Oral History Interview with
John W. Snyder
Secretary of the Treasury in the Truman Administration,
1946-53. Other Federal positions once held include Executive Vice-President
and Director, Defense Plant Corporation, 1940-43; Assistant to the Director
of the Reconstruction Finance Corporation, 1940-44; Federal Loan Administrator,
1945; Director, Office of War Mobilization and Reconversion, 1945-46.
Secretary Snyder has been a longtime close friend of Harry S. Truman beginning
with their service in the U.S. Army Reserves after World War I.
Washington, D.C.,
February 20, 1969
By Jerry N. Hess
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NOTICE
This is a transcript of a tape-recorded interview conducted for the Harry S. Truman Library. A draft of this transcript was edited by the interviewee but only minor emendations were made; therefore, the reader should remember that this is essentially a transcript of the spoken, rather than the written word.
Numbers appearing in square brackets (ex. [45]) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.
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This oral history transcript may be read, quoted from, cited, and reproduced for purposes of research. It may not be published in full except by permission of the Harry S. Truman Library.
Opened September, 1970
Harry S. Truman Library
Independence, Missouri
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Oral History Interview with
John W. Snyder
Washington, D.C.,
February 20, 1969
By Jerry N. Hess
[1122]
HESS: Mr. Snyder, this morning, let's continue on with our discussion
of the foreign affairs matters.
SNYDER: Well, Mr. Hess, this report was an optimistic but not particularly
revealing public report that I made at the time. In keeping with my own
conception of my official function, I retained my personal report to be
made to the President himself. However, the magazine U.S. News and
World Report, in its issue of October 18, 1947, after stating that
I was not talking outside of official circles, but that the ideas that
I brought back from abroad can be easily ascertained, as it was my view,
as they interpreted, that financial help for Europe was most urgent. To
some extent of course,. they added, that it appeared to be a change of
view. In an article
[1123]
which they wrote:
Before the trip, Snyder had endorsed the Marshall plan in general
terms, but was looking skeptically at many details. As the man who
must provide the money, he wanted to be sure that the money would
be available. Within the administration, he was a deterrent, a counterbalance,
for Secretary of State George C. Marshall's insistence on quick, large-scale
action. What Mr. Snyder saw in Europe removed some previous doubts.
Now his great influence is on the side of speedy aid, but there are
still limits. In urging aid for Europe, Mr. Snyder is speaking only
of the period immediately ahead. He says Europe has to be helped through
the winter by advances that will provide coal and food. Beyond that
he does not go for the present. He apparently feels that later aid
should be tied to later developments.
As the article reported, I had returned from Europe convinced that assistance
was needed to get the Europeans through the approaching winter. This type
of assistance I certainly believed to be urgent, but I realized that it
would perhaps take time, perhaps many months, to get the Marshall plan
approved by Congress and in working order. However, the further optimism
that I might have
[1124]
reflected about European recovery in the statement that I made immediately
after I got back from Europe, I really used that as the basis of reporting
what I saw on the trip. I, without doubt, gained firsthand knowledge of
the manner in which the European countries had already gotten together
to draw up a plan for their own economic recovery. Secretary Marshall's
statement that the initiative should come first from Europe had been taken
by the Europeans at its face value. I had seen evidence of their reaction
to Marshall's speech. While in Europe, I had attended some of the meetings
of the economists and government officials that later resulted in the
so-called Paris report, a blueprint for recovery of Western Europe. This
activity upon the part of the Europeans greatly heartened me towards the
execution of the Marshall plan. Secretary Marshall's Harvard speech caused
great interest in all the European capitals.
[1125]
Marshall had told the Europeans that it was their move, and the
move was not long in coming. The leader and great force behind the first
action was Great Britain's foreign secretary, Ernest Bevin. It was Bevin
who did more than any other single European to make the Marshall plan
a reality. Bevin was an unusual figure in Europe, and particularly British
politics, a leader of the Labor Party in Britain. Bevin became foreign
secretary after the war when his party upset the Conservative government
of Winston Churchill. His background made him almost unique in the Labor
government, a working man who had made his career in the trade union movement.
