Harry S. Truman Presidential Library & Museum


 

Henry L. Deimel

Oral History Interview with
Henry L. Deimel

During the years of the Truman administration, was wartime shipping adviser; Special Assistant to Director for Near Eastern and African Affairs, Department of State, 1945-1949; Foreign Service Officer (appointed), 1949; Counselor for Economic Affairs, American Embassy, India, 1949-1952; and Civil Air Attaché, American Embassy, France, 1952-1956.

Washington, D.C.
June 5, 1975
by Richard D. McKinzie

[Notices and Restrictions | Interview Transcript | List of Subjects Discussed]


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.

RESTRICTIONS
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 It may not be published in full except by permission of the Harry S. Truman Library.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 February, 1982
Harry S. Truman Library
Independence, Missouri

[Top of the Page | Notices and Restrictions | Interview Transcript | List of Subjects Discussed]



Oral History Interview with
Henry L. Deimel

Washington, D.C.
June 5, 1975
by Richard D. McKinzie

[1]

MCKINZIE: Dr. Deimel, I think that many historians are interested in how people decided to go into Government service. A good place for us to start would be if you could say something about your background, your education, and how you came to decide upon a career in Government.

DEIMEL: Yes, I can tell that very easily. Just by way of background, I was born in June, 1899 in Brooklyn, New York. I spent my first three years traveling in Europe, in Germany and England -- my father had business affairs abroad -- and then California -- San Francisco, Oakland, San Jose. Then by 1907, I was in school

[2]

in Yonkers, New York. Then we went to Brussels; I attended a German school, so I just naturally picked up German and French there, because I had to. English was a taught language in this Deutsche Gymnasium in Brussels, where I was from 1907 to 1910. Then we moved to England; I went to a local preparatory school and then three years, from 1913 to 1916, to an English public school, Malvern College in the West of England, in Worcestershire.

I was one of a big family; there were eleven children. My mother died when I was three, so there was a second mother -- oh, a mother to me. So there were eleven of us, of whom five [Now, in 1980, only two remain -- my youngest sister and myself], may I say, are still living. Most of the family had returned to the United States, to New York and then to San Francisco, in 1914, leaving myself and an elder brother in England. We returned from England in 1916 (just before the all-out submarine warfare), to California in 1916, and then I spent seven years at the University of California in Berkeley, got my A.B. in economics, and a teaching fellowship for

[3]

three years, and my Ph.D. in May, '23.

Well, how did I get into the Government service? My problem was, I was usually pretty good most of the time at my studies, but as for occupation, I didn't know what to choose because I didn't know what there was to choose. That was the problem in those days. I had no driving thought; did I want to be a doctor, did I want to be a lawyer? Well, I didn't know anything about the needs and possibilities. But sort of by good luck Henry Francis Grady became my mentor; he had been commercial attaché in London and The Hague after the First World War. I became his teaching fellow my last year, and he became chairman of my Ph.D. committee when I finally found something to try to write a thesis on. And while he was there, he suggested that I apply to the Bureau of Foreign and Domestic Commerce for employment. That was the great new Bureau which was growing in the Department of Commerce under Herbert Hoover. Henry Grady had been in the Bureau before he came out to California. A friend of his in the

[4]

Bureau, L. [Louis] Domeratzky -- who was the assistant director of technical affairs in that Bureau -- came out to California and I met him. So I asked him, "Do you think there's a job for me there?"

He said, "Well, write to me when you're ready."

So, when I got my thesis done, or was just finishing it, I wrote to him and sent applications, and through him I got a job. I had to rush -- I didn't even stop to collect my degree; it was conferred in absentia -- because I got word from one of the division chiefs, a man named Henry Chalmers, chief of the Division of Foreign Tariffs. He had a position as assistant chief open, and if I could be there by May 15, I'd be considered for it. And meanwhile, he’d see that there would be two other possibilities, so it would be worth making the trip. So, I came out, and after some hemming and hawing I was appointed to that job, assistant chief of the Division of Foreign Tariffs, on May 30, 1923. That was a stroke of luck, because it was not only a better job than most entering jobs, it paid enough

[5]

so that winter I got married and my wife came out from San Francisco. But also, it was a remarkably good observation post.

The Division of Foreign Tariffs was set up to provide American business with information about the tariff duties and import rules and regulations in foreign countries. Our business was to keep up-to-date on all of that. We had quite a library. For those days, it was a large division; it was about 20 people. I was thrown into job number two. We not only had to be able to answer letters -- inform Black and Decker what the duties on their products were if they tried to find a market in France, for instance -- but we had to keep our own records up and publish the changes. The Bureau of Foreign and Domestic Commerce for that day was a bureau with a mission: to promote American exports. It was one of the characteristics of that sterile era, that exports were considered good, imports were bad. It was shortly after the Fordney McCumber Tariff Act was passed in 1922; it was a deadly era.

[6]

MCKINZIE: Wasn't it difficult to promote foreign exports when, at the same time, you had to justify high American tariffs?

DEIMEL: It should have been. It wasn't, so far as I was concerned, for two reasons. We were in a service of information, and there were plenty of people wanting the information, so I didn't have to concern myself with imports. There was a lesson to it, though. I wonder if this story about Herbert Hoover would be interesting.

One of the lucky things about my job was that, as an assistant chief of division, I was admitted to his staff conferences; they were supposed to run every other week, every other Saturday morning, I think, but actually he'd skip a number. But you know, for a new, young fellow coming out of nowhere -- of course Berkeley was not exactly nowhere; it certainly isn't now -- to Washington to sit at the feet of a great figure like that and hear him tell what's what; that was a marvelous experience until I discovered the feet

[7]

of clay. I must say that I have a warm admiration for Herbert Hoover as a man. I had a few personal encounters with him and I was struck by the kindness, the warmth of his blue eyes, the friendliness. But that wasn't his public figure at all. But when it came to the discussion of import tariffs, he laid down a dictum and that was part of, what shall we say, the book we went by -- it wasn't published but I don't see any reason why not to say it: "Import duties are a controversial matter; therefore, we do not discuss them." And when it came to dicta like that, he was direct, straight-forward, and completely arbitrary. To a young man just out of university -- well, as I say, there were feet of clay.

So, we had to develop all sorts of ideological ways around that. When some American firm would complain about the high duties that they had to pay to sell into a foreign country, we'd have to say, "The height of import duties is an internal affair. A foreign government has nothing to say about it, so long as there is not discrimination.

[8]

But if there is discrimination against American goods, then we can ask our Embassies, our commercial attachés, to take up the matter." As a result, we made all sorts of efforts to find discrimination.

I remember once, for instance, that I was busy dictating an instruction, a memorandum, to go to our commercial attaché in Berlin I think. It was on the subject of the duty on canned sardines. The German import duty on our sardines, which were a large fish called the pilchard, canned in tomato sauce, was much higher than the duty on the true sardine, a smaller fish canned in olive oil from Portugal. So, I was trying to develop a thesis that that was discrimination, enough of a thesis so that the commercial attaché could go to whatever office he would go to -- I didn't know who he went to in those days -- and say, "This isn't really right, and we're good friends; can't you do something about that?"

So that's the way we tried to get around the problem, but it always did seem to me a sterile

[9]

situation and that, really, to my mind, characterized our foreign relations, and I think, our economic domestic affairs generally, too. The sterile twenties, it seemed to me, were characterized for instance by President Coolidge's famous dictum, "The business of America is business;" and Coolidge on the war debt, "They hired the money, didn't they?" The major effort of the very good few men in the Economic Advisors Office in the State Department was to settle the war debts, the thesis being they should be paid. Well, now, I don't want to blame Herbert Hoover or the officials in the State Department or anybody else or even the Congress. It was the spirit of the times; the tariff act of 1930, Hawley-Smoot was a culminating example -- it was the spirit of the times. We had had, as I see it, in World War I, a high-pressure introduction to the world, and perhaps some little excessive idealism that kind of fell flat after the war. We tried to draw back into our shell, and yet we couldn't; we were expanding. We were moving into the world, particularly in

[10]

economic affairs, so that there was a dichotomy there, an unnatural split. And that, in my mind, characterized the twenties. It was an empty era ended by the Wall Street collapse and the depression. Then came the great change, the great liberation. I can still remember the enthusiasm with which I listened over the radio to Franklin Roosevelt's acceptance speech and also his inauguration speech. It was a new era, and certainly I wasn't alone in that complete sense of enlightenment, of enthusiasm.

MCKINZIE: By this time you were in the Department of State?

DEIMEL: Oh, yes. From the time I began to know my way around Washington, I wanted to get into the Department of State. I had some friends there, notably Harry Hawkins, who was then working on commercial treaties. In fact, he later became assistant chief of the Treaty Division of the Department of State. He used to come over to my office in the Department of Commerce to check on some aspects, and we'd argue about this

[11]

and that. For instance -- a little by-line -- he was responsible for the phrase, in our commercial treaties of the time -- all, as I said, based on the principal of nondiscrimination -- "from whatever port arriving." That's a vital phrase. It was quite a victory on Charles Evans Hughes' part that this phrase was approved by the Senate in assenting to the commercial treaties. It's in the shipping field. You know, we had then built up a big wartime shipping fleet, and there was hope among the merchant marine fraternity to keep a large fleet active in peacetime. But the only way they could do it, without more costly subsidization than would be approved, would be by discriminating somehow, by what was called flag discrimination -- by requiring for instance, in a crude sense, that half of all American export and import cargoes should go in American flag ships. In other words, the cargoes should be divided between the ships in the direct trade -- German ships from German ports to America, American ships from American ports to Germany, and

[12]

reverse. Obviously they couldn't stop in the middle of the ocean and exchange cargoes, so they should be made to share the traffic equally. And higher duties should be levied in the indirect trade -- that is, for instance, a Greek tramp ship carrying coal from Newport News to Italy would have to pay a higher duty than if carried in an Italian or an American ship. Now, there was quite an effort during the twenties to put that across, and it came pretty close to being put across. But as a means of preventing that, which would have been very unfortunate for our commerce, Harry Hawkins devised the phrase to ensure that there should be no discrimination by flag of ship, in tonnage dues or import duties on the cargo and so forth, between the ships of the other contracting party and any other ships, "from whatever port arriving." In other words, a Greek ship could pick up cargo in Italy and bring it to New York, and the cargo wouldn't have to pay any higher duties. Now, that was really a landmark in the beginning of a more liberal foreign trade policy. That comes in

[13]

later again in the trade agreements policy.

So I had several friends in the small Economic Division of the State Department, who were helpful in aiding me to transfer there. Unfortunately, my chief in the Department of Commerce did not like the idea. In fact, without my knowledge -- I was told later -- he squelched several attempts by the economic adviser to get me transferred. But finally Wallace Murray, who was then chief of the Division of Near Eastern Affairs -- he later became Ambassador to Iran -- said he was looking for an economist for his little division, which dealt in the relations with what we now call the Middle East, the Arabian countries, and the Balkans, including Turkey. He was looking for an economist, and Harry Hawkins suggested me. And he asked me to come over. Of course, I was enthusiastic about it, and after some difficulty I got transferred. So that's how I came to get into the State Department. I had a wonderful four years in that little division as economist; I was desk officer for Egypt and

[14]

Ethiopia then. There were eleven all told in that division, including the messenger. It was a marvelous environment, and I enjoyed it thoroughly. I wasn't confined to the work there. For instance, after the changeover, after Roosevelt was in, I would be called on from time to time to do broader economic work in the Department. For instance, I was interested in exchange controls, so when the London Economic Conference was set up, and preparatory papers were being written, I wrote the one on exchange controls, the preparatory paper for our delegation to the London Conference. So, on the basis of that, later on in 1935, I was given a trip to Geneva to attend a conference there on exchange controls.

