Documents / FOIA release
This Top Secret study by the Interdepartmental Coordinating Group on Germany and Berlin, dated July 12, 1961, and released by the Central Intelligence Agency, answers NSC Directive No. 58 of June 30, 1961. It sets out courses of action for the Berlin crisis but does not judge their merits. It covers imminent presidential decisions, a three-phase timetable running to January 1, military preparations and mobilization, covert action, economic sanctions, public information, negotiating positions and checkpoint procedures for East German personnel.
“Fuller”2 pages
Read from the scan by GLM-OCR; expect the odd misread word.
## SECRET The defense effort could not directly have accounted for this spurt of inflation. For Federal spending on national defense rose modestly in 1950-III to $14.1 billion (at annual rates) from the $12.0 billion level of the previous quarter. Federal defense orders for hard goods were at a high level: $4 billion of new contracts equalled about five times the amount of actual expenditure. These were expansionary factors, but the major responsibility for the inflationary spurt must be attributed to consumer behavior. Households saved only 2.8 percent of their disposable income in 1950-III, in contrast with the average saving ratio of 5 percent in the preceding two years. Their excess spending was directed principally at durable goods. The annual rate of auto buying rose from $12.2 to $14.9 billion, or 22 percent, from the second to the third quarter; outlays on furniture and household equipment soared by 37 percent from $12.4 to $17.0 billion. More than half of the gain in total real GNP occurred in the relatively small consumer durables sector. The rise in consumer outlays for nondurable goods was comparatively modest; all components of nondurables showed gains of 5 to 6 percent in 1950-III, only slightly exceeding the 4 percent rise in disposable income. Yet, because the prices of foodstuff, clothing, and other nondurable items are more flexible than the prices of hard goods, inflation at the retail level was more pronounced for soft goods. Prices for nondurable goods rose by an average of 2.9 percent in 1950-III; consumer durable goods experienced a price-increase of 1.6 percent. In their hard-goods spending binge, consumers were motivated by attempts to stock up before shortages and large price increases would develop. Memories of the conditions prevailing during World War II were undoubtedly vivid. The magnitude and duration of the Korean crisis was uncertain. A new 1950-model refrigerator was excellent insurance against the possibility that no refrigerators would be manufactured for consumer use in 1951 or 1952. To an individual, such a purchase appears prudent; it is an act of hedging against inflation and shortages, not an attempt to speculate. In an economy where the consumer is normally sovereign, it is hard for any household to view the prudent management of its budget as an unpatriotic act. But, when all households act to beat inflation, they produce the very situation whose consequences they are trying to avoid. There is surprisingly little evidence in the aggregate of similar activity by business firms in the summer of 1950. If enterprises
Not linked to a story yet.
FOIA release, from the cia-readingroom collection. The PDF is mirrored here; the original link is above. The text was read from the page images by GLM-OCR; expect the odd misread word. 163 pages are in the text index: search them above, or from the library's search.