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 It may not be published in full except by permission of the Harry S. Truman Library.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

[1898]

HESS: Mr. Secretary, I have a few questions about some specific tax measures. On January 14, 1948, Representative John Dingell submitted H. R. 4968; the bill contained an excess profits tax proposal. In the bill, excess profits were defined as profits greater than 135 percent of the base established under wartime law, which was the average of 1936-1939 profits or 8 percent of invested capital, and it had been first outlined in the State of the Union message on January 7th; the bill provided for a reduction of income tax of $40 for each taxpayer and each of his dependents. According to the New York Times of January 23, 1948, the figure was set at $40 in joint studies by Treasury, White House, and Budget Bureau personnel. Reading one quote from

[1899]

A. E. Holman's book, United States Fiscal Policy, 1945-1959, he has the following quote:

What do you recall about that particular measure?

SNYDER: Mr. Hess, I think that measure of Mr. Dingell's was simply his interpretation of what Mr. Truman had asked in his bill, in his proposed legislation. President Truman made a request, and I think that on top of the so-called [Representative Harold] Knutson proposal, Mr. Knutson, at that time was chairman of the Ways and Means Committee, and he had introduced a tax bill, which President Truman didn't agree with at all, and many parts of it I didn't agree with. In order to get some

[1900]

counteraction there, this bill that you just mentioned, as having been introduced by Congressman Dingell, the record shows that he forced the acceptance of that bill in conjunction with the Knutson bill over the strong objection of Chairman Knutson. But he was able to carry his point and introduced his bill. Congressman Dingell told the Committee that the community property principle could be included in his bill without affecting the Treasury receipts by changing the $40 tax cut recommended by the President for each individual to $30. Now that's where this $40 business got in to it. The purpose was that actually the $40 tax was in effect raising the exemption on the individual, and it was just stated in a different way. Frankly, it was unfortunate, because it gave the wrong connotation to the proposal, but the simplest way would

[1901]

have been to raise the individual exemption by $100 or something like that, don't you see, or $200. But then the most interesting part about this was that Mr. Dingell stated before the committee, he said, "Now, I want you to understand that I'm not advocating this bill, but I'm only suggesting it as a possibility, because it's what Mr. Truman says he wants." I think that's very interesting. You asked me, you said that it was indicated that I didn't favor the bill. Well, I think neither side particularly favored it. Dingell, who was a Democrat, and a Democratic member of the Ways and Means Committee, stated that he wanted it understood that he was not advocating making change like that, but that it would help carry out a proposal made by President Truman.

I was opposed to the bill because I thought that it was badly timed; it came at the wrong

[1902]

period; it took up some matters that later on we may have been considering, but it caused a big drop in our revenues at the very time that we least desired them, so far as our plan of trying to get the finances of the country back under control after the great deficit spending of the war. I pointed out to Chairman Knutson and the Committee, that this bill without doubt would remove over six million people from the tax rolls. Of course, Mr. Truman wanted to go even further than that at the time. If there was going to be a tax bill he wanted to remove some ten million people, but that larger exemption, you see, by the $40 credit as it was called, which actually had the effect of asking to raise the deduction for the individuals.

HESS: Were you in favor of the excess profits tax provisions in this bill?

[1903]

SNYDER: Well, no, I wasn't, and I never have been in favor of the excess profits tax taxes, for this reason: My resistance to an excess profits tax was that it was penalizing the man who did his job best. You offer a certain project to the industry to build a certain thing, and ask for bids on it. The bids came in and you have an opportunity to get competitive bids and award it to the lower bidder. That ought to be then the bid at which the man who got the lowest bid, and if he can turn out the product, then he's entitled to make his profit on that.

In the pressure of war, however, the necessity for products becomes very urgent, and the purchasing departments of the various services resort to cost-plus contracts, at which the Government will award a contract to a company

[1904]

on a cost-plus basis. Think there ought to be an adjustment in the cost-plus contract so that when they are audited that any excessive profits could be adjusted in the price paid without any excess profits tax. But when the excess profits tax was used, when they went back and audited, they applied the excess profits tax against what the Government considered they properly should have made. The inequity of it was apparent against the man who did a better job, because if you give the same job, cost-plus job to two people, and one man runs his cost way up and doesn't turn in a particularly good product, and yet he rides right on with his excess cost and the increased cost of the Government, his production line cost, material flow, labor application, and can hold the cost down, why, he ought to be entitled to a

[1905]

fair margin of profit. That, got very much entangled into the excess profits tax picture, and caused a great deal of dissatisfaction during the Truman administration.

