Harry S. Truman Presidential Library & Museum

Oral History Interview with
John W. Snyder

Secretary of the Treasury in the Truman Administration, 1946-53. Other Federal positions once held include Executive Vice-President and Director, Defense Plant Corporation, 1940-43; Assistant to the Director of the Reconstruction Finance Corporation, 1940-44; Federal Loan Administrator, 1945; Director, Office of War Mobilization and Reconversion, 1945-46. Secretary Snyder has been a longtime close friend of Harry S. Truman beginning with their service in the U.S. Army Reserves after World War I.

Washington, D.C.,
February 20, 1969
By Jerry N. Hess

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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.

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 It may not be published in full except by permission of the Harry S. Truman Library.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

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Oral History Interview with
John W. Snyder

Washington, D.C.,
February 20, 1969
By Jerry N. Hess

HESS: Mr. Snyder, this morning, let's continue on with our discussion of the foreign affairs matters.

SNYDER: Well, Mr. Hess, this report was an optimistic but not particularly revealing public report that I made at the time. In keeping with my own conception of my official function, I retained my personal report to be made to the President himself. However, the magazine U.S. News and World Report, in its issue of October 18, 1947, after stating that I was not talking outside of official circles, but that the ideas that I brought back from abroad can be easily ascertained, as it was my view, as they interpreted, that financial help for Europe was most urgent. To some extent of course,. they added, that it appeared to be a change of view. In an article

which they wrote:

Before the trip, Snyder had endorsed the Marshall plan in general terms, but was looking skeptically at many details. As the man who must provide the money, he wanted to be sure that the money would be available. Within the administration, he was a deterrent, a counterbalance, for Secretary of State George C. Marshall's insistence on quick, large-scale action. What Mr. Snyder saw in Europe removed some previous doubts. Now his great influence is on the side of speedy aid, but there are still limits. In urging aid for Europe, Mr. Snyder is speaking only of the period immediately ahead. He says Europe has to be helped through the winter by advances that will provide coal and food. Beyond that he does not go for the present. He apparently feels that later aid should be tied to later developments.

As the article reported, I had returned from Europe convinced that assistance was needed to get the Europeans through the approaching winter. This type of assistance I certainly believed to be urgent, but I realized that it would perhaps take time, perhaps many months, to get the Marshall plan approved by Congress and in working order. However, the further optimism that I might have

reflected about European recovery in the statement that I made immediately after I got back from Europe, I really used that as the basis of reporting what I saw on the trip. I, without doubt, gained firsthand knowledge of the manner in which the European countries had already gotten together to draw up a plan for their own economic recovery. Secretary Marshall's statement that the initiative should come first from Europe had been taken by the Europeans at its face value. I had seen evidence of their reaction to Marshall's speech. While in Europe, I had attended some of the meetings of the economists and government officials that later resulted in the so-called Paris report, a blueprint for recovery of Western Europe. This activity upon the part of the Europeans greatly heartened me towards the execution of the Marshall plan. Secretary Marshall's Harvard speech caused great interest in all the European capitals.

Marshall had told the Europeans that it was their move, and the move was not long in coming. The leader and great force behind the first action was Great Britain's foreign secretary, Ernest Bevin. It was Bevin who did more than any other single European to make the Marshall plan a reality. Bevin was an unusual figure in Europe, and particularly British politics, a leader of the Labor Party in Britain. Bevin became foreign secretary after the war when his party upset the Conservative government of Winston Churchill. His background made him almost unique in the Labor government, a working man who had made his career in the trade union movement. He brought energy, force, and realism to the Foreign Office. He was not one of British Socialism's theorists, he was a man of direct, and formidable action. Of all the members of the Labor government I had the closest relations

with Bevin. The two of us had become friends who trusted and respected each other. In the wake of the Marshall speech, Bevin led the way to the organization of the Committee for European Economic Cooperation; it became known as the CEEC. He and the French foreign minister first invited the Soviet foreign minister to join them in considering whether a joint European plan for economic recovery might be devised. As a matter of fact, it was somewhat startling to recall that Russia and her satellites could have even thought of participating in the Marshall plan. The invitation was open to all European countries, and the State Department took a calculated risk in order to avoid charges that the Marshall plan was directed against the Soviet Union. The gamble paid off since Russia, afraid of loosening controls over her satellites, prevented them from participating in the Marshall plan.

