Numbers appearing in square brackets (ex. ) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.
See also: Paul G. Hoffman Papers
Opened January, 1966
Oral History Interview with
October 25, 1964
by Dr. Philip C. Brooks
DR. PHILIP C. BROOKS: Perhaps you can tell me how you happened to get into the European Recovery Program in the first place. I would be much interested to know.
MR. PAUL G. HOFFMAN: That story never has been told. Early in March 1948, I heard rumors that I might be considered for the post of Administrator of the Marshall Plan. At about the same time General William Draper asked me to serve as a member of a commission to study the economic situation in Japan and Korea. I accepted at once, thinking I would be in Korea and out of reach when
the legislation setting up the Marshall Program was passed. My scheming didn't work. The passage of the ECA legislation was delayed and I was en route home at the time. When I reached Honolulu, I found a telephone call waiting for me from John Steelman saying that President Truman wanted to have a talk with me as soon as possible. I said to John, "Would you mind telling me what it is about?"
He told me that after some delay the ECA act had been passed and the President wanted to talk to me about serving as Administrator of the Marshall Program.
I said, "That is very flattering, but how soon will the President have to have his answer?"
He said, "Immediately."
I said, "In that case, much as I regret it, my answer has to be 'No,' because I have family and business associates with whom I would have to
discuss so far-reaching a change."
His answer was, "How soon can you be in Washington?"
I told him approximately five days.
I did arrive in Washington in five days and before I went to see President Truman, I called my good friend Senator Arthur Vandenberg and told him that I had been informed that President Truman was going to ask me to take on this assignment. I told him that for many reasons it would be impossible for me to do so.
The Senator's reply was, "You don't dare refuse if the President offers this opportunity to you."
I said, "Yes, I dare." And that ended our conversation.
I met with President Truman by appointment. He formally asked me to accept the post of Administrator. I replied, "Mr. President, I am
deeply appreciative of your offer, but it would be a mistake for me to accept it because I don't really want to leave Studebaker at this time. I have been working for the last thirteen years trying to help get the Studebaker Corporation to a point where it was making real money. It is there today and I want to be around for the next five years. May I add that it would be a mistake for you to appoint me because I have employed a good many thousand people in my day and I never knew anyone who didn't want the job that was offered to perform satisfactorily."
The President's reply was, "Well, Mr. Hoffman, some of the best people we have in government have to be drafted. We hope you'll prove to be one of them, and I am expecting you to say yes."
I said, "Mr. President, I certainly will give it the most serious consideration. I'll
telephone Mrs. Hoffman; I'll telephone my business associates and see what can be worked out."
We left on that note.
Much to my surprise at 4:30 that afternoon when I was involved in a press conference at the Pentagon on the Japanese and Korean economies, one of the reporters asked me, "Have you been offered the post as ECA Administrator?"
Because I felt that this was a confidential matter between the President and myself, I replied, with my tongue in my cheek, "What does the job pay?" His answer was $20,000 a year.
I said, "It must be a good job."
At that moment a loud-speaker came on stating that the President had just announced that Paul G. Hoffman had just accepted the post as Marshall Plan Administrator. So I found myself in a job that I had never accepted.
BROOKS: Did that bother you at the time?
HOFFMAN: At the time it seriously troubled me, but in drafting me as Marshall Plan Administrator, President Truman did as great a favor for me as one man can do for another. It opened my eyes to many things of which I was totally unaware and it was the beginning of my real education.
BROOKS: Mr. Hoffman, I am curious to know how much you knew about the Marshall Plan before that, if anything.
HOFFMAN: I had been a member of the committee under Averell Harriman, which studied the report of the committee headed by Sir Oliver Franks, which had been appointed to ascertain the amount of United States goods that would be required to restore Europe to its prewar level of agricultural
and industrial production. Their estimate was $25 billion worth of goods and services and a period of four years to complete the program. The Harriman Committee's report concluded that a job could be done for $17 billion, but concurred in the estimate that it would take four years to do it.
It might be interesting for me to break in here and tell you that at the end of two and a half years, agricultural production in the Marshall Plan countries was 20 percent ahead of the 1938 level and industrial production was 40 percent ahead, and the total cost of the program up to that time had been under $10 billion.
BROOKS: Were there people who predicted that recovery could not take place in the four-year time period, that it might take even a decade?
HOFFMAN: That is correct. However, from the very beginning of the program, we made it perfectly clear that we would be out of Europe in four years; that whatever was to be accomplished had to be accomplished in that period of time. We also made it clear that primary responsibility for the recovery program rested with the Europeans themselves. The first line of the Harriman report, a line which I am proud to say I wrote, was "Only the Europeans can save Europe." And major credit for recovery belongs to the Europeans.
BROOKS: This high degree of cooperation among Europeans is what interests me most. Did you know before the Marshall speech of June 1947 about the content of that speech?
