Oral History Interview with
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 was a longtime close friend of Harry S. Truman beginning
with their service in the U.S. Army Reserves after World War I.
John W. Snyder
May 21, 1969
By Jerry N. Hess
[Notices and Restrictions | Interview
Transcript | Additional Snyder Oral History
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. ) 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 It may not be published in full except by permission of the Harry S. Truman Library.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
[Top of the Page | Notices
and Restrictions | Interview Transcript
| Additional Snyder Oral History Transcripts]
Oral History Interview with
John W. Snyder
May 21, 1969
By Jerry N. Hess
HESS: Mr. Secretary, in an earlier interview, when discussing the events of 1952, you said that President Truman had said that Eisenhower would make a good standard-bearer for the Democrats that year. Do you recall when he made that statement, and just what he may have said?
SNYDER: I don't recall the exact date. We were sitting around talking one time as we frequently did. Back in the twenties and thirties when we would get together, we would talk about who would make a good President or Senator or Governor. Both President Truman and I had been good friends of General Eisenhower. He just mentioned, I recall on one occasion, that he thought maybe he would make good presidential material. Later on, some
further discussion was given to the matter, and I think there was an overture of some sort. I don't recall any specific detail of Mr. Truman making an approach to Eisenhower, but I do recall that George Allen was very enthusiastic over such a possibility. Somewhat later Ken Royall began to take an interest in it, but at this particular time it was just a matter of exploration and not with any idea of any specific approach.
HESS: Do you recall what George Allen and Kenneth Royall may have said at that time?
SNYDER: I don't know if they were present when it first came up, but later Allen had decided that it would be fruitful to talk to Eisenhower, but nothing ever came of it.
HESS: Moving on into 1952, as we are, what do you
recall about the convention and the campaign of 1952?
SNYDER: Well, the convention, I recall going out there with President Truman. He invited me to fly out with him. That was my first novel experience of seeing us take off from the ground in the airplane on a television set in the airplane. We had a television set rigged up in the plane, and the ground cameras were working as we took off and we sat in the plane and watched ourselves take off. It was a rather interesting experience. We flew over to Chicago and immediately tried to get in touch with Stevenson. We were having dinner at the Saddle and Sirloin Club, I believe, at the stockyards, and Mr. Stevenson was backing and filling; apparently he was most desirous of being drafted. He
didn't want to appear to be a candidate, he wanted to be drafted. Mr. Truman very pointedly told him that that was one job that you had to show a real genuine interest in, that people weren't around just passing the Presidency out, generally speaking. There had been cases of maybe a draft when Roosevelt in later terms had been practically offered the nomination on a silver platter, but generally speaking, the prospect had to show some real interest in the position.
HESS: Why do you think Mr. Stevenson had that attitude?
SNYDER: Well, I just think it was Adlai. He was an unusual person, very delightful. I was very fond of him, but he had some unusual notions, and that was one of them, that he would consider that to be the desirable situation.
Well, anyway, finally, I think after some backing and filling, Mr. Stevenson finally said that he would like to have it and made some gesture in that direction. On the next day at the convention, of course, he was nominated, and we flew on back to Washington following that. In the meantime, we had had conferences. The President had received quite a number of prominent Democrats in his suite, and had talked with them. There was a rather unpleasant situation that developed. The President was not given, I think, the consideration that he should have had in the seating at the convention, and in the facilities and arrangements. They gave him only two or three seats, I think, maybe four seats. It wasn't even sufficient for his own family and the party he brought with him. But we managed to find spots around. The convention didn't have the verve that I
would have liked to have seen, and certainly that we really needed, because there wasn't the spontaneous response from the convention that occasions of that sort should bring out to put real life into a coming campaign. In the visiting delegations, there wasn't a great deal of unanimity. They all seemed to be somewhat resigned that Stevenson should be the candidate, but they didn't like his reluctance to come out and say that he wanted it. That's about the chief impressions that I have, unless you have some questions.
HESS: I have a few. What do you recall about Vice President Barkley's efforts to obtain the nomination?
SNYDER: I don't think that they were very pronounced. There was some talk around. He made a splendid talk, but there was no real drive for Barkley
at the '52 convention that there had been in Philadelphia in '48.
HESS: What do you recall about the possibilities of some of the other people receiving the nomination in that year, such as Averell Harriman?
SNYDER: Well, Averell had been a very loyal Democrat, and had performed magnificently during the war, and had been extremely helpful to Mr. Truman all during his administration, but there wasn't any real effort made to nominate any particular candidate. There were quite a number of trial balloons sent up, but there was no real organization behind any other candidate.
HESS: One of the trial balloons came rather early, and was for Fred Vinson. Do you think that he
stood much of a chance?
HESS: After Mr. Stevenson received the nomination, he did not move his principal headquarters to either Washington or New York, but instead kept it in Springfield, Illinois. Why did he make that decision in your opinion?
SNYDER: Well, again, Mr. Stevenson overlooked the fact that he had to run on the party's record; that he couldn't disassociate himself from the Democratic Party. He made several unfortunate remarks, one of which out on the West Coast, he referred to the "mess in Washington" which was very devastating because of the manner in which it was used by the opposition constantly. They almost adopted it as a byword of the campaign.
And it was to not be identified with the outgoing administration that he established his campaign and kept it away. It was a very unfortunate thing for him, and certainly for the party that he did so. I don't think he could have won under any circumstances, however, because they had to head up the opposition, this great national hero who was running on a number of emotional items that it would have been very difficult to overcome by any sort of campaign.
HESS: Do you think that the Democrats had anyone that year that could have defeated General Eisenhower?
SNYDER: I doubt it. That's what I was just saying. He was running on several emotional issues; he led us to victory in war; he had pledged to get the boys out of Korea; his stature as a
hero was very high, the women took up a very active campaign on the Korean issue, and I don't think that any Democrat could have won that year.
HESS: The time that he said that he would go to Korea, do you see that as a major point in his victory?
SNYDER: Yes, the Republican National Committee took that up and played it to the hilt, and there was a door-to-door campaign by the women telling the mothers that Eisenhower had pledged to go to Korea and get the facts and bring that matter to a close. There's no question but that that had a very, very important bearing on the results. Remember Eisenhower won the election as an individual, not as a Republican Party leader.
