The Jack Rabin Collection on Alabama Civil Rights and Southern Activists

Series II: Southern Activists

Sub-series 3: Clifford and Virginia Durr

Appendix II.3E: Transcript of Audiotape 20

Location: ?the Durrs’ home

Speaker: Clifford Durr

Interviewer: ?John Imhoff

Date: Unknown (probably late 1960s)

Repository: University Libraries, The Pennsylvania State University, Special

Collections Department, Historical Collections and Labor Archives

Transcriber: Barry Kernfeld

Item number: Audiotape 20

In this transcript, “[?]” indicates an inaudible word and “[ ? ? ]” indicates something more substantial—two or three words, perhaps a whole phrase, and occasionally an entire sentence—that is inaudible.

On audiotape 18, beginning at approximately the 16:45 mark, Clifford Durr says: “While we were mentioning the Defense Plant, I found on my recorder a tape which I had made with this fellow Imhoff over at [?] City College, on the Defense Plant Corporation. I’ve got . . . in here somewhere I’ve got two tapes, two sides of two tapes on it.” The interviewer declines Durr’s offer of the tapes: “We have film and microfilm readers—no tapes.” Durr replies, “I’ll just leave it here then.” The present reel, audiotape 20, which starts in mid-discussion, is evidently the second of those two tapes.

Imhoff: Why did the banking interests not see to their interests in Congress? Why did they permit this expansion of RFC power? It seems that they’d have – that they would have had a good issue to use, the socialism issue, and it wouldn’t have taken much to apply some pressure to Congress to get provisions in there that would have been more acceptable and more profitable to them.

Durr: The bankers really didn’t know what was going on until this thing got launched. Jesse Jones, in general – I’d say he polled some of the New York bankers – but generally, temperamentally, he was sort of a banker himself, and the bankers had high confidence in Jones.

When – one of the battles Roosevelt had with Jones – when they started a business loan program for the RFC, there’s a – that’s finally coming out of that, because the RFC wasn’t doing the job – is the Small Loans Administration. But Jones got the power to make loans to business, and he didn’t use it for a long, long time, because they didn’t think the bankers would like it. And then when he did have to use it, he worked out this system of making the loans in cooperation with the banks, where the banks would make it in participation with the RFC, which really meant that RFC would guarantee half of the loan, or whatever the percentage was, so when the banker was making a loan of $30,000, it meant as far as their risk was concerned, it was only $15,000, because the RFC was taking up the rest of it. But the banks would handle the thing and collect the interest, giving the RFC that part of it.

Now Jones himself, as I think I’ve said in the – in this published part of the story – Jones had this – he like to get power just to have it, and also sometimes to keep other people from using it. He’d get it first. He sat – he had a very strong position with the Senate Banking Committee and Congress too. He was strong with the conservatives in Congress, particularly on banking and currency, and whatever Jones asked for, he got without – there weren’t any elaborate hearings or anything else. The committee would just vote it out, and it would go on through. So, as I said before, the approach to Jones on this was the shotgun in the corner approach. And so, on that basis, he – we get up the legislation for him, and he takes it up to – I don’t know whether you take it to Carter Glass or who on the committee, and it went in the mill right off.

Jones went out to the Chicago convention in 1940, and by the time he got back, Congress had approved this thing. So the bankers began to – they were alerted to this thing by the – some of the business people brought into government: the Eatons, the Proctors, and the people of that sort. They came in, and we started taking the shotgun out of the corner, and that’s when they began to get in on the deal.

Imhoff: So you say that initially, then, the bankers simply had no reason to fear anything threaten their interest coming out of the RFC [?].

Durr: Yes, they probably were unaware of the fact that the legislation was even pending.

Here is another aspect of it that I think is quite interesting from the standpoint of the problems of the historian. I said in this unexpurgated edition – I tell the stories here about the difficulties of getting any publicity on the fact the Defense Plant was in business and how we go about that. But I’ve recently read – who was the guy that wrote the life of Roosevelt? James MacGregor . . .

Imhoff: James MacGregor Burns.

Durr: . . . MacBurns [sic], and also Blum’s Morgenthau and Roosevelt. And here you have these people at the high level discussing – sweating over how they’re going to get production going and how they’re going to do things, and as a matter of fact we were already doing them, but they didn’t know about it.

Imhoff: People in government didn’t even know about it.

Durr: People in government didn’t know about it. Patterson was definitely involved, but people at the high level of government really were not aware of what’s going on. For example . . .

Imhoff: But why didn’t you even earlier go to say, Ernest Lindley, and try to get them to break this story.

