Yuri Ivanovich Sum,
INT: Yes. But originally... I thought that some of that money - you're talking about a sort of windfall to the government... how much could some of that money have been used for post-war reconstruction?
TG: Well, it was used for post-war reconstruction. It enabled them to put in their own financing of post-war reconstruction a larger amount than they otherwise would have had, you see. It just... it meant that some of their expenditures, by insisting that it be used for deficit reduction, the real effect of that was to make some of the expenditures of the Italian Government payable actually paid by counterpart funds. It just meant that the Italian Government could not have so big a reconstruction programme that it would force more and more printing of lire in order to balance the budget.
INT: You mentioned how the system worked, the strong emphasis on proper authorisation. Can you expand a little on how important it was that the goods were seen to go to the right end-user?
TG: The reason for this... This process of expenditure which I've just outlined, the letter of commitment and the procurement authorisation, was a new development in the giving of aid. Usually, aid between countries in the 20th century, up until that point, had been given in the form of a bank transfer. That is, if... let's say the aid which had been given under UNRRA, for example, or the intermediate... the interim prograbetween the end of UNRRA - the United Nations Relief and Rehabilitation Administration - and the beginning of the Marshall Plan, had been done by, let's say an account being set up in the Federal Reserve Bank in New York for the Government of Italy, and dollars were pby the US Treasury into that account, into the Italian account at the Federal Reserve Bank, and then the Italian Government could draw dollars from the Federal Reserve Bank and spend the dollars directly itself, that meant that there was no... really no end-use control, no control once the money left the Federal Reserve Bank, you see. Now the procurement authorisation technique meant that no money, no actual money was given, no actual dollars were given to any of the recipient countries. All that they got were the commodities that were purchased, you see. And these commodities were designed for a particular plant - that is, certainly the machine tools or the equipment. The problem with corruption was mainly with the... oh, what's the term?...
INT: Well, let me ask you that as a question, to say how... the degree of emphasis that was put on avoiding anything slipping in towards the black market.
TG: That's the point. You see, what was likely to slip into the black market was mostly bulk commodities like wheat or coal or fuel oil or raw materials of various kinds. And some of it did - I mean, there's... you can't eliminate that completely. But the procurement authorisation technique meant that the commodities were designated, were sent in designated ships and the United States Go... the programme paid for the shipping costs and so on and so forth, so there was always... the ECA always knew where these commodities were, either being bought or being manufactured or in transit to the recipient countries, or... And then, when they arrived in the recipient countries, the governments co-operated with the local ECA mission in spot-checking the use of these commodities. So... the system was as good as could be expected. Sure, things drifted into the black marklet - there was no question about that - but at least nobody made off with money, you see, which they could have done under the old system, actual dollars. So that was an improvement.
INT: You mentioned...
TG: (Overlap) But it was... actually, the Marshall Plan, from the US point of view, was an extraordinary operation. The ECA was a very small agency. When you think that in four years the ECA spent a total of 13.7 billion dollars - that's in 1950 dollars - today, in present-day dollars that's about 124 billion dollars. Well, think of an American agency today spending 124 billion dollars in four years, without an enormous bureaucracy to do it, without all kinds of... you know, just losing track of things and so on and so forth. The ECA was a very small organisation. Fewer people spent more money in that agency than ever before or since in the United States Government. It was an extraordinary performance.
INT: How much did it mean that each person in the United States was contributing?
TG: Well, if you take the total cost of 13.7 billion, divide it by the population of the United States, you come out with $80 per person. It cost $80 per person... was what (Laughs) the Americans spent. Or if you want to put it in another way, again in an overall way, the... in the four years of the Marshall Plan, the total amount came to 1.3% of US gross national product produced in the four years. In other words, the average of the four years was 1.3% of US gross national product. That's an extraordinary amount of money when you think that today the total foreign aid programme for economic and military purposes of the US Government is less than two tenths of one per cent of GNP. It's bigger in... in actual dollar terms now than it was, but in constant dollars, it was very much less. So it's much... it's an infinitesimal proportion of US GNP today. It was a significant portion of US GNP in the Forties and early Fifties, and this was at a time when there were enormous arrears of consumption in the United States, where the Government could have spent the money on construction of roads, repair of bridges, all the things that had been neglected during the war and even during the Great Depression that preceded the war. So there was a real sacrifice in terms of... on the part of the American people.
INT: But to what extent was it a willing sacrifice?
TG: It was a willing sacrifice, and that was largely because of the extraordinary educational effort which went into the Marshall Plan. Not only was the ECA a small organisation - literally maybe a couple of thousand people, that's all, when you compare it with the enormous bureaucracies that we have today in this country, that are spending, you know, relatively less money - it was a very popular agency. I remember I was the seventh employee of the ECA. The ECA started early in April of 1948, after the appointment of the administrator. The administrator was a man named Paul Hoffman. Paul Hoffman was president of the Studebaker Automobile Company, which in those days was a very successful automobile company. Paul Hoffman had a reputation as being a great salesman, and he was. He was an extraordinarily fine man. And... but he had a capacity for selling things, and a sincerity about it that was so convincing, and he... I would say his... the main thing... his contribution as administrator of the agency was to go around the country and make speeches, to go around Europe and make speeches, explaining in simple terms what the programme was all about and why. His testimony before Congress each year, in getting the annual appropriation, was very convincing. I mean, even Republicans who were isolationist admired Paul Hoffman for his ability to... and his sincerity and his humanity and so on. He was an extraordinary man. Now what he did was, he appointed as his assistant administrator a man named Richard Bissell. Richard Bissell was another extraordinary person. He had... he was an economics professor who had graduated and gotten his PhD at Yale, and he had played a very important role during the war as the... in the war shipping administration, in... managing the movement of shipping for both military and civilian purposes, in both the Atlantic and Pacific and so on and so forth, and doing that without computers was an extraordinary job, of knowing where every ship was, assembling the convoys, knowing what cargo was in them, knowing what was lost en route, and knowing what had arrived at the ports, and so on. And Dick Bissell was the man who devised the system for doing that. After the war, he went back to MIT, where he was an economics professor, and then he came into the Marshall Plan. Hoffman brought him into the Marshall Plan. He was the man who hired me. And he was the man who was the top policy maker and policy creator of the Marsh... of the agency, that is of the Plan as it worked out. And he had three assistants. I was one of them, and he had two others, a man named Sam Van Heining, who was his quantitative assistant, who kept the books on everything and who knew all the figures; and a third, a man named David Richardson, who was his troubleshooter, who went around and took care of sudden crises that happened. I was generally his assistant for policy. And... Dick Bissell ran the Marshall Plan - he was Mr Marshall Plan in every sense of the word. He was an extraordinary boss. He was very open to new ideas; he wanted people to bring new ideas, new angles on how to do things, how to improve the performance of the agency. And this attracted a lot of people. There were... I don't know... a hundred times more applicants for the positions in the agency than... were actually hired, because Congress had said: "Do not transfer people from old-line agencies, existing government departments, to the new agency," so they had to hire people from outside. And people from the universities, great faculty... heads of businesses from all over the country wanted to work in the Marshall Plan, so we had our pick of the best.
TG: (Overlap) This wreally the best and brightest - not the Kennedy Administration, (Laughs) as Halvar Stand's book claimed...