HESS: As you recall, President Truman had a very vigorous campaign that year. Did you feel that
Governor Stevenson wanted President Truman to campaign in this manner?
SNYDER: I doubt it. It's my personal recollection that Mr. Stevenson did not welcome any strong activity, vigorous activity, on the part of the administration.
HESS: Did you go with the President on any of his campaigns that year?
HESS: He spoke at Kiel Auditorium for his final speech.
SNYDER: I was not with him on that occasion.
HESS: Do you recall anything else dealing with Governor Stevenson?
SNYDER: Governor Stevenson in his speeches
was magnificent. They were splendid talks, beautiful phrases, and language, but he frankly talked over the heads of his principal audience; you sat and enjoyed the speech, but when he was through, when the speech was over, the average listener had difficulty in recapturing just what it was that he had said. It was very beautifully said, beautifully phrased, and you relaxed and enjoyed listening to him; he had nice delivery, but this remained true. After he went to the U.N. he became very beloved. He made, I think, a great representative, but he didn't seem to be able to carry his points too well. As a matter of fact, a sidelight on that, I was in London the morning he died. My two granddaughters and I had been on a tour through Scandinavia, and we were on the way home. We went over and paid our respects
at the Embassy, and it was very touching, very impressive, the huge crowd that stood there in front of the Embassy -- of course, it rotated, they came and went, but the crowd remained large from the time it was announced that he died until the cortege went to the airport to bring the body home. There was a deep sense of loss expressed by the British people, which was most touching and impressive to me.
HESS: Governor Stevenson again received the nomination in 1956. Let's discuss that for just a moment. Now the President supported Mr. Harriman in 1956.
SNYDER: That's true.
HESS: Did you think that the President had very much of a chance of getting someone other than
Governor Stevenson in that year?
SNYDER: I don't think so. We just had not built up a driving organization in the Democratic Party. The party was sort of drifting, Eisenhower had had such a tremendous press and reception during his first four years. It would have been a very difficult task to have defeated him for a second term.
HESS: Were there any others besides Governor Stevenson and Mr. Harriman who were seriously considered for the Democratic nominee that year?
SNYDER: I don't recall.
HESS: Moving on from that subject, let's discuss the transition from the Truman administration to the Eisenhower administration. We have mentioned this in times past, but we probably have not
covered it as well as what we would like to. What else comes to your mind when you look back on the days of the transition?
SNYDER: As you say, we have touched on this subject previously, there were several of us who talked with the President about the idea that we should, in the different departments, make every effort to make the transition as smoothly as possible in the interest of the good of the country. The President agreed with us, and I proceeded to take a very strong part in the transition in preparing the successors to the Treasury with every possible aid so as not to disrupt the financial, monetary and fiscal side of the Government's operation, because the Treasury is the heartbeat of the Government. None of the other departments can function, and the plans and the policies of the administration would be damaged, if the financing
wasn't properly and adequately handled. So I set up a suite of offices in the Treasury for Mr. Humphrey, Randy Burgess, and "Chappy" [H. Chapman] Rose, and several others whom Humphrey brought with him. We gave him an opportunity to interview all the different department officials, the civil service people who would remain there and were actually the staff members. They were somewhat difficult to satisfy. They took the attitude -- initially Mr. Humphrey didn't, but he gradually grew into that attitude that they knew what they were going to do, and that this was helpful, but they could have done just as well without all this assistance. Their staff people didn't think so. They thought it was of tremendous value to them. We did do quite a number of things -- we were trying to show them that we were not antagonistic and that the Treasury was for the public welfare.
One thing that we did in the Treasury with the President's approval: We had quite a little surplus then, and there was some talk that we ought to reduce the debt by five million dollars, but knowing the financing that was coming up and the rollover in some of the financing and some of the requirements for additional funds, the President agreed with me that we would not do that, and we left them with a cash surplus that could be used. That, of course, was very poorly appreciated openly. It was deeply appreciated internally, frankly because they knew darn well that it helped them tide over that situation. But publicly, you never heard any acknowledgement, any recognition of that service. Perhaps the State Department almost matched the Treasury's efforts to try to inform the incoming administration on the problems,
but I think the Treasury Department's efforts, particularly in the tax field, in the bond financing, in the maturities that were coming up, and in the savings bond area, clearly indicated that we tried our best to carry out the President's wishes for a smooth transition. I have heard a great deal about this recent transition that took place. I think that that was very nicely done. Joe Fowler followed the same general policy that I did and tried to give the incoming administration every opportunity to make a good transition.
HESS: In Mr. Truman's Memoirs, Volume II, starting on page 513, he discusses a conference that was held on November 18th between the incoming and the outgoing administrations. What can you tell me about that conference?
SNYDER: Well, President Truman was very anxious because of the times and the problems and of the change in complexion of administrations, to do everything possible to smooth the changeover, and he would take every step that he could take to make it smoother. So he made an overture to the President-elect and the first step was somewhat cooly turned down because President-elect Eisenhower had been somewhat swayed by his colleagues that the best thing to do was to wash his hands of anything dealing with the Truman administration, and not to get committed to doing anything that would be of assistance to the Truman administration in the last days. The new administration would have to be responsible for whatever steps that they took and the day they were taking over was on January 20, on inauguration day. However, Mr. Truman persisted, and again
invited the President-elect to come in for a conference and let his principal Cabinet officers give a briefing to him and his personal staff. This was finally set up for November 18th at 2 o'clock at the White House. It was a pretty standoffish affair. General Eisenhower was particularly glum. I don't think that he smiled the whole time that we were in session. He seemed to be on the defensive for some reason, he was very cautious about any statement that he made. He seemed to be particularly anxious that anything that was said should be recorded and that memos should be prepared on it. As a matter of fact, I remember him saying one time, "Am I supposed to be taking notes?" Of course, many of the Cabinet members had papers outlining the important problems faced by their departments.