He brought energy, force, and realism to the Foreign Office. He was not
one of British Socialism's theorists, he was a man of direct, and formidable
action. Of all the members of the Labor government I had the closest relations
[1126]
with Bevin. The two of us had become friends who trusted and respected
each other. In the wake of the Marshall speech, Bevin led the way to the
organization of the Committee for European Economic Cooperation; it became
known as the CEEC. He and the French foreign minister first invited the
Soviet foreign minister to join them in considering whether a joint European
plan for economic recovery might be devised. As a matter of fact, it was
somewhat startling to recall that Russia and her satellites could have
even thought of participating in the Marshall plan. The invitation was
open to all European countries, and the State Department took a calculated
risk in order to avoid charges that the Marshall plan was directed against
the Soviet Union. The gamble paid off since Russia, afraid of loosening
controls over her satellites, prevented them from participating in the
Marshall plan.
[1127]
The Soviets declined to take part in such discussions, and early in July
Britain and France proceeded to invite all European countries, with the
exception of Spain, to send representatives to a conference which would
draw up a European recovery program. All sixteen nations sent representatives
to Paris where the CEEC was formed. On September 23, 1947, after about
two months of furious work, the Paris report of the CEEC was transmitted
to American officials. It presented a plan for European recovery based
on estimates of production, needs and outside assistance required. This
report, a remarkable achievement by sixteen nations, successfully fulfilled
Secretary Marshal’s dictum that the initiative should come from Europe.
I had seen the CEEC at work, and had learned of some of the results of
its efforts during my trip to Europe. I entirely agreed with the State
Department in its
[1128]
statement:
The report of the Committee of European Economic Cooperation represents
in the light of European history a significant achievement. In the
space of somewhat over two months representatives of the governments
of sixteen countries of diverse histories and customs all suffering
in some degree from the catastrophic results of World War II, from
economic ills and political tensions, met together in a harmonious
and cooperative atmosphere and produced a document of historic importance.
The conclusion of the CEEC was that if the program of European recovery
was to be achieved, sizable assistance would be needed from the United
States. Taking the report as a starting point, various U.S. Government
agencies studied the program and the recommendations, and the estimates
of assistance needed from the United States were scaled down. When the
administration went to Congress for appropriations for the program in
late 1947, it requested total assistance of between fifteen and seventeen
billion, eight hundred million dollars, for four
[1129]
and one quarter years. It asked for six billion, eight hundred million
dollars for the first fifteen months of the program. The aid requested
included estimates for Western Germany. Getting the Marshall plan through
the Congress was a matter of several months. In the meantime, however,
events in Europe and elsewhere did not stand still. To fill the need for
immediate relief while it was considering the Marshall plan, the Congress
in 1947 passed two foreign aid laws providing immediate funds to distressed
countries. As noted above, the National Advisory Council had reminded
the Congress in June that nearly all money then authorized for relief
had been committed, and that the funds on hand or in immediate prospect
were not sufficient to accomplish the purpose for which foreign aid had
been provided.
When I returned from Europe, as I have
[1130]
just stated, convinced that the European people should get immediate interim
aid for the coming winter, I made it clear that this aid was needed. The
Congress first passed a post-UNRRA bill appropriating three hundred and
fifty million dollars for that program. In my view, however, and in view
of the NAC, this amount was still not enough, and the council then recommended
to Congress a plan for interim aid to Austria, France, and Italy, the
three Western European nations in the most dire need. On December 23,
1947, the Congress appropriated five hundred ninety-seven million dollars
for the interim aid program, and on March 31st, 1948, an additional fifty-five
million dollars was provided for the same purpose. Nearly all of the interim
aid program funds were in the form of grants. Later, some twenty-one million
dollars of unexpended funds from the program were incorporated into the
European
[1131]
Recovery Program. Both the post-UNRRA and the interim aid programs met
a crucial need in a crucial time. They enabled a number of countries which
were in critical condition economically to subsist until the Marshall
plan could get underway. The importance of the Export-Import Bank in the
foreign aid plans and operations of the United States Government was recognized
throughout the postwar period by the Truman administration. Shortly after
the war ended the lending authority of the Bank was raised by Congress
from seven hundred million dollars to three and a half billion dollars,
and corresponding with this increase in authority was the rise in the
Bank's outstanding credits from two hundred fourteen million dollars in
1945 to nearly two and a quarter billion dollars in 1948.