MCKINZIE: But of course, President Roosevelt torpedoed the ideas...

DEIMEL: Well, I recall that. As I remember, the story was this: Cordell Hull was going with a delegation to London, and he took with him several people, including Harry Hawkins. Now Harry Hawkins was,

[15]

at that time, assistant chief of the Treaty Division in the State Department, and one of my best friends. Roosevelt said, as I was told, when he said good-bye to Cordell Hull, "Now, you want to have a good backstop committee in your department, so that when you send telegrams back they know where to go."

Cordell said, "Oh, yes, we'll take care of that."

So, three men were set up to be the backstop, Frederick Livesey, Paul Culbertson, and myself. I think we had a meeting and decided that we'd keep in touch and wait for the telegrams. The telegrams would go to Frederick Livesey, who was Assistant Economic Adviser. Herbert Feis, who was then the Economic Adviser, went to London as a part of the U.S. delegation. So, we'd see each other maybe at lunch there and say, "Well, any telegrams come in yet?"

No, no telegrams came in, and before any could come in we got this blast -- something to the effect

[16]

that it would be a terrible catastrophe to tie ourselves to gold or something like that. Anyway, it did the conference no good. There was some background, as I understood it, that might seem interesting. The conference was one of the first steps of the New Deal in the international economic field. Of course, the Roosevelt program was directed at domestic recovery. The first big thing they did, for instance, was to abolish prohibition. Hoover had said it was a noble experiment, and nobody who hadn't lived through those thirteen years could realize how disastrous and ugly an experiment it was. But Hoover did not have political courage to tackle the issue directly. Instead he called it a "noble experiment," but he wasn't going to take the risk of attacking prohibition. Yet, when Roosevelt came in with a complete change, it seemed as easy and simple as it seemed for Nixon to establish entente with Red China. (I'm not comparing the two men.) Before the London Conference,

[17]

the first step toward building up a new economic world was to call all the Ambassadors in Washington to the Department of State one by one and read them a sermon about how their countries should expand their economic policies. They shouldn't tie their currencies to gold, they shouldn't pursue deflationary policies.

MCKINZIE: A sermon by whom?

DEIMEL: I don't know who proposed the idea. Each Ambassador was called in, and at the ones I attended the sermon was delivered by Frederick Livesey, who, by the way, was a very remarkable man. He was very quiet but utterly brilliant, and yet the warmest and most broadly reflective human being I've ever known. Well, so here's the funny story. We attended these sessions; they were rather empty. The Ambassador would listen very sedately and nod his head. And after it was all over, a few weeks later, there was an Ambassador (more probably Minister) from a very small country called Albania who was alone

[18]

here, had no staff; he lived at the Mayflower Hotel. And relations with Albania were under the jurisdiction of the Near Eastern Division. So he came to Wallace Murray and said, "Now, why is this that I've been discriminated against?" He was a Minister, not an Ambassador. "Every other chief of mission has had this lecture given to him, and I have not. What shall I tell my government?"

Wallace Murray, of course, said, "We'll fix that up. Come in tomorrow afternoon."

And he phoned Fred Livesey, and Fred Livesey said, "Well, Henry Deimel can give it. Call him in."

So there I was, hauled into Wallace Murray's office the next day with this Albanian minister -- I forget his name; he had a good sense of humor though -- and Paul Alling, the assistant chief, and myself. And I gave the orthodox spiel. And at the end of it the Minister said, "I congratulate you on how well you delivered your lessons"

This was an early groping of the State Department into international economic affairs, under the

[19]

New Deal into this new world of economic cooperation.

MCKINZIE: Now, do you think that this was the influence of Cordell Hull or was this the influence of something bigger than Cordell Hull?

DEIMEL: I would say it was partly Cordell Hull's influence, but not bigger than him. I think it was smaller, in this sense; that it was trying to find the easy way -- just as I say Herbert Hoover's easy way was to say, "The tariff is controversial; we don't discuss it." So, the easy way was to preach a sermon to the other countries.

The next step was to try to do something in a great big conference, but that failed. But after that failed, Cordell Hull's turn came, and he was able to sponsor a reciprocal tariff bargaining policy, the trade agreements program. It ran counter to what had been the accepted version of international economics in the 1920's, in which high tariffs are good as long as they're import

[20]

tariffs or your own tariffs and so forth. It was part of a broader movement. The tariff of 1930, that was the tariff act, wasn't it, that Hoover did not veto? Now 1932 was the election year and Franklin Roosevelt won. It must have been the Democratic Congress of 1932, before the elections, that the House passed an act that never came to anything. It was to provide for a tariff bargaining proposition by which it was felt, well, we could get by with some reductions in our tariffs if we got countervailing reductions in other people's tariffs. The theory up till then had been rather the opposite. The flexible tariff act of 1923 allowed adjustment of the tariffs according to cost differences, but also threatened additional tariffs if we were discriminated against. Now, this was a reversal; this was a reduction in our tariffs subject to bargaining with the others. This was in a bill passed in the House to that effect, but it didn't get anywhere until after the London Economic Conference failed. Cordell Hull came

[21]

back and I think his attitude was, well, now is my turn to do something real. For years in the Senate and in the House, he had preached tariff moderation -- not free trade; one thing we were forbidden to talk about in the State Department was free trade, because that was simply playing into the hands of the high tariff people. If you were a free trader then you were anathema. But tariff moderation -- I must say that is the key to much of my admiration for Cordell Hull. He was himself, really, a very strong man, with strong convictions and, just like hickory, didn't break. His efforts were always sustained; he hung on but always with reasoned moderation. He did get the Trade Agreements Act of 1934 through Congress, and that authorized a tariff bargaining procedure, under many restrictions and for three years only. But as Harry Hawkins once told me, he had come back from a long chat with Cordell Hull about the time it was time to try to get the act renewed, and Cordell said, "Well, if you try to get it a permanent act

[22]

now, you won't get it. But we'll get it renewed this time. Maybe we'll get it a little liberalized, and next time after that we'll get a little more," just showing the way to a solid, moderate, but constantly pressing, not easily giving up, point of view. It is not the idea that you solve the problems of the universe by one formula, but of working to make things better.

MCKINZIE: Now, this idea, which you described as liberal economic -- could you say that that, itself, was an attraction for young people in the thirties to come to work for the Department of State?

DEIMEL: I think so, very much. In fact, when I moved over from Near Eastern to the Trade Agreements Division in 1935, I hated to leave Wallace Murray. He didn't try to stop me, although he said he was sorry I was going. I wanted to get back into this tariff work. That was in my case; I wanted to get back into that movement. My job was mostly to build up a division. You see, Harry Hawkins as

[23]

well as Henry Grady had their hands full getting their program started. So, somebody had to hire the new people. We'd gotten an appropriation of a hundred thousand dollars for the first year, and the next year I worked up an appropriation proposal for one hundred and eighty thousand dollars, which seemed to bother Wilbur J. Carr, the Assistant Secretary of State; he felt that was much too much. But we did start a new division, and I think it can be said it became the nucleus of much -- not all, by any means, but much -- of the economic organization of the State Department later. So I should say, yes, that was one of the attractions. There was something more than that. I would like to pay tribute beyond the State Department -- because I think this will be relevant here -- to the interdepartmental trade agreements organization. This was done very wisely under Cordell Hull and Henry Grady, who became the first chief of the Trade Agreements Division. He was Dean of the College of Commerce at the University of California and took leave in 1934 to come to head up the new

[24]

division. Harry Hawkins became his assistant chief, and a year later I became his second assistant chief.

It was recognized that the Department of State alone couldn't carry this program. What the Department of State could do was carry the political obloquy of reducing tariffs. But the wisdom and guidance and the detailed facts must, in large part, also come from other government agencies. So an interdepartmental operation was set up, with representatives from the Tariff Commission, the Department of Agriculture, the Department of Commerce, the Treasury Department, and the State Department, of course. There was this about it, that idea of tariff reduction by reciprocal bargaining was -- what I think you were pointing to -- so ideologically satisfactory a proposition that it stirred the enthusiasm of numerous people, not only from the outside but a lot of very capable people in the Government who saw a chance to break out of these constricting ideas of the old era of the 1920s. I'd like to

[25]

mention a name or two. In the Tariff Commission there were many of them, but I would say that the principal one was one of the members of the Tariff Commission named Emanuel Fox. He was one of the outstanding personalities in the Trade Agreements program. He could be mean, he could be down to earth, he could say the most disagreeable things in the Trade Agreements Committee. But he had a warm heart, and he knew what he was saying. And he knew the political traps and how to get around them. Oscar Ryder, was another tariff commissioner who did marvels. Now, they insisted that their participation here was officially authorized but personal. The Tariff Commission was not involved in the approval of any reductions in duties. You see, that would endanger the Tariff Commission. But the commissioners who participated and those of their staff whom they trusted brought a lot of people to the Tariff Commission in order to participate. I think that answers your question.

Now, in agriculture, too, there was the man

[26]

who became chief of the Foreign Agricultural Division, Leslie Wheeler, later agricultural attaché in Mexico. He was a marvelous person, very honest, very intelligent, but very shrewd politically in this, the politics of the administrative side -- in other words, not participating but recognizing and knowing the politics of the Hill, and, also, how far you can go. He was marvelous in bringing the Department of Agriculture to accept actually necessary, though sometimes very unpalatable-seeming things. I remember having a long argument at some meeting down in Memphis with a professor of agricultural economics. He was casting ridicule on the trade agreements program because the farmers were not well off. The whole purpose of tariff reduction, he said, had been to restore the farmers to what they had been previously. In other words, the idea from the agricultural specialist point of view was that industrial duties should go down but never agricultural duties. Yet, that would have been like trying to race a horse with

[27]

three legs, because many of our necessary imports are agricultural -- some of them, important ones, are competitive. We need them, too. So you couldn't simply say, "No agricultural concessions." But you did have to justify them awfully hard. So Leslie Wheeler did a marvelous job in knowing how to get necessary proposals -- ultimately the wool from Australia; that was one of the items that we didn't face up to until the very late thirties, but we ultimately got by with it. I've often thought that there was not just a camaraderie, but a devotion to the ideals of tariff moderation as it was embodied in this group of people, maybe a hundred of them, drawn from numerous different agencies in which the State Department exercised leadership -- not because it tried to grab glory, but because it was willing and able to take the political obloquy. "That nasty State Department, it will do these foolish things and nobody can do anything about it." You could get by with that. We were willing to take that, and we had some very wise and shrewd

[28]

people in charge of this; Cordell Hull, who provided the political leadership and tenacity; Henry Grady, who had this marvelous -- more than practical sense -- deep realism. Oh, after the act was passed there was a lot of palaver about how the world would be set right because we would get into a big tariff conference; there was endless palaver. The Assistant Secretary of State in charge, Francis Sayre, was the head of that. His idea was this big idea; we'll get a big conference and set the world right. Well, the London Conference had just shown that it didn't work that way. So, Henry Grady said, "Well, look. You can't have a trade agreements program without trade agreements; let's negotiate some."

