Harry S. Truman Presidential Library & Museum


Oral History Interview with
Leon H. Keyserling

Member of legal staff, Agricultural Adjustment Admin., 1933. Secretary and legislative assistant to Sen. Robert F. Wagner (New York), 1933-37. Gen. counsel, U.S. Housing Authority, 1937-38; deputy administrator and gen. counsel, 1938-42; acting administrator, 1941-42. Acting commissioner, Federal Public Housing Authority, 1942. Gen. counsel, National Housing Agency, 1942-46. Vice chairman President's Council of Economic Advisers, 1946-50; chairman, 1950-53.

Washington, D. C.
May 3, 1971
by Jerry N. Hess

[Notices and Restrictions | Interview Transcript | Additional Keyserling Oral History Transcripts]


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 It may not be published in full except by permission of the Harry S. Truman Library.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 January, 1975
Harry S. Truman Library
Independence, Missouri

[Top of the Page | Notices and Restrictions | Interview Transcript | Additional Keyserling Oral History Transcripts]



Oral History Interview with
Leon H. Keyserling

Washington, D. C.
May 3, 1971
by Jerry N. Hess

[1]

HESS: To begin this morning, Mr. Keyserling, will you give me a little of your personal background? Where were you born, where were you educated? Tell me a little about yourself?

KEYSERLING: I was born in Charleston, South Carolina, in January of 1908, but I never lived there, and I was just in the hospital there. The first eight years of my life were spent on St. Helena Island, which is a sea island off the coast of South Carolina, the southern part. There were ten thousand Negroes living on the island at the time and five or six white families.

After spending my first eight years there during which I hardly went to school as there were none, but was educated at home, we moved over to the metropolis of Beaufort across the river, which had two thousand people, about half whites and half Negroes. I went from the

[2]

fourth grade through high school there, graduating in 1924.

My father was very active in a wide variety of enterprises. In the 1890s he had helped to reintroduce sea island cotton in South Carolina, which had been grown there before the War Between the States but had been abandoned. He was very active in that; he was very active in truck farming, growing thousands of acres. He was president of the South Carolina Produce Association, which were the largest shippers of vegetables in the Carolinas, and he also was the head of a company that ran a chain of general merchandise stores and a wholesale business on the various islands, and he was the head of an ice manufacturing company.

Beginning in 1920 with the great decline in commodity prices, especially first cotton, the farm depression really set in there around 1922, and continued without abatement until after, or the beginning of World War II. So he, like most of the other people there, were practically completely liquidated, but then had started over again and had made a fair comeback. He was very interested in public affairs. He served as a member of the city government; he served during his last years as chairman of the Beaufort County Welfare Board; and after he was

[3]

seventy he retired from business and gave most of his time until his death at the age of eighty-four to public causes in the United States, especially in his part of the country; but also following the advent of Mr. Hitler to the problem of Jewish refugees and all of the causes that related to the establishment of Israel. Actually, he died instantaneously at the age of eighty-four while making the third of three speeches in New York City on behalf of the United Jewish Appeal, at which time I got a wonderful letter from President Truman.

The only reason I mention this is that I got a very early introduction into public service and the public interest, and I always said that I learned more from my father than from anybody else about what I call social responsibility. And the man I learned most from about courage in public office was Senator Robert F. Wagner; and the man I got the most from on the score of intellectual integrity was Professor Rexford G. Tugwell, and I'll come back to him in other connections because he was so active in the New Deal.

My mother was also very active. She was vice president of the South Carolina Parent-Teacher's Association, very active in all types of civic affairs.

[4]

In 1924 I came north and entered Columbia University, where I majored in economics, graduating in 1928. It was there I first got to know Professor Rex Tugwell. From 1928 to 1931 I went to the Harvard Law School, graduating in 1931. I then had an offer for a job in a leading New York law firm, Chadbourne, Stanchfield, and Levy, which was one of the outstanding firms in New York at the time, but for some reason decided instead to go back to Columbia and study economics, particularly because I had the opportunity to do some work for Professor Tugwell, who was then beginning to make his contacts and do work for somebody who at that time was Governor Franklin D. Roosevelt. So from 1931 to early 1933 I was at Columbia doing graduate work in economics. I completed my requirements for the doctorate, but got so busy from 1933 forward that I never wrote my thesis, never regret that I didn't.

I held three jobs there at the time. One was as an assistant or instructor in economics; one was doing studies for the general education board of the Rockefeller Foundation; and one was writing some books with Tugwell and others, which were published although my name did not get on them. One was a study of American economic life and the means of its improvement, [American Economic Life and the Means of its Improvement] which was

[5]

published after I came to Washington, and which I did really most of the work on, because Tugwell was so busy with Governor Roosevelt. This was an effort to readjust economic teaching to the realities of economic life and still represents my idea of how economics should be taught on the college and university level.

Parenthetically, I think that the way economics actually is taught at the college and university level is atrocious and explains a great deal of the alienation of the young people from the kind of education they are getting, because it is so remote from life, and as I shall point out later, this also has an impact upon the recruitment, the fruits of the recruitment of membership on the Council of Economic Advisers, and the Council of Economic Advisers' staff, which unfortunately is becoming increasing an inbred process, where the recruitment is almost entirely from one narrow school of professional economists who really make the choices, although the President does nominally. Truman didn't do it that way, and I'll come back to that.

In early 1933, I came down to Washington with Professor Tugwell at the very beginning of the New Deal, and for a very short period of time, in fact, only about two weeks, I was employed as an attorney in the Agricultural

[6]

Adjustment Administration. The reason for that was that although Tugwell wanted me to work with him, he thought that I could get better compensation if I was set up in the legal department, but I never actually received any salary because I left the job before the Agricultural Adjustment Administration was finally approved.

There was one interesting comment on my interview with Jerome Frank, who had been picked to be general counsel of the triple A. I came in to interview him and we had never met before arid I sat down and he said, "What do you know?"

I said, "I know 'Cotton Ed' [Ellison D.] Smith." Cotton Ed Smith was chairman of the Senate Committee on Agriculture and was violently opposed to the New Deal and all its works even at that early date, but had been, as was James F. Byrnes, a lifelong friend of my father's.

Jerome said, "You know Cotton Ed Smith. Let's go."

We jumped into a cab and we went up to see Cotton Ed Smith and naturally he gave me a very cordial reception.

We got back in the cab and on the way back Frank said to me, "How would $4,000 a year be as a starter?"

Well, this was all the money in the world at that time. I looked out over the Washington Monument and I said, "I think that will be all right."

[7]

But as I say, I never got any of it.

During those first two weeks I became very much involved in the drafting of the National Industrial Recovery Act, and was part of a group including Jerome Frank, Harold G. Moulton, the president of the Brookings Institution, John Dickinson, the Assistant Secretary of Commerce, and Simon H. Rifkind, who had been for six years up to that time, legislative assistant to Senator Wagner. And I had a good deal to do with the drafting of the act. I also met with a number of trade association lawyers who were interested in the act at that time.

HESS: How is an act like that drawn up?