In the interim period before the Marshall plan got underway, Government
leaders again turned
[1132]
to the Export-Import Bank for assistance. It was proposed within the Treasury
that the Bank extend unsecured reconstruction loans to European countries
to tide them over the interim period. However this could not be worked
out, for as the Export-Import Bank itself pointed out, the Congress had
directed it to cease using unsecured reconstruction loans. The Bank did
look into the possibility of making secured loans to a number of European
countries, but these did not make a significant contribution to foreign
aid in the interim. The Export-Import Bank continued throughout the Marshall
plan period to be the principal Government agency through which foreign
loans were granted and administered. This was a result of a provision
in the Marshall plan's legislation providing that the administrator of
the Economic Cooperation Administration to transfer funds to the Bank
[1133]
when he wanted to extend a loan. Congress again increased the Bank's lending
authority in 1951 in the midst of the Korean war, this time to four and
a half billion dollars, and directed the Bank to place importance on the
development of sources of supply for strategic materials for the United
States. Within the Cabinet, and within the entire executive branch of
the Government, the organizational problems inherent in the launching
and maintaining of large foreign aid programs became a matter of greatest
interest and urgency in the summer of 1947. There were, of course, great
problems, given the impact of such programs on the entire Nation and the
fragmented responsibilities of our Cabinet system. President Truman on
June 22 appointed three committees to study the relationship of foreign
aid to various parts of our national economy. Several congressional committees
also
[1134]
entered the field with surveys and studies of their own.
Later, Under Secretary of State Robert Lovett set up an informal, interdepartmental
committee on foreign aid. The nature of the Lovett committee was discussed
in a memorandum of September 11, from Frank Southard to me. Southard noted
that Lovett had called the first meeting of his group which consisted
of State, Treasury, War, Navy, Interior, and Agriculture. He proposed
to use this as a steering committee and to refer various aspects of the
Marshall plan to the NAC, the Krug and Harriman committees, and the food
committee and others.
Recognizing the difficulties of coordinating such a program among the
various agencies and departments, I believed that an informal committee
would not be able to handle the job. My experience as Director of the
Office of War Mobilization and
[1135]
Reconversion had convinced me of the necessity of having a permanent coordinator
of such a program. However, my proposal that a Cabinet committee be set
up by Executive order to handle the job was not accepted. Southard reported
to me on this matter. In a memorandum he stated:
We have heard nothing of your proposal for a Cabinet committee to
be set up by Presidential order, but I have sensed among my key State
Department people misgivings concerning the effectiveness of the informal
procedure that is now beginning to function, and I do not believe
that they would resist your proposal if it was pressed.
However, I did not press for my proposal, for as I recall later I began
to doubt the efficiency of even the Cabinet committee because of their
lack of central direction and control and concluded that they were not
much of an improvement over the informal committee plan. In addition,
the National Advisory Council, which I headed, came
[1136]
to be relied on more and more as the top agency of the executive branch
on foreign financial problems related to aid programs. There were a number
of good reasons for this. The NAC was a permanent group. It had had experience
in the field of coordinating Government agencies dealing with foreign
economic matters, and it had its own staff. We will see later how the
Council retained a strong hand in foreign aid even after the establishment
by Congress of the Economic Cooperation Administration. In the days when
the Truman administration was working out its proposals for the European
Recovery Program, the NAC played a very vital role. To it was referred
all of the financial problems connected with the program, and from it
came many of the provisions of the legislation concerning financial matters.
Frank Southard headed the NAC task force working on the Marshall plan.
[1137]
Among its more notable contributions to the European Recovery Program
as it took shape was the provision for the establishment of counterpart
funds which served the double purpose of reducing the threat of inflation
in countries which received aid and provided funds for the carrying out
for the many functions of the program. Counterpart funds will be discussed
a little later as we get into the further operation of the European Recovery
Program.
