Harry S. Truman Presidential Library & Museum


Oral History Interview with
Henry H. Fowler

Henry H. Fowler
During the Truman administration, Fowler served as Special Assistant to the Administrator, Foreign Economic Administration, 1945; Administrator of the National Production Authority, 1951-52; and Director of the Office of Defense Mobilization, 1952-53. During the Kennedy and Johnson administrations, Fowler served as Undersecretary of the Treasury, 1961-64; and Secretary of the Treasury, 1965-68.

Washington, D.C.
June 20, 1989
Niel M. Johnson

[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 It may not be published in full except by permission of the Harry S. Truman Library.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 July, 1991
Harry S. Truman Library
Independence, Missouri

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



Oral History Interview with
Henry H. Fowler

Washington, D.C.
June 20, 1989
Niel M. Johnson

[1]

JOHNSON: Dr. Fowler, I'm going to start by asking you if you'd give me your birthplace, your birthdate and your parents' names?

FOWLER: I was born on September 5, 1908, in Roanoke, Virginia. My father was Mack Johnson Fowler, and my mother was Bertha Browning Fowler.

JOHNSON: Did you have brothers and sisters?

FOWLER: I had no brothers and sisters. I had one little brother who died when he was about three days old. So for all practical purposes, I was the only child.

JOHNSON: How about your education?

FOWLER: I went to the public school system of Roanoke. I graduated from Jefferson High School in 1925, and went to nearby Roanoke College which was in Salem, a town

[2]

about seven miles from Roanoke, in September 1925, and finished there in 1929. I went to the Yale Law School that fall and took my LL.B. degree at Yale in 1932 and a graduate degree (J.S.D.) in 1933.

JOHNSON: What was your father's occupation?

FOWLER: He was a locomotive engineer on the Norfolk and Western Railroad.

JOHNSON: Who influenced you most toward a legal career would you say?

FOWLER: Well, I backed into it. I didn't know what I wanted to do when I left college. My mother, of course, wanted me to go into the ministry, and I always had been bent to some extent in that direction, but I didn't feel the call. I liked to write; I liked to speak; I liked people; I liked competitive activity, and I had been in a lot of activities in college, one of which had been the editor of the college weekly. I thought a little bit about newspaper work, but I finally decided the legal profession would answer most of those instincts best, and so I decided go to Yale Law School.

JOHNSON: Were you a history major when you were in college?

FOWLER: Yes. History and English.

[3]

JOHNSON: So you got your law degree. What next?

FOWLER: Well, that was just one degree. I graduated in the spring of '32, and the spring of '32 was not the most auspicious time for a young law school graduate who had no affiliations with a family in the law business, or whatnot, to come out. I thought I might like to teach, so I got something called a Sterling Fellowship at Yale. I got a scholarship grant, and this was enough to take care of me for a full year while I received my doctorate. I got something called a Doctor of Juridical Science, which was equivalent to a doctoral degree in the law.

I wrote my thesis during that year and came out of Yale, finally, in the summer of 1933.

JOHNSON: What was the subject of your thesis?

FOWLER: "The Psychological Approach to Procedural Reform." Procedural reform has been something that has plagued the legal profession, the Anglo-American legal profession, for centuries. There were at least three observable efforts to reform the procedures so that justice could be quickly arrived at instead of being miscarried for technical reasons. One was the Field code in New York; in 1850 they passed a law reforming it all quick and sudden like, doing it all in one fell swoop, and in a few years the judges and the lawyers

[4]

who couldn't change habits that fast, had it more fouled up than it was before.

The second one was the English code reform, which was in two steps, in 1832 and once again sometime in the 1870s. It was a little bit more of a graduated approach, and that worked fairly well.

Then there was a third step, taken in Virginia. It started in about 1640. They did it one little nip at a time. The first approach was that any public official who absconded with public funds, or was charged with it, all you did was to file a notice of motion and bring him to heel; and all he could do was to answer the notice of motion. He and his lawyers couldn't fiddle around and delay and delay, with this motion and that motion and whatnot, and they found that worked. So they gradually extended it to other types of litigation. That was what I would call the evolutionary approach. Of course, what you were dealing with was the psychology of the bench and the bar, and the fact that you couldn't change, in a hurry, the way they handled their affairs. Hence, this essay was a combination of tracing the legal history of this phase of the law and developing the proposition that an evolutionary approach was more practical.

JOHNSON: A lot of respect for precedent of course. So then in '33 you have your doctorate.

[5]

FOWLER: In '33 I had my degrees. I came back to Virginia and took my bar exams. I was on my way to New York to continue interviewing several of the major firms there that led me to believe that I might be acceptable, when I stopped here in Washington for a weekend. This was on Saturday night, and I went out with some friends. There was a gentleman standing in line at the Chevy Chase Club, a man named Stanley Reed, who later was U.S. Supreme Court Justice Reed. He was then General Counsel of the RFC, the Reconstruction Finance Corporation. We got into a conversation, and he said, "Where are you going?" I said, "New York." And he said, "You're making a mistake. You ought to stay here. This is where the action is." Of course, Roosevelt's hundred days had just passed and the New Deal was taking shape. So the fellows who were with me and their dates said, "He's right; that's what you ought to do." One of the fellows with me said, "We'll put you in touch with somebody. You ought to stay over Monday and have some interviews." So I did, and I ended up staying in Washington and going with a well known law firm named Covington, Burling, Rublee, Acheson & Shorb. I didn't want to go with any one Government agency at that time; I wanted to kind of look the whole scene over, and I thought that during a year in private practice I could look over the

[6]

landscape and then go into some challenging New Deal activity. That's what I did.

JOHNSON: You were with that firm for what, a year?

FOWLER: I was with Covington and Burling for a year. Then I went to the Reconstruction Finance Corporation's Small Business Division which seemed to be interesting and challenging. But before I was well underway on that, in about a month or two months, I was approached by the General Counsel of the Tennessee Valley Authority. He said, that the constitutionality of the Tennessee Valley Authority, which was one of the centerpieces of the New Deal, President Roosevelt's and George Norris' favorite project, was being challenged. He said, "I want you to come on down. Nobody knows much about trying a constitutional law case on the facts, and why don't you come down and help me take it on." I did. I went with TVA in September of 1934.

JOHNSON: Who was the General Counsel?

FOWLER: James Lawrence Fly, who was a very great and able lawyer. He had been an experienced lawyer in the Department of Justice in antitrust work. He later became the chairman of the Federal Communications Commission here in Washington.

JOHNSON: So you were working up briefs defending TVA's

[7]

constitutionality, and you stayed with the TVA?

FOWLER: Well, this was not something you did within a month or two, trying a constitutional law case on the facts. This case was my main assignment, and it ended up in the U.S. Supreme Court a year later as a very famous case in the books now called the Ashwander vs. TVA. It was finally decided by the Supreme Court in the winter of 1936.

We had finished the case; we had had it argued before the Supreme Court, and we were waiting for the decision when I was coopted by the Securities and Exchange Commission to work on another constitutional law case involving the constitutionality of the Public Utility Holding Company Act. A group was being recruited throughout the Government under the aegis of Mr. Benjamin Cohen, who was Tommy Corcoran's partner in Corcoran and Cohen. Four or five of us were recruited to do that. We thought we'd have to go to trial on that case. Well, it turned out we were able to stipulate the record, rather than to try it in court. The facts were the facts and we were able to get an agreed stipulation with the Electric Bond and Share Company which was the defendant.

About thirty or forty utility companies had challenged the constitutionality of the Public Utility Holding Company Act, and SEC decided it would try to

[8]

deal with this complexity of suits by bringing its own case against a major utility holding company. That was SEC versus Bond and Share.

Well, when they stipulated the facts in the case, by the summer, a second TVA case had been filed, the so-called 18-company case. I went back to pursue that because the Ashwander case had been only decisive of the constitutionality of the TVA Act insofar as it pertained to the acquisition of facilities for the distribution and sale of power from the Muscle Shoals Dam power properties, which were defense properties, clearly developed in World War I to supply ammonium nitrate for our explosives in World War I.

So the remainder of the TVA project then came up for challenge in this so-called 18-company case. That took about three more years. So, that was finally finished favorably, on the grounds that the company did not have standing to sue. It was on a technical, procedural ground, but in essence it closed out the constitutional litigation for TVA in the navigation, flood control and electric power fields. I was by that time an assistant general counsel at TVA. Before I could get well underway in new work in Chattanooga, Mr. Corcoran up at the White House had again gotten me to do something else.

JOHNSON: I think he and Cohen were part of what was called

[9]

the "second brain trust" that Roosevelt had.

FOWLER: Yes.

JOHNSON: Bond and Share, was that the case?

FOWLER: Electric Bond and Share. SEC vs Electric Bond and Share.

JOHNSON: So you had plenty of experience defending New Deal legislation.

FOWLER: Five years of constitutional litigation.

JOHNSON: Which certainly put you on the side of the New Deal.

FOWLER: Oh, very much, very much. I was a New Dealer.

Well, I went on from that. A call came from the White House to go over and meet with Senator Robert LaFollotte who was chairman of the Senate Civil Liberties Committee, as it was called. It was a committee set up by Congress to investigate violations of the rights of free speech and assembly and the right of labor to organize and bargain collectively. He had been underway on a series of investigations for three or four years and he wanted to conclude them with a series having to do with agricultural labor and migratory labor nationally and particularly on the West Coast. This was a "grapes of wrath" story. I agreed

[10]

to do that and did that for a year, working under the direction of Senator LaFollette, as the chief counsel of the committee.

JOHNSON: Did you get acquainted with Senator Truman at all in this period?

FOWLER: I did not get acquainted with Senator Truman then and I'll come to that later. I just want to close out the rest of this history. The investigations were completed on the West Coast and [then conducted] here in Washington on migratory labor, the agricultural labor situation, which involved not only civil liberties, but the lack of employee protective legislation generally. They were left out of normal protective legislation and a lot of issues were presented. We had hearings in Washington on that. As a matter of fact, World War II for all practical purposes erupted in Europe the day in September 1939 that I came into Union Station to go over and see Senator LaFollette to take this on. I finished with that and the reports on those investigations; I had nothing to do with the previous ones at all.