The Soviets declined to take part in such discussions, and early in July Britain and France proceeded to invite all European countries, with the exception of Spain, to send representatives to a conference which would draw up a European recovery program. All sixteen nations sent representatives to Paris where the CEEC was formed. On September 23, 1947, after about two months of furious work, the Paris report of the CEEC was transmitted to American officials. It presented a plan for European recovery based on estimates of production, needs and outside assistance required. This report, a remarkable achievement by sixteen nations, successfully fulfilled Secretary Marshal’s dictum that the initiative should come from Europe. I had seen the CEEC at work, and had learned of some of the results of its efforts during my trip to Europe. I entirely agreed with the State Department in its


The report of the Committee of European Economic Cooperation represents in the light of European history a significant achievement. In the space of somewhat over two months representatives of the governments of sixteen countries of diverse histories and customs all suffering in some degree from the catastrophic results of World War II, from economic ills and political tensions, met together in a harmonious and cooperative atmosphere and produced a document of historic importance.

The conclusion of the CEEC was that if the program of European recovery was to be achieved, sizable assistance would be needed from the United States. Taking the report as a starting point, various U.S. Government agencies studied the program and the recommendations, and the estimates of assistance needed from the United States were scaled down. When the administration went to Congress for appropriations for the program in late 1947, it requested total assistance of between fifteen and seventeen billion, eight hundred million dollars, for four

and one quarter years. It asked for six billion, eight hundred million dollars for the first fifteen months of the program. The aid requested included estimates for Western Germany. Getting the Marshall plan through the Congress was a matter of several months. In the meantime, however, events in Europe and elsewhere did not stand still. To fill the need for immediate relief while it was considering the Marshall plan, the Congress in 1947 passed two foreign aid laws providing immediate funds to distressed countries. As noted above, the National Advisory Council had reminded the Congress in June that nearly all money then authorized for relief had been committed, and that the funds on hand or in immediate prospect were not sufficient to accomplish the purpose for which foreign aid had been provided.

When I returned from Europe, as I have

just stated, convinced that the European people should get immediate interim aid for the coming winter, I made it clear that this aid was needed. The Congress first passed a post-UNRRA bill appropriating three hundred and fifty million dollars for that program. In my view, however, and in view of the NAC, this amount was still not enough, and the council then recommended to Congress a plan for interim aid to Austria, France, and Italy, the three Western European nations in the most dire need. On December 23, 1947, the Congress appropriated five hundred ninety-seven million dollars for the interim aid program, and on March 31st, 1948, an additional fifty-five million dollars was provided for the same purpose. Nearly all of the interim aid program funds were in the form of grants. Later, some twenty-one million dollars of unexpended funds from the program were incorporated into the European

Recovery Program. Both the post-UNRRA and the interim aid programs met a crucial need in a crucial time. They enabled a number of countries which were in critical condition economically to subsist until the Marshall plan could get underway. The importance of the Export-Import Bank in the foreign aid plans and operations of the United States Government was recognized throughout the postwar period by the Truman administration. Shortly after the war ended the lending authority of the Bank was raised by Congress from seven hundred million dollars to three and a half billion dollars, and corresponding with this increase in authority was the rise in the Bank's outstanding credits from two hundred fourteen million dollars in 1945 to nearly two and a quarter billion dollars in 1948.