President Truman had quite a little talk with President-elect Eisenhower before they went into the general conference. Later he said that it was somewhat of a wasted effort because he wasn't too sure that President-elect Eisenhower paid a great deal of attention to what was said. After we did gather, Mr. Truman briefed those present on what he and President-elect Eisenhower had said before they came in. I think I was the first one who was called on to present the Treasury's position to the President-elect. As I recall, this was about a two-page memorandum, in which I had called to the attention of the new administration the problems which were foremost in the Treasury, that needed their very prompt attention, such as some refinancing that was due to come up. The Treasury every Monday morning has quite a refinancing in bills and in notes, which is just routine. It comes up
every week of the world as these bills that are outstanding, the ninety day and one hundred and twenty day bills, and three hundred and sixty date notes, roll over; they are either refinanced if they don't have sufficient money to pay any of it off, if you have sufficient cash and want to reduce the outstanding bills, you can do so at that time. If you need just exactly that amount of money, then they just roll over. Or if you need some additional funds at that time, the amount is raised. So there is always a negotiable question about just which way you're going to handle the financing. There was also a question about the savings bonds program, which we felt should be called to their attention, because certain work was being prepared for a savings bond program.
There were a number of other matters.
We had just come out of the Internal Revenue reorganization, and the final steps had been taken in establishing the new districts in December, or were to be in December (this meeting was held in November), and we wanted to explain to them that the organization in form was completely finished. However, there were many follow-through matters that had to be considered, that were vital that the new administration take hold of and move right along on. There were ever so many matters that in an organization the size of the Treasury and the many vital functions that they are performing for the Government, it's pretty clear that every day something comes up of great importance. So we tried to highlight the most important ones that might cause some ripple, or might need some executive action, maybe from the president, so that they would at least have these pointed
out to them; and this would give them plenty of time to study the matters in the period of time before they took office, which in the Treasury they did. All together I say there wasn't a great deal of recognition openly of the help that we'd given them.
HESS: Did President-elect Eisenhower, during the meeting, ask any questions that would have given you an idea that he was really looking for help and advice in making a smooth transition?
SNYDER: No, I don't recall any questions that he asked, except, "Am I supposed to be taking notes?".
HESS: What was the attitude of his staff members that were there at that time?
SNYDER: Somewhat aloof. There was not any real
warmth, or cordiality. It was just, "Well, this is something that you seem to want to do and we're going to get it over with and finished." Initially Humphrey was cordial, but after getting into office it didn't take him long to begin to be very, I would say, withdrawn from anything that had been in the Treasury prior to his arrival.
HESS: Do you think that attitude had its basis in political action?
SNYDER: Oh, I'm sure it did. As I have discussed before there were some investigations and hearings that came up. He and I had been friends for many years, and I called him up and asked him if I could have access to the files in the Department. All the records were there in the Treasury, and I was being asked questions in some
of the hearings that required background information, and he gave me carte blanche, he said, "Just come over and get anything you want." And that went along for several weeks. Then all of a sudden, I think it was because of a storm of protest that went up in Brownell's office or someplace, that we were preparing our case at the Treasury Department. I don't know where they thought we would prepare it, because we couldn't make up those things. We were only quoting right from the records of the Treasury, we couldn't alter them in any way. But that seemed to be considered quite a breach on the part of Humphrey to party loyalty. So, anyway, he advised our people that they could no longer have access to the Treasury records. And, of course, we reported that to the committee that was making the investigation, that whatever
we said would have to be from memory, and that it would necessarily have to be very restricted because we didn't have free access to get the facts from the Treasury records. "Of course," I said, "you have that access, so whenever something comes up of that nature, I'll just have to ask you to go to the Treasury and get it." Well, pretty soon the inquiry drifted off because apparently they were endeavoring to get at something that didn't exist. Mr. Brownell's campaign was to get at something to bring embarrassment to President Truman. I don't think there was any question about that. All the questions that they asked Ed Foley and me indicated that they were trying to find some irregularity that would be embarrassing to Mr. Truman.
HESS: One final question on the transition: What
is your evaluation of the success of the transition from the Truman administration to the Eisenhower administration?
SNYDER: Oh, I think it went exceptionally smooth.
HESS: One question about this time: Have you ever heard of the statement that the President may have made at a meeting at Blair House on January 19, 1953, the evening before the inauguration of General Eisenhower, stating that what he would be remembered for would not be for the Marshall plan or point 4, but would be for the reorganization of the White House office in such a manner that no future President could make a mistake. Did you ever hear that?
SNYDER: I did not. That's news to me. Where did you get that?
HESS: This is just a question that has come up, and I always like to state it as a statement that the President may have made, because I have found no one that can say, "I was there and I heard it." So I always put the word "may" in there. Maybe he did not make the statement.
SNYDER: I never heard such a statement. That's the first time I've ever heard that.
HESS: Do you recall a meeting at the Blair House, or at the White House, the night before the inauguration?
SNYDER: It would have been at the White House.
HESS: It should have been at the White House because that had been open and they had been moved back to the White House for a long time.
What did the President do the night before inauguration?
SNYDER: I just don't remember.
HESS: For the remainder of this morning's session let's discuss the trip you took to Russia, which I understand was after the Truman administration, is that right?
SNYDER: It was. As a matter of fact, it was not until 1961. I have made some notes about that trip and would be very happy to read them into the record if you think that would be worthwhile.
HESS: Fine, let's do that.
