Harry S. Truman Presidential Library & Museum


Oral History Interview with
Willard L. Thorp

Deputy Assistant Secretary of State for Economic Affairs, 1945-46, and Asst. Secretary, 1946-52. Member of U.S. delegation serving as special adviser on economic matters, Paris Peace Conference, 1946; special adviser on economic matters, New York meeting of the Council of Foreign Ministers, 1946; American representative to the United Nations General Assembly, 1947-48; and chairman, U.S. delegation to the Ruhr Coal Production Talks, Washington, D.C., 1947.

Amherst, Massachusetts
July 10, 1971
by Richard D. McKinzie and Theodore A. Wilson

[Notices and Restrictions | Interview Transcript | List of Subjects Discussed]


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 It may not be published in full except by permission of the Harry S. Truman Library.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 January 1978
Harry S. Truman Library
Independence, Missouri

[Top of the Page | Notices and Restrictions | Interview Transcript | List of Subjects Discussed]



Oral History Interview with
Willard L. Thorp

Amherst, Massachusetts
July 10, 1971
by Richard D. McKinzie and Theodore A. Wilson

[1]

WILSON: Mr. Thorp, would you describe, please, the circumstance of your appointment as the Deputy Assistant Secretary of State for Economic Affairs in 1945?

THORP: I suppose I should go back to when I was born, but I'll talk primarily about my entry into international affairs.

This goes back to 1933. Until that time I had been largely involved in such fields as

[2]

business cycles, corporation finance, and money and banking. For a period I was on the staff of the National Bureau of Economic Research, but, since 1927, I had been a professor in Amherst College.

In 1933 suddenly I got a call from the head of the American Statistical Association. He asked me if I would go to Washington to be a member of a group provided by the Association to advise Mr. Roosevelt and his Cabinet about how to reconstruct the statistical services of the Government. These had been substantially cut back in 1930, '31 and '32 by the Hoover administration, as part of the general effort to keep the deficit down.

I had been a member of a group which had met at Princeton and had already sent to Washington a strong protest about what had been happening

[3]

in the statistical field.

When I arrived in Washington that summer -- I went there as soon as the college year ended -- I was assigned to review the statistical activity of Commerce. I started circulating around in the Department. At that time the head of it was Daniel Roper, a political appointee, but the operating head was a man named John Dickinson, a lawyer from the University of Pennsylvania.

After I had been working on this job about a month I was called in by Dickinson who said, "We have a very difficult situation. There's building up a great pressure to appoint a Southern candy manufacturer as head of the Bureau of Foreign and Domestic Commerce. From my point of view this is the most important bureau in the Department. We've got to fill the post as quickly as possible. Will you take it?"

[4]

Here was I 34 years old, never having run anything except during the war, when I had been personnel officer in a training camp. Luckily, I had a very able chief sergeant who knew the ropes and really ran the office (I was 18 years old at the time). Except for that and one year as chief statistician for the New York State Board of Housing, I had been in research work, I had been teaching at Amherst, and suddenly was invited to become head of a large and important bureau. It included all the commercial attaches, or what was left of them (there had already been a hatchet man named Amory, who had fired a great many people in the period from March to June). It was the contact with businessmen. It also operated regional offices around the country and published voluminous reports.

I became the head of that bureau almost at

[5]

once and found myself deeply involved in foreign commerce. This meant that whenever any international policy problems came up, of which there weren't very many in 1933, I was pulled in on it not to mention the continuing responsibility for the commercial attaché apparatus.

I was one of the group that drafted the reciprocal Trade Agreements Act, along with Rex [Rexford G.] Tugwell, Herbert Feis, and others. I was also involved in the whole problem of how alcohol was to be treated after the ending of the prohibition, which again had a foreign angle. Most important was the whole question, since foreign trade was going to hell very rapidly, of what could be done about it.

This lasted until May, 1934, when through a series of circumstances that we don't need to go into, the President withdrew my name. Political opposition had come from Senator

[6]

[Hubert Durrett] Stephens of Mississippi, who was essentially responsible, because I had not appointed a client of his to a job. At any rate, this was my initiation into foreign affairs in the Government.

While I was head of the bureau, the State Department made a big drive to take over the commercial attaches. I made a successful resistance to this so that things went on as before. Parenthetically, when I was back in the Department of Commerce in '38 or '39, the State Department again made a drive for this. I abetted it on the grounds that the State Department appeared to be much freer of political choosing and handling of personnel than the Commerce Department. I had watched this whole operation now for five years and was prepared to arrange a transfer over the protests of a great many commercial attaches who said, "We will just be second-rate

[7]

citizens, we will not be absorbed. We will just be frozen, with no chance, no opportunity." It turned out in the end that a number of these fellows wound up being ambassadors. Walt [W. Walton] Butterworth is probably the best known one. He was one of the commercial attaches that I "sold down the river to the State Department."

During this period I had worked rather closely with a man in the Treasury Department: Dean Acheson. I met him on one of those lovely Government yachts which served to make sure that all ships in the Chesapeake were behaving properly, a job frequently done by high officials! I think within the next week I got a call from him saying, "On my desk there's an enormous pile of stuff having to do with the problem of dumping. I don't know anything about dumping. I wonder if you'd be willing to take all this and look it over and see what action the Treasury ought

[8]

to take on this problem." From then on when he got involved with a foreign problem, he was very likely to call me and ask if I would help him out. So that I came to know Mr. Acheson fairly well, on a working basis.

After the Bureau of Foreign and Domestic Commerce and a few brief assignments, I became head of the NRA Policy Board, and was there for a while. I then went up to Dun and Bradstreet and was its chief economist. Dun and Bradstreet had never had an economist before. The head of it, Arthur Whiteside, had been a member of the group heading the NRA and felt that a lot of its material might have economic use. I was very happily functioning there when I got involved again in Washington. Harry Hopkins, who was Secretary of Commerce, became sick and was limited in his activity. Three of us became

[9]

a triumvirate that ran the Department of Commerce. I think I spent two days a week in New York at Dun and Bradstreet and the rest of the week in Washington for that period. That involved also being the Commerce man on the TNEC (the Temporary National Economic Commission) which was a terribly exciting job. It unfortunately was reaching a point of conclusion when the war came along and we never really made use of all the work that was done.

Hopkin's illness brought me back into the Commerce Department again because I had to do everything that was substantive; from advising Mr. Hopkins whether or not to approve the form for the 1940 census, telling the railroad industry, "For heaven's sakes, buy a lot of freight cars and get the economy going. That's a good opportunity that you've got and you'll need it." But mostly I was still at Dun and

[10]

Bradstreet.

Then suddenly I got a call from a Federal judge to come and see him. It turned out to be about one of the two biggest crooks of the twenties, Howard Hobson. Hobson had gone to jail, his enormous empire was in bankruptcy. The judge wanted to know if I would come and be a trustee of this.

It turned out later, to my surprise, that one of the people who had suggested me was Acheson. This judge had offered the post to Acheson and Acheson had said, "Well, if I do it, I'll do it only if a fellow named Willard Thorp would come and be my assistant on it," or something to that effect.

For the whole war period I headed this utility system, the third largest in the country. When I say I "headed it," I must modify that.

[11]

I had a co-trustee who was twenty years older than I. He was a lame duck congressman who left it all to me to do.

MRS. THORP: His claim to fame was that he had uncovered the fact that the letters against the proposed Public Utility Holding Company Act with which the Congress had been inundated were shams. They were letters with names taken from cemeteries and what have you.

THORP: It was a little more obvious than that. They tended to be letters from people whose names began with A, B, and C. Nobody whose name began with T or W sent in a letter!

MRS. THORP: Dennis Driscoll was an enchanting loveable man, but of course, the whole outfit needed somebody with brains and drive. The financial community bet that it was going to

[12]

take twenty years to get this mess straightened out. It was out of re-organization in six years.

THORP: The re-organization of the Associated Gas and Electric Company was an education in law and business operation. There were some very difficult law suits against accountants and banks, and very lively tax problems to be settled. Many of the properties had to be sold. Besides all of this was under the jurisdiction of a Federal judge; whenever you wanted to hire a stenographer you had to go and ask permission and so forth and so on.

Incidentally I don't know whether it is typical or not, but since he knew something about the market for stenographers, it was harder to get the judge to approve a stenographer than to approve the refunding of a bond issue that might involve ten million dollars.

[13]

MRS. THORP: This was also because he was a political appointee. All of this was much too complicated for him to comprehend.

THORP: To try to keep a small international thread in this, and this is a very gossamer thread, I should mention that this system had been built up by accumulating existing properties. This was, of course, a very essential way in which the country shifted from local electric light companies to large systems. Systems in the twenties were primarily built up by buying a company, floating bonds of greater value than were paid for it, and then using that money to buy another company.

One of the things the Associated owned was the Manila Electric Company. I was therefore actually involved in operating a foreign electric light and power company. I must say, however,

[14]

that the problem of operating a Philippine company in the early forties was never challenging. It finally had to be sold under S.E.C. orders.

Now to get back to your original question. I got a phone call in the spring of '45 from Ed [Edward S.] Mason, an old friend of mine, and a professor at Harvard. At that time he was Will [William C.] Clayton's assistant. The State Department had never had an economic staff of any significance. Herbert Feis had been there; as a matter of fact, he was there, as far as I know, back in 1933. When they passed the Reciprocal Trade Agreements Act, the problem of negotiating these was put on the State Department. Henry Grady came in and built up a group for this which included people who came later to be of considerable importance, like Leroy Stinebower. But, the weakness of the Department is evidenced by the fact that

[15]

there had to be a separate Foreign Economic Administration set up during the war. There was just very little to build on.

Will Clayton, who came into the State Department in December, 1944 and Ed Mason decided that the Department was going to be faced after the War with a tremendous variety of problems beyond the trade policy problem, and that it must build up a substantial staff.

MCKINZIE: Do you think Secretary [Cordell] Hull had anything to do with that decision?

THORP: I wouldn't know. I would rather doubt it. My earlier contacts with Secretary Hull did not suggest that he was a very imaginative person. Anyway, Hull was out and Stettinius came in, in December, 1944.

MRS. THORP: I think it was Will Clayton who telephoned Willard. He didn't find out until afterwards

[16]

that Ed Mason had suggested him to Will Clayton.

I happened to be sitting in Willard Thorp's office when the call came from Will Clayton asking him if he would take this on. He turned absolutely silver-color, really grayish. At this time he had a wife (not this one) and three children who were naturally a major expense -- adolescent children. When he got off the phone and told me what the invitation was, I said, "Well, you just can't do this." He had parents also, his father was a retired minister and clearly didn't have very much to live on. I said, "You just cannot afford, with all the requirements on you, to take on a job like this in Washington."

He looked at me -- there was nobody else present, and no heroics about him -- and said, "What kind of citizen would I be if I refused to go broke to serve my country?" I knew what he was talking

[17]

about, because he had already gone broke once in the New Deal days.

THORP: Yes, that's right. In '33-'34 I ended up going up to Dun and Bradstreet having borrowed on my life insurance.

WILSON: Why did this remarkable group of people come into the Government, or stay on, at a great personal sacrifice?

MRS. THORP: I have a thing about this. I get absolutely enraged when people go into hysterical kudos for someone like [Robert] McNamara or George Romney from American Motors. These and other people gave up a million dollars worth of securities and turned it into some form of trust. It's one thing for people whose fortunes are absolutely assured; it's quite something else for somebody who says, "I will wear a hair shirt

[18]

for the rest of my life because I love my country." This is what no one has an appreciation of. Willard gave up 60 thousand dollars a year and took ten.

THORP: I think it was eighty-five hundred a year when I went down as Will Clayton's deputy. This was tough because I did have a certain number of obligations.

MCKINZIE: At the time you went down, did you have some idea of Will Clayton's position and of the position of the economic affairs staff in the Department? Did you think you weren't going to be able to do anything once you got there?

THORP: I had a little sense of this because of my experience earlier, having been in the Commerce Department, and having dealt with the State Department. But I did realize that the postwar

[19]

period would have economic problems like no other postwar period. The level of destruction and its global character were new conditions. I had a vague sense that there would have to be much improvisation.

Will Clayton was a tremendous person. I think he was an outstanding individual; people respected him all through the Government. In most areas in which he dealt he was thinking in policy terms, so that I was tremendously attracted by him. A number of people I knew were already in the Department. There was also the possibility that in the dissolution of FEA we might pick up a lot of added people. We had major negotiation about that, turning to a large extent on trying not to get a lot of deadheads; to get the best people. Commerce took some, we took some. As still other war agencies disbanded, we picked up more top-level

[20]

economists. During this period, as a result of the character of the postwar problems and the fact that so many economists had worked together during the depression, in the War Production Board, the OSS, and other agencies in the government, it became a relatively easy thing to build up a magnificent staff. I felt that the postwar period saw the State Department as having the best economic staff in Washington. One particularly interesting thing was that the Department had little authority to do anything. I spent more time negotiating with the rest of the U.S. Government than negotiating with foreign governments, and my staff almost never left Washington, except when there was something like a trade negotiation, which required the participants to stay indefinitely in Geneva or Havana or Paris waiting for instructions from Washington or for others to get theirs from their capitals.

[21]

MCKINZIE: The War Production Board and the Office of War Mobilization and Reconversion and several other agencies all had their plans about how the United States should approach foreign economic policies after the war. I assume that it fell upon your office to do something with all of those things. Do you recall anything about those?

THORP: There were a certain number of people and agencies who brought in suggestions. Many were political or very short-run in terms of immediate needs. My office operated on the principal that the more flow of ideas that came in the better. It was up to my office to sort them out and blow on the occasional one that had a spark in it and stamp on the others. I got an awful lot of crazy stuff, but we managed not to be hung up. However, in the early postwar stage, we had relatively little to do with German or Japanese policy, though that soon changed. I would say that the only area in which I really

[22]

felt we were hung up was Latin American. For a long time, our policy had involved a lot of goodwill but was without very much action. Our European allies were of primary concern and we dealt with Latin America by talking and not doing very much. This wasn't entirely true. After all, technical assistance programs had been developed in Latin America before they developed anywhere else. But that was a matter of certain special cooperative programs in agriculture, health, and education. I must say that a good many of the most basic policies (the kind of thing that delights George Kennan, for instance) were in the hands of the political officers in the Department. They might have had some economic overtones, but frequently I wouldn't be involved in it at all. I always attended the Secretary's meeting in the morning when I was Assistant Secretary. Even when I was Deputy, Clayton was

[23]

away a good deal of the time, so that I attended in his place and had a chance to make suggestions or argue things.

On the point about our having people who didn't carry their share of the load it may have been that the fellows down below had a problem about this. I didn't have. I don't recall having anybody in a division chief position that -- I really ought to check this name by name -- but off-hand I don't recall having anybody whom I just thought was hoisted on me that I hated to have, who was a deadhead and so forth. I would insist that at the Division Chief's level, at any rate , this was really an outstanding group of people. To illustrate -- when I set up a special unit on Germany (before the Department had any such political unit) who was it? -- Ken [Kenneth] Galbraith, Walt Rostow, and Emile Despres.

I came in to the Department in July 1945, at the point when Potsdam and the U.N. San

[24]

Francisco meeting were in motion. I had to run awfully fast to even get caught up. I didn't know about most of these problems in depth. Who could from the outside?