BROOKS: One of the most significant things that he said was that the European countries should get together and express their needs collectively. This really seems to have been the beginning of European cooperation.
HOFFMAN: That was the beginning. We were very insistent that there be cooperation and we wanted that cooperation expressed with something other than words. The Europeans had made two promises to the United States if Marshall Plan help was forthcoming. The first promise was maximum self-help on the part of every country; and second, maximum mutual aid.
In December of 1948, an historic meeting took place between Sir Stafford Cripps and the other ministers who were members of the Organization for European Economic Cooperation, which we helped organize, and my associates and
myself. We told them, very pleasantly, I hope, but very firmly that whereas they had made good on their first promise, that is maximum self-help, that little or nothing had been done to make good on their second promise, which was maximum mutual aid. I said that it would be our responsibility to tell the Congress of the United States in February of 1949 precisely what had happened unless they took some steps and quickly to make good on their promise of mutual aid. The situation was really intolerable because all the Marshall Plan countries were maintaining not only prohibitive tariffs, but also exchange controls and import quotas, which almost completely blocked intra-European trade. We insisted that all devices for blocking trade be sharply reduced.
BROOKS: What happened at that historic conference?
HOFFMAN: Most of the ministers of the Marshall Plan countries were present with Sir Stafford Cripps acting as their spokesman. Along about midnight, Sir Stafford Cripps asked if I would meet with him alone. I said certainly. As our conversation started, he seemed to be somewhat exasperated by my insistence that something must be done to reduce trade barriers and fast. He said, "Well, what will satisfy you?"
I said, "If in February we can report to the Congress that 50 percent of the barriers to trade among the European countries have been removed, Congress would, I believe, be satisfied."
I further stated that by a 50 percent reduction, we meant a reduction in the total volume of trade among the countries, not 50 percent of the items that make up trade, in some of which there was little or no volume.
At 3 a.m. he said, "We'll have that 50
percent reduction in effect by February 1, 1949." It was done.
BROOKS: You were expecting a great deal of cooperation from the European countries so soon after the was and many of them had been at each others’ throats. It was a rather remarkable accomplishment.
HOFFMAN: The reduction which took place in January of 1949 was, of course, only one step toward the great expansion in intra-European trade that was needed. Of all the moves that were made, the most important was the organization of the European Payments Union. This followed late in 1949 and made possible the use of non-convertible currencies on the part of Marshall Plan countries for payment of goods exchanged among them.. Once the services of the Payments Union became available, the upturn in trade was
spectacular. It was a major factor in the success of the Marshall Program.
BROOKS: I came away from Europe with that impression too. I also came away with the impression that much of the credit for the effectiveness of this whole program -- and many of the people I interviewed told me this individually -- went to Mr. Hoffman and your own cooperation with the European leaders. For example, some of the British people told me that much of the success of the program resulted from the good working relationship you had with Sir Stafford Cripps despite your divergent points of view.
HOFFMAN: While Sir Stafford Cripps and I started out, I think, in a mutually skeptical attitude one about the other, I came to have the utmost respect for him. He was a truly great public servant. As I told him, the real problem is
that there were not enough Sir Stafford Cripps in the world. If there were, if perhaps everyone was willing to work as hard and diligently as he did for the good of the community and without thought of his personal interests, the system he proposed might work. But I felt that most of us in the world today gave priority to our personal interests. Some day we may all be as dedicated as he was to the public interest. It isn't that kind of a world yet.
One enterprise Sir Stafford Cripps and I jointly inaugurated was the Anglo-American Council on Productivity. This turned out to be one of the most effective innovations introduced by the Marshall Program. Almost all European countries faced the necessity of a rapid increase in productivity. Their factories were filled with out-dated tools and they were employing old-fashioned methods.
Sir Stafford wisely insisted that the Anglo-American Council should include representatives of both the employers and the employees. Further, it was to be a two-way street with groups going from Great Britain to the U.S.A. and vice versa. Among other results that ensued from the Council's activities was the reorganization of the steel industry in Great Britain and the adoption of a number of European practices in our own steel industry. The success of the Anglo-American Council was such that both France and West Germany became interested and carried on similar activities.
BROOKS: Another thing I was told in many countries was that much of the credit for accomplishments of the Marshall Program went to the Americans who headed the missions in the Marshall Plan countries. Now these people, I assume, were
chosen by you. Did you have any magic device in choosing these officials?
HOFFMAN: The magic was in the Marshall Plan itself. It provided an opportunity for appealing and constructive work. In a sense, the mission chiefs were given the opportunity to help act as architects for the new Europe that was envisioned.
BROOKS: There was a certain amount of idealism involved?
HOFFMAN: Oh, yes. But the idealists employed as mission chiefs were also realists. This is true of every one of them, but as examples, I'll give you David Bruce in France, John McCloy in Germany, David Zellerbach in Italy and Thomas Finletter in Great Britain.