Frank A. Southard, Jr. Oral History Interview

Oral History Interview with
Frank A. Southard, Jr.

Director, Office of International Finance, Treasury Dept., 1947-48; associate director, Research and Statistics, in charge of International Section, Board of Governors, Federal Reserve System, 1948-49; U.S. executive director, International Monetary Fund and special assistant to Secretary of the Treasury, Director of International Monetary Fund, 1949-62; and U.S. alternate governor, board of governors of International Bank and Monetary Fund, 1949-62.

Washington, D.C.
March 16, 1973
by Richard D. McKinzie

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

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.

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 It may not be published in full except by permission of the Harry S. Truman Library.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 February, 1976
Harry S. Truman Library
Independence, Missouri

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

Oral History Interview with
Frank A. Southard, Jr.

Washington, D.C.
March 16, 1973
by Richard D. McKinzie


MCKINZIE: Mr. Southard, do you recall how you happened to be approached by John Snyder in the middle of 1947 to come down and work for the Treasury Department? You mentioned previously that you'd been back at Cornell in the economics department after the war.

SOUTHARD: Well, I'm not sure of what caused him, to approach me. The direct approach was made to me by Andrew Overby, who was then Special Assistant to the Secretary of the Treasury, and who had been borrowed by Snyder from the Federal Reserve Bank in New York. Secretary Snyder wanted (well, if we back up a moment please), the position held by Harry White as Executive


Director on the Fund board representing the United States was vacant with the resignation of White. And Snyder wanted to propose to the President that the President nominate Overby, because it is a Senate confirmation position, to be the U.S. Director in the Fund. So, he had to find for himself, someone to take over the international work in the Treasury. And so Overby approached me, and I came down to discuss it in, I guess, roughly March, 1947. I first said, "No, I couldn't leave Cornell so soon again on leave of absence," but then I decided that was the wrong decision, and the president of Cornell agreed I could take another year of leave beginning the 15th of July.

Why was my name -- I didn't know Overby at all, and I didn't know Secretary Snyder. Edward Foley, who was then -- I guess he was then General Counsel, but he later became Under Secretary under Snyder (Under Secretary of the Treasury) -- told me that he was the one that suggested my name to Snyder. It could have been true. I'd


known Foley when I was in the Treasury before the war and we'd been together in the war -- that's possible. But in any case, I came at the request of Snyder, and took over on the 15th of July 1947 the position of Director of the Office of International Finance, which was created as of that day to handle the Treasury's international work.

MCKINZTE: Did you find that a lot had changed since you were in the Treasury the early part of the war years? That is to say, the Treasury was more involved under Snyder in international matters.

SOUTHARD: I don't think that would be accurate. The Treasury under [Henry Jr.] Morgenthau, up to the time I left it -- and I was only there from January of '41 up to the time I went in the Navy in July of '42 -- the Treasury was very active because Morgenthau was close to [Franklin D.]


Roosevelt and Morgenthau had a pretty good team around him. But the real difference is, of course, that there was only one preoccupation in the Treasury in that period and that was the coming war. We were involved in lend-lease very actively, and economic warfare, pre-emptive buying and plans for wartime operations, since everyone prior to Pearl Harbor, I think, was proceeding on the assumption that one way or another we were going to get in the war. So it was a totally different atmosphere, but the Treasury was thoroughly active. I would say the difference was twofold: First under Morgenthau, Harry White and company, there was very little easy collaboration with let's say the State Department and so on. If we collaborated we had to do it privately. Whereas, of course, under Snyder and the Truman setup there was a relaxed collaboration, and then, in addition, by the time I came back the U.S. had joined the Fund and the Bank, and the Bretton Woods Agreement


Act had been passed by Congress, and it provided for the setting up of a National Council -- I've forgotten the full name -- National Council...

MCKINZIE: National Advisory Council on International Monetary and Financial Policy.

SOUTHARD: ...and in that period under Snyder the Council was very active. It still exists. I think it has become a much more pro forma body, but it was very active then. He always sat in the chair and called meetings regularly. And this provided a ready-made interdepartmental collaboration -- it was very easy.

MCKINZIE: Well, you've come immediately to one of the major questions I wanted to ask you to discuss, and that was about the State Department and the effect of the close personal relationship of Secretary Snyder with President Truman? Some scholars have said that that gave the Treasury a kind of special in. That Secretary Snyder did


in fact know in some cases, better, maybe, than State what the President was thinking about.

SOUTHARD: Well, there's no question, of course, that Snyder was back and forth across the street to see the President anytime he needed to be, either on his initiative or the President's. He did have that kind of easy access. But I think we do have to bear in mind that the Secretary of State also had ready access to Truman, and I don't think that the Treasury had so clear a line to the White House that the State Department was in any real sense "frozen out." If we take the work that was done on the two really great international initiatives of the Truman administration in my field; one was the Greek-Turkey aid, and the other of course, was the Marshall plan. Now in both of those the lead was taken by the State Department in my experience, in the sense that it was the State Department that was chairing the setup. In the


case of the Marshall plan I was chairman of the interdepartmental group that was working on the purely financial side, but we were, in fact, meeting in the State Department Building, and we were meeting weekends and everything else. And people like Ty [C. Tyler] Wood, who, incidentally, is still in town -- I don't know whether you've talked with him -- and, now General [George A.] Lincoln, who was then a colonel, I guess, and was very active, we were all physically over in the State Department, and the State Department was really taking the lead. I had the feeling that we in the Treasury were firmly in the saddle on the financial side of all that work. But the State Department was the one that was putting all the pieces together. We were fully active in the general committee, and we had our own financial group that was doing the financial side.

