The Atlantic Report on the World Today: Washington

PRESIDENT EISENHOWER has one of his strongest administrative teams in the Treasury Department. Indeed it is hard to see how he could have enlisted better brains than he did. The influence of Paul Hoffman was evident in the choices. Secretary George M. Humphrey has been a close friend of Hoffman. He is the Cleveland steel and coal industrialist who, when Mesabi Range iron ore appeared nearing depletion, took a farsighted interest in developing a new source in Labrador.

Marion B. Folsom, the Under Secretary, has been, like Hoffman, chairman of the Committee for Economic Development, and he has long been working on a revision of the tax system. Assistant Secretary Chapman Rose, a onetime law clerk to Justice Oliver Wendell Holmes, was closely associated with Humphrey as a Cleveland lawyer.

It is in the selection of W. Randolph Burgess as special deputy to the Secretary on debt management that the new course of the Treasury may be most clearly seen. Mr. Burgess has been chairman of the executive committee of the National City Bank of New York, an institution that has given a great deal of attention to the funding of the national debt. This problem is allied with the control of inflation. Under Secretary Snyder the Treasury took deferred action. Its apparent primary concern was to keep the interest charges on the national debt as low as possible so as to hold down the cost of servicing the $267 billion sum (which this fiscal year will cost $6 1/4 billion in carrying charges).

This concern of the Treasury with artificially low interest rates led it into a public squabble with the Federal Reserve Board in 1950 when the latter body was seeking to restrict credit. Secretary Snyder finally agreed to a truce which resulted in somewhat higher interest rates. But the groundwork for postwar monetary inflation had long since been laid.

Where the Treasury missed an opportunity was in its failure to refund the national debt after World War II. Some three fourths of the $267 billion debt consists of bonds that are callable or will come due within five years. Had these short-term obligations been refunded — that is, exchanged for long-term bonds when the interest rate was low — the premium would have been on saving and the subsequent debt service charge would have been reduced.

Too rapid a reduction in the debt, especially when defense spending is tapering off, might of course precipitate a recession. The question will be one of fine balance calling for a working arrangement between the Treasury and the Federal Reserve Board that still will respect the latter’s independence. The Eisenhower Administration will have the benefit of sound advice and experience in its effort to chart a stable monetary and credit policy.

Ike’s personal staff

In staffing the executive branch, it seems likely that the President, will follow the military type of organization with former Governor Adams of New Hampshire his “chief of staff.”

The job of a military chief of staff is to insulate his superior as much as possible and to make sure that relatively few persons report to him directly. Without doubt the President needs some screening procedure. But one grave danger is that the President will be shielded from happenings that tend to discredit his administration. President Truman used to complain that he had trouble finding out what was going on. There is also danger that presidential aides, without close supervision, may become focal points for special interest pressures, as they were in the Truman Administration.

Certainly the new President will need a staff of men who understand the difference between an agent and a principal. One who did in the Truman Administration was Rear Admiral Sidney W. Souers. A Missouri businessman whose military title derives from wartime service in naval intelligence, Souers was President Truman’s confidential consultant on national security affairs. He was the first director of what is now the Central Intelligence Agency and the first executive secretary of the National Security Council, and was instrumental in preparing the legislation to establish both agencies.

Souers briefed the President almost daily on security matters, and he also did such other confidential jobs as the investigation that led to the firing of Theron Lamar Caudle. One of Souers’s great assets was his ability to remain in the background as an agent of the President.

Particularly important was the link Souers afforded with the National Security Council. This is the toplevel agency — whose principal members are the President and the Secretaries of State and Defense — that attempts to tie together military policy and foreign policy. Although a confidential trouble-shooter is not provided in military tables of organization, President Eisenhower no doubt will find it necessary sooner or later to rely on someone with the qualities of Admiral Souers.

McKay and public lands

It is in the Department of the Interior that the efforts of the Eisenhower Administration at consolidation may first be observed. No one expects that Secretary McKay will upset the programs of public works and conservation that have been Interior’s stock in trade. But he is likely to modify new extensions of the Interior programs. Many persons are watching to see whether he will stand up against the attempts by certain Western legislators to revise public lands policy to favor some stockmen and lumber interests.

During the campaign there was some fear that if the Republicans came in there would be pressure to turn control of grazing lands over to the stockmen. The Republican plank on public lands — in which the unsuccessful candidate for Senator from New Mexico, Patrick J. Hurley, reportedly had a leading part — gave some substance to this fear by a reference to “legislation to define the rights and privileges of grazers. ”

Grazing is only one use of the public lands. Overgrazing in the past greatly hampered two prime objectives of Federal management: watershed protection and the prevention of soil erosion. Although many stockmen exhibit a genuine interest in conservation, there has been unremitting pressure on the Bureau of Land Management for more “liberal” policies.

Range land administered by the Bureau is for the most part poorer in quality than that within the domain of the Forest Service. It is noteworthy, nonetheless, that the grazing rate per head of cattle set by the Bureau is less than one third that charged by the Forest Service. Many rangers say privately that even the Forest Service rate is too low. Secretary McKay will find himself in the middle of this controversy.

Private power and irrigation

In line with President Eisenhower’s campaign promise to bring more partnership between the states and the Federal government in developing natural resources, Secretary McKay also may be counted on to explore new devices for state representation. He has opposed a Columbia Valley Authority as bringing too much Federal control. But as Governor of Oregon he participated in the Federalstate Columbia Basin Interagency Committee.

Secretary McKay has indicated his belief that private power companies should be allowed to do all they can, but that some projects are of such size that only the state or Federal government can undertake them. One public power decision he will have to make is whether to support legislation authorizing the mammoth Hells Canyon dam on the upper Snake River.