In the interim period before the Marshall plan got underway, Government leaders again turned

to the Export-Import Bank for assistance. It was proposed within the Treasury that the Bank extend unsecured reconstruction loans to European countries to tide them over the interim period. However this could not be worked out, for as the Export-Import Bank itself pointed out, the Congress had directed it to cease using unsecured reconstruction loans. The Bank did look into the possibility of making secured loans to a number of European countries, but these did not make a significant contribution to foreign aid in the interim. The Export-Import Bank continued throughout the Marshall plan period to be the principal Government agency through which foreign loans were granted and administered. This was a result of a provision in the Marshall plan's legislation providing that the administrator of the Economic Cooperation Administration to transfer funds to the Bank

when he wanted to extend a loan. Congress again increased the Bank's lending authority in 1951 in the midst of the Korean war, this time to four and a half billion dollars, and directed the Bank to place importance on the development of sources of supply for strategic materials for the United States. Within the Cabinet, and within the entire executive branch of the Government, the organizational problems inherent in the launching and maintaining of large foreign aid programs became a matter of greatest interest and urgency in the summer of 1947. There were, of course, great problems, given the impact of such programs on the entire Nation and the fragmented responsibilities of our Cabinet system. President Truman on June 22 appointed three committees to study the relationship of foreign aid to various parts of our national economy. Several congressional committees also

entered the field with surveys and studies of their own.

Later, Under Secretary of State Robert Lovett set up an informal, interdepartmental committee on foreign aid. The nature of the Lovett committee was discussed in a memorandum of September 11, from Frank Southard to me. Southard noted that Lovett had called the first meeting of his group which consisted of State, Treasury, War, Navy, Interior, and Agriculture. He proposed to use this as a steering committee and to refer various aspects of the Marshall plan to the NAC, the Krug and Harriman committees, and the food committee and others.

Recognizing the difficulties of coordinating such a program among the various agencies and departments, I believed that an informal committee would not be able to handle the job. My experience as Director of the Office of War Mobilization and

Reconversion had convinced me of the necessity of having a permanent coordinator of such a program. However, my proposal that a Cabinet committee be set up by Executive order to handle the job was not accepted. Southard reported to me on this matter. In a memorandum he stated:

We have heard nothing of your proposal for a Cabinet committee to be set up by Presidential order, but I have sensed among my key State Department people misgivings concerning the effectiveness of the informal procedure that is now beginning to function, and I do not believe that they would resist your proposal if it was pressed.

However, I did not press for my proposal, for as I recall later I began to doubt the efficiency of even the Cabinet committee because of their lack of central direction and control and concluded that they were not much of an improvement over the informal committee plan. In addition, the National Advisory Council, which I headed, came

to be relied on more and more as the top agency of the executive branch on foreign financial problems related to aid programs. There were a number of good reasons for this. The NAC was a permanent group. It had had experience in the field of coordinating Government agencies dealing with foreign economic matters, and it had its own staff. We will see later how the Council retained a strong hand in foreign aid even after the establishment by Congress of the Economic Cooperation Administration. In the days when the Truman administration was working out its proposals for the European Recovery Program, the NAC played a very vital role. To it was referred all of the financial problems connected with the program, and from it came many of the provisions of the legislation concerning financial matters. Frank Southard headed the NAC task force working on the Marshall plan.

Among its more notable contributions to the European Recovery Program as it took shape was the provision for the establishment of counterpart funds which served the double purpose of reducing the threat of inflation in countries which received aid and provided funds for the carrying out for the many functions of the program. Counterpart funds will be discussed a little later as we get into the further operation of the European Recovery Program.

In one important aspect of the overall foreign aid picture, it was my privilege to play a leading part before Congress and before the people through speeches and presentations. Of course, this was frequently referred to as my fight to have the Congress provide foreign aid funds within a balanced budget. It is characteristic, as it was stated by the press at the time, that I should function in that fashion. I was expected to strongly advocate the programs of

