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.
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# BERLIN PLANNING: ACTIONS TO MINIMIZE DISLOCATIONS TO THE U.S. ECONOMY AND THE BALANCE OF PAYMENTS # SUMMARY ## 1. Economic Impact of Preparedness Program Provision of a Berlin capability may impose severe strains on the domestic economy and on the balance of payments. It is only prudent to prepare to meet these contingencies. If, however, the program is a gradual and modest build-up of military potential, not specifically keyed to the Berlin crisis, no severe problem of destabilization may arise. In the domestic economy, the principal initial threat of dislocation and inflation arises from the psychological impact of fears of war and prospective shortages. As in 1950, these fears could lead to hoarding, scare buying, and price increases, out of proportion to the actual increase in Federal purchases. Current unemployment and excess capacity provide considerable economic room much more than in 1950--for an expansion of the Federal defense budget. But, if additional expenditures for the Berlin capability mount to an annual rate approaching $15 billion within a year, these demands superimposed on the general economic recovery will give rise to bottlenecks, specific shortages, and possibly general excess demand. Upward pressures on wages and prices would be strong, and even stronger if the psychological impact of the crises created abnormal consumer and business spending. The United States balance of payments could deteriorate (a) because of the increase in imports accompanying an accelerated upswing in economic activity; (b) because of U.S. cost and price increases; (c) because of a flight of capital reflecting loss of confidence in the dollar for political or economic reasons. ## 2. The Need for Direct and Indirect Controls To deal with these unfavorable contingencies, the government needs both indirect controls--taxation and general monetary policy--and direct controls over wages, salaries, rents, and prices and over the allocation of materials, labor, scarce capacity, and consumer goods. Neither kind of controls can by itself stabilize an economy dislocated by crisis psychology and a sharp increase in defense spending. 3. State
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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.