MRS. THORP: I recall (obviously, not of my own knowledge, but what I remember of what Willard commented on) that down the line there were people inherited from these other organizations, about whom the topflight people were not too happy.

One of the sad things that happened in the great exodus in '52 (because people wouldn't care to work in the kind of intellectual and moral slum that anything headed by John Foster Dulles would become) was that the people who got promoted were the type that were only tolerated when the Department was a first class institution. This did damage to the United

[25]

States for which the Republicans must take full blame and which has not yet been cured.

THORP: It was harder to keep people as we got along into the fifties. I was already losing people for two reasons: one, I would say our problems were gradually getting less crisis-seeming; and, secondly people wanted to go outside either to get back into academic posts or business. The latter was beginning to have international interests and couldn't find better trained people. The forties and the thirties produced almost no graduate students in international affairs. Unemployment, labor problems, and the business cycle were the key subjects and graduate students went into them. When the companies and the banks began to want people who could help them work through the currency maze, for example, I lost person after person out of the financial side, starting with Pete

[26]

[Emilio] Collado.

As Clarice says, the departments were even greater after 1952. Up till then there was another reason as to why people stayed, and that was [Senator Joseph R.] McCarthy. His efforts to clean out the Department meant that few left. Mr. Dulles discouraged the economic staff by saying that he didn't want an economist to head the economic work. He brought in Sam [Samuel Clark] Waugh. I'm very fond of Sam as a person, but Sam ran a trust company out in Nebraska and I doubt if he had ever analyzed a balance of payments before he came to the State Department. Anyway, people left. Even in the Dulles period, I tried to persuade some to stay.

I asked one fellow why he was leaving, who said, "You know, I used to write a memorandum

[27]

outlining an idea and send it upstairs, feeling sure that it would be reviewed in terms of the broader picture. It would be used or not used. Now I send a memorandum upstairs and it's always approved. I don't know the total picture well enough to have my memoranda automatically approved. This is giving me a kind of responsibility where I don't have the vision to see the total picture and so I've got to pull out."

WILSON: There are thousands of boxes of records, FEA records, in a warehouse out in Suitland, Maryland. They put them in vaults. There are just enormous numbers of policy studies and background papers and what the United States is going to do after the war, and I don't think [Leo T.] Crowley was saying, "Okay write a background study." A number of people seemed

[28]

to think that the FEA would be an agency which would carry over from the war period, and yet it was so amorphous. You came in just at the time when everything was coming together, with the end of lend lease and immediate dissolution of FEA and Crowley's resignation...

MCKINZIE: I particularly remember one study the War Production Board-not the FEA, did where they said that if something wasn't done about foreign economic policy as soon as reconversion occurred we would find ourselves with all the pent-up demands for products to be filled in a year or two. Then we are going to be faced with this terrible problem of what to do.

THORP: There is no doubt but that proposals for postwar policies and programs were developed in many places. We inherited most of the plans

[29]

and many of the people who had worked on them earlier in other places. The decision to dismantle the FEA was very important in clearing the way for the State Department to emerge in a leadership position. As to the sources of ideas, I can only say that they came from inside and outside the Government, often from several sources simultaneously. Often a program took bits and pieces from various sources, including Congress, of course. Even if you could find the earliest time it was put on paper, it still might have been the product of much talk among a number of people.

But as to overall program-making in the economic field, particularly when foreign and domestic considerations overlapped, the problem might move to the Council of Economic Advisers. The whole questions about domestic policy, production, and so forth was quite an undertaking. In its most formal aspect there

[30]

was the Council of Economic Advisers' Economic Report. The Council did some first drafting, but the proofs relating to international affairs would come over to me then to the Treasury. I would rush an answer back with whatever my people thought (we'd all looked at it) would be the appropriate thing. Then when this got boiled down as much as possible we'd have a final meeting with the President. People would appeal there and argue it out with him. This would be a half day meeting which happened each year, and this was where the problem of finance, production, and foreign trade programs got pulled together.

Now, this frequently meant that things got omitted. The central problem might be something that I'd have no interest in, like how much housing shall we finance or something of that sort. Nevertheless this was an integrating

[31]

process. The Budget Bureau also had a job of integration, so that all departments would take the same policy position. Everything we sent to Congress had to go to the Budget Bureau first. If you sent a letter up to Congress it had to be cleared by the Budget Bureau. However, if I went up to testify, it didn't get cleared. It was a very funny kind of business.

In a sense, I was an odd man on everything under the sun, and the economic report was one of the things that seems to me to have been very important in forcing a degree of coordinated economic policy. We would have meeting after meeting about it. On the first draft somebody down the line would work with the Council. The Council of Economic Advisors had usually one person in charge of a small staff. Walter Salant was the staff man at the time.

As to Crowley, he left to run a railroad,

[32]

but he was still around Washington to some extent, as I recollect.

MCKINZIE: Is it fair to say that the vast number of reports from the FEA were pretty much shelved, put in their boxes, and not used?

THORP: I would have to say that the reports as such were probably not used, but that ideas float around. You quickly lose track if the source of ideas so that whether they got into the general stream or not I don't know. Probably some did and most didn't. Of course, some of those people who came into the State Department must have brought some of their ideas with them. And if an idea's time has come, it may occur to several persons quite independently.

MCKINZIE: Some in FEA had some very ambitious ideas -- The Industrialization of China, a five volume

[33]

study of how the United States was going to industrialize China.

THORP: They may have been responsible for the Yangtze River proposal. That is the only specific Chinese project I remember that came up: an effort to take the Yangtze River and do a TVA with it.

MCKINZIE: Is it fair to say also that if there was any one theme at the time when you came in, it was the theme of expansion and freeing trade. Was this, perhaps, the dominant idea in all these agencies?

THORP: I don't know about all the agencies, but certainly it was important in ours, the State Department, especially as a long-run objection. In the short run, there were postwar problems of rehabilitation and settlement of accounts and

[34]

the establishment of international economic agencies. I would say that the economic group in the State Department was operating on a "one world" kind of concept.

We had learned during the war all sorts of difficulties about working with the Russians. I remember sitting in on one of the so-called Soviet protocol sessions, where the Soviets came in and asked for this many oil rigs, and this many machineguns, and so forth, I was just there representing the Department, but as a listener rather than an active participant. The main actors were the Defense Department, the War Production Board, and the Lend-Lease Administration. I learned how little the Russians were willing to discuss their plans and programs, as compared with getting a justification for our supplies to the British. When we wanted to know exactly what they (the British) were going to do, we found out. It really was all worked out jointly. The Russians

[35]

case was really one of demand by them, "We need this for our program, period," and very little supporting evidence was forthcoming as to the actual program. Nevertheless, stemming I guess from Mr. Roosevelt's hopes, and from the hopes of everybody, there was a real hope that we could go ahead as to plans and operations. It shows up in the Bretton Woods negotiations, it shows up in lots of places, that we were trying very much to find a way of working with the state trading countries; and that perhaps on economic goals, at any rate, we could work together. No, I don't think there's any question about the long-run goals. Every time we made an agreement with anybody, like the British loan agreement, or the Marshall plan, the preamble always outlined this happy economic future of stability, growth and non-discrimination. Many governments were so committed.

[36]

I would say that this was the direction in which we were working (at least as far as my end of the State Department is concerned). Even the Greek-Turkish program did not shift as to a dominating cold war policy. But the conditions which led to NATO brought us to a second-best position of not "one-world" but as much of the world as possible.

MRS. THORP: I would suggest just one thing. I think nothing shows how optimistic the Government was about its relations with Russia more than the fact that the Marshall plan was offered to include Russia, as well as everybody else.

THORP: Where I first came directly into the problem of dealing with Russia was in the controversy in connection with UNRRA funds, as to whether or not some of the funds should go to the Soviet Union. That was an area which Mr. Clayton handled

[37]

himself. I only picked up bits and pieces in my morning conferences with him. I went to one or two UNRRA meetings when he was out of the country, but this was his project and he worked on it with Tyler Wood, who had been brought in to handle UNRRA. He gradually emerged as the person who was closer to operations in the assistance field, not always at the policy level, but the operations, than any other human being. He was my deputy during the period, and incredibly meticulous. He worked day and night to check over every figure and make sure that this and that made sense, and was magnificent in terms of working with congressional committees, though not so good at working with the European representatives. They wanted to work with me or with Will Clayton (they always wanted to work with as high level people as possible). On the UNRRA-Russia issue there was real trouble as to whether or not they should get four hundred

[38]

million or not.

MCKINZIE: When you were planning for Marshall plan aid and for other aid programs, did you think back consciously of the UNRRA experience, that this was a sort of indication of how difficult it would be to work with the Russians.

THORP: We had plenty of problems in working with them, but we were prepared to tackle this. I don't think we realized, and it wasn't true at that time, that this would have inevitably led to a terrific congressional difficulty; it would have ended the Marshall plan, or prevented the Marshall plan from going through (if the Russians had been in it). At that time we weren't recognizing that the Congress probably had much stronger anti-Communism concerns that the administration.

[39]

MCKINZIE: Was there some feeling that by offering this Marshall plan aid, and if the Soviets did accept it, that it would have beneficial effect on the U.S.-Soviet relations?

THORP: Not so much on U.S.-Soviet relations as on the keeping of the U.S.S.R. within the "one-world" concept. It was another aspect of the theory that led us to resist the establishment of the Common Market. The Common Market was opposed by the economic staff on the theory that we believed still in non-discrimination. This was too large a change to come within the Custom's Union exception. I would say the economists didn't argue for Russian inclusion or Common Market opposition very aggressively since they recognized that political consideration were more important than economic on such matters. If we could pick out one political reason for supporting the Common Market, it was

[40]

that this would bring Germany in close, continuing touch with the West. We would also have liked to bring the Soviet Union into a working relationship with us. I don't know the extent to which there was any discussion with the Europeans about this. Will Clayton was the chief contact with the Europeans during the development of the Marshall plan, and I've always suspected that he may have discussed this with them and they said, "Oh, well, if they want to come in, we've got to bring them in." It would seem to be logical that that was the case.

MCKINZIE: There is a temptation on the part of some historians to make an equivalency between Will Clayton the cotton broker and Will Clayton the representative of the United States; to suggest a kind of unsophisticated businessman who looked very narrowly to the interests of

[41]

the cotton brokerage community. Could you comment on that?

THORP: When I came into the State Department, one of the first things Will Clayton said to me was, "This is an absolute instruction. If anything comes into the Department bearing on cotton, you will handle it. I'm not to know about it. If you cannot handle it, take it to the Secretary."

Now I said to him, in parallel, "If anything comes in on the Philippines, since I've had this utility connection, I can't have anything to do with it."

There's a very interesting bit that I should add to this fact. I was called up on the Hill by the conference of cotton Senators. They wanted to discuss sales of cotton to Japan. Japan normally had bought its cotton from India.

[42]

It's very short staple they used to get, and it's a kind of cotton we didn't actually have to sell. At any rate, the Senators felt that since we won the war we should take over the Japanese cotton market.

When I arrived and walked in, there were about 20 Senators in this office. One said, "Where's Will Clayton?"

I said, "Well, Mr. Clayton feels that any problem connected with cotton should not be handled by him because of his interest. Therfore, I represent the State Department for this."

Whereupon one Senator said, "What have we got him in the State Department for?"

Well, this is the answer about Will Clayton. He clearly was concerned with American interests. He recognized the danger of a conflict of interest, so he never touched any cotton matter. He knew a great deal about other commodities, and would be called from all over the Government

[43]

on questions about other commodities. He would talk freely about them, but never about cotton.

MRS. THORP: Will Clayton was really a man of thought, of great sophistication, in the pleasant sense of the word, and a man of wide-ranging knowledge, and poise. There's just nothing of the hillbilly, the narrow businessman. I'm not meaning to suggest that he wasn't a man who had faults, from my point of view. (His wife must have been mentally ill. She would insult and badger him in public, diplomatic situations). He was such a damned fool about his wife and what he put up with that it was incredible, but she was otherwise really an extraordinary person.

THORP: He was a favorite guest in Washington circles. There's nothing which indicates this more clearly than the fact that I had fewer invitations out

[44]

to dinner as long as Will Clayton was in town. Obviously we wouldn't both be invited to the same one. When I became Assistant Secretary in charge of the economic affairs, and the Marshall plan went into operation, our social life became even more strenuous as economic and finance ministers came to Washington. Of course, I must say that my wife was also an attraction, which made a difference.

But to come back to Mr. Clayton. He was a very successful businessman but paid no attention to his business. I saw him day and night -- my office was next to his, I knew who came and went, what went on -- and there was, as far as I could tell, absolutely no private operation in his own interest.

MCKINZIE: It appears that there might have been some conflict between the status of Mr. Clayton and Mr. Acheson, both as Under Secretaries in

[45]

this earlier period, because of Acheson's previous interest in economic affairs. Was that a smooth working relationship?

THORP: It was an extremely good working relationship. As a matter of fact, I've heard their report on how well they worked together calling on members of Congress, which was, after all, a very important part of what they did. I have no sense of there ever being conflicts between these two. I doubt very much if there was even much disagreement between them. They thought very much along the same line, and I would have great trouble in sorting out which one of them thought what. So many things float around, and so many things are in the atmosphere that who picks it out of the atmosphere is just a random chance. I think that's true of the Marshall plan.

MCKINZIE: We would like to ask you about your

[46]

experience at the Paris Peace Conference. The National Advisory Committee for International Monetary and Financial Affairs seemed to be designed to play a very important role. Did you have anything to do with this?

THORP: The Paris Peace Conference is a story quite apart from the second part of your question. I think you refer to what I call the National Advisory Council of which the Secretary of the Treasury, at this time Fred Vinson, was the chairman. It was set up originally for the purpose of giving instructions to our representatives on the International Bank and the International Monetary Fund, on the theory that they were sort of Ambassadors. They couldn't be Ambassadors from the State Department or from the Treasury, they had to represent a group and so this was set up for that purpose. It was very active for awhile because both of these new

[47]

organizations had a lot of early problems. It gradually expanded as a place for reviewing various particular matters. It reviewed the loans of the Export/Import Bank. Theoretically, it reviewed them from the point of whether or not they had adequate security. Occasionally, the State Department and the Treasury would argue over the application of the term "security." However, this was really a cover for other considerations and reflected different attitudes in particular cases. The NAC was the Treasury's best entrance to foreign economic policies -- and there would be times when it would be quite active. The NAC had a number of subcommittees, and every Export/Import Bank loan was reviewed by a subcommittee which had an interest in the issue involved. Technically the Secretary of State was a member of the NAC, just as technically he was a member of the Export/Import Bank board,

[48]

but he did not usually attend either, and I sat in his chair. There were occasional problems where the National Advisory Council got used as a way of either resolving a difficulty, or of the Treasury imposing a position. But as a general matter, I wouldn't regard it as an important center for policy. It had nothing to do with trade policy. It was strictly financial and its main activity was the backstopping of the Bank and the Fund.

WILSON: Was it the sense of the State Department that Europe's problems were basically problems that could be handled through the Ex/Im Bank, the IBRD loans, and other long-term plans?