One was negotiated in the early months. But it was not exactly a phony, but close to one; that was the trade agreement with Cuba which was a renewal of the special economic treaty, which provided preference for sugar. And Sumner Welles, whom I knew and liked and respected -- and who had

[29]

somewhat narrower ideas, although he could accept broader ideas -- was always pushing for more preference for Cuba. There was a fight to prevent that from developing. So Henry Grady pushed for the idea that we should get into other negotiations right away, so at the end of three years we would have some agreements to show. But then the question came, what does an agreement look like? And there's where Harry Hawkins came in. Since we had been working together, I had been mostly listening to him formulate treaty clauses like "from whatever port arriving." He, for ten years, had been hoping for a tariff bargaining policy and was wondering how that tariff bargaining policy could be reconciled with the unconditional most favored nation policy, the essence of which is that if we'd give a reduction in duty on Italian tomato paste, by an unconditional most favored nation treatment, Greece gets it too. Now a lawyer will say to me, "Well, I don't see how you can bargain effectively if you bargain away a tariff concession on your

[30]

part and then give it free to somebody else." Of course, that's logic, isn't it, except it's based completely on false premises. You're not trading in real things; you are using each other's reciprocal behavior to do a thing you ought to do anyway, by opening up the channels of trade a little. But it took a lot of effort to put over this combination of a tariff bargaining policy with an unconditional most favored nation policy, and Harry Hawkins was the man who did it because he had the formula. The formula, very simply, is, you negotiate with each country on the articles of which they are the principle suppliers -- not too rigidly; you can make a concession on this or that, but generally reductions would be made only on articles of principal importance to the other country. In other words, it would be automobiles in Japan now, not automobiles from Ethiopia or something like that. Harry knew those principles and then knew how to write it into an agreement. He told me once, when he got his new job years before, Assistant Chief of the

[31]

Treaty Division, he wondered, now, what would a tariff bargaining treaty look like? You see, they had a program of commercial treaties, principally most favored nations treaties, but establishment treaties, too. He said, "Well, I thought the very sensible thing; I'd go and look up some old treaties."

So, he had studied the old treaties; he knew the sort of formulation, framework. And after another country was invited and agreed to negotiate, he could come into the meeting with a draft agreement. First, of course, though, it would have to go through the trade agreements committee. But, actually, the actual clauses, the wording, was reserved for the State Department, because that was our natural job, and there was no complaint about that.

MCKINZIE: You've established a couple of what I think are important background points to what all came later, and you've made a clear indication of the change in the atmosphere and attitudes of the State Department in the 1930s. You mentioned that there

[32]

were limits beyond which people in the State Department could not go at that time, because of political considerations and economic circumstances. You also indicated the important influences of Harry Hawkins in the Division of Trade Agreements. How did you happen to go to his office in 1935? Was that sort of an internal transfer?

DEIMEL: Oh, well, let's see; partly there was, I'll admit, some nepotism. Partly, I needed more money, and there was a possibility of an increase from $4,600 to $5,600 a year. If I had stayed in the Near Eastern Division, maybe I would have ended up as an Ambassador, which I didn't. But I was mentioned for a lot of things, too. There was an opening with the Economic Adviser that Henry Grady told me about, and I said, "Well, gee, that could mean a thousand dollars more in salary for me." I had a growing family; I needed it. "So, what's the chance of my getting it?"

So Henry Grady spoke to Herbert Feis, who said, "Yes, I'd be delighted to have him."

[33]

They spoke to Wallace Murray; would I transfer: And I regretted it and Wallace Murray regretted it, but he wouldn't stand in my way. But things didn't work out too well in the Economic Adviser's Office, for me. It's a long story, how it was kind of a mix-up; nobody knew where anybody was. I had some interesting things to do.

But after a year, there was a need for a second assistant chief and somebody to build up the structure of the Trade Agreements Division. And Henry Grady was leaving shortly, so the nepotism angle wouldn't be too much of a difficulty. Harry Hawkins wanted me, so it was a transfer within the Department. Cordell Hull was agreeable, and I got the job.

MCKINZIE: I don't want to belabor the 1930s too long here, but there are some things that historians are interested in and would be appreciative of your comments on. One of them is the often aired and often speculated-about dispute between Cordell Hull and Sumner Welles, and what effect that actually had upon the élan, the morale, of

[34]

people in the Department. Could you feel that if you received instructions from Cordell Hull or when you were operating in pursuit of some idea or some goal beloved by Cordell Hull, that you were actually doing something that President Roosevelt -- ultimately responsible for these kind of things -- really wanted done? There are indications that Cordell Hull, at one point, said he was depressed and discouraged and thought he was going to resign because the President seemed to be listening to Sumner Welles. How did that affect you, because you were in this small group?

DEIMEL: I would say it didn't affect me. I may say I was in a peculiar position -- second rank. In other words, I didn't deal very frequently personally with them. I liked them both when I did. In fact, I admired Cordell Hull tremendously and liked him. Also, when I got to know Sumner Welles better I liked him. I found him a warm person. I knew that there was ill feeling between the two. I'm not sure what it was. I think it was that Welles

[35]

was the more superficial activist. For instance, I recollect one; it was a question of whether -- and I think this is one reason I got along well with Welles -- we should agree to give Cuba a larger preferential in the sugar tariff. Harry Hawkins was on vacation, and so Sumner Welles called me in and he said, "I know that preferential tariffs are against your principles, but if you go against the principle, then you should make it effective. And if the present preferential isn't effective, it should be increased to make it so." Well, you know, that, again, is good lawyer's logic, but it's not economic realism. Well, I think most of the fellows -- I'm patting myself on the back -- would have said, "Yes sir, yes sir." I wouldn't quite go with that, so I said to him, "Yes, so long as it doesn't get too extortionist."

He kind of took a double-take, looked at me, then he smiled and said, "You're right."

I think he was pleased that I had the courage to speak up. Well, in that way and ever after,

[36]

we always got along fine. So, he was the practical man of action, but relatively limited. He was a very bright man. Cordell Hull was deeply philosophical, a long-range thinker who was a politician who tried to guide rather than make. So, there was a difference. Now, I didn't know what was going on; so far as Cordell Hull's feelings, yes, I'm sure he felt that way, discouraged at times. But, you know, I read something the other day that sort of rang a bell. I think it was Roosevelt's technique to keep his people a little off balance between each other, so that they would not be able to put anything across on him. Just the opposite happened to Lyndon Johnson. You know the story about Lyndon Johnson, after the Kennedy assassination, being briefed about the necessity of armed action in Vietnam. .And all the generals and all the politicos, the "great deep" political thinkers of the time and so forth, made so clear to him how absolutely we had to get into Vietnam in a military way. So he agreed, but later is said to have told a confidant, "You

[37]

know, I feel like a fish that's just swallowed a great big juicy worm and found a hook in it." So you see, he didn't have enough strength, knowledge in himself, to resist the pressures, coaxings, and blandishments of his advisers. Roosevelt had the trick of keeping them all a little off balance, keeping them struggling against each other a little, so he'd get a more balanced picture. Now, I would say that that may have been the case with Cordell Hull and Roosevelt. I will say this to add; one of the things I was told, that Henry Grady said, was that it was much easier to get a controversial tariff reduction approved for a trade agreement by Roosevelt than by Cordell Hull. Surprising, isn't it? Roosevelt would take the risk, the political risk. Cordell Hull would cut the duty on manganese any day, but consider cutting the duty on wool? Well, we'll have to think about that! A difference in approach, and yet there was sustained determination in Cordell Hull to put it across slowly.

[38]

He was at the other side of Roosevelt in that, from a man like Sumner Welles, who wanted to do things right away. So that's how I would explain the difference.

MCKINZIE: Did you feel that the State Department was a capable organization in the 1930s? Was it an organization in which a young man could understand what the whole thing was about and did not have to fragment his attentions so much as one has to do in modern bureaucracy?

DEIMEL: Yes, more than now, but not completely. In fact, I would say -- I'm speaking personally -- I was, as I look back, quite naive. I was still young; I wasn't completely disillusioned by the twenties, by any means; I thought, well, we had wise men -- Bill Castle, W. R. Castle, was Under Secretary. I thought he was a wise person, although I recollect something, because I was interested in tariffs, that he said, reading a report of his press conference. In about 1930, a bargaining tariff was

[39]

being considered, and somebody at the press conference asked him, "Do you think it would be a good idea?" Bill Castle, then Under Secretary, a Republican, said, "No, it wouldn't. It would mean that the State Department would have to enter into every little controversy over every little duty on every little bit of industry that's involved" -- which is precisely what we did, later on.

So, you see, I did feel, between then and the trade agreements program, that there was that liberation, that we could do things. But my point of view was -- to my own fault -- pretty strictly confined to economics, particularly economics of trade, and the other movements went on. For instance, I was really not conscious of what was going on in Germany. And I should say, the other side of the picture of this brilliant era of the thirties -- I'm talking about '35 to '40 -- was the Hitler regime and Nazism, but I was largely unconscious of it. But I'm sure that wasn't the case in lots of other parts of the State Department.

[40]

So, I say I was pretty well ignorant. I didn't realize, for instance, in 1939, the Russo-German pact; I didn't realize what it meant. But that's because I was narrowly concentrated on my own theater. So, there was that concentration, but the other side of it was that it was only during the thirties that the State Department began to build up a more detailed consciousness of the work of the world, the economics of the world, or even of the politics and humanities of the world. It was a small, very fine organization, but elitist and dealing with mostly the superficialities. I think of Secretary Kellogg, who became so enamored of the Kellogg-Briand pact that the nations would abolish war by agreeing not to go to war. Well, that was Kellogg's own mania, but it wasn't absolutely in conflict with the State Department of the day, which is very different from today.

MCKINZIE: Well, then why did you decide to get out of the State Department at the time all of this excitement occurred?

[41]

DEIMEL: Because I didn't realize it. You see, we had had, in '38, our big negotiations with the British Empire for a trade agreement. Then came '39 and the war, and I thought, my gosh, that's the end of any peaceful development of trade. I did have some interesting things to do; basic work diminished, but I found some things, for instance an examination of the possibilities of an international cocoa agreement. I remember meeting Nelson Rockefeller and being quite well impressed by him in that connection, at a committee meeting. And I had brought a friend of mine into the State Department, Jesse Saugstad, a shipping expert who came from the old Shipping Bureau. I thought we needed somebody who had a liberal point of view on shipping, and he had. He didn't have the very narrow mercantilistic shipping policy view. He got, somehow, in touch with Sumner Welles to organize an inter-American shipping conference. We held a conference here in Washington. Sumner Welles was the chairman; I wrote his introductory speech, and I remember

[42]

Sumner Welles' secretary said to me, after he read it, "You know, he didn't change a word," which was quite a compliment. Well, the conference was to cope with the change in shipping lanes due to the war, which was still a war in Europe -- this was 1940. Most of the work was done in the Maritime Commission by various of the more intellectual types, the more thinking types in the Maritime Commission. Just about that time, the head of the economic research of the Maritime Commission died and that position was open. Again, it would mean quite a change if it was offered to me; I would have my own division. I'd be chief, not assistant. All my life up till then, I'd been a subordinate or an assistant chief. Now I'd be chief. I'd have a staff of a hundred people. This also meant another increase in salary, and I had a daughter that was ready to go into college, and it seemed like an adventure. I didn't realize the war was going to come to what it was; you know, it was the period of the phony war, and I still

[43]

had the thought, maybe we could do this time -- and it was ridiculous now as I look back -- what we failed to do in World War I, stay out and see that a decent peace was arranged. Well, you see how naive I was.