In one important aspect of the overall foreign aid picture, it was my
privilege to play a leading part before Congress and before the people
through speeches and presentations. Of course, this was frequently referred
to as my fight to have the Congress provide foreign aid funds within a
balanced budget. It is characteristic, as it was stated by the press at
the time, that I should function in that fashion. I was expected to strongly
advocate the programs of
[1138]
my administration, and, as many thought I would necessarily bring about
considerable fiscal restraint. All the Government officials were victims
of similar situations to some degree, but none, as I recall, was quite
given the pressures that I received at the time; although I expected these
pressures, my official responsibilities required me at all times to speak
up strongly for the fiscal soundness of the plan. I felt that the alternate
goads and restraints of this situation, with particular sensitivity in
the months leading up to congressional approval of the Marshall plan,
would be most helpful in steering the plan through Congress. While I definitely
favored the Marshall plan, I also had to think of my program for
a balanced budget, and I believed that foreign aid should be provided
within a balanced budget and not through deficit financing which would
weaken
[1139]
our own economic position. According to the press of the time, as I look
back, much space was given to the issue in the newspapers from October
29th on. At that time, I was asked if I thought that Congress
should act on the Marshall plan before considering any tax reductions.
At the time I was quoted as saying, "Definitely, because I certainly want
the Marshall plan to be within a sane, balanced budget." I also stated
that I was quite sure that the National Advisory Council would confer
as a group on Marshall plan appropriation requests, to judge their relationship
to a balanced budget and the problems of the Treasury and the Federal
Reserve System.
In January of the following year, when I appeared before the House Foreign
Affairs Committee to discuss the European Recovery Program, I again reiterated
my desire to see
[1140]
the program come within a balanced budget. One interesting result, without
any question, in my opinion, was a change in the attitude of the Republicans
towards the Marshall plan, due largely to the position that I was taking
that it should be considered within a balanced budget, because at first
the Republican segment of Congress was rather cool to this, and of course,
as you recall, they were in control of the Congress at the time that this
legislation was up there. But we developed some very strong advocates
among the Republican leadership.
HESS: Who was the strongest?
SNYDER: I would have to go back and check my records there. I think that
Senator Robert A. Taft was exceptionally helpful, Senator Robert Kerr,
a Democrat, was very, very productive in this period. Senator Tom Connally's
aid was material
[1141]
in the Senate, and Sam Rayburn was most effective in steering the program
in the House. The most important hearings, in my opinion, our most effective
hearings, were on the Senate side.
HESS: Was Senator [Arthur H.] Vandenberg helpful?
SNYDER: Vandenberg was very helpful, yes. Senator [Eugene Donald] Millikin
of Colorado was, as I recall, very helpful. And to give fairness to all,
I must say that real support was developed in the Senate.
In November of 1947 the President's Committee on Foreign Aid estimated
a first-year cost of five and three quarters billions of dollars, and
a total cost of twelve to seventeen billion dollars for the whole Marshall
plan, as I mentioned awhile ago, covering the whole four and a half year
period. The committee also advised the President that the United States'
natural
[1142]
resources and productive capacity could safely support a program of these
dimensions. In December of 1947, the Truman administration sent to Congress
its recommended draft legislation for the Economic Cooperation Act of
1948. That gives us a guideline on when, and that was in December of 1947,
before we got around to actually sending up a well-rounded program, with
the title of "The Economic Cooperation Act of 1948." It was the time before
the ECA program first went to Congress.
The funds requested for the first year were close to those recommended
by the President's Committee on Foreign Aid, but the draft legislation
represented not only the administration's recommendation for appropriations,
it also included recommendations for an organization to administer the
program. The bill submitted to Congress represented weeks of long, hard
work, for all
[1143]
members of the Truman Cabinet, and it contained the proposals which President
Truman and his advisers believed would best insure the efficient and vigorous
administration of the European Recovery Program.
First of all, it made participation in the program open to all European
nations, and their colonies or dependencies that were willing to take
certain specified steps to cooperate with their neighbors and with the
United States. It provided for the setting up of a new agency of the Government,
the Economic Cooperation Administration (the famous ECA), and that organization
was to be headed by an administrator. It also called for a special representative
of the ECA to be maintained abroad and for the ECA personnel to be employed
overseas, as well as at home, in administering the program. The administrator
of ECA was authorized to transfer goods and services as well as funds
in the
[1144]
accomplishment of the program, and to make guarantees to U.S. citizens
and businesses to facilitate private investments overseas. All loans
were to be handled through the Export-Import Bank. When a loan had been
approved ECA would transfer the funds to the Export-Import Bank for disbursement.
It was felt that the Bank, because of its great experience with foreign
loans, and because it was a permanent agency that could service loans
in the future, it would be the best agency to handle these disbursements.