MCKINZIE: Do you recall those discussions which took place in late summer of '47 and the fall, about how much Marshall plan aid would be in fact


required? There were two or three figures bandied about. I think the CEEC in Europe came up with originally a twenty-nine billion dollar figure, and then it was cut to twenty-one, and then of course, down to about seventeen. The Treasury Department and you yourself were much involved in that.

SOUTHARD: Yes, we were, but not in the sense that I could say that we were the ones that did the work in that. We were collaborators with the other people in State.

MCKINZIE: How much time did you spend on Capitol Hill the summer of '47?

SOUTHARD: The summer of '47 nearly none. And there again the continuing kind of liaison, day-to-day trying to keep Senators and Congressmen informed was being managed by State. It was not until, as far as we in the Treasury were concerned -- as far as my personal appearances are concerned and


those of Secretary Snyder -- it was not until, we really were putting the thing together and were ready to go into testimony that we began being in contact with it.

Now, I could back up and say there was one other thing where the Treasury was taking the lead. There had been worked out before I came back to Washington, of course, the big loan to the United Kingdom, the Anglo-American Loan Agreement. And the British resumed convertibility I guess the day I came to town, June 15, 1947. And it was evident immediately that they were in deep trouble. This was a premature effort. I had nothing to do with the drafting of the agreement or with the decision to hold the British to it; but almost the first thing that I was told when I got here by a young man that I brought in who was borrowed from another department, Lowell Pumphrey, who came in to see me. He said, "You know, there's no question at all that the British are in trouble." So the first thing that we had


to deal with was the almost complete collapse of sterling and the spending of the entire loan in a futile effort to support convertibility of sterling. So we had to do some frantic improvising and late night meetings with the British in the Treasury, and Snyder having quick meetings with the Secretary of State and so on, in his office, to try to decide what to do next -- someway, if you will, of reading into the agreement an escape clause which wasn't there, because it was drafted with no escape clauses in it.

MCKINZIE: Did the British themselves have any suggestions?

SOUTHARD: Sure. They wanted to be able to stop convertibility. And in the meantime, to spend the money. Well, we agreed that they'd stop convertibility. We froze the balance of the loa -- there wasn't all that much left. Then in subsequent weeks when the British were as hard up as they could be and desperately needed the balance of


the loan, Secretary Snyder, with me with him, went up and talked privately to Senator [Arthur H.] Vandenberg and some others telling them that we really had no choice except to let the British spend the rest of the money. There was no other source of money at that time; the Marshall plan didn't exist, and lend-lease was over. The people we talked to nodded their heads and said, "Okay, if this is what you feel should be, we won't criticize it." There the Treasury was taking the lead. But in the Marshall plan, we were partners with State, who, in my opinion, was really taking the lead in all of the planning and in planning all the testimony. We went up, Secretary Snyder and I and some others, to testify on the financial side of it.

MCKINZIE: I noticed that about every day or every other day you wrote with [Thomas J.] Lynch...

SOUTHARD: Who was then General Counsel.


MCKINZIE: ...memorandum to Secretary Snyder giving a fairly full account of what various people had told the committees of Congress. I take it, then, you were the Treasury's contact on Capitol Hill for the period of the presentation of the Marshall plan.

SOUTHARD: Yes. We were up there much more often than our own testimony called for. I was just saying that when it came to active testimony we did only a small part of the whole testimony. I think the record will show that.

MCKINZIE: Was there any Treasury feeling that you ought to confine your remarks simply to financial remarks or was there some dealing with the sort of reconstructed isolationists on Capitol Hill, and a kind of commitment to the general cause?

SOUTHARD: I can't recall that I was doing a whole lot of missionary work outside of the committee rooms. My memory is getting faint on that, but


I can't recall, that I was, at least, and I don't believe other Treasury people were. Of course, the financial side of the program was a very big side of it. We were testifying on the whole question of repayment terms, if any, use of counterpart funds -- all of this fell to us to make the case up on Capitol Hill.

MCKINZIE: How did you happen to go to the Federal Reserve in 1948?

SOUTHARD: Well, I had planned to return to Cornell at the end of the year; and you may remember that there were not very many people that thought that President Truman was going to be reelected, and I really think that included Secretary Snyder. At least he was busy clearing out his collection of bric-a-brac, and so on. So he had never proposed that I stay down here, because, as he told me later, he didn't have anything to offer, because he didn't feel that prior to the election he was in any position to make any


forecasts that he himself would be there. I had every intention of going back to Cornell. Then the Federal Reserve approached me to come there and take over their international work. The then Chairman of the Federal Reserve was Thomas B. McCabe, who had been president of Scott Pager. I thought it over and decided that I should resign from Cornell and stay in Government service.

MCKINZIE: That was a fairly major career decision about getting out of the academic world.

SOUTHARD: Yes. I realized that at the end of three crowded semesters back at Cornell I was getting head over heels in university administration, and that inevitably, if I stayed in university work, I was going to end up in administration as dean or college president, I wasn't going to stay in teaching. I liked that sort of thing -- policy making if you will. So, I decided that I really wasn't making a choice between


teaching and research on the one hand, and Government work at the policy level on the other; I was making a decision between the Government policy level on the one hand, and university administration on the other. True, I might have been able to hang on to some teaching, but looking around at friends of mine who had thought they could do that, I saw almost none of them ever succeeded in making the compromise between university administration and continuing teaching.

Well, then, I hardly made that decision and got over to Federal Reserve until Mr. Truman was elected, and Mr. Snyder found that he was going to continue to be Secretary of the Treasury. So then he asked me i