THORP: Well, I would say our concept, which wasn't entirely carried out (obviously couldn't be; we had to use whatever resources we had) was

[49]

that the banks were for long-term growth and development purposes, the Export/Import Bank had the added function of facilitating American exports. The other necessity -- relief and reconstruction -- should be handled by separate congressional appropriations. I think we had a pretty clear notion about this, although at times we had to amend this idea. For instance, we didn't have any money for Yugoslavia since it was not eligible for Marshall plan aid. We had to pound the Export/Import Bank over the head. No sensible banker would make a loan to Yugoslavia when Tito first thumbed his nose at Russia. I can remember this as one case where I had to twist the Export/Import Bank's arm around to the back of the neck in order to get them to release 40 million dollars for Yugoslavia. We had no other place to get money quickly.

[50]

Also, the immediate French postwar needs were handled through the Export/Import Bank, from which they got a billion dollars.

It was our policy that the International Bank should handle everything it could and the Export/Import Bank should pick up the cases that the International Bank couldn't or wouldn't handle. There were a number of countries that didn't belong to the International Bank. In this early period Argentina didn't belong, Israel didn't belong, Yugoslavia didn't belong. There were a number of countries where we had to do it through the Export/Import Bank if it was to be done at all.

I don't know how many representatives of governments who came to my office to borrow wanted to go to the Export/Import Bank, whose interest rates were lower. They always wanted to go to the Export/Import Bank. I'd just say, sorry, the door that's open to you is the International

[51]

Bank, and that's where they had to go.

WILSON: In our interview with Mr. Collado I gathered that in the early period at the International Bank there were some difficulties about leadership. Eugene Meyer was there and I gather that this was a major reason for Mr. Collado's leaving the Government.

THORP: Mr. Meyer was not at the Bank very long. There was quite a little shifting around there for a while. Collado was a key man in the State Department in the very early period but he left shortly after I came to go over to the Bank as the American director. After Collado and Clayton left, the Treasury took over the backstopping. The State Department lost control over the directorship on the Bank. I suspect that Standard of New Jersey had something to do in getting Collado away from Washington.

[52]

He became one of its top officials.

MRS. THORP: This was a little bit of cronyism, I'm sorry to say. I think that all of this happened because of [John] Snyder, in Treasury. It's embarrassing, he was so bad and so ignorant; often drunk.

THORP: At a number of dinner parties in Washington, especially in the Marshall period, (Marshall wouldn't go out except for a head of government and Bob Lovett had only one kidney so he wouldn't go out much), I was the third ranking man in State and I was young and vigorous, and had all my kidneys and all my possessions otherwise, had a wife who was a plus, and so I was elected to attend these affairs. It was not my charm but, of course, I was the first man wanted because the foreign visitors for whom the dinners were given were usually on economic

[53]

business. They wanted to have somebody from the Treasury, somebody from the ECA, and somebody from the State Department. Over and over again we went to dinner parties where Snyder was also. He liked to go to these things. Sometimes it was very embarrassing because he did drink much too much.

MRS. THORP: When he was sober he really had nothing to offer.

THORP: The people under him also were problems to us, but maybe they should have been; that's the function of the Treasury. George Willis was always difficult.

WILSON: How much business was actually transacted at these social affairs?

THORP: Very often there would be a dinner to introduce me to the man that I was going to meet

[54]

formally the next day, at an official meeting. My wife hated these dinner parties, because as soon as we got through eating the men went off. She was stuck with the women, which wasn't always an attractive thing. These meetings would range all the way from our getting a little feeling of personalities to the actual moving in on the problems we were concerned about. I would say that this was often very valuable. These visitors were often cabinet line people -- particularly if they were from the Marshall plan countries. There were other countries where a particular problem might be important, say, in aviation. But Mrs. Thorp and I hardly touched Latin America socially. The danger was that if we started in that circuit, it was hard to discriminate, and they all were socially active. Once in a while we'd go to Pan American Union for a concert or to the Cuban or Brazilian

[55]

Embassy for a very small affair. We touched only an occasional country which was secondary in the economic sense at that time. Mostly we saw Europeans. These were top-level people, because they had to be. Their wives were frequently much more interesting than generals' or Senators' wives. These dinners were of number one importance.

Now the number two social burden was the cocktail party. The cocktail party, I would say, had only occasional value, but then it was really important. It might be that I would have raised a question formally with an Ambassador such as, "As to this problem on our aviation agreement; when is your group coming over?"

Then two weeks later I'd run into him at a cocktail party. I wouldn't want to call him and question his government's efficiency

[56]

by saying, "Look, it's been two weeks; I haven't heard from you." At a cocktail party I could just say, "By the way, have you had any word yet?" I would say that this was valuable. Such parties also gave me the chance to talk with somebody from another U.S. department inconspicuously. I wouldn't have wanted to go to his office, and he might not have wanted to come to mine. That might have raised questions. At a party, I could run into Brannan and talk with him about some agriculture problem whereas we would have had to discuss it with our staffs present if it had been an appointment in his office.

MRS. THORP: I think a great many important things happened on social occasions, and sometimes not directly. Willard's told you about those that were quite direct, but often somebody will say

[57]

something to somebody's wife because he wants it to be taken back to the husband. They pick and choose pretty carefully, and there were at least two occasions when people who wanted to defect spoke to me about it. I was personally responsible for the first reply by anybody in the administration to McCarthy. There were a number of things of this sort, and they usually started at a social event.

THORP: On the Economic and Social Council, Clarice was a regular channel to me of information.

MRS. THORP: Probably the most unusual intelligence "officer."

WILSON: The first instance that you mentioned would seem to have a semi-official character. How would this be arranged?

THORP: An important guest, say the Finance Minister

[58]

of France, would come to Washington for conversations. The Ambassador would set up a dinner several weeks ahead if he knew the man was coming. A typical dinner would be one in which I would be there, the political officer from the Department would be there, somebody from the Treasury would be there, along with a couple of members of Congress (this would depend on the problem they wanted to talk about), and three or four people from the Embassy staff. It would be a dinner party most often of twenty or twenty-two people, I suppose though sometimes they were much bigger.

I remember the first dinner given by the new Yugoslav Ambassador, Vladimir Popovij. He dearly wanted to have a private conversation. In this kind of situation it's very likely that when you leave the dining room, the Ambassador will suggest where people go and even where they

[59]

sit. In the Popovij case, which was the first time we went to the Yugoslav Embassy, there was a little round table off by itself in the drawing room, at which the Ambassador and I sat afterwards. Nobody around anywhere near the two of us, you know.

This kind of thing was fairly standard at the time, but we got other chances to talk with them that aren't planned this way. For example, I sat next to [Alcide] de Gasperi at a banquet in New York, where I was to make a little farewell speech. He was at the time the Italian Prime Minister, and I had a long conversation with him during dinner. All of a sudden he leapt up, hastened down from the head table, and disappeared. The Ambassador, [Alberto] Tarchiani, immediately followed him to see what was wrong. All of us were wondering what had happened. We knew that he had had a very strenuous day in

[60]

New York; they had given him a program of being in two places at once, on the hour every hour. The poor man was very tired. He finally came back to the table and I whispered to Tarchiani, "What's wrong, is he all right?"

"Oh, he popped a button in his dress shirt."

We've probably spent more time on this subject than we should, but I wouldn't want to leave the matter of dinners and cocktail parties without adding that Mrs. Thorp and I both enjoyed the experience hugely. To be sure, there were days when we might have to appear at as many as four cocktail parties and weeks when we had only one free evening. But this was high caliber company. It was not always business. There might be a performance by some distinguished musician or musical group. And -- there was extraordinarily good food and drink.

[61]

WILSON: One of your most interesting experiences must have been attendance at the Paris Peace Conference in '46. Could you comment on that? We might start with reparations.

THORP: The problems raised at the Peace Conference were extremely varied. In the first place, the propositions in the proposed treaties were assigned to a political or an economic committee, and obviously there were problems of overlap. For example, the political group decided to set up Trieste as a separate little area.: This raised a host of economic problems. And there also was confusion because a number of the specialized problems were handled by different people. I don't know why the Danube was regarded as an economic problem, but it did come to the Economic Committee and Senator [Arthur H.] Vandenberg was in charge of that.

[62]

Vandenberg and [Tom] Connally were both there for a good deal of the time. They were very good friends of Secretary [James F.] Byrnes who also was there for an appreciable amount of the time. I don't need to remind you that they were two very powerful Senators. I think Byrnes wanted them there because the treaties had to have Senate approval. Vandenberg was assigned to keep an eye on me and sat next to me at many meetings. I must say no one has ever pointed out the significance of the fact that Vandenberg and Connally spent a number of weeks in Paris in 1946, where there wasn't much electricity and there wasn't much food variety. Top people from all the allied countries were there, and the Senators got a tremendous picture of the European postwar situation. This was well before the Marshall plan. The Europeans were excited about them.

[63]

I can remember the first time Connally was scheduled to make a speech. The word went around and everybody came in to listen. Of course, he spoke with the old Southern flowery ardor. They talked about him for days.

MRS. THORP: It educated both ways; it educated them, and it educated the Europeans about us and our problems. Senator Vandenberg was more of a counterpart of the Southern Senator Klaghorn.

THORP: A great deal of preparatory work had been done on the peace treaties in the Council of Foreign Ministers. Jacques Reinstein, who was the key American on the economic side at the Council Meetings, sent thousands of hours trying to muster the facts and discussing the problems with his opposite numbers, especially the British. When we came to the larger meetings on the Paris treaty, there was a draft which

[64]

represented the approximate agreement by the Four Powers. No one was always sure what any agreed set of words actually meant. I was, for instance, at the Council meeting when the so called final agreement on the Danube was reached. Up to that point every time that the Danube question had come up (the way they were working on the treaty was going round and round Article 1 to Article 79 or whatever it is, and then they started with Article l again), Mr. [Vyacheslav Mikhailovich] Molotov would say, "It's not appropriate for us to discuss this, because many countries who border on the Danube and who are concerned are not sitting here at the table." That was true of most every other article, too, but in this case he would say, "We do not discuss it," and it was not discussed. The article consisted of a sentence-long proposal by the U.S. which said that the Danube should be ruled

[65]

by a commission and should be opened for nondiscriminatory traffic or words to that effect. One day when they reached this number, Mr. Molotov said, "I agree."

Well, everybody's jaws fell open. There had been no discussion, no hammered out explanations, no actual record except the brief statement. Not even a discussion of who should be on the commission.

When we got to the subject of reparations, there had been no similar prior agreement among the Four, and this subject was hammered out at the peace conference itself.

WILSON: We have an impression that this idea of international patrol of the Danube was one of President Truman's own projects.

THORP: I haven't the slightest idea, but it wouldn't surprise me. Let me tell you why it wouldn't surprise me. Truman knew his rivers. There was once a proposal to bring more copper eastward

[66]

to the ocean from Central Africa. The proposal involved building a railroad from Lourenyo Marques up through Mozambique into Kenya. At any rate, the complicating point was that it involved the cooperative effort of the Portuguese. Since there was some question of how much we should cooperate with the Portuguese in the Portuguese colonies, this issue was finally referred to Mr. Truman. I went over to outline this proposal to Mr. Truman and asked him whether we should go ahead with it or not. To my great surprise, he said to me, "is it to follow the course of the Limpopo River?" The Limpopo River to me was Kipling's invention; "the great, grey green Limpopo River all set about with fever-trees" in the "Just So" stories which I was brought up on. It never occurred to me that there actually was such a thing as the Limpopo River. My surprise must have shown

[67]

because he then got up and went over to the big globe that he kept in his office. He whirled it around, found and pointed out to me the Limpopo River. The route did go up the valley of the Limpopo River. This was one indication of the fact that on geographical issues he had an interest. The other was a time that I went into his office with a group to talk about the way in which the lander in Germany were to be realigned. He asked the State Department political officer, who was presenting the program, if he had a map of prewar Germany. The fellow blushed and said no, he had just brought a map showing the new boundaries, but he'd send for one at once.

Mr. Truman said, "Oh, don't bother." He went to the bottom right hand drawer of his desk which had nothing in it but folded maps. He thumbed through these maps, pulled out

[68]

a map of prewar Germany, and went on with the discussion.

These two stories suggest a geographical interest and perhaps why the Danube problem would have specially appealed to him. However, I do not remember ever hearing of his interest.

MRS. THORP: He certainly has always been terribly interested in history and reading history. The Danube has always figured so large in what Americans have learned of European history, that it's very well-known and his interest was probably awakened as he read.

THORP: I don't intend to say that the peace treaties operation was one in which, on the economic side, I did all the work. I had a good staff. However, I sat at the table, did all the speaking and arguing as well as the negotiating outside. Mr. Byrnes was in Paris for most

[69]

of the time and I checked with him from time to time, but I'm not aware of this being more than asking for general approval.

On the reparations issue we brought in people who made guesses about capacity to pay, helped work out speeches, and then I argued them. I remember one speech on Rumania or Hungary, in which I had a very elaborate statistical presentation of its capacity to pay and so forth. I must have taken about an hour to present it. At the Peace Conference there was consecutive translation so it took the whole morning to be translated into French and then into Russian. The Russian reply came the next day. This was an important enough issue to bring [Andrei Y.] Vishinsky in. Vishinsky started his speech by saying, "I'd like to say something about the American delegate. You may not all know that he's the

[70]

president of the American Statistical Association," which I happened to be that year. "We all know that statisticians are liars and we know American statisticians are especially liars, and the president of the American Statistical Association must be about the biggest liar in the world. Therefore, how can we give any weight to this presentation which he made yesterday. And anyway, what does all this matter when one takes into account the damage which Russia suffered during the war? No amount of reparations can be adequate." Then he went on for an hour with no reference to the other countries, talking about Russians killed, houses burned down etc. This was just a standard speech which they made.

MRS. THORP: This made headlines in all the New York papers, this attack on Willard Thorp. At

[71]

this point I was practicing law in New York and the afternoon papers were out (at that time there were afternoon papers). Willard's best friend telephoned me and said, "Clarice, have you seen the afternoon papers?"

I said, "No."

He said, "Well, there's no hope for our getting along with the Russians."

I thought he was really out of his mind, and I said, "Why?"

He told me about this attack, and I said, "Well, don't you think you're exaggerating Willard's importance? Do you think this is really going to cause a breakdown in our relations with the Russians?"

He said, "No, don't you understand me at all. I just think that if anybody who is dealing with Willard (who is so mild mannered, never loses his temper, never is unpleasant) attacks

[72]

him in this fashion, it shows that they don't want to get along with us."

I think there was really something in that.

THORP: As a matter of fact, they did get along with us to some extent. One of my minor diplomatic procedures that turned out well was that I would go to Arutinian, my Russian opposite number, and say, "I think you've really got something on this point. So I have redrafted our proposal and I wish you'd look at it. See if it doesn't meet your position." It really was just a paraphrase of our earlier position. It wouldn't be any change in principle, but it might actually soften a word or something. He would take it to Mr. Molotov and tell Mr. Molotov, "Well, we've really won this one. The Americans are proposing to change it." Three or four times we

[73]

settled a problem on the basis of my redrafting.

MRS. THORP: Willard, you haven't finished the Vishinsky story.