The administrator was authorized to increase production of strategic materials
for stockpiling purposes, and that it was regarded that countries receiving
grants deposit equal amounts of their local currencies in specific deposits,
such funds to be known as counterpart funds. The ECA was to terminate
operations on June 30, 1952, unless the Act
[1145]
was extended by Congress. The draft legislation also dealt with the question
of whether the funds expended under the program should be in the form
of grants or loans. It stated that such determination was to be made by
the administrator in consultation with the National Advisory Council.
This was a subject that was to be of great concern throughout the
ECA operations.
When I appeared before the House Foreign Affairs Committee on January
14, 1948, to discuss the financing of the European Recovery Program, I
was pressed very strongly on just what the function of the National Advisory
Council was to be.
I stated in my appearance:
This is a program for the economic recovery of Europe. It is not
merely a relief program.
Moving on to the subject of loans versus grants, I stated my own and
the administration's views on the matter. It was my deep concern about
[1146]
the results of the loans of the First World War that led me to be so aware
of the dangers that lay in making loans to these devastated countries.
It was apparent that Congress, as well as most Americans, wanted to make
as much of the aid money available through loans as possible. It was natural
that no one wanted to give away anything unless it was absolutely necessary,
but to me it seemed necessary that the Congress and the people understand
that it was to our benefit to see to it that the recovery program
be not too strictly tied down to loans. In my presentation, I have stated:
This assistance should be provided as a combination of grants-in-aid
and in loans. The criteria for selecting one or the other form should
be the capacity of the participating countries to earn in the years
to come the dollars which would be needed to pay interest and principal.
We must keep in mind that these countries have already incurred an
obligation for large annual payments of interest and amortization
arising from the dollar loans extended to
[1147]
them over a period of years by the United States Government or the
United States private capital market. We should take care not to insist
that these countries contract additional dollar debts, which would
absorb so much of their dollar earnings as to operate to the disadvantage
of future trade and private investment. If the entire aid for European
countries were to be made on a loan basis, it would be practically
impossible for them to meet the additional charges from their earnings
of dollars, even after trade and investments return to normal. The
proportion of total aid which can be prudently provided on a loan
basis, will depend on the estimate of the borrowing countries' capacity
to repay in dollars and also on the degree of flexibility which can
be introduced into the terms of repayment. We propose that when the
administrator for Economic Cooperation decides after consulting the
National Advisory Council that it is desirable to extend aid on a
credit basis, he will allocate the funds to the Export-Import Bank.
Incidentally, this is one example of the manner in which the National
Advisory Council would perform its customary role of coordinating
the United States' foreign financial policy.
In advocating the great flexibility in the manner of whether aid should
go as loans or as grants, and in warning of the dangers of tying the Europeans
down to the repayment of principal and
[1148]
interest, I was only repeating the lessons that I had learned from our
experience with war debts after World War I. As I have said, I was echoing
the warnings of an earlier Secretary of the Treasury, who had recognized
the dangers inherent in World War I war debts, but was unable to substantially
alter the situation. In a speech on March 24, 1926, Secretary Andrew Mellon
said:
Some of the debt settlements we have negotiated have been criticized
because it is claimed that our failure to collect the last cent imposes
an avoidable burden upon our taxpayers. This criticism is without
perspective and does not take conditions in their true relative importance.
I should rather have solvent customers in the future which permit
me to run a profitable business than insist upon terms of debt settlement
which will again force my customers into bankruptcy. A businessman
would prefer making one hundred dollars in his business than being
repayed five dollars of a debt. The farmer or the laboring man would
rather have a market for our surplus in Europe than save a dollar
of Federal taxes.
[1149]
More than two decades separated these positions, but it seemed that both
of us were trying to drive home the same point, that the United States,
as an exporting nation, had an interest in maintaining the ability of
its customers to continue to buy.
In my appearance before the Congress, I went on to make these points:
One, the NAC was studying the problems of what to do about the assets
of the Marshall plan countries located in the United States. Two, since
it would not be possible or desirable to obtain all the goods needed in
the programs from the United States, the NAC believed that the ECA administrator
should be authorized to procure supplies outside the country. These were
what we call off-shore procurement. And three, that the European countries
negotiating agreements with the United States should clear
[1150]
their agreements through the National Advisory Council.
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