The St. Lawrence Seaway project was under consideration and I was asked to become a special counsel to the Federal Power Commission to work on it because of my association with TVA and whatnot. Leland

[11]

Olds, who was the chairman of the Federal Power Commission, and Adolph Berle from the State Department, and the General of the Corps of Engineers were a group of three, who were charged with the responsibility of developing a plan for the St. Lawrence Seaway project which had been back in the wings for 30 or 40 years, but had never been undertaken. I was asked to become special counsel to that group of three, working for the Federal Power Commission, which I did. I negotiated an agreement between the Federal Government and the Dominion of Canada, and between the Federal Government and the State of New York. These required approval by both houses of Congress since they were agreements and not treaties. The authorizing legislation passed the House, but before we could get it to the Senate President Roosevelt called it off because by that time (August 1941) it was clear that the possibility or likelihood of war had to take priority over major projects with three or four or five-year dimensions.

JOHNSON: So the St. Lawrence Seaway project actually started during the Roosevelt administration.

FOWLER: Yes, but it was called off because of the likelihood that it would be interrupted and would have to be stopped.

JOHNSON: So we're talking about what year?

[12]

FOWLER: It was the summer of '41.

JOHNSON: When you arranged these agreements with Canada and with the State of New York?

FOWLER: Yes, and they were up for Congressional approval. When the project was called of, I was then asked by Mr. John Lord O'Brian, who was the General Counsel for the newly established Office of Production Management, to become one of its several assistant general counsels. The OPM was the predecessor of what was later called the War Production Board. The name was changed after Pearl Harbor on December 7. I served the War Production Board, as one of four or five assistant general counsels, in organizing all of the legal work in connection with what became the organization and mobilization of the U.S. economy for World War II. I took that job in the middle of September of 1941, and began to recruit a staff and to organize operations--in the General Counsel's office.

JOHNSON: Had you gotten acquainted with the Truman Committee?

FOWLER: I'll come to that. I should say I knew Mr. John Lord O'Brian because he had been special counsel of the TVA in its constitutional litigation. He was very famous, one of the great lawyers of our time; he had

[13]

served under four or five Presidents and although a Republican, he had been asked by President Roosevelt to come down and take charge of the legal work in connection with our mobilization effort because of his standing as a well-known and highly regarded public lawyer, as well as private lawyer. He had a fine firm in Buffalo. Although he was an older man at the time, he agreed to do it.

In the work of the War Production Board, I was brought into my first contact with then-Senator Truman, who was chairman of the so-called Truman Investigating Committee. In the War Production Board, about half of the so-called industry branches had lawyers assigned to them who would report to me. Typically, a lot of the key people, the directors or key people of the industry branches, or the heads of the key sections, would be the so-called "dollar-a-year men." These were highly trained executives of major corporations who were selected because of their experience and skill in organizing and directing production. Their salaries were paid by their companies except for "one dollar" paid by the Federal Government as a token of the trust being placed in them.

Another fellow, who was assistant general counsel there, and I were the "shepherds" of the dollar-a-year men. They were one of the targets of one of Mr.

[14]

Truman's investigations. I think the only time I met him was when I went down after the hearings that had been held. I was not involved too much in the hearings; I got called into it as the hearings were well underway. I went down to have a conference with him about the report that was underway, or in process of preparation, and to explain to him that a lot of these gentlemen had just come down to work in the WPB and they weren't familiar with Government routine and red tape.

So a lot of the matters under investigation, from my point of view, was the result of ignorant conduct rather than conscious misbehavior. They were hailed before the Truman Committee but there were no prosecutions that I recall or anything of that sort. They were chastised by the chairman and the members of the committee and in the report. In effect, they were told, "Don't do this anymore," that kind of a thing. There may have been a few resignations involved in it, I don't recall.

Anyway, I met with Senator Truman and we had a businesslike and pleasant interview. I didn't persuade him of anything and he didn't persuade me of anything. But anyway, out of that meeting I developed an admiration for President Truman. I won't go through the rest of my activities during World War II unless you want to.

[15]

JOHNSON: You mean the War Production Board?

FOWLER: And afterwards. I did other things too.

JOHNSON: That was your only contact with the Truman Committee?

FOWLER: That's right.

JOHNSON: So you were advising the War Production Board throughout the war period.

FOWLER: Until February of 1944. We were pretty well organized and mobilized by that point. All of the orders: the L orders, the M orders, the P orders, the various kinds of regulations that were necessary to shift from a civilian economy to an effective war-making economy, while maintaining the essential civilian parts of the economy, were pretty well in place and behind us.

JOHNSON: You know, the media said that the Truman Committee saved taxpayers from one to twenty billion dollars.

FOWLER: I wouldn't have a view on that; I don't know. My relationship with the committee was just about as cursory as I've indicated in this one big visit with the chairman.

JOHNSON: But that did get him a good press, I suppose.

[16]

FOWLER: Oh, he became a national figure as a result of it.

JOHNSON: Do you think the committee did a good job?

FOWLER: I have no way of knowing whether it did or not. I think it was generally esteemed, and people thought that it did an excellent job and I would not say anything to the contrary.

JOHNSON: Of course, there is a lot of records of hearings and so on, and that has been covered.

FOWLER: You've got all kinds of stuff on that, and there's nothing that I could add to what you have.

In February of '44 I went to London with the Mission for Economic Affairs, this time in the role of an economic adviser rather than a lawyer. This mission was the London office of something called Combined Boards: the Combined Production and Resources Board, the Combined Raw Materials Board, the Combined Food Board, the Petroleum Administration for War. We were working in concert with what was called the British Empire, and Canada, and these boards were set up to try to coordinate our efforts, lend-lease and reverse lend-lease, and many other types of cooperation, so that there would be a coordinated production and supply effort for our forces around the world--ours, the

[17]

British, the Canadians, and some of the other helpful countries.

Frankly--and this was a matter of some dispute in my family--I went over because I had very bad eyesight and I knew that if I were a volunteer for one of the military services in Washington, which I wanted to do, I would be just sent over to the Pentagon doing a lot lesser work than I had been doing. I wanted to be close to the action. So I decided that I would go to London, work for the mission for a month or two, and apply for a commission as a lieutenant in the Navy so that my wife and children could be fed. I did that. Then, I was badly taken aback because Admiral [Louis E.] Denfield, the head of the Bureau of Naval Personnel, sent a letter to one of my bosses in London saying, "Your friend Fowler's eyesight is such that he is not available for combat duty, and I've got more naval lieutenants in London that are not available for combat duty than I can handle. He will serve his country a lot better staying on and doing what he is doing over at the Mission for Economic Affairs."

So I stayed there doing work of various kinds, which were related to the coordination of our production and supply with that of the U.K. and the Empire, and Canada, until the following September when I came back to the War Production Board. For about a

[18]

month, I guess, I was working there doing my final reports on what was going on and what I had been concerned with over there, which was, you know, what to do in the wake of battle to restore the economies of wartorn Western Europe, and that kind of thing.

JOHNSON: So you're planning for reconstruction. Now we're in the late '44, early '45 period?

FOWLER: Late '44. That didn't last but a month when I got drafted again.

President Roosevelt was then still very much in charge. There was a dispute between [Henry] Stimson, the Secretary of War, and [Henry] Morgenthau, the Secretary of the Treasury, as to what would be done with the German economy. Morgenthau was for, well, the catch phrase was, "pastoralizing" it, and Stimson wanted to reconstruct it on a peaceful basis, but to have a mix of industrial and agricultural operations with which to restore the economy along a very peaceful bent.

Roosevelt solved the dispute between these two by asking Leo Crowley, the head of the Foreign Economic Administration, to conduct a series of studies on how to carry on the economic and industrial disarmament of Germany so that it would never be in a position to make war again. That approach didn't take either position

[19]

between these two disputees. I organized a group of about 35 task forces that went into trying to, as I put it, deal with the economic and industrial disarmament, but to restore, on a peaceful bent, a consumer-oriented, rather than a heavy industrialized militarily-oriented economy.

JOHNSON: Is this part of the Foreign Economic Administration that was doing this?

FOWLER: That's right.

JOHNSON: Making plans for postwar reconstruction of Europe.

FOWLER: That's right. I had to take various units in that organization and put them together into something called the Enemy Branch. When we got our reports pretty well in hand and done, why, I was taking them over to General [Lucius] Clay. General Eisenhower was the top man, but General Clay was the manager of our zone in Germany.

JOHNSON: So now we're into the occupation period.

FOWLER: In the meantime Roosevelt has passed away, Truman had taken over, and the German armies have surrendered. The Japanese war was still going on. While I was flying over with a small staff, with these reports, on my way to Frankfurt and then to Berlin, the Potsdam

[20]

meeting occurred. You know from your other records what happened at the Potsdam meeting, but it became abundantly clear that as General John Hilldring, who met me in Paris, told me when I arrived there, "You had better take those reports on back home; there isn't going to be a single Germany. The Russians are going to run their zone the way they want to run it, and they're going to take everything that's moveable back [to the Soviet Union]. We can do our zone the way we want to, and maybe we can get the French and the British to cooperate with us and we'll have that." That is the way it worked out.

I went on to Frankfurt and to Berlin and spent about a month there . . .

JOHNSON: In Berlin.

FOWLER: . . . acquainting General William Draper, who was the economic adviser to General Clay, and his staff with these reports.

JOHNSON: But you were not at Potsdam at any time?

FOWLER: Oh, no. The Potsdam meeting had occurred while I was flying over there.

JOHNSON: Well, your reports though, the information that you had been working up, was that used for some of our preparations for the Potsdam conference?

[21]

FOWLER: I don't know whether it was or not.

JOHNSON: They dealt with reparations as well as democratization, and decartelization, breaking up the cartels. Was that part of your planning too?

FOWLER: We didn't get into some of these other aspects. But the reparations were very much a part of our plan. For example, there was a big dispute about reparations and our attitude toward reparations was that we wanted to use their facilities to restore the functioning of their economy rather than take away what was needed for that. I think the only thing we asked for in reparations, as I remember, was Hitler's yacht, or something of that sort.

