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 10, 1968
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 It may not be published in full except by permission of the Harry S. Truman Library.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
[Top of the Page | Notices and Restrictions | Interview Transcript | Additional Snyder Oral History Transcripts]
Oral History Interview with
John W. Snyder
January 10, 1968
By Jerry N. Hess
HESS: Mr. Snyder, what stands out in your mind concerning the period of time that you spent as Federal Loan Administrator?
SNYDER: Mr. Hess, my two and a half months as Federal Loan Administrator was about the busiest, shortest, most satisfying of any period of similar length of my life. I was appointed Federal Loan Administrator on April 17, 1945. As you have pointed out, it was the first major appointment made by President Truman. The Senate confirmed my appointment on April 27th, and I was sworn in on April 30th. The public reception to the announcement of the appointment ranged from "Who is he?" to those that were highly favorable. I am happy to say that the large majority fell in the latter class. The business community particularly accepted it as a good omen that Mr. Truman had appointed a
banker for a banker's job. As I still had hopes of getting back to St. Louis and taking up my bank work in the First National Bank there, I got busy at once to accomplish many of the things that I had felt should be done in recognizing the RFC and the Federal Loan Administrator's job for peacetime operation. I had been in and out of the RFC operation for nearly ten years beginning back in 1937 as manager of the loan agency in St. Louis. In 1940 I was called to Washington to help organize the RFC for handling its defense programs. It was at that time that a wartime expansion of RFC resulted from the establishment of a number of subsidiary corporations that carried out specific wartime functions up until the present time. By the present time, I naturally refer to the time of my appointment as Federal Loan Administrator.
In the first week of May the war was
obviously approaching its end, and with it, the RFC's major contribution to the war effort would be finished. I had long felt that there should be a contraction of war agencies as soon as practicable, and I had discussed it at great length with Jesse Jones, with members of Congress, and with many others before I became Loan Administrator. With this in mind, it was one of my initial major undertakings as Federal Loan Administrator. I immediately began plans for streamlining the program of the RFC. I discussed it again with a number of those in Congress who were particularly interested in the RFC operations, and with Mr. Jones, and with the President. They all were in complete agreement that the five large subsidiaries that had been created for defense and war purposes should be absorbed by the parent corporation. To be absorbed were the Rubber Reserve, Metals Reserve, Defense Supplies, Disaster Loan, and the large Defense Plant Corporation.
The way it worked out, the streamlining was primarily a bookkeeping change that would simplify the RFC setup and prepare it for whatever peacetime task it might be given. Senator Robert F. Wagner of New York introduced the necessary legislation into Congress to implement the plan of contraction. It was promptly passed by the Congress, which was obviously gratified to find a Government agency ready to cut back its own empire.
The next major task that faced me as Federal Loan Administrator was what to do with the surplus Government war plants and equipment after the war was over. As you know, as head of the Defense Plant Corporation, I had supervised the financing of the building of most of those facilities. The Defense Plant Corporation had actually signed contracts for the financing of close to eleven billion dollars of war facilities. The war in
Europe having ended on May 8th and with the war in the Pacific approaching its climax, many of the industrial facilities were no longer needed. So I immediately began plans to dispose of the surplus plants as rapidly as was feasible with the approval of the Government. A large number of persons both in and out of Government had expressed the hope during the war that some of the war plants would be retained and operated by the Government to provide yardsticks by which to gauge private industry. I had been opposed to this program from the very first days of the creation of the Defense Plant Corporation. A number of my associates and I in an attempt to curtail such an eventuality wrote a clause into the contracts, the lease arrangements which the Defense Plant Corporation entered into with the industrialists who operated the defense plant facilities, providing that when the necessity for defense was no longer apparent that the lessee could buy the plants
back under a stipulated formula. Therefore, in consultation with the board of directors of the RFC, which had absorbed the defense plant operation, we began to discuss the most appropriate procedures to follow in bringing about this restoration of industry to private hands.
My third important consideration was to begin work with the directors of the various RFC functions to make plans for the best manner in which the RFC could serve in the great reconversion problem that was going to face the country following the war. Probably I can best illustrate what developed in my mind by reading an excerpt from a speech that I made in Evansville, Indiana about that time:
There are five major problems that will tax the initiative, ingenuity, and patience of us all, how to reapply our labor force to the job ahead; how to re-equip our factories, how to maintain credit, how to skillfully liberate our controlled economy
from the protective measures necessary in the peak war years, and how to adjust our tax structure after Japan is defeated.
I then outlined a few of the steps that the RFC would be prepared to take in aiding in industrial reconversion:
First, to make loans against the cancelled war contracts; second, to make business loans to returning veterans; third, to make commitments now for future loans so that industry might proceed with plans for rehabilitation and reconversion; and fourth, automatically guarantee bank loans to industry up to 75 percent with a ceiling of $250,000 for each loan, and participate with banks in individual industrial loans made to industry in any amount. I was particularly anxious that the Nation know that the RFC was well prepared to cooperate with the Nation's commercial banks to finance plant reconversion, finance equipment and plant purchases, and to finance property purchases where needed.
