economic implications of resumption of U.S.- Communist China trade 10/58. 351bid. 36Ibid. 371bid. 38CFEP 557/1, Tab B, 8/13/57. 39Ibid. 40Ibid. 41Cf. The New York Times, Aug. l957-Dec. 1958, also Townsend Hoppes: The Devil and John Foster Dulles, pp. 403- 404, and Leonard Mosley: Dulles, pp. 219-315. 89 42DDE Papers, Legislative series, Box 12. DDE talks with legislative leaders 3/5/58. 431bid., 6/5/58, Box 14. 44Ibid. 45DDE Papers, Diary series, Box 49. DDE Diary 7/12/58. 46 . . Ib1d., DDE D1ary 7/14/58. 471bid. 48 . . Ib1d., D1ary 7/16/58. 49 State Department Decimal Files No. 511.67, Box 98 re ”Reported support in the U.S. for resumption of U.S. trade with Communist China,” l/13/54. 411.9331/1— 1354. 50State Department Decimal Files No. 511.67, Box 82. Letter, International Longshoremen and Warehousemens' Union to Lodge, Jr., Ambassador to U.N., 9/16/53. 411.93/9—1653. 51Ibid., Box 49. Letter, American Tung Oil Association to Acheson 6/18/51 521bid. 53CFEP Records, 1953-61, Policy Papers series, Box 10 re "Summary of Trade Control Developments," 8/23/56. Also cf. Record of NSC 4/5/54 and CFEP 501/2 re China Trade 2/5/57. 54 2/18/56. 55William J. Keefe: Congress and the American People, p. 57. New Jersey, 1984. DDE Papers,Diary series, Box 45. DDE Diary 56DDE Papers, Confidential File, Box 62. Letter, DDE to David Eisenhower 8/15/58. BIBLIOGRAPHY BIBLIOGRAPHY I. Archives and Manuscript Collections: Eisenhower, Dwight D: Papers (1953-61). Dulles, John Foster: Papers (1951-59). Gray, Gordon: Papers (1946-76). Jackson, C.D.: Records (1953-54). U.S. Council on Foreign Economic Policy: Records, 1955-61. White House Office, Office of the Special Assistant for National Security Affairs: Record (1952-61). Records of National Security Council. JCS Records. Defense Department Central Files. State Department Decimal Files. Commerce Department Decimal Files. 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