I'll give you as an example, the jeep. Willys-Overland Corporation who brought out the accepted model of the jeep, which was approved by the Quartermaster Corps, and later by the Department of Defense -- during World War II it was the Quartermaster Corps that handled the purchasing of the jeeps. Afterward they determined that they wanted a second source of supply however. Willys-Overland had been in financial difficulties before the war, and were not on a sound financial base, and although they turned in the model that was accepted as standard, the Quartermaster Corps desired to have a second source of supply as a safety factor, and so they got the Ford Motor Company to come into the

[1906]

picture, and they required the Willys-Overland people to give them their plans and specifications and send one of their foremen over to help setup the production line. The Government permitted Ford $100 to $150 per unit over what they allowed Overland, because Ford claimed that their costs were running so much higher for some reason or another, that their labor market was higher than Willys-Overland was. But all during the war, Ford got anywhere from $100 to $150 more for the same product than Overland did, and the Overland product was apparently the best, because it was a common saying around the armed forces that when you sent the enlisted men out after a jeep or out to a supply depot to pick up several jeeps, they all immediately looked for the Willys jeep because they said its performance was more assured and more standard. I added that just to show you one

[1907]

example of when the man does a real good job, he ought to be entitled to a profit on what he did, don't you see?

HESS: Are there any situations when you think an excess profits tax should be employed?

SNYDER: Well, it's hard to oppose it in time of war. When you're doing as I was telling you, you're rushing contracts, you haven't time to go through the normal bidding for it, and so forth, and there's a war on and pressure, and you'll give a man a contract to do something at a certain price, and he gets organized and can turn it out better than the price that you gave him, well, it seems that it is still applying a penalty to the man who does a good job, over the man who does the poor.

HESS: As I read in the New York Times about the $40

[1908]

tax cut, was that figure set at $40 during joint studies between the Treasury, the White House, and the Budget Bureau?

SNYDER: I'm not too sure exactly where that came up. The Treasury was not in on it. We would have recommended the raising of the exemption, rather than that particular device, of a $40 credit. If they had raised the exemption by about that much, it would have had about the same effect, but then they, got into quite a debate about it and it didn't pass, as you know.

You know, you were talking just a minute ago about the community property principle. At the time, that wasn't very popular, and there were quite a number of the states that didn't have the community property law and were resisting it very strongly, they didn't want it. I remember Congressman [Robert L.] Doughton pressed

[1909]

me pretty hard. He wanted a yes or no answer as to whether the community property principle should be extended to all the states. I remember I told him, I said, "If this Congress wants to correct it." I was opposed to it at that time myself, because I thought it was going to cause us some problem with our taxes right at the time when we needed them and we didn't want any reduction I told him, "If Congress wants to correct it and provide the revenue that would be lost through some other tax, why, I would be in complete accord with them." My only objection to it was an untimely reduction in revenues that we needed pretty badly. Later, when it was finally approved, and it went through with the Treasury's support,

HESS: Did you try to dissuade the President from recommending that there be a $40 additional

[1910]

tax credit before he came out with that pronouncement in the State of the Union address?

SNYDER: Yes.

HESS: What did he say?

SNYDER: He said, "No, I want to put this up to them, and I think it will be all right. I think this is one way. It looks like they are trying to swing this bill to make it look like they've taken care of everything, and this will be more obvious to the little man that he's getting something," It wasn't persuasive, unfortunately.

HESS: Did you think that Mr. Truman honestly thought that he could get a bill like this through the Congress at this time?

SNYDER: I don't know. I wouldn't want ever to say that Mr. Truman did something that he didn't

[1911]

think was honest.

HESS: Well, we're not talking about honesty, we're talking about politics. Do you think Mr. Truman's actions were politically motivated?

SNYDER: I think that there was some horse trading going on there. There is no doubt that the Republicans were after a reduction in taxes for political purposes. So, he was just capitalizing, maybe, on a different twist of it.