I immediately began to work out with banks an arrangement for making loans under what we called the "blanket participation agreement." Under this agreement, banks were permitted to make loans subject only to a few conditions, such as solvency, collateral, and a limit on salaries paid by the borrower. This permitted the banks to make loans on their own judgment and without requiring prior approval by the RFC. I felt that through this agreement that the Government was showing complete confidence in the banks, which is, of course, as it should be. It was my opinion that together the banks and the RFC could solve the financial problems of the small businesses, which were capable of, and entitled to solution during the reconversion and post-war periods. While I was in the midst of these engaging pursuits aimed at a reconversion program, I received a message from President Truman, who was, at the time, at the
Potsdam Conference, that he wanted me to take over the Office of War Mobilization and Reconversion, a job which I frankly did not wish to undertake. However, since I was in Washington to be as of such help to President Truman as I could be, I could not hesitate to undertake to do the job that he wanted most for me to do.
As I was preparing to leave the Federal Loan Administrator's job, I summed up in my own mind what I had been able to accomplish in the short time in which I had been in the office. I began by streamlining the RFC. I made an effort to make the agency more efficient and more economical. I established a broad policy for the disposal of surplus plants and material, and finally, I set out a program for the RFC, which was to help it carry out in the post-war years a program to aid large and small businesses, a program that certainly, in my opinion, would go a long way towards the transition
from war to peace. This, Mr. Hess, I think, gives you a brief story of my experience as Federal Loan Administrator.
HESS: Mr. Snyder, what type of plants presented the most difficulties in the conversion process?
SNYDER: Well, naturally, it was those types of unusual plants like the magnesium plants and some of the large steel plants--the one out at Provo, Utah, for instance, was an enormous, complex, integrated steel plant that was built out there near the middle of Utah, away from sources of labor supply, of iron ore, and from coking coal. It was purely a political location. But we were able to finally locate a buyer in the U.S. Steel Corporation, but, of course, in that case, there had to be some bargaining because they were taking an operating problem on their hands in taking over the plant.
In the Rubber Reserve, we had to wait our time until the rubber manufacturers were ready to undertake to switch from natural rubber to synthetic rubber. But, in due course, those plants were all absorbed very well, but it was slow doing. Some of the larger ordnance plants, such as the one that I mentioned out at Chicago, had eighty acres under one roof. Well, it took quite a bit of planning to get operations that could utilize that large a space, but through community cooperation, putting sometimes eight and ten operations into the same building, we were able to get them all pretty well operating. There were many, of course, the one-purpose plants for manufacturing machine gun bullets and things of that sort, that there just wasn't any peacetime use for, had to be either turned into storage plants, or some facility of that character. But by and large by our foresight in putting the option clause into the contracts, the operators
in the Defense Plant Corporation facilities had planned ahead for the use of their plants. In that way these plants were more easily converted than some of the one-purpose plants that were built by the Ordnance Department and some of the specialized agencies.
HESS: The efforts on finding an occupant for the Willow Run Plant came a little later, is that right?
SNYDER: Well, yes, the Willow Run Plant was initially built by the Ford Motor Company. Mr. Ford, Sr. didn't want to have anything to do with Government financing. And so when he started to build the large bombers in that plant, why, he built the plant himself. Subsequently, the Defense Plant Corporation purchased it from the Ford Motor Company, and leased it back to them for operating during the war. Following the war, the plant was used by two or three different lessees,
initially, the Kaiser Motor Company was in there for awhile, and one of the large hangars was taken over for a municipal airport terminal. Finally, though, they got it operating pretty well; all the facilities are now in use.
FUCHS: There for awhile, wasn't Lustron using part of the facilities?
SNYDER: Yes, but that wasn't a very big operation.
HESS: And we'll come to that later when we discuss housing. Also, I believe that Tucker was in there making cars.
SNYDER: Well, Tucker was to have made cars, but he had three or four prototypes of an assembled car, but he never went into production.
HESS: Did you ever see one of those cars?
SNYDER: Yes. I went to a showing that he had one time.
And the greatest attraction were the lovely girls that he had standing around it.
HESS: And not necessarily the car?
SNYDER: That's right.
HESS: What type of conversion presented the least difficulty?
SNYDER: Well, the plant that was of the size that could be quickly turned into manufacturing of a product the company was accustomed to make, like the automobile plants. General Motors did a tremendous job, Ford did an important job, so did Chrysler, in very quick conversion, taking out the special tooling that was installed for the defense program, and switching to the type of production line that was required for the automobile assembly.
HESS: During the time that you were Federal Loan
Administrator, and also with the OWMR, what plans were made to prevent profiteering in the disposal of surplus plants and property?
SNYDER: The Defense Plant Corporation attempted to meet that problem through the clause that I mentioned as an option to buy at a certain agreed formula, that considered depreciation, usage, size of the plant, and its adaptability to prevent operation. A fair formula was worked out that would prevent, to a great degree, any profiteering. The greatest problem came when you had a plant that was not readily usable, or you had a plant that the operator holding the option did not particularly want to buy at the end of the hostilities, or a plant that was too large to be used by the lessee. Then we had to get into some negotiations to try to sell it. I don't think that as far as the plants are concerned, there was any great degree of profiteering.
The profiteering came largely in the dispo