KEYSERLING: Well, this act started as a trade association act. The original draft of the act grew out of the so-called Gerard Swope plan for Recovery. It was really a draft at that time because it hadn't been introduced as a bill, to suspend the anti-trust laws and to enable cooperation among trade associations to stabilize prices and wages and to increase employment. This original idea, which had come from the Swope plan had probably been formulated into language by two leading trade association lawyers. One was Gilbert H. Montague, who happened to be also the attorney for the Rockefellers; and the other

[8]

one was a prominent New York lawyer by the name of David Podell.

Well, anyhow, we got started working, and we met over in the Brookings Institution office, and we worked on it for several weeks. Then we had a meeting in Senator Wagner's office at which I was present, along with Jerome Frank; Henry Wallace, the Secretary of Agriculture; Professor Tugwell; Winfield Riefler, who at that time was head of the Central Statistical Board and later became prominent as an economist, and a few others. We discussed this for an hour or two and then Senator Wagner was sort of tired and he said, "Well, I guess that's all we can do today."

And I said, "Well, I don't want to leave here with the thought that we are all in agreement. I don't think this is the main approach at all. I think the act has got to do something about improving wages, about improving labor conditions, about protecting collective bargaining so that it will be in better balance, and so we will have a stimulation of consumer interest and consumer buying, or otherwise we're not going to get recovery."

The Senator was very much interested in that and a week later I got a call from Si Rifkind, who as I say, had been the Senator's legislative assistant for six years.

[9]

He was going back to New York to work exclusively in the Senator's law firm, and that's how I went over to work with Senator Wagner as his legislative assistant, where I stayed for four years, technically, although I did an immense amount of later work with him through 1946.

It was in his office and under his direction that we rounded out the drafting of the National Industrial Recovery Act, because with rare exceptions, he insisted that the drafting of bills that he introduced be done in his own office.

We rounded out the provisions of that act in about the form that it finally passed. Then we added another title, which dealt with public works, and which was the foundation of the original Public Works Program under Harold Ickes, the so-called 3.3 billion dollar Public Works Program, which later branched out into civil works and Federal Emergency Relief Administration and so forth, especially because Senator Wagner for a number of previous years from the beginning of the depression had been introducing bills on emergency relief and on public works. It was in his office that I drafted the actual provisions of the public works section with some help. The way we arrived at the three billion, three hundred million dollar figure was that this was the total of the public works

[10]

projects in his files, which had been collected over the years in connection with the introduction of public works legislation.

Then the bill went to hearings before the Senate Finance Committee and then it went out on the floor. Senator Wagner was the sole Senate sponsor of the act. It was very vigorously debated. He made a very long opening talk on it which I prepared, because I was then working for him, which covered about equally the economics of the whole situation and an argument in favor of the constitutionality of the act. I mention this because all the way through from 1933 until today, my economic training and my legal training have sort of interpenetrated on public problems that involved both in varying degrees.

Now, after the National Industrial Recovery Act was passed in the summer of 1933, it was found almost impossible to enforce the collective bargaining provisions under Section 7a of that act. Industry was opposed to them; Hugh Johnson, who was the Administrator of the NRA, was opposed to them; Donald Richberg, who was Hugh Johnson's counsel, was opposed to them; President Roosevelt didn't understand them and set up a large number of special boards, an automobile board and a steel board and

[11]

all kinds of boards, to try to vindicate by so-called mediation a statutory right, which you can never do.

So, in the fall of 1933, I was walking along the street with some friends. I remember it. It was a snowy day, and I got the idea that perhaps Section 7a ought to be translated into a permanent statute. Senator Wagner was very enthusiastic about that, and that statute was drafted by me under the Senator's supervision entirely in his office with some help from others. The Senator was also chairman of a pre-statutory labor board that was appointed by President Roosevelt and composed also of three members of industry and three members of labor. The industry members were Walter Teagle, the president of Standard Oil of New Jersey; Gerard Swope, president of General Electric; and Louis Kirstein, the president of Filene's of Boston; and the labor members were William Green and John L. Lewis and Professor Leo Wolman, who taught labor problems at Columbia. Senator Wagner was in Europe when the board was appointed. He sent me a wire, "You take my place until I get back." I remember how peculiar my experience was as a young fellow of twenty-five sitting with these six august people talking about what we were going to do until the Senator got back.

Due to the fact that the Senator remained chairman

[12]

of that board on into 1934, I got considerable familiarity with the administrative side of it. But anyway, in early 1934, the National Labor Relations Act was introduced. It went through a bitter struggle for two years. It was enacted in 1935. I have always thought rightly or wrongly that both economically and politically, and politically I mean in the sense of shaping events to come, it was the most influential act of the New Deal. Its influence on the economic side doesn't need to be discussed because organized labor grew from three million to a peak of twenty million probably, under the act, and its great political influence was that this was really the basis of the historic affiliation of labor with the Democratic Party, which with slight variations is persistent till this day. Now, that wasn't the only reason for it, but that was the basic start of it, so the act had tremendous economic and political significance.

It was very interesting to note that the passage of the act was hardly supported by the administration. The Secretary of Labor, Frances Perkins, was really--she didn't testify against the act, she testified, but her testimony consisted mostly in arguing that the labor board should be placed in the Department of Labor, which Senator Wagner was violently opposed to and ultimately

[13]

his view prevailed.

The President blew hot and cold, and never explicitly supported the act until in 1935 when it reached the Senate and was on its way to passage in the House. Before it came to a vote in the Senate, Joe [Joseph T.] Robinson, who was Majority Leader; Pat Harrison, who was the second ranking Democrat in the Senate, told Senator Wagner that the act couldn't pass, and it would be very embarrassing to the party to bring it to a vote and then not pass it, and said, "Come up to the White House with us so that we can explain it to the President." They wanted the measure sidetracked without a vote.

They went up to the White House and the Senator said, "Never mind whether it passes it or not, I just want a vote." And when the vote came there were only six votes against it. Then it passed on the House side.

I might make mention of some of the other New Deal legislation.

HESS: One thing further on the NRA, how did you feel when it was declared unconstitutional?

KEYSERLING: The NRA was declared unconstitutional. There was a partially dissenting opinion by Judge [Benjamin Nathan] Cardozo. The decision declaring it unconstitutional

[14]

was unanimous, but the other judges declared it unconstitutional on the broad general grounds that it went beyond the power of economists to regulate interstate commerce. Cardozo wrote a separate opinion in which he did not agree with that, but held it unconstitutional solely on the grounds that it was an improper delegation of legislative power to the Executive and that the standards set were not complete, he said, "This is delegation running riot," because he was so displeased with the way the codes were being administered, and the absence, really, when they got before the Supreme Court, it developed that they didn't really have records of what they had done. This was important because the Supreme Court, even before the change in membership after the court packing plan, really completely reversed itself when it came to the National Labor Relations Act in 1937.