Well, I had one meeting with our allies while I was in Berlin. It took place in Moscow. I went in one day in early September to tell General Clay goodbye, and he said, "I've got bad news for you." He said, "Ed Pauley, who is our reparations commissioner, is back in the United States and the Russians are demanding a meeting in Moscow. The French and the British are ready to go, and Pauley says that only you and Bill Draper can represent him. You're the only people he will authorize to represent him. So, you've got to go." I said, "Well, General, you know, the war's over and I'm a civilian. I want to get back home and see my

[22]

family and whatnot, but I'll go. But if we don't get anywhere in the first meetings I'm going to come back, come back awful quick."

Well, to make a long story short, we went there, and we had five days. We played our record and they played their record. We did it again, and we were getting nowhere, and all of us: the British delegate, the French delegate, Draper and I, came back. That's been my only five days in Moscow.

JOHNSON: Do you remember what the big hangup was there in Moscow on reparations?

FOWLER: My recollection doesn't take me back that far.

JOHNSON: Of course, the Soviet Union had a case in that much of the country had been destroyed by the Germans, so they felt they had a reason, of course, to take some of their industry back with them.

FOWLER: The essence of their (the Soviet) decision was, I think, just as you put it, to strip it. There also was a bit of punishment involved in it. Our position was that we didn't want these fellows to build up a new military force in a hurry again, and that we wanted to--well, these reports were detailed. I had, for each industry, people from the War Department, people from the Navy Department. The Air Force, of course, was included in the Army at the time. Then I had people

[23]

from industry, and others too. It was a technical, professional type of job.

JOHNSON: So it was a problem of maintaining industrial strength, you might say, of the West Germans?

FOWLER: And restoring economic viability, I'd say.

JOHNSON: Without the military potential.

FOWLER: Without the military potential, yes.

JOHNSON: Of course, this involved breaking up the Krupp empire, and some of those large semi-monopolies, or cartels.

FOWLER: That's right. I don't recall how much. I haven't been over these documents in thirty or forty years, so I don't know what we didn't cover or what we did cover, except that I took it industry by industry, mainly, although there were some political and psychological elements to it. I can remember, one of the taskforces was a group of psychology experts, and their mandate was, "What would you do from a psychological standpoint in dealing with this?" And the answer, I'm shorthanding it, was rather interesting. Talcott Parsons, who was the head of this department at Harvard, got a half a dozen or a dozen of his colleagues around various universities. As I remember

[24]

the thrust of their report--I say I haven't looked at it in 30 years, 40 years--the Germans go back to the time of the Teutonic knights who built these little forts in what is now East Prussia. They were the warriors; they were the Prussians, and they protected the rest of Germany from the Mongols and whatever people were in the flood tide from the east that was coming. The rest of the Germans who were good, peaceable types--farmers, peasants, workmen and whatnot--they allowed the Prussians to be the leaders. And that's the way the German empire ultimately evolved, with these states merging into the empire.

And according to the report, what the Germans really need, to be a constructive force in the world, is to have a sense of security. Therefore, Germany ought to come back and join the family of nations, as it were, as a part of Europe, with the United States in the background so that they would have a sense of security. I'm putting it very clumsily, but that was the essence of it.

Well, the West Germans have pretty well demonstrated that they can be a very effective economic force. As far as I know, they seem to be still peacefully intended. I don't know about the East Germans.

JOHNSON: So when you finished that project, what happened?

[25]

FOWLER: I was through, so I came back home after five days in Moscow and a couple of days in Berlin. I came back home, and closed up the Enemy Branch in the remaining months of October, November, and December. Although Leo Crowley was kind enough to say, "Look, this is going into the State Department along with OWI and some of the other units, and I'll be glad to have you become a key part of the State Department," I said, "No, thank you, I'm getting out."

So on January 1, 1946, I opened my law office in Washington.

JOHNSON: I notice you had Leva, Hawes and Symington.

FOWLER: I had Leva, Hawes and Symington; they were all colleagues of mine in the War Production Board, on the legal side.

JOHNSON: Marx Leva and Stuart Symington?

FOWLER: No, Lloyd Symington, that was Stuart's cousin.

JOHNSON: Hawes.

FOWLER: Alexander Hawes had been another assistant general counsel in the War Production Board.

JOHNSON: I see. Then you apparently served on a legal advisory committee of the National Security Resources Board for a couple of years.

[26]

FOWLER: Yes. That was a casual kind of a thing to do.

JOHNSON: And there was Emergency Powers Act legislation that you helped draft?

FOWLER: And I lectured over at the War College. I was interested as a private citizen in these things, so I got involved in politics. I was a strong supporter of Harry Truman in '48. I was one of ten people who organized something called the Truman-Barkley Straight Ticket Committee in Virginia because the Democratic State Central Committee had met on September 15 and had said, "We are supportive of all the Democratic nominees to the House, and there are three good men nominated for the Presidency, Truman and Dewey and Thurmond, and we take no position."

Howard McGrath, you know, was over at the Democratic National Committee. I went in to see him and I told him we were going to organize this Democratic Truman-Barkley Straight Ticket Committee and any help the National Committee could give us, we would welcome. I got $l,000 from him so that was all we had. We tried to wage a little bit of a campaign, trying to rally all the Democratic officeholders around the state, sending mailings to them and having a few meetings. I had given up on the nation and the state, the commonwealth, but I was going to carry Alexandria

[27]

for him, which was where we were living. So, we made a little deal with the local forces there. We would support their guy for Congress if they'd support Truman on a straight ticket. We carried Alexandria by 14 votes, and Virginia by a much better margin.

JOHNSON: That's something.

Before I follow up on that, how about this National Security Resources Board work that you did?

FOWLER: Very minor, very casual. It was just a way of trying to keep some of us who had been heavily involved in the War Production Board effort that understood stockpiling and . . .

JOHNSON: Was this a response to Cold War concerns too, that we needed to maintain maybe a bit of a mobilization base?

FOWLER: Yes.

JOHNSON: And what you have said about the election of '48, was that the extent of your involvement in that election?

FOWLER: That's right.

JOHNSON: And . . .

FOWLER: Somebody approached me, I've forgotten who, about

[28]

whether I wanted to be rewarded by going on the SEC or something. I said, "No, thank you." I was doing this for purely public reasons and I had no desire to go back into the Government.

JOHNSON: So you stayed in private practice.

FOWLER: I stayed in private practice, yes.

JOHNSON: Until you were enlisted again in what year?

FOWLER: 1951.

JOHNSON: In September 1950 Truman signed the Defense Production Act . . .

FOWLER: The Defense Production Act of 1950 was signed in September, and my friend Manly Fleischmann was the counsel to the National Production Authority. Shortly thereafter, he was appointed as administrator of the National Production Authority, and then became the director of the Defense Production Administration.

JOHNSON: The National Production Authority, was that set up within the Commerce Department?

FOWLER: That was put into the Department of Commerce. It was a group of people, some of whom were from the outside, but initially it was made up of people from the various departments of the Government whom, it was

[29]

felt, had some knowledge and experience that would be useful. Then, we filled it in with what were called "without compensation," WOC type. They were dollar-a-year men by another name. That was not casual; there was a section of the Defense Production Act, which authorized the President, through his delegated people, to take in so-called "without compensation" employees who had special skills, special knowledge, and special abilities that were not readily available within the Civil Service.

JOHNSON: It was expected that their firms or corporations would pay their salaries?

FOWLER: That's right.

JOHNSON: And apparently that was a successful recruiting effort.

FOWLER: In my view you couldn't fight a major war again [without them] that would go from what we were at the outset to a qreatly enlarged scale of effort. Mind you, we had pretty well demobilized. The National Resources Planning Board was very small. Whatever people say, we had, in good faith, pretty well gone the peaceful route. Look, the Defense budget in the fiscal year before the Korean war broke was 12 billion dollars. During the Korean war it went to four times

[30]

that, to $50 billion.

JOHNSON: And remained on a fairly high level ever since.

FOWLER: That's right.

JOHNSON: Yes, I notice in July--this may be before you got back in--but Truman as part of this mobilizing for the Korean war, partial rather than full mobilization, did request a tax increase because he said we should "pay as we go."

FOWLER: That's right.

JOHNSON: Did you agree that we should pay as we go?

FOWLER: Yes, but I had nothing to do with it. That had all been done when I re-entered the service. That policy and that attitude of funding the war as you went along, I think, was more attributable to John Snyder and to the chairman of the Council of Economic Advisors, Leon Keyserling. I don't know whether Charlie Wilson had anything to do with it or not, but I know my friend Manly Fleischmann was too busy getting the tools; he was thinking about machine tools and not about dollars.

JOHNSON: Sure. Well, it was conservatives in Congress, Republicans and Southern Democrats, who reduced the tax proposal that Truman had made. Of course, if you don't get revenues from taxation you have to borrow, so it

[31]

appears the conservatives were more willing to run budget deficits. Is that true during the Korean war?

FOWLER: Well, I can't really give you a judgment on the politics of that particular policy. All I will say is that I agree with President Truman's policy of trying to avoid budget deficits, and in retrospect I thoroughly agree with it.

JOHNSON: You mean you would agree with Truman's policy of higher taxes to pay for more of the cost, rather than borrowing?

FOWLER: Yes.

JOHNSON; We had a terrific debt, of course, from World War II that we were trying to pay off. Truman did have two or three balanced budgets.

FOWLER: He had three balanced budgets.

JOHNSON: More than any President ever since.

FOWLER: That's right. By the way you're talking to the fellow who as Secretary of the Treasury brought in, under Lyndon Johnson, the last surplus in the budget from July 1, 1968 to June 30, 1969, right in the middle of the Vietnam War by a temporary ten percent surtax on personal and corporate income plus a mandatory reduction in non-defense spending of six billion dollars.

[32]

JOHNSON: In July of '51 the Defense Production Act amendments extended the Government's authority to control production, channel materials, and regulate business. But the GNP, you know, did rise. It apparently was up to $327 billion in 1951 and it appears that per capita consumption of civilian goods and services declined only 3 percent from June of '50 to the end of the following year, December of '51. In other words, there wasn't any great reduction in civilian production, but the percentage of GNP that went to the war effort, of course, did more than double, to 14 percent. That's a figure of 14 percent at the end of 1951.

FOWLER: Those figures cloud and cloak a lot that should be noted. For example, we had to institute the same kind of materials control system that we had in World War II, the so-called Controlled Materials Plan, to channel copper, steel, and aluminum, in their various shapes and forms, from civilian use to military use. We had to expand the production facilities in many, many areas. So a good part of what the National Production Authority and the Defense Production Administration were concerned with, was shifting the production mix of the American economy from what it had been, which was very minor in terms of defense production, to a very major defense effort.