So, I thought, well, maybe so far as maritime policy goes, here's a chance to do on maritime policy what was done in our trade policy by the trade agreements -- in other words, adopt a balanced program. We had achieved, in the Merchant Marine Act of 1936, a little technical change -- several of us claim to be authors for it -- which stated that it was the policy of the United States to have a merchant fleet capable of carrying -- the initial proposal was -- at least one half of its trade. We managed to change that to "a substantial portion," because "at least one half" was a key for enormous shipbuilding subsidies and shipping subsidies, whereas a "substantial portion" you could be sensible about. So with that and the differential costs thesis, which was drawn over from the 1922 tariff act, I thought that something

[44]

rational could be worked out. So those things sort of built up. And again, I didn't think the State Department would be an exciting place during the war. It was a department of peace, as I knew it. So, I made a very foolish step, and yet if I had not I would have missed a lot; I had a marvelous observation post during the war. After we got into the war, I found I had under my control a wealth of information about ships and shipping routes collected over 20 years which I could turn over into different forms. They were collected for propaganda purposes. I could get them turned over, if I could get time enough, into the data which was suddenly so needed for wartime purposes. We needed an inventory: What shipping tonnage did we have? How much did we need to build? Where could we use it? The Maritime Commission had all the basic data there, but not organized. I discovered then there, too, the uses of the IBM tabulating machine, the precursors to the computers. And I was able in March, April, and May of 1942 to bring

[45]

out a report. I was working all night then, and I was having Lew Douglas on my tail all the time, and I had to fight to get attention. The shipbuilders in the Maritime Commission said, "Do you want ships or do you want reports?" and all that. But I did get a report out, knowing what ships we had, what ships our allies had -- you see, I had access to all the secret information. And I estimated what our shipbuilding would lead to and how to estimate losses -- that latter was somewhat insubstantial. But it turned out right. On the basis of a few months experience, I was able to forecast for several years the prospect of what shipping tonnage we'd have. It turned out, of all things, to be pretty well right. That was very exciting, and Lew Douglas took my report, when I finally got done with it after about three weeks, to Sir Arthur Salter, who was the British shipping man here. Salter actually said, "That's a fine report. How in the world did you ever get so much out of so little information?"

[46]

It worked out, but it worked on my nerves, and I could not stand the infighting; you know, the war, in Washington, was almost a war between people grasping for power here as much as a war against the enemy. I couldn't understand it. I remember once the Army and the Navy were struggling to get ships; the Army had produced some charts. I was called into one office where there was an array of Navy brass come to complain about an Army chart that showed the Navy having more ships than they really did, so that the Army would get more. And this Navy admiral turned to me and said, "Did you make this chart?"

I said, "I am not sure. It looks something like some of those that have gone out of my office, but does not have the identifying marks."

He said, "Well, who are you? Are you a Navy man or an Army man?"

Well, this just disgusted me. I happened to have been in the Army in the First World War, but I didn't tell him. They apologized later,

[47]

and as a result of that I got into all sorts of naval secret information. So, I had a marvelous time, but I couldn't take that. I could not cope with the new War Shipping Administration, with all their demands. If I had had stronger nerves, I would have stayed. So, I agreed that I would stay with the Maritime Commission and look after the long range things, and one of my assistants would take the statistics for the War Shipping over. And I thought, well, we're good friends; he'll keep me in on this. But he got interested in power, too, so he didn't. But I had a very quiet, unexciting, but very interesting three years watching the sea war, from the point of view of shipping tonnage, shipping losses, shipping uses. So I learned about the nature of the world -- I mean geography of the world -- in that job.

MCKINZIE: During this time, did you anticipate that when the fighting did stop, and if they did decommission ships of Germany and Japan, that there would be a long period of shipping shortages

[48]

in the postwar period?

DEIMEL: I wondered about that. Actually, I did do this. I'll just mention that in between, then, I went with Henry Grady for three months to the Allied Control Commission for Italy. But to stick to this question, yes, I felt, now, there will probably be a surplus of tonnage, as there was after the First World War, and we will hold the tonnage; what do we do with it? So I started to worry about that a little. I had a very good secretary, then, whom I brought over to the State Department with me and who stayed with me for several years, until I went to India. She said, "Well, why don't I come to your house over the weekend, and you can dictate this thing?"

So we sat there all one Sunday, and I dictated the first outline of a draft of a report on postwar shipping tonnage. I'd meanwhile had one of my assistants make a chart of prospects of the volume of trade, oh, from 1900 on. It showed how the volume of trade followed a regular curve. A man

[49]

named Case, who used to write for the New York Times, spent a few months with me in the Maritime Commission. So, I was able to use this, got it circulated around before I left the Maritime Commission. Jerry Land, the chairman, was a retired admiral, and the highest Navy commendation was "well done." Well, he sent his copy back to me and had written "very well done." And even Solomon Bloom, the chairman of the Merchant Marine Committee, the Congressman from Newport News, was very interested in it. It was never published but used internally. It showed what we could expect to have by different types of ships and estimated what the needs would be. The Maritime Commission tried to get me to stay on with them, but I was fed up there and I had a chance to go back to the State Department. Jesse Saugstad had gotten a new shipping division established, of which he was chief. And just as I'd brought him in years before, he brought me back, and I was his shipping policy adviser. And that's how I got back. I had a

[50]

marvelous time for several years. My main, own interest was doing what I could to get ships back into hands where they would use them. I would just like to tell one story: I was back in the State Department, and Will Clayton was Under Secretary of State -- a very good, really solid person. Well, Italy needed coal, six million tons of coal a year, and our shipowners -- ship charterers rather, chartering ships from the Government; the Government owned all the ships or practically all -- were making millions carrying coal to Italy. And of course, we were supporting Italy; this was after the war. So we paid not only for the coal, but for the transport. I figured that if we could only give Italy a hundred liberty ships which otherwise were laid up in the harbor and tell them, "Go take these ships and put your crews aboard and carry the coal," the six million tons of coal would cost -- instead of a hundred and seventeen million dollars, including shipping costs -- something like twenty-six million, which we were paying. I thought that was good, and Will

[51]

Clayton approved and was going to propose a bill which would require legislation by Congress, when Herbert Hoover came out with precisely the same idea, on a much larger scale, for Germany. And that raised such an outcry, such a political outcry, that the whole business had to be abandoned. So that didn't go. But I did get working with the man who is now the Italian Ambassador here, Egidio Ortona -- who is a remarkable person, by the way -- and got quite a few ships back into Italian hands, including their passenger ships, the Saturnia, the Vulcania, the Conte Grande, and the Conte Biancamano and a number of cargo ships. Well, I was doing that while my superiors -- not Saugstad, but others, the Assistant Secretary -- kind of frowned on it. That was ordinary work, and I was supposed to be doing policy work! I did get a lot of satisfaction out of doing that, and the final result on that line was that I managed to work out the first executive action General Marshall took under the Marshall plan, which was to direct the Maritime Commission to sell ten of our surplus ships to the

[52]

Government of Turkey under a special clause in the economic reconstruction act, the Marshall plan. Yes, there was quite a story there. But that kind of ended my shipping career for the time being.

MCKINZIE: You had a diversion, however, in the midst of that, I take it, when you went to Italy in 1943 and 1944 to work with Mr. Grady?

DEIMEL: The Allied Control Commission for Italy. The story there is this: Henry Grady had come back from the University of California, where he was dean of the College of Commerce, to be the first Chief of the Division of Trade Agreements in 1934, and then later as Vice-Chairman of the Tariff Commission. But he had to resign from the university to become the Assistant Secretary of State for Economic Affairs. That was in around 1940. And then he was asked to take the presidency of the American President Line, the old Dollar

[53]

Line that had been taken over by the Government. Of course, he had a growing family, too, and I think his salary as President was $25,000, which was unheard of. An Assistant Secretary of State would get about $12,000 or something like that. So, he took it, and he did a remarkably good job, but it didn't satisfy him. He was always ready for a political job, a Government job, a special job this time, and so he did get a couple of assignments to the Philippines and later on a Palestine investigation. But this during the war was to be the Vice President -- there was a British President -- of the Allied Control Commission for Italy and the President's own special representative. He was looking for people to go with him, and I wasn't doing anything special; he asked me to go, and I did get leave from Jerry Land. He said, "You can go for six weeks, and if you ask I'll renew it for six weeks, but that's all."

Well, I went anyway; I wanted to get into action again. So, we had a great adventure.

[54]

Another one of his assistants was a banker from New York who's now in California, John Simpson, a friend of his. And Simpson and I, in December, 1943, flew down to Brazil and across to Africa and up into Italy. And there, in the three months I was there in Naples, I watched Henry Grady, with his usual magic, turn a situation of utter confusion into one of rational good order. There was the Allied military government, the AMG, which was there to impose some sort of military rule on Italy, and imposed upon that was the Allied Control Commission, which was solely British and American. The Russians were out of that, although I think they were meddling in Yugoslavia. The Allied Control Commission was to begin to set up a civil government in Italy. As I say, I just had the beginning taste of that. At least I did get under fire. I'd been under fire in the First World War when I watched some Zeppelins bomb the outskirts of London, and in the Second World War when I saw some German cannons bomb a hydroelectric works that we were looking at in the mountains in

[55]

Italy. So I did get under fire, theoretically, in both wars. It was for me very interesting, enlightening, but I wouldn't say particularly productive. At least I did help Henry Grady get order out of chaos. He then went on to Rome; I got my extension, but Jerry Land wouldn't extend again. He said, "Well, to give you another extension would mean that I don't need you, so you'd have to resign." I should have taken the risk, but I didn't quite feel like it, with a family here and no other support. So I didn't; instead, I took this other route to getting back to the State Department through Saugstad, for three years in shipping policy. And then they promoted me to a position as advisor in the supervisory Office of Transport Policy. But meanwhile, just to finish briefly, Loy Henderson, whom I had known from the old days before he went on the first mission to Moscow, was Director of the Office of Near Eastern Affairs and was looking for an economist. I had gotten some reputation under the trade agreements, and they were hoping to organize a big economic

[56]

bureau in that office (which they have now). So, he asked me to transfer and Saugstad said, "Yes, that's a better job for you; go ahead."

So I did in '46 and had a marvelous time there, although the money for the bureau didn't come through, and I was sort of left to do what I could and had more or less something that was supernumerary. But I did some interesting things, including representing the U.S. on a committee of the United Nations. Then I decided, well, my children are grown; I think I’ll have a fling at the foreign Service. I got in through the side door, the section which allows a staff officer of the State Department to be admitted through special examination. And I passed the examination, and they only offered me a class 2 instead of a class 1, and I was wondering whether to take it when Ray Hare, later Ambassador to Egypt, then chief of the office, said that they had heard that Loy Henderson, who was Ambassador to India, was complaining that he had no economist and wanted one. They had said, "Well,

[57]

Henry Deimel is being offered a class 2 post; would you take him?"

They said the answer came back in such terms that they couldn't show it to me; it was too glowing.

I said, "Well, with that, I've just got to."

So I agreed, and had a fascinating but difficult and unfortunate time in India. Again, I wouldn't have missed it, although how these things come together!

I just want to tell you I have a great admiration for George McGhee, again as a very able man of action. Well, he had taken Loy Henderson's place, but had been moved up to Assistant Secretary of State for Near Eastern Affairs, and he asked me to stay on as economist. But I didn't feel I could; I had already pledged my word to Loy Henderson that I'd go to India instead.

I found George always an interesting man. He wasn't too well-liked in the State Department, because he was too full of energy and too much the

[58]

man of action -- in a way something like Sumner Welles. The State Department generally likes quieter people, more like Cordell Hull. But I must say, I observed George McGhee after the Truman Doctrine for Greece and Turkey was announced; then the State Department had to organize itself to head this program. The Army, the Defense Department, was already there; it had a lot of mules to send to Greece right on the dot. We had nothing but a speech by President Truman. So George McGhee took over the task of organizing the program of aid to Greece and Turkey. I sat in a good many of the meetings. He's a driver -- he was in those days; and once or twice he drove me in ways I didn't exactly admire, telling me through a third person what to do without that third person knowing what I was to do, to produce a memorandum by 12 o'clock without telling me what it was to be about and then telling me he was ashamed of it afterwards. Well, I hold that against him, but not really. But he was a driver, and he was such an

[59]

efficient driver -- the kind the State Department needed in addition to the reflective people. I witnessed the same thing by him at a Foreign Service Conference in Ceylon in 1950.