I felt that I didn't agree with the NRA decision, though Senator Wagner never protested the decision. I felt that the act had accomplished an enormous amount of good. It had certainly abolished the sweat shop; it abolished child labor; it had set in motion some processes of recovery through the wage provisions; and even so far as the industrial cooperation is concerned, I happened to believe that--well, really, the talk today about guide

[15]

lines and the talk today about voluntary controls is really an appreciation of the fact that in our kind of society, industrial concert guided by the public interest and with some guide lines from the Government, is really the only alternative to chaos on the one side and excessive centralization under definitive public law on the other side. So that part of it has really been vindicated although we haven't yet gotten the complete answer.

Now, after the National Industrial Recovery Act, I've just about given the history of the National Labor Relations Act, but there were a number of others. The Social Security Act of 1935 was the one great act introduced by Senator Wagner that was not actually drafted in his office. He had in 1934 introduced an unemployment insurance bill with Congressman [David John] Lewis of Maryland, which was the forerunner of the unemployment insurance provisions of the Social Security Act; and he had, going back many years earlier, introduced legislation which had been passed for the study of unemployment insurance, which was the first bill on that subject in the Congress, and for the creation of the employment stabilization board, the idea of which was a Government board that actually became law (this was in the late twenties or very early thirties), that whenever

[16]

the index of employment fell below a certain level, and it was so certified, the Government would accelerate its expenditures for public works to compensate for the difference. President Hoover never activated the Stabilization Act.

Now, in 1934, under the pressure of some of these earlier acts, President Roosevelt appointed a commission to study Social Security, and it was this commission that drafted the plenary bill that was introduced in early 1935 by Senator Wagner and became the Social Security Act of 1935.

One interesting thing and important thing at that time, the bill provided for a nationwide system of old-age insurance, but for a state system of unemployment insurance to set up forty-eight systems of unemployment insurance. This was the so-called Wisconsin idea, and it was very avidly espoused by the Department of Labor, and by Secretary Perkins under the influence of the Wisconsin people. In fact, the person in charge of it over there at that time was Arthur Altmeyer, who lately became a great member of the Social Security Board and he was from Wisconsin. I felt very strongly that the unemployment insurance system ought to be national, and went to see various members of the Commission. There

[17]

were more than twenty members of the Commission, and when I went to the first ten they all told me that they were for a national system, but that everybody else on the Commission was for a state system. Well, I gave up. I saw what was going on. They were just bowing to the views of the Department of Labor, which had been sold to the President.

I talked to Senator Wagner and said he ought to make a fight on this, but he happened to be in the middle of the tremendous fight on the National Labor Relations Act at that time in 1935. He said, "I can't fight the administration on this one, too."

So it went through that way, and as we all know, it was one of the greatest mistakes we've ever made. We've been trying ever since to get something approximating a Federal unified system of unemployment insurance, first through Federal contributions, and in a way, the recent emergence of an idea of a nationwide system of income supports, while not strictly analogous is in the same history.

HESS: What was their argument on the side that it should be done through the states?

KEYSERLING: They were greatly influenced by Justice Louis

[18]

Brandeis, who believed that any big job was too big for any man to handle, therefore you had to break it down. He was a fragmentist; he wanted to break up all the big industries; he was the brain trust of Woodrow Wilson's, "The New Freedom." Wilson, when he campaigned in 1912, had Brandeis as his chief economic adviser. He said, "You can't regulate the monopolies a la Theodore Roosevelt or the Progressives, Walter Lippmann, and so forth, you've got to break them up."

Of course, he changed completely after he became President and was the leader in the enactment of a great deal of Federal legislation, railway wage and hour laws, the Federal Trade Commission, the Federal Reserve Board, and so forth. So, it was under this influence of the Brandeis-Wisconsin school that they said, "This is a new experiment. Let's try to set it up in forty-eight different laboratories," somewhat analogous to the way our recent war on poverty became so experimental that millions of plans were tried everywhere at the local level, and it proved to be pretty much of a fiasco and a disillusion. From the beginning of the war against poverty, I said, "Let's take three or four strategic national programs." Let's concentrate upon Federal works as a

[19]

means of last resort to take care of the unemployed who weren't employed privately. I said, "There's also need for that work in the public sector." Also, I urged a nationwide system of income payments. Both of these ideas gained much support in the 1970s. But you see how in even those early New Deal years you had the first strands of these divergent views which ran through the New Deal, the Fair Deal, and the New Frontier and the Nixon administration.

Next we come to housing. There Senator Wagner was extremely active. It was in his office and under his direction that I drafted the United States Housing Act of 1937, which was the first permanent decentralized low rent public housing program. There also in 1934, I participated in the drafting of the National Housing Act which created the Federal Housing Administration of mortgage insurance and in the important amendments to the act a couple of years later. Most important, in that way I got drawn from 1944 forward into the drafting of the general housing act of 1949, which was the most important of all the housing acts, and in which in its preamble guaranteed a decent home for every American family in a suitable living environment, and that act was sponsored by Senators Wagner, Ellender and Taft. Wagner was chairman of a committee beginning during

[20]

World War II to consider that act and the other two members were [Allen J.] Ellender and [Robert A.] Taft. I started out as the expert to Senator Wagner and Senator Ellender, whom I had worked with before, but very shortly. Taft selected me as his adviser, and I worked very closely with Bob Taft on that housing legislation all the way from the World War II days until 1949 when it became a law, and converted him. He even became an ardent public houser and was called a Socialist by the National Association of Real Estate Boards.

HESS: That is a very interesting point, because in most areas Senator Taft was known as Mr. Republican, an arch conservative. Why did he change on this one aspect of public housing, which is a liberal measure?

KEYSERLING: Well, the first reason is that Mr. Taft was not an arch conservative. Mr. Taft was an enlightened conservative in the fashion of the British Tories who in the 19th century had put through a lot of reforms. Let us remember...

HESS: He used to speak of himself as a true liberal, a Jeffersonian liberal.

KEYSERLING: Well, anyway, I don't know whether he was that,

[21]

but anyway, let us remember that Mr. Taft not only became the most powerful supporter of the housing act, because Senator Wagner by that time was ill and Taft really carried the burden. Mr. Taft also introduced the first and most comprehensive bill for Federal support of public education at the school level. Mr. Taft also had a health bill. Mr. Taft believed that the Federal Government had the responsibility to support basic minimum standards in the field of education, health and housing, so he really was far more progressive than most members of the Republican Party, and he became known as Mr. Republican because he was such an intellectual giant and did his homework so well, and was basically a Republican in the political sense, and interested in the political future of the Republican Party; thus, he became the great leader of the Republicans on Capitol Hill, and of course, was a presidential aspirant.

HESS: When you first started discussing housing measures with him though, were his views quite as far developed along those lines as they later became?

KEYSERLING: No, I think I had a lot of influence on him, but as a matter of fact, I first had contact with Senator Taft in 1939, which was his first year in the Senate.

[22]

He had been elected in 1938, and he was on a subcommittee of the Senate Committee on Education and Labor, which was considering an extension of the Public Housing Law. When I got through testifying he was considerably impressed, and really became a friend of public housing from that point forward. He made a great deal more progress over the years as I worked with him so closely on the Wagner-Ellender-Taft Bill.