[33]

There are reports available. You will find them in the residuum of the Office of Defense Mobilization, which is now something called the Federal Emergency Management Agency; it's the last vestige of the Office of Defense Mobilization. You will find a set of about 60 different historical reports of what we did in steel, what we did in aluminum, what we did in automobiles, what we did in consumer durable goods, what we did in paper and pulp, what we did in a whole series of areas. As I say, there are about 60 historical reports which tell the story that we couldn't cover here today.

JOHNSON: You were appointed Deputy Administrator in September 1951 to Manly Fleischmann. What was your first major assignment, do you recall?

FOWLER: Well, when you're a deputy to anybody, you get everything awful fast, and most of them are the dirty ones. One, that I particularly remember, is that there was something called the Savannah River project. The Savannah River project was the hydrogen bomb. There was a great race on at that time as to who would get the hydrogen bomb first. We knew the Russians had the technical know-how and knowledge and we suspected that they were underway on it. We didn't ever know whether Korea was going to mature into a "WW III," but anyway,

[34]

the Savannah River Project was on the top of everybody's list as something to get done and get done fast. It was bogged down. The construction program was bogged down, and it was behind schedule, and whatnot.

I remember I was to have in the people in the private companies that were responsible for the construction, to have in various people from the agencies that were concerned. One of the things that you had, one of the tools that you had, was a so-called "directive." A directive was something that went from us, the National Production Authority, to X company, saying, "In your production schedule, you have this particular type of equipment, or many types of it; that you have this heat exchanger down on the list, way down, to be delivered to the X company. We are directing you to bring that up and put it on the top of the list." And that was a very harsh thing, you know, to do.

JOHNSON: Without explaining your reasons necessarily.

FOWLER: Even if you explained the reasons of what it was for, it would "discombobulate" the production schedule.

JOHNSON: Sure.

FOWLER: I remember saying to the manager of the project

[35]

after listening to the story of these delays in getting orders filled promptly; he said he didn't have enough labor. I had Joe Keenan, who was a big labor leader at the time; he had worked in the War Production Board. He was a friend of mine. He was working then, I think, in the Defense Production Administration. He was at the meeting. I remember saying to the head man, finally, "How many directives do you think you need?" I don't recall what it was, something like 250 or 300 or 1,000, which we undertook to expedite. Then I remember saying, "How much labor do you need?" Then he would tell us and I would say: "Well, Joe, you've got to go out and recruit this kind of labor and that kind of labor and whatnot, and get it down to where the Savannah River project is underway." This was an expediting meeting; that's what it was.

The more usual meetings were to allocate. We had a quarterly allocation of copper, steel, and aluminum in its various shapes and forms. Each company was in the chain of making war materials, whether it was a subcontractor or a sub-subcontractor, or the prime contractor. Each company would send in what it needed. Then, you had to put all that together, and you found out that if you gave them all that they wanted, you might discombobulate a hell of a lot of what was going on. So you or they, the producing company, then would

[36]

have to cut back on their civilian production and kind of ration things. This was the controlled materials plan. We had it in World War II, as well.

JOHNSON: And you had a sequence you had to be concerned with too?

FOWLER: Yes, each quarter we would make the determinations for the particular industry divisions that were involved. They, in turn, would give to the companies that they were responsible for, how much of their request that could be granted and give them the necessary tickets that they could go and be a part of the allocation process that was universal around the country.

Now, this was the major way to provide an orderly provisioning of a material that was in short supply. Quite often there wasn't enough of it to take care of the military needs and the civilian needs. Therefore, some of the nonessential or less essential civilian needs, you had to wipe out by so-called M Orders. Some of the essential, but not completely essential materials, you had to diminish to some extent, by so-called P Orders. Then, having whittled down the requests that would come, to the ones that were considered essential to civil or military needs, you then had to allocate the crucial materials (steel,

[37]

copper and aluminum) through the Controlled Materials Plan.

JOHNSON: What kind of orders did you call them? Did they have a letter?

FOWLER: They were just allocation orders. I've forgotten what our technical names for them were.

JOHNSON: But these were the essential items.

FOWLER: This happened every quarter. The reason it gets to be a little vague with me now is that I came in in September and by January I was the administrator of the National Production Authority. Manly had said, "You take this hat and I'll just keep the other hat." I called all the economists in that were racking up this quarterly allocation for the fall quarter of 1952. This is the spring of 1952, and we had to do this six months ahead, you see. I called them in with all their sheets of paper and all the recordings, statistical compilations of what had been asked for from the military and the essential civilian sources in Interior and Agriculture and Government and so on. I saw that they looked a little bit puzzled. I said, "What's the problem, gentlemen? Is it 175 percent of what we have, or 150 percent, or 225 percent? What does it look like for the fourth quarter?" They said, "It looks as

[38]

though they are only asking for about 120 percent." I've forgotten what the figure was, but it was something far less than expected. I said, "Well, that means we can get the decontrol instruments out and put them to work. If we have gotten enough done and underway, and with the new supplies that are coming in from the new aluminum plants, the new copper supplies, the new steel supplies, we can pretty well begin to take off these restrictive orders in the fall." By this time, in June I think it was, I had on the other hat, Defense Production Administration, as well as the National Production Authority, so that I could see from both sides--the operating side and the planning side--that the materials problem and the facilities problem had been pretty well licked.

JOHNSON: You're talking about the spring of '52. The big issue at that point, too, was the steel strike and Truman seizing the steel mills.

FOWLER: That's right.

JOHNSON: Of course, Secretary of Commerce Charlie Sawyer got very much involved in that because he became the agent of the Government that was in control.

FOWLER: That's right, operating the steel industry.

JOHNSON: All right, did you get involved in that problem?

[39]

FOWLER: Yes.

JOHNSON: Who was giving Truman advice on, let's say, the crucial nature of steel? In other words, was he told that we don't have that much steel in the pipeline, or stockpiled, and so we can't afford a strike, that that would be threat to national security?

FOWLER: There are various forms and shapes of steel; it's not raw steel, not the ingot. I'm guessing a little bit here, because I was not involved in that. Manly Fleischmann was still the Director of the Defense Production Administration until June. A lot of this discussion you're talking about now had to do with--I've forgotten the calendar there, but I suspect it was in April and May that the negotiations were going on. I had no part in any discussions about whether we should take over the steel industry or not. That had been done some time in the spring, as I recall, because the appeal went to the Supreme Court and it was argued. I know it was all on a fast track. The Supreme Court decision came down early in June.

JOHNSON: Apparently, the advice that Truman received was that it was still a critical problem for the war effort; steel was a critical problem.

FOWLER: I can tell you something about that. The day I was

[40]

sworn in, putting on the additional hat of Defense Production Administrator, I arrived in town at the office and was sworn in, and at noon when the Supreme Court met and handed down their opinion, there it was. The workers in the steel industry went out on strike, and I rang every bell and every button that was in sight to get all the people in from the steel division, you know, the key people, to say, "Now, what is this going to do? What are we going to have to do?" Then we worked out a very, very hard-bitten, tough program to see that the key things that we needed most, this kind of shape of steel or that kind of form of steel, would be given preference so as to minimize the damage from the disruption of the strike. The President was absolutely right. We had to have this steel unless we were going to call to a halt a lot of very, very, basic military production that was in the pipeline.

JOHNSON: I've read somewhere that David Stowe was involved in this chain of information to the White House. Did you deal with anybody in particular at the White House?

FOWLER: John Steelman.

JOHNSON: Okay, you dealt with Steelman, and Steelman advised the President. I mean what was the chain there?

[41]

FOWLER: Dave Stowe, as I recall it, and I'm just guessing here to some extent, was involved with the Department of Labor and with Charlie Sawyer in trying to get the industry, and the labor people, the unions, together and to avoid the strike. After the Supreme Court decision, I'm sure he was jumping through the hoops; sure, the Court has now said that they can go ahead and strike, but how can we get them together to get the thing settled?

JOHNSON: After the Government seized the steel mills, didn't they give a raise to the workers?

FOWLER: That I don't know.

JOHNSON: Charlie Wilson got into this little tiff with Truman.

FOWLER: What the dispute was between him and Truman I've never known.

I can tell you about the only time I got involved in this sort of thing was after I was Director of Defense Mobilization, and I got caught in a situation with President Truman involving the coal strike.

JOHNSON: Well, had you dealt with Truman or met with Truman in this period that we're talking about?

FOWLER: No. I had no relationship with him on this job,

[42]

since my responsibilities were to report to the Director of Defense Mobilization who . . .

JOHNSON: To Charlie . . .

FOWLER: To Charlie Wilson. And after Wilson left, John Steelman acted; he was called "Acting Director" and I reported to him. Then in September, when Steelman asked me if I would take it over for the remaining time of the Truman administration, until January 20, 1953, I agreed I would stay on although I was scheduled to leave everything in September. I was like the little boy who kept being pushed to the front of the room, and there I was. Then I went in to see the boss.

JOHNSON: At that point.

FOWLER: After Steelman had said, "Would you take it," and I said, "I would," then I went in to see him. And then I saw Truman the manager.

JOHNSON: We'll get to that, but first, on the relationship of DPA (Defense Production Administration) with ODM, the Office of Defense Mobilization, the DPA was subordinate to ODM, was it not?

FOWLER: Absolutely.

JOHNSON: How was that relationship? Was there much overlap or was there any friction?

[43]

FOWLER: As far as I am concerned, it was a very satisfactory relationship. Manly Fleischmann had a lot more involvement in that since he'd been there from the beginning, but as far as I was concerned, my meetings with the ODM, as it was constituted when Wilson was there, were very frequent about this, and that and the other thing. And John Steelman was a good friend, and I dealt with him, so I have nothing but the pleasantest of recollections.

JOHNSON: John Steelman, you had been acquainted with him since when?

FOWLER: Well, I really got to know him during this period. I may have met him socially or something before, but it was on the job.

JOHNSON: When you went over to see Truman in the Oval Office, who went with you, or who arranged it?

FOWLER: Well, John arranged it, and I just presented myself.

JOHNSON: So you met one-on-one with President Truman in the Oval Office.