MCKINZIE: You have indicated that when you were with the Allied Control Commission in Italy it was a particularly fascinating vantage point, but you didn't think that you were able to accomplish all that much. Did you, at that time, wonder or have your own thoughts about reconstruction after the war? Here we were, beginning to wind down the war, in a sense; did you anticipate that there would be those postwar problems? You indicated that you were a great admirer of Cordell Hull's international, integrationist policy. He brought Will Clayton into the State Department at a critical time. And, as I understand it, Will Clayton believed that there would be a short period of readjustment, maybe two years, and if there were appropriate trade agreements signed after two years there would be a kind of upward spiral of

[60]

prosperity based on a great unprecedented integration of world economies. Well, was this your own vision of the postwar world?

DEIMEL: I would say it was my hope rather than my vision, and I didn't have it in such broad terms. In other words, my viewpoint -- shipping tonnage and so forth -- was relatively narrow compared to Will Clayton or the financial people who organized the Bretton Woods. I'm trying to think of one who was a good friend of mine and who has been a director of Exxon for a long time -- Pete [Emilio] Collado. Now, he had a broader point of view, and I was much encouraged by Bretton Woods -- a marvelous accomplishment. But I hardly dared hope, after my memory of the narrow reactionism of the 1920s, that we could hope for so much yet. I remember one instance talking with Will Clayton. I don't know how it came up, but it was something to do with whether the Japanese should have any ships. And he said something I wasn't used to hearing from an Under Secretary of State, usually, but it sounded

[61]

so good: "Well, the alternative is that 50 million Japanese have to starve." In other words, that's a point of view that you didn't used to find in the old State Department people. But Will Clayton could see it. Now, that, plus, as I say, these economic actions trying to reconstruct Europe, leading into the Marshall plan and the foreign aid program, were, as far as I could see them and understand them, most encouraging, most hopeful. I did not get it down into quite the specific terms of seeing it all work out in a few years; I thought it'd take longer than that. So I wasn't surprised when, as it turned out, it did go a good deal slower. So I was encouraged. I just want to add a footnote; it is very sad that that extremely favorable frame of mind, which was based, I think, on strong favorable public sentiment, had to be undermined by McCarthyist paranoia and militarism. But the undermining came mostly while I was away, and I didn't recognize it fully until coming back, until the disastrous things that led into Vietnam.

[62]

I think and hope that that's over, and now we have a third chance and an even greater chance. Just as the second one was so much greater than the first because of the Trumans and the Cordell Hulls, so the third is greater, and particularly because I think of Coleridge's words of the Ancient Mariner about the wedding guest; “A sadder and a wiser man he rose the morrow mourn." I think maybe that can be applied to the United States, and with that we have great possibilities. I mean, when I think of my six grandchildren, I'm not thinking any more of nuclear holocaust; I'm thinking what a really full and rich life they have chances for.

MCKINZIE: As Special Assistant to the Director of Near Eastern and African Affairs, you mentioned that you went into this position with the anticipation that there would be funding for a rather large economic operation within that. Now, I wonder if you might amplify that a little bit, because, as you indicated, it didn't develop. What was the rationale for its being? There

[63]

hadn't been a lot of American trade with the Near East in the previous period.

DEIMEL: Well, I'll have to think out loud on that, because, actually, I didn't make it a condition of my agreeing to the transfer. I thought the transfer was fine. And it was tempting. Well, the basic theory was that we needed to know more of what we were doing, and knowledge of economics and economic relations was the most vitally important. I guess the third factor was that it couldn't be left to a single economic agency in the State Department, because that would tend to have its own program, its own plan, and would tend to be biased and not take into account the special circumstances of any regional area. Therefore, since the Department was necessarily divided up into four or five regional bureaus -- when I came in they had been divisions, and when I left there were about twice as many bureaus -- each bureau needed its own special intelligence, special information -- not secret intelligence, but understanding, rather, of the economics that makes things tick. They never told me why they asked

[64]

for me, but I think they remembered two things; in 1938, I organized the sixty people who had been working on the British and Canadian trade agreements to make reports on it for the press. Cordell Hull signed that agreement in front of Franklin Roosevelt. Roosevelt was going to grab the pen and sign, and the Chief of the Treaty Division, Charley Barnes, had to say to him, "No, Mr. President, your turn comes later; this is the Secretary's turn to sign." Well, these two printed volumes explaining the details and nature of the agreements were on all the newspapermen's desks at the time of signing of the agreements. That took six weeks of organization and editing, high pressure work. And, secondly, there was this report about postwar shipping tonnage. I think they thought, well, that I'd shown ability to organize, and that maybe I could organize an economic bureau. But we didn't go into any length about that. I was glad to make the change, get back into the Near Eastern Affairs for a change, and I didn't regret it.

[65]

MCKINZIE: Mr. Deimel, were you aware at the time that there was going to be a "Europe first" trade policy?

DEIMEL: I'll put it this way; I must have been aware, although I never thought in those terms, because -- now we're thinking in terms of the Marshall plan -- it seemed to me, and it still seems to me, that the reconstruction of Europe first was essential. That reminds me; after I got into the Near Eastern-African Divisions and while the question of extending foreign aid or the Marshall plan from Europe to Asia and Africa was being discussed, I was discussing that with some of my confreres in Near Eastern-African Affairs. And I tried to say what I truly believed, and that is, well, we can't support the whole world. What we need is to reconstitute, rebuild and see Europe rebuilt, because much of the supplies of commerce, as well as aid, that other countries of the world need cannot come entirely from us; it must come from Europe, too. Therefore, it is to the interest of the Near Eastern countries that we put all our efforts to

[66]

the rebuilding of Europe, because that will do them a lot more good than if we tried to aid them. Well, the answer was a rather cynical answer of the desk man who had to deal with the people in the Embassies who were saying, "We ought to get some aid too." He said, in reply to my remarks, "Well, try to tell them that." Now, maybe my view is to be condemned as a "Europe first," but it seemed to me that Western Europe is a part of the Western world, the industrialized world, the reconstitution of which was essential to worldwide growth. And this was before the deep split of the cold war; we still hoped, and I remember vividly how, at least, I hoped that somehow we've got to get along, we'll find a way of getting along with Russia. I remember it seems to me, Jimmy [James F.] Byrnes' efforts as Secretary of State to work out a cooperative relationship with Russia, which, of course, fell through into the cold war. And I don't know how you assess the blame for the cold war -- so much, so complicated. So, you see, well,

[67]

my answer would be I think Europe first was necessary, because a world without Europe would be a world dead for us, a world in Russian hands.

MCKINZIE: When they were reconstituting Europe with the Marshall plan in 1947 and 1948 and you were still with that division, there was some talk about what would be required from the Near East, in the way of oil resources, in order to rebuild Europe. And there were a couple of reports which talked about how this needed Near Eastern oil would increase oil prices in the United States. Would an economist working for the Office of Near Eastern and African Affairs be involved in the production of that kind of report or would that be done by the Europe people?

DEIMEL: Well, I think it must have been some other office. That is one phase I don't remember.

MCKINZIE: What about this proposition that it was going to cost the United States a great deal, in terms of its oil supply, to be able to support

[68]

European recovery?

DEIMEL: Now, I never ran across that question, which is evidence that it didn't come to me. Now, when did it come up? I wouldn't have gotten it while I was still with the Shipping Division or the Office of Transport Policy, but it might have -- it did, I'm sure -- come up later. But it didn't come up to me in the Near Eastern Affairs Division -- partly, maybe, I wasn't aggressive enough; partly, I had other things to do; partly, it wasn't time yet. You know, it reminds me of a little anecdote, something Harry Hawkins once said to me many years ago which is still to some extent true about the State Department. This was the little old State Department.

He said, "You know, Henry, it doesn't matter how much the State Department is organized. Any topic that comes up, give it enough time, it will come into the hands of a fellow who can handle it."

I don't know how true that is now, though. It's too big an outfit.

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But I think this particular question was handled between the European Affairs Division, if they were in on it at all -- they probably were. We always thought they were rather a snooty outfit, anyway; I belonged to them later, when I was in France, of course. Or it was one of the economic branches which had so proliferated. It seems to me that I read a memorandum once by a man named Loftus. He's dead now, too, but he followed me in India and then he went back to the university. He was an economist who wrote a paper on petroleum. That might be about 1949. So, the question certainly was active. But no, it never came to me, so you can see the impetus there, or the crux there, was economic and European, and only as a little byplay Near Eastern. And yet, when it came to the relationship of the oil companies with the Arabian Governments, for instance, that was strictly Near Eastern Affairs. They handled it through our Ambassadors. The oil companies were keeping close touch with our Ambassadors and with

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us on those questions.

MCKINZIE: Well, I wonder if we might talk about development and the thinking about development in the Office of Near Eastern Affairs; what you were able to do in the way of input, the kind of statistics, the kind of information you had at your finger tips, the relationship between the economic and the political people. As the State Department grew, there have been some people who have said that the economic people went their way and the political people went their way, and, as a result, a lot of political decisions were made without full knowledge of the economic repercussions thereof. Would that have been, in any sense, a fair criticism of the Near Eastern Division?

DEIMEL: Oh, yes. In fact, I think it's just half of the criticism, and the other way, too. For instance, on this oil question you mentioned, the economic people concerned might have gone ahead without consultation with the regional -- that is, the political -- division. I think that's very

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true. I think it's a fair criticism. And, at the same time, I think it's rather inevitable in what's become necessarily a large organization, not only in itself, but stretching out into other agencies of the Government, and where there's pressure of time. That, I think, is the fundamental problem. Unfortunately, when they're recognized, these problems have to be answered and answered pretty soon. It's true that they don't get answered pretty soon, but the pressure is to answer them soon. We think we don't have the time to answer them, and, therefore, you don't have time to go to everybody. "Take it up with so and so." But there was development of the use of the telephone, which offset that, and I noticed that particularly between when I left the State Department in '41 and when I came back in '45 -- the clearance of telegrams. In the old days you'd have to take a telegram around the hall and get somebody in another division to put their initial on to clear it; that's where they had their

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concurrence. After I came back, that wasn't done anymore; it was done by telephone, and if it was in a code, why, you just paraphrased it -- cleared by paraphrase by phone. So that helped a lot where actual clearance was necessary, and I'd say that, on the whole, there are two factors which promote cooperative interrelationships. One is the genuine idea to get the other person's good advice, and the other is to get him to share the blame when things go wrong. Against that, though, there are two things: one, the time it takes when you're under pressure; and two -- a fact of life that you have to recognize -- not exactly the lust for power, but the wanting to act on your conclusions without a lot of palaver to convert somebody else -- rather a human attribute that is probably less dominant in the State Department than anywhere else. But still, why go into a long argument when you already know what that guy will say? But, on the other hand, if he has a legitimate interest and things may go wrong, better get his initials on that paper.

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MCKINZIE: When this economic organization within Near Eastern Affairs didn't materialize, you mentioned earlier that you had to carve out a kind of a domain. How did you do that and what was it?