Durr: As I said, it was the RFC policy that no member of the staff ever gave any interviews to the press without clearing with Uncle Jesse. He kept all that in hand, and I scrupulously observed it until I got to the point – and you know, it’s something of your bureaucratic conscience – I had to do a lot of rationalizing with my bureaucratic conscience of the – in this whole program of getting this thing done, more or less, when Jones wasn’t looking. So you do have a loyalty to the boss, but my rationalization was twofold: one was the real boss was Franklin D. Roosevelt, and Roosevelt wanted desperately to get this expansion going. And the second was that legally, Jones didn’t have the power he was exercising, because he had been kicked upstairs in this reorganization plan, to get him out of the picture, and he was exercising power not by virtue of his legal position, but by virtue of the fact that the RFC board were his boys. I mentioned [?McClausen] and Husbands particularly. So I did clear everything with Schram very scrupulously. Schram was concerned about the situation in Europe. He believed we better be getting ready for this thing. And Schram again – it was a rather interesting thing. I was the only one that would stick my neck out. Schram would go along. I told him what I was doing, and he said – told me very frankly, “I’m not going to stick my neck out, but you go ahead and do what you can do, and if you can get in trouble – if you get in trouble, you can say you’ve cleared it with the chairman of the RFC board, but you got to carry the load, so . . .

Imhoff: But Schram was unwilling to smote any publicity.

Durr: No, it was for the first few weeks or maybe couple of month, almost. I was a – had the whole thing on my shoulders from the standpoint of the context for the – what Schram might have been doing behind the scenes, I don’t know, but he wouldn’t take a public position. But my calling in Ernest Lindley was – this sort of a desperate act, this government by elite that sometimes is effective and sometimes it’s band. And Lindley – I had known Lindley since our Oxford days. I had some confidence in him, and Lindley – he was rather close to the White House too. I think there was some personal friendship even before Roosevelt got to – was elected. And I thought he would be a good contact to get it out, and far less sensational. He wasn’t the sensational type like Drew Pearson. And ouf course my name – I’ve got the story around. We’ll find that Lindley story in the files, I’m sure.

Imhoff: Yeah, I was going to see if I could find that.

Durr: I’ve got that in the files, I know.

These are problems that you’re up against, problems of the use of government administration . . .

Imhoff: Later on, after the Time article was not printed, you said it appeared in several other newspapers. Now did those newspapers get their story from the Time man, or did they get that story from Lindley, or was it just coming out generally at that time?

Durr: No. You see, when the Lindley story comes out – I told you how Jones was getting a little uneasy. He was afraid that he had bet on the wrong horse. And he had been panned for not doing anything, and this was in the field of the financing of tin smelter. That didn’t come under Defense Plant Corporation. These were other operations. And I figured that the climate had changed. [ ? ? ] increasing public support for intervention. You know Roosevelt had that trouble. You remember way back. I think it was what? -- about ’37, when he made his quarantine speech. Quarantine the aggressors. And he got an ad- -- such an adverse reaction, the old isolation sentiment was so strong, he just had to back down and then slowly building up public sentiment. He worked on that for a long, long time. So the climate was changing.

Another thing that you have to keep in mind – you see, my part in the Defense Plant Corporation, the war hadn’t come on. We were not in war. Pearl – this was all before Pearl Harbor. So you did not have the patriotic appeal. Certainly any manufacturer after the country was attacked, after the Japs had blown the hell out of us there at Pearl Harbor, who says, “Im not going to produce,” why the public would come down on him like a ton of bricks. So this was a harder – you had to make other appeal. We could have gotten tighter contracts and contracts more favorable to the government, I’m quite sure, except for the fact that this had to be – we had to bait them and not appeal to their patriotism so much as their own interest, during this period. It was a – of course you had the power when the war came on. You could just take – had power even to take over plants. That [ ? ? ] earlier too, if they didn’t cooperate.

Imhoff: Klagsbrunn seemed to stress in his article, even more than you do, the real advantages of government ownership accruing to the industrialists involved. He stresses less than you the importance of maintaining the government’s interest. This is a very persistent theme in everything that you write and say. But Klaggsbrunn in his article – he wrote “Some Aspects of War Plant Financing.” It was published in 1943, and he stresses very strongly the advantages of government ownership to the industrialists involved.

Durr: Of course you avoid your tax problem there of your – it had been – here was the government helping them to pay off the plant. At first the manufacturers, they didn’t have the money to do the job, and they couldn’t really – the banks didn’t have the money to do it. This was too big a job. But even on the smaller deals, the banks would always – if they did make the loans, they would get their bit of control in there, which some of the manufacturers were worried about. Now the EPF . . .

