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 7, 1968
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 It may not be published in full except by permission of the Harry S. Truman Library.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.,
February 7, 1968
By Jerry N. Hess

[274]
HESS: Mr. Snyder, in my research on the subject of reconversion and unemployment I found something that we'd better clear up and that deals with your report as director of OWMR to the President of August 15, 1945 entitled "From War to Peace: A Challenge." I found several historians and writers who attribute to you, or at least state that you went along with, the idea that there would be some eight million unemployed at the end of World War II. The following three quotations are from the report of August the 15th, and I found portions of the first two used several times by various authors. Sometimes the report wasn't referred to and the author just said something to the effect, "John Snyder said." The first quotation that I found of interest was: "The outlook for this peacetime

[275]
victory is bright, but it will not be won easily nor immediately. There should be no mincing of words. The sudden termination of the major portion of war contracts will cause an immediate and large dislocation of our economy. Our Nation will undergo the shock of considerable, but temporary, unemployment. The severity of this shock is increasing by the sudden ending of the war."

The second quotation is: "Perhaps as much as half of the eight million workers now employed in war plants will be able to stay with their present employers to produce civilian goods of the same kind they are now making for the armed forces. The number who will be laid off, during the next two months, is estimated to be about four million. The total amount of unemployment will depend upon the rate of demobilization of military personnel, and how rapidly reconversion can be accomplished in war plants and how

[276]
quickly other civilian activities can be expanded. It is expected that there will be 5,000,000 or more unemployed in three months. By spring, unemployment may reach about 8,000,000."

And the third quotation is: "But we are not going back to long periods of mass unemployment. Labor is determined, businessmen are determined, farmers are determined, and the man in the street and his Government are determined that we shall put our productive capacity to work producing goods and services for peace. And we shall need these goods for we have a pent up demand at home and abroad that together will tax for some time our capacity to produce."

Now it seems to me that the thoughts expressed in the widely dissimilar quotes from the report are just not compatible. They don't seem like the thoughts or ideas of the same man. What do you say to that?

SNYDER: Mr. Hess, we'll have to go back just a little

[277]
to get perspective. Fred Vinson was the director of OWMR for less than four months, actually, and it was during that short period that he brought in a Mr. Robert Nathan, an economist who was connected with one of the labor organizations; and he brought in with him a number of very bright, young economists. Now the period covered by the OWMR report of June 20, 1945 actually was issued on August the 15th, 1945. I didn't take over the OWMR until July the 23rd, so you see that the date of the report was actually for a period prior to my taking over, and the publication was within a very few days, just two or three weeks, after I did take over. Hans Klagsbrunn, who I had brought with me from the RFC, and I did not have time during that short period to test out or recheck or rethink the economic analysis on which certain parts of the report had been based. This special report on reconversion

[278]
was in many respects a realistic, hardfisted outline, but in other respects it tended towards economic forecasts which were not mine, and with some of which I did not agree. The report was a product of a group of young men working over a period of several months before I went into the OWMR, under my predecessor, Fred Vinson, and it had a rather interesting background. It did not spring up overnight, although it was rushed to completion in the fast-moving final days of World War II. Nearly all of the statistical work on the report was done during Fred Vinsonís tenure as Mobilization and Reconversion director and most of that job was done by the economist I just mentioned, Robert Nathan, or by those he had brought with him. Mr. Vinson, as I have just mentioned, had brought Mr. Nathan in at the time he was appointed. Iíll gave to admit that in the

[279]
later days I considered it most unfortunate that I could not convince Mr. Vinson that he should sign that report as it really was for his period. He even declined to cosign it with me. As we needed the report for many parts of the reconversion, and the President was very anxious to have it to use it in a talk that he was going to make, I finally succumbed and let the report go through. Of course, I am on record because I did sign and I did support the majority of the items reported; there were so many parts of it that were excellent and only a limited few that were so wide of the mark that I just couldn't agree with them. One of the flaws in the report, according to my views, and for which I was somewhat criticized in later days, was the estimate of eight million unemployed by the spring of 1946. Actually unemployment in the reconversion period never did reach more than three and a half million--that's less than half of this

[280]
prediction. Now, this isn't hindsight of mine. It was my conviction at the time that the reconversion was going to move along much more smoothly. I had spent years talking with industrialists, businessmen, with bankers, during the war and as the war approached an end, and I knew that there would be a great drive and a real desire on their part to swing this reconversion back into peacetime operations with the greatest speed possible. It may be noted that this estimate of eight million unemployed, however, was even less, as big as it was, than some of the other estimates at that time in some of the more liberally oriented sectors of the Government. What I figured, as I've just said, was that what they were overlooking in these estimates was the ability of American industry to swing quickly into production to meet the great consumer demand. I think that somewhat brings it into focus.