my administration, and, as many thought I would necessarily bring about considerable fiscal restraint. All the Government officials were victims of similar situations to some degree, but none, as I recall, was quite given the pressures that I received at the time; although I expected these pressures, my official responsibilities required me at all times to speak up strongly for the fiscal soundness of the plan. I felt that the alternate goads and restraints of this situation, with particular sensitivity in the months leading up to congressional approval of the Marshall plan, would be most helpful in steering the plan through Congress. While I definitely favored the Marshall plan, I also had to think of my program for a balanced budget, and I believed that foreign aid should be provided within a balanced budget and not through deficit financing which would weaken

our own economic position. According to the press of the time, as I look back, much space was given to the issue in the newspapers from October 29th on. At that time, I was asked if I thought that Congress should act on the Marshall plan before considering any tax reductions. At the time I was quoted as saying, "Definitely, because I certainly want the Marshall plan to be within a sane, balanced budget." I also stated that I was quite sure that the National Advisory Council would confer as a group on Marshall plan appropriation requests, to judge their relationship to a balanced budget and the problems of the Treasury and the Federal Reserve System.

In January of the following year, when I appeared before the House Foreign Affairs Committee to discuss the European Recovery Program, I again reiterated my desire to see

the program come within a balanced budget. One interesting result, without any question, in my opinion, was a change in the attitude of the Republicans towards the Marshall plan, due largely to the position that I was taking that it should be considered within a balanced budget, because at first the Republican segment of Congress was rather cool to this, and of course, as you recall, they were in control of the Congress at the time that this legislation was up there. But we developed some very strong advocates among the Republican leadership.

HESS: Who was the strongest?

SNYDER: I would have to go back and check my records there. I think that Senator Robert A. Taft was exceptionally helpful, Senator Robert Kerr, a Democrat, was very, very productive in this period. Senator Tom Connally's aid was material

in the Senate, and Sam Rayburn was most effective in steering the program in the House. The most important hearings, in my opinion, our most effective hearings, were on the Senate side.

HESS: Was Senator [Arthur H.] Vandenberg helpful?

SNYDER: Vandenberg was very helpful, yes. Senator [Eugene Donald] Millikin of Colorado was, as I recall, very helpful. And to give fairness to all, I must say that real support was developed in the Senate.

In November of 1947 the President's Committee on Foreign Aid estimated a first-year cost of five and three quarters billions of dollars, and a total cost of twelve to seventeen billion dollars for the whole Marshall plan, as I mentioned awhile ago, covering the whole four and a half year period. The committee also advised the President that the United States' natural

resources and productive capacity could safely support a program of these dimensions. In December of 1947, the Truman administration sent to Congress its recommended draft legislation for the Economic Cooperation Act of 1948. That gives us a guideline on when, and that was in December of 1947, before we got around to actually sending up a well-rounded program, with the title of "The Economic Cooperation Act of 1948." It was the time before the ECA program first went to Congress.

The funds requested for the first year were close to those recommended by the President's Committee on Foreign Aid, but the draft legislation represented not only the administration's recommendation for appropriations, it also included recommendations for an organization to administer the program. The bill submitted to Congress represented weeks of long, hard work, for all

members of the Truman Cabinet, and it contained the proposals which President Truman and his advisers believed would best insure the efficient and vigorous administration of the European Recovery Program.

First of all, it made participation in the program open to all European nations, and their colonies or dependencies that were willing to take certain specified steps to cooperate with their neighbors and with the United States. It provided for the setting up of a new agency of the Government, the Economic Cooperation Administration (the famous ECA), and that organization was to be headed by an administrator. It also called for a special representative of the ECA to be maintained abroad and for the ECA personnel to be employed overseas, as well as at home, in administering the program. The administrator of ECA was authorized to transfer goods and services as well as funds in the

accomplishment of the program, and to make guarantees to U.S. citizens and businesses to facilitate private investments overseas. All loans were to be handled through the Export-Import Bank. When a loan had been approved ECA would transfer the funds to the Export-Import Bank for disbursement. It was felt that the Bank, because of its great experience with foreign loans, and because it was a permanent agency that could service loans in the future, it would be the best agency to handle these disbursements. The administrator was authorized to increase production of strategic materials for stockpiling purposes, and that it was regarded that countries receiving grants deposit equal amounts of their local currencies in specific deposits, such funds to be known as counterpart funds. The ECA was to terminate operations on June 30, 1952, unless the Act

was extended by Congress. The draft legislation also dealt with the question of whether the funds expended under the program should be in the form of grants or loans. It stated that such determination was to be made by the administrator in consultation with the National Advisory Council. This was a subject that was to be of great concern throughout the ECA operations.