Like most Westerners, Secretary McKay is known as an advocate of reclamation, but lie also takes a dim view of the political activities of Federal bureaucrats. Thus the Bureau of Reclamation, whose administration under Commissioner Michael W. Straus had many political overtones, is sure to come in for scrutiny.

One charge lodged against the Bureau, particularly on the ColoradoBig Thompson irrigation and power project in the Rockies, is that it has loaded an excessive proportion of the cost on irrigation so as to justify lower rates for public power. Certainly the Bureau has displayed a remarkable ability to underestimate construction costs.

There is a moot question whether it is possible to get a complete accounting of the actual cost of public power when it is produced as part of a multiple-purpose project. The complaint of juggled figures remains, nonetheless, one of the most potent arguments of the private power companies in their contention that they can provide power more cheaply.

Another activity of the Bureau of Reclamation that may come under scrutiny is its “partnership” with the Corps of Engineers in the Pick-Sloan plan for the Missouri River. This arrangement has been roundly damned by conservationists as excluding valley-wide development and neglecting the upstream conservation so essential to effective flood control.

In this connection there may be renewed pressure on Secretary McKay to revive the recommendation of the Hoover Commission task force for a Department of Natural Resources. Such a department would absorb the natural resources functions of Interior, the Department of Agriculture, and the Corps of Engineers. While it would not eliminate conflicts and duplications in governmental programs, it would ensure unified policy direction.

Justice and the oil companies

Attorney General Brownell has an able assistant in William P. Rogers, the Deputy Attorney General. Rogers, a Washington lawyer, was the former chief counsel of the Senate War Investigating Committee, and he is known for his fairness. His appointment thus has been taken as a happy sign of President Eisenhower’s feeling about the conduct of investigations.

One of Mr. Brownell’s first big decisions will be what to do on the international oil suit launched bv his predecessor in the Department of Justice. State and Defense Department officials have been crying that this suit, with the whetstone it gives to the forces of fanatical nationalism in the Middle East and Latin America, is the most disastrous blow to United States foreign relations in a decade.

There is undeniably more than a little inconsistency in the fact that the State Department has been consulting, in the Iranian crisis, the same oil companies that the Department of Justice has apparently regarded as suspect. In many instances the State Department urged the oil companies, for diplomatic and national security reasons, to enter into the very contracts that the Department of Justice has condemned.

The suit had its genesis in a report by the Federal Trade Commission completed in the fall of 1951. This report, kept secret at the time, alleged that five American and two foreign oil companies had engaged in a gigantic cartel to restrict production and keep prices high. It cited a number of restrictive agreements between the companies and foreign firms.

M hen the report was circulated through the Administration, various officials objected to its publication. Admiral Souers protested the damage the report would do to American interests abroad. Secretary of State Acheson and Secretary of Defense Lovett were said to be opposed to release, but neither would take the initiative in the National Security Council for fear that his past business connections with the oil companies might be criticized.

During the summer, stories about the contents of the report were given to the press, especially by Senator Hennings of Missouri. Finally, after appeals from several Senators, President Truman authorized Senator Sparkman’s Small Business Committee to make the report public with certain deletions. This gave the oil companies the first knowledge of the general charges against them.

What did not come out until much later was the fact that in June, 1952, President Truman had disregarded the protests and had authorized the Department of Justice to take legal action against the oil companies. This culminated in the antitrust suit filed in August along with a separate suit to recover alleged overcharges to the Economic Coöperation Administration on oil bought in the Middle East for shipment to Europe. In support of the subpoena the Department of Justice advanced the unique argument that dependence on foreign oil under the agreements bad endangered American security by removing the incentive for domestic exploration.

Federal District Judge James R. Kirkland, remarking that oil could be “the fuseline of a powderkeg to set off another war,” continued the subpoena but modified its scope. Subsequently the British and Dutch governments declined to make available the documents in their possession. No one argues that improprieties or abuses by the oil companies should be condoned. The fear of State and Defense officials is that the manner in which the cartel suit was presented — involving, as it does, some agreements of twenty years’ standing — will set off new epidemics of nationalization fever such as swept Iran. Already the Venezuelan government had indicated that it will be forced by popular sentiment to conduct its own investigation of the oil companies there. This follows the nationalization of the tin mines in Bolivia and rumblings about copper in Chile.

If the oil companies have engaged purposely in illegal restrictive agreements, it would be possible to apply for an injunction or to issue ceaseand-desist orders without exposing the national security to such peril. What Attorney General Brownell will have to decide is whether the legal case against the companies warrants the damage done. Certainly President Eisenhower will need to concern himself with the breakdown of coordination that the oil case represents. For no administration can present a united front when several departments ride off in opposite directions.

Mood of the Capital

Indecision has afflicted the whole area of American aid to Europe. The British interest in “trade, not aid” — an important consideration in Churchill’s visit — has a great deal of appeal in Washington. But the practical mechanics of stimulating more dollar-carning trade are another problem, what with Secretary of Commerce Weeks talking about the need to protect American industries against foreign competition and Senator Millikin of the Senate Finance Committee raising doubts about the reciprocal trade agreements.

On one point virtually all parties seem agreed: the need to reduce the number of Americans in government jobs abroad. Former Secretary of Commerce Sawyer, as a sort of swan song before his departure, turned in a critical report on European economic conditions. He pointed to the confusion resulting from “too many people doing too many things”; for example, there are four Americans with the title of “ambassador” in Paris, each claiming authority to act. The remedy for this situation, Mr. Sawyernoted, “does not require another study employing a large staff to consider and report upon the problem.”