FOWLER: I had agreed to do it, and he was just receiving me, and we had a little talk.

JOHNSON: Did you have a little conversation?

[44]

FOWLER: Oh, yes.

JOHNSON: Do you remember what you talked about?

FOWLER: Well, yes, I remember it quite well, that part of it. I got a picture of a man who had, in my book, a very, very keen managerial sense. He's not thought of as a great manager. He's not esteemed as a great manager, but in my book, he was a great manager. I'll tell you why. He said to me, "Now, Joe," Joe was a nickname; he said, "You know all about this. You've been through it in World War II; you've been through it over here, and you're taking on, of course, a larger assignment. You've got the Office of Price Stabilization, and the Office of Wage Stabilization under you, as well as the things you're mostly involved in, production and supply." He said, "You know how to do the job. I want you to go in there and do the job. Don't feel like you ought to call me and ask me what you ought to do. You go ahead and do it as you think it ought to be done. Give me, every Friday afternoon, a memorandum telling me what are the major things you've done that particular week that you think I ought to be aware of, and tell me what are the things that are on the calendar that are coming up that you think I ought to be aware of."

Now, I don't know where those memoranda are, but

[45]

they ought to be in the White House files.

JOHNSON: Weekly?

FOWLER: These were weekly things, and then, of course, there were the public quarterly reports he was to receive. He said, "If I have anything to ask you about, or to change, or questions or objections, you'll hear from me. But in the meantime, just go ahead and do the job."

JOHNSON: He delegated you the responsibility and the authority.

FOWLER: Yes. Oh, I'd see him at Cabinet meetings. Every time he'd have a Cabinet meeting I'd be there.

JOHNSON: When did you start attending the Cabinet meetings?

FOWLER: Right away.

JOHNSON: September of '52.

FOWLER: Yes, '52.

JOHNSON: And what was your impression of his Cabinet meetings?

FOWLER: Well, I thought they served a useful purpose. I think there are limits to what a Cabinet meeting can do, and his manner of conducting a Cabinet meeting made

[46]

a lot of sense to me. He would come in and give us a little report on several things that he thought were of high importance that we ought to be aware of, that he was involved in, so to speak, so that we could be knowledgeable about them and explain them if they came up, and be informed. Then he would turn to Dean Acheson, who was on his right, and then to Bob Lovett. Then he'd go all around the room, and to me. In the pictures you'll see where we all sat. Each fellow would tell about what were the key things that he was up to, and what he thought his colleagues ought to be aware of, and answer any questions that the President or the other members of the Cabinet would ask.

JOHNSON: Do you remember if Leon Keyserling sat in on any of those meetings?

FOWLER: No.

JOHNSON: The Council of Economic Advisors was not represented in those meetings.

FOWLER: No. Not that I recall.

JOHNSON: So you were kind of giving economic advice.

FOWLER: No, I was not. I was sticking to production and supply. Well, we come to the one time that I got overruled, and that was only one time that I got

[47]

overruled. It had to do with the coal strike.

JOHNSON: Why don't we get into that.

FOWLER: All right.

JOHNSON: What was the issue there?

FOWLER: In October the President asked Charles Sawyer, Secretary of Commerce Sawyer, to lead a mission to Western Europe to examine some of the national economies and come back and report to him how we could convert what was aid to trade. Instead of providing aid to Britain, France, Germany, the Netherlands, Belgium, Italy and Greece, we could make it trade. He suggested--I can't remember whether it was direct or whether it was through John--that I go along with Charlie Sawyer and his group to get a feel of what resources were available in those countries that would be useful as a part of a mobilization base, because the preservation and the augmentation of the mobilization base, from a partial posture to a full posture, was my main concern. It had become my main concern at that time because, as I have told you, the shortages that had existed in late 1950 and through '51, and through the first six months, roughly, of '52, were all pretty well in hand.

Well, what I was concerned about and what he was

[48]

concerned about was how we could move from a partial mobilization to a full mobilization, or how his successor might do that. It was a question of what ought to be preserved and conserved and so on, and what we ought to do to try to keep this mobilization base in a readiness posture indefinitely.

I had recommended that we set up a group of so-called reservists, in effect, the people who had served six months or a year in one of these WOC spots. They were back now in their businesses, but hell, they knew their way to the station, the way to the airport, they knew the ground. They had a certain amount of experience and we wanted to keep them in a readiness posture. I don't have to go into what we ought to do about plants and machinery and equipment and stockpiles--not only stockpiles of materials and whatnot, but tools and machinery that once you stop producing an item, instead of throwing it away, you mothball it and keep it in readiness. All that kind of thing.

So, the mobilization base, keeping an ability to move to a full mobilization, was something that was very much, I felt, my responsibility and I think the President shared that feeling because he wanted me to go around and survey these other countries. Well, I wasn't much concerned with what Secretary Sawyer was

[49]

doing on trade and aid, except that I was a part of the group. My eyes were concerned with what we could do on the mobilization front if the need should arise. I must say, a certain amount of international activity was involved in my responsibilities too, because in certain items that were in very short supply, we not only had to take care of our shortages, we had to try and help some of the other countries, our allies, take care of their shortages, in sulphur and copper and things of that sort. This wasn't too easy to sell on Capital Hill. We had a group that was working with the representatives of the other countries. We didn't reconstitute the old combined boards thing that we had [in World War II], but it was something of an equivalent approach.

It wasn't a big deal, but it was an important thing for the four or five items of which there were world-wide shortages. We wanted our key allies to feel that we were, you know, thinking about them, about them being confronted with a shortage around the world.

So, the mobilization base was very much on our closing agenda, even though he [Truman] was going to be leaving office on January 20th. We didn't know who the new successor was going to be, whether it was going to be Adlai Stevenson or Dwight Eisenhower. We didn't know what his posture would be; we didn't know whether

[50]

he would want to heat up the war in Korea, which was on a kind of a standby basis at that particular point, or whether there would be peace, or whether it would go into a WW III. You know, Berlin was there, NATO was there. This was a lot more than the Korean picture that one had to keep in mind. This has always been called the Korean mobilization, but we were having in our minds West Berlin, and . . .

JOHNSON: Well, didn't we start rearming Western Europe really, when the Korean war started? Of course, NATO was involved. In other words, we were shipping military materiel, not just to Korea, but a lot was going to Western Europe.

FOWLER: Just how much of that was going on I can't tell you, because that was a Defense Department function. How much of the stuff that we were facilitating for the Defense Department to have, or the Army, the Navy, the Air Corps at that time, that was being deployed elsewhere, I really don't know the dimensions of it. Anyway, the mobilization base was a key. So that's what I was doing, going around Western Europe and visiting with the key business elements.

They had a meeting when we were in Frankfurt with about a hundred of the key German manufacturers, and some of them were from West Berlin. It was the first

[51]

time that they had all been gathered together for a meeting of that sort since World War II.

JOHNSON: Well, wasn't that very touchy? Here you're talking to German industrialists, and you're proposing that perhaps they should help with this mobilization base . . .

FOWLER: I was looking them over. Let's put it that way. No, I wasn't making any approaches, but I was trying to learn and get a feel of what they had. You will find reflected in my last quarterly report, if you ever have access to it, some of this. So, while I'm gone the coal union, John L. Lewis and the United Mine Workers, and the coal companies got head-to-head. The Wage Stabilization Board had decided that the request of the United Mine Workers was excessive, and it would break the appropriate standards for wage stabilization. It had, in effect, rejected the proposed agreement between the unions and the coal companies, because it would destabilize other wage arrangements that were coming up.

When I arrived back in New York on the plane, I was met by three or four of my colleagues. They said, "We've got a real mess on." They described the situation, and said, "The rumors are going around Washington"--the way rumors always go around

[52]

Washington--"that the President is going to solve the problem by abolishing Wage and Price Stabilization, so there won't be any ruling on this particular matter between the unions and the operators. We'll finesse the problem that way."

So, I called John Steelman and I said, "John, these rumors have come to me. I've just landed, and this is my business. However the President's going to handle it, I want to have a visit with him about it." This was the first time anything of this sort had ever happened. There never had been any evidence, any time, that what I was doing, somebody else in effect was going to decide it.

So, John called me back a little later that evening and said, "We've set up a meeting tomorrow afternoon." I think it was an afternoon meeting.

Well, I went in the Cabinet room and there was a whole circle of people around the table. I'm sure Leon Keyserling was there, and I think maybe some people from the outside. I couldn't place all of them that were around, but there were Department of Labor people, and the Mediation people--I don't know whether the head of the Mediation Service was there, but the mediator on this case was--and fifteen or twenty others. The President said, "Now, this matter about John L. Lewis and his wage thing is up, and I want to hear from the

[53]

Director of Defense Mobilization. Then I'll hear from all you fellows around the table."

I said, "Well, Mr. President, I know this matter has come up in my absence, and my impression of it is that there are several ways it can be approached. Number one, you could stand behind the ruling of the Office of Wage Stabilization for which I'm directly responsible, two layers down, which also has been approved by the head of the Office of Economic Stabilization, which is, you know, one layer up." I said, "You could approve that; let that order go into effect. You could reverse it, or you could abolish the wage stabilization machinery." I think these are about what I said. And I said, "You've never in your entire career, as a Senator or as Chief Executive, taken a backward step in standing up to the Communist threat around the world. We have no knowledge as to what is ahead of us in the next few months, or what your successor is going to have to do, but I would hate to see him deprived of the tools that he may need to use in taking the course of action that he may think is in the interest of the country. Therefore, I hope that you will approve of the order, to allow the wage stabilization order to go into effect."

Well, he went around the table and everybody had their pitch. Of course, nobody supported me. Well, I

[54]

had said to him, "Mr. President, let me reassure you on one point. We've got enough coal above ground--I've had this checked out--so that we can take a strike." The election had occurred by the way, while I was gone, while I was on the boat going over, so this was in mid-November. I said, "You can turn it over to your successor, and the country won't be in a terrible situation because of a lack of coal."

Well, we went around the room, and when we finished he said, "Well, I don't want to turn over the country to my successor with a big coal strike on. I've decided to give John L. Lewis his wage increase." I don't know whether he said John L. Lewis, or the United Mine Workers, but they would have their wage increase.