In 1937 I had left Senator Wagner technically, and became general counsel of the United States Housing Authority, under the first permanent public housing legislation. By 1942, there were sixteen housing agencies in Washington, and we were in a war; every housing agency was at loggerheads with every other. Finally, in desperation, President Roosevelt appointed Judge Sam [Samuel I.] Rosenman, who had not yet come down here as his special counsel, to try to straighten this out. Rosenman came down and had interviews with the various people in Washington. Then he called me over to the White House. He said he had cleared it with President Roosevelt that I should work with him confidentially on a plan to straighten this out, and I drafted for Rosenman and the President, Executive Order 9070, which was approved in February 1942, which put the sixteen housing agencies

[23]

into one National Housing Agency, of which I was general counsel 1942-1946, and which after the war became the Housing and Home Finance Agency under the act of 1949, and which still later gained Cabinet status as HUD, Housing and Urban Development. There were many urban development provisions in the 1949 act which I had drafted over the years.

HESS: Before we leave Senator Wagner, he is very well known also for liberal measures as we have mentioned, what was in Senator Wagner's background to make him develop into one of the leading liberals of this particular time?

KEYSERLING: Well…

HESS: Tell me something about the man.

KEYSERLING: I will. Incidentally, let me say that in terms of influence on history, in terms of legislation that has enduring significance, in terms of a volume of important legislation initiated by him--and incidentally on housing measures too, he never had much support from the White House, never--he towers over any one or any ten New Dealers, and yet, because intellectuals and historians are attracted by the person with flair, of a sensational nature, they have never given Senator Wagner his due.

[24]

They don't neglect him, but I mean they weren't attracted to him as they were to Senator George Norris, who was a great man, but who only had one bit of legislation, the TWA, because Norris was a dissenter and an iconoclast, and he had more flair and so forth and so on. But it's always interested me that these intellectuals and historians make these kind of judgments.

Now, the question of how Senator Wagner became this way is a little tricky. Suppose you started by saying that he was a poor boy, had hardships. Well, Alfred E. Smith was also a poor boy with hardships, but he ended up as a reactionary leader of the Liberty League, and a violent opponent of the Democrats and of Franklin Roosevelt as President. So you can't explain it entirely that way. However, Senator Wagner always said to me, and it is true, that the reason he became the unalloyed liberal that he was was because of his early experiences. He had been born in Germany; he had been brought here as a small boy; his father had died when he was an infant; his mother was a janitress; his older brother, Gus, was a baker, and he had all these hardships. He used to say to me that the belief that, no matter how many handicaps you have, if you just have it within you, you can rise to the top--he always used to say, "Leon, that's bunk."

[25]

He said, "For every one who rises to the top, a thousand are destroyed. In rising to the top, a lot of it is luck."

There are lots of interesting things about Senator Wagner. When he was in the Senate, he was also the member of a law firm in New York, but he would never let them take any case involving the Federal Government. He was a widower, he was very attractive. He was sought after socially, but he would never go the social rounds and go to dinners. He said, "The reason why, the kind of people you sit next to at those dinners, by the time they get talking reaction in your ears, you become one yourself." He said, "I don't want to subject myself to it."

Now, we come to the Employment Act of 1946. The real background of the Employment Act of 1946 is the Pabst Postwar Employment Contest of 1944, which was an essay contest on postwar full employment. There were more than 35,000 entries, and the preliminary judges were the economics department of Columbia University; and the final judges were Wesley C. Mitchell, the business cycle economist; A. F. Whitney, the president of the Railway Trainmen; Clarence Dykstra, the president of the University of Wisconsin; Beardsley Ruml, the famous economist-businessman. My essay got the second prize of $10,000 in

[26]

that contest, but its relationship to the Employment Act is that it was really an outline for that act. It was called "The American Economic Goal." It was published in '44, and it outlined the process of setting goals for the economy of maximum employment and production; outlined the development of an annual report to the Congress; outlined the creation of an institution which brought together the Congress of the Executive, somewhat like the Joint Economic Committee for Congress and the Council of Economic Advisers. It didn't specifically advocate a Council of Economic Advisers, but Beardsley Ruml said to me when we had a banquet in New York, he said, "This is the first time I have ever seen this idea of really budgeting long-range prosperity on a budget basis." I emphasize that in connection with what I will say later about the history of the act in being, and my experiences on the Council, and the subsequent experiences under the act.

As World War II came to near its end, it occurred to me that the American economic goal ought to be translated into legislation. I was, at that time, general counsel of the National Housing Agency, which had been created under the Executive order in 1942. So I wasn't absolutely a freelance, but I started working on the

[27]

bill, and first of all, I placed with Senator [James E.] Murray of Montana, a man by the name of Bert [Bertram] Gross, who had been on my staff when I was general counsel of the USHA, to work with Senator Murray on the full employment bill idea. Then I involved Senator Wagner in it, and the others were Senator [Joseph C.] O'Mahoney, whom I had worked with a great deal, and Senator [Elmer] Thomas of Oklahoma; and on the House side, Congressman [Wright] Patman. Congressman Patman, in the last few years, in many, many hearings has said publicly, in fact, he's overstated it, he said, that I created the whole Employment Act of 1946. But anyway, a bill was introduced. The first bill that was introduced was a rather general bill, somewhat similar to my Pabst plan, but it got out of hand and some people wrote into it, made it a specific formula, just for the Government to spend more money as employment dropped. I was against that, because I thought that all national policies ought to be combined in an effort to have the economy performing fully, but it shouldn't wed itself to any one particular formula.

Well, there was a great deal of controversy on the Hill, and the bill which actually became law went back very much to a general plenary statute. Some people said it was watered down. It wasn't watered down, it was

[28]

built up, because under the Employment Act, the President can select any policies he chooses to. There were no limitations; he is not tied to one single formula. He can use money policy, tax policy, spending policy, housing policy, social security policy, etc. Now, the act, in its administration, has never lived fully up to its expectancies, but the act was a plenary statute and that was what it should have been.

Now, during the battle for the act, I had one of my first important contacts with the Truman administration. Truman originally had not been supporting the bill very actively--and this was before there was any Council, because it was before there was any act--I was still general counsel to the National Housing Agency. Many groups were organized, we organized a very extensive nationwide campaign. We brought in the labor people; we brought in public interest groups; we had a small team that prepared all kinds of economic studies. There were various people working on it. Avery small committee was set up of me and Bert Gross and Ed [Edward] Pritchard, who later got into some difficulties on another score, but he at that time was a protege of Fred Vinson, and he had been secretary to one of the judges on the Supreme Court. We were sort of a steering committee, bringing

[29]

others in, developing the raw materials, helping the Senators and so forth. I had the most access to the Senators because I had known them the longest and had worked with them in so many other connections.

Well, it was felt that the Truman administration was not giving as much support as it might have to the Full Employment Bill, so I was selected by this group to go before Truman's--I think it was called Mobilization Committee, whatever it was--or Mobilization and Reconversion. The chairman of it was Fred Vinson: Other members were William H. Davis, Phil [Phillip] Murray, of the CIO, William Green of the AF of L, Anna Rosenberg, Jim [James G.] Patton, of the Farmer's Union, various businessmen, and so forth. So I went over to the White House to a meeting of the Mobilization Committee and spent an afternoon explaining the act to them. Vinson was tremendously impressed, as were some of the others, and very shortly thereafter, Truman began to put some real drive behind the Employment Bill and it became a law in 1946, and I was one of the three members appointed to the Council of Economic Advisers. I was named Vice Chairman.