[281]
O. Max Gardner, who at that time was chairman of the Advisory Council of the Reconversion Office, and my assistant Hans Klagsbrunn and I, opposed setting any fixed estimate as to the unemployment, but, as I say, we were somewhat pushed into it by the force of circumstances and we've had to live under the criticism that came up later. However, the record of the Advisory Committee of the OWMR shows that we did oppose it very strongly and did not want to include it; however, I think that the record that was established in the rapid reconversion did much to offset the talk about the overestimate of the unemployed. Of course, at the time there was great pressure on the part of many of the young liberals. Mr. Nathan, before he came with Mr. Vinson, had been an economist for the CIO and there was considerable talk later that possibly a considerable amount of this pressure for

[282]
putting a big figure on unemployed was to help impress Congress with the dire requirements for the full employment bill. There are many other suggestions that have been made, but to get the record straight I want to categorically state to you at no time was I in agreement with such a high estimate.

HESS: Mr. Snyder, on October 30, 1945, the President made a radio address to the American people on prices and wages in the reconversion period. In the speech he said, "There are several reasons why I believe that industry as a whole can afford substantial wage increases without raising prices." Did you agree with that, sir?

SNYDER: There were a number of different groups around the Government that had been working on some analysis of the wage and price structure. Mr. Wallace, particularly, had had some of his economists in the Commerce Department prepare

[283]
some figures which were not at all acceptable to me, or to some of my economists that I asked personally to look into that subject. There were one or two of the sectors of the economy where some wages could have been raised without materially affecting the price. It would cut profits lower than some of the industrialists would like to have in those particular areas, but it would still produce a livable profit. Generally speaking though, it was not possible to do because costs had gone up and rehabilitation of the industry had to take place. There was a reshaping of the production lines; there were new products being brought out and there was just as much of a problem of the industry generally, having gone without normal profits, as it was that labor had been held down by the operations of the wage control orders during the hostilities. By and large though, to me it was a matter of wage and price problems. Largely

[284]
it was a matter of the negotiation between the labor and the management, or in the study of any contact that might come up with the price-wage question. What I opposed more strongly than anything else was any blanket assumption that across the board a very large wage increase could be made without some consideration being given to price. There were statements that anywhere from 14 to 24 percent increases in wages could be given to labor without any price raise at all. Well, this, of course, just didn't make sense, and particularly in connection with the steel problem that came up later; there was a very strong pressure brought to try to hold the ingot price of steel, which is usually the gauge of price in other areas, down to its current price and at the same time give the laborer, or the wage earner, a rather substantial increase in wages. I brought in some outside economists and we made a very

[285]
careful study of this situation and it was very clearly shown--we had a schedule which showed the relationship that wages at certain levels had towards the price that would be required for fair and equitable earnings for the steel mills. It was that analysis that influenced Mr. Truman materially in making the decision that he did.

HESS: Whose advice had the President taken to arrive at that conclusion?

SNYDER: Well, there was a general memo that had come up. It was indicated, I think, in one of the OWMR reports that had been slipped in, that wages could be raised in many areas without a price raise, but he was getting it from Wallace and from Ickes and from various persons who were still at that time, I think, in advisory positions--I'd have to go back and check to see, but he was getting the advice from quite a number of people.

[286]
Certainly he was, getting it from Mr. Bowles, and some of his people.

HESS: Did you talk to the President personally about this question?

SNYDER: Yes, yes at great length, but it ended in sort of a compromise. It was the best we could get out of the arrangement at the time. If you will re-examine your question, the statement that you read, you will see that there was a compromise area in there. It wasn't an all-out endorsement for large wage raises with no price raises. It said that there were some areas in which that was true. Well, that was correct, but it was interpreted immediately that the President had indicated that all wages could be raised without any prices raised.

HESS: Not just wages in some areas, but wages in all areas. What were the areas where they could have been raised without...

[287]
SNYDER: I would have to go back to my records. I recall that there were a few.

HESS: On November 5, 1945, the President spoke at the opening session of the Labor- Management Conference in Washington. Just why was that particular conference set up?