Imhoff: On this point of industrialists fearing banking control, what’s your experience in that regard? Who did you talk to in industry? How many people did you talk to who seemed to be aware of this? We talked abut it before, but I’d like to get it on tape.

Durr: I can’t remember specifically any of them that I talked directly about that to, except Mac Gordon of Wright Aeronautical, who volunteered his statement. I was trying to be as uncontroversial as possible. I was concerned with their interest. I didn’t – last thing I wanted was to get labeled as a radical or have this operation regarded as any way radical or socialistic or anything else. My basic concern then – I was very desperately concerned about our finding ourselves in the middle of the war and unprepared. I don’t know why. I spent some time in Germany when I was over at Oxford after World War I, and I came out frightened. At first – you know we had had the propaganda about the German atrocities even during World War I – the war propaganda. Then there was a little reaction from that. I remember my sense of disillusionment when Ambassador Brice – you remember the British ambassador to this country. Wrote The American Commonwealth, this three-volume work. He was sort of a hero of mine. I had read The American Commonwealth, all three volumes. And then Brice was on a commission over there in England. It was studying German atrocities and issuing reports: the rape of Belgium and the horror stories coming out of Belgium. But when the war was over, Brice came out with a statement. He says this was all just wartime propaganda. There were some atrocities, but as a matter of fact Germans were no more guilty than anybody else. So that was rather disillusioning.

Then I went into Germany, and – this was about 1921 – on vacation. For a short while I was in – see, America – the United States had withdrawn her troops. They just – they – after about – we didn’t stay in longer than a year or so. I’ve forgotten how long. But the British – the French stayed in longer than anybody. I remember taking a boat trip up the Rhine from Frankfurt, and here were Singhalese troops that were – I got to thinking about this as Reconstruction Days, because I saw these – these were pretty tough boys. I remember when I was going to the – this friend and I – through Savannah, Georgia. We got up early in the morning to take this boat. And here was an old German woman – looked like she was in her sixties – with a basket in her arm, going to market. This was the days when you still had cavalry, and there were a couple of these Singhalese cavalrymen on horseback coming down the street, patrolling the street, and this old woman was on the sidewalk. They whipped their horse up into a gallop, chased her off the sidewalk. She falls sprawling. Her basket rolls out in front of her, and then they wheel their horse and were laughing. This is a great sport.

And then, on this boat trip – there were a lot of French officers and their wives taking this boat trip for a vacation. I never saw such arrogance as they were showing toward the German waiters and the waitresses on the boat, and so I found myself getting a little sympathetic to the Germans. My Southern blood got riled, that they’re going through what we went through in Reconstruction.

Then we went into Munich, and we wanted to settle down there, because this was cheap. Inflation was just coming on, and it hadn’t gone all the way, and we had a nice room, three meals a day for 37 marks. A mark was then about a penny, about a cent. Of course, two or three months later, you’d take a bushel basket to buy a piece of cheese. But we would go to the Hoffbrau house. We would study a little bit and then we’d go to the Hoffbrau house and drink beer with the people. My German was pretty primitive, but several Americans in the crowd who spoke very fluent German, and some of the Germans spoke English. And I found myself warming up to these Germans as the reaction from the atrocity stories. I liked them. You’d get into France and Italy and always hassling about your change and bargaining, then had to count your change. In Germany, here was the price, and you could put the change back in your pocket, and you knew you were getting it – the right change. So I reacted favorably. They were being very friendly, but then – every now and then the subject would get back to the war, and I began to get disturbed. Now this was ’21, only three years after the war, and you still had the feeling of England and France, of countries in mourning. Germany hadn’t been invaded. They surrendered before they were invaded, but their loss of life was terrific, and of course most of the fellows that we were talking to had been in the German army, many in the air force, and – but when the subject turned to the war, they talked like – about it like we’d talk about a football game. No sense of horror or the loss, the death, the sorrow, at all. You ran a fresh team in on us in the last quarter. Next time we’re going to run up too big a score. This was the Versailles – the Versailles Treaty was in effect then, and Germany was supposed to be disarmed.

The first time I ever flew in a plane was a German commercial plane. I flew from Munich to Nurenburg. The had about two or three planes on the line. Carried the pilot with two passengers. Very informally run, but I noticed that the airport was right in the middle of a farm machinery manufacturing plant. Then I saw around there, there were about – there must have been 20 pilots for every plane they had, and many of these guys had been aces during the war. Hanging around, and when I took a look at the machinery, they just – these plants could very easily converted over to making airplanes again.