SNYDER: Any Western traveler who goes to the USSR for a first visit enters a world utterly strange to him. He finds himself in a country about which he's formed some very definite opinions, from press reports, from stories told by other people, and from bits and pieces of information
picked up here and there. I spent some months reading and talking about the Soviet Union before I made the trip, so naturally I had established in my mind certain ideas about the country. My first real job, therefore, upon arriving in Moscow, was to begin revising my views as I came in contact with the realities. First off, I was surprised by the appearance of the people. They appeared friendly, though reserved, well fed, though their diets, as I learned, were not as varied or as unrestricted as those to which most of us are accustomed. They chatted freely as they walked along the streets with frequent smiles on their faces, particularly the young people. Their clothing was of good material, though of a courser material, poor tailoring and more somber in appearance than we here are accustomed to seeing. I was unprepared for the great crowd
on the streets, the eager shoppers at the kiosk and in the shops, and at the large number of sightseers from other parts of the USSR and the bloc countries that were constantly in motion on the streets. I was also somewhat unprepared for the unrestricted freedom of action that I personally experienced in all parts of the country which I visited. I traveled a little over forty-seven hundred miles in the European Soviet Union, by air, by train, car and boat. I visited ten cities, seven factories, two state farms, one collective farm, drove into the country from different cities several times, frequently without guides, but with friends who knew the country and the language. I visited several homes; I attended a wedding, and I spent a morning in an elementary school. I took long walks in the daytime and at night,
unattended. And I must frankly say that at no time did I feel any personal restraint or restriction. I would add, as an item of interest, not one time was my luggage opened for inspection on my whole trip, that is, to my knowledge. Also, I took nearly 500 pictures without any objection or question by any officials. Of course, I did not try to photograph any of the defense installations or Sputnik launching pads. I soon found that the Russians, unlike Americans, liked to boast a great deal about what they have done and what has happened and the great discoveries they have made. I was exceptionally fortunate in being able to run across a number of newspaper people, and a number of schoolteachers, and some attorneys who were over on different projects that gave me an opportunity to get
their views; and many times, as I've said, to visit with them and to have them take me out on certain trips without any Russian personnel or guide with me. However, I was assigned an Intourist guide the day I arrived in Moscow and that young lady was with me the whole month and a half that I was in Russia -- she was constantly in the background.
HESS: Is that the normal procedure?
SNYDER: Yes, that's absolutely normal. Whenever we would get into certain cities, she might turn me over to another guide who was particularly familiar with that city, and she would go about her way many times, but she was present, and I saw her in the morning and we would line up the day's program, and things of that sort. She was ever present, and she escorted me to the
airport when I left coming back. That was an overall picture, but there were a number of times that evidently by the time we had been there that long, she was glad to get a little relief herself.
It is difficult to envision a people who can design and launch Sputnik, and at the same time have the most primitive conception of plumbing, a people who build absolutely beautiful parks, and at the same time have badly surfaced roads and streets, a people who can build monumental buildings, such as their five great skyscrapers, which they have, but are not able to install reliable elevators in any of them. We find the ultimate in scientific research, and at the same time smelly, objectionable soap. We find people seeking the freedom of outer space, yet recognized no freedom on the
earthly sphere on which they live. We find them giving emphasis to education, and yet constantly emitting distorted and restricted information to their people about the outside world. We find elaborate health resorts; at the same time, extremely poor construction in housing for the people. These are impressions, of course, after a comparatively short visit of a casual tourist, but they certainly did impress me tremendously, the great contrasts that were visible to me.
But suppose we take a broader look now at this remarkable country that was such a revelation to me when I arrived there. As you know, the Soviet Socialist Republics cover an area of about eight million, six hundred thousand square miles, as compared with three million, six hundred seventy-five thousand square miles in the United States. Of this total, approximately
two million square miles lie in Europe, and six million, six hundred thousand square miles in Asia. The latest census gives the population as approximately -- now these figures that I have in this memo will have to be updated if it's of any importance, but we must remember that this was back in '61, about eight years ago, so if we want them brought up to date, why, it's a simple matter.
HESS: Figures as of that time.
HESS: It might be best to leave them as they were at that time.
SNYDER: That's what I say, we're going to leave them just like they were then.
HESS: And make it plain that that's what they were
at the time of your visit.
SNYDER: Right. The latest census gave the population of approximately two hundred and twenty million persons, of which 48 percent live in the cities, and 52 percent in the rural districts, and approximately 45 percent are male, and 55 percent were female. That compares with our one hundred and eighty million at the time. As you probably know, the USSR is described in the Soviet constitution as a "Socialist state of workers and peasants." Basic political authority, according to official theory, is vested in a system of Soviets, that is to say, councils of deputies of the working people, but in practice, however, the USSR is ruled by a self-perpetuating authoritarian government in which the Communist Party of the Soviet Union exercises unlimited
controls over the basic policy and activities of all administrative agencies by means of its exclusive power of selection and removal of executive, legislative and judicial officials.
I think it might be well at this point to review the educational system that had been involved in the USSR since the revolution. The Soviet Union maintains an extensive system of educational institutions. A recent check of the number of students attending school totaled thirty-six million four hundred and forty-two thousand students, which compares with forty-four million five hundred thousand in the United States as of that year. This number, however, shows a decrease in the USSR of some two million less than the number attending prior to World War II. That may have been caused largely by the great losses that they had in World War II, and the lower birthrate
during the war. A breakdown of this total figure shows thirty-two million in attendance in elementary and secondary schools, and a million nine hundred thousand in universities and special schools. There is no tuition charged for admission in any of these different types of schools. As a student approaches the end of his grammar school studies, his scholastic capabilities are carefully measured and if it does not appear that he or she can attain outstanding accomplishments in the scholastic field, their interests are directed towards vocational work which would train them for skilled workers' positions in factories or farms or in the business world by the time they would have finished what is normally our high school courses. Last year, it was estimated that in the Soviet higher educational establishments, 32 percent of the
graduates received engineering or scientific degrees, 40 percent higher education, which fitted them for teachers' positions largely, 10 percent in agricultural degrees, 9 percent in medical training, and the balance of approximately 9 percent in various other pursuits. The Russians have become prodigious readers. That impressed me tremendously. On the streets, you saw these little book kiosks, in every store there were book shelves, and the libraries are very extensive. I had a letter of introduction to the director of the Leningrad Library. They have over ten million volumes, which is extremely large. It was fascinating. Everybody you saw on the street had a paperbound book under their arm, or if you got on the subway, they were always reading, constantly. It made quite an impression, the eagerness with which they were seeking to take advantage
of the opportunity to learn something about everything that was going on.
As you've undoubtedly read, early after the revolution the leaders selected what they considered to be the essential goals in their efforts to establish a new economy for the Socialist country which they were creating. They chose industrialization, housing, scientific accomplishment, agriculture, accompanied by a mass organization for recreation as the primary objectives, leaving for later years the achievement of many of the objectives which we consider of primary importance in a high standard of living. The buildup of defense, of course, was overriding in all of their efforts. The building of defense had priority over any other of the various objectives.