SNYDER: Well, at the time it was probably altruistic, and we were very hopeful that labor and management would sit down together and give a breathing spell to a battle between wages and prices and inflation in setting up the economy to meet the tremendous pent-up demands for consumer goods, for housing, for so many of the items which in normal course had been held back because of the war. We had several forces that were being brought to bear. There were tremendous savings, pent-up savings that people held. Instead of buying things during the war, they had put their money into savings banks, savings bonds, and so there was

[288]
a tremendous volume of savings that was ready to go into action to make investments, to buy something for the home, to buy an automobile, to buy all sorts of things, washing machines, radios; then on top of that, and at the same time, there was pressure for increased wages which added to the large volume of available funds, would press prices up before the supply of goods was available on the shelf of the dealer and all of which would have produced inflationary pressures. It was hoped that management and labor would sit down and say they would have a cooling off period in which they would work together and just gradually, through negotiations at the bargaining table, go about these increases. But it soon became evident from the very first day that labor was not going to give an inch in their demands. According to their leaders, they had restrained themselves, they had put their shoulder to the wheel to produce

[289]
goods for the defense needs, and actually some of them went so far as to say that their contribution to the victory of World War II was greater than the soldier's because they produced the very product that won the war and, therefore, they were entitled now to be unfettered and go forward with their demands for wages. This didn't take but a moment to infect the management, who were very open to infection, that they too had been restrained and been renegotiated and had held their profits down and so forth and, therefore, they too, now that they could get back into a free market, they wanted to have their pricing unrestricted by any controls or holdbacks; so the conference which idealistically was a splendid idea, practically and actually turned out to be a most unfortunate failure.

HESS: Did you at times confer with the representatives to the conference?

[290]
SNYDER: Oh, yes, I talked with both labor and with management, but there was no getting them together; no getting an agreement of any character.

HESS: So it really didn't come to much. Is that right?

SNYDER: However, it may have had one good effect; it woke us up to the facts of life that we were really going to be faced with some realistic dealing with these matters whereas we might have been longer in coming to that realization.

HESS: Well, on November 29, 1945, the President read at a press conference a statement on the first one hundred days of the reconversion--a milestone more or less--and just a small portion of that statement is: "Unemployment, so far, is less than had been expected. This means that the disruption of our economy has been less drastic than anticipated. However, we are still in a

[291]
transition period. The rapid demobilization of the armed forces will undoubtedly increase the unemployment total over the next few months."

So here we have a statement that things haven't really been so bad but they may get worse yet in the future. What was your view about this time? This is along toward the end of November, about a hundred days after the end of the war?

SNYDER: It had begun to be rather evident that as contracts came up with labor that there was going to be greater pressures for higher wages and conversely that there'd be demands for higher prices. It began to be pretty evident that our transition from war to peace was going to run into supply problems, it was going to run into skilled labor problems; it was going to run into a great, great number of allocation problems; that the normal supply and demand

[292]
balance could not be maintained; that with all this pressure of purchasing power that was available that we were going to have a very difficult time meeting the demands that were going to develop. And too we were under great pressure from abroad. The countries devastated by the war had begun to assess their damage and the problems that they were faced with, and their requirements to try to get back on their feet. We were approaching world rehabilitation with a clearer vision then than we had in the excitement and the pressures of the first stoppage of the war, and these things began to come into clear focus. That was the reason for that warning being raised. We were moving along rather quickly; we had absorbed the returning serviceman very quickly. In one of our conversations I told you, one of the great helps that we had with the returning soldier was the desire of so many of them to go back to school. They were employed

[293]
in studying for months and years and that helped to gradually bring them back into the labor supply. It was a combination of all these things that began to impress many of us that the future months ahead were going to present some pretty difficult decisions and actions.

HESS: Also on the subject of reconversion, in an article you wrote for the Nation's Business, in May of 1946, entitled "All-out Production is America's Out", you had the following statement: "It's time we took stock of ourselves. We need to go back to first principles, put what we have been doing against what we ought to do, and strike a batting average. When we do, if we are candid, we shall all admit some mistakes. That goes for Government administrators, businessmen, Congress, labor unions--even people from Missouri. One big error made by many was in confusing relatively simple physical reconversion

[294]
of plants with reconversion of the delicately balanced economic system. That system in the United States is more complex and more intricate than it is anywhere else in the world. Normally it is self-regulating by the forces of competition and progress. But in abnormal times it can run as wild as a driverless truck...We can only do this by exercising certain controls and so, for the time being, order implies restraint."

Now, your article does go on to very fully outline what you said there, but one reason this seemed important to me was when we had discussed reconversion, I had thought of it more in terms of plant reconversion rather than the far more complex economic aspects, so I wanted to bring that up to you and perhaps have you say a few words on the difference between the two.