DEIMEL: Well, I might say I didn't. I did whatever came to hand and kept busy enough. First, I think I've always been an observer, and I would have the perfect delight of reading a half-inch thick pack of telegrams every morning; I knew what was going on. I'd never known what I'd be called in for, but when something special happened -- for instance, at the United Nations an economic committee had been set up for Europe, ECE [Economic Commission for Europe]; that meant then that there should be one set up for Asia, ECAFE, and that was set up, and then one, ECLA [Economic Commission for Latin America], for Latin America. By that time we all got the thought, well, there's just too much proliferation of committees. But, of course, the Near Eastern countries wanted their committees set up. They thought, that's another pipeline to

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aid from the United States; we should have one. So, I began to study the subject to get other people's opinions, which were generally, in the State Department, hostile: Do we want another agency that just complicates affairs? And, so, when it was pressed to the point of having a committee set up in Flushing at the United Nations for several weeks to study and recommend on setting up a commission for the Middle East CECME), they naturally said, "Well, you've been studying this; you go."

So I was the United States delegate, and, incidentally, it was just after the establishment of Israel. I wondered, well, this was a collection of Arab states; what would happen if the new Israeli Government insisted on being a member of this commission. Fortunately, they were shrewd enough and far-visioned enough to see that it didn't mean anything to them, so that question never came up. But my job was to, if possible, see that no commission was set up --

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there's no point for it -- and if it was set up, to see that Greece and Turkey were included. These were all policies I developed and got approved; I guess the Assistant Secretary's as far as it went, maybe the Secretary of State. The third point was that the large powers should not be members. I got all three points across, and that killed the setting up of the commission, which would have had no purpose, anyway. So that was very interesting. But that's the way things came up, simple tasks. Meanwhile, I was trying to keep in touch, learn what was going on, make recommendations that came up, for instance, in the division of food aid -- see that India got her share, things like that.

MCKINZIE: Now, in this period after the war, in some parts of what's now appropriate to call the "Third World," there was a lot of talk about "the revolution of rising expectations" and what that was going to mean for the future. It was a phrase used a great deal in connection with Latin America.

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As a man who was reading the telegrams coming in every morning, did you anticipate that a revolution of rising expectations was happening in the Middle East, and that it would require major economic development in the area to keep it from jeopardizing legitimate U.S. interests?

DEIMEL: Yes. I would modify the thought a little as I saw it. And as I say, I've always been somewhat naive and somewhat too idealistic. I had explained to you what my first thought was: Well, Europe is part of the workshop and is needed, so start that first. My second thought was that I followed Mr. Truman's Point IV doctrine, which was, yes, that standards of living can be considerably improved by the adoption of some of our technology. And I had noticed that quite a few people had gotten scared, and I was scared, about the immensity of the economic burden of supplying the capital by government. The way out seemed to be the technical assistance program, Point IV -- that is, by which we would send people around with enough money for

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demonstration projects, mainly to show how we did things. That was Point IV, as I envisioned it, and I also thought, well, some capital is necessary. And I added to that -- all this was as part of my belief under the trade agreement program -- that a prosperous world is likely to be a more peaceful world. We used that argument very effectively in the end of the trade agreements programs, when World War II was threatening. The tariff lobbyists really got annoyed at us, because that was the argument. I held to that, and I think that was our belief -- those who weren't cynical enough to "know better" -- that that could help and would likely be a substantial aid in building a more peaceful world. And that carried through in my ideas all the way through, except that as the years went on and there were always aid programs and capital started to be infused and made it much broader, two things happened: One, the economic improvement never seemed to come, at least as fast as we hoped; and secondly, the economic effort became diverted to military

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aid, because military aid was what Congress said that the people would stand for. We got scared under the cold war, and under the Dulles regime we had to build up military defenses. And that so completely distorted the whole thing. So it's an unanswered question -- about which, nevertheless, I'm a little skeptical -- as to how effective a more pure and substantial economic effort would have been. I have become increasingly skeptical, really, on these grounds, that national communities are biological more than mechanistic; therefore, it is like, you know, the immunological problem, you can't introduce biological substances from one organism to another. It's not that simple, like when you change the parts in an automobile. And therefore, the problem of aid in worldwide development is far more complicated than we used to think. It involves the whole cultural setup. I'm not deliberating and I'm not thinking it should be abandoned, but rather that it needs to be kept in somewhat more sophisticated proportions -- not

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sophisticated in a cynical sense, but sophisticated in the understanding of the organic, biological nature of human communities.

MCKINZIE: In connection with this business of development (you’ve already mentioned oil), did you ever come into contact with people who urged regional development programs? Of course, there was that Jordan River development authority idea, at least, and in 1951 or’52, after you were gone from this, there was a proposal by Edwin Locke to create a kind of massive regional development program, an integration of the economies of the nations of that region. Was this idea at all kicked around in the period you were there?

DEIMEL: The only one I remember -- and I distinctly do remember that -- was what I call the integration of Europe, the possibility that Europe will remain and increasingly become more of a community rather than these bunches of countries split by the thousand year quarrel over Alsace-Lorraine. Now,

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that, I know -- and I also accepted it with deep heartfelt approval -- was a strong element of the Marshall plan.

MCKINZIE: Oh, yes.

DEIMEL: But now, as to elsewhere, no, I can't remember being involved or concerned very much with any such program, because India was enough unto it self, and the chance of a unified program between India and Pakistan was something for the far future. It would be desirable, but so were a lot of other things. So, it wasn't there. No, it was only in Europe; of course the idea of the organization of Europe has been something in the air in all my Government career. I don't know you remember, but at the time European tariff questions were active in the early twenties, somebody in the League of Nations, I think, built a model showing the height of tariff walls around the different countries of Europe, and it was quite spectacular. Of course, it was a bit phony,

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the whole thing, just as was Hoover's proof that we were a low tariff country because practically all of our imports came in duty-free; this was phony because our high tariffs kept much of the dutiable goods out. But certainly I think it's an idea of this century that Europe needs to act more as a unit and not just in wartime -- an active idea of the century. And I think it has a chance of coming to pass -- not a merger of nationalities, but an increase in the cooperative interplay between nations.

MCKINZIE: You mentioned that India was something to be considered unto itself, and we'll talk about that in just a moment, but I would also like to ask you if you considered Iran as a country unto itself. As I understand, President Roosevelt had a special hope for the development of Iran. He believed that here would be the test of the idea contained in the Atlantic Charter and the United Nations Declaration. If, indeed, the nations which signed those two documents did

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believe in the right of national self-determination, if they did not have territorial ambitions, the Soviet Union and the United States would focus on Iran as an area near which both had interests and see Iran develop and have multilateral trade and all this kind of thing. Was there any special attention given to Iran, that you recall, in the early postwar period?

DEIMEL: No, I don't recall any, especially. It certainly got its share, I think. I was never actually in on it. Well, I did make a trip out there in '48, and that's my only knowledge of Iran, firsthand knowledge. Our efforts, the aid program, to develop Iran, I think, were substantial. I don't remember thinking of it much in terms of the cold war, of course. Wallace Murray, who was Ambassador to Iran, told me afterwards, "Well, it's the one place where we did push the Russians back, after the war" -- I mean, after the idea of cooperation, instead of the cold war, had then gone by the board. No, my impression was that Iran was

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and always has been an important element in our foreign aid economic program, ever since Point IV, and perhaps second only to India. I mean, I'm reserving Europe; that was a reconstruction job. But perhaps second only to India would come Iran. But I didn't participate.

MCKINZIE: I ask everyone who was in the Near Eastern Division if they can help with the historical problem that developed over Iran. In a book that President Truman wrote or dictated after his retirement, he says that in 1945 or early 1946, when the Russians had not withdrawn their troops from Iran as they had promised at the wartime conferences, he told Stalin that if he did not withdraw those troops, he (Truman), would send the U.S. Sixth Fleet to the Persian Gulf, with the implication that there would be some kind of Soviet-American confrontation in the area. Now, the head of the historical office of the State Department says that he can find no evidence that Truman ever communicated that idea to Stalin.

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Do you recall that there was ever such a communication?

DEIMEL: No, I wouldn't have seen it. I can only, as I say, repeat this again: Wallace Murray, who was Ambassador to Iran -- I think it was about that time -- told me later, with considerable pride, "Well, we did push the Russians back in Iran." So that would give backing for Truman's book, and whether you take what Truman said literally or as a sort of colloquialism, it seems to me quite likely to be true -- quite credible would be the word, wouldn't it; quite fully credible. But I couldn't document this. I wasn't in on any such exchange. And I don't suppose anything would be in the volumes of Foreign Affairs which have been published?

MCKINZIE: There's no such document entered for 1945 or 1946.

DEIMEL: Would it be conceivable that Truman meant, "I told him through my ambassadors?" I think it's quite likely that he did, and, there, the Russians

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ran up against the possibility of confrontation and withdrew.

MCKINZIE: Another thing that occurred in the Near Eastern Division, when you were serving there, was something of a "falling out of love" between some of the people in the division and the President. He did, in fact, refer to "striped pants boys" in the State Department and, more than that, he went so far as to suggest that unnamed people were anti-Semitic. Loy Henderson, I think, was the man who bore the brunt of that more than anyone else. I wonder if you might discourse on that subject?

DEIMEL: Well, first of all, as you know, it's one of the touchiest subjects there is. I think it's fully substantiated. I don't know why President Truman supported the cause of Israel. I never, in my own good luck, had to get into that problem at all. But I was, as usual, an observer, and I did recognize considerable, shall I say, dismay, among my associates over the line of policy toward

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Israel that was being followed. But that was not an anti-Semitic line; it was regarded as the proper policy in the interests of the United States. In other words, so far as there was a difference, it was this difference that the permanent officials in the Department of State, the career officials, did not see the length of support for Israel to which our policy seemed to go as being in the full interest of the United States -- that we went rather too far.

MCKINZIE: A divided state, then, would have been more appropriate?

DEIMEL: Perhaps. I never went into the technicalities of it, and I may say now, well, Israel exists is about all I know. I don't want to be completely wishy-washy and say two sides. I did share the dismay in some of the stories I heard about how the vote in the United Nations was put over.

MCKINZIE: You're speaking of lobbying activities by Israeli partisans?

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DEIMEL: And not just in New York, but down in some Caribbean Islands where governments were persuaded -- now, this is jut a story I've heard -- to instruct their United Nations representatives to vote in favor of the resolution to establish Israel on the ground -- not officially communicated to them, but communicated to them by somebody -- that the United States wanted them to. Those were the days when, of course, we were running the United Nations, the way the Third World runs it now -- maybe our just desserts. But, no, I can only speak from hearsay, from a post of observer -- a rather naive observer; certainly, I'm not anti-Semitic. I have a great admiration for the Jewish people; I have many Jewish friends. At the same time, I recognize that they, as well as all other human peoples, have that tendency to go too far, which is the trouble with the human race.

MCKINZIE: I take it, then, that having such economic involvement as you could create for yourself or

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take as issues came up, you decided by 1949 to go into the Foreign Service in a formal way. And you've indicated that your first post was in India because of Loy Henderson -- who by this time had been a victim, I gather, of this problem and had been one way or the other...

DEIMEL: It wasn't a demotion; after all, Ambassador to India was a pretty good step, and then he went to Iran from there. There is one step in between, I may say. In 1948, just after I got back from the United Nations on this committee, I was told, "There's some money available for you to take a trip and learn something about the Middle East." So I had all that summer and fall; I had a marvelous tour from here to Cairo and then Jeddah, Baghdad, Tehran, Basra, and then down to Dachran and then back to Basra, Baghdad and over to Damascus, Beirut, Ankara, Istanbul and finally wound up in Greece, where my brother-in-law was Ambassador. In those three months, I really got something of an acquaintance, not with the countries, not with the people,

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but with the geography and some idea of the countries and what work at Foreign Service posts was like. Prior to that, I had never really felt of myself as being desirous of that, because I had gone to school abroad and it wasn't anything new to me. But then I took on the thought, well, I'd kind of like to enter Foreign Service myself, and that's why I did then. That trip was the clincher; before that, I'd always been primarily interested in national policy affairs here in Washington, which always seemed to have plenty of scope for all the energy and interest that I could put into it; I was never bored. But then, I was lucky.