HESS: In Stephen K. Bailey's book, Congress Makes a Law: The

[30]

Story Behind the Employment Act of 1946, he said that you emphasized and you suggested that a continuing American Economic Committee should be established along the general lines of the Temporary National Economic Committee? Is that correct?

KEYSERLING: Yes, I made some reference to that earlier. You see, I was preoccupied with a problem, that although we had a separatist form of government with the legislature and the President being separate, that we had to find some institutional devices for approximating in some respects the parliamentary system, so that you didn't have quite this division, and so that you really had them working together on problems.

So the permanent committee, which might be called a council, which I proposed under my 1944 essay, was that an American Economic Committee which was composed jointly of members of the Cabinet and members of the Congress--you see, it was a joint committee in that sense, which we've only very rarely had. It was that joint committee which was to draft the annual American economic goal which was the counterpart of what have become the economic reports. So in that respect, it was a variant upon what actually happened, but nonetheless, the '44

[31]

thing was the only plan of the thirty-five thousand submitted, or at least of the fourteen that won prizes, because I don't know about all of them, that made any suggestion of this kind of long-range planning and long-range goals and an official committee.

I also suggested that the President adopt the American economic goal and the American economic plan, and make it the subject of his messages such as the time of the State of the Union message, and that he make frequent reports to the Congress on it. So, there were the areas of similarity and dissimilarity between the final act as it emerged and my 1944 plan.

HESS: Do you think your plan for the American Economic Committee was really the seed for the Council of Economic Advisers?

KEYSERLING: Yes, to a very large extent. But you can't weigh these things exactly. My plan differed in some degree. They decided, and possibly wisely, that they didn't want to mix the Congress and the Executive in that way, so they separated the two; but certainly, the idea of a Council of Economic Advisers and a parallel body, in the form of the Joint (Congressional) Economic Committee embodied my basic idea of more unity in action.

[32]

And the Council of Economic Advisers tried to bring together the far flung economic programs of the Executive Branch; there was an absolute parallelism with my plan there. How effectively it worked is another matter that we'll probably come to on a separate connection.

HESS: One other point I want to check with you before we move on is in Mr. Bailey's book, he mentions that Charles Murphy of the Office of Legislative Counsel also worked on the drafts along with Mr. Gross. Is that correct? Do you recall Mr. Charles Murphy's involvement in that matter?

KEYSERLING: I think that would certainly be correct. The legislative counsel of the Senate was almost always brought in from the point of view of technical format. Without any disparagement to Murphy, for whom I have great regard, I don't think he had influence on content, but the legislative counsel's office was almost--most Senators always sent their bills to the legislative counsel for format and style and conformity.

HESS: Sort of a nuts and bolts type of operation.

KEYSERLING: That's right.

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HESS: Do you recall working with Mr. Murphy very often on the Hill, the times when you both were on the Hill?

KEYSERLING: I worked with Mr. Murphy in many connections on many bills, but it sort of merges because I worked so much more with him when we were both working for Truman that it's hard after all these years to disentangle the two. But I did know him well on the Hill.

HESS: All right. Are we ready to move on to the days of the Council of Economic Advisers, or do we have anything else to cover before that?

KEYSERLING: I think we ought to mention briefly some of my other activities during the Roosevelt period because they provide basis for some of the important activities that you are interested in during the Truman administration.

In addition to my work on all of this legislation, being the draftsman really of some of the primary acts, I did all the work so far as Senator Wagner was concerned, and also for some other Senators, not only on the preparing of speeches and articles, but I prepared at least ten articles for the New York Times alone by Senator Wagner on the National Industrial Recovery Act, on housing, on Social Security, on employment; and I also prepared many

[34]

of the committee reports in connection with these measures. I prepared on the Senate and the House, committee reports in 1935 on the National Industrial Recovery Act; I prepared the committee report on the Senate side in 1937 on the United States Housing Act, which was extremely comprehensive and mostly an economic document. I remember Hugo Black, who at that time was chairman of the Education and Labor Committee which had jurisdiction, saying to me, "Why this is the broadest economic paper of this kind since Hamilton's report on manufacturers." He was very much taken with it. So I did a great deal of that.

Now, I also got very actively into the translation of economic programs and ideas into the political process in many ways. First of all, Senator Wagner was a very, very active campaigner. I was not only with him in his campaigns for re-election in '38 and '44, but I was with him almost every year, because every year he was either campaigning for a President or campaigning for a governor of New York, or campaigning for the New York state legislature, which was in the odd years, or campaigning for the mayoralty in New York, or campaigning for other Senators around the country like--well, I remember Bob [Robert J., Jr.] La Follette and "Shay" [Sherman] Minton and others who asked him to come out and speak for

[35]

them. So I developed speeches for all those purposes.

Next, and more important, the Senator and almost perpetually the chairman of the Democratic Platform Committee or Resolutions Committee. In 1936, the convention being held in Philadelphia, I made the first draft of the Democratic platform in 1936, the entire draft, in Senator Wagner's office. It later got over to the White House where Sam Rosenman and others changed the style and the format considerably, but the content was the same.

In 1940, Senator Wagner was again chairman of the Platform Committee, and again I prepared the draft. This time it was hardly changed from initial preparation to final enactment. A large part of it was economic sectors. The only thing that happened then, I remember vividly, the Senator was living in the Shoreham and after we had the draft and before we went to Chicago--this was in Chicago (we usually went there a week or so before the convention opened to do further work there), he sent it up to the White House. Finally, the President sent it back with only one change in his own handwriting. We had something in there to the effect that we would not send our men to fight in foreign wars and Roosevelt wrote in, "Except in case of attack." This was about the only

[36]

change that he made in the whole platform in 1940.

Then he sent Lowell Mellet, who was working with him, Ben [Benjamin] Cohen and Tommy [Thomas G.] Corcoran, up to the Shoreham, and I read the whole platform to them. Senator Wagner was there, but there were practically no changes.

In 1944, I again drafted the platform, because the Senator was again chairman. We went to Chicago, the Senator became ill, and John McCormack substituted for him as chairman of the Platform Committee, and remained chairman for several subsequent conventions. I worked with John McCormack, and there again in '44 as in '40, the platform came out almost the same in form as well as in substance as it had originally been drafted, and as I say, I had done that for Senator Wagner.

Now, in 1948 Truman was President, and the platform there was drafted at the White House, but the economic portions of it, and I'll come to that separately because that ties in with the Ewing meetings and so forth, the economic portions of it were a resume of the economic ideas and positions that I had been developing at the White House with Clifford and with the President and so forth and so on. So I've got to come back to that separately.

[37]

In 1956--in '52 I didn't have much to do with the first Stevenson platform--but in 1956 I was at the convention. John McCormick was chairman of the Platform Committee and he had me draft the economic sections.

