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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# SECRET Spot shortages of specialized products, tools or types of material could occur as a result of a crash munitions production program. Civilian transportation could be strained for limited periods of time because of the magnitude of troop deployments contemplated. These prospective supply dislocations do not seem to be of such a magnitude, character and duration as to threaten serious dislocation of the domestic economy, insofar as a very preliminary reading without a table of requirements permits a judgment. 2. The principal threat of dislocation to the domestic economy resulting from the provision of the Berlin capability is a destabilization of prices, wages and rents resulting from the psychological impact of the fear of war and prospective shortages. The Berlin preparedness measures and public reaction thereto might engender hoarding, scare buying, advance stocking, speculative buying, and artificial price increases. 3. An analysis of the history of the economy during the early stages of the Korean conflict from June 1950 to January 1951 shows that a serious inflation was experienced as a result of a psychological response to the crisis, out of proportion to the actual strain on the economy. (For a detailed analysis of the 1950-51 record see Appendix A.) 4. Many similarities between the present economic situation and that of June 1950 suggest the serious possibility that similar responses may well occur during the course of this Berlin crisis. There to be sure are some significant and reassuring dissimilarities: (a) excess productive capacity is much larger in mid-1961 than in mid-1950; and (b) the responses in the summer and fall of 1950 followed upon the actual outbreak of hostilities. (See Appendix A.) However, in our view, they are offset by the facts that (a) in the forthcoming contest of will and power the Soviet Union is directly involved as an opponent and (b) the new factor of Soviet nuclear capability for attack on the Continental United States is present in the national mind. It is true that no adverse domestic economic reaction occurred at the time of the 1959 Berlin crisis. But this is not reassuring now because by the time the crisis became widely recognized by the public, the Soviet position eased, the foreign ministers' conference was scheduled, and no large military build-up occurred. 5. In addition to the purely psychological factors that might destabilize the U.S. economy, the preparation of a Berlin capability may involve an increase of between $5 and $15 billion in government expenditures in a relatively short period of time. An increase in Federal expenditures approaching $15 billion on an annual basis within the next year could begin to produce excess demand
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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.