MCKINZIE: When you did, then, go to India, you had to get involved, I take it, in some very precise matters in the Embassy in New Delhi. I wonder if I could get you to talk a little about the job of an economic counselor in New Delhi and also about .American aid efforts in India in those days?

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DEIMEL: Yes. I found it very interesting. I found the Embassy at a very low ebb as far as staffing went, and that wasn't remedied during most of my period. In fact, once I complained to a desk man in Washington who had told me that Point IV people in Washington were getting impatient, that I wasn't getting enough done. I said, "Well, how do you expect me to do it? Do you know that today I am the economic section?" The others had gone home or been transferred, and they hadn't sent replacements. My secretary was sick. Well, that was the worst. The economic section there, during my stay, was allowed practically to disintegrate, until some new men came on and then they started to build up. As I say, I started the foreign aid program to India with my own hands, and by the time I left there was a separate aid office of at least 50 people. So, it was just beginning to scratch the surface. What I had to do -- and it took up a great deal of my interest and time during the three years there -- was to explain things to the

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Indian Government officials, who by the way, were the best trained officials I ever met. They were the old British-Indian civil servants, and they kept the Government of India going for a few years after liberation. I explained to them what our concept of foreign aid was and how it would work. And after some consultations back and forth, I was then required to submit a draft, sort of an establishment agreement, to them, which would set up an agency for us to deal with them and the rights and privileges and so forth. I got that accepted practically without change. Otherwise, it was mostly trying to report on Indian economics, and there, I think, we failed rather miserably, because we had a completely new staff. We hadn't set up any lines of communications yet; it would take them four or five years. The economic reporting was done mostly from the consulates in Bombay, Madras, and Calcutta. They would report directly, and I would get copies. And oh, yes, we did have one very interesting affair which led on to other work later, a bilateral Indian-American civil

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aviation meeting. The Indians became dissatisfied with our airline operations to India, so it fell to me to argue that with them and then get some of our people from the Civil Aeronautics Board over and have a full-fledged but informal conference -- there were some technical angles to keeping it informal -- and then to carry that work on. The whole issue there was that the Indians wanted to clamp down on our air services in order to divert the passengers to Air India, whereas our whole thesis was, at that time, the opposite of our merchant marine policy; we wanted open skies, as far as possible. At least, the designated airlines should be the ones who decided how often to fly, how big the planes to be put on, and so forth. And it was difficult touch and go business. The key thing to soothe the Indians, or make them wary enough not to throw over our aviation agreement in order to advance the cause of Air India, was to argue most eloquently the need for growing air services. You had to have the services before you

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got the traffic, and if you tried to corral the traffic that was there, in the old mercantilistic way, you'd just kill the services. I managed to keep that going. They didn't have a formal conference until later, and, very interestingly, that led to my next assignment as civil air attaché in Paris, where I had the same function to perform, keeping the lid on during the growing stage of our air services. But we had some other conferences; there was an international conference on high dams. I could have taken a trip with them throughout India, but I was just too busy.

MCKINZIE: There was a comment by somebody that a lot of Indian officials, when they talked to anyone about aid to India, always wanted to talk about steel mills and not to talk, on the other hand, about a better long-handled hoe, and that there were really two concepts of aid: massive injections of capital and the building of service infrastructures. You have indicated pretty much where you stood on all that in relation to the Middle East. Did you

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have discussions with Indians who did push for the massive injection of capital approach to aid?

DEIMEL: Well, yes, they all hoped for substantial amounts of capital to relieve their economic situation. They shared the general idea that economic development means industrialization, and, therefore, you couldn't get very far with the simpler notions. And then there was one other factor; we had, in addition to myself as economic counselor, a very senior man, just one man, as agricultural counselor at New Delhi. He had been there a long time and really did a magnificent job in agricultural relations and promoting agricultural development and so forth. So I didn't get into so much of that. We worked very closely together; Taylor was his name. But you see, we didn't get down into that until after I was out of it. We were just trying to scratch up some topics that would begin the program. For instance, I had one very interesting interview with a statistician. He was a very close friend of [Jawaharlal] Nehru

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at the time, and our first meeting was very unfortunate. I was required to report back to Washington what was going on on Point IV. Mr. Mahalanobis was his name; he had a very high position, head of the Indian Statistical Organization. And the third secretary in the Ministry of Finance was getting the information for me. It evidently rubbed him on the raw; he told me I'd better speak with him direct. I asked Mahalanobis, "Can I come and talk with you?" He was quite nasty, and when I got there he said, "What's this about your making an investigation of what I'm doing?"

I told him, "Oh, that's your semantics; nothing at all, no investigation. I used the wrong word. I just wanted to let some of my people know some of the interesting and useful things that the program money was already being used for." And then I listened to what he had to say; by the time the afternoon was over, we were quite friendly. But that was about as far as it went, just trying to find a few things that

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could be listed as a starter. But on your main point, oh, yes, I think it was widespread that the idea of development was of all this, the mechanistic development, the industrialization, which means steel mills. And I think in India there was all this pressure for more aid to build more steel mills. And I remember later, in '68, when I was in Karachi on another aid matter entirely, I talked with one of the aid men, a specialist who was in steel. His job was, as a steel expert, to tone down the excessive ambitions of the Pakistani Government to set up steel mills. So, I mean, you couldn't help running into that, where they wanted airlines, they wanted steel mills, they wanted great industries. And the simpler approaches were not completely lost sight of, but didn't get the dramatic enthusiasm.

MCKINZIE: Did this make you think less of them as economists? Were they addressing themselves to matters that were essentially political rather

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than economic? I'm thinking of a couple of people, not in the Near Eastern Division but in Latin-American Affairs, who said bluntly of Latin-American aspirations and of the people who offered those aspirations that they weren't very good economists.

DEIMEL: Well, I want to put it more gently than that, but I had been so accustomed, all through my Government career, to coping with influential ideas that were not very sound economically; it would be no surprise to meet that elsewhere. And, as a matter of fact, the particular officials I dealt with, notably in India, were highly trained, highly sophisticated, excellent economists who knew pretty well what they were doing and were trained to cope with the pressures of, say, the more narrow-minded. In my years there, I didn't get into so much contact; it was somewhat limited. If I'd had a second term, I might have gotten into broader touch, but mostly I was in this rather rarified atmosphere of highly intelligent, highly trained, and altogether admirable officials --

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those that I met. They were the British-trained Indians; they were Indian civil servants from Bihar, Calcutta, Delhi, Bombay, all over the country. But they were very high-grade people.

MCKINZIE: In the following years, after you were gone, India presented a particular problem to the State Department. As the cold war heated up, the administration of John Foster Dulles took the position, always, that the neutralism of India in matters involving the United States and the Soviet Union was immoral. Now, I think there is no man who is more suspicious, probably with good cause, of the Soviet Union than Loy Henderson. He had been called by Chester Bowles “the father of cold warriors” or something like that. Did you get the impression that he also took this position with the Indians, that somehow a position of neutrality was immoral?

DEIMEL: Loy Henderson was a highly trained, well-educated, deeply understanding person. To compare

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him to Bowles is like comparing a Ph.D. in foreign policy to someone who has just made it through grammar school, in deepness of understanding. Loy Henderson had his troubles with the Indians, yes. He was very much disturbed by the fact that India recognized Red China while he was there. You’re quite right that he was, contrary to my naivete, absolutely sophisticated on Russia. After all, he had been there in those early days, under Roosevelt, when we first sent a mission over, and he got to learn something about it. Yet, Loy Henderson’s attitude toward the cold war was not the narrow, paranoid attitude that led to the military aspects of the cold war. I’ve always admired him tremendously, and I would say, no it was a deeper sophistication and understanding of the limitations and dangers of the Soviet tyranny. It was, I think, deeply intelligent and informed.

MCKINZIE: What was your relationship, the Embassy’s relationship, with this Point IV staff that grew

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up while you were there? One of the problems for the people who were concerned about this is the relationship of the Embassy with the aid mission.

DEIMEL: Well, I think, during my last six months was when they came over. I think there was a tendency for them to be suspicious of us, especially as Loy Henderson, without my knowledge, had made the recommendation to Washington that I should combine the position of economic counselor and head of the aid mission, so as not to have two heads of economic agencies. He did that without asking me, and it didn't do me any good, of course, although it was meant very well. But as a result, they were suspicious. They rented a separate building a good distance from the Embassy. But I think that was the initial phase. By the time I got there in '57, I thought that the aid people and our Embassy people, economic people, were working together quite well. They had different jobs, but they were working quite well, and so I didn't notice any divergence at

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all, once they got over the first getting acquainted. Of course, when the aid mission came over there was a complete change, Ambassador Bowles followed Loy Henderson, who had become Ambassador to Iran. But there was, I don't know, maybe a two or three month interval, and Loftus came to replace me as economic counselor. So there was a considerable turnover. But to the best of my knowledge it worked out all right. The whole business was big enough, and there was insufficient tangible power in the set-up to cause anybody to want to grab power -- at least, that's the way I put it. Again, I may be naive, but that's my impression. I was just back in India once more, in '47, for a few weeks again on the aviation problem.

MCKINZIE: Was India in 1950-51 a hardship post?

DEIMEL: I think we got a little extra allowance. Oh yes, there was an extra allowance, but that was more on account of the exchange difficulties, and that was cut down to the bone just as I got

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there, so I didn't enjoy any. Yes, it was a hardship post medically, in the sense that we had an Embassy nurse there, and the military attaché later got a doctor, because everybody got sick -- Delhi-belly, diarrhea, as in any strange hot climate. But I don't think it was rated officially as much of a hardship post. It wasn't too bad. I was very comfortable. After all, I had a whole house for my wife and I, and later, after she left, my 20 year old daughter spent a year away from college, came six months to Delhi and six months to the Sorbonne in Paris with her cousin, my niece from New York. They ran the house for me with eight servants, and we had duty free imports of food, canned goods and so forth, by the case load. So, except for my wife's unfortunate illness, which was amoebic dysentery and compelled her to go home, it was very comfortable. And as my daughter once said to me, "Daddy, you certainly have a lot of prestige around here."

Here was this dramatic, romantic new international capital, Delhi. It had been a British

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provincial town, then came the war and some influx of foreigners, and then the liberation. It was an international capital with lots of new Embassies, self-government, and so forth. The Indians have a love of show, and so do the British, and the Indians took over from the British. I remember the first celebration of independence day; they had ten thousand troops parade in the stadium. It was just the most colorful thing I've ever seen. So, it was, in those respects, a very pleasant existence. In addition to the Embassy cars, I had my own Chevrolet with my own driver, and he was the best driver in Delhi at that. Later I got him a job as chief driver for the new aid mission when I left. Later, in '57, he drove me and my associates, when I visited again; took the day off and drove us down to the Taj Mahal at Agra, out of memory of our good times together. I had eight servants, of whom the wages of four I could count off against my income tax as being for representation purposes. So, it was, aside from a little health hazard and

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the illness of my wife, a very delightful experience -- aside from the agonizing professional misfortune of not being able to accomplish anything in a short time and sort of having your career turned over. From 1923-49, I did pretty well in the Government service; I got out into the Foreign Service and had to learn the new culture, and it was a different matter altogether. I got through, though. But it was a delightful experience that, for all its misfortunes, I never would have missed.

