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Walter S. Salant Oral History Interview

Oral History Interview with
Dr. Walter S. Salant

Head economist, Research Division, Office of Price Administration and predecessor agencies, 1940-45; economic advisor to the Economic Stabilization Director, 1945-46; economist for the Council of Economic Advisers, Executive Office of the President, 1946-52; and consultant in the economic and finance division of the North Atlantic Treaty Organization, 1952-53.

Washington, D.C.
March 30, 1970
by Jerry N. Hess

See also Walter Salant Papers finding aid

[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 It may not be published in full except by permission of the Harry S. Truman Library.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 October, 1970
Harry S. Truman Library
Independence, Missouri

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


Oral History Interview with
Dr. Walter S. Salant

Washington, D.C.
March 30, 1970
by Jerry N. Hess

[1]

HESS: Mr. Salant, to begin with will you give me a little of your personal career. Where were you born, where were you educated and what are a few of the positions that you have held?

SALANT: Yes. I was born in New York City and went to school, from the first grade through the end of high school, at the Ethical Culture Schools, which became known as the Fieldston Schools, in New York City. I did my undergraduate work at Harvard, then did a year of graduate work at Cambridge University and then I came back, in

[2]

September 1934, to the United States and got a job in the Treasury Department, where I remained for a year and a half in the Research and Statistics Division. Then I went to New York to see what a Wall Street brokerage firm was like and decided what I really wanted was to do more graduate work.

In September of '36 then I went back to Harvard to do two years of graduate work, the second of which was in the Littauer School, which was just beginning. While there I spent my second year almost entirely, at least in the first semester, in what has since become the famous Fiscal Policy Seminar that was run by Professors Alvin Hansen and John Williams. In the second semester I also was an assistant in the Economics Department.

In the summer of 1938, I came down to the SEC where I assisted Raymond Goldsmith in making the first estimates of individual saving by a method that has since been used to supplement the methods used by National Income Division.

[3]

Instead of estimating saving as the difference between income and consumption, this was an attempt to estimate it by measuring the changes in the assets and liabilities of individuals. That has since become the basis of a regular quarterly statistical release.

In the autumn of 1939 I joined a new division in the Department of Commerce, in the Secretary's office, where Harry Hopkins was then the Secretary of Commerce, called the Division of Industrial Economics, which was under the direction of Richard Gilbert. This division was to advise the Secretary, who wanted to play a more active role in economic policy, as many Secretaries of Commerce since then have tried to do. One of the notable contributions of that division, perhaps, was the Annual Report of the Secretary for the fiscal year 1939, which many people do not seem to know about, which is perhaps the first statement in

[4]

an official document of what is now called the "new economics." At least that is my recollection of that statement, although, if I went back and looked at it again, I might find that my memory has played tricks on me.

HESS: Who was instrumental in the drawing up of that statement?

SALANT: Well, this little team in that division consisting of six or eight people, but the main person was Richard Gilbert who was the director of the division, and the spark plug of the advice that Secretary Hopkins got, and who played a very considerable role later, although an unsung one, in economic policy during the war.

In September 1939, when the war broke out, this division was more or less converted into a staff for the Price Commissioner, the Price Commissioner being Leon Henderson. When I refer to the Price Commissioner I'm talking about

[5]

one of several members of the National Defense Advisory Commission which the President appointed. I'm not sure I have the title of that organization exactly right, but that was a commission of a few people, each with functional responsibilities. Leon Henderson was given the responsibility for price developments, and this little group which Richard Gilbert was to head, moved more or less bodily over to helping Leon Henderson. That group subsequently became the Economic Adviser group to the Office of Price Administration and Civilian Supply, which subsequently became known as the Office of Price Administration, of which Henderson was the first head. You might say that the wartime price controls were -- got their first start in that group and then developed further as it became an operating agency.

I was with the Office of Price Administration until April 1945, when I went over to the Office of Economic Stabilization and became economic

[6]

advisor to the Stabilization Director, who was then William H. Davis. I remained there after Mr. Davis was, let us say, unceremoniously dumped by President Truman and...

HESS: Why?

SALANT: I don't think I'm in a good position to answer that, but I can say -- and this perhaps might be an interesting little bit of oral history that you wouldn't have gotten from anywhere else.

HESS: That's exactly why we are here.

SALANT: Mr. Davis had no forewarning of being dumped. He went to the White House to a meeting, I recall, in the East Wing and the President was at the same time having a press conference in the West Wing. The President said at the press conference that he was appointing, I can't remember who it was now, to -- oh, that he was moving the functions

[7]

of the Office of Economic Stabilization to the Office of the Director of War Mobilization and Reconversion, and a reporter said, "Mr. President, what does that do to Will Davis?"

And the President said, "I guess that leaves him out of a job."

Apparently somebody ran over from the West Wing to the East Wing to tell Mr. Davis this, and it was a completely stunning blow to him. I recall how that came to us at the office, at Mr. Davis' office. Mr. Davis had been driven over to the White House conference in the office car by the office chauffeur, Herbert, and after the press conference ended, Herbert came back with the car but without Mr. Davis, and I recall that Mr. Davis' secretary said, "Herbert, what did you do with Mr. Davis?"

And Herbert said, "He said he wanted to walk back to the office. Kind of looked like he had something on his mind."

[8]

HESS: Do you know why that move was made, why he was ousted?