It is general knowledge, I believe, that
the economy of the USSR is organized on the basis of state ownership and enterprise. The government owns or controls all land, and all resources and instruments essential to the production and distribution of goods. But it is a surprise to find that to date, however, direct ownership or operation of economic enterprises by the states, are not yet fully complete. In agriculture particularly, where the government itself operates a large number of units known as state farms, a big part of the rural population still is grouped in so-called collective farms, the latter being normally units of cooperating farmers working under close supervision of the government. Some of the older people have been allowed to keep their little farms, and are given the privilege of growing vegetables or products, pigs, chickens,
over and above their required allotment that they are to produce and turn in to the state organization. They can raise that for their own use to eat themselves, or to sell, or whatever they might want to do. The Kulaks revolt impressed the top leaders, although millions of the farmers were killed, and the government did realize that they were up against the monolithic barrier, and that they had to give some consideration; so they devised this collective farm arrangement whereby the farmer actually was told what to raise, and how much to raise, and he had to turn that into the pool. He was given a feeling of independence and allowed to have a few square feet of land which he could put to his own use. However, they were constantly weeding those out as the time went on, as the old people died off and
so forth, and the big objective was within a certain period of time to have all the farms under the state farm program. The Soviet Union had great difficulty in the past in bringing the farmer into the Soviet system, due to the basic individualistic makeup of the farmer's mind, as I've just said. In the Communist twenty-year program of objectives, all the farms will come under the state farm administration during that time. While ownership by the state does not encompass all economic establishments, all economic activity in the USSR, whether it is carried on by state-owned or cooperative enterprise, is directed and controlled by the central government. Such control is exercised primarily by means of a highly centralized economic planning apparatus, headed by the state planning committee, which is
known as (Gosplan). Since 1928 the Soviet Union economy has operated under a series of periodic production drives known as "five-year plans." The principal results of each five-year plan in the past has been the advancement of the capacity and the control of the Soviet industrial plan. Not all branches of industry, however, have received equal attention, or a proportionate part of new investment capital in Soviet planning. The industries regarded as strategic in the process of forced industrialization have been provided over the years with a maximum of resources required for their expansion. For example, the heavy industrial sector received 90 percent of all new machine tools and instruments channeled into industry in the recent years. In particular, steel, coal and electric power output have been given outstanding
priorities. Petroleum and timber production have lagged until very recently. The Soviet government within the last two years has taken drastic steps to correct the inadequacy of petroleum production and that is growing in the last eight years. Most of their petroleum is of a lower grade than ours, and requires special refining. You cannot refine the Russian petroleum in the refineries set up for the rest of the world. It has to have a particular type. It has a large sulfur content, and requires special treatment. The Soviets have announced to the world that it is their intention within the next few years to capture 15 percent of the world markets in petroleum products. They have not been too successful in that, because their free enterprise training has not been of a character that permits them to have success
in competing with the highly organized marketing of our bit petroleum organizations in Europe and the United States. As an example of recent production accomplishments, the Soviet Union has produced 240 percent as many machine tools as were made in the United States during the past five years. Now, you can see the trend that going toward tremendous industrial expansion and leaving many of the other things that we consider vastly important to a higher standard or living, and letting them stand by, because most of their machine tools were going into defense plants and things of that sort and not into plants that would raise the commodity production of the Soviet Union. Electric power has increased 320 percent in the past ten years, at that time. This rate has slowed down somewhat, but they are still pressing for electrical
power increase. Industry has been increasing in capacity at the rate of about 9 percent a year. They have kept that up. It's still running between 8 and 9 percent, I understand. To accomplish this high degree of industrialization, consumer goods have, of course, been neglected. The regime has controlled this through a combination of high price levels and restricted volume of output in the field of consumer goods. This has had the effect of allowing the government to channel a maximum of resources in the form of new equipment and manpower to heavy industry. Under this system of governmental priorities, the consumer section of industrial production has consistently lagged behind the heavy sector. Official spokesmen have justified the continued need with maximum emphasis on heavy industry on the grounds that this sector of
industrial production provides the foundation for: one, steady growth of overall Soviet economic capacity in the future; two, an adequate volume of military output, including new and costly types of armament; and three, extension of large scale assistance to Communist China and satellite countries of Europe and Asia. Of course, since I was there the Communist China association has fallen through. But the aid that they were giving to Communist China may be switched somewhat to Korea and other places of that sort. The satellite countries of Europe and Asia are
still being pressed, as you know by the recent Czechoslovakian problem, and they have built up a tremendous submarine fleet since I was over there. So you can see that the heavy proportion of their expenditures is still towards armament. In the important area of agriculture, it is of great interest to find that only 10 percent of the eight million six hundred thousand square miles of the USSR is arable farm land. Great parts of the Soviet territory, chiefly in the east and north, are either too cold, too dry or too poor for the soil to be considered usable for agricultural purposes. In spite of the fact that less than 10 percent of the land is suitable for farms about one third of the entire Soviet land mass is covered by forests whose trees are principally large pine and spruce, very fine timber. While the
government does not directly assign specific acreage or production quotas to each collective farm for each crop, the government indicates by establishing its procurement plan which are prepared by the Central Planning Committee, exactly what it expects the farms to produce. The decision as to what to produce is normally left to the local authorities to allocate their quota among the farms in their jurisdiction. Incidentally, there is a very heavy penalty assessed against failure to come up to your quota. Those penalties are usually in less freedom of the authorities to move in certain directions, less equipment, they'll drop an automobile off of the quota for the officials, or things of that sort. The penalty is rarely, a jail sentence or anything of that sort. It's usually depriving of some little additional
bonus that they would get. In order to placate some of the old farmers the USSR permits small plots of land -- I think I interposed that just a moment ago. For your information, I might say that it is estimated that less than fifty thousand acres of land is now cultivated by the independent farmer. So you see the squeeze is constantly on there to eliminate these collective farms. Continually since the revolution the farm programs have been somewhat ineffective, and in spite of the boast from time to time of the top officials to the effect that they were all dirt farmers at one time, these problems continue. They just don't seem to grasp farm operation, that it is pretty much of an independent incentive idea that caused the farmer to get out and work harder to produce greater crops. As a remedy for the inadequate supply of grain resulting from the
inefficient farm operation, the USSR launched in 1954 a powerful campaign to send out large numbers of young people to Siberia and Kazakhstan for the purpose of reclaiming through agricultural production vast stretches of virgin or idle lands. The reports that I had indicated that this effort was showing very poor results. The whole conception was wrong. You cannot pick a boy or girl, a young man or young woman, out of school and tell them to go out and become farmers without a great deal of guidance and day-to-day supervision and instruction. That was not given. They went out and faced these vast tundras and just tried to create for themselves a new home and a new objective with no knowledge of soil conditions, of crop conditions or that sort of thing. There were over sixty million acres involved in this poorly planned program. In the last eight years
it's become even worse. The Russians try something that works out on paper or on a slide rule without any genuine experience behind it to give proper leadership to the projects. It might interest you to tell you that I visited two state farms and one collective farm; just for your information, I'll briefly describe one of them, one of the largest state farms. One of them I visited was actually one of the prize farms in the whole Republic of Russia. Russia is one of the fifteen states in the Soviet Union. There are many others that you know about like Georgia, Tashkent, the Ukraine, those are all different states. This farm was one of the prize farms in the State of Russia.