In 1960 I wasn't close to the Kennedy people, but Kennedy's whole '60 campaign was on the idea of economic growth, which I had been pounding for seven years and tight money, which I had also been pounding for seven years, so that through this work and the other political work, I became really close to the practical aspects of selling some of these programs.

Now, we come to 1946. In 1946, I was put on the Council along with Dr. [Edwin G.] Nourse and Dr. John D. Clark.

HESS: One question before we move on to '46 about the convention in Chicago in '44. Were you surprised at that time that Mr. Truman was put on the ticket as Vice President? What did you know about Mr. Truman at that time, in '44?

KEYSERLING: Well, this is a commentary upon what happened to Truman after he became President, or at least what was revealed after he became President. From 1933 to 1937, when I was legislative assistant to Senator Wagner--now, Truman wasn't there in '33. Truman, I believe, was

[38]

elected in '34.

HESS: That's right. He came to town in '35.

KEYSERLING: 1935, all right. So, there were two years--well, in fact, three years, '35, '36 and '37, when I was up there while Truman was in the Senate, and I also got up there a great deal thereafter, because although I stopped working for Wagner technically in '37, I was the one that he always called back on the important jobs, including his platform writing and also the legislation. And by then being in the Housing Agency I was testifying a good deal on the Hill, and I got before committees that Truman was on.

I remember those early days when I used to sit in back of the room in the Senate Chamber, because we'd have that privilege. I thought what a wonderful institution this Democracy is, that the men that it sends up on the whole--because I could look around this room, I could see men that I agree with like Bob La Follette or Senator Wagner; I could see men that I disagreed with like Walter George or Dick [Richard B.] Russell; I can see other men like Hiram Johnson or William E. Borah, and so forth and so on. But so many of them, whether I agreed with them or not, they are such able, forceful men and there are

[39]

certain things that they stand for.

As of that time, there was a man sitting in the back row, always immaculately dressed with a blue suit and a matching blue handkerchief...

HESS: He looked like a former haberdasher.

KEYSERLING: ...and a matching tie, smiling, ruddy faced, hair carefully clipped and trimmed, but you would never have ranked him as one of the great Senators. I never would have picked Truman for President during these years.

I remember I was before a legislative committee, not too long before he was nominated for Vice President. This was an appropriations committee and I was asked a lot of questions by [Senator Kenneth] McKellar and [Senator Carter] Glass and various others. At the end I was asked a question by Truman. I remember the thought that ran through my mind as I walked out of the room, "That is rather mediocre." A little while later he was President of the United States, and he became a great President, as we all know. Now, I'm not going into the unanswerable question of whether he changed, or whether the circumstances changed or what happened. But there it is. You asked me.

HESS: Did you ever testify before the Truman Committee?

[40]

KEYSERLING: Yes, I appeared before the Truman Committee and I got the feeling that it was doing a marvelous job, but there again, I got the feeling that Hugh Fulton and others had an awful lot to do with that, and I was never impressed much by Truman before he became President.

HESS: Who conducted the majority of the questioning, was it Hugh Fulton?

KEYSERLING: I think most of it was by Hugh Fulton, although I was only before them once, as I recall. Incidentally the Truman report gave exceptionally high marks to the housing program that we conducted in the U.S. Housing Authority, because we converted to a war agency in 1941, and the housing done by the National Housing Agency when I went over there as general counsel, which was entirely war housing. He gave us an entirely clean bill of health. He wrote a wonderful report about our activities, or at least issued a wonderful report about our activities.

HESS: Moving on to 1946 and the Council of Economic Advisers, I think that's what we were getting into when I broke into your thoughts to move back into 1944.

KEYSERLING: Well, first let me talk about the appointments,

[41]

putting aside personalities entirely. At this moment, putting aside entirely whether Nourse was the right man, or Keyserling was the right man or Clark was the right man, my view is that Truman is the only President who really grasped how members of the Council of Economics Advisers should be appointed, in the sense of grasping the broad nature and implications of the thing. Let's look at what he did, again getting aside from whether the people were the right people.

He picked one man, Dr. Nourse, who had been president of the American Economic Association, and who was the head of the Institute of Economics at Brookings. In other words, a recognized, distinguished, so-called professional economist, whatever that might mean.

He picked me on the specific ground that I had had more experience in Government's dealing with economic problems than almost anybody, and he thought that vastly important. We did not know each other well at the time, or hardly at all.

He picked John D. Clark, who had started out as a delegate to the Baltimore convention that nominated Woodrow Wilson; who had been a member of the Wyoming legislature; who then had become an immensely successful businessman, and was once listed by James W. Girard

[42]

as one of the twenty wealthiest men in America. He was vice president for Standard Oil of Indiana; but who in 1929 had divested himself of his business interests, and gone to Johns Hopkins, built a home there, set up his family there, and taken a Ph.D. in economics, and who thereafter had been dean of the business school at the University of Nebraska.

Now, regardless of the personalities, that's the way to pick a Council. Subsequently and unfortunately, the thing has gotten entirely into the hands of one narrow group of professional economists from universities. Really, the President hasn't chosen them; technically, he appoints them, but if you look at it, again without regard to personalities (I'm talking principle), when Arthur Burns left [Raymond J.] Saulnier succeeded him. Saulnier was a member of the Council under Burns and had been a colleague of Burns' at Columbia. When Walter Heller left [Gardner] Ackley succeeded him; when Ackley left [Arthur M.] Okun succeeded him. They were all from the same narrow group, and the other members of the Council. This became even more true of the members of the Council as distinguished from the chairman. They were all picked by the same small fraternity. And another bad consequence of that was the excessively frequent rotation. If you

[43]

study the terms of tenure over the last fifteen years, you'll find that it's sort of become--if they come in as a member of the Council, it almost seems that they come in to burnish their reputations a little bit to go somewhere else. When I was chairman of the Council, I could never conceive of my having left that job voluntarily.

I could never conceive how anyone who had that kind of responsibility and opportunity would relinquish it voluntarily to do something else. I was voted out. So, I look with disapproval on that whole new kind, and while I can't get into it in detail, the entire concept, that a distinguished academic economist, whether it be Paul Samuelson or someone else, is uniquely equipped to deal with the problems of the economy and the making of policy is an erroneous idea. I'm talking about the policy side; but even aside from that, it is just a fallacy, because the whole nature of their training, the whole nature--if you look at their textbooks, it doesn't wrestle with the problems of the economy; it doesn't look at the economy; it's model-making and econometrics and a lot of formalistic things and theory that have very little to do with the economy. So, you can do great work in that field and not really be trained at all to serve as chairman or as a member of the Council of Economic Advisers.

[44]

So, we came in in 1946.

HESS: What in your opinion was Mr. Truman's view of the function or duties of the Council of Economic Advisers when it was first established? How did Mr. Truman see this new instrument?

KEYSERLING: Well, in the first place...

HESS: Do you think he had a clear understanding of what he had to work with?