SALANT: I don't know. There was much talk that the President, who was then fairly new in the office, just wanted to have somebody whom he knew better in that position. Well, the position already existed, but he wanted the powers, I think, put into that man's hands.

HESS: About what time was this?

SALANT: This was in the summer, if I recall correctly, of 1945. The President, you recall, President Roosevelt, had died in April. President Truman was at first far from comfortable in the office. Of course, this was generally regarded as a rather gauche way of handling things and there were accusations that he wanted a crony, as people said, in the position, but nobody else was in a position to speculate or say anything

[9]

authoritative about what the reasons were.

HESS: I believe it was about in June when John Snyder was appointed as head of the Office of War Mobilization and Reconversion.

SALANT: That's right, it was John Snyder, now that you remind me of it.

HESS: He was the one that was taking over OWMR at that time.

SALANT: Yes, then a -- but an appointment was made to -- that thing's [reference to the tape recorder] still going isn't it?

HESS: It's still going.

SALANT: I hate to waste the time while I speculate about this.

The office was left in a cut-down form and a district judge from Kansas City who was a friend of President Truman's, was appointed named Judge J. Caskie Collet, if I remember correctly.

[10]

HESS: You do.

SALANT: I can't remember the exact timing of all these things and, in particular, I can't remember the relationship of the Bowles appointment to the position of Economic Stabilization Director in relation to Collet's appointment, but it must have come later. Well anyway, without moving out of that office, I subsequently became the Economic Advisor to the Price Decontrol Board, which was set up in the legislation of the summer of 1946.

When most of the price controls were dismantled, shortly before the 1946 election, the Price Decontrol Board in effect went out of business. At that point Dr. [Edwin G.] Nourse, the first chairman of the newly formed Council of Economic Advisers, invited me to become a member of the staff of the Council and I accepted that position. So, that was the end of my period

[11]

with the Price Control, but you can see from that that I was with it from the time it was a gleam in the eye until its burial.

HESS: Fine. That we will want to come back to and go over in detail. Now, after you were on the Council of Economic Advisers, I believe in 1952, you went to NATO. Is that right?

SALANT: That's right. I was on loan, supposedly, but I had in fact to resign formally in order to become a member of the Foreign Service Reserve, which was a necessary condition for my taking my family to Paris for the NATO job. While I was in Paris the election occurred.

HESS: And the Republicans came in.

SALANT: And the Republicans came in and I was -- I went back and I helped Arthur Burns for a few weeks and then left, left the Council.

HESS: Where did you go at that time? What positions

[12]

have you held since the Truman administration?

SALANT: I was a sort of full-time consultant for a newly formed private organization, public service organization, called the Committee for a National Trade Policy, which was organized by George Ball, Charles Taft, and a number of others, mostly businessmen, and I stayed there until March 1954, when I was a visiting professor at Stanford University for the spring quarter. In September 1954 I came to Brookings.

HESS: Where you...

SALANT: Where I've been ever since.

HESS: Ever since, fine. Now, on several of the jobs that you have mentioned, the positions, you did mention some duties, but are there any other duties that come to mind? We'll just hit upon these just lightly, but at the time that you were on statistical research at the Treasury Department

[13]

in 1934-36, any particular duties, anything of interest come to mind at that time?

SALANT: Well, I was hired on that job on a trial basis, my first job, as a senior statistical clerk, at the munificent salary of $1800 a year, and after one month I was promoted to the lowest of the professional ranks which was called what, junior economist or something, at $2000. I have trouble remembering any great continuity in that job. I did quite a lot of things of a general policy character, because at that time I was regarded as a rather advanced young man, having just come back from a year at Cambridge University where the content of [John Maynard] Keynes' still unpublished General Theory was being talked about. And so, I was able to give what are now conventional reasons for the use of fiscal policy under conditions of unemployment, and I also wrote memoranda about the effects of the exchange rate policy

[14]

and wrote memoranda also on various proposals for currency reform, about which practically one in every ten people in the population had a suggestion. Washington was full of people who thought they knew what was wrong with the monetary system, and the Treasury was the focus of all those incoming letters and proposals.

HESS: What were your views at that time? What should be done to get the country moving and get the country out of a depression?

SALANT: Well, my views, which of course weren't worth anything...

HESS: As a junior professional.

SALANT: As a very, very junior professional, were strongly in favor of the use of budget, of government expenditures, to get income and private spending up and to fight the view that it would be very inflationary in the sense of price-raising

[15]

rather than money-income-raising, to expand demand at a time when there was a great deal of unemployment.

HESS: During this period of time did you have any association with the Secretary of the Treasury Henry Morgenthau?

SALANT: No, I did not. I was...

HESS: Did you ever see him during this period?

SALANT: I may have seen him walking down the hall once or twice but that's about all.

HESS: All right.

SALANT: My main contacts were with Lawrence Seltzer, and at first I had some slight contact with Harry [Dexter] White, but the international and the domestic work were separated after Harry White came into the Treasury, and I went over and worked with Seltzer who was in charge

[16]

of Domestic Research, or in effect in charge, although his title was Assistant Director of Research.

HESS: What was Harry White's title at this time? Do you recall?

SALANT: I don't recall exactly.

HESS: What seemed to be his...

SALANT: He was the director of monetary research, it may have been called the Director of International -- it may have been called the Division of International Research or something, but the function was international research. He did not, at least when I was there, worry about domestic financing matters, and things like that. He worried more about whether the French were going to be able to stick to the old gold parity in the face of declines in the foreign exchange value of sterling and the dollar