MCKINZIE: Did you find the Foreign Service to be more restrictive than the Government service which you had been in before?

DEIMEL: For my purposes, yes. It's the difference between a career service, a highly developed, highly organized, the dos and don'ts service -- it wasn't too new to me, because, somehow, an English public school has something of the same. I mean, you learn what you do and what you don't, but you had to learn them and I didn't have much time to

[105]

learn -- as against what was, for me, much more wide open, what I'd call it. It was career -- although I wasn't blanketed into the full Civil Service until 1942 for pension purposes; but there was a much freer atmosphere in what I'd call the Washington policy service, where, from my approach, you tried to understand, tried to make the best of things, and tried to carry out what little you could that came to your hands to carry out. But my recollections of Washington was of utter freedom as compared with the career p's and q's that you learned later.

MCKINZIE: Now, you worked with Loy Henderson; you knew Loy Henderson before, and here you start working with him in New Delhi, and yet it's a very different world. Was it the difference between working for him or knowing him in the State Department and then working for him as an officer in the Foreign Service?

DEIMEL: No, it wasn't, because, somehow, my relationship

[106]

with Loy Henderson -- and I don't quite know why -- has always been so very warm, cordial, and close, I should say. No, it was not working for Loy Henderson the Ambassador, who had all my loyalty and understanding, but, rather, working for the Foreign Service. After all, he was Ambassador, but he was also a Foreign Service officer, and he could help me only within so many limits. He had his hands full with his own troubles, too. And, for instance, it was the deputy chief of mission, a man who came over from Berlin, who did me the ruination, who prepared my efficiency report. Now, here in Washington, an efficiency report was the form to be gone through, and all the time I had an excellent one, the very top, no question about it, for 26 years. I got to Delhi, the same way as ever. I didn't pay, I guess, proper respect to my categorical superior -- I'm not speaking of Henderson -- and I got a Dear John notice in due course from Washington -- I, who had always been top; I, who had always been fought

[107]

for when I transferred. For instance, when I transferred from Transport and Communications to the Near East and African Division, the Transport head objected. Since I was willing, Loy Henderson insisted, and the case went up to Dean Acheson, himself, who was Secretary of State, before Dean Acheson said, "Let the man choose for himself." Well, I got, to my surprise -- after my wife was sick and gone back; it wasn't for a year and a half -- this Dear John letter: "Dear Henry, I regret to inform you that on the basis of your efficiency report, the promotion board has rated you in the lowest 10 percent of your class. This is the first time you have been rated, so there will be no serious consequences." Oh, I can remember the words; it described me as several things which I didn't recognize in myself: wavering, indecisive, a bunch of things like that. I didn't recognize myself. I went to talk to this deputy chief of mission; "Oh, I'm quite surprised

[108]

at this." So, I didn't think it would be quite this drastic, but, oh, yes, I spoke to Henderson about it. He said, "Well, I do remember something like that in your report, but I passed over." There, I think he let me down; he should have told me before it went in. But he had his troubles. But this other guy said he didn't mean to have it so drastic. My next efficiency report was much better, but I hadn't, I think, paid him the proper attention. His mission to Delhi was to come and organize that mission, and, as he told me, to show Washington that Delhi is "on its toes;" that was his expression. Well, apparently, I hadn't taken that seriously enough. That's what I mean by an organized career against the strictly personal relationship that, for 26 years, I'd enjoyed in Washington.

Well, now, when I say this, at the same time I recognize that I am biased in my own interests, that I certainly had plenty of faults, and if I had the years to do over I'd do them differently

[109]

would probably make different mistakes.

MCKINZIE: But then that relationship, that Foreign Service problem, made it somewhat difficult, I take it, to do substantively what you...

DEIMEL: No, it never did. Of course, I just had ten years in the Foreign Service. It's purely professional and personal; if I hadn't come to retirement age, probably I would have been retired for lack of being promoted. See, I was appointed to Class 2 and was never promoted to Class 1, even though I had been at the top of the Civil Service for ten years before. I didn't know my onions; I didn't know how to play my professional career onions. But when it came to substance, oh, no, I think I did a good job in India. And I know I did an excellent job in Paris, because before I came there they didn't want to fill the post of civil air attachés they wanted that post filled by some other specialty. So, they delayed my coming for two or three months. When I left,

[110]

they refused to let me go until I had been replaced. Well, there's a little difference there, and it was at a time, when I came, that our relations in aviation with the French Government were just as touchy as hell. The French were going to call us into a conference as the first step toward canceling the aviation agreement. By the time I left, the French head of the civil aeronautics agency there -- a very fine, highly educated Frenchman, said to me, "You know, Mr. Deimel, as you go I want to tell you: We have not regarded you here as the ordinary civil air attaché of the other countries, even of England. We've regarded you as a special friend." (I wish this would be on record somewhere; this is just a personal conversation at lunch.) "We have always realized that you always spoke up for your country's interests in aviation," he continued; "that you always expressed your country's point of view. But, also, we knew that you understood ours, and we felt that you caused Washington to understand what our point of view on aviation was."

[111]

Well, that was the last word on that. So, on substance, I think I did all right. I had three years more here, back in Washington, but that was different.

MCKINZIE: But you were, at the end of the Truman period, in beautiful Paris rather than in...

DEIMEL: Well, it was the beginning of the Eisenhower period, because I was here during the elections. I was in India during the opening of the Korean war and all the turnover that came; I was here on a long vacation during the summer of '52. Let's see, my second daughter got married then; I managed to stretch it out so that I could stay for her wedding. Then I got to Paris in January of ‘53 and was there until I was called back to Washington, of all places, in '56, which would have been a good thing only it fizzled out. It was all right. Then I had a final fling on an aid program, the Afghan-Pakistan transit project. I've had so much luck in my career, just to have

[112]

that final fling at putting something across. Someday I'll go down to the State Department and find out whatever happened to it. But I had 20 million dollars to divide between Afghanistan and Pakistan to build up communication and transport, rail transport, between Karachi and the border of Afghanistan, as a means of persuading those two countries to negotiate a transit treaty between themselves, on the basis of which this aid project would be established. And I got it done, and we even got the Afghan Government to call in its so-called Parliament to ratify the treaty, when Washington demanded ratification, 12 hours before the money would have lapsed. It was sort of a dramatic finale that made up for all my heartaches before then, and, of course, what they did then, while I was away, was to fill my post back here. So, I had to come back and spend a few months on the India desk again before retiring. I was within six months of being 60, and I decided to retire voluntarily. I did so that I

[113]

could be hired by the Government again. You see, I was not persona grata with the Dulles administration. I was a Cordell Hull man, who had lived through it, and a distant relative (by marriage) of John Davies. And yet the Aid people called me back three times after I retired -- of all things, to work on their promotion boards. I saw a certain irony in that. But, altogether, it was very exciting.

MCKINZIE: Well, I should say so. Professor Deimel, thank you.

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List of Subjects Discussed

    Acheson, Dean, 107
    Afghanistan, transit project with Pakistan, 111-112
    Agriculture Department, U.S., 24, 25-27
    Air India, 92
    Albania, 17-18
    Allied Control Commission for Italy, 52, 53-55
    Alling, Paul, 18
    American President Line, 52-53
    Atlantic Charter, 81-82

    Barnes, Charles, 64
    Bloom, Sol, 49
    Bowles, Chester, 98, 99
    Byrnes, James F., 66

    Carr, Wilbur J., 23
    Castle, William R., 38-39
    Chalmers, Henry, 4
    China, People's Republic of China, 16
    Civil Aeronautics Board, U.S., 92
    Clayton, Will, 50, 51, 59, 60, 61
    Collado, Emilio G., 60
    Coolidge, Calvin, 9
    Cuba, sugar agreement with U.S., 28-29
    Culbertson, Paul, 15

    Davies, John P., 113
    Deimel, Henry L, background, 1-4
    Domeratzky, Louis, 4
    Douglas, Lewis W., 45
    Dulles, John F., 98

    Europe, integration of, 79-81

    Feis, Herbert, 15, 32
    Fordney McCumber Tariff Act, 5
    Foreign and Domestic Commerce, U.S. Bureau of, 3-7
    Foreign Service, U.S., 104-109
    Foreign Tariffs Division, U.S. Bureau of Foreign and Domestic Commerce, 4-7
    Fox, Emanuel, 25
    France, aviation agreement with U.S., 110

    Germany:

      import duty on sardines, 8
      Nazi regime, 39
    Grady, Henry F., 2, 23, 28, 29, 32, 33, 37, 48, 52-55

    Hare, Ray, 56
    Hawkins, Harry, 10-11, 13, 14-15, 21, 22, 24, 29, 30-33, 68
    Henderson, Loy W., 55, 56, 85, 98-99, 100, 105-106
    Hoover, Herbert, 3, 6-7, 9, 16, 19, 20, 51
    Hughes, Charles Evans, 11
    Hull, Cordell, 14-15, 19, 20-22, 23, 28, 33-34, 36, 37, 59, 64

    India, U.S. economic aid to, 89-103
    Inter-American Shipping Conference, 1940, 41-42
    Iran:

      economic/social development of, 81-83
      U.S.-Soviet confrontation over, 1946, 83-85
    Israel, U.S. support for creation of, 85-87
    Italy:
      Allied Control Commission for, 52-55
      shipping aid to, post WW II, 50-51

    Japan, U.S. aid to, post WW II, 60-61
    Johnson, Lyndon B., 36-37

    Kellog-Briand pact, 40

    Land, Jerry, 49, 53, 55
    Livesey, Frederick, 15, 17, 18
    Locke, Edwin A., 79
    London Economic Conference, 1933, 14-15

    McGhee, George C., 57-59
    Malvern College, Worcestershire, England, 2
    Maritime Commission, U.S., 42, 44-45, 47, 49, 51
    Marshall, George C., 51
    Marshall Plan, 65-67
    Merchant Marine Act, 1936, 43
    Merchant Marine, U.S., 11-12, 43
    Murray, Wallace, 13, 18, 22, 33, 82

    Nehru, Jawaharlal, 94
    Nixon, Richard M., 16

    Oil, Middle East, 67-69

    Pakistan, transit project with Afghanistan, 111-112
    Point IV program, 76-77, 83, 90, 95, 100
    Portugal, sardine exports, 8
    Prohibition experiment, U.S., 16

    Rockefeller, Nelson A., 41
    Roosevelt, Franklin D., 10, 14-15, 16, 20, 36, 37, 64, 81
    Ryder, Oscar, 25

    Salter, Sir Arthur, 45
    Saugstad, Jesse, 41, 49, 56
    Sayre, Francis B., 28
    Simpson, John, 54
    Smoot-Hawley Tariff Act, 9, 20
    Soviet Union, confrontation with U.S. re Iran, 1946, 83-85
    State Department, U.S.:

    Tariff Commission, U.S., 24, 25
    Tariffs, reciprocal, 19-22, 24, 28-31, 35, 37-39
    Trade Agreements Act, 1934, 21, 28
    Truman Doctrine, 58
    Truman, Harry S., confrontation with Soviet Union re Iran, 1946, 83-84

    United Nations:

      Declaration re national self determination, 81-82
      Economic Commission for Asia, 73
      Economic Commission for Europe, 73
      Economic Commission for Latin America, 73
      Economic Commission for the Middle East, 74
      Palestine partition, vote on, 1947, 86-87
    University of California, Bekeley, 2-3, 52

    War Shipping Administration, U.S., 47
    Welles, Sumner, 28-29, 33-35, 38, 41-42
    Wheeler, Leslie, 26-27

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