THORP: I should say that when Vishinsky finished his speech, when he reached me on his way out of the room, he reached down to shake hands with me before he left, after calling me the biggest liar in the world.

WILSON: What attitudes did you personally bring to the conference about reparations?

THORP: My heart was in what we were putting forward because I felt that these countries should pay reparations. About some parts of it, like the restitution of artistic property and the like, there was no argument in my mind. I did feel that the basic reparations had to be in a form which did not involve currency transactions,

[74]

because of the post World War I problems, and that's what we worked out. I felt that they should transfer amounts of product related to past records of production in the countries, thus being non-destructive but nevertheless a burden. We didn't try to get the very last ounce, but on the other hand we didn't want it to be just symbolic. It was to be thought of as a significant payment made in terms of native products. Incidentally, we were not seeking payments to the United States but to the Allies who had themselves suffered destruction. I should like to interject another point here.

Just as in domestic controversies a great deal depends on the interpretation of the language, internationally it does too. In a substantial number of cases I have seen this come about, two of which are connected with the peace treaties. I won't give you the full

[75]

details but one stemmed out of the fact that the Russians (having only governmental aviation) had no word or even concept for civil aviation treaties. We thought we had an agreement and the Russians almost knocked out the treaty when they discovered that this meant that Mr. A and his private plane could land in Trieste. The words didn't mean that to them.

Similarly, when reparations came up and the Greeks at the final meeting asked if they could get sulphur. The Russians said, "No," and I said, "Yes," because as we drafted it, mineral products were permissible. According to the Russian's translation, sulphur is not a mineral product, because their word for mining involves going down into a hole in the ground; surface stripping is not mining. Therefore, we had a hassle for a little while, though we had no basic disagreement. We had

[76]

to work out a new phrase, I don't remember what it was, but it's something like "products extracted from the soil." If five years later the Greeks had asked for sulphur from Italy and Italy had said, "No," we would have been mad. If Italy had said, "Yes," the Russians would have been mad, and everybody just would have said this is dirty dealing. We just happened to catch it at the time. I don't know how often this happens, but I'm sure it underlies many international disputes.

WILSON: Was there at this time any substantive difference in the American position with regard to reparations from Germany and Italy? Was there a partiality on the American side with regard to Germany and Italy?

THORP: Oh, yes. Germany was really regarded as a bitter enemy. At the end of the war, there

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was the Morgenthau plan which aimed to reduce Germany to a third-class country in economic terms, unable ever to start a war again. Italy on the other hand, had come around finally, and was not a real threat to the future. To cite differences, reparations were set on Finland; we had not wanted to go through with it at all, but the Russians were insistent on Finnish reparations. That's the one case where we really argued for inability to make any substantial payments.

Another thing that is interesting is essentially a technical matter. The final session to approve the draft treaty was set, and we hadn't yet arrived at a reparations figure for one country, for Hungary I think. It may have been one of the other countries. We started two days before with this on the agenda, and the Russian had just been stalling. It was obvious

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that they were going to stall this meeting so we'd not reach a vote in time to be considered at the final session. The meeting started in the morning and it wasn't until the next afternoon that (through some parliamentary maneuver which I've now forgotten) we finally brought it to a vote. I was in the chair one day, one night, and most of the next day.

Mr. Vandenberg came in the next morning looking nice and fresh and I had been there all night. I think the important thing, the new thing about the making of these treaties, would be the presence of Connally and Vandenberg actively participating. In our hotel (we had the Maurice Hotel for the whole U.S. delegation) we had electricity seven days and nights, and we had heat, for this conference went on until the end of October. This was not true anywhere else in Paris. On food, for instance, or

[79]

alcohol, you were out of luck. There was virtually no wine as of that time, and no desserts except the seasonal fruits. You had a couple of weeks when they gave you a pear, a couple of weeks when you had cherries, and so forth. It was really an important experience. Of course we didn't just sit in Paris. Life was active. The negotiators were there, the British were there, the French were there. My opposite number from France was [Herve] Alphand and [Maurice] Couve de Murville was the French representative in the political group.

WILSON: I asked that previous question in part because of the possibility of domestic political pressure on people like Vandenberg and Connally even though they didn't have many Italian-Americans in their constituencies. Did you have any sense that they were conscious of the

[80]

necessity to give Italy certain treatment, or to treat Germany harshly.

THORP: There was something on which Vandenberg insisted on making a speech because it related to people in his constituency. I wonder if that was the Danube by any chance?

MCKINZIE: Did you go directly from Paris to your work on the Ruhr question?

THORP: No. That was, I think, an intervening question. I was in and out of Germany on various problems. I can give you some atmosphere but not much detail. Germany was run largely by the occupying generals. General [Lucius] Clay of the U.S. was the one I saw most often. Back in Washington [Patrick] Hurley was the key fellow for some time. When, after much debating., Clay, the British, and the French would be unable

[81]

to agree, the issue would be sent to the diplomatic group. There must have been three or four times, in varying degrees of formality, when a sort of commission was set up. If it was political I wouldn't be in on it, but if it was an economic problem, for instance, the currency problem, I would either go to Berlin or we'd have the meeting somewhere else. I don't think any of these were actually resolved in Berlin. I think we wanted to be away from the generals to resolve them. We would work out some solution and, of course, the generals would make it work (cursing all of us madly for giving away the positions that they fought for). Our job was to resolve it somehow. I was in and out of Germany in that sense, although initially I was as concerned about the whole development of German policy as anyone. The problems continued. There was the problem of getting Germany into the Marshall

[82]

plan, for example.

WILSON: General Clay and his assistants undertook a very strong program, not on their own entirely, which often contrasted with the official policy of the United States Government. While they were doing these things there was a continuing debate about the military giving over the occupation to the State Department.

In this relation were they sincere about it or did they want to get Germany off their hands?

THORP: For a considerable period, the State Department regarded the fact of occupation as placing Germany in the Army's hands. After the war, it was very slow in setting up a German unit in its geographical structure. This was very unsatisfactory on the economic side so, before the political boys acted, I set up a small unit to concern itself with Germany's

[83]

economic problems. It consisted of Walt Rostow, Kenneth Galbraith, and Emile Despres. How's that for State Department quality?

By and large the State Department became more and more distressed about the status of Germany and the situation there. The Berlin Airlift crisis was an indication of weakness: I think every government felt that Berlin was one of our vulnerable spots. Those people that were worried about the Russians felt that we were giving them a great opportunity to put us in a difficult spot. The State Department was trying more and more to take over the responsibility, but it was tempered by the fact that the War Department was able to get GARIOA funds out of Congress, half a billion dollars a year, and while it wasn't all for Germany (some was for Japan and other countries),

[84]

I've always wondered why the Army didn't make major efforts to get out. One important element was probably the fact that common action was required, involving the military of the U.K. and the military of France. Our military was not going to get out if the other military were still there. It really wasn't an economic problem. The economic problems were day-to-day puzzles: what do you do about American property in Germany, and how do you handle restitution. Who controls monetary policy, etc. I also had something to do with the effort to get the principles underlying earlier reparations programs shifted to an unstable base. The Morgenthau plan was a program for which I had no sympathy, because it just couldn't work. I had no expectations that removing factories was feasible and I learned later that most of what Russia got was never reconstructed. I think the

[85]

U.S. got one factory for making silver foil. In Washington, one of my greatest problems was that Congress isn't willing to have a person who really knows about something come and testify. They want a person of sufficient rank. And, therefore, the amount of time I had to spend testifying about things which I'd only learned about during the previous 24 hours was just fantastic. Committees of Congress would insist and so you would do it.

I visited in Amherst a year or two after I had been in Washington, and in a speech congratulated the faculty on the perfect training they had given me for my job. Everyone in the faculty seemed to be very pleased until I said, "What you did was make it possible for me to pass the test after having learned all that I knew about it in the previous 24 hours."

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WILSON: You were involved throughout your period in the Truman administration with the ITO and the negotiations for GATT?

THORP: No, that isn't quite right. This was Will Clayton's specialty -- Will Clayton, working with Clair Wilcox, [Louis Joseph, Jr.] Halle, and then with Ray Vernon. He also handled the ITO negotiations. I was familiar with it all, and I was involved in a certain number of specific things. I was in on several sessions, but I didn't go to the Havana Conference, for instance, which set up the Charter. I was involved, once they had the draft charter, in some of the hearings that were held around the country. The creation was primarily Mr. Clayton's affair.

Once the GATT was set up and operating I became more involved; and was the U. S.

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representative to GATT sessions. By that time, Mr. Clayton had left the Department. I was in charge of the Torquay negotiations and headed the delegation, but I was only there a week or ten days when I got a cable that I must return. The French had a financial problem and the Department wanted me to handle it; [Henri] Bonnet was coming over. So I left the conference after the initial go-round of speeches.

It's only fair to say that the original GATT negotiations and any later tariff reductions are the kind of thing in which there must be almost resident representatives, who are waiting most of the time either for their own government to tell them what to do, or for the government they are negotiating with to tell its representatives what to do. Win [Winthrop G.] Brown and people like that were there to handle these things. I got involved in it occasionally.

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I did go to the regular GATT meetings, as distinct from GATT negotiations. I also had to handle trade problems at home. Senator [Wayne Lyman] Morse, for example, was all steamed up about the possibility of a tariff cut on Italian maraschino cherries. He took the position that it's all right to talk about people being able to shift from one industry to another, but you can't shift a cherry tree anywhere. Therefore, trees, fruits, and nuts ought to be something in which a person who plants one is assured, for the life of the tree, that the market conditions will not be changed by the government. The issue went all the way to the White House and the tariff was cut.

At GATT I had probably the most difficult problem that any American has ever handled in international negotiations. That was when quotas on cheese were established in an amendment

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to the National Defense Act. I had to explain to the other countries just why the United States believed that imports of cheese were being restricted on the grounds of national defense. That was rather difficult. This had been an amendment that was put on at late midnight. We had become a cheese eating nation during the war; we doubled our per capita consumption of cheese. Of course, there were no cheese imports during the war. When the imports started again, it was regarded by American cheese producers as a very improper thing for these foreigners to do. There was a market which they had built up, so they said. Before the cheese imports had even reached the cheese imports level of before the war, they began to be very steamed up about it. A quota requirement was then tacked on to legislation which the President couldn't veto.

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Under one GATT commitment, you could do this sort of thing, but if you did it then other countries were entitled to raise a tariff against you as an offset.

At the next GATT meeting, I explained the background of this and how the Executive Branch would try very hard to get it adjusted. I put on a great deal of weight because I ate cheese at every luncheon and dinner, demonstrating my great love for cheese. We finally got an agreement giving us a year to correct the situation, but we were not able to. I remember testifying later before the House Agricultural Committee about this, and having a member from Minnesota inform me that Minnesota had developed blue cheese. What right did these Danes have to come in with blue cheese since Minnesota was the real source of blue cheese.

The GATT was a real addition in the trade

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field because you could not only try to work these things out, but on a number of situations it really was a judicial problem. For instance, the Germans lowered the tariff on Norwegian sardines, not on Portuguese sardines. Are these like commodities? Are they different commodities? This gets resolved in GATT to the delight of everybody, including my wife. At GATT cocktail parties she served both kinds of sardines with labels.

I would say that on the trade side, I was completely enthusiastic about the ITO charter. All of us had been moving in this direction, but much of this now is gone. The most favored nation business is pretty completely lost. We have reached a point where tariffs are so low that the problems are shifting; other kinds of problems are developing. I made lots

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of speeches all over the country about trade and the importance of expansion of trade.

MCKINZIE: What sort of reaction did you get when you would go into Milwaukee, Wisconsin or wherever you went?

THORP: This was a very favorable period, and we were all completely misled about potential reactions to imports. The Reciprocal Trade Agreements Act was passed in 1934. Trade was minimal at that time because of the depression. Nobody was greatly concerned with competitive foreign trade at that point, and there was no feeling that foreign markets offered as any hope. The war completely shut off foreign trade. After that countries concentrated on their reconstruction, so they used their resources (n domestic rebuilding. In the late forties we all thought that the battle

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of free trade was won. There were few objectors, with a very few outstanding exceptions. The case that I remember best concerned Swiss watches. That's when a labor leader, marched up and down in front of the White House with a Roman toga on, and a sign saying, "Rome burns while Byrnes roams." In fact, Byrnes was off to the U.N. or somewhere.

The import of Swiss watches far exceeded our domestic production. The Waltham Watch Company went to pieces but other American watch companies were prospering. I suppose there was no single item in the trade field in which the State Department was more involved than in the demand for increasing the tariff on watches. The defense people said they had to have the watch industry because they were the only people that could make the minute kinds (no pun intended) of equipment required

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for fuses. When we looked into that, other manufacturers like General Electric said, "Well, we can do it too." In any event, it turned out that you didn't need the whole industry to do it. This was a continuing squabble long after I left the Department. The Swiss Minister, Mr. Charles Bruggmann, who was married to Henry Wallace's sister, pursued everybody -- a sweet person, but a sincere nuisance on this issue. I did get into an appreciable number of trade problems, particularly after Mr. Clayton left.

WILSON: Is it fair to say that the principle in the Department and in general was that the U.S. economy was officially competitive and would be able to adjust to any situation.

THORP: Oh, sure. I would say that the problem didn't really become major until the sixties when

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foreign production was again in good shape. Certainly through the fifties I don't think it was except for a limited number of special cases. After all, the Reciprocal Trade Agreements Act was regularly extended.

MRS. THORP: I'd like to add that the cheese lobby has never given up. There were characters -- whose names I don't remember -- who used to telephone at home to castigate him for fighting for free trade, and when they wouldn't find him at home they'd castigate me. Very incredible lunatics.

THORP: One of our biggest problems in the Marshall plan was the tobacco group, and that wasn't import, that was export.

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WILSON: I talked to the Greek representative to the old ECD this summer. He spelled out quite clearly that the occupation authorities in Germany were able to bring in tobacco, and Greece had great difficulty in that.

THORP: You could have gotten the same story from Turkey, but I would say we had surprisingly little of this. I think the tobacco case was probably the worst one and the export of cotton was always around to worry about.

MCKINZIE: You alluded a few moments ago to the "buy American" problem that began in the 1930s, very early in the depression. It obviously was in conflict with the Department position that you have to increase imports in order to expand exports as well as to revive European countries' economies. How did you deal with these Congressmen when they came up with the plan?

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THORP: This wasn't so much Congressmen. As a matter of fact, the case I remember best was an Army purchase of microscopes. Japan, which is very good on optical goods, insisted that it should have been given more consideration. The problem of "buy American" is that it was on the books, but the law did not set the percentage which you had to allow the domestic offered price to be above the foreign one. Could the Americans have the sale if his price were 50 percent more or 75 percent, or how much? The big battle was with the Defense Department as to what this percentage should be on a number of items. The microscope issue was brought right up to the Secretary of Defense. Finally he bought half from Japan and half from an American firm.

WILSON: One discordant note in this period was the

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arrangements and the encouragement given to what was a regional situation under the European Recovery Program. There was a serious difference in principle between what I suppose was the State Treasury approach, commitment to the ITO charter in GATT and the sort of things that went on in 1948, '49 and '50 under the ECA and their encouragement of a discriminatory arrangement on a regional basis, the efforts to bring about European integration, economic integration. How serious was that?