HESS: Do you think that this could have been something in the nature of record-making and issue-building against the 80th Congress by saying to the American people, "Here we are trying to lower your taxes, and the do-nothing Republican 80th Congress is no going to do it."

[1912]

SNYDER: Well, I think that is what was in the back of his mind there.

HESS: Did he ever express anything like that to you?

SNYDER: No, I didn't discuss that with him. The only thing I did press for was that if they didn't want to put the $40 credit in there that they would find some other way to raise the same amount of taxes, don't you see. It was a very difficult situation to face up to. Mr. Truman did not want to lose any gross revenues, but he put it up to the Congressmen, even in the recommendation, that that $40 credit ought to be made up by taxes somewhere else.

HESS: Did you like to keep yourself separated from matters of political consideration such as this, if this was a political measure. If

[1913]

something like this was going to be sent to Congress for political reasons, did you like to disassociate yourself with such matters?

SNYDER: I attempted to iron out all my objections and arguments with the President, and once a decision was made, regardless of how I might have felt about it in discussing it with him, I usually went along with the administration's stand, because I have seen too many times the damage that is done to an administration by having schisms between Cabinet members and their agency heads. I would put up my arguments and my fights with the President, and if he finally made the decision that he wanted to go a certain way, why, I tried to accommodate myself to the administration's point of view.

HESS: Do you think that the position of the Secretary

[1914]

of the Treasury should remain aloof from politics?

SNYDER: Yes. President Truman was very cooperative in letting me keep the Treasury somewhat removed from politics, because between us we agreed that the Treasury was the business part of Government, and that we were dealing with both sides. We had problems with the taxpayers of both parties, and therefore, it would be advantageous to stay somewhat clear. Mr. Truman never asked me to make political speeches, and he passed the word on to the Democratic headquarters and it was rare -- while I was in the Cabinet -- it was rare that either the Secretary of State or the Secretary of the Treasury went out on a political campaign with a political campaign speech of

[1915]

some sort. That doesn't mean to say that in our talks, in our routine speeches and our routine actions, that we weren't supporting the administration, and that we weren't 100 percent for Mr. Truman. I want that to be very clear. We didn't take sides on a matter that was opposed to the administration's stand. If that makes it clear.

HESS: It certainly does.

In my research on H. R. 4968, I could only find one entry in the Congressional Record and that was at the time it was proposed so it must not have been voted out of committee. Is that correct?

SNYDER: It never was. I just mentioned that. I think it was about the 15th of January, Congressman Dingell was allowed to read his bill, but I can't find the bill anywhere. That

[1916]

particular number seems to have just disappeared.

HESS: It's only listed once in the Congressional Record. That's when it was proposed, and that's the only entry given for it. So usually that indicates that it just did not come out of committee.

SNYDER: That's right.

HESS: The next bill that I have a few questions about is H.R. 4790, and early in the second session of the 80th Congress, Representative Harold Knutson introduced the bill, H. R. 4790.

SNYDER: That's the one I was talking about.

HESS: That's the one we were talking about a little earlier, is that right?

[1917]

SNYDER: Yes, that was the Knutson bill. He, at that time, was chairman. He was the Representative from Minnesota.

HESS: And Dingell brought out a similar bill later on, is that right?

SNYDER: No, he brought out a bill not similar to Knutson's bill, but a bill that incorporated some of the things that Mr. Truman was trying to get included, and I tried to persuade Chairman Knutson that any tax adjustment -- you see, his bill was taking care of the high bracket people largely. That's where the big end of his tax relief came, was to the high bracket taxpayers. Mr. Truman's feeling was that greater attention (and that's where the $40 came in), greater attention should be given to the lower brackets. I urged Chairman Knutson

[1918]

that any tax adjustment that was to be made at that particular time ought to be concentrated on the bottom of the income scale instead of on the top of it. I remember suggesting to him that though the cost of living tax adjustment credit recommended by Mr. Truman of $40, he called it "A cost of living tax adjustment," you know, he could not endorse any general reductions in tax rates under the present circumstances. That was his effort to bring some relief, was that cost-of-living reduction. That probably was the reason why he didn't want to go along with me in raising the limit to accomplish the same thing. I would have opposed it myself under any guise, because I didn't think we ought to be reducing taxes at that particular period.

