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 was 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.,
July 2, 1969
By Jerry N. Hess

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

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

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 It may not be published in full except by permission of the Harry S. Truman Library.

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

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Oral History Interview with
John W. Snyder

Washington, D.C.,
July 2, 1969
By Jerry N. Hess

[1704]

HESS: Mr. Snyder, this morning let's continue on with our discussions of matters of taxation.

SNYDER: In our reporting on the tax activities and the tax problems, I believe we got up through fiscal year 1949 in our discussions last week. In taking a look at fiscal years 1950 and 1951, today, I find that in fiscal year 1950 we had a deficit of four billion six hundred million dollars. This was brought about somewhat by the tax reduction of 1949, which affected us in 1950 and we had not been able to cut back expenditures quickly enough to keep the budget balanced. The cuts in the tax structure amounted to about this deficit, a little less probably, somewhere around four

[1705]

billion dollars. Then in 1951, however, we had apparently got hold of things and we showed a surplus again of three billion five hundred million dollars. In fiscal 1950 there was no major revenue legislation enacted. A tax revision bill, House Bill 8920, was passed by the House on June 29, 1950, but developments in Korea led to substantial changes in the bill and the Revenue Act of 1950 was not approved, finally, until September the 23rd 1950, which was in fiscal year 1951. This revenue bill was not quite up to what it should have been, but it at least made a step towards meeting the Korean expenditures that were, of course, at that time, completely unpredictable. And we did take a step to try to meet some of those expenditures, war expenditures, with increased taxes.

[1706]

When I went before the Ways and Means Committee in February 1950, I tried to emphasize the necessity for limiting the amount of excise tax reduction, because of the Korean situation, and specified most urgently the need of reduction of the excises on transportation or property and persons, long distance telephone and telegraph communications, and the retail excises. Those I felt could be modified, to some extent, to help with the rehabilitation of our economy. Then, in the interest of tax equity, I very strongly recommended that the manufacturer's excise tax on radios be extended to television. Television was coming then into great popularity. I discussed, at that time, very seriously, Mr. Hess, the necessity for us facing up to the many flagrant loopholes that existed in the tax structure. Some of those, through the

[1707]

years, have been patched up to some extent, some in the gift area, and some in the estate tax area, but there are many more that are wide open and seem to be very controversial and we're still talking about trying to close some of those loopholes. One of them, of course, is the oil depletion loophole. We permitted that concession in days when we were trying to encourage exploration for oil, but that necessity has long since expired. We know where oil reserves are, far beyond our use for many years, including our defense needs, and because of our American companies invading foreign fields and coming across enormous fields in which they have a large interest, the necessity for this loophole has been obsolete in my opinion.

HESS: I have heard that Sam Rayburn took a very

[1708]

close interest in matters of the oil depletion allowance. Is that right?

SNYDER: Mr. Rayburn took very prompt and immediate action every time the question came up and, I must say, that he was very instrumental in sidetracking any efforts that were made for changing the oil depletion ratio.

In fiscal 1951, Congress continued the policy of strengthening the revenue system to meet increased expenditures for defense. Two major revenue taxes became law during this year, which helped materially as you saw in my report. It helped us change back to a surplus for the year '51. The two major revenue acts that were enacted that year were the Revenue Act of 1950 and the Excess Profits Tax Act of 1950. In addition, action

[1709]

was initiated during the fiscal year 1951 on the Revenue Act of 1951 which, however, was not enacted until October 20th, 1951, which threw it into the 1952 fiscal year. Altogether these three revenue measures increased tax liabilities to an estimated fourteen billion seven hundred million dollars for the full year operation at the calendar 1951 income level. Of this total, the Revenue Act of 1950 accounted for five billion eight hundred million dollars, the Excess Profits Tax Act of 1950 put three billion five hundred million dollars, and the Revenue Act of 1951 for five billion four hundred million dollars. All but a billion of this increased revenue under the three measures, came from increased taxes on individual and corporate incomes. That amount of new tax coming in materially assisted the Treasury

[1710]

in its program of trying to keep on top of our fiscal and monetary problems without going into deficit financing.