When I appeared before the House Foreign Affairs Committee on January 14, 1948, to discuss the financing of the European Recovery Program, I was pressed very strongly on just what the function of the National Advisory Council was to be.

I stated in my appearance:

This is a program for the economic recovery of Europe. It is not merely a relief program.

Moving on to the subject of loans versus grants, I stated my own and the administration's views on the matter. It was my deep concern about

the results of the loans of the First World War that led me to be so aware of the dangers that lay in making loans to these devastated countries. It was apparent that Congress, as well as most Americans, wanted to make as much of the aid money available through loans as possible. It was natural that no one wanted to give away anything unless it was absolutely necessary, but to me it seemed necessary that the Congress and the people understand that it was to our benefit to see to it that the recovery program be not too strictly tied down to loans. In my presentation, I have stated:

This assistance should be provided as a combination of grants-in-aid and in loans. The criteria for selecting one or the other form should be the capacity of the participating countries to earn in the years to come the dollars which would be needed to pay interest and principal. We must keep in mind that these countries have already incurred an obligation for large annual payments of interest and amortization arising from the dollar loans extended to


them over a period of years by the United States Government or the United States private capital market. We should take care not to insist that these countries contract additional dollar debts, which would absorb so much of their dollar earnings as to operate to the disadvantage of future trade and private investment. If the entire aid for European countries were to be made on a loan basis, it would be practically impossible for them to meet the additional charges from their earnings of dollars, even after trade and investments return to normal. The proportion of total aid which can be prudently provided on a loan basis, will depend on the estimate of the borrowing countries' capacity to repay in dollars and also on the degree of flexibility which can be introduced into the terms of repayment. We propose that when the administrator for Economic Cooperation decides after consulting the National Advisory Council that it is desirable to extend aid on a credit basis, he will allocate the funds to the Export-Import Bank. Incidentally, this is one example of the manner in which the National Advisory Council would perform its customary role of coordinating the United States' foreign financial policy.

In advocating the great flexibility in the manner of whether aid should go as loans or as grants, and in warning of the dangers of tying the Europeans down to the repayment of principal and

interest, I was only repeating the lessons that I had learned from our experience with war debts after World War I. As I have said, I was echoing the warnings of an earlier Secretary of the Treasury, who had recognized the dangers inherent in World War I war debts, but was unable to substantially alter the situation. In a speech on March 24, 1926, Secretary Andrew Mellon said:

Some of the debt settlements we have negotiated have been criticized because it is claimed that our failure to collect the last cent imposes an avoidable burden upon our taxpayers. This criticism is without perspective and does not take conditions in their true relative importance. I should rather have solvent customers in the future which permit me to run a profitable business than insist upon terms of debt settlement which will again force my customers into bankruptcy. A businessman would prefer making one hundred dollars in his business than being repayed five dollars of a debt. The farmer or the laboring man would rather have a market for our surplus in Europe than save a dollar of Federal taxes.

More than two decades separated these positions, but it seemed that both of us were trying to drive home the same point, that the United States, as an exporting nation, had an interest in maintaining the ability of its customers to continue to buy.

In my appearance before the Congress, I went on to make these points: One, the NAC was studying the problems of what to do about the assets of the Marshall plan countries located in the United States. Two, since it would not be possible or desirable to obtain all the goods needed in the programs from the United States, the NAC believed that the ECA administrator should be authorized to procure supplies outside the country. These were what we call off-shore procurement. And three, that the European countries negotiating agreements with the United States should clear

their agreements through the National Advisory Council.

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