HESS: President Truman vetoed H.R. 4790 on April 1,

[1919]

1948, and it was passed over his veto the following day. The vote was 311 to 88 in the House, and 77 to 10 in the Senate. Correct?

SNYDER: That's right. They kept saying that inflation had subsided and this was needed to spur the production and to lift the economy, and I insisted through that whole hearing that we still had inflationary pressures and they had to be checked and that the administration would be the first to come forward with proper rate reductions with a well-balanced tax revision program just as soon as we felt those inflationary pressures were subsiding.

HESS: The next subject that we have is the minor recession that came along in 1949 and 1950, and there are some historians and economists who say that the administration was slow to

[1920]

recognize that a recession was developing at this time. What's your reaction to that?

SNYDER: That's debatable. We had so many pressure groups. I guess you always have. Every administration has them. But here one minute we have been having this pressure, pressure, pressure, on inflation, "We must do something to stop inflation," and then all of a sudden it switches over and it starts that we are now plunging into a recession. Well, you don't just turn the tap on and off, Jerry. It isn't that simple. It would be marvelous if your income revenue supply was there in a great big reservoir, and you could just turn the tap on and have it come when you needed it, and slow it down when you didn't need it. It takes planning; it takes hearings before Congress, that is to take any legal action

[1921]

towards tax reforms and things of that sort. We were proceeding with what fiscal programs we could by lowering the margin requirements and things of that character, and there is always a group who want you to do something spectacular. Well, I was always opposed to that procedure with regard to monetary matters. Of course, Providence came along and took care of us that time. It wasn't any crystal gazing on my part that let me know that Korea was coming on. But if we had moved any more rapidly, and had set in motion certain things, we would have had just that much more trouble reversing. When we did have to go before Congress, we would have had more space to make up, because, as I say, Providence came to my rescue there in whatever action that we took that was attributed to be slowness; it turned

[1922]

out that we were fortunate in the conservative position that we took with the economy at that particular time.

HESS: It is generally agreed that the first official pronouncement of that development was in the mid-year economic report published in July of 1949, and that it noted that in the first half of 1949 there occurred a "moderate downward trend." Do you recall that?

SNYDER: Yes, that was discussed at some length. Who was the head of the Council at that time?

HESS: [Leon H.] Keyserling?

SNYDER: Yes, Keyserling. You know, Mr. Keyserling was an enthusiastic person and a very likeable sort of person, but his economics were self-generated, and although he called himself an

[1923]

economist and he lists himself officially today as an economist, I have never known of his having ever studied economics as a serious course of study. And so, he used to come out with this, I think, "hip pocket" tenets of economics that I just couldn't agree with at all times.

HESS: Dragging out our two old terms, "liberal and conservative" how would you describe Mr. Keyserling?

SNYDER: I think Mr. Keyserling could easily be called an ultra liberal.

HESS: Without any reservations?

SNYDER: Without any reservations.

HESS: How would you compare Mr. Keyserling with Chester Bowles on their liberality?

[1924]

SNYDER: Hand in hand. I think they could go hand in hand. Mr. Bowles had been, of course, a very successful businessman, and had amassed quite a fortune in the advertising field, in public relations. His company had been bought out by General Foods, because General Foods wanted to take over when they had their great consolidations, and as part of their reorganization plan they bought out the Bowles advertising agency, Benton and Bowles. Benton and Bowles were a very aggressive company and apparently a very good productive company, because they had a number of the big accounts of the industries which were consolidated into General Foods. Clarence Francis, who was the president of General Foods at that time, told me that when they examined the situation in the consolidation they found that they were paying to bring all these contracts together and they

[1925]

were working harder for Benton and Bowles than Benton and Bowles was working for them. So they bought them out at a very handsome price. Mr. Bowles then started out in a public career because he was comfortably fixed. So Mr. Bowles came into Government. He ran for office in Connecticut and became connected with the OPA here, and made quite a dramatic performance of his leadership there. I thought it was very effective during the latter part of the war. But after the war, it was difficult to work hand in glove with him because he was so intent upon this so-called liberal idea and in his daily radio speeches he was the one person standing between the housewife and perdition. It was hard to get along with him at times. But I remember when Mr. [William] Benton, who was a Senator at one time, never got off on that