KEYSERLING: It depends on what you mean by a clear understanding. I don't think that any President has even commenced to grasp fully the implications of the Employment Act or of the Council, or the implications of a really integrated and coordinated economic policy. Let me illustrate what I mean and then I'll come back to Mr. Truman.

I can explain this best by going back to my 1944 essay, because in connection with that essay we can submit supplementary material. This thing was limited to two thousand words, but I submitted a ten or fifteen thousand word tract, and interestingly when Columbia University published the essays later on and also published excerpts from the whole thirty-five thousand contributors, made a

[45]

book out of the whole thing, they printed in the back my fifteen thousand word tract, which was the only long thing in the whole book. What I said was that we learned during World War II the great things that we could do, but that the difference between World War II and the New Deal was this: That while the New Deal had done a lot of great things they were all an inconsistent experimental hodgepodge. Under the agriculture effort we tried to restrict production; under other things we tried to increase production; under the NRA we tried to lift prices; under other acts we tried to lower prices. So there was no consistency. But we learned during World War II what we could accomplish when we had a really unified, mature, comprehensive economic program that are based all on the major activities in the Government, and this was the idea of the act; that you set a long-range budget and you made your goals; that you break it down by economic analysis into the component parts; and then that you bring in every policy that bears upon that, so that an effective economic report, really to be meaningful, would have to have: First, long-range five or ten year goals for employment and for production and for income flows to bring about economic balance, and for allocation of resources between investment and

[46]

consumption. In other words, a long-range analysis of the kind of economic adjustment that you needed, which is what we had done during World War II. Then you bring to bear upon that all your important policies, which would be, at least, tax policies, spending policy, money policy, Social Security policy, housing policy, farm policy, and international economic policy. If you look at any economic report in recent years, it has nothing like that. It usually has a review of what happened last year, which anybody can do, a forecast which anybody can do, but no real goals of the kind I'm talking about; and usually concentrating almost entirely, say, on fiscal policy or on tax policy or what happens to be the rage of the moment. Social Security policy raises more money than tax policy; farm policy is responsible for the fact that we have uprooted millions and millions of families and sent them into the cities where they have gone on the relief roles.

There's been nothing on long-range thinking, and really, the bringing together of these policies on a long-range balance program. No President has really understood this, and none of the academicians on the Council have really understood this, and lest you think that this is a prejudice of mine, just go look at the

[47]

reports. Money policy is conducted separately by the Federal Reserve System. This is wrong. It should have been cured long ago under the act. It could have been cured if the President had really taken a position. No President, from Wilson when the act was set up through Roosevelt or through Truman, including even Harding and Hoover and Coolidge, dreamed that you could have a free-wheeling Federal Reserve System independent of the Treasury and of the Government. This all developed in the virulent campaign against Truman late in his second term, whether because somebody had given a gift to a wife of one of his secretaries, or because the Party had been in so long, whatever the reasons were, this deterioration...

HESS: Part of the so-called "Mess in Washington."

KEYSERLING: Yes, although there was no mess when another President was given a blooded herd and no taxation on his memoirs, and millions of dollars of advice on the purchase of securities, there was no mess in Washington. But be that as it may, this weakened Truman to the point--although he was as strong as any President had ever been in recognizing the evils of the tight money, rising interest rate policy of the so-called independent Federal Reserve Board. They swung away from him, so that in 1952 you

[48]

had a conspiracy of factors. First of all up on the Hill, you had Paul Douglas who had a lot of standing as an economist, and he and I have been great friends in recent years. But in 1952, where there was a so-called accord between the Federal Reserve Board and the Treasury, Douglas on the important Joint Economic Committee was violently against the President on this. He was also mad with the President over some judicial appointment matter.

Coming over to the Executive side [John W.] Snyder stood with the President; but [Thomas B.] McCabe was against him in the Federal Reserve. Truman thought that Bill [William McChesney, Jr.] Martin, who was Under Secretary of the Treasury was with him. He sent Martin over to the Treasury to replace McCabe. Martin promptly double-crossed him; and I know all about this because in 1952 the President set up a committee of four people: John Snyder, as Secretary of the Treasury; Bill Martin, as head of the Federal Reserve Board; Charlie [Charles E.] Wilson, who was mobilizer, and me as Chairman of the Council of Economic Advisers. Snyder got sick and went to the hospital. The whole thing got out of hand. Wilson as a hard core businessman sided with Martin and I was lost in that situation. They ran away from Truman;

[49]

they made the accord; they abandoned the Federal Reserve support of Government bonds and so forth and so on, and that whole thing happened that way. I'm trying to get back to where I was before I digressed on that.

HESS: You were mentioning Mr. Truman's understanding of the Council of Economic Advisers.

KEYSERLING: Yes. I'm saying that perhaps he understood it to a larger degree than the President since--but there has been really no President who has fully grasped the potential of the great, unified, consistent, long-range national economic policy of the kind we had during World War II.

HESS: One of the reasons I asked that question is that in the book, Economic Advice and Presidential Leadership: The Council of Economic Advisers by Edward Flash, and also Dr. Nourse's book, (Nourse, Dr. Edwin G. Economics in the Public Service) I get the impression that those two gentlemen do not think that Mr. Truman had a clear understanding. In Dr. Nourse's book he quotes Truman as saying at the time that you were sworn in, "Now, you gentlemen just keep this national income up to two hundred billion dollars and we'll be all right." And in Dr. Nourse's book he implies that he did not think that Mr.

[50]

Truman had a clear view of what the Council of Economic Advisers was. Did you think there was some misunderstanding between Nourse and Mr. Truman?

KEYSERLING: Well, let's take them one by one. First of all, I have already said that I don't believe that any President has really fully grasped what the Employment Act can do. I think that Dr. Nourse's book is a profoundly unfair book. In the first place, its lack of profoundness is partly indicated by the very statement that you read. Here we were at a swearing in and the President makes a desultory remark, "Now, you gentlemen just keep this national income up to two hundred billion dollars," which was the full employment level of income at the time. I don't attach any significance to a remark like that. I mean, it was a pleasantry.

HESS: It's the type of a remark that's made in a situation like that.

KEYSERLING: That's right. At a photographic swearing in. Now, let's get to the more fundamental aspects of the Nourse-Truman-Keyserling controversy. Dr. Nourse and I actually had very few differences on economic policy. He was there from '46 to '49. We helped the President

[51]

to write a great number of economic reports, and major economic reports. We wrote the published Council reports which has never been written since. We wrote many memoranda to the President. There were only two instances at the most in all that time where there was enough of a difference on economic matters for us to write separate memoranda to the President. That is not what the difference was, and that is not the source of Nourse's embittered book.

I reviewed that book in the Annals of the American Academy and pointed out the basis of his feeling at that time. Nourse and I had a disagreement that had nothing to do with economics. It was a political science matter; it was a matter of the administration of Government. Nourse did not want the chairman of the Council or members of the Council to make any appearance on Capitol Hill or to testify before the Joint Economic Committee. I did.

