David C. Bell Oral History Interview

Oral History Interview with
David C. Bell

Member of the staff of the U.S. Bureau of the Budget, 1942, 1945-47, 1948-49; Special Assistant in the White House, 1947-48, 1949-51; Administrative Assistant to President Truman, 1951-53; Director, Bureau of the Budget, 1962-62; and Administrator, Agency for International Development, 1962-66.

New York City, New York
August 20, 1968 and September 12, 1968 and October 16, 1968
by Jerry N. Hess

David Bell

[Notices and Restrictions | List of Subjects Discussed]

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

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

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 It may not be published in full except by permission of the Harry S. Truman Library.

Opened August, 1972
Harry S. Truman Library
Independence, Missouri

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Oral History Interview with
David C. Bell

New York City, New York
August 20, 1968
by Jerry N. Hess


HESS: Mr. Bell, for the record, would you relate a little of your personal background, where were you born, where were you educated, and what positions did you hold prior to your service in the Truman administration?

BELL: I'd be glad to do that. I was born in North Dakota. My folks moved to California when I was about five and I went through primary and secondary school in Palo Alto where my father was on the faculty at Stanford, and I went to college at Pomona College in southern California. I graduated in 1939. I went to Harvard for graduate work in economics, completed the M. A. in June of 1941 and had started to work on a Ph.D. when the war started, and my draft deferment was cancelled, as it should have been. For a few months in early 1942 1 worked as a junior staff


man in the Bureau of the Budget. But in the middle of 1942 I enlisted in the Marine Corps Reserve, as an officer candidate. I was called to active duty and sent to OCS at Quantico in late '42, was commissioned in early '43 and was assigned as an instructor there until '45 when I was assigned to California briefly and then for several months to the G-2 Section at Marine Corps Pacific Headquarters in Hawaii.

After the war ended, I was returned from Hawaii to the States and put on inactive duty in about November or December of 1945. I had acquired a wife and baby during the war and returned to the Budget Bureau in late '45, rather than returning to Harvard to finish my economics Ph.D. In the Budget Bureau I had been assigned in 1942 to work in the War Organization Section, as it was called, which was headed by Bernard Gladieux. When I returned at the end of the war, I was assigned to the division of the Bureau that handled labor and welfare matters, and worked with Dave Stowe and Bob Clark on some of the agencies in the Labor Department and in what was then called the Federal Security Agency and later became the Department of Health, Education and Welfare. I worked with that group through 1946.


In late '46, I think it was, Jim Webb, then Budget Director, sent to Clark Clifford in the White House some ideas on labor legislation which we had been thinking about -- it was a very important issue in those days -- as material for the January 1947 state of the Union message. It happened that Clifford was more impressed by the ideas about labor legislation that came out of our group in the Budget Bureau than he had been by any of the material that he had received from the Labor Department, or the National Labor Relations Board, or any other Government source. So he asked Stowe and me and Ross Shearer to work with him on that section of President Truman's state of the Union message in January 1947.

During early 1947 the Taft-Hartley Act was under consideration, and Clifford used us as his personal staff to keep track of the progress of the legislation, and to analyze the various provisions that were under consideration during the legislative process. And then we assisted him in drafting the Taft-Hartley veto message after the bill had been enacted. All this, incidentally, was and is not extraordinary but a frequent type of service that Budget Bureau staff members become


involved in, because the Budget Bureau is part of the Executive Office of the President and serves as an augmentation staff for the White House. In this way I became known to Clifford and to Charlie Murphy, and in late '47 Murphy asked me to come over full-time on the White House staff working for him.

HESS: As a man who was associated with the Budget Bureau for a number of years, including a period of time as head of that Bureau, I'd like to ask you a few questions about its operation. Just how has the role of the Bureau of the Budget changed since its establishment in 1921?

BELL: Well, as I understand it -- I'm no expert on the detailed history of the Budget Bureau -- in the early days it was thought of primarily as an organization concerned with the efficiency of Government operation. They used to tell a colorful story attributed to Charles Dawes, who was one of the early Budget directors, to illustrate his conception of the Budget Bureau's work. He said, it is alleged, that the Budget Bureau was not concerned with the purpose of governmental activities, it was concerned with whether they were


efficiently executed, and if one of the purposes, for example, of a Government agency was to dump garbage on the steps of the United States Capitol, it would be the Budget Bureau's job to find out whether this garbage was dumped at the least possible cost.