I got up again, and I said, "Mr. President, that's your decision. We will try to do our very best to live with it and to make it work and to maintain the wage stabilization program and the price stabilization program (which was related to it) to the very best of our ability until the time comes to turn it over to the new administration. But," I said, "tomorrow morning when the news goes out on the wires, and the press comes to me and asks me if I recommended your decision, or agreed with it, I hope you don't expect me to stultify myself." I didn't know whether he would throw

[55]

me out through the window or out of the room or say, "Well, then give me your resignation," or what, you know.

He didn't hesitate a minute. He turned to Charlie Murphy and he said, "That's fair." He said, "Charlie, when you issue this tomorrow, you say that over the contrary decision of the Director of Wage Stabilization, and the Director of Economic Stabilization, and the Director of the Office of Defense Mobilization, that I have decided to grant the increase." And that's the way, I think you'll find, the thing came out. So I was off the hook, and he was taking the rap.

Well, that's the end of the story until after the last Cabinet meeting, or about the time of the last Cabinet meeting, in January 1953. I went to have my little farewell visit with him and to thank him for my picture and the nice letter he had sent, and all that sort of thing. He looked at me and grinned; he said, "Joe, it's too bad we didn't get together earlier." He said, "I can do business with a fellow when I'm the boss and I take a decision, and he says, 'Well, I don't agree with you, but I'll do my very damn best I can to live with it, and carry it out.'" He said, "That's the kind of guy I can work with." Or words to that effect. You know the way he talked.

[56]

Well, I said to everybody, "He was a great boss and he was a great manager." That's the only time that I ever recall--there may be others, but they didn't reach my knowledge--where I was, you know, finessed.

JOHNSON: He certainly made it so that you could have your opinion, just that when he made his decision he expected help to carry it out, but he didn't expect you to lie to people and say that you agreed with it when you didn't.

FOWLER: That's exactly it.

Well, we had a very pleasant relationship after he left Washington. I can't tell you how many times I saw him when he came back here. I remember he was very thoughtful. He wrote a letter once to my mother, who was an old lady in her eighties, about me. I think he was back here for some event, and the old group would gather around and have a dinner and whatnot. I mentioned to him I had to leave to go down and see my mother; she was eighty-some. He said, "Give me her address," and sure enough, he sent her a very nice letter.

JOHNSON: Thoughtful. I notice, backing up a little bit, in July of '52, that you got a compliment from Secretary [Charles] Brannan. He appreciated the help of the Defense Production Administration in meeting what he

[57]

called a "tinplate crisis"--apparently referring to the canning of foods.

FOWLER: There were about thirty of those crises a day.

JOHNSON: Did DPA merge with ODM, or what happened to DPA?

FOWLER: No. DPA was right there until the finish. When I left it was still functioning.

JOHNSON: Who took over when you left?

FOWLER: Well, I guess that's an interesting story I ought to tell you. I had let it be known to the press weeks prior to the Inauguration, shortly after I came back, that I would be retiring as of January 20th. My duties would be up. I didn't want any question about whether Eisenhower wanted me to stay or whether he didn't want me to stay. I was out. I kept waiting for somebody to be named, and nobody was ever named. Finally, it got closer and closer and I began to feel kind of a concern. I was going to walk out on January 20th, and I was concerned that whoever came in wouldn't know the picture and there would be a lot of things pending that he ought to be aware of.

So, about two or three days before the Inauguration--I still had no word from anybody that there would be a successor--I started writing kind of a last will and testament "to whom it may concern,"

[58]

listing the various things and whatnot coming up, the kind of things that I would have said to him had he come in to visit me. I finished it up about 2:30 in the morning of January 20th and then I got up and I went to the Inauguration. Then I went over to Dean Acheson's where Dean was having a luncheon for the President to say good-bye. I found out--I don't know whether it was that afternoon or the next day or when it was--that one of my two deputies, Arthur Flemming, had been named Director of Defense Mobilization.

JOHNSON: What was the relationship of the DPA to the Commerce Department?

FOWLER: DPA was independent; it was separate. The National Production Authority was in the Commerce Department. DPA was recruited and put together as a separate temporary agency, just as the NPA was set up more for administrative reasons. I retired as Director of the NPA, National Production Authority, when I took over the ODM.

JOHNSON: What happened to the NPA? Was it dissolved?

FOWLER: Oh, it continued. It continued on as did DPA.

JOHNSON: They continued on, but when you left NPA, who took your place as its director?

[59]

FOWLER: It was, the name escapes me now [R.A. McDonald]. But he was my choice to run that, and Charlie Sawyer's. I should say this about Charles Sawyer. While I was the administrator of NPA, I made it my business to go and try to keep Secretary Sawyer fully informed, just as I did Manly, about what was going on. This wasn't something that was put on me, but it was something that I was glad to do because Sawyer had been very helpful, and quite often I would ask him for his reactions and advice because I found Charlie Sawyer a very wise and very constructive person.

JOHNSON: Did you report through Manly Fleischmann to Sawyer, or did you report to both of them, kind of parallel?

FOWLER: Reported to both of them.

JOHNSON: I think Sawyer wasn't especially pleased at taking over the steel mills. He was somewhat conservative, I suppose, compared to most members of the Cabinet, wasn't he?.

FOWLER: Oh yes.

JOHNSON: We have his papers. In fact, I processed part of the collection.

FOWLER: I saw that you had them.

[60]

JOHNSON: As soon as you became Director of ODM, you started attending the National Security Council meetings. Was this an interesting experience and anything special?

FOWLER: Well, of course, it was interesting. I don't remember very much about it. I never kept notes. I didn't believe in that.

JOHNSON: Didn't keep a diary.

FOWLER: I'll tell you one story. Did anybody every tell you about the last Cabinet meeting?

JOHNSON: I haven't heard it.

FOWLER: Well, we went through this usual routine that I described. The President came in, and he said, "I have a couple of announcements to make." He said, "One, there is a picture, an autographed picture of me, which is very modest, out waiting for each one of you to take away. It's addressed to you and you can take it away if you want to," and so on. And he said, "My second announcement is, I hope that nobody around this table writes their memoirs until at least a year is passed."

That's all he said. He turned to Dean Acheson, and he went around the room and Bob Lovett always had a few funny things to say. Finally, he got around to the end of the room and Charlie Sawyer happened to be the last man in the circle. Charlie said, "In the light of

[61]

what the President said at the opening of the meeting, my closing comments will be to tell a story about the four men of the cloth who were on a train from a small town in Illinois, going into Chicago. It was a winter day and it was warm in the car and they were all sitting together at the end, and they were moved to talk. The Methodist minister confessed that he was a very sinful man. Occasionally when he went into Chicago, he would go to the tracks and bet on the bangtails. And they all comforted him and said, 'Well, that's bad, that's wicked, you shouldn't do it, but I'm sure you'll be forgiven.' And the rector was moved to confession; he allowed as to how he had too much of a taste for good bourbon whiskey and so occasionally he'd imbibe too much. And they all comforted him. The priest spoke up and said, 'I too am a sinful man and on occasion I look at female members of my parish and my thoughts are not what they should be.' And the rabbi had been sitting over in the corner looking out the window not saying a word. All eyes turned on him and he said, 'Well, now, I too am a sinful man, and my great sin is gossip, and I can't wait to get back home.'" And that closed the meeting as I recall it.

So, I didn't write papers or books, and haven't done it to this day.

JOHNSON: Eben Ayers did keep a diary. Eben Ayers was

[62]

assistant to the press secretary, and his diary came as somewhat of a surprise to some. Of course, Stimson certainly had a diary that is very well known. [James V.] Forrestal kept a diary.

FOWLER: Yes, a lot of them did. Well, to tell you the honest truth, I faced up to this. I realized that some of the things, even in this period, would be of great interest. But I was so damn busy working, you know, and getting ready for hearings and all that sort of thing, that come 12 or l:00 o'clock when I'd close a briefcase at home, I didn't have time to sit down and recall what I had said to so and so, and what he had said to me, and who I had sat by at dinner, or whatever anyone said at the Cabinet meeting, anything of that sort. I'm not critical of people that do. I just tell you, I didn't do it because I had other things to do.

JOHNSON; Now, fortunately Dean Acheson had these "memos of conversation." These were business meetings, not personal, but every time he met with somebody, oftentimes foreign officials, he would write or dictate a memo of the event.

FOWLER: Oh, when I was in the Treasury, every time whenever a foreign minister, finance minister, or official would come in, I had what you call a "note taker." That's what they called them in the State Department. I'd

[63]

have a note taker in to take notes.

JOHNSON: Did those end up in the Archives, the National Archives?

FOWLER: I don't know where they are. I guess they're either in the Treasury archives or in the Johnson [Library] archives.

JOHNSON: We have an oral history transcript with Shaw Livermore. Do you remember him?

FOWLER: Vaguely remember the name.

JOHNSON: Well, he described a meeting with the National Security Council in late September that you couldn't attend so you delegated him to go and he was surprised to see Acheson and Lovett show up, and then President Truman. The business part was short, but it was the first time that he had met Harry Truman. He felt that Truman used the NSC effectively, but that later Presidents tended to ignore the National Security Council. What's your recollections of Truman's attendance at the NSC meetings?

FOWLER: Sitting here today, I don't remember the meetings all that well. I only remember one, and that I think was the last one I attended. Usually, I tried to follow both while I was in the Treasury. I attended

[64]

National Security Council meetings at President Johnson's invitation, although I wasn't a member of the Council, and several with Kennedy when Doug Dillon would be away. But I followed the practice of not getting into anything that wasn't my business. At a Security Council meeting, there wasn't much talk about a shortage of this or a shortage of that, or what are we doing about the controlled materials plan, or whatnot. I don't think most of the fellows, you know, had that much awareness of it.