[1926]

angle. He was a very effective help to the administration, and in anything that came up. He was a good Senator, but he stayed more a businessman than Mr. Bowles did, because Mr. Bowles has never recovered from his experiences in the liberal field. He made a big hit as Ambassador to India, because that's what they wanted, all the liberality in the world from the U.S. He was constantly backing up and favoring their demands on this country for greater aid. Mr. Bowles, apparently, had the notion that there was no bottom to the till when it came to these liberal ideas.

HESS: Fine. Now the other questions I have on my list you have covered in the recorded portions that we have taken down the last few times: Taxation for 1950; taxation during the period of the Korean conflict, so that finishes

[1927]

all of the questions that I have on my list. Just one question on taxes, what would be a perfect tax situation taking into consideration income taxes, corporation taxes, excise taxes, is there a perfect tax?

SNYDER: I doubt if you could ever come up with what would be generally accepted as a perfect tax, even though you were allowed to start out fresh as we did in Japan. We built a tax system for them. I sent a task force of experts from the Treasury, twelve men, a cadre of twelve men, who went over and worked out a tax program. We had a great opportunity then to come out with as near a perfect tax program as was possible. But even then we ran into great problem's. You have resistances and you have certain groups that have more persuasion than others

[1928]

and the first thing you know, you began to begin to get lumps in the general structure of your tax conception. Ours, I don't suppose, will ever overcome the inequities and the loopholes and things that have grown into it, because of the manner in which it was built. Starting back when we were going out for more taxes during the depression. We needed some revenue to carry out the various recovery programs. A tax was usually put on where it would cause the least excitement or the least resistance. Then the war came on with its greater demands. Then again a tax was put on pocketbooks, and one was put on this and one put on that, and it just bulged out into places all over until it was a terrific sight to behold when you tried to think about a reorganization of our tax structure on an equitable basis. Now consider

[1929]

this bill that Congressman [Wilbur D.] Mills introduced and the House passed. All you have to do is to read your papers. That was intended to try to correct some of the inequities and some of the loopholes and things of that sort, to bring it nearer to a perfect tax structure.

But it's a hopeless task, as it appears from the Senate hearings.

HESS: Well, Mr. Snyder, that ends all of the questions I have on all of the subject that we had intended to cover. Do you have anything you would like to add on Mr. Truman or the Truman administration?

SNYDER: Well, I think that we'll bring this present series of interviews to a close by stating that it has been a great pleasure to have had these talks with you, and to have given you some of

[1930]

my experiences, and tell you of my activities while serving with President Truman. I found him to be one of the finest men that I have ever come in contact with, and it was not only a great privilege, it was a great pleasure to have been associated with him in the difficult times that we went through when he was President. I was delighted to have had that opportunity to have been associated with him, and to have lent whatever aid I could to him, because I considered at that time, and have never wavered in my belief, that he was a great President and I am delighted to see him every year become more and more established in the minds of historians and the people, as having been a great President. I think maybe I've told you Mr. Hess, I was never associated in politics; only when Mr. Truman was involved, did I ever get actively

[1931]

into political activities, and that was largely on the fund-raising side for him. I never had any political ambitions, and so the only motive that I had was to try to help him as long as he thought my work was effective. That was my one goal. I never had any notion in mind to seek any credit for anything that was done. I wanted him to have the credit. If it was something that redounded to his credit and to his better meeting the problems that were facing him, that gave me the greatest satisfaction in my work with him. As soon as he left Washington, I stepped out of public life and have stayed out these fifteen odd years. But it's been such an enjoyable experience to sit here with you these past weeks and review and reminisce on some of the things that occurred while I was serving with

[1932]

Mr. Truman.

HESS: We thank you very much for your time and for your assistance to the program.

SNYDER: I might say this in adding that if anything occurs to you as you are interviewing other people and if you'd like to drop back over some day and we'll pick up a few threads that we dropped along the way, why, I'll always be very happy to see you and to visit with you.

HESS: Fine. Thank you very much.

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