Then, on Sunday, as a recreation, we’d go out on the edge of town, and this was supposed to be picnics, but you found the fellows in uniform with their packs – no guns – but maneuvering all over the landscape.

Imhoff: This was way back in ’21 already.

Durr: This was back in ’21. Then I think another thing that got me after – at Oxford, German – Roman law was an important subject, the idea that you know one system of law, you understand another one a little better, so we went back to Gaius and Justinian. One of the textbooks – I forgotten whether it was Gaius or Justinian – had been written by a German, in about a 1910 edition I suppose, and in his introduction [?] Gaius and Justinian both on civil war – civil law. They had nothing to do with war, but here was this German prof going out of his way in his introduction to spend pages on paying a tribute to the glories of war. It’s only in time of war that people get united. They forget their petty squabbles. They unite in a common cause. It stimulates activity and inventive genius. War is progress.

And so I came out of Germany – I was politically unsophisticated – with this deep concern. When Hitler came to power, I saw Hitler as nothing more than an impolite manifestation of the old Junker spirit. Everybody was saying [ ? ? ] this line . . .

Imhoff: More dangerous because he had a broader appeal.

Durr: . . . that the Germans won’t go for – they might go for Hindenburg, but they don’t go for a tin soldier, so you don’t have to worry about Hitler. But it seemed to me that he was talking the language that had been instilled into them for quite a while: all the glories of Fatherland and the military might and all of that.

I remember again – now talking about the bankers – this was an office of one of the big New York banks. We had put some Ford stock in this bank with the RFC. We had some little problem and this was – it must have been about ’34 or ’35, and we wound up our business in short order. We were talking, and I was expressing some concern about what was happening in Germany. He saw, “Aw, you don’t have to worry about that guy Hitler. How’s he going to do anything? He hasn’t got any goals.” You see the complete blankness and unawareness of what was going on here.

So I was concerned about the thing, and I used to have nightmares about the – you see, the – when the – Germany started bombing the hell out of the Low Countries, Rotterdam and then Amsterdam, and then they started on bombing Britain . . .

Imhoff: During your . . .

Durr: And I’d really – I had nightmares about our troops unarmed and the U.S. was being slaughtered by these German planes, with no airpower. So I – the burning thing with me – the big drive – I would have done most anything to get these plants built. I thought that was the big [?]. But I did see . . .

Imhoff: When – during the years that Hitler was rising, did you come into contact with many of your friends, your American friends, during your Oxford days, during the days that you were in Germany?

Durr: No.

Imhoff: Did they have common fears? Did people who – did people that knew Germany intimately have common fears?

Durr: Not particularly. I can’t say that I had any intimate knowledge of Germany. I was in Germany.

Imhoff: You had some pretty strong impressions.

Durr: But they were just impressions. Of course I was politically naive when I went over there. I was interested in seeing the people and the new scenery and new sights and so on, and I was politically unaware. But two countries I went into made quite an impression. They were the only countries that made – had any kind of an impact on me from a political standpoint. One was Spain. I saw – Primo de Rivera was in power then, and the contrast between the wealth and poverty – at the same time, a certain pride among the poorest people, and I just had the feeling that this country is ripe for a bloody revolution, that this thing can’t keep on. And then in Germany I – like I said, I had this feeling that the German military might would just – is just in abeyance very briefly. We got to watch that thing very closely. But I – I’d studied German in school, but I couldn’t speak it much, and I read it very poorly, so I was no student of Germany, but there were just impressions from what I saw.

And all kind of pretenses. There were some shipyards that they were maintaining and seemed to me in very good shape, although they were not positioned to produce ships. The Versailles Treaty was cutting down on so many things. But they were still making a heavy investment in a plant that they were not using. An example of the maneuvering around, the soldiers on the pretense that this is just a form of recreation for the weekend, but all military maneuvers, without guns, with uniforms and full packs.

Another – that was the primary thing. It was the defense I was concerned about. But I did have in the back of my mind other considerations that I think will come out in the files. One, I had the – you see, when we hit the Depression – after World War I, we were – the industry was haunted by this fear of overproduction, and plants were scrapped. Good plants were scrapped, because of the fear of overproduction, which seemed to me a terrific waste. So I did want to keep this thing so the plants wouldn’t be scraped, even if they gave them options. I wouldn’t have given them an option if I had my way completely, but we did give them options to buy the plants when the war was over.

Imhoff: You wouldn’t have done that, though, if you . . .

