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Hubert F. Havlik Oral History Interview

Oral History Interview with
Hubert F. Havlik

War Production Board (Office of Civilian Supply, Program Review), 1942-44; Adviser on Lend-Lease, Foreign Economic Administration, 1944-45; Chief, Division of Lend-Lease and Surplus War Property Affairs, U.S. Department of State, 1945-46; Chief, Division of Investment and Economic Development, Department of State, 1946-48; Chief, Payments Section and Trade and Payments Division, Office of Special Representative, Economic Cooperation Administration (later Mutual Security Administration and Foreign Operations Administration), Paris, 1948-54; and U.S. Representative on Managing Board of European Payments Union, Paris, 1950-54. Then served on the staff of the International Bank for Reconstruction and Development, 1954-69.

Arlington, Virginia
June 20, 1973
by Richard D. McKinzie

[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 It may not be published in full except by permission of the Harry S. Truman Library.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 April, 1980
Harry S. Truman Library
Independence, Missouri

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

 



Oral History Interview with
Hubert F. Havlik

 

Arlington, Virginia
June 20, 1973
by Richard D. McKinzie

 

[1]

MCKINZIE: Mr. Havlik, we might begin, if you could tell me something about your background and how you happened to come into Government service, what motivated you to take a career with Uncle Sam?

HAVLIK: Well, I had been at Columbia University throughout the thirties, teaching economics and government, contemporary economic problems. My main field of special interest was government regulation of industry, particularly the public utilities, and I had taken my doctorate

 

[2]

under James C. Bonbright in the field of electric utilities, writing a book on electric power rates. That was my chosen field.

MCKINZIE: You were a colleague of Rexford Tugwell?

HAVLIK: Yes. At Columbia College we had a very exciting program of courses in Contemporary Civilization. We had Rex Tugwell, Joe McGoldrick, Harry Carman, John Coss, Horace Taylor, Jacques Barzun, Dwight Miner, Walter Langsam, the brilliant Charles W. Cole and others. Many of them became university presidents and Government servants. I also did some extra work outside in the late thirties. I worked with Arthur R. Burns on the 20th Century Fund's survey of electric power and its regulation by Government.

But toward the end of that period (the 1930's) there was a certain degree of built-in frustration. The depression was on and there was little opportunity to move. I stayed

 

[3]

at Columbia University for ten years, practically without any change in salary; my top salary was $3,000 a year. The university faculty didn't move. Only when some professor died or retired was there a promotion, and consequently we were forced to do consulting work or work extra hours (teaching at the American Institute of Banking, etc.). But worst of all was the fact that we were not getting anywhere. I was writing articles and participating in writing the textbook that we prepared on contemporary economic problems. I wrote the parts on the State as Economic Regulator. But all that was getting to be frustrating. Opportunities simply for interviews concerning jobs elsewhere were extremely rare. Once in a while someone would come, say, from Carleton College in Minnesota. They'd want some instructor to come and teach about twice the load I was doing at Columbia, coach the golf team, carry the collection tray at church, etc.

 

[4]

So, when the preparations for the war came along in the latter part of 1941, I began thinking that I might participate in Washington. I hadn't gone into the New Deal, partly because I didn't want to move my family from the suburbs of New York, where we were comfortable, to what I considered to be a temporary and highly confused situation.

MCKINZIE: Were you sympathetic to Roosevelt's view?

HAVLIK: Yes, I was sympathetic. I had several friends working in the administration. But even there the opportunities for people of my kind were not all that many. But late in 1941, Leon Henderson had been authorized to start organizing work on civilian supplies, requirements and price controls. He set up an office on civilian supplies and price controls and invited my colleague Arthur Robert Burns, who had done the book The Decline of Competition in

 

[5]

industries -- not connected with the present Arthur Burns of the Federal Reserve Board -- to help.