HESS: What was your view of that?

BELL: I think that's silly. I think that Government efficiency is an important part of the interest of the Budget Bureau, but I think that how much money the Government spends is influenced far more by decisions as to what the Government will undertake, and the most important questions that the Budget Bureau is involved in are questions of what the programs of the Government should be, and whether they should be enlarged or diminished. The Dawes view was, by and large, the view through the twenties and thirties.

HESS: The view that was accepted at that time?

BELL: As I understand it. I don't want to minimize the importance of the Budget Bureau in those days. It was a great step forward in the efficiency of the United States Government to have in one place the anticipated


expenditures of the Government all accurately assembled, related to the same time period, and made available where anybody could look at them, compare parts of them, add up the totals, and so on. That had not been possible before the Budget and Accounting Act of 1921, so that it was an important step forward to have a Budget Bureau at all, and to have the President required to submit a single budget to the Congress each year.

But in the late 1930s, with the Brownlow Committee -- Louis Brownlow, Charles Merriman, and Luther Gulick -- that Roosevelt appointed, a new and broader concept of the Budget Bureau came into being, which was that the Bureau ought to be a major staff arm for the President advising him on overall budget questions, policy questions related to the budget, fiscal policy, and matters of the organization of Government, and that it ought to be taken out of the Treasury where it had been up until that time, and put into a new Executive Office of the President, which was invented by the Brownlow Committee. All of this was done in about 1939.

HESS: This was the Reorganization Plan Number One of 1939.


BELL: That's right. And the first director of the Budget Bureau under the new arrangement was Harold Smith, who had been budget director for the State of Michigan. He remained as budget director through World War II, and it was under him that I served first in the Budget Bureau in 1942. He resigned in 1945 -- I think this is right -- and went to work for the World Bank. He died shortly thereafter. He was a very fine man, an excellent budget director, and he established what is essentially the modern view, the modem role, the modern organization, and the modern methods and procedures for the United States Budget Bureau. He was succeeded, I think, immediately by Jim Webb, and later by Frank Pace, and Fred Lawton, all during Mr. Truman's term.

It isn't part of the answer to your immediate question, but it's worthy of note, I think, that in Mr. Eisenhower's two terms, the Bureau declined in importance somewhat because it was placed in the charge of accountants. Accountants are estimable people, but the particular accountants who headed the Budget Bureau during the Eisenhower years did not have the same broad conception of the Budget Bureau and its role as Smith and Webb and the others had had. So


when I became Budget director in 1961 under Mr. Kennedy, we quickly restored the broader view which had been held earlier, which was not a novel view and was a very simple thing to do, as most of the senior staff members felt the same way I did because they had all been there in the Truman days, as I had.

HESS: The four men that you named: Smith, Webb, Pace and Lawton, did they carry out their duties in any noticeably different manner?

BELL: Well, you understand that I was a relatively junior member, first of the Budget Bureau staff and then of the White House staff in those days, and also that this was now twenty years ago. My impression is that Harold Smith had more impact on Government decisions than any of the other three, which is, I'm sure, largely due to the fact that he was in the job a long time, and he established a very intimate and effective relationship with FDR during World War II. There were a lot of issues having to do with the organization and reorganization of Government for war purposes, which were natural issues for the Budget Bureau to take


the lead on, and many issues of war and postwar fiscal policy, on which the Budget Bureau had a good staff, and had a lot to say, so that Smith, and the Budget Bureau in Smith's day, were very significant.

Webb was also a very active Budget Director. He was in office in a crucial time, up through Mr. Truman's first term, until January 1949, I think, when he became Under Secretary of State. Webb was a vigorous figure, used the Bureau imaginatively, and in my own observation was second only to Smith in the impact that he made.

Mr. Pace and Mr. Lawton were, I think, less influential. In part, I suspect, that's because the issues that came along in their terms were less significant issues than Smith and Webb had had to deal with. In part also, I think, they are different people, and Pace was perhaps not as comfortable in the job of Budget Director as the others. He was a natural executive and, I think, was much more at home after he became Secretary of the Army with a major operational responsibility.

Fred Lawton is a superb person. I admired him greatly as a Budget Bureau staff member. He was the


first career man to become Budget Director. He had worked in the Bureau for a long time, and in the Government for a long time. It was a significant reward for a longtime Government official to become Director of the Budget Bureau. I think Fred did a good job. He was not at home -- it was not his natural milieu -- working on major issues of Government policy. And he would, I'm sure, be the first to say that he had less impact on, say, the economic policies of the Government than his predecessors had had. But he ran a strong Budget Bureau and was a strong, effective man.

HESS: Are there any changes that should be made in the Bureau today, either in its organization or basic functions?

BELL: Well, I'm out of date somewhat, and I cannot really comment in any detail on how the Budget Bureau is organized or how it operates today. I left it in December 1962. I've known the subsequent Budget Directors well, but I'm not in any sense familiar with the organization of the Bureau today. I thought when I left -- that is now nearly six years ago -- I thought the


Bureau had not successfully adapted -- this is obviously, as far as it's a criticism, a criticism of me more than anybody else -- had not successfully adapted to the necessity for using modern management techniques. The Bureau had done useful work on the adoption of computers in the Federal Government, standards for doing that efficiently, minimizing costs, and so on. We had successfully restored in the Kennedy years -- this is a very important matter in my opinion -- we had successfully restored the concept of direct responsibility by the operating head of each agency, and the elimination of Government by committee, which was so pernicious during the Eisenhower years, with the National Security Council machinery, and all sorts of other committees being the normal way to proceed, wasting enormous amounts of time and producing the least common denominator of results. The fact that this was done in the early Kennedy years was in significant measure a return to the system which had been followed most sharply and markedly under Mr. Truman. One of Mr. Truman's most characteristic attitudes was that he wanted to place responsibility


clearly on an individual, to give him leeway and opportunity to function, to carry out that responsibility, and he wanted a sense of the direct line relationship between himself and the principal officers of Government, so that they could get on with their work and he could know exactly who was responsible for any given issue.

We restored that concept easily and effectively in the early days of the Kennedy administration. And the Budget Bureau's role in doing that was significant and useful. But there is a lot more than that to the effective operation of the Government of the United States today. It's very large, very complex, and the problems it deals with are increasingly hard to handle by simple concepts of Government organization. Relationships between the executive branch and the Congress are increasingly tangled; I don't think the Budget Bureau did anything particularly useful about that when I was there. Relationships between the Federal Government and the states and localities are also increasingly tangled; again, I don't think that when I was there, the Bureau was contributing very much toward the solutions to those problems. The relationships between


the United States and international agencies and other countries are very complex and difficult to handle efficiently and effectively. And the Bureau did a lot of work on those areas when I was there and has done more since, but they remain stubborn and intractable.

So that all of this which is really organization, communication, structure, lines of responsibility, the ways to establish a well-functioning modern Government, this is the area in which, it has seemed to me, the Budget Bureau could do more than it has done. The work that the Bureau did then and has done since on programming and planning and budgeting has been very valuable and very good, but its work in this other area has, I think, been less impressive.

HESS: What we have just covered is probably part of the answer to my next question, but what did Mr. Truman seem to believe to be the proper role of the Bureau of the Budget during his administration?

BELL: He thought of it as a strong staff agency. It was not, in any sense, positioned between him and any of his subordinates -- any of his Cabinet officers or his


agency heads -- but he regarded it as a very valuable source of advice, information, questions, crosschecks on what the departments were doing, or said they were doing. He thought of the Bureau as providing the extraordinarily valuable services of keeping track of the budget itself, the financial side, and providing backup for the legislative process, the preparation of legislation to go to the Congress, watching the legislation while it was there, and clearing the testimony of executive branch witnesses to be sure it was consistent with what his program was and what he wanted them to say. All in all, my impression was that Mr. Truman relied heavily on the Budget Bureau for staff services of great significance to him.

HESS: Checking through the enrolled bill file at the Truman Library, I have found that Mr. Truman often placed great weight on the advice of the legislative reference service of the Bureau of the Budget, even many times as opposed to the majority of the advice from the other agencies.

BELL: That's right. And you'll find, I think, that that's probably true of every President. As I remember the process, the Budget Bureau collected the views of all


the agencies in town concerned with a given enrolled bill, prepared a summary memorandum, and prepared, if asked, its own recommendations. It did this in very close collaboration with Charlie Murphy in the period when I worked with Murphy in the White House. He was Administrative Assistant to the President in charge of the legislative coordination process. Later he was himself Special Counsel.

I think in those instances in which the views of different departments and agencies were overridden, the President would want the views of Murphy, or sometimes Murphy and Clifford when Clifford was there, and it would be their views rather than the views of the Budget Bureau which would be given the most weight, but they relied on Budget Bureau staff work before they made up their own minds, and often the Bureau memorandum wasn't written until there had been preliminary discussions, so that the view the Budget Bureau would be stating -- the Budget Director's views -- and Murphy's or Murphy's and Clifford's views, would be the same and therefore the recommendation of the Budget Director in a sense was in line with and part of the recommendations of the President's staff.


I'm sure there would have been cases in which the Budget Director's views were different from those of Murphy, or Murphy and Clifford, and it would be interesting to check through the files for such cases. In such a case, I would have assumed that normally the President would have agreed with Murphy, or Murphy and Clifford, rather than the Budget Director, but I don't recall any such instances offhand.

HESS: Fine. The following quote is from your sketch in the 1961 Current Biography

Bell also explained to the committee (the Congressional Joint Economic Committee)
the Kennedy administration's concept of the budget, which, in effect, is regarded as an
instrument of national policy rather than a bookkeeping device to discourage expenditure.

Was that any different than Mr. Truman's view?

BELL: I'm sure he would have agreed that the budget is an expression of national policy. He would have felt that he made policy in many instances by making budget decisions, that policy questions came to him very often in the form of budget questions. But the significance of that 1961 quote probably relates to the question of whether the size of the budget and the relationship


between budget receipts and expenditures should be deliberately directed to influence the total economy. These are questions that have grown out of so-called Keynesian economics. On those questions, the state of understanding and acceptance of modern economics was much greater in 1961 than it was in Mr. Truman's day.

I don't recall at this late date -- I can't give you direct evidence of Mr. Truman's views on the question of whether the budget ought to be deliberately unbalanced in order to stimulate the economy or -- well, now, wait a second. Maybe I can recall something that bears on this. It seems to me that in the early days of the Korean war, one of the questions that arose was what the tax policy should be, whether taxes should be raised in order to limit the extent of the Federal Government's deficit in order in turn to limit the degree of inflation which would follow. And President Truman did recommend quick and sizable tax increases in order to limit the degree of inflation that would follow from larger Government expenditures during the Korean war, so that this was, in fact, a direct application of modern economics. So that's a piece of


evidence, I guess, that he would have seen the matter in that way.

I don't think the question arose during his tour of office -- I don't recall it offhand, at least -- what should be done in case of a recession. There wasn't really any recession in the years immediately after the war, except for the temporary and brief hesitation in 1945 , which was a result of the conversion of the economy from war to peace.

HESS: What do you recall about the press conferences that the President used to hold exclusively about the budget?

BELL: Well, I can recall some of them very well. At least one of them I remember was held over in the theater-like area alongside the corridor between the East Wing and the White House. I can't remember whether he held them there each year. It is significant, I think, that President Truman held those press conferences personally. I can remember him sitting there with John Snyder on one side, and in the one that I remember most vividly, Jim Webb was on the other. So, it would have been in


Webb's term.

I remember Mr. Truman took great pride, and justified pride, in his knowledge of the budget. He spent many hours on it during its preparation. The practice was for the Budget Director, after he had held the appropriate internal hearings in the Budget Bureau, to prepare a memorandum on each department of Government or major agency, take it to the President, and discuss it with him. Then, of course, there was an opportunity for the head of that agency to appeal to the President if he wished to do so, so that the President frequently had to go into the matter in some detail in order to decide between the views of his Cabinet officer and the views of the Budget Director. So, Mr. Truman was thoroughly acquainted with the Budget by the time it was put together, and he took great delight in having these annual press conferences on the budget and answering the reporters' questions himself, or asking Snyder or Webb to augment what he had said, or to answer a question if there was something in greater detail than he wanted to answer himself.

HESS: Would it seem to you that President Truman had a


greater grasp of the budget itself than most Presidents have had?

BELL: I don't think he had a greater grasp. I don't know about Mr. Roosevelt's grasp because I never had a chance to observe him closely. I have had personal experience with President Kennedy and President Johnson and both of them, like Mr. Truman, considered each budget issue as a very significant issue. They went over the agencies one by one, carefully, they listened to appeals from Cabinet officers and agency heads, and they knew the budget in considerable detail, Mr. Johnson, perhaps, in a little more detail than either Mr. Kennedy or Mr. Truman, because Mr. Johnson is a man who has an enormous capacity for detail, but with no more attention to the big questions, the important major issues, than Mr. Truman or Mr. Kennedy displayed.

HESS: What do you think the President would do if he received conflicting advice from the Bureau of the Budget and the Council of Economic Advisers? Whose advice would he take?

BELL: Well, he wouldn't normally get conflicting advice


from those two sources. This is an important point, incidentally, which I should have mentioned earlier in response to your question about the role of the various budget directors in the war and immediate postwar years. One of the important changes in Government machinery which was made right after World War II, was the passage of the Employment Act of 1946, the establishment of the Council of Economic Advisers, and the assignment to that council of the responsibility for advising the President on overall economic policies intended to achieve full employment, and whatever the phrase is, purchasing power, or something like that.

Until that was done, the Budget Bureau in a sense combined the responsibilities of advising the President on the budget and advising him on economic policy. Under Harold Smith, those duties were taken very seriously, and the fiscal division of the Budget Bureau included such people as Gerhard Colm, J. Weldon Jones, Gardiner Means, and others, who were significant economists in their own right, imaginative, strong minded men who participated deeply in the decisions on economic and fiscal policy during World War II.


When the Council of Economic Advisers was established, part of the Budget Bureau's earlier responsibilities in effect were transferred to the new Council of Economic Advisers.

This was a matter, incidentally, of considerable concern among the people in the Budget Bureau who had worked on these matters. I can remember during the time when the Employment Act of '46 was under consideration, there were some internal memoranda within the Budget Bureau which put forward the view that while the act itself was a useful thing, the duties that it established should be placed on the Budget Bureau, and not on a new and separate organization; that it was a mistake. in concept, in government organization, to establish a different agency. The functions should be left with the Budget Bureau.

Well, that was not the course that was taken. The new Council of Economic Advisers was established. After it had been established it was logical and appropriate that the views of that council would be the views that would be sought and listened to by the President on major issues of economic and fiscal policy. It would still be possible, indeed it would still be


necessary, for the Budget Director and his staff to come to views on, say, the size of the budget, the size of the budget expenditures, the relationship between expenditures and receipts, whether or not there should be a deficit or a surplus, and it would also be necessary for the Council of Economic Advisers to come to views on the same set of questions. There would be other issues on which the Budget Bureau and the Council would both be appropriately involved. And in those cases the President might well get advice from both sides. I would say that under those circumstances there would be no automatic answer to the question whose views a President would pay more attention to. It would depend on what he thought of the individuals involved, it would depend on what he thought of the weight of the arguments, it would depend on the advice he got from the White House staff members.

When I was in the White House under Mr. Truman, one of my jobs was to work with the Council of Economic Advisers in the preparation of their annual economic report, which meant to participate in the raising and settling of the issues which were considered and commented on in that annual economic report. And as I


said a minute ago, many of those issues would be of concern also to the Budget Director, so that as a White House staff member, I was often involved in this kind of argument. The Budget Director might have a somewhat different view than the Council of Economic Advisers, and sometimes I would be involved in taking an argument like that to the President, or more often, in being present when the President considered it, and I don't think he would automatically have taken the views of one over the other. He would want to listen to the views and see where he came out on the specific question that was at issue.

HESS: On the subject of the state of the Union message for 1947, which you mentioned a while ago, would you describe the relations between the White House staff and the staff of the Bureau of the Budget in drafting state of the Union messages?

BELL: In those days, you mean? Under Mr. Truman?

HESS: In those days. This particular message for one. Other than their loaning you to the White House.

BELL: I can't recall an awful lot about it. If I'm not


mistaken the pattern of events was something like this: Jim Webb was Budget Director and he had become acquainted with Clark Clifford. Clifford was short of staff and asked Webb if he could have somebody to help him during the preparatory stages leading up to the state of the Union message, because Clifford wanted to ask for recommendations from all of the various Government agencies, recommendations as to what should be included in the state of the Union message and what positions the President ought to take. That involved a lot of work, getting in touch with the various Government agencies, collecting and collating their reports, pulling out the important matters and the issues to be resolved and all the rest of it. Jim Webb -- I believe my recollection is correct -- made available to Clifford a man by the name of Charles Stauffacher, who was then in the Budget Bureau, a very able man, incidentally, who later during the Korean war was staff assistant to Charles Wilson in the office of Defense Mobilization, and worked there for General Lucius Clay, who offered him a job thereafter with Continental Can about 1952 or 1953 and he's still there. He's been an executive vice president of


Continental Can, and financial vice president in recent years.

HESS: Was he assigned a specific portion of the message to write?

HESS: My recollection is that he was not assigned any portion of the message to write. He was to assist Clifford in gathering material for the message. I was a personal friend of Stauffacher's. He was from Pomona originally as I was. We had been graduate students at the same time at Harvard, and Stauffacher knew that Dave Stowe and Ross Shearer and I and others on the Budget Bureau staff had been worrying a good deal about the question of labor policy. He suggested, I think to Webb and Webb to Clifford, that Clifford might be interested in our views on that subject, so that our suggestions about labor policy for the January 1947 state of the Union message, I think were transmitted to Clifford through Stauffacher. Thereafter, Clifford called us in and talked to us and we worked with him directly. So the part of the state of the Union message which dealt with labor policy -- I see it appears here under


the heading, "Labor and Management" and it goes on for about two pages plus [ Reading from the state of the Union message for 1947, Public Papers of the Presidents, 1947 volume ] -- was originally drafted by us. That is, we prepared a draft of it for Clifford, and I'm sure he would have revised it very substantially, quite possibly rewritten it thoroughly, I can't recall at this late date. I don't know exactly where drafts of the other parts of the state of the Union message came from.

HESS: Did James Sundquist help on that message?

BELL: I don't think he helped on that one, at least I don't remember him. He was certainly around the Budget Bureau and the executive office in those days. I remember him much more vividly at the time of the Korean war. I'm sure he was on the Budget Bureau staff in the early years after the war, but I don't remember him in connection with this particular message.

HESS: What part did George Elsey play in the writing of the 1947 message?

BELL: I can't recall, but it was probably extensive because at that time Elsey was Clifford's principal personal assistant, and he probably -- although you can


ask him, obviously -- he probably prepared the initial rough draft of large parts of the message, perhaps put a complete draft together from the various sources. But that's speculation.

HESS: I've heard the 1947 state of the Union message -- this was, of course, the one that was delivered at the opening session of the 80th Congress -- described as the "opening gun" for the 1948 presidential campaign. What do you say about that?

BELL: Well, I don't know. I don't think I have any useful comment on that. I do know something about later events leading up to the ' 4 8 campaign and during it, but as far as we were concerned, what we saw of the message was what I indicated. It was plain that in the President's mind the single most important issue was labor policy, and we were very pleased to have been involved in preparing that part of his policy and message, and very proud, as a matter of fact, that Clifford and the President had liked our suggestions well enough to incorporate them very largely in what was finally included in the message. But how far they saw that message as the opening gun in the 1948


campaign, I just have no way of knowing.

HESS: Fine. I've heard that, and also the 1948 state of the Union message, referred to an "issue-making and record-building," but I didn't know exactly how much part that played in the thinking of the men who were working on them.

BELL: Well, that's a slightly broader question -- at least I would interpret it as slightly broader. There's no doubt that President Truman perceived the annual messages as a means to put before the Congress and the country the President's views of what was called for in the interest of the nation. He wanted to make his positions strong and clear. He believed that is what the Constitution requires of the