THORP: We were very insistent in connection with the Marshall plan that barriers to trade should be lowered and we argued for "most-favored-nation" terms. However, the initial obstacle was the unusual use of quotas in Europe -- not so much tariffs. The integration problem was one about which we in the economic side did

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worry a good deal. The members of the Common Market were to give each other more favorable treatment than they gave the rest of the world.

On that there were two answers to our position that came through. One was, to hell with the economics of this, this is an important political move. That easy answer eliminates an economist, who hasn't got much more to say except, "Okay, but there's a price you're going to pay." Sometimes we got a chance to say that and sometimes we didn't.

The other answer was to obtain a commitment that this would not lead to an increasing of tariffs against the outside. It would lower the tariffs inside; the tariffs outside would become identical for the Common Market members and would start at the average of all the existing tariffs. Depending on the product, it meant

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increasing the tariffs for some countries, and lowering them for others. Tariffs would be set at their average. The Market would go on as a unit in the GATT, negotiating lower tariffs on a reciprocal basis. The individual countries were all committed to lowering tariffs outside, as a general principle. Our great worry was that it would build up a higher and higher fence and so forth.

Theoretically, this argument happened to come along in writings by Jacob Viner about whether or not a common market was trade diverting or trade creating. It gave a possible theoretical justification of a customs union under the kind of circumstances which we had. The economic opposition, for these two reasons, was not one hundred per cent effective. I don't remember ever forwarding a memorandum that was anti-European integration from the

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economic side of the Department. We had our worries about it, but these two things kind of took care of us. One took care of us as honest economist (the Viner analysis) and the other took care of in terms of saying it was none of our business. I would say on this basis we were unhappy about it, but not aggressively so. I shouldn't say "we." We did have some people who were so strongly ITO charter minded but I must say when people have said to me, "Look, you've got 48 states," and go on, "You've got 48 states with no trade barriers, you've got a Custom's Union in your county. What's the difference if we have some sub-areas too, within a total? It's kind of difficult because after all the Common Market didn't add up to as much trade as our 48 states added up to.

The ECA itself wasn't entirely sure about

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pushing integration. It was quite a shock when Eisenhower made that speech in London at the Pilgrim Club. He really pushed for it, and then it gradually grew as a means of tying Germany to the West.

MCKINZIE: May I just take it back a little bit before the creation of the ECA, and talk a little bit about 1946 and the early part of 1947. So far as the American public was concerned, Europe existed but in a kind of great gray kind of zone and then suddenly in the middle of 1947 it was discovered all at once by, say the man on the street, that Europe was just in a hell of a shape, that recovery had not occurred, that the kind of development which had been anticipated simply wasn't even about to happen. What I would be interested in is your impressions of the Department's feeling,

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and the Department's awareness of Europe's failure to recover before all of this sudden Marshall plan business came out of that.

WILSON: Could you give a narrative of your involvement in the European recovery plans of 1947?

THORP: I was in Europe in '46; peace treaties consumed quite a chunk of the latter part of '46, so I can't talk about the Department. I would say that we became aware of the degree of difficulty pretty early, largely because we were involved in it. Europe was in our hands. We early on discovered the things one doesn't have in mind -- a company's factory may still be there, but all of its records were bombed. The manager doesn't know who his customers were, and he doesn't get back the people that were in its sales department. How does this get going again? It was this kind

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of disorganization that was the surprise. We did know, from the bombing surveys and things of that sort, something about the amount of destruction, but we didn't have any idea about the destruction in terms of foreign assets and ways of earning foreign exchange.

I wasn't involved in UNRRA very much. UNRRA didn't cover the whole area anyway. I was involved, before UNRRA was over, in the British loan problem. I was involved in the GARIOA problem. That's the amount of funds required in Germany run by the Defense Department, and a post-UNRRA program for poverty states which I administered. That was in the State Department, the early '47 appropriation.

There was what I call post-UNRRA, and after that was interim aid. Interim aid was to keep you going until the Marshall plan took

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over. So after UNRRA, the short-term aid programs were run in my shop, and that meant very close attention to the situation in the countries involved. The fellow directing it was Ty [C. Tyler] Wood.

An even more pressing source was the fact that during the period of ’46 and building up to '47 we had this steady stream of visitors from Europe coming over with their appeals. People like de Gasperi and [Georges] Bidault came over to Washington and outlined their difficulties. Certainly we were very much aware of the economic mess that Europe was in, though not in terms of sitting down and drawing up a financial statement about just what was required. We were struggling with all the European countries to get more exact knowledge about their financial affairs. We were pretty

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insistent about that from the countries getting aid.

In two cases we got excellent information. One was Keynes' presentation to putting forward the British loan. That was done in the Federal Reserve Board Room ( it took two days) and was a perfectly magnificent outline, statistical where necessary, of British obligations, capacities and requirements. It came out with a need for more than the final figure and that was on an assumption, which he didn't live to see whether or not he could bring it about. He hoped to negotiate substantial reductions with the countries holding blocked sterling claims. These were amounts owed item -- India, Egypt, and others -- in payment for services and goods which they had provided the Allies during the war. Keynes felt that this should be their contribution

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in the postwar situation, or that payments should be scheduled over a long period of time. He was convinced that he would be able to work this out. What he didn't know was that he wouldn't live, and furthermore that you couldn't go with this request to India, which was the biggest claimant, as I recall it, under the political circumstances which had developed. Then it would look like a deal for freedom to India. This reduction in sterling claims was an assumption underlying the loan which would have made a good deal of difference.

As a matter of fact, most of the loan went right through England and on to other countries to meet demands for unblocking sterling claims. You may remember that the loan also had a provision requiring the U.K. to make sterling convertible. They tried but it created such a run that they had to shut the doors again.

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The other perfect presentation was by Dag Hammarskjold who came over because of an odd Swedish problem. The Swedes ended the war with lots of gold and European currencies. Immediately people in Sweden started buying from the U.S. boatloads of all kinds of stuff -- things that they hadn't had and wanted like citrus fruit. The problem was that in our trade agreement with Sweden, there was no way in which they could manage to limit the purchases from the U.S. and permit whatever they could buy from England, France, Switzerland, anywhere else. He and I had one of the most interesting negotiations I've ever had in trying to decide how to fit this odd set of circumstances into a boiler plate, most-favored-nations. His knowledge, and the data that he had on Sweden, was something like Keynes' knowledge about England.

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On the other hand, the French never could give us any decent information about anything. The French had no balance of payments estimates. When you think about it, they don't today. The French overseas territories are involved, lumped in. There are the franc areas and so forth and so on.

We had, I would say, a pretty good picture, but no overall view. Things came in bit by bit and I think one of the real contributions to the Marshall plan was the fact that we had to take this material up to Congress. We went up in '46 for UNRRA, for GARIOA, for the Philippines, and for the British loan, perhaps more. We went up first thing in '47 for the post-UNRRA, and for Greek-Turkish aid. I showed up there before the four committees insisted on these needs over and over. Then of course, the proposed authorization and appropriation had to be debated and finally

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voted by Congress. This steady stream of demands brought the reaction which anyone would expect -- sort of a "you here again? Why don't you come up once and for all and tell us what the problem is in total and what it is going to look like. How long before they can take care of themselves?" It was just an automatic consequence of that situation. As far as Congress was concerned they had to have something like the Marshall plan or else they were just sick and tired about this kind of performance. I was getting more and more tired about it, after all, this was no fun for me. But it did convince me that our method of short-term limited aid wouldn't do. Even in that, it was hard to make estimates of need if you didn't have an overall picture. The countries were normally quite interdependent and what each did affected all the rest.

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WILSON: Yes, did you think you could do it?

THORP: Yes. Obviously we were getting at the end of that road and had to take another tack.

MRS. THORP: He had been talking about it for months, so he could.

THORP: As for Congress again, this isn't just a matter of going and testifying. In those days you went and sat down with the committee in the executive session day after day and talked about it. We had very good working arrangements with these committees. I would spend hours with them, and I'd sit with them when they'd mark up the bill. Ty Wood would do the same. And remember, here was a constant flood of officials from European countries coming over to tell us what their troubles were.

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WILSON: One of the things that doesn't quite ring true is an often repeated story that somebody in the spring of 1947 said, "My God, look at the situation Europe is in, we must do something." In two or three days there came Acheson's speech, or there came Mr. Clayton's trip around Europe and a memorandum he wrote.

THORP: This calendar might be true. This series of events was itself a demonstration of the problem. Mr. Clayton was our leading observer; his observations were the most important with respect to the situation in Europe. There also had been two (there still was one more to come) terrible winters.

The first year the Marshall plan got completely screwed up by the weather. We had to provide winter wheat when we wanted to provide the machinery set out in our beautiful

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first year program, Congress wanted to know every item. We had to prepare for Congress a complete program of what was to be purchased and sent, as far as we could see it. It was over a million items on the computer (the kind of computer there was then, the punch card thing), put together to create these black books.

WILSON: Was there confidence at the time of the speeches that you could get the kind of information from Europe which was necessary; that European nations would come together and cooperate?

THORP: It was expected. I don't think anyone really visualized it in detail, except maybe Mr. Clayton. This is an unknown to me. What happened in Europe was directed by him. I am sure that he had a great deal to do

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with what came out of it, but the questions of whether or not the Russians should be invited, and just what form the OEEC should take. I'm sure he did some consulting with them. I'm also sure that he gave them some notion of possible limits of amounts, because God knows you could make this an infinite amount.

We didn't have any questions about the European side on this. As a matter of fact (having put the finger on Congress as one source), I would certainly put the finger on the European countries themselves. Everybody thinks Marshall came up, Bevin started galloping and the Europeans suddenly saw the light. The Europeans for months had been talking about their problem of how to answer our questions if they didn't know what other Europeans were going to do. After all, their lives were mostly integrated with each other economically. The

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French, the Germans and the Italians bought and sold from each other. The Dutch wouldn't buy any French wine because the French wouldn't buy any Dutch tulips. The only way to get this going was to get them each buying from the other. Everybody that came into my office raised this problem with respect to the European picture. They were forced into a recognition of dependence on each other, and the terrific problem of the quota system and everything. Quotas could only be reduced on some sort of simultaneous basis, but Europe had no machinery for this and apparently it didn't occur to them to try to somehow set up their own operation. There was the hope that the new U.N. ECE would become such. One of the interesting early questions about the machinery for the Marshall plan was whether it shouldn't be put under the

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U.N. ECE, rather than be handled outside of it. The problem, fortunately, was settled by the fact that the Russians wouldn't agree on who the director was to be and the ECE didn't really get organized until after the Marshall plan was going. It wasn't there at that time so we were hung up about it as a possible organization. I doubt very much if it would have happened anyway, but it was at least one of the things which was explored.

MCKINZIE: After the Marshall plan and the ECE were created, some people tried to bring the two into an orderly relationship. There wasn't much success.

THORP: The memberships weren't the same, but they did develop a sort of a division of labor. The ECE took care of most problems that were

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East-West problems; so, if it was a matter of Czechoslovakian cement being shipped into West Europe this got discussed there.

MCKINZIE: You say, "fortunately." I assume by that you mean that it would have been a kind of hard program to sell if it had gone under the ECE .

THORP: Yes.

MRS. THORP: Harder to operate even.

THORP: It would have been harder to operate and harder to sell the aid program under ECE. I find it hard to visualize it moving as quickly as it did under those circumstances. We had had trouble operating UNRRA because the Russians were both difficult and slow. Somehow, they didn't seem to know what discussion meant. To move quickly, it had to have some

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kind of power center. Of course, the Marshall plan had the U.S. as a power center with Canada.

We should give Canada a lot of credit in this. Canada is forgotten; nobody remembers that Canada had anything to do with the Marshall plan. Canada made a substantial contribution, and was an observer -- the same status that we had -- in the OEEC.

MRS. THORP: Marvelous people represented them here.

THORP: The Canadians were, in this period of time, the conscience of the international community in the trade field. They were tougher than the U.S. about the proprieties and what should happen, and really served a terribly useful purpose there. They've been forgotten here, also.

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WILSON: One of the things that has come up is the contrast between the kind of information which the United States had about the state of the U.S. economy, the kind the European governments had about :their own. One Greek said, "Well, the Americans were asking us for information. Necessarily asking us for information we could not give, and we made it up." I'm not sure whether he believed that he had fooled Americans or not.

THORP: I think one of our worst problems was with the Yugoslav case. (That wasn't a Marshall plan country, so it had to be handled differently when it broke with Russia). They had a planning commission and would give us their plans for the year. We discovered after about two years that what ended up at the end of the year had no similarities to the Planning Commission expectations. We really got into

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trouble when our assistance moved into less developed countries like Saudi Arabia where the head just hands out a bag of gold to somebody and there are no pluses or minuses or even numbers in their accounts.

MCKINZIE: Did the increasing tendency to blame everything on "the communists" and to justify actions on ground that they were "anti-Communist" erode the influence of the economic people in State?

THORP: On our economic side, I don't think this had very much to do with it. We would give our best to keep it minimized as far as we could. Of course, the Communists were terribly helpful in taking over Czechoslovakia just when the Marshall plan was coming along, a godsend from the point of view of convincing Congress. We had to battle Congress and the Defense

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Department considerably not to be too tough with respect to trade with the Soviet Union. This was at one time a very serious threat; my spies came to me and said that the Defense Department was going to propose in the Cabinet meeting that the U.S. should refuse aid to any country that sold anything to the Communists. I remember my wife and I had a dinner date that night. I got all my fellows together and they worked all evening on what was the right position to take. After dinner, I went back to the office and worked it over. I didn't like what they had but we finally came up with a limited program which the Secretary of State, took to the next Cabinet meeting, the one before Defense's plan was to be brought up, and got it through. The Defense program was never submitted. I think it was Acheson that

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got it through. Then the Battle Act: I remember going and calling on Congressman Battle and saying, "Look, here's a big gap in legislation. Would you be willing to help us try to fill in with something that we can live with?" And so we got real legislation, which leaves a loophole for the President and which we could live with.

WILSON: Could you talk about one of the committees that you chaired, the committee in the summer of 1947.

THORP: The Marshall speech, as you know, was not really a joint plan or complete in any detail, but this is the normal Government process. Whenever the President or the Secretary of State is making an important speech he searches through the Government to find an idea from somebody that will be fresh. I've sometimes thought that

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probably the best way to move an administration on was to get the President to speak to the U.N. or the A.F. of L., or at a commencement. This forces him to search for something that gets you out of the rut.

In the case of Lend-Lease, the Marshall plan, Point IV (and I'm sure that one could find a number of others), there was nothing but just a gleam in the eye that was presented. Even thought it might have been perfectly right and absolutely essential, it immediately goes back to the working stiffs, to find a specific skeleton and then put some flesh on the skeleton.

The Marshall plan was really very much that way. In general concept it was spelled out by Marshall, although he left it to the Europeans to develop. Just what the U.S. Government was to do and how it was to be

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organized is not included in the Marshall speech.

At first it was all hypothetical because no one was sure as to whether the Europeans would really go through with what seemed logical for them to do or whether they would be stymied by some such superficial diplomatic problem like where to meet, or run into some basic difficulty. In spite of this uncertainty, we felt that we ought to start to do something. We started meetings of what we called the Board of Directors on June 25. It met then July 1st, again July 3rd, and rather intermittently. I think my last record of a meeting is October 28th.

