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.
“Cooper”8 pages
## SECRET demand pressures on the economy. Even apart from psychological factors and the possible development of general excess demand, a substantial build-up of military expenditures could be expected to generate cost-push pressures and sectoral price increases resulting from sharp changes in the pattern of demand. 6. If the preparations for a Berlin capability are accompanied by inflation, the consequences will be damaging to the national interest in four ways: (a) Speculative inventory accumulation during the crisis is likely to cause an economic recession fueled by inventory disinvestment when and if the crisis is peacefully settled. (b) The rise in the domestic price level could imperil the international position of the dollar and impose strains on the U. S. gold position. The U. S. is particularly vulnerable in this respect because the dollar is an international reserve currency. (c) Hoarding, speculation and excessive inventory accumulation, if allowed to snowball, could create a degree of economic disorganization sufficient to weaken the capability of the U. S. for any rapidly increasing production of military goods associated with limited or general war. (d) Should the Berlin situation develop into limited or total war, the failure to deal effectively with inflationary developments before the outbreak of hostilities would make the institution of adequate emergency stabilization measures substantially more difficult and less effective. 7. The reference to the danger to the international position of the dollar and the U. S. gold position inherent in any inflationary rise in the domestic price level requires amplification. The U. S. is currently running an over-all balance of payments deficit at an annual rate of about $1.2 billion as compared to $3.8 billion during 1960. Much of the change is due to the conjunction of high levels of economic activity in other advanced countries with recession in the United States. The progress of recovery will bring an increase in U. S. imports during the second half of the calendar year. The over-all deficit (excluding special debt prepayments) is estimated at approximately $1.5 - $2.0 billion for calendar 1961, without taking into account the effect of Berlin preparations. Factors
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FOIA release, from the cia-readingroom collection. The PDF is mirrored here; the original link is under it. The text was read from the page images by an OCR model; expect the odd misread word. 163 pages are in the text index: search them above, or from the library's search.