I recall the last meeting--I think it was the last meeting of the Council under President Truman. One question came up that I felt I had to say something about. The Department of Justice was about to bring an antitrust suit, a criminal antitrust suit, against many of the leading oil companies and their chief executives. It had to do with Arabian oil, or Middle East oil; that was what was involved--what they were doing out there and dealing with Middle East oil. The real issue was whether it should be a civil antitrust suit or a criminal antitrust suit. I happened to go to that meeting and that was on the agenda, and this was the issue that emerged from the discussion. I and several others at the meeting felt that when you call somebody a criminal in the Middle East it means somebody really very, very bad. A criminal antitrust

[65]

suit can be on a suspicion of price arrangements, or some kind of a business deal that is thought to be a restraint of trade, but it's arguable as to whether it is or not. I thought, and there were others too, who felt, that it would greatly damage the ability of our oil companies to provide the oil that we needed to have supplied at that particular time, because we still depended on foreign oil and many of our allies did. If, suddenly, something should happen, like a criminal antitrust suit, that might disable the oil industry, you know, that would reduce or inhibit that source of supply of oil at that time, which was very important and basic and fundamental to our activities both military and civilian, it was the wrong approach. I think that point of view was expressed, as I say, around the table. There were several others. Of course, the Department of Justice had its position. They wanted to go forward with it. My recollection is that the President decided that it should be a civil suit.

JOHNSON: This incident that had been mentioned about the wage increase for the coal miners has been commented upon, in an oral history interview, by David Cole, (Transcript of Oral History Interview with David Cole, Truman Library, pp. 39-41) Director of the Federal Mediation Conciliation Service.

[66]

According to his recollections, it was Thanksgiving eve of '52 when President Truman called together Roger Putnam (his Economic Stabilization Director), you, John Steelman, David Cole and David Stowe to discuss a dispute over this wage settlement between John L. Lewis and the coal industry. It apparently involved only something like six cents an hour, and Cole says that you had very little to say; that's his recollection. He says that Truman sided with him (Cole) on agreeing to the 6 cent increase.

FOWLER: I won't dispute his recollection, except he's very far off about what I had to say.

JOHNSON: What did you think of Roger Putnam's effectiveness as Stabilization Director?

FOWLER: Well, I worked with him from mid-September until he left, and as far as I'm concerned he was effective. He was workmanlike, an able executive, with a business background, by and large. I would give him a very favorable rating.

JOHNSON: And that was one of his most difficult jobs?

FOWLER: One of the most difficult ones. He had to deal with prices and wages. Archibald Cox was the Wage Stabilizer. There was a Wage Stabilizer and a Price Stabilizer and they both reported to Putnam, who was

[67]

the Economic Stabilizer [Director, Economic Stabilization Agency], because of the inter-relationship between movements in wages and prices. And then Putnam reported to me.

JOHNSON: There was a Congressional Joint Committee on Defense Production under Senator [Burnet R.] Maybank, and Vice-Chairman, Representative [Paul] Brown. Did you have to coordinate with them?

FOWLER: Oh, yes. Went up before them many times. It was a very good, very desirable arrangement. We could have spent every day up on Capitol Hill appearing before committees, and very wisely the Congress set up a Joint Committee on Defense Production so that all of the complaints or questions, or concerns, that arose about our operations, were filtered from the various elements in the Congress to the Joint Committee on Defense Production. So they were our Congressional leg. That's what a fellow like Bill Bennett needs to have now.

JOHNSON: Wasn't that sort of a successor to the Truman Committee? It was looking into defense production.

FOWLER: Yes. Only this was Senate and House.

JOHNSON: Yes, a joint committee. That was a good arrangement?

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FOWLER: Absolutely.

JOHNSON: In one of your last memos to the President, on January 9, 1953, you submitted a draft bill to amend and extend the Defense Production Act, which I think you've already mentioned.

FOWLER: Yes.

JOHNSON: One point you noted was that authority for the Federal Government to construct industrial facilities to maintain productive capacity essential to the mobilization base had been denied by Congress twice. Congress insisted on private ownership, and you said, "I am convinced certain specialized needs cannot be met through the machinery of incentives to private industry, and that we should ask again for this Government authority within appropriate limits." Do you recall what happened to this recommendation?

FOWLER: No.

JOHNSON: Probably the Eisenhower people would have leaned more toward letting private industry set the agenda?

FOWLER: I really don't know. When I left on January 20, I left.

JOHNSON: And the Chairman of the Advisory Committee on Production Equipment also recommended that, in his

[69]

words, "production capacity be substituted for the stockpiling of military end items to the greatest extent practicable."

FOWLER: Yes, that was a very special committee that was part of this mobilization base concept; a man named [Harold S.] Vance, who was head of Studebaker Corporation at that time, was the chairman of it. This committee addressed itself to what were the various measures that should be adopted to assure the maintenance of an adequate mobilization base. This is what this question of Government facilities pertained to, because when the shooting is going on you can ask companies to do things, but when it's over, and you say, "We want you to get a tax amortization certificate and build a facility and mothball it and have it idle," so on and so on, people aren't going to respond to that. If you're going to get it done and done right, properly maintained, there is a place for Government-owned facilities. In our mobilization base today, there is a place for Government-owned facilities. So I would stand behind that right to the end.

JOHNSON: Yes, in fact, that was done, wasn't it. Production lines were set up and set aside for standby, for emergency use, were they not?

FOWLER: It's my impression that some of it was done, but

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also my impression is that the whole concept of maintaining an adequate mobilization base gradually deteriorated under both the Eisenhower administration and the Kennedy administration. Let me just say, today we do not have an adequate mobilization base. We are geared today to fight the next war with what we have when the war begins, by and large. It's a matter of great regret, great concern, to me. There is still the Industrial College of the Armed Services which is doing the studies, but it's only been in the last few years, under the Reagan administration, that there's been a couple of key people over in the Defense Department that have revived the notion that we ought to pay some attention to our mobilization base.

JOHNSON: A reserve capacity to produce, in short order.

FOWLER: There are a lot of things, for example, today that are being produced in small quantities for some purpose that might be useful for a lot more, if you had a total war.

JOHNSON: In spite of the huge spending on the Defense Department, we're still not getting this mobilization, this reserve production capacity, you're saying?

FOWLER: That's right. That's my judgment, sitting, you know, off a hundred miles away from what's going on.

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I'm making talks about it from time to time. I made a talk over at the Industrial College of the Armed Services a couple of years ago, you know, encouraging them and urging them [to see] that more attention be paid to the mobilization base.

JOHNSON: Well, the arsenal system in the Army does serve this purpose to some extent.

FOWLER: That's an example.

JOHNSON: You see, I was historian of the Army Weapons Command from '57 to '63, and I remember there was some information about the mobilization base.

Again in January of '53 you mentioned in a memo to Truman a special expansion program to create additional capacity to build "elephant tools" by a combination of private and public funds.

FOWLER: Yes, big things. Normally you wouldn't get them done in the private sector, even for automobile production, things of that sort. They are special purpose, heavy machine tools; that's as close as I can come to it.

JOHNSON: You're talking about them being mothballed until they need to be used, and trying to get them to see that as a cost-effective or productive thing to do. That was not an easy thing to do.

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FOWLER: That's right.

JOHNSON: There is the military-industrial complex that Eisenhower talked about. Well, with the Korean war, American industry, let's say basic industry, and the Defense Department did have to work very closely together.

FOWLER: Very closely together.

JOHNSON: After the war was over, defense spending might have sagged a little bit but it found a new plateau.

FOWLER: We adopted the policy at that time, as I viewed it from the outside world, of maintaining a force in being that would be adequate to take care of the situation, having in mind that the atomic bomb would be the decisive factor. In a shorthand way, the feeling was spread around that the war would be over in two weeks, or two months at the most, and therefore, you had to fight with what you had when the guns started. You didn't have to worry about the kind of massive organization of the whole economy, the way we did in World War I when we got there about the time it was over, and the way we did in World War II when Franklin Roosevelt said we need a hundred thousand planes and everybody thought, "Oh, my God, he's nuts; he's bonkers," and whatnot. But we did it, you see. People

[73]

thought you wouldn't have that sort of a war again.

I don't know where we are today on this issue, but the question may come up again to some extent. If we reduce our conventional forces, as we may in terms of these negotiations that are going on, it would be a lot easier, as I look at it, for the Russians to build up fast, and move into the West.

I'm sure they think we can move a lot faster than they can because we've got a lot better production, but it's on this side of the Atlantic, and it doesn't exist. If you've ever tried to get all of the machine tools--anybody that's ever been in World War II in our business, or in the Korean War, has gotten machine tools engraved on their hearts, because on these special purpose machine tools, it takes eighteen months to twenty-seven months lead time to get them designed, and get them produced in quantity, to get it done.

So, let me put it this way. At the time the Korean War ended, the mobilization base concept was a very meaningful thing. If you wanted to rely entirely on the nuclear weapon, then it's another story.

JOHNSON: Well, do you think the erosion of this mobilization base resulted from the "more bang for a buck" that Wilson, the other Charlie Wilson, had as a strategy?

[74]

FOWLER: An Air Force strategy.

JOHNSON: It would be a quick war, and forget about getting into production because the war would be over before you could produce. In other words, it would be non-conventional war and that's . . .

FOWLER: That's what you prepare for. So when Vietnam came along, we had to reconstruct a whole new approach. In the Treasury, we just had to finance it; I didn't have to do anything about it, so I'm not going to pose as an expert. But my impression is that smart weapons and all the conventional aids to conventional warfare had to be developed and designed, particularly for jungle warfare during the early sixties.

JOHNSON: We were not expecting, were we, to get into that kind of warfare and we weren't that well prepared for that kind of warfare? Of course, there are other reasons too why we had such a terrible problem with that.

FOWLER: Yes.

JOHNSON: Okay, just to quickly summarize your post-Truman career. You left ODM when Truman left the White House. You went back into private practice?

FOWLER: Yes.

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JOHNSON: And you were in private practice until when?

FOWLER: Until 1961.

JOHNSON: Kennedy came into the White House, and then somebody talked you into coming back into Government, or did you volunteer?

FOWLER: Douglas Dillon, the Secretary of the Treasury.

JOHNSON: Douglas Dillon talked you into coming back . . .

FOWLER: He was a Republican serving in a Democratic administration, and I was a Democrat. I had been president of the National Democratic Club here, and I had been a member of a key committee, in the National Committee . . .

JOHNSON: The National Democratic Committee? You were involved in the DNC?

FOWLER: Yes, in the late '50s. I never ran for office. But I was a partisan Democrat. I haven't been in recent years; I have been a bipartisan Democrat in recent years.

JOHNSON: A "pay as we go" Democrat maybe.