Some of this time I wasn't even in Washington, although I do find that I came back three or four times for meetings of the group.

MRS. THORP: You got married.

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THORP: Yes, that's right.

There was a British financial crisis right in the middle of it all. That almost prevented my getting married but the British crisis got solved just in time. At any rate, this Board of Directors met regularly. It had one person assigned to it full time, Charlie Kindleberger, who would presumably prepare a memorandum. We would meet and go on from there and debate about it. This was, in a sense, a very real preliminary effort to think about how this thing should operate.

The Board of Directors included C. Tyler Wood and Dal [Dallas W.] Dort, who were the two doing the interim aid program and were right in the middle of the operating problem. Harry Labouisse had been involved in the occupied territories work. Bonesteel came into it representing the Defense people and became

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a key figure in the thing, and Paul Nitze was there from the start. It always met at night; it was not to interfere with the daily work although Kindleberger was taken off all his other work. As a matter of fact, one of the interesting aspects of the Marshall plan is that, like anything new in the Government, there was no provision in the budget or the personnel for developing anything new. Therefore, this all had to be done with people doubling up; either doing this and their regular job or doing a person's job for him, or by borrowing people from other places to fill in. It was all done that way. In a speech I made, my presidential address to the American Statistical Association (it's in the American Statistical Quarterly) on international statistics or something of that sort, I gave some data about the magnitude of the statistical job that was involved in preparing

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this.

The Board of Directors worked on ideas like counterpart funds, what should be in the agreements between countries, and so forth. It was not something that went up at that point for higher consideration. We felt "who else was going to put this together?" This was a natural continuation of operating in the field. Of course, various other problems emerged that had to be taken by the people at higher levels; by political officers or by the organizational people. We were talking at lunch about who should administer this. Our original thought was to continue with the same group that was doing it. But when this idea went to Congress it got shifted over to having separate administrations. Then the amusing thing was that when Mr. Hoffman came in he took all my gang over to ECA so that

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the State Department personnel actually carried out the program.

MCKINZIE: Could you tell us something about the importance of food in the beginning of the supply program to Europe?

THORP: Yes. There were a number of different commodities of which there are special stories and special relationships. One could talk about tobacco, where there was special effort to develop a market through the use of the Marshall plan. I don't think this happened with very many commodities. That's a very conspicuous case. The oil problem had to do with moving foreign exchange around from country to country, which was really quite important to the petroleum companies. The motion picture situation was one in which suddenly a number of countries began to ration

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screen-time. Foreign movies could only have a certain number of hours each week in a particular theater.

As to food, the problem became a very real one. I think the best demonstration of that is by looking at the Marshall plan expenditures and comparing them with the program that had been worked out in the black book for the first year. If you do that, you'll find that much more food was going to Europe than had been planned and the net result was a cutback in the amount of machinery and equipment which was sent. This was made necessary by the failure of the winter wheat crop and the general food shortage, all of which in turn reflected the fact that the so-called breadbasket of Europe was no longer in existence in that form.

Now, having said this in general, I think one can bring this down to the Washington scene

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and I'd like to ask Mrs. Thorp to just tell you about how this worked from the point of view of the French Embassy.

MRS. THORP: Madame Bonnet, the wife of the French Ambassador, was a handsome, charming, bright, woman, Greek by birth and French by adoption. She was very popular in Washington, and went to every cocktail party that entire winter season in the same black Dior dress, thus indicating that France could not afford her a proper wardrobe. She gave at least one dinner party, quite large, to Senators, Congressmen, and other high officials. Everybody left that party hungry because she served foie gras and French bread of the kind that would be eaten in France, (that gray, miserable, hard French bread) but the wine was excellent. I think we had a salad along with it, and I don't remember what

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the desert was, but everybody left hungry. The object of the game was to show that everybody was hungry in France and they certainly needed some help.

THORP. I can tell an opposite story. When de Gasperi was in Washington, January of '47, the Italian Ambassador gave a big party for him. I happened to leave the party at the same time Senator Connally left, and he turned to me and growled, "If they can afford this kind of party, I don't see why we need give them any aid."

That visit of de Gasperi reminded me of one other thing that would give you a little feeling about that period. He obviously had come over to get some kind of help from the U.S. We searched every cupboard and we couldn't find anything that was available. We couldn't build up an Export/Import Bank loan,

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there wasn't a penny left in our aid programs, and this was very embarrassing. De Gasperi was highly thought of; he worked well in his government, and was giving some real stability to Italy. Finally we did succeed in finding something that he could take back. The Army decided that they had underpaid the Italian prisoners of war and there was a back payment to be made. De Gasperi announced it when he returned.

WILSON: Was there any indication that the British felt that they had a special relationship with the United States that they didn't need to go to these extremes?

THORP: I think the British were in an embarrassing position. They had gotten this loan, which had been negotiated, approved by Congress, and contained a substantial sum of money. It was

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embarrassing for them to come back in the matter of a few months and say that they were in any difficulty. The British were in a very special situation here.

On the other hand, they were a leading party in the whole thing. Ernest Bevin was the one who picked up the ball first and started running with it, and they were the people that it was easiest for us to work with. When Congress had finally approved, and it came to getting the Marshall plan going, shipments could be made for one month, but would then have to be discontinued unless agreements had been reached as to the general intent, procedures, and conditions under which aid was being provided. The European countries set up a committee with Oliver Franks, the new British Ambassador to Washington, as chairman. I represented the U.S. We had one month to do it.

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I'm not sure whether we did it in a month or it took a month and one day. This was a very difficult thing to work out. Congress had defined in the law a number of things to which the recipients. had to: commit themselves. These were not written in the form that made them easily translated into an agreement. On top of that all the departments in the U.S. Government rushed forward with proposals of what additional things it would be nice to have incorporated. For example, they were all to adopt antitrust laws like the American anti-trust laws. The biggest difficulty was that Mr. Hoffman, who had now been designated as head of the organization, brought in as his lawyer Alex Henderson from New York who was used to drawing to things like bond indentures. What he had in mine was that the agreement should cover every possible contingency.

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In international affairs these are the difficult things to handle, and since they are not likely to happen, you'd say, "Well, let's hope it doesn't happen, and if it does we'll try to deal with it." An international agreement becomes, to some extent, a "best efforts" kind of thing. It can't possibly contain protections and indications of what's to be done in everything that may happen. My problem was to get an agreement that was at all possible for the other governments to sign, and at the same time not to have Henderson feeling this was absolutely inadequate.

Franks was a wonderful person to work with; he had no experience in working between governments. He had been in the British Government during the war, and he would often come to me with a cable from his government. We'd read it and he would say

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"Now, why do you suppose they want that word changed? That doesn't make any sense to me. Do you see any reason why it should be changed?" We would struggle with the problem, not on behalf of either country's position but in trying to get a workable agreement, and this was a time consuming and difficult affair. Everything had to be referred back to London. Luckily, while the Congress had defined certain things, they still left a whole series of things unresolved. For instance, in an agreement dictated by Congress everything had to be labeled "from the U.S.A." How do you label a chunk of coal? How do you label a surgical needle, and so forth? The general principles oftentimes can't be applied completely. Still, we got this negotiated and an agreement worked out.

WILSON: Would it be fair to say that the ECA tended

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to be fairly rigid and tried to push through things with regards to Great Britain or the entire OEEC that weren't very easily translated into practice and weren't perhaps politically feasible?

THORP: I don't believe I can answer that. At this early point, the ECA hardly existed. Of course, it did develop its own character later. I'd have to think about individual situations. There were periods in which we in State were very concerned for this or that aspect of the ECA's operation. Then it would run on and I wouldn't know anything for weeks about what the ECA was doing. There would be people down the line, our commodity people in the State Department and other people, that would only call it to my attention if they were disturbed about something. I would say that I probably

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knew more about the Export/Import Bank operations during most of this period. I was in on more decisions in the Export/Import Bank than I was on ECA, because this was a separate organization. Congress expected it to be. But for the Bank, State was represented on its Board of Directors. Every once in a while we'd get steamed up about ECA once we set up a committee. Defense had somebody and I was there and we were supposed to meet once a week for a policy review. We did this about three weeks. There had been concern in the State Department by the political officers that ECA was running way off in the wrong direction. There was feeling on the part of the political officers that they were isolated from it; that judgments were being made that they should know about. There was less problem on the economic side because this staff I had was good and kept

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track of what was going on.

To illustrate the sort of political problem: The question came up about using the Marshall plan to get freedom for Indonesia. We told the Dutch we were going to stop their aid unless they gave freedom to Indonesia, and told Indonesia they could have a hundred million dollars credit at the Export/Import Bank if they got their freedom. We felt that using both a stick and a carrot we could get things done. I was in the discussions about that, but again I would regard it as primarily a political kind of decision.

As the record shows perfectly clearly, McCarran tried year after year to get Spain involved in the Marshall plan. Still, the Marshall plan said, "You've got to be a member of the OEEC," and the other countries wouldn't take Spain in. There were strong anti-Spain

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feelings in enough countries so that it was impossible.

It is true that we finally did get some other countries into the aid bill. Yugoslavia never was a member. In the Spanish case McCarran finally managed to get a total of 100 million dollars (the first time was 50 million dollars) in an amendment for aid to Spain.

The morning after the act was passed, the Spanish Ambassador came to my office and said, "Where do I go to get my 50 million dollars?" I said to him, "I'm sorry, but what's appropriated to you is in the Foreign Aid Act." (I never was sure that I was on good solid legal grounds about all of this). "We provide money for payment for particular programs and projects. We never give cash out to anybody; we make payments on specific requirements.

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The first thing you have to do is to develop a program of what you're going to do with the 50 million dollars and bring it back to my office."

He developed a program of 50 million which was very simple. "We'd like 50 million dollars worth of wheat." He came in with this program and I said, "I'm sorry, that won't satisfy the United States Government. You don't need 50 million dollars worth of wheat. You didn't import that much last year and you don't need it. This is supposed to be for your development, and in a country that has one railroad wreck a day, you ought to be able to find other things more useful to do."

He went away again, and the next call I had was from McCarran. "Why isn't the Spanish Ambassador getting his 50 million dollars?"

I said, "Well, we're very eager to give it

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to him, but he's got to come up with a satisfactory program." He finally came in with a program we could accept, although there was one item in it which worried us greatly at the time. That was an appropriation for oak barrel staves, to be charred and used in aging sherry. We weren't sure whether the American public would realize that this was going to increase its export proceeds and was a fine thing to do, as opposed to those who thought that we shouldn't finance the production of sherry. I must say this is a special case in the aid program, and it's a rather interesting one.

The problem of Yugoslavia was a special one, and it came very suddenly upon us. Here was a country which had broken with the Russians, almost all of whose external economic life was turned towards Eastern Europe. It was suddenly

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finding itself with a solid iron curtain blocking the ways by which it had made its living, sold its goods, as well as the source where it bought much of its requirements. We in turn found ourselves without any way of dealing with this, because even though this was 1949 or '50, they were not members of the OEEC. We couldn't give them any Marshall plan aid, and we had no easy technique for dealing with this. The only immediate possibility was to give them an Export/Import Bank loan.

I can remember this as being very difficult because the Export/Import Bank in general didn't like to move for political reasons. In this case they did, and we were able to get congressional action in 1950 providing some funds.

What I remember particularly about the situation was the fact that the U.S. was trying hard to get the British and French to join. We

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had a tripartite group. I represented the U.S., there was a French diplomat, and a very stuffy Englishman. (Once when my wife and I were in Pakistan, we found a barber shop named after him.) The problem was to get the three countries and the Yugoslavs to agree on what the program should be. This was very difficult, because Yugoslav programming was very ineffective and sketchy to say the least.

We worked out a program in 1951, and it was good enough that then we were able to get the World Bank to move in and help support Yugoslavia. In '51 we also got them into the general overall aid fund. This was a very interesting case because these people were Communists. It always left me with a personal question as to what it was that people were so steamed up about, when the Congress (where Communism was a fighting word) would vote 50

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million dollars for aid to Yugoslavia in spite of the fact that Russia was so unpopular. I must say that the Yugoslavs were very clever. The first Ambassador that they sent to the United States after they became independent was a man named Vladimir Popovitch, and we were both at the first dinner that he gave for me. After dinner he and I sat down together and he asked me a question. I had spent a great deal of time with Communists, and this is almost the first time anyone ever asked me a question rather than just lectured to me. His question to me was why we had not had a depression after the end of the war. He listened while I answered and while I don't think he ever became very popular, at least he and his staff had quite a lot to do with the fact that we were able to work out a program which kept them afloat. Probably if they hadn't been this kind of

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Communist group in Washington, our work with them would have been so unsatisfactory in so many ways that we would have had to drop it entirely.

It was decided before the war as to when the Philippines would become independent. Immediately at the end of the war was the date that had previously been decided. Everybody agreed that this was most unfortunate when the time approached. It would have been much better for them if they could have continued under American aegis until they'd been reconstructed and then become independent. We didn't dare suggest that they postpone the date, they didn't dare suggest that we postpone the date; so they became independent. We paid them tremendous sums which we owed them: we paid back pay for the entire period for all surviving members of their military forces and we paid them an

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enormous amount for destruction that took place in the Philippines, as though this were part of the U.S. (and in a sense it was). We taught them a whole lot of things, improved education and road building, but we handled their finances and then they suddenly had to handle their own finances at a point where they just were flooded with funds. They had some economic problems.

MRS. THORP: They all got rich, no doubt, personally.

THORP: No, that isn't the way it worked. They would've gotten rich personally except that the funds in this case were distributed to all of these individual ex-soldiers. They personally didn't get very rich but I'm sure there were many clever entrepreneurs who ended up with fortunes. Of course, the country had no foreign exchange problems but there was a substantial inflation.

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The trouble is that this is a period when everything under the sun was going on. Economic problems were everywhere. We haven't talked at all about Latin America. There's another all night session I had once with Latin-Americans, who were very outraged because of the fact that we had been unwilling to sell them stuff during the war. They piled up dollar deposits, and then we finally were willing to sell to them after the prices had gone up substantially.

MCKINZIE: Did the Latin Americans get very upset about being excluded from the ECA?

THORP: They had funds but were upset over the availability of goods and the adverse terms of trade. As to supplies, for example, they wanted power plants, but so did the U.S. electric companies and the Europeans. As to financial aid, the Export-

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Import Bank filled in with quite a substantial amount. It had already started before the war, making loans for development purposes. During the war it started the big steel plant in Brazil and I think we managed through Export-Import Bank loans to keep quite a flow going. After all most of these countries were rich at the end of the war, just as Sweden was, so that it wasn't immediate.

I would say that there was a growing feeling that we were giving preferences to Europe, though we tried to convince them that Europe was an important market for them as well as a source of goods which they needed. This feeling got greatly exacerbated by the fact that Africa received preferences from the Common Market, and this more than any other one thing has irritated them no end. They feel they ought to at least have that same situation with us. In that case,

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the world would have been really frozen into a pretty bad pattern, so that I don't think it's likely to happen. Nevertheless they've got a point with respect to giving permanent preferences to colonies.

