Oral History Interview with
Secretary of the Treasury in the Truman Administration, 1946-53. Other Federal positions once held include Executive Vice-President and Director, Defense Plant Corporation, 1940-43; Assistant to the Director of the Reconstruction Finance Corporation, 1940-44; Federal Loan Administrator, 1945; Director, Office of War Mobilization and Reconversion, 1945-46. Secretary Snyder has been a longtime close friend of Harry S. Truman beginning with their service in the U.S. Army Reserves after World War I.
John W. Snyder
January 15, 1969
By Jerry N. Hess
[Notices and Restrictions | Interview Transcript | Additional Snyder Oral History Transcripts]
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. ) 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 It may not be published in full except by permission of the Harry S. Truman Library.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 September, 1970
Harry S. Truman Library
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Oral History Interview with
John W. Snyder
January 15, 1969
By Jerry N. Hess
Twenty-fifth Oral History Interview with John W. Snyder, Washington, D.C., January 15, 1969. By Jerry N. Hess, Harry S. Truman Library.
HESS: Secretary Snyder, in George Kennan's Memoirs pages 458 to 462, he speaks with considerable directness of the involvement of the Treasury Department, and yourself in particular, in the matters pertaining to the possible devaluation of the pound in 1949. After having reviewed those pages, what are your comments?
SNYDER: Mr. Hess, there's no question in my mind but what Mr. Kennan is a very capable career man, trained in the State Department of the United States. His performance of his duties with the State Department has made a very good record. The only problem that we find is that Mr. Kennan's education and training did not also include matters of finance. They were largely diplomatic and it appears that Mr. Kennan,
like a great number of his confreres was somewhat of an Anglophile. He had the apparent notion that the resources of the United States were inexhaustible and that they should be employed to the greatest extent to relieving some of the economic and financial problems of Great Britain and particularly England. He takes up the matter in his book in regard to the talks that came up -- which were called financial, economic talks by everyone -- that those were matters of diplomatic settlement and arrangement, not on the basis of any sound structure for the future, but meeting the present situation in which Great Britain's government found itself. There's no question in my mind, and we made it clear continuously, from the time I went into the Treasury, up until the time I left, that we were most sympathetic, we had the warmest feelings towards Great Britain and the respect
for the part they had played in World War II. We can go back even further, as I had that feeling in World War I, because I was a participant in that conflict; and without doubt, Great Britain took a very valued and effective part in World War I, and certainly repeated that tremendous showing of great courage and great tenacity in World War II. But we were now approaching a time of trying to straighten out the problems that were brought on by World War II, and chiefly among them were some very intricate and difficult economic and financial problems. Actually, the conferences and discussions that Mr. Kennan approaches in his book, in the pages to which you refer, really started back in 1947. The problem probably started in 1946 when the United States made a loan of three and three quarters billions of dollars to the British. The loan was very controversial. We had many of our bankers,
our Congressmen, and our businessmen who were not at all pleased with the manner in which the loan was set up. There were some, however, in our Government, who felt that it should have been much larger, and there were some, including me, who had doubts about the structure of the loan that was finally made. I had had some experience and certainly a great deal of research on the manner in which the settlements were made after World War I, and those countries with whom we made many of the settlements had been devastated by the war, and were left flat on their backs. To make loans to nations under such circumstances was not realistic, and many of those loans, none of which were paid, except Finland, actually caused a lack of concerted work in later years, and caused many hard feelings between countries, and finally most of them have been disposed of one way or another, without actual payment.
HESS: On the subject of the 1946 loan, I have read that some people in the United States opposed that loan to Britain because the Labor government was in power in Britain and was asserting greater state control over the economy and narrowing the area of free enterprise. How did you feel about that matter?
SNYDER: That was definitely the thought of a great many of our businessmen, our bankers, and a great many of our Congressmen too. Of course, at the time, we must go back to the time now that we are discussing and place ourselves in a position in 1945 and '46. We must remember that the Labor government was as of then untried, and it had not had an opportunity to demonstrate its capacity for national leadership, much less world leadership. Of course, we must recall that Great Britain, the British Empire, was an international power as well as a national one when the Labor
government took charge in the summer of 1945. There were those that had grave doubts that from the philosophy and the policies that they had announced in their campaigns and in their assumption of the government, that their views were workable, particularly their advocacy of nationalization of industry and finance.
HESS: What was your view in 1946?
SNYDER: My view in 1946 was that the loan probably was as much as we should have made them, but I felt, and very strongly, and the record shows that I felt that a good part of the loan should have been an outright grant with no repayment problem, but I also felt that there should have been a greater pre-planning of how the money was to be used, because it was later provided that it was from poor planning that their great troubles came. Because Hugh Dalton, who was the Chancellor of the Exchequer of the Labor government at that
time, used very poor judgment in pouring out the proceeds of the loan to the British colonial countries that had built up large pound debts that Great Britain owed to them, and in a moment of great largess he paid off two or three of them which exhausted to a great extent the entire loan, and built up no good will as it turned out with those countries; and so therefore, I think that the principal expenditures of the three and three quarter billion dollar loan was very unhappily squandered.