FOWLER: "Pay as you go," and a strong defense Democrat. Whatever you want to call it. But, anyway, Douglas, who was a friend, said, "Here I am a Republican,

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serving in the Kennedy administration and I obviously need somebody who knows the Hill and knows Washington and has Democratic credentials. Jack Kennedy and I have decided you're our first and only choice. You've got to do it for a couple of years and help me out," you know, the usual thing. I came back in for two years, which extended into three and a half and . . .

JOHNSON: You were Under Secretary of the Treasury.

FOWLER: The Under Secretary, yes.

JOHNSON: And then after LBJ took over as President . . .

FOWLER: He called me back to be Secretary on April l, 1965, and I served until December 20, 1968 when he knew I had to go back and start making bread for the family. I had a top-flight Deputy Secretary that he knew very well and he said, "Well, I'll let you go thirty days early."

JOHNSON: Who was it then that succeeded you?

FOWLER: Joe Barr, who was my Deputy Secretary.

JOHNSON: And then have you been in private practice?

FOWLER: I've been in the investment banking business in New York since January 2nd, 1969. I retired as a general partner of Goldman Sachs in 1980, and have stayed on

[77]

there at the request of the two co-chairmen as chairman of Goldman Sachs International. I was guiding the firm in developing its international business basically. So I stayed on parttime four years. Now, I'm fully retired, and am only a limited partner. I have some of my funds in the firm, which is an advantage. And we have an international advisory board. I started that, and I'm still a member of it. We meet four times a year.

JOHNSON: So you do a lot of traveling to Europe and other places.

FOWLER: During my Goldman Sachs days I was about two and a half to three months of the year out of the country, either in Western Europe, or the Far East, and occasionally in Latin America, setting up our offices and making our contacts and arrangements, and becoming international investment bankers in a big way.

JOHNSON: You weren't involved in the Point IV programs?

FOWLER: No. Well, as Secretary of the Treasury you are automatically--although your name is sent up and you're confirmed--assigned as U.S. Governor of the World Bank, the U.S. Governor of the International Monetary Fund, the U.S. Governor of the Inter-American Development Bank, and the U.S. Governor of the Asian Development

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Bank which LBJ set up during my tenure. Now we're also members of the African Development Bank. In the Treasury job more than half of your time is in international things of various shapes and forms and sizes. It involves international economic and financial cooperation and coordination.

JOHNSON: Just a final question, I suppose, concerning Truman's interest in balancing the budget. He was very strongly interested in it. Of course, he would unbalance it for something of higher priority, but what was your opinion of Truman in this regard, as compared to this stereotype of spend and tax? There is a stereotype of the "tax and spend Democrat," who supposedly doesn't care about budget deficits. That doesn't apply to Harry Truman, does it?

FOWLER: He would have never been in that camp.

JOHNSON: And Lyndon Johnson, when he was President, there was a balanced budget.

FOWLER: The last year, July 1, 1968 to June 30, 1969, there was a surplus in the budget. That's a long story, but the basis of it is that he tried in '66 to get various increases in revenues. The advice that he got, if you read in The Vantage Point, his chapter in The Vantage Point, was that he could not get a tax increase during

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l966. In January 1967, it was clear by that time that there were pressures. As a matter of fact, he had to suspend the investment tax credit in September of 1966, and reduce some of the civilian programs and hold down on Government agency borrowing from the market. He recognized during the latter part of '66 that we had to have more revenue.

So, in January of '67, he asked for a 7 percent surcharge increase of both personal and corporate income taxes, across-the-board.

Really, all during the winter and spring of '67, because of the suspension of the investment tax credit and something of a decline of industrial building and so forth, automobile production was flat, housing was down, and it looked as though we might be going to have another recession. So he put off pressing the surtax until August of '67. In August of '67 it was clear that we were not going to have a recession, that it was just a kind of a pause, and that growth was continuing, Vietnam expenditures were going up, but we were going to have a substantial budget deficit in the fiscal year that began July 1, 1967.

So in August of '67 he went in with everything he had for a temporary l0 percent surcharge. He had practically everybody in the House on the Democratic side over for breakfast in a series of about six or

[80]

eight breakfasts.

There was a conflict, however, between the Ways and Means Committee and the Appropriations Committee, and Johnson was not for reducing the civilian expenditures. He was for a pure but temporary tax increase. The Ways and Means Committee--Wilbur Mills and Johnnie [John W.] Byrnes were the chairman and the ranking minority member--were not going to go for a tax increase without a reduction in expenditures. So, month after month, I went up for hearings three separate times, and I'd come back and tell the President, you know, "We are not going to get this unless we take a reduction in expenditures." The House Appropriations Committee was saying it's not their business to tell us what we've got to do; in effect, they are saying, "We authorize the spending, and it's their business to raise the funds either by borrowing or taxation." I finally didn't get that resolved until March, and I didn't get it resolved on the House side. I got it resolved over on the Senate side.

I got a little excise tax extender passed by the House and sent over to the Senate for hearing before the Senate Finance Committee. I was asked a question in hearings by a Republican Senator who said, "As a bipartisan measure, a Democratic Senator and I would like to ask you how you would feel about putting your

[81]

10 percent surcharge that you've been trying for seven months to get from the House, as an amendment to this bill, adding that 10 percent surcharge, and a six billion dollar mandatory reduction in civilian expenditures in the budget that came up to us just a couple of months ago."

Well, you can imagine the embarrassment of my situation. So I won't hold this very much longer, but I'll tell you, I answered with a story, which ended up with the saying, "I don't know what the motion is, your honor," it's a lawyer story, "but whatever it is, I'm for it." LBJ tried to get it down to four billion, but they wouldn't give, so finally he went along and it was passed in June 1968. That brought a $25 billion deficit in the fiscal year ending June 30, 1968, down to a $2 billion surplus in the fiscal year July 1, 1968-June 30, 1969, and that's the last surplus we've had in the Federal budget.

JOHNSON: You don't subscribe to the Laffer curve then, that if you reduce taxes that somehow this would end up increasing Government revenues?

FOWLER: Well, it depends upon what you do on expenditures. If you reduce taxes, you'll get more revenue, but if somebody is there spending that additional revenue, you're not going to get your budget balanced.

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JOHNSON: But you don't necessarily get more revenue for the Government by reducing taxes, do you?

FOWLER: Every time you do. You get more growth.

JOHNSON: But you're talking about a tax increase, a 10 percent surcharge.

FOWLER: It happened with Andrew Mellon, and it happened with the Kennedy-Johnson tax bill, in 1963.

JOHNSON: Is it happening now?

FOWLER: Look, we're getting a huge amount of revenue, increased revenue, every year, but the increases in expenditures are, you know, exceeding the amount of the revenue of the country.

No, Laffer is wrong in a sense that he should have conditioned what he said in that you'll soon have a budget balance, provided you don't spend more in the meantime. He didn't say that, "providing you don't spend more."

JOHNSON: That's a very important qualification.

FOWLER: A very important qualification.

JOHNSON: Well, I want to thank you very much for your time and all this information.

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


List of Subjects Discussed

    Acheson, Dean, 46, 58, 60, 62-63
    Ayers, Eban, 61

    Brown, Paul, 67

    Clay, Lucius, 19-21
    Coal Dispute – Management/Labor, 47, 51-54, 65-66
    Cohen, Benjamin, 7
    Cole, David, 65-66
    Congressional Joint Committee on Defense Production, 67
    Corcoran, Tommy, 7
    Cox, Archibald, 66-67
    Crowley, Leo, 18, 29
    Council of Economic Advisors, 30

    Defense Production Act, 28-29, 32, 68
    Defense Production Administration, 28, 32, 35-40, 42, 57-58
    Dillon, Douglas, 75
    “dollar a year” men, 13, 29
    Draper, William, 20-22

    Eisenhower, Dwight D., 19

    Foreign Economic Administration, 19
    Fleischmann, Manly, 28, 30, 33, 39, 43, 59
    Flemming, Arthur, 58
    Fly, James Lawrence, 6
    Federal Emergency Management Agency, 33

    Goldman Sachs International, 76-77

    Hawes, Alexander, 25
    Hilldring, John, 20

    Johnson, Lyndon B., 31, 78-82

    Keenan, Joe, 35
    Keyserling, Leon, 30, 46, 52,
    Korean War, 29-30, 32, 52, 53

    LaFollette, Robert, 9, 10
    Lewis, John L., 51-52, 54
    Livermore, Shaw, 63
    Lovett, Bob, 46, 60, 63

    Maybank, Burnet R., 67
    McGrath, Howard, 26
    Mission for Economic Affairs, 16-17
    Mobilization, 48-50, 69-73
    Morgenthau, Henry, 18
    Murphy, Charles, 55

    National Production Authority, 28, 32, 34, 37, 38, 58
    National Resource Planning Board, 29
    National Security Council, 60, 63, 64-65

    O’Brian, John Lord, 12
    Office of Defense Mobilization, 33, 42-43, 48-49, 53, 68-74
    Office of Production Management, 12, 42
    Oil, Middle East, 64-65

    Parsons, Talcott, 23
    Pauley, Ed, 21
    Potsdam Conference, 20
    Putnam, Roger, 66

    Reconstruction Finance Corporation, 5-6
    Reconstruction of Germany, 18, 21, 22-24
    Reed, Stanley, 5
    Reform of Anglo-American Legal Procedures, 3-4
    Roosevelt, F.D., 5, 11, 13, 18-19

    Saint Lawrence Seaway Project, 10-11
    Savannah River Project, 33-34
    Sawyer, Charles, 38, 41, 47-48, 59, 60-61
    Senate Civil Liberties Committee, 9
    Snyder, John, 30
    Steel Strike, 39, 40
    Steelman, John, 40, 42-43, 52, 66
    Stimson, Henry, 18, 62
    Stowe, David, 40-41, 66
    Supreme Court Decisions:

      Public Utility Holding Company Act, 7
      TVA, 6-8, 12
    Symington, Lloyd, 25

    Tennessee Valley Authority, 6-8, 12
    Truman Investigating Committee, 13-14, 16
    Truman, Harry S.: 10, 13-14, 19, 26-27, 30, 31, 39, 41-46, 52, 55- 56, 60-61, 63, 71, 78

    United Mine Workers, 51

    Vance, Harold S., 69

    Wage Stabilization Board, 51
    War Production Board, 12-13, 15, 17, 25, 27, 35
    Wilson, Charlie, 30, 41-43, 73

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