SNYDER: To follow through with you on what you have just said about your impression and how

[295]
generally accepted that impression was, and how far it missed actuality: During the war we had had two great displacements of personnel; one was the serviceman going across the seas to fight and being dislocated, displaced as to his peacetime job; number two, we had moved great numbers of laboring people from one side of the United States to the other; we had recruitment trains that took whole trainloads of people from the east out to the shipyards, the aluminum plants, the magnesium plants, the airplane plants, on the West Coast. We had an imbalance then of peacetime operations with labor. We had the immediate problem of relocation of labor to face unless we could build up peacetime production in those plants that could be reconverted quickly; viz. change lathes from doing something for guns or a warplane or something, into a truck or a wagon or a plow. We had to not only do that, but had to have

[296]
the labor trained to do a different kind of job. Furthermore, the location of this plant should be near to its market from a transportation cost situation; and further than that, we had had four years in production cutback; we therefore had to rebuild distribution for these products, train salesmen, prepare general display and advertising, and then beyond that we had to rechannel raw materials into these plants to make these new things that they were going to make, or to even make the old things that were to go back into the consumer market. There were hundreds of thousands of people that had been making ships and building airplanes that had to be retrained into a new job. Let's take the lumber industry. They had almost gotten into a groove of certain specified military specifications whereas when they went back into abroad peacetime demand, they had to reorient their sawmills and

[297]
their shaping mills, their planning mills and everything into making things that would fit in with the peacetime economy instead of a military economy. Our whole steel supply had to be rechanneled and instead of all going into the big, huge plants for war materials, it had to be distributed back into both the large and the smaller plants and let them reestablish their markets. That's just briefly some of the real problems that had to be faced.

HESS: In my research on the redeployment problems I found indications that one of the first problems with which you were presented when you became director of the Office of War Mobilization and Reconversion was to help work out a transportation crisis regarding the redeployment program. I read that the problem was given to you by the Mead Committee after they had heard a good many days of testimony of

[298]
representatives of the Army, Navy and the Office of Defense Transportation and the Association of American Railroads, and that the committee issued a report declaring that it should be the function of OWMR to initiate policies to prevent such conflicts and controversies from developing. What do you recall about that episode?

SNYDER: The Mead Committee report, of course, was of no comfort or help to me because it was completely unoriented with any of my work. All their criticism and suggestions were largely about what had gone on before under wartime conditions. The Mead Committee report, as I remember, came out about the 8th of July which was long before I even went into OWMR and it couldn't have been criticizing any of the actions that I'd taken, although when once they said OWMR they pointed it at me, as

[299]
director, and therefore I had to face up to it. Their report was unfair, it was unbalanced, and it was unrealistic, but we had to accept it and try to answer as many things as we could to keep unrest and excitement out of the general economy. Their whole concept of the office of OWMR did not match mine at all. They wanted to set it up as a dictatorial, czarist type of office that would order the other departments and the other agencies of the Government to do certain things and to be omnipotent in its judgment. I preferred and I intended to revert to the more normal way of having industry and labor and the various established agencies of Government take up their duties and to move forward in a stabilized, realistic free enterprise fashion. However, there were certain things that were brought to light by the Mead Committee such as the transportation situation and that required attention. This was accelerated by the fact that V-E Day came along and stopped

[300]
hostilities in Europe and our whole war focus was moved to the West Coast, to the Pacific, so we began to move large quantities of materials, of war materials, of personnel, across the continent in redirecting them rechanneling them, towards the west instead of the east. There developed pretty quickly a railroad crisis in our transportation. Many of the supplies and troops we took through the canal and went around by water, but a great portion, for purposes of expedition, we had to unload at the Atlantic ports of the United States, ship them across the country, and pick them up there and send them on to the required areas. This was partially because we didn't have the ships to do all the movement and partially to expedite the time requirements. In order to solve that I had a meeting with the Army and with the management of the railroads, and we worked out a program. First I had the railroads give me a

[301]
schedule of the type of men that they essentially needed, and I then persuaded the Army to furlough some 4,000 trained men for the railroad operations and this helped solve that problem. It also, concurrently, helped solve the coal problem because we were backing up in coal shipments at that time, and we were having great difficulty in moving these large tonnages of coal that were needed in new locations as the economy swung back from war to peace.

HESS: I had found indications that you were called upon to arbitrate the dispute between the armed service and the fuel control agencies over manpower to operate the coal mines too, is that correct?

SNYDER: Yes. We had that problem and I worked it out somewhat along the same lines, by getting some of the essential people furloughed out of the Army or actually discharged as quickly

[302]
as possible with some priorities which helped temporarily to meet that situation. It didn't help it permanently because we began to have arguments with the coal people pretty soon after that, but it met the immediate crisis.