HESS: Was this farm one that was usually shown, was it sort of a show place that was shown to
SNYDER: Yes, that's right. It was a dress performance. But it was located about thirty-five miles from Rostov, and it was known as a beef and dairy farm and covered about twenty-five thousand hectares, approximately sixty thousand acres, of which twenty-one thousand were in cultivation and the rest was either forest land or pasture land. The principal crop raised on the farm was wheat, although a large part of the acreage, as I just mentioned, was planted in maize and hay for the livestock that was produced. The farm employed thirteen hundred workers, a hundred and five tractors, sixty combines, and fifty-seven trucks of the two and four ton variety. In the livestock activity, the farm had a herd of twenty-three hundred cows, seventeen thousand
pigs, and seventy-five thousand chickens. The employees on this farm were paid wages. They worked seven hours a day, six days a week. Out of their wages they must pay a small rent, and buy their food from a cooperative store. The school, hospital, and medical aid was all furnished free. The farm had seven hundred acres that were devoted to gardens for the workers. The produce from these gardens is sold at nominal prices to the workers. The director of the farm receives one hundred and forty rubles per month, or about one hundred and fifty dollars, and the foremen receive about one hundred to one hundred and ten rubles per month, and the common laborers about eighty to one hundred rubles a month. That's around seventy-five to one hundred dollars a month that the worker receives. The produce from the
farm is delivered to grain elevators, milk distributors and meat packers in Rostov. All of these institutions are state operated. A credit for the value of the produce is given to the farm on the books of the Gosbank. In the budget each year a certain amount is provided for operating costs plus a percentage of the crop proceeds which can be used for expansion or improvement in the operation of the farm. When asked what happened if the farm had a deficit, the director advised that there were no plans to handle a deficit, as he did not believe there had ever been a deficit in his time. Frankly, I must tell you that the standards on the farm were well below those set by our average farmer, and the manner in which they handled the farm you could never tell whether they were actually making money or
losing it, because they switched the figures around to suit the general plan, you know.
HESS: I think one statistic that would interest farmers was the fact that those Russian farmers worked seven hours a day, that's not very long considering the way most farmers work.
SNYDER: That's right. There's just not the drive there.
The greater portion of the movement of goods and passengers in the USSR is still handled by railroads. There are great users of railroads because of the great distances, and the road conditions. The freight handling last year was 82 percent by rail, 4-8/10 percent by truck, 11 percent by river, and only 2 percent by air, 73 percent of the locomotives of the railroads are steam. They are still using steam locomotion,
whereas in the United States here, we practically have no steam left, 11 percent in diesels, and 15 percent in electric. With the completion of this year the large hydroelectric plant on the Volga River (I guess it's now Volgagrad, they changed the name with the deStalinization), of the hydro-electric plant in Siberia, the trans-Siberian railroad will be electrified, cutting about two days time required to transport goods from Moscow to Russia's Pacific Coast. They've had a great deal of difficulty with that electrification, although the road is now electrified.
In connection with the financial operations of the Soviet Union, the economy of the USSR, while subject to a wide variety of direct government control, is operated as a money economy. Wages are paid in cash, consumer
purchases, service and travel are paid for in currency. All transactions among state enterprises are settled through money accounts. The revenue and expenditures of the government were balanced in terms of the national currency, and while the use of the money is general in the Soviet economy, its function is quite different, wholly limited and of a very different character than in the free market economy. The level of wages and prices are fixed by the government directors, and not by the relationship between supply and demand. Similarly, the annual volume of industrial and agricultural output, as well as the amount of capital to be invested in new productive facilities, are all determined by government orders issued through the central planning organization, and in accordance with the economic and socio-political
program of the ruling Communist Party.
In my notes here I describe the monetary system. Do you think we ought to go into that?
HESS: I think it would be interesting for the man who headed our largest financial body here in the United States to express his views of Russia's financial system.
SNYDER: The monetary unit in circulation in the USSR is the ruble. The ruble at that time was equal to one hundred kopeks, and it's purely a domestic currency, its value being determined at all times by government fiat. As such, it cannot be quoted on any international monetary exchange except by approximation. Domestic laws in effect since the late twenties prohibit its export from, or import into, the country. You can't take rubles out and bring them back in. The rate at which the ruble is convertible to
or from foreign currency under special circumstances is determined by the Soviet government, which through the state bank also exercises a monopoly over all foreign exchange. Effective January 1, 1961, the Soviet government revalued the ruble in terms of both gold and U.S. dollars. The valuation given to the so-called heavy ruble was established as a dollar and eleven cents, U.S. That's about the rate that is continuing at this time. The people of the Soviet Union boast that the ruble is at a premium over the dollar under the new arrangement. It's meaningless, however, because rubles are not available. You couldn't buy them on the open market, as recently they bought the German mark, any other currency or the dollar -- you can't do that. They're not available in the market. So to say that it's
at a premium over the U.S. dollar is kind of a handmade boast.
HESS: Why have they set it at that evaluation, any particular reason?