People don't realize that a colony is actually part of the metropolitan power. It doesn't have any tariffs, it's part of the country with just a little ocean in between. If it suddenly becomes independent and has to jump to a foreign power status, this would be very disruptive. That's why we worked out a 20-year gradual adjustment on the Philippine tariff. In economic terms the Philippines become a foreign country after 20 years. Bit by bit each year they become more foreign as far as trade is concerned.

MCKINZIE: That leads naturally into the business of Point IV which is a strange mixture of economics

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and politics.

WILSON: I gather this was no more than a gleam in the eye when President Truman made his speech, so it must have been one of your more interesting experiences.

MRS. THORP: It's also a great question as to whether that was thrown on him or from him. It certainly can't be more than six or eight months since Ernie Gross said to me, "I am so outraged at all the people who take credit for the Marshall plan, when I know it was your husband's idea." Much the same could be said about Point IV.

THORP: I think that one can't help thinking and talking and if one is in a central position like I was, he tries to spell out all sorts of possible ideas. The situation requires it. This is why I find it so futile to try to

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credit individuals. You don't know whether "A" thought of this or whether "A" got it from "B". By the time you chased it all around, "B" got it from someone else and it changes as each person passes it on. Everybody's got something to do with it. There probably are cases where you can blame it on a single individual, but I must say it doesn't happen very often.

Before the Point IV program, I had connection with the inter-American operation, the services and so forth. This was excellent technical assistance outside of any national frame. The United Nations specialized agencies were essentially technical assistance centers. It became increasingly apparent that we were not dealing with competent countries like the Europeans in the Marshall plan, but with many backward areas. You couldn't solve their problem with the

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formulae which related output to capital. There was a knowledge requirement.

To my surprise when I started work on Point IV I discovered that this was done all over the Government; there were lots of technical assistance projects not thought of as more than a kind of extension work. Some country asked the Library of Congress if they'd help to set up a cataloging system, because most libraries around the world aren't cataloged in any kind of system. One of our great contributions, which nobody ever gives us credit for, is the number of libraries that are usable now that weren't before. When we were in Japan in '55 the U.S. had a little library school there. At the University of Tokyo library books were on the shelves as they had been bought, and the professors liked this; they were the only people who could use the library. It was a

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beautiful library but there was no way of finding anything in it; it was just a pile of books.

When Mr. Truman made his speech. Clarice and I were sitting 20 feet away from him there at the Capitol. I don't know just how I managed to stay in my chair. This came as a complete surprise to me, this Point IV proposal. I think it was to virtually everybody.

The next day after the inauguration Mr. Truman sent Mr. Acheson an instruction that he would move ahead on this. Mr. Acheson sent Willard Thorp an instruction he would move ahead on this, and I did.

MRS. THORP: The buck stopped there.

THORP: The difference between Point IV and the Marshall plan, not only as a concept in scope and everything, is that nobody upstairs paid much attention from then on. In other words,

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this was just left to me to do, although I may have once or twice gone and talked with Mr. Truman about it. Even he didn't have any particular ideas as to just how he wanted it; certainly the people in the department didn't. I got Sam Hayes and a couple of other people, and we went to work.

The first thing we did was to call a Government conference. I sent out invitations to all agencies that were engaged in any foreign technical assistance to come to this meeting on February 9th. Over 20 agencies showed up, and I discovered that the Government had already been very busy. When you begin to think about it, you realized that this was true the Department of Agriculture had various experimental stations all through Latin America. The Health people had various outposts around the world for one reason or another. The Bureau of Public

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Roads already had a big summer school which brought in people from foreign countries ending up with a tour of American road building equipment manufacturers' places. Most of the time was spent in showing them how Americans built roads. The Census Bureau helped many countries to plan and carry out a national census. There was quite a lot already going on, but it never had been a matter of general public policy.

We thought we were supposed to rush this and get it along, so we put together a program. I had to check with Mr. Truman once to make sure that my interpretation was right, that Point IV was technical assistance, and that his speech was written on the assumption that capital was taken care of. I later made that point in the U.N. and got clobbered by all sorts of people that it wasn't being taken care of. However, the International Bank and the Export/Import

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Bank were supposed to be a source of capital, but there wasn't anything like this to supply technical assistance.

We got a program together and got it up to the Congress. Mr. Truman sent it with a message in June. Since there was nobody specially pushing it, hearings were badly delayed. I came in and testified about it and then nothing much happened. I suddenly got a call from Chris Herter, who was on the committee. He said, "Look I don't think you're going to get anywhere with that bill. I don't want the thing to die, so I'm going to put in an alternative bill. The committee can sort of puzzle about what it wants to do and this may be helpful." At any rate, nothing was passed in either the House or the Senate that year.

An embarrassing thing developed that year in that, the President having spoken in January,

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I was expected at the summer ECOSOC to make a proposal applying Point IV internationally. We had interdepartmental meetings. This involved us in an unusually difficult problem; because (a) we had to decide how it should operate having all the specialized agencies in mind, and (b) how the deuce was the money to be handled; not to mention where it was to come from?

We had meetings and then I flew over to Geneva for ECOSOC. They had me scheduled for the next day to make the presentation of Point IV. I got there and discovered that nobody had sent over any speech for me to deliver. It was supposed to have been written for me by the people in Washington, on the basis of a committee meeting which we just held.

On top of flying over and that was more strenuous then, I spent the night writing a speech. I gave it the next day. Almost that

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whole session was devoted to development of the details of the U.S. proposal. We finally had to resort almost to a jury system. The problem was how to divide the money among the specialized agencies. Each country had a different idea of what was important: this one wanted most to go to health, this one wanted most to go to agriculture. We finally had everybody put his figures in an envelope, and give them to the chairman. He averaged the percentages proposed by all the members and that was that. Given the situation, it was as good as any method I guess.

I came back to America and we went to work again. We redid the whole proposal, worked more closely with Congress, and got an authorization bill through the House. When it came to the Senate I got clobbered first by McCarran: "Where do you find this in the

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constitution?" (We spent a lot of time on that). "What do you mean, going to the U.N. and proposing a program there when the U.S. doesn't have any such program? By what right do you suggest all this at the U.N.?"

We went on with the hearings and when we'd completed this the program moved on through the committee. Finally the committee brought it out to the floor. The lobbyist experts on the Hill informed me that it wasn't going to pass the Senate. I then met with a liberal lobbyist group, composed of trade unionists and church members, if one can call them that. They sent out word and in two weeks time managed to get enough support behind the bill so that it was finally passed, I think, by one vote. That's the story of the Point IV program.

WILSON: How did Henry G. Bennett come into it all?

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THORP: I don't remember how the administrator got chosen or anything about it. He wasn't part of the planning.

Incidentally, I might say that among the group that we brought into Washington to consult on this was Margaret Mead. People who say "all you economists" don't ever realize that other people know something about what are normally called economic problems.

MRS. THORP: She wasn't the only one. You had anthropologists, sociologists, and you had some linguists.

THORP: We tried to cover the waterfront on people who might be expert on this even in the very early period -- within the first three or four months.

WILSON: The popular view is that the Point IV idea

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touched a nerve, and elicited considerable sympathy from the public.

MRS. THORP: It touched a nerve by stimulating the people of good will, the church people, and the trade unionists, who stimulated their people and made sure that their nerves were touched. They touched the Congressmen where it hurt.

THORP: This was a natural and it would have surprised me tremendously if it had not become a part of the aid program. It's more like sending missionaries than sending goods, somehow.

MCKINZIE: The slowness of getting it through Congress, then, was due to congressional conditions at the time?

THORP: First, we had to formulate it and then, since it was a new program, it had to run the Congressional

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gauntlet. At that time, it had no enthusiasts in Congress to push for it. I think we did awfully well in putting the program together. The message went up on June 24th with the whole program. Having in mind that this was a period when lots else was happening, this was pretty good. We proposed 45 million dollars and finally Congress gave us 35 million. The Congress also, when it came around to pledging for the U.N., approved a pledge so that we got out of that situation.

WILSON: I wonder if you might discuss the last year, at the time of the changeover of administrations.

THORP: I think to some extent any changeover must have a dismal period, for the obvious reason that a very large part of foreign affairs involves interdepartmental work, and interdepartmental

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work involves people developing some degree of trust in each other. That takes time.

I had reached the :point with, let's say, Charlie Brannan in Agriculture where if we had a problem, I could go to Brannan and work out something with him. If however, we had been new people coming into a government we would feel that we had to demonstrate our loyalty and strength to our own departments, and our own juniors. We would be much less likely to compromise, and the problem would be much more likely to go to the White House. While many problems between departments did get settled at high levels, we did have to go to the White House on some of them. I went to the White House more often on aviation problems than on any other single subject. I think the reason is that I was in a Government department dealing with an independent administrative agency.

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It wasn't willing to compromise at all with me. It would have been different in going to Treasury or Agriculture, where if I knew the people and had a, good case I could usually work out some settlement.

At any rate, there is that inevitable difficulty of shifting personnel. I did have the feeling that Mr. Dulles, with his initial testimony on being examined for Secretary of State, demonstrated his complete ignorance of anything economic. The whole economic problem after the war, according to him, was that everybody wanted dollars. Nobody wanted dollars, they wanted goods, and it was all completely wrong to put it in currency terms as he did. In fact, he said that he didn't want an economist as Assistant Secretary for Economic Affairs.

One other thing ought to be in the record. Mr. Dulles was asked by Mr. Truman and Mr.

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Acheson to work out a Japanese peace treaty. After this had gone some distance I saw the draft as it then stood, and discovered that the economic matters which are normally covered in a peace treaty were not there. There was nothing about trade; there was nothing about reparations, except that reparations were to be negotiated afterwards. Negotiating reparations is a very hard thing, and I went and protested to Mr. Dulles and said, "Look, when are we going to get at the economics?"

He said, "My instructions are to get a peace treaty and that if there are things that look as if they would delay it, I'm to leave them out." He did get a peace treaty, but should get no credit as an expert negotiator for doing it. I think the political reason for doing it was that we were very eager to bring to an end a situation in which we were supposed

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to join with other countries, including the Russians, in the administration of Japan. This may well have been an overriding reason that justified leaving all these things out. But, if one goes that far then one should say this is a phony kind of treaty. It isn't to be regarded as a great achievement.

WILSON: You are one of the few to serve as Assistant Secretary under all four Secretaries of State in the Truman administration. It would be very helpful to have your evaluation.

THORP: There was a very high rate of turnover at both Secretary and Assistant Secretary level. Eleven months after I became Assistant Secretary, every other one had left and I became the senior. I think there were something like 32 others during the entire period I was there. It's interesting to note that the turnover was

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greatly reduced towards the end of the session rather than the early period. I don't think this was because they finally got people who were more set in their ways; it was merely that we felt that if we left the State Department it might be suggested that Senator McCarthy was responsible for our leaving. We used to meet at the morning session and there'd be a headline in the newspaper that McCarthy says tomorrow he'll announce two new top people in State who were Communists. We'd look around and point the finger at each other and so forth.

I came in when Stettinius was Secretary but we didn't overlap very long. I did see him on several occasions and he always was not only friendly but quite enthusiastic. His reaction was "That's a wonderful idea, we ought to do it," but somehow I didn't get a feeling that he was going to help me very much in getting it done. He didn't seem to be an

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action person. Perhaps it was because his experience had been at the second level in a large corporation. He had dealt with the financial problems of U.S. Steel, but they had had almost no international relations in the thirties and early forties. It may be that at that time his mind was largely focusing on the U.N. San Francisco session, which was to come shortly thereafter. While I don't know it directly, I'm told that he was active in determining the decor with respect to this session. Gossip had it that U.N. blue may be explained by the fact that he felt that this was a most becoming color in front of which he might sit with his silver white hair as chairman of the conference

Senator [James F.] Byrnes, the next Secretary under whom I served, was quite a different sort of person. Mr. Byrnes knew the Government

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very well; he had a number of close friends, many of them in the Senate. He was inclined to make quick judgments on problems which were likely to be quite complicated, relying either on his own intuition or upon the advice of this or that friend of his. As one thinks about it, this is almost the inevitable way in which a Senator must operate. No Senator has a staff that can begin to cover the hundreds of problems on which he has to make a decision. He must vote over and over again, and his voting becomes more and more a matter of what his friends decide to do or what he just feels is the right thing to do based on such knowledge as he may have. In our end of the Department, we had an informal spy system which tried to keep track of what was coming to Mr. Byrnes' attention so that we could get there before he asked anyone else about how to handle a problem. We

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tried hard to get him to take advantage of having a staff of experts.

This doesn't mean that 90 percent of the work of the State Department didn't go on perfectly normally. As a matter of fact, my theory about the way in which something like the State Department works is that 90 percent of the problems can be and are handled by the people at the expert level. This is because existing policy and precedent are sufficient guides. The 10 percent of more difficult cases have to come up to someone like myself, an Assistant Secretary, and maybe I can dispose of half of those problems, maybe 8 percent of them. This leaves two percent which may require interdepartmental action or probably can be settled by the Secretary. This is all he has to bother about. To be sure that 2 percent is often the most important problems, but the flow into the Department gets sorted out in the process.

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When it reaches the Secretary, he can settle some and then take some fraction of 1 percent over to the President. This is the inevitable way that it has to: work. It fails when a person holds onto a problem without either settling it or passing it on. The volume of individual problems coming into the State Department everyday from foreign governments, from American citizens, and other parts of the American Government, was tremendous.

Mr. Byrnes sometimes came to very quick decisions. I remember his reacting very strongly and instructing us to cancel a loan to Czechoslovakia because he saw the Czechoslovakian delegation applauding a speech by the Russians in the Paris Peace Conference. It took two days to get this straightened out as a gesture with very little meaning. In general one has to think of him as not used to working with

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a staff; though he was not as bad as Mr. Dulles by any means. Dulles also was used to a one-man operation and did not begin to use his staff effectively. He was one of those people who rely on their own capacities for handling problems which clearly are more than any one person can handle.

General Marshall was the extreme opposite. He used his staff almost to the maximum. In the first place, General Marshall was the only Secretary of State who left his office at 4 o'clock every afternoon. This itself was an indication of reliance on his staff. Of course, he also had an extremely able person under him. Bob Lovett was extremely able and one can easily think of him as a possible Secretary of State. General Marshall's contact with the staff was largely through memoranda. General Marshall's requirement was that any matter coming

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to him would be put on one sheet of paper, single-spaced. At the bottom right-hand corner, you typed "approved" or "disapproved" with two nice lines so he could initial whichever one he agreed to. This was very difficult for us because up to that time we had been used to writing quite complete memoranda on each problem. (We salved our consciences by producing the one page memo but then adding appendixes when we thought more detail should be available to him.) I think the memorandum process is one of the ways in which one can keep the level of staff work high. If a memorandum came up which I thought was undergraduate level, it went back and had to be redone. The present tendency not to have such a requirement, it seems to me, lets down the standard, makes a much poorer record, and does not provide proper staff assistance to the higher-ups. It's very hard to maintain

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standards unless you've got some continual examination, even though it may not have been set in the academic form.