Then we came to 1947, at the time that we held a World Bank and Fund meeting in London. Hugh Dalton brought this matter up at the time and said it looked like they were going to have to have further financial assistance, even before they had yet spent the funds of the first loan. He began to see it was going to take a greater amount of funds, subsequently, to
meet their, I would say, grandiose idea of paying off some of these debts that they had. They began to again approach the idea that they wanted to fall back on the multilateral exchange rates that had been so prevalent prior to the war. So our first talks then actually started in 1947. The British muddled through until the spring of 1949. That year the World Bank meeting was to be held in the United States and there was no doubt but what a great deal of discussion would come up on the European financial and economic situation, and among these, chiefly, Great Britain's problem. Sir Stafford Cripps was Chancellor of the Exchequer at the time, and he began to make statements and word was leaked out that he planned to lay the whole cold matter of the British economic plight before parliament. We had made a study over here of the situation. The National Advisory Council of the United
States Government made a very careful study on the international monetary and financial problems, and presented a report to President Truman in the summer of 1947 which he sent up to Congress. The contents of that study became known, and this accelerated Sir Stafford Cripps' intent to place the economic condition of Great Britain before Parliament. At that time, in order to lay plans and to agree on some policies for guidance in our discussions in the World Bank and Monetary Fund meetings, which were to be held in Washington in September, I planned a trip to Europe in July to talk to our own Treasury representatives and to see how things were moving in the various member countries in Europe, and to particularly talk with Maurice Petsche, who was the Minister of Finance of France at the time, and was to be the joint chairman of the meetings of the Bank and Fund in the United States
in September. It was a preparatory program to try to have our meetings run more smoothly and more productively that caused this trip to be planned.
HESS: What were your findings from that trip?
SNYDER: Well, I want to go just a little bit further here. Again, Sir Stafford Cripps accelerated his program and by the time I arrived in Paris, which was my first stop, we were having frantic calls from London to please come there on our next stop and discuss these matters with Sir Stafford Cripps and Mr. [Ernest] Bevin, the Foreign Minister at that time, and with the Bank of England. I think before we get into any discussions back and forth I want to point out that the papers, both here and in Europe, took a great deal of space to thrash this all out before I ever got over there, and after I
arrived. It had been my plan to go to Paris and London, Brussels, Stockholm, Geneva, Rome, Athens, Ankara, and Cairo, and get a pretty good view of conditions by talking with ECA representatives, our ambassadors, and with our Treasury representatives in those countries. The matter got into such a turmoil, I would say, because there were statements back and forth, most of them coming from some of our own United States representatives, who were pressing for these to be diplomatic discussions, rather than financial and economic. If you go through the newspaper clippings which I have laid out here for you, Mr. Hess, you will see that the papers did not take, generally speaking, anywhere near the attitude that Mr. Kennan took. As a matter of fact, some of our papers here were extremely complimentary of the manner in which the meetings were held, and were not nearly as critical of the incapacity of the Treasury
to handle financial affairs, as was Mr. Kennan. Now, in order to get this picture somewhat organized I would like to read into the record a paper that I have prepared on this subject, if that's agreeable with you. And then we'll discuss any questions, if you'll just keep notes as we go along; if there are any questions that subsequently we want to go into, we will.
In the years from 1947 through 1949, Great Britain went through a series of crises in her economic life. These crises occupied much of my time and attention and were a major item of concern to the Western World. To some nations it appeared that the United States showed favoritism by conducting extensive, bilateral financial negotiations with the United Kingdom, while at the same time urging other European countries to settle their problems through the Organization for European Cooperation, which
grew out of the earlier CEEC. France was in this position, but the United States explained its position by saying that relationships between the sterling and dollar areas were the concern of first importance to the governments which are the centers of the two currency systems. To understand the postwar financial situation of Britain, we must glance briefly back to the period before World War II. There we find that Britain was still a powerful creditor nation, with a huge empire to which it acted as banker and financial manager. The war put a critical strain on Britain's financial resources, leaving her with a rundown economy which needed American goods in order to rehabilitate itself. As we recall, England, particularly, was an entrepreneur nation. They had great skills, they had great banking facilities, great insurance facilities, and they had great industrial
facilities, but they had no raw materials, and so they used to import raw materials, process them, and then market them throughout the world.
In the postwar period, Britain was a debtor to the United States, but its position at the head of an empire dictated that so long as possible, it remain a creditor to its dominions and colonies. This split financial personality had its effect on Britain's postwar situation as I mentioned just a moment ago. When the Anglo-American loan was closed in 1946, amounting to three billion, seven hundred and fifty million dollars, it had only been a matter of months since lend-lease had ended. Great Britain was a major beneficiary of lend-lease, but an American public and government, which had been willing to undertake these wartime grants was not willing to do the same immediately after the war to a nation which was not only a trade competitor but
which still possessed an apparently rich empire. The United States properly insisted not only on offering aid only through a loan, but wrote into the loan agreement requirements that Britain assume the obligations of correcting multilateral exchange rates. One of our prime foreign economic objectives in setting up the Fund was to try to get a better exchange position between the trading nations, and this included convertability of currency and the lowering of trade restrictions. It was the United States' position that we should only help them through a loan. Personally, as I mentioned a while ago, I had a feeling that a considerable part of that initial loan should have been a grant. What happened in the succeeding months is an unhappy story in which there is no blameless hero or a completely evil villain. There is enough blame to go around for all of us. With the end of
1946, Britain took steps to develop a system of sterling convertibility, that is, to