SNYDER: Just a few cents above the dollar, for the purpose of impressing their own people, largely. Most everything they do is for the impression of their own people to make them more susceptible to living under the restricted life that they do there. In practice, the revaluation has actually meant very little. As for practical purposes the decimal point in both the former ruble evaluation and the domestic prices were simply moved one point to the left, so when the ruble went up the price of goods went up, and so it meant nothing to the people. If you have ten cents more it will
cost you ten cents more to live. Under the new regulations the new heavy ruble had a theoretical value of .9874:12 grams of gold. That's meaningless, because you couldn't turn all the rubles in a trunk in for one ounce of gold. There's just no such arrangement. But they like to quote that, you see. Up to the present the ruble in foreign trade has been used by the Soviet government purely as an accounting unit. Its actual transaction with the Western countries has been conducted in the monetary unit of the country traded with, or in some cases, through the sale of actual gold. We do not have any idea what the reserves of gold are in Russia. That's been kept a strict secret. They have been extensively mining gold ever since their revolution, but we have no idea how much reserve gold
that they have. It's been estimated from time to time, but it's problematical. No one has an accurate knowledge.
HESS: What effect would it have on the market if someday they came out with an announcement that they had huge quantities of gold?
SNYDER: The greater problem would be their pouring gold in and despoiling the markets of the Western free enterprise countries. That would be the greater danger. Their simply announcing that they have these gold reserves, I don't think would have a great effect, but it would certainly be a depressant if they would go out and corner markets with the use of gold, don't you see, of strategic and critical material. There is the great danger.
HESS: Do you think they might have this in mind?
SNYDER: Well, it's always a threat hanging over our free enterprise economy.
The banking system in the USSR headed by the state bank is owned and operated by the government. There's no private banking in Russia. As the central bank of the all-union federal government, the state bank issues bank notes, extends short time credit, handles mutual payments among enterprises, and regulates currency circulation. In 1957, the state bank had one hundred and seventy major offices and forty-six hundred and ninety minor district branches around the country. The total of short term credit extended by the bank to the national economy in 1955 amounted to 250 billion rubles. That meant that the government was financing all operations and you could almost say that that was about what
their gross national product was, as compared with our nine hundred million dollars. The state bank also serves as the fiscal agent of the Soviet government in the latter's relations with foreign governments, farms and individuals, its foreign finance operation, chiefly those involving contact with individuals. The state bank delegates some authority to the bank for foreign trade. In general, however, the state bank has the exclusive right to buy and sell foreign exchange and foreign currency and to buy gold, silver, and other precious metals. To get the perspective of that, it would be as though our Federal Reserve Bank handled all our deals with our international corporations, all had to clear through the Federal Reserve Bank, they had to supply the money that private industry would invest abroad, all the income
that came in from abroad would have to be paid in to the Federal Reserve Bank, and that they actually control all the purchase of all metals, gold, silver, or platinum, or whatever it might be, but it all would have to be handled by them. So you can see, the restrictive policy of their banking system.
The general public, collective farms, and public organizations are served by a network of state savings banks, which include some fifty-eight thousand, five hundred and eighty-four branches located throughout the country. The savings bank pays an interest rate of 2 percent for call deposits and 3 percent for time deposits left for a period of six months or more. The annual increase in the assets of the savings banks is treated by the Soviet fiscal authorities as additional current budget revenue
similar to proceeds from the sale of bonds. The savings banks of the Soviet Union, as the most widely-distributed financial institutions, also perform a variety of functions in collecting and dispersing current money payments between the government and the population. At the beginning of 1959, total deposits in the savings banks were reported at seven hundred and eighty-seven billion rubles. But the peculiar part is that just about eight years before I was over there, the government confiscated all the savings, so they are forced to put their savings in, and yet, by example, the government at one time took it all away from them, but on the basis that they had an investment in their great country, that it belonged to them, don't you see. The interest rate in the USSR does not perform the function of regulating the volume of credit or currency. Interest charges
serve the more limited purpose of encouraging savings by the population, of allowing the banks to restrict short-term borrowing, of earning income necessary for their own operation, as well as for building up reserves. Otherwise there is no loan capital in the Soviet Union. No one can go in and borrow, as we do in our banks here, on a private transaction. No corporation can go in and borrow according to their belief as to their need. It must be determined how much they can borrow by the state plan. The tax revenue of the Soviet government is derived approximately 53 percent from turnover or sales tax assessed against factories, 22 percent deductions from profits of industry, 7 percent from loan revenues, 6 percent from social insurance funds and 2 percent from savings. They have a
nominal 10 percent income tax, which is very non-productive. According to the Communist twenty-year program, announced shortly before I got there, it is the long range intention of the Soviet Union to eliminate income taxes entirely.
I spent some time in talking to the trade minister official. I learned that the distribution of goods in the USSR is organized to help carry out the economic program of the Soviet government, and is accordingly dominated by the state organization. As in the case of industrial production, the central government has not been able thus far to provide sufficient facilities to manage the whole task of distributing goods to the consumers of the country. The government has therefore temporarily limited its sphere of activities largely to the cities and to
industrial settlements leaving the task of distributing goods in rural areas to a network of so-called cooperative outlets. As rapidly as possible, however, it is the intention of the government to completely nationalize all distribution of goods through state-owned outlets.
One of the continuing problems facing the USSR is inadequate housing. Tremendous strides have been made in each five-year plan but they have all fallen short of the goal. It is the ultimate aim of the Soviet government to provide nine square meters, that's about eight by ten feet, per person in housing space. The present estimate of the USSR Planning Committee is that within the next decade they will have solved their housing shortage. Well, that decade is about over and they haven't anyway near solved
it. More recently they are switching people around between the old houses to make them feel like there is progress being made.
One of the impressive sights in every city that I visited, as well as in the industrial areas, was the tremendous number of large apartment houses that had been built, or were under construction. Within the last ten years housing capacity has been tripled. Unfortunately, in this mad rush to produce housing on a crash basis, much inferior construction has been experienced, and maintenance is growing as a major cost of operation of the apartment houses. Plumbing fixtures, electrical fixtures, and elevators are areas in which the principal defects show up. Leaky faucets, running toilets, rusty pipes, smelly facilities are present everywhere you go.
Now, to draw up a conclusion of my experiences,
I'll say, Mr. Hess, briefly, that one of the positive conclusions that I did reach in my five week visit behind the Iron Curtain, definitely did not make me an expert on Soviet affairs. I want to make that very definite, and therefore, with this understanding clear, I'll venture to tell you some of my personal impressions.