Then he asked James W. Angell, another colleague of mine at Columbia University. So, after Pearl Harbor things began to break very quickly. I was invited early in '42 to come and work in what was called the Office of Civilian Supply in the War Production Board, which was headed by Leon Henderson. His deputy was Joseph L. Weiner. Arthur Robert Burns was in charge of one principal branch and Angell another.

So, I went down in February of 1942 for what I considered to be a temporary assignment during the war. I took leave of absence from Columbia College and immediately plunged into an assignment to consider problems of electric utilities and fuel supply. Now, the electric utilities capacity and requirements, etc., were

 

[6]

being dealt with capably by Julius Krug and his people in another part of the War Production Board, but what concerned us most at that time was energy, particularly gasoline and fuels. Almost immediately we were thrown into the issues of whether to build the Big Inch pipeline, so as to get some protection against the loss of fuel and gasoline which was occurring off the Atlantic coast with the heavy torpedoing of tankers by the German submarines. It was an issue as to whether we should devote scarce steel to that project or if not, how to allocate supplies of petroleum. It was soon decided to build the pipeline.

And then we were plunged into the question of gasoline rationing. The President was reluctant to do it; he didn't want it. But eventually the supply situation -- heavy military demands and the shortages of internal supply -- forced the decision, and we made recommendations

 

[7]

as to how this might be done, what the volume should be, etc. Those were highly controversial things which were fought back and forth a great deal within the War Production Board, with the Department of Interior, which had in it an Office of Petroleum Supply, and with the Price Administration which was the rationing agency. There were a number of different agencies involved in this kind of thing, but eventually -- about June 1942 -- the decision to ration gasoline was made.

Then my chief, Mr. Weiner, asked me to help organize a study of energy supplies and requirements during the war period; the National Resources Planning Board carried out the work. I was the liaison.

When the study was made, it was not too definitive; it couldn't be. But it did focus upon a few questions of the adequacy of supplies of coal, petroleum, energy, etc. No fundamental

 

[8]

decisions were taken, but it was an added input in the consideration of future energy development problems.

MCKINZIE: There was some discussion, was there not, of development of synthetic fuels at that point?

HAVLIK: There was not very much that I knew of. We were under heavy time pressures', and people would have to look at synthetics from the longer point of view. There may have been some thought of synthetic fuels, but I wasn't involved in that.

When I got through with that, I turned to helping Arthur Robert Burns review the civilian supply programs as they were formulated. The issue was, what amounts should consumers be getting of various commodities and products. Well, the military was claiming so much steel and other metals, so much paper, so much textiles, and so much glass for war

 

[9]

production. How do you deal with the ensuing shortages? Should you cut out certain uses? Should you allocate, as the War Production Board could, supplies to various users, give them various kinds of priorities? The Office of Civilian Supply had the task of looking at the civilian situation and trying to protect the civilian economy and keep it functioning. The various branches of Office of Civilian Supply developed such programs in cooperation with the other part of the War Production Board. These were presented them for approval as a basis for either rationing, price controls, awards of priorities, or specific controls over allocations of materials. One of my jobs with the aid of a small staff was to review the programs and to make recommendation as to whether they should be approved, changed, or restructured.

Now, in the end, that work, which lasted from the summer or late fall of '42 through '43,

 

[10]

was increasingly disappointing. We were proving to have adequate supplies to carry on the war. Moreover, the armed services had the major say in what they wanted and pretty much got what they wanted, and the issue of civilian supplies proved to be relatively unimportant. It was really a question of price controls, which was not within our purview. The job in civilian supply became less challenging as time went on.

There had been going on during those years a struggle in the foreign economic field. A lend-lease program had been set up, under the Lend-Lease Act, headed by Edward Stettinius; he had an Office of Lend-Lease Supplies. There was a Board of Economic Warfare headed by Henry Wallace, whose job was pre-emptive purchases and all kinds of things in economic warfare. And there was the Reconstruction Finance Corporation, headed by Jesse Jones, with various responsibilities in the purchase

 

[11]

and financing of foreign supplies and materials. Eventually there was a great deal of shoving and pushing between these agencies, principally between Wallace and Jones. After some consideration, President Roosevelt moved in his characteristic fashion by melting the two things together, at least the Board of Economic Warfare Office and the Lend-Lease Office. He took some procurement activities away from the Reconstruction Finance Corporation, which still existed. He put all these under the direction of a completely new person (not new to the Government, but new to the field), Leo Crowley, who had done a good job in organizing and running the Federal Deposit Insurance Corporation, which was one of the landmarks of the New Deal.