Of course, about this time we began to move more positively into the U.S. participation into the European recovery program. In the fiscal year of 1950, about four billion dollars were transferred to that activity and that increased our expenditures to about nine billion dollars by the close of fiscal year 1950. And then we began to get the feel of the improvement that was taking place in the European situation by the end of fiscal year 1951. At that time the United States' balance of payments underwent a considerable change, which was only natural. If the European countries got back into production they could produce many things that they had been

[1711]

forced to buy from the United States; therefore, our balance of payments underwent a change, as I said. For the fiscal year of 1951, the total merchandise imports of the United States amounted to eleven billion seven hundred million dollars as to compared to seven billion four hundred million dollars in 1950. In the same period, the United States' merchandise exports increased from ten billion to thirteen billion so that the excess of commodity exports over imports was reduced by around three billion dollars as you can see, which changed our balance of payments picture rather markedly at that time.

I want to remark again that during all this time the Treasury was constantly endeavoring to improve its entire operation through management procedures, through reorganizations of department, and through continual application of new

[1712]

methods and new processes, and through close attention to the findings of the congressional committees that were trying to help in these reorganizations.

A complete chapter could be written on that one subject. We've touched on it from time to time in our various discussions, but it was an enormous job that the Treasury undertook and accomplished in the years that I was Secretary of the Treasury.

At this time, I think that we might inject some figures which maybe would be better deferred until our next session, but I'm going to introduce it here to show you the efforts that have been made by the Treasury, both by President Truman and myself, because it was through his splendid leadership and cooperation in these fiscal matters that enabled our

[1713]

financial situation to remain as splendid as it was throughout his administration as President. I'm going to give you a chart here. The figures that are shown on the chart were taken from Page 11 of the annual report of the Secretary of the Treasury for the fiscal year 1953 and, since that annual report was signed by my successor, G. M. Humphrey, who was then Secretary of the Treasury, you can see that these are not figures that have been in any way dressed up to present this picture.

HESS: They were not favorably doctored in any way.

SNYDER: Yes. Because they actually were lifted right from his report and I call your attention to this, Mr. Hess, that during the period that I served as Secretary of the Treasury, from June 25th, 1946 through January 20th, 1953, the

[1714]

records show that we practically operated the Government on a net balanced budget basis, except for the last few months when the Korean war disrupted our record. If you take the reporting of the Treasury up through March 31st, 1953, which had some bearing because we went out on January 20th, but the next figures that we could pick was '53 and there was no material changes that took place in policy or in action on the part of the Treasury in that short time, you will see we operated on a balanced budget for a period of about six years. So, I think that that gives you the true picture and this chart shows that in the fiscal year 1947, we had a surplus balance of eight hundred million dollars; fiscal 1948 we had a surplus of eight billion four hundred million dollars. Then in '49 we

[1715]

had a deficit of a billion eight hundred million dollars. That big drop came about because of the tax reduction, as I mentioned awhile ago. And then 1950, a further deficit of four billion and six hundred million dollars when that tax reduction was catching up with us more. Then in 1951, we had a surplus again of three billion five hundred million dollars. In 1952, of course, the expenses and costs of Korea were beginning to show up in the budgetary operation because there had been a lag time between June 1950 when the Korean trouble started, it took time to get things in motion and fiscal 1952 when we had a deficit of three billion nine hundred million dollars. Until September of 1952, we still had sufficient revenue coming in that our deficit was held to an additional three billion nine hundred

[1716]

million dollars; and then going from September 30th, 1952 to March 31st, í53, after we out, the deficit was a billion nine hundred million dollars. But, cumulatively, adding and subtracting the surpluses and the deficits, we ended up for the period of Mr. Trumanís administration, while I was serving as his Secretary of the Treasury, with a net deficit of three billion four hundred million dollars, with a year and a half of war going on in between, donít you see. So, I thought that was an extremely interesting set of figures as to how Mr. Trumanís administration met the financial problems of its times.

HESS: Thatís very good.

SNYDER: I think thatís all for this morning.

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