The reasons that I did arose out of what I had learned since 1933 and out of my preoccupation with getting a workable rapprochement between the Congress and the Executive, embodied, indeed in my 1944 plan. Furthermore, the Council of Economic Advisers were not anonymous private staff to the President like Clark Clifford or [Dr. Henry A.] Kissinger, although he hasn't remained

[52]

very private. We were appointed by the President, confirmed by the Senate under a statute which defined our functions. We were given Cabinet rank by salary and in other ways, and we were charged with helping the President prepare his economic report. When the President sends that to the Congress, the report has stamped on it, "Prepared with the assistance of the Council of Economic Advisers." The report goes to the Joint Economic Committee which holds hearings on it. Now, who is going to be the trustee for the President; who is going to represent the President at those hearings?

HESS: It should be the Council of Economic Advisers.

KEYSERLING: It would have to be. Nourse said no, and the reason he gave was, he says, "What will happen if I go up there and I disagree with the President? If I state my disagreement there's an embarrassment; if I don't state it, I'm stultifying myself."

I said, "What about any man of integrity on Cabinet level? Suppose the Joint Chiefs of Staff disagreed with the President on a weapon; or the Director of the Budget on an appropriation; or the Secretary of State on a foreign policy; or the head of HEW on a health program? If the disagreement is of sufficient size, then the man

[53]

of integrity has to resign; if it is minor, then he has to recognize that he is not President, and so long as he is in that job he has to support the President." This is eternal through American history.

And furthermore, while Nourse wouldn't go up on the Hill, he was going all around the country making speeches to everybody except the Congress, saying that he disagreed with the President. Now, here's where Truman made his mistake. This was not an issue of economics. This was an issue of a functioning of Government. Truman should have called us in at the beginning and said, "Gentlemen, after all, I'm the one who has had the experience in this, I have to determine how my agencies function. It is normal, natural, proper and inescapable that the Council of Economic Advisers represent me before the Joint Economic Committee." But he finessed it. He didn't want to offend the old man, so what did he do? First he sent up Paul Porter to represent the economic report; then he sent up Charlie Brannan as Secretary of Agriculture; then he sent up Averell Harriman as Secretary of Commerce; he sent up Porter last, and by the time he got to Porter, Porter said, "This is absurd." He said, "I need the help of the Council."

Then Truman decided in '48, "We will let Nourse not

[54]

go if he doesn't want to go, and we will let Keyserling go if he wants to go." So I went. And the interesting thing is that before '48, quite aside from the President, John D. Clark agreed entirely with me. Now, although Nourse was chairman, he was one among three equals, and what you do on a multiple body on a matter of procedure, you, go by majority vote. The chairman can be outvoted. So it was Nourse's obligation in my view, once we outvoted him on it, either to go or to have one of us go and just say, "I'd rather have one of the others do it." But he made a public issue of it. We--until he made a public issue of it--went along with him and didn't go from '46 to '48, until he made a public issue of it by going telling people around the country that we just wanted to support the President politically, which put us in an impossible position. And it later developed that what he was really concerned about was that in 1946 the Republicans had taken the Congress, and he thought Dewey was going to be President, and he was in private consultation trying to assure that he would stay on in the next administration and therefore he did not want to be identified politically with the President that he was serving.

[55]

Well, history has settled it.

HESS: Is that one of the reasons that he left in 1949?

KEYSERLING: Yes, this was the big thing, and when he wrote the book he was in a great distemper, and he grossly misrepresented Truman.

HESS: Why did the President keep him on for that year?

KEYSERLING: I guess he thought he had prestige. He didn't want trouble.

HESS: He kept him on for a period of time after the election.

KEYSERLING: That's right. Now, he wrote this book in that great distemper, and many of the things that he says about Truman are very unfair. For example, access. Now, if he complains about the fact that the President didn't understand all the details of economics, how could any President? But on access, he's completely wrong. I know from my own experience when I was chairman, and with Nourse it was the same way, I called up, Matt Connelly answered the phone, he never even said, "I'll call you back." He said, "Two o'clock on Thursday." Absolute and complete access to the President, and a most favorable attentive audience.

[56]

The President usually knew what he wanted in a rather decisive way and would state it, very clearly. He paid a great deal of attention to us; he was guided very considerably by our policies. So that is an unfair book.

HESS: While we have mentioned Matt Connelly and the President, how were your relations with the other staff members at the White House at this time? Clark Clifford, who was there until 1950, and then Charles Murphy?

KEYSERLING: Well, I had no relations with Matt Connelly except as Appointments Secretary. I was very close with Clifford. We worked very closely together from the beginning. In fact, this brings us in a way to the Ewing matter, and to the larger aspects of this. Clifford and I were as close together as any two people in those jobs could be. We had confidence in each other; we worked together a great deal.

HESS: Had you ever met Mr. Clifford before he was in the White House?

KEYSERLING: No. In fact, I first met him at the first meeting of the Ewing group, but this was early.

HESS: Late '46?

[57]

KEYSERLING: Yes. You see, in '46, the President had a disastrous congressional defeat. Very shortly thereafter, a man by the name of Donald Kingsley, who was the first assistant to Ewing, Ewing was the head of the forerunner to the HEW. Ewing had been a very, very successful lawyer. He had been a partner of Charles Evans Hughes; he had been the general counsel for Anaconda, but he had also had Democratic political experience. I think he was co-chairman of the New York State Democratic group.

Don Kingsley called me, I think it was late in '46, and he said, "We want to set up a little group to discuss the future of the Democratic Party." And that group met from late '46 until shortly after the '48 election. It is interesting that although we met every Monday night at Ewing's apartment at the Wardman Park, had a wonderful steak dinner and then spent three or four hours together, there was never a single whisper of those meetings in any press in the United States to my recollection. It never got out.

How different that is from the more recent times when everybody is busy over exaggerating how they made the President or they educated the President, or they told the President what to do. People like Arthur Schlesinger and some of these others in recent years, you'd think

[58]

they practically ran the White House, when he was just there as a Boswell. He didn't run anything.

No word of it got out. Now, the members of the group: There was Clifford; there was Murphy; there was me; there was Charlie Brannan, first as Assistant Secretary of Agriculture and then as Secretary of Agriculture; there was David Morse, who at that time was Assistant Secretary of Labor and later became head of the International Labor Office for many years; there was "Debby" [C. Girard] Davidson, who was Assistant Secretary of the Interior; there was Donald Kingsley; occasionally, very, very rarely, Howard McGrath, as Democratic National Chairman, dropped over, but very occasionally. He really had nothing to do with it. That was about the group. It's possible that there was one that I didn't mention, I don't know.

HESS: How effective did you think that that group was on influencing Mr. Truman's views?

KEYSERLING: That group was immensely influential.

HESS: How did you go about applying the influence that evolved?

KEYSERLING: Well, first of all, you've got to analyze how

[59]

the group functioned and how it operated before you come to the question of how we influenced the President. You see, when Truman became President in 1945...

HESS: It's getting close to twelve...

KEYSERLING: If you want to interrupt at any time, we can resume some other time.

HESS: It's coming close to twelve and we're about down to the end of this reel, and I thought perhaps you had a luncheon engagement. We could cut off here and start at this point at a later date, if you'd like?

KEYSERLING: Well, we could do that. Perhaps it's better.

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