Oscar Cox, a prime author of the Lend-Lease Act, was the general counsel of the new Foreign Economic Administration. Lauchlin Currie, intimate adviser to the President on

 

[12]

economic questions and formerly of the Federal Reserve Board staff, was the deputy administrator, deputy to Crowley. It was a curious triad. Crowley was conservative, Cox was an imaginative liberal lawyer, and Lauchlin Currie was a shrewd liberal economist. There was a kind of a power balance between them.

Well, Lauchlin Currie had as one of his principal assistants V. Frank Coe, later on Secretary of the International Monetary Fund (who ran into security troubles). Currie also invited his old friends Arthur Robert Burns and James Angell to come and join his staff. Burns came in to work on trade problems and Angell came in to work on foreign finance and lend-lease policy problems. So, at lunch one day in February 1944, Jim invited me to join him in FEA.

I said, "What do you want me to work on?"

He said, "Well, I want you to work on lend-

 

[13]

lease policies. There are all kinds of questions coming up on lend-lease. Some have been dealt with on a ad hoc basis; others not yet fully faced. Nobody has stood back to look at them; you can do a great deal of good here."'

I said, "Jim, I don't know anything about lend-lease. I have never been involved in foreign finance. I don't know an exchange rate from a bill of goods, and I'm completely without special qualifications for it."

He said, "Well, you would be starting on a par with everyone else. None of us know about lend-lease. I know that you've got imagination and a good head on you, and I think you will find it interesting."

So, I said, "I'm bored at Civilian Supply; I'll come and join you." And I did, and that was my introduction to foreign finance. It constituted the rest of my working life, until about two years ago.

 

[14]

It was a tremendously exciting period. The organization was new, it was uncoordinated, and people were trying to deal with problems against the heavy pressure of time and events. I must say that there followed a period from that time on till I left the Federal Government in '54 that was just one series of highly interesting issues, sets of problems, and personal contacts, all of which were just absolutely fascinating.

MCKINZIE: Can you describe some of your work when you first went to the Lend-Lease Administration?

HAVLIK: Well, looking back it's not altogether easy; however, I have tried to make some notes.

What I discovered first was that lend-lease was not simply giving the foreign countries whatever they wanted. A set of procedures had been developed to get from them a list of requirements. The Russian lend-lease was dealt with separately. They had an absolutely binding

 

[15]

annual agreement -- a protocol -- on what kinds of supplies they would get, specific amounts, etc. That was handled by Major General Wesson and John Hazard, completely apart from policy issues relating to other countries. We followed that activity to some extent, but nevertheless it was largely self-contained.

The rest of it was adjustments of the volume and kind of lend-lease supplies and services to various countries, depending upon the wartime situation, upon their own capacity, and to some extent upon political considerations.

My first assignment was to draft a memorandum or letter from the President to Winston Churchill, in effect proposing certain reductions in lend-lease to the U. K. on specific items to bring the total down to a more modest figure. For one thing, partly, we felt the British were then mobilizing monetary resources more effectively, and American forces were getting into the war

 

[16]

(this was in 1944). And partly, too, I think Mr. Roosevelt wanted some pressure upon Churchill for various policy reasons. There were debates going on in the background as to whether the attack should be upon the "soft underbelly" of Europe or from the north, whether there should be two fronts or one front. Mr. Roosevelt would use as counters in these debates anything he had, including the threats of reduction of lend-lease.

So, some of these memoranda and drafts were given to the President; I do not know whether he showed them to Mr. Churchill at the various conferences which they held from time to time. But I do know that some of the recommendations weren't