Durr: If I had all my rathers, I would have said, now let’s government – government’s put up the money, now let’s let the government hold title completely, and then, when this thing is over, we’ll see what we’ll do with the plants.

But there was some rationalization in there. One, the manufacturers would have been less willing to come in. And second, we had such a limited staff to supervise a construction. None of the manufacturers built these plants for our account. We said, you go ahead an built them just as you would if it were your plants. So I figured if they had a stake in them, with this option to buy at cost less depreciation, that would be an incentive to keep costs down and . . .

Imhoff: This is something that Klagsbrunn refers to in his article.

Durr: . . . and do a good job.

But another thing that I had very definitely in the back of my mind, that I wasn’t in position to do much with – see I was very conscious of the under-industrialization of the South, going back to my days as a lawyer for the Alabama Power Company, when I worked with the new industries division quite closely, and then as I told you, I was – I worked on this Economic Report on the South, Roosevelt’s. And it’s the lack of capital that we had, the South being really blessed above the average region in natural resources, but without the capital to develop them. It was not only the South, but you take a look at the country at the time, the manufacturing was concentrated on the Eastern – Atlantic seaboard and the Great Lakes area, and even the West and Midwest had very little industry. So I thought, here is an opportunity to bring about a better diversification, a better balance between agriculture and industry, because here’s the government putting up 100% of the cost to the plants, and these are multiple purpose plants. These are not just government arsenals that could make one thing. But the ordnance still continued to build the arsenal type of thing from – the explosives and to a considerable extent the small arms, ammunition, and things of that sort.

Again, from a military standpoint, the pressure was on for dispersal of plants, because you – the more concentration of industry you had, the more vulnerable your industrial plant was to bombing or attack. So from a military standpoint, the dispersal of the plants was . . .

Imhoff: Did you feel you had any success in accomplishing that, particularly in getting industries in the South, [ ? ?] the South?

Durr: Very little. We got – now some parts of the country – now Texas got in in a big way, and of course you got in in Washington and Oregon and California and some of those states. You see California wasn’t too much of an industrial state at that time. Of course some of them are paying for it, because they put all their eggs in one basket. [ ? ?] particularly apt in Washington state. The aviation plants as they shut down are in a hell of a fix.

But in Alabama, I couldn’t arouse too much interest. See, here were little fellows becoming big, particularly in aviation. And we had some small manufacturers that were competent in Alabama, around Anniston and Gadsden and Birmingham, so I got in touch with a fellow named Tom Johnson, who had been head of the power company’s new industry division and I’d worked with very closely. I called him, and I said, “Tom, here’s the chance to get some industry in Alabama, in the South.” I said, “Here’s the – we lack capital, but here’s the government putting up 100% of the capital and desperately looking for manufacturers who can make things. And we’ve got some pretty competent small guys down there, and here’s the chance. Why don’t you go round?” And I said, “The – both the Defense Commission and the people over at the military are looking for people desperately. See if you can’t stir up some interest, get in their applications, and let them get aware of the fact.”

It was – a couple of months passed, and he came to Washington. I saw him again. Had lunch with him. He was pretty discouraged, and he said, “I can’t get anywhere.” He said, “All of them said they doing all right. They don’t want to get messed up with government.” So these plants went elsewhere, but we did get the aluminum fabrication. The Reynolds first – the RFC made a loan for their first aluminum plant, but the – fabricating plants surround the rolling mills. Fabricating plants. And then an aluminar plant in Mobile. See aluminar – you make your aluminum. You take – you start out with your bauxite, and you reduce that to aluminar, and then you take aluminar and reduce it to aluminum. But they would reduce – they’d take the baux – the raw bauxite and reduce it to aluminar in Mobile, because that would just about – I mean the shipping cost would have been cut in about half. I don’t know whether those plants are still operating at all or not.

And then there was – let’s see. Was it Hayes Aircraft in Birmingham?

Imhoff: Hayes is still there, I think. Isn’t it?

Durr: I think it is. I don’t know what it’s manufacturing now, but there – Alabama didn’t – they just wouldn’t get in on the deal. I think we’ve just got sort of a psychological block about industry. We have to bring in industry. We can’t produce – we can’t start industry around here. It’s – I suppose that’s the trouble.

But we have digressed. Maybe this is interesting background. I don’t know whether you’ve got any other questions, things you want to talk about before we . . .

Imhoff: Take a break.

Durr: Since you mention this business of the option as an incentive to the manufacturer – there was another thing. Our small staff – you see, we were trained not to get in the people. They would examine – the division of psