Ewan Clague Oral History Interview

Notice
This is a transcript of a memoir dictated for the Harry S. Truman Library. A draft of this transcript was edited by Mr. Clague, but he made only minor emendations; 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 It may not be published in full except by permission of the Harry S. Truman Library.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 November 1966
Harry S. Truman Library
Independence, Missouri

[1]

I was standing on the platform of the Back Bay Station of the New Haven Railroad in Boston when I heard -- or saw -- about the death of President Roosevelt. I glimpsed a headline in a newspaper being read by a fellow traveler, "PRESIDENT ROOSEVELT IS DEAD." I simply couldn't believe it, but I went upstairs to try to find a paper and verified the awful fact.

To say that I was shocked and depressed is the understatement of the decade. Ordinarily I have a sanguine temperament and take things as they come. In this particular case I was devastated. I could recall in recent years only one previous occasion in which I had been as deeply, fundamentally disturbed. That was in April of 1940, five years before, and the occasion was the Nazi

[2]

invasion of Norway. On that previous occasion I was so upset that I fumbled my work at the office for several days until I could get a grip on myself. On this occasion, I found it practically impossible to sleep on the way down to Washington, and my feeling the next day was one of complete discouragement. It seemed as if the bottom had dropped out of the world. However, my memory is that I recovered rather quickly from this depression, partly because of the excellent start made by President Truman in taking over the duties of the office.

I was not well acquainted with President Truman, but I had had some experience with him as a senator in connection with the work of his committee on the conduct of the war. Also, I had heard him speak at an interstate conference of Employment Security Administrators in Missouri in one of the early years of the war. Lastly, I knew he had been for a time an employment office administrator in the U.S. Employment Service, and for

[3]

that reason I felt that he would have an understanding of some of the problems we were dealing with in the Employment Security Program.

The first incident that stands out in my memory was the case of the post-war projections of unemployment. During the war, I was director of the Bureau of Employment Security. In the pre-war period, this bureau comprised the unemployment insurance system and the U.S. Employment Service, which was engaged in placing unemployed workers. Immediately prior to December 7, President Roosevelt made a decision to nationalize the employment service in order to obtain a better coordination of nationwide employment service activities. It was felt that the State services were not sufficiently coordinated and integrated for effective administration of placement. I myself remained with the Social Security Board as Director of unemployment insurance. The nationalized employment service was transferred from the Social Security Board to the new War Manpower Commission.

[4]

At the beginning of the war in 1941, the Social Security Board had been engaged in making economic projections: first, the pattern of economic development during the war, and the second, the estimated post war readjustment.

There was a man on my staff in the Bureau of Employment Security by the name of Woytinsky, a refugee from Soviet Russia, who had worked his way through Germany, Switzerland, France, and finally to the United States. He had worked with the Social Security Board in the early years of the program, serving at times on the Board staff as a consultant, and at other times, under the auspices of the Twentieth Century Fund and the Rockefeller Foundation. Woytinsky was a world-famous economist and statistician who helped develop some of the statistical programs in the early period of the Board's operations. He was especially interested and skilled in analyzing future economic development. So, when the United States got into the war, he was commissioned to develop a wartime and

[5]

post-war projection, with particular reference to employment and unemployment. This he did in a famous document which projected the defeat of Germany at the end of 1944, the defeat of Japan by the end of 1946, and a two-year period of readjustment in 1947 and '48. A significant fact concerning this long-range projection was that it sketched out a probable gross national product during the war years and then forecast a speedy and successful post-war readjustment lasting only about a year. It pointed to new high levels of production and employment in 1948 and beyond. The interesting point about this projection is that the actual readjustment which took place in 1945-46 was almost exactly as it had been sketched out by Woytinsky five years before. He was wrong on the timing of the war ending, but he was completely right with respect to the nature of the post-war readjustment. He persisted in arguing that the volume of unemployment in the post-war readjustment would not exceed three and a half million workers.