Mr. Marshall was used to using his staff in Army style. At the Council of Foreign Minister's meeting, where there were the four foreign ministers sitting around the table (each one had a couple of people behind him),Mr. Marshall usually would not speak even in reply to a question unless one of the staff had written out a suggested reply and passed it to him on a little piece of paper, He did not like to extemporize. I'm not saying that he was unwilling to move ahead without the staff's concurrence, but that he did give the staff a full opportunity to advise him. He did not make a practice of having conferences with the interested people on a particular problem. In the office, he had a pretty dignified and cold manner, but outside

[176]

he could relax and be a very pleasant companion. He was to give a speech somewhere and was to go in a private car, when it was suddenly brought to my attention that a paragraph in the speech was way out of line. I tried to catch him in his office but he had already left. My wife and I chased down to the railroad yards and found his private car in which he was sitting all alone. The business took little time and then he insisted that we stay on. He was obviously delighted to have company and I don't think we've had a more interesting evening of listening to someone tell stories about people and subjects about which we had a real interest.

MRS. THORP: He was a man of the utmost charm.

THORP: This had no similarity to the man that I often saw in his office where his personality was

[177]

impersonal and very businesslike., I've heard him chew out his messenger boy in rage in what everybody would regard as normal Army vocabulary because he didn't answer the bell quickly enough.

Mr. Acheson functioned in a way decidedly different from any others. He was a man who liked to talk with the experts, sit around the table, review the problem, and use his own mind to make suggestions and test whether everything has been considered. He was great at cross-examination, but his thinking was positive. It was a delight to work with him. You felt that if the problem was one of great concern to you and your group, you would be given a full chance to present it. This would usually be after you had sent a memorandum, so he wouldn't come into it blind, but already had some background to work on. The discussion

[178]

technique helped to assure us that he really understood the issue, whatever it might be.

So, you have four people of entirely different procedures involved here.

WILSON: How much involved was this leadership in shaping of Department morale or Department attitudes. Was that at all important?

THORP: I suppose Mr. Acheson saw the largest number of people in the Department, at least they personally were in contact with him, as compared with the others. The operating leadership within the Department turns a great deal on the Under Secretary. This was very true in the period that I'm talking about. I don't remember who was Mr. Byrnes' Under Secretary. But I do remember Bob.Lovett and Jim Webb.

Jim Webb was the only driver of the whole

[179]

lot. He would say, "When are you going to get this memorandum in? What's the date?" And when the date came, "Where is it?" He was a real management character. He tried very hard to understand most of the things, but he frequently didn't. He had one unfortunate characteristic which a good many people have. When he was testifying at the hearing and he wasn't sure of something, he'd prefer to go ahead and take his chances rather than to turn and say, "Now, Mr. Thorp, will you answer that because you're familiar with it?" Most experienced witnesses would have done that, but Jim Webb wouldn't. In spite of what I have said about individual secretaries, in my days the Department was much more a group operation in which no one felt that somebody in particular was running the Department, or somebody was a morale builder. To be sure the political and

[180]

economic officers did not always agree, but the organization held us all together. My impression is that morale ran rapidly down hill under Mr. Dulles.

Within the Department we had the whole miserable security problem. That was a force which united us against outside attack but also raised fears and doubts. After a bit it got taken away and largely concealed from the rest of us. It became apparent to all the security people that the minute they charged "x", if he or she was in the economic department they had me to question them as to what was wrong, what kind of evidence, and so forth and so on. They solved the problem by seeing that I didn't know anything other than that "x" had left. While I knew about a few cases I'm sure that I didn't begin to know them all. I think because I made such a stink about the first one that

[181]

I ever heard about that they concealed as many as possible. But it was a great strain. I was called as a witness in a few cases, and Mrs. Thorp sat on the front row whenever one of our people was being tortured by the Committee on the hill. She had many ways of demonstrating our support.

WILSON: What you said earlier suggests that there was a remarkably high level of morale, in that you could sit around in the morning and say, "Okay, we're going to stick this out, because we're not going to give the people the pleasure."

THORP: There was more personal loyalty to Mr. Acheson than to any of the others. And he was the one who really stuck it out.

MRS. THORP: I think there's no question about it. I could have seen Jimmy Byrnes burned at the

[182]

stake, and I wouldn't have batted an eyelash, but I think I would have bled to death for Dean Acheson. This is in spite of disagreeing with him on many things. He is the kind of person you have to admire for the breadth and the scope of his intellect and for his strength of character. I certainly disagree with him now as much as I don't, but I just will never stop admiring him.

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List of Subjects Discussed

    Acheson, Dean G., 7, 8, 10, 44, 45, 112, 121, 122, 154, 166, 177, 178, 181, 182
    Africa, 149
    Agriculture, Department of, 155, 164, 165
    Alphand, Herve, 79
    American Statistical Association, 2, 70, 126
    Amherst College, 2, 4, 85
    Argentina, 150
    Associated Gas and Electric Company, 11-14

    Battle Act, 122
    Bennett, Henry G., 160, 161
    Berlin, Germany, 81, 83
    Bevin, Ernest, 114, 133
    Bidault, Georges, 105
    Bonesteel, C.H., 125, 126
    Bonnett, Henry, 87
    Bonnett, Mrs. Henry, 130
    Brannan, Charles F., 56, 164
    Brazil, 149
    Bretton Woods Conference, 35
    British loan of 1946, 35, 106, 107, 109, 133
    Brown, Winthrop G., 87
    Bruggmann, Charles, 94
    Budget, Bureau of the, 31
    Butterworth, W. Walton, 7
    "Buy American" policy, 96, 97
    Byrnes, James F., 62, 68, 69, 93, 169-173, 181, 182

    Canada, 118
    Census, Bureau of the, 156
    Central Africa, 66
    China, 32, 33
    Clay, Lucius D., 80, 82
    Clayton, William C., 14, 15, 16, 18, 19, 22, 23, 36, 37, 40, 41-44, 45, 51, 86, 87, 112, 113
    Collado, Emilio, 26, 51
    Commerce, Department of, 3, 6, 7, 8, 9, 18, 19
    Commercial attaches, 6, 7
    Common Market, 30, 99-101, 149
    Congress:

    Connally, Tom, 62, 63, 78, 79, 131
    Council of Economic Advisors, 29, 30, 31
    Council of Foreign Ministers, 63, 64, 175
    Couve de Murville, Maurice, 79
    Crowley, Leo T., 27, 28, 31, 32
    Czechoslovakia, 120, 172

    Danube River, 61, 64, 65, 68
    Defense, Department of, 34, 97, 104, 120, 121, 125, 126, 138
    de Gasperi, Alcide, 59, 60, 105, 131, 132
    Despres, Emile, 23, 83
    Dickinson, John, 3
    Dort, Dallas W., 125
    Driscoll, Dennis, 11
    Dulles, John F., 24, 26, 165, 166, 173, 180
    Dun and Bradstreet, 8, 9, 10, 17
    Dutch East Indies, 139

    Economic Cooperation Administration, 98, 101, 102, 127, 128, 136-138, 148
    Economic Report of the Council of Economic Advisors, 30, 31
    Economic and Social Council, 57, 158
    Egypt, 106
    Eisenhower, Dwight D., 102
    England, 108, 132, 133, 143, 144
    European Recovery Program, 98, 102-104
    Export-Import Bank, 47-50, 131, 138, 139, 143, 148, 149, 156, 157

    Federal Reserve Board, 106.
    Feis, Herbert, 5, 14
    Finland, 77
    Food Commodities, 129
    Foreign Aid Act, 140
    Foreign and Domestic Commerce, Bureau of, 3, 4, 5, 6, 8
    Foreign Economic Administration, 15, 19, 27-29, 32
    Foreign economic policy, 21, 22
    Four Powers, 64
    France, 50, 84, 108, 109, 115, 143, 144
    Franks, Oliver, 133, 135, 136
    Free trade, 93, 95

    Galbraith, Kenneth, 23, 83
    GARIOLA, 83, 104, 109
    General Agreement on Tariffs and Trade (GATT), 86, 87, 88, 90, 91, 98, 100
    General Electric Company, 94
    Geneva, Switzerland, 158
    Germany, 23, 40, 67, 68, 76, 77, 80, 96, 102, 104, 115
    Grady, Henry, 14
    Greece, 96
    Greek Turkish aid, 109
    Gross, Ernest, 151

    Halle, Louis J., Jr. 86
    Hammarskjold, Dag, 108
    Havana Conference, 86
    Hays, Samuel, 155
    Henderson, Alex, 134, 135
    Herter, Christian, 157
    Hobson, Howard, 10
    Hoffman, Paul G., 127, 134
    Hopkins, Harry, 8, 9
    House Agricultural Committee, 90
    Hull, Cordell, 15
    Hungary, 77
    Hurley, Patrick J., 80

    Imports, 92, 93, 96, 97
    India, 41, 106, 107
    Indonesia, 139
    International Bank and Monetary Fund, 46, 48, 50, 51, 156
    International Trade Organization, 86, 91, 98, 101
    Israel, 50
    Italy, 76, 77, 80, 115, 131, 132

    Japan, 41, 42, 97, 153, 167
    Japanese Peace Treaty, 166, 167

    Kennan, George F., 22
    Kenya, 66
    Keynes, John M., 106, 107, 108
    Kindleberger, Charles, 125, 126

    Labouisse, Harry, 125
    Latin America, 22, 54, 148-150, 152, 155
    Lend lease, 34, 35, 123
    Library of Congress, 153
    Limpapo River, 66, 67
    Loans to foreign nations, 47-51
    London, England, 136
    Lourenco Marques, 66
    Lovett, Robert A., 52, 173, 178

    McCarran, Pat, 139-141, 159, 160
    McCarthy, Joseph R., 26, 57, 168
    McNamara, Robert, 17
    Manila Electric Company, 13, 14
    Marshall, George C., 114, 122, 123, 173-177
    Marshall Plan, 35, 36, 38, 40, 44, 45, 49, 54, 81, 82, 95, 98, 104, 109, 110, 112, 115, 116, 118, 119-120, 122-124, 126, 128, 129, 133, 139, 143, 151, 152, 154
    Mason, Edward S., 14, 15, 16
    Maurice Hotel, 78
    Mead, Margaret, 161
    Meyer, Eugene, 51
    Minnesota, 90
    Molotov, Vyacheslav M., 64, 65, 72
    Morgenthau Plan, 77, 84
    Morse, Wayne L., 88
    Mozambique, 66

    National Advisory Council, 46-48
    National Bureau of Economic Research, 2
    National Defense Act, 89
    National Recovery Administration Policy Board, 8
    Netherlands, 115
    New York State Board of Housing, 4
    Nitze, Paul H., 126
    North Atlantic Treaty Organization (NATO), 36

    Office of Strategic Services, 20
    Office of War Mobilization and Reconversion, 21
    Organization for European Economic Cooperation, 114, 118, 137, 139, 143

    Pakistan, 144
    Pan American Union, 54
    Paris Peace Conference, 46, 61-65, 68-80, 172
    Philippines, 41, 109, 146, 147, 150
    Pilgrim Club, 102
    Point IV, 123, 150-163
    Popovic, Vladimir, 58, 59, 145
    Portuguese East Africa, 66
    Presidential transition, 163-165
    Public Utility Holding Company Act, 11
    Public Roads, Bureau of, 155, 156

    Reinstein, Jacques, 63
    Reparations, 69, 70, 73-77, 84, 166
    Reciprocal Trade Agreements Act, 5, 14, 92, 95
    Romney, George, 17
    Roosevelt, Franklin D., 2, 35
    Roper, Daniel, 3
    Rostov, Walter, 23, 83

    Salant, Walter S., 31
    San Francisco UN Conference, 169
    Saudi Arabia, 120
    Secretaries of State, evaluation of, 167-179
    Securities and Exchange Commission, 14
    Snyder, John W., 52, 53
    Social functions, 52-60, 130, 131
    Soviet Union:

      Berlin airlift crisis, and the, 83
      Congressional trade policy toward, 120, 121
      general comments on, 36, 37, 38, 49
      Japan, and U.S. occupation of, 167
      Marshall Plan, and the, 36, 38-40, 114
      reparations, and, 70., 75-77, 84
      UNECE, and the, 116
      UNNRA, and the, 117
      Yugoslavia, and, 119, 142, 143
    Spain, 139-142
    Standard Oil of New Jersey, 51
    State Department:
      "Board of Directors," 124, 125, 127, 138
      China, and aid to, 32, 33
      Clayton, William C., avoids conflict of interest in, 40-44
      Commercial attache, and, 6, 7
      economic staff of, 14, 15, 19, 20, 23, 24-27
      European Cooperation Administration, and the, 138, 139
      European Recovery Program, and the, 103, 105
      Foreign Economic Administration, and the, 32
      foreign economic policy, 21, 22, 27-31
      Germany, economic policy. toward, 80-84
      lend lease, and, 34, 35
      loyalty of employees, 180, 181
      Marshall Plan, and the, 36, 38, 44, 45
      social functions, 52-60
      tariff policy, and, 93, 94
      Thorp, Willard, appointed Assistant Secretary for Economic Affairs, 1, 15-18, 19
      trade barriers, policy toward, 101
      Treasury Department, working relationship with, 47, 48
      UNRRA, and, 36-38
      West Germany, and occupation status of, 80-84
    Stephens, Hubert D., 6
    Stettinius, Edward R., 15, 168, 169
    Stinebower, Leroy, 14
    Suitland, Maryland, 27
    Sweden, 108, 149
    Swiss watches, 93
    Switzerland, 108

    Tarchiani, Alberto, 59, 60
    Tariffs, 86-88, 90, 91, 93, 94, 98-100
    Temporary National Economic Commission, 9
    Thorp, Clarice (Mrs. Willard), 26, 54, 57, 60, 70-72, 130, 154, 181
    Tito, Josip B., 49
    Torquay negotiations, 87
    Trade barriers, 99-101
    Treasury Department, 7, 8, 46-48, 52, 53, 58
    Trieste, Italy, 61, 75
    Truman Doctrine, 36
    Truman, Harry S.:

      Dulles, John F., given State Department appointment by, 165, 166
      Economic Report of the CEA, and the, 30
      geography, knowledge of, 65-68
      Point IV, and, 151, 154, 156, 157
    Tugwell, Rexford G., 5
    Turkey, 96

    UNECE, 115-117
    United Kingdom, 84
    United Nations, 152, 160, 163, 169
    United Nations Rehabilitation and Relief Administration (UNRRA), 36-38, 104, 105, 109, 117
    U.S. Steel Corporation, 169
    University of Pennsylvania, 3
    University of Tokyo, 153, 154

    Vandenberg, Arthur H., 61, 62, 63, 78, 79, 80
    Vernon, Raymond, 86
    Viner, Jacob, 100, 101
    Vinson, Fred M., 46
    Vishinsky, Andrei Y., 69, 70, 73

    Wallace, Henry A., 94
    Waltham Watch Company, 93
    War Department, 83
    War Production Board, 20, 21, 28, 34
    Waugh, Samuel C., 26
    Webb, James E., 178, 179
    West Germany:

      economic policy toward, 80-84
      occupation status of, 80-84
    White House, 164
    Whiteside, Arthur, 8
    Wilcox, Clair, 86
    Willis, George, 53
    Wood, C. Tyler, 37, 105, 111, 125
    World Bank, 144

    Yangtze River, 33
    Yugoslavia, 49, 50, 119, 140, 142-146

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