HESS: We mentioned the GI bill of rights just a few minutes ago, and also under your direction there was an interagency committee set up that steered the GI education bill through the Congress, is that correct?

SNYDER: Part of the responsibilities of the director of OWMR, and of his office, was to help implement and steer the legislation that was requested by the administration through Congress, and it was required of that office that it follow through on all the bills that were sent up--the requests for passage of certain legislation. The GI bill happened to be one of them, and in order to get at it because it touched so many different

[303]
segments and so many of the personnel of different operations of Government that, as I recall, I set up a committee of some seven different heads of agencies to work together because it affected all these various agencies in one fashion or another--labor, commerce, agriculture and others, as well as the Army and Navy--and by having all those work together on a concerted plan we were able to present evidence to the committees in Congress which enabled us to get the bill passed.

HESS: The bill that you worked on became Public Law 679, that was signed on August the 8th in 1946. In my research I found that there was a Public Law 346 signed by President Roosevelt on June 22, 1944.

SNYDER: That was the earlier bill and actually that is the "GI Bill of Rights." This latter Public Law 679 was really a supplement to

[304]
Public Law 346. They were later merged into one bill.

HESS: Didn't the first bill have a provision for education? Why was it thought necessary to...

SNYDER: It wasn't broad enough. The first provision wasn't broad enough.

HESS: What is your estimation of the success of the GI bill of rights--the educational angle of the GI bill of rights?

SNYDER: Mr. Hess, it's been of great interest to me as the years have gone by to look back and measure the tremendous impact that this GI education bill had on our whole scheme of higher education in this country. Without question it completely reoriented our planning and thinking of higher education; it stimulated it to the point that it changed our methods of teaching; it changed our programming; it changed the

[305]
requirements of teachers, of faculty, of the equipment of universities, of the size of the universities. Because the GI when he came home had a more fervent desire to actually get an education, and it wasn't a matter of boondoggling or just finding a reasonable excuse for not going back to work, he went into the school with a desire to learn and an eagerness and a sincerity that was a shock at first to the faculties and to the principals, directors and administrators of our schools and colleges, and it soon awakened in the whole Nation the fact that we had a situation here that we had to meet. Because of this desire for education of the G.I., these men came out of college better prepared to take up their ultimate job, their ultimate position in our economy. And, too, many were educated that would never have been educated had we never had the war. To me it was just a complete reorientation, a revolution in higher education in our country.

[306]
HESS: One thing that we covered a little bit the other day was on inflation, but I'd like to read a short statement and then ask a question to perhaps further clarify what we've already got down. In the 1945 volume of the Current Biography there is a short quote: "Snyder was accused by some people of moving so fast in abolishing many wartime controls that he was paving the road for runaway inflation."

Now, I know we discussed inflation the other day, but wasn't this a very real danger that with the pent-up buying power of the savings that many wartime workers had been able to put away, that if controls were discontinued when goods and commodities were still relatively scarce, that competition for those goods would cause prices to rise rapidly and that a period of inflation would ensue?

SNYDER: That was one of the problems that we had to

[307]
face frontally. Let's measure it. That is without doubt the one thing that the people in OPA and those other members of the groups that were insistent upon a planned economy hung on to largely, but you've got to face the truth of things. There were many areas that soon didn't need them, but the advocates for full control did not want to let any controls go when they weren't needed because they said it would be a precedent that would spread and weaken the controls in every area. You would set up a lack of incentive if you were holding controls on some item where they weren't needed; it would cut back the vigor and the enthusiasm that was necessary for the drive for production. It was the resistance of the planned economy advocates to any partial removal of controls that forced us at times to go faster than we really would have wanted, because they refused to agree to progressive releases. They claimed we were

[308]
unrealistic, but the facts proved that they were the ones that were unrealistic. Certainly we had to take a calculated risk in removing controls at times because of this failure to cooperate in a gradual removal. But fortunately, for me, the American citizen took hold of this thing--American industry, American banking, American business, American workers, took hold of this thing and got our economy moving to where we were able to produce sufficient consumer goods to meet the needs of all the people, and we didn't have the huge inflation that everyone expected. We had some inflation. It's only natural. We had to release that pent-up purchasing power someday; we couldn't keep it glued down; we couldn't have a Russia; we couldn't have a Communist control of buying and selling in our type of Republic, in our type of Democracy. Maybe I was fortunate in that the people did take hold, and it was due largely to the ingenuity, drive and the stamina of our American people that helped me out of the removal of controls.

HESS: They made you look good in the end.

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