[6]

When it became apparent in the early spring of 1945 that the war with Germany was about to end, we had Woytinsky draw up a proposal for the readjustment of the economy during the remaining period of the war with Japan. It had already become apparent that the peak of wartime employment had been reached in November, 1943, and that the flow of war munitions and supplies was being produced with a declining number of workers. The question was what to do when Germany was defeated, what readjustments should be made. Woytinsky drew up a paper, which we reviewed in the Social Security Board and then sent over to the Office of War Mobilization for their consideration.

The key point in Woytinsky's projection was that there would no longer be need for a 48-hour week. There would be almost certainly a decline in war employment. He therefore proposed that the hours per week be reduced to 45, with a comparable rise in hourly pay that would retain the same level of weekly income. His argument was that the workers

[7]

in this case would be glad to accept the reduced hours and that the effect would be to spread the unemployment to some extent. He further anticipated that in the final readjustment after the defeat of Japan, there could be a similar reduction attempted in such a way that gradually the country would work back to a 40-hour week without experiencing any sharp unemployment increases, or any great reduction in worker income.

Nothing came of this effort on our part. The memorandum was lost in the Office of War Mobilization without any comment ever coming back to us in the Social Security Board. Years later, when Professor William Haber of Michigan was doing some historical summarizing of the activities of the mobilization agencies, he telephoned me one day to say that he had found in the files a copy of my letter transmitting Woytinsky's projection. On the paper was a notation, "This is not worth serious consideration."

Woytinsky's views ran so contrary to the

[8]

prevailing fears in the mobilization agencies concerning a great post-war depression that his thinking received no serious consideration.

Then when the war with Japan came to an abrupt end in August, the .fears of post-war depression dominated the picture completely. The hours of work were reduced, wage controls were removed, the country entered a post-war readjustment, not with a high volume of unemployment, but with a major industrial relations problem. The cutback in the 48-hour week, with the premium pay at time and a half, had the effect of sharply reducing the take-home pay of the workers. Yet at this very time, the price level was creeping upward, not so fast then, because price controls were still in effect, but the shrinkage of weekly income was not in any way countered by a reduction in the cost of living. The workers clamored for increased pay to make up for the loss in weekly earnings and we entered the worst period of strikes that we had had in many years. The result was a series of

[9]

wage increases designed to make up the loss; and the consequence of that was a rise in prices as soon as controls were taken off in the summer of 1946.

Then, by a series of developments, I found myself in the middle of that picture. When the war had finally ended, the Employment Service and the War Manpower Commission were still in existence. The first step taken in the post-war readjustment was to transfer the Employment Service to the Department of Labor. In the meantime, the Bureau of Employment Security, administering the Federal-State Unemployment Insurance System, was located in the Social Security Board. This led to a series of legislative battles concerning the eventual location of these two programs.

In the Social Security Board, we were well prepared for the post-war readjustment. The unemployment benefit funds in the States had been built up to levels sufficient to take care of more unemployment than actually developed. The addition

[10]

of unemployment benefits for returned servicemen in a separate program took care of any pressures that might have arisen in that direction. As a result, during the readjustment of 1945-46, the employment security program performed on schedule.

As the director of the program, and as a ten-year veteran in the Social Security Board, I expected to continue with this work in the indefinite future. However, in the summer of 1946, it must have been about early June, I received a telephone call one Saturday (we worked on Saturdays in those days) from Ed [Edwin E.] Witte, who had been one of my professors at the University of Wisconsin. Professor Witte asked if he could run over to take lunch with me on Saturday noon in the Social Security Building. I agreed to see him, and we met in the lunchroom. I shall never forget the way Professor Witte tackled the subject almost immediately. "I have a proposition to make to you," he said, "and I want you to promise not to say 'no'

[11]

until I have had a chance to explain it."

I don't remember what I replied, but he went on, "I want you to become Commissioner of Labor Statistics. Now, don't say 'no' until I have a chance to tell you about it."

I mentioned something about being completely satisfied with the Board where I was, and that it was very unlikely I would consider anything else, but I indicated that I was willing to listen. He then went on to explain that he himself had been offered the job as commissioner, but that he felt that he had only about ten years left in which to develop his thoughts concerning the Social Security program. He therefore proposed to return to the University of Wisconsin and had no desire to come down to serve further in Washi