John W. Snyder Oral History Interview, April 17, 1968

Notice
This is a transcript of a tape-recorded interview conducted for the Harry S. Truman Library. A draft of this transcript was edited by the interviewee but only minor emendations were made; therefore, the reader should remember that this is essentially a transcript of the spoken, rather than the written word.

Numbers appearing in square brackets (ex. [45]) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.

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This oral history transcript may be read, quoted from, cited, and reproduced for purposes of research. It may not be published in full except by permission of the Harry S. Truman Library.

Opened September, 1970
Harry S. Truman Library
Independence, Missouri

[582]

HESS: Mr. Secretary, what were your views on the tax structure of the United States at the time you became Secretary of the Treasury?

SNYDER: Well, frankly, Mr. Hess, the tax structure in 1946, when I went into the Treasury, was a hodgepodge, it was a conglomerate of taxes that had been added on as revenue was required without any real reference to keeping the whole tax program in balance, and as a result we had a hodgepodge of taxes and many that had been applied against any source that would yield the revenue. This procedure, or this policy, was begun back towards the end of the days of the attempt to recover from the depression. As we needed additional taxes for revenues for the relief programs, so-called emergency taxes were voted, which, when the war came on, stayed

[583]

in the picture. And then as the war came on, Mr. Roosevelt elected to adopt a policy that did not face up to the real potentials of the cost of the war and he delayed asking Congress for taxes to support the expenditures of our war effort. Then when we did start trying to raise revenues while the war was still in progress, we found ourselves putting on excise taxes and raising the income tax, raising the corporate tax, and as demands for revenue became greater and greater and we were going more and more into deficit financing to support the war, many of the taxes were put on just wherever they found a source of taxes that would yield revenue for the purpose in mind. As a result, by the time the war was over, and the aftermath of the war was on us, with all of the problems of reconversion and readjustment of our economy, we had a great ball of taxes. Our tax structure was bulging in spots with bumps that shouldn't

[584]

be on there. And then it was extremely difficult to try to unwind those taxes and to relieve those that were truly emergency taxes and did not fit in with the normal peacetime economy, particularly in such matters as the excise taxes on ladies’ pocketbooks and all sorts of things of that character. We very early attempted to give consideration to tax reform. Mr. Truman and I concurred completely in the desirability and the necessity of attempting to get a better balanced tax structure and tax program. We immediately ran into the problems of resistance of holding certain taxes on and resistance of releasing taxes in other areas. And we had the same problem developed that we had in the releasing of controls. It was feared that as you started trimming any of the taxes, you would start a demand on all of the excise taxes, which, of course, was true and will

[585]

always be true, that when you have just piled controls, or taxes, on a great cross-section of our economy, when you start trying to repair it and bring it into better balance you're going to have certain parts of industry urging you to take taxes off of them, and saying that if it became a genuine problem and we'll have to go into the efforts that we made a little earlier. It was a problem that was recognized by Mr. Truman and me right at the very beginning of my service in the Treasury. There were about nine months there that I suppose that the Treasury was so involved in unwinding from the war, the formation of the World Bank, and the International Monetary Fund, in which the Treasury took a very active part, and Congress had so many things under consideration in the aftermath of the war it just hadn't gotten around to an attempt. So, when we did undertake it, we found

[586]

ourselves in a tremendous quandary of how to attack it. The Ways and Means Committee was very cooperative and recognized the necessity, but when you are responsible for coming up with a problem of that sort, it puts a greater reluctance on the entity that's required to make the changes. It caused them to be cautious. Having assembled such a conglomerate of taxes they wanted to be very careful how they undid them and rearranged the tax pattern. So, I think that we'll a little later take up a fuller discussion of what we attempted to do about taxes, and maybe discuss some of the bills that did come up.

HESS: Just one more general question: During the war there were some excess profit taxes placed on some of the industries. Just what were your general views on excess profit taxes?

SNYDER: As a war measure, it was probably justifiable.

[587]

Normally, I am opposed to that type of taxation. It's very difficult to say that just because you are successful and can do a better job and save more money, that you're going to be taxed heavier for your frugality and ingenuity. The excess profits tax cannot possibly be equably applied. It actually turns out in practice to be a policy in which you're paying a premium for inefficiency. Many cases that we had come to light were companies making the same product. One made a very nice profit on the end product, and the other just barely broke even. Well, then because this one company had been able to do a better job they were penalized on their profits. But for the war effort when we're up against the gun, there may be some justification for doing that, although I think there should be greater equity in the incentive plan for encouraging people to do a better job.

[588]

As a matter of fact, those that didn't make their profits and lagged behind in their efficiency of operations, were really very costly to us, and we should have found a better way of going about improving their production plans and procedures, rather than to penalize the ones that were doing the good job.

HESS: Well, shall we shut it off and discuss the bills next week?

SNYDER: All right.