Russians are not usually people who like accepting discipline any more than is absolutely necessary; in spite of all the pressures that are put upon them, they will do little odd things that are most unexpected. For instance, Mrs. Shapiro, who is a Russian, and is the wife of the New York Times representative in Moscow, told me a story. She said that if you go out and build up a wide fence and say absolutely, "You're not to go across there," that in three years they would be digging under it or climbing
over it. If you put a sign, absolutely, "You must use the tunnel under the street," you'll see policemen constantly busy trying to stop people from marching across the street. They are seeking to get some expression of independence, and that's true wherever you go. It is therefore a triumph of Russian energy and drive that the Soviet government has succeeded in imposing the disciplines of technology upon so many millions of people and inspiring the best of these to develop their techniques further. It was amazing that with their desire for a show of independence that they have been able to concentrate enough discipline to accomplish what they have. When one studies ordinary Russians, one finds on the one hand, a narrow, finicky adherence to technique or rules, and on the other hand a tendency to take short cuts and to improvise
with little regard to matters of detail, finish or maintenance. If a carpenter can put up a board that is three inches short, he'll nail it up there and go on his way; the plumber is always looking to take shortcuts; they don't look towards excellence at all. They are always trying to show off this independence that is latent in them.
HESS: Is that one reason why their buildings so quickly need extra maintenance?
SNYDER: I think so. They are sloppily built. After the death of Stalin, the restrictions were taken off to some degree but only very limited. His successors have discontinued the blood purge [Lavrenti Pavolvich] Beria having been the last. There is no evidence that they have used police terror recently as instruments of
person control, except in Czechoslovakia recently. They have liberated the restraints on the movement of people within the Soviet boundaries; they have modestly increased production of consumer goods, and that's true right up until today, in the eight years since I was there they are still way short of production of consumer goods, and the goods that are offered to the public in the stores are still rather shoddy compared with our standards here. They have somewhat lifted the ban on allowing foreign visitors to tour the country, and they are permitting a little more freedom in visiting with their citizens; they have provided more recreation through the erection of parks, swimming pools and stadiums, and they have greatly impressed their people with their scientific achievements in space, and by
promises of rising standards of living, peace, plenty and national supremacy in the future. It's always the future. In talking with friends who have only recently been to Russia, it hasn't materially changed since my trip. The only tendency that has been developed, which the government might regard as dangerous to the Kremlin has been the greatly increased curiosity about foreign countries by their own people, and their desire to travel abroad is very avid in each one of the Russians that I talked with. They passionately love to hear about foreign countries when they get an opportunity. They are very doubtful about some of the things that you want to tell them, but still they want to hear about them. At this time the government still has a firm, grip on power, and has succeeded in consolidating and expanding its position, even though it is
generally agreed that the government is not wielding quite the same degree of power that Stalin did. So long as material prosperity continues to increase and so long as control by the political police does not resume its old severity, the Soviet government is obviously going to have much more popular support, more probably than it has ever had. But the Russians, with all their indoctrinization, restrictions, and over-organization, are slowly approaching a desire for something like a pattern and standard of living of other industrial people. It's growing in the people in spite of all of this over-organization. Really, I think that fact is one that we must count as one of the major hopes for world peace, the growing desire of the Russian people for greater freedom and a better standard of living.
As to the Communist Party, let me point out one very important fact that is frequently overlooked and misinterpreted. Over the last twenty years or so, the total party membership has varied between 3 and 5 percent of the population, and this proportion is apparently thought by the rulers as very satisfactory. The other 95 to 97 percent describe themselves as "non-party sympathizers." Only party members are normally referred to as Communists. The Communist Party of the Soviet Union is not a political party, in the sense in which parties are understood by people who are not Communists. It is meant to be the organizational and propaganda elite. It is considered a tremendous honor by the Russian people to become a party member. The Communist Party task now is to govern the country and bring about total
communism. You cannot join simply by virtue of approving the party's aim, and of being willing to pay your subscription and attend a few meetings. The people wanted as members are organizing secretaries, troubleshooters, club leaders, propagandists, and party scouts. And if you are not prepared to put your leisure and convenience entirely at the service of the party, and be sent away for months on special duties, you are unlikely ever to be accepted as a party member. Once you have joined, you cannot resign safely from the party. Although efficiency in production is yet unsolved, there is evidence of definite improvement in the Soviet economy. The regime has convinced the people that they are going someplace, Sputnik is an example. That was a great morale lifter. There is no seething unrest, apparently, among
the individuals, except the desire for betterment. I am convinced that the individual citizen does not want war, for the scars of war have been left through the ages on the Russian people. Even the wars that they have won have left destruction, death, and suffering in their wake. I am convinced that the leadership in Russia know this, and that further they know that if the Russians should start a war, even if they win, that the leaders that started the war could never survive as leaders to reap the benefits of the victory, even if they should gain one.
On the other hand, it is the positive determination of the Soviet leaders to destroy the economies of the capitalistic countries, for they are convinced that it is in this demonstration of superiority of communism
over capitalism that will enable them to maintain the tight control of the Kremlin over the USSR and the bloc countries. They will attempt this objective through ever means at hand, fomenting unrest in troubled areas, keeping the free world off balance in our defenses through the use of psychological diversion, infiltration and subversion. Economic and propaganda patterns of the USSR are repeated in all the bloc countries with some variation.
These are the problems facing the United States and the Western World in their relationship with communism. How to meet this determined threat will occupy the best efforts of our leaders and our citizens for many years to come. We have a real job ahead of us.
HESS: I have one question. You have several examples showing the desire of the people to
show their independence. If at any time that you were talking to a manager of a farm or something like that, did they ever express to you any desire for greater independence of action or movement on their part?
SNYDER: Individuals, yes. "Now, if I had my way, I could do this so-and-so." Yes, many times. "If I had my way, I would like to visit the United States." "If I just had the money, I'd like to do this." "If I had my way, I wish I could have been an engineer," when he was something else, don't you see. Well, that sort of undercurrent I ran into constantly.
HESS: Did any of them make statements that would sound like they preferred the capitalistic form of government?
SNYDER: No, they were very cautious about that. They never came out and made such a statement exactly.
HESS: That would be kind of a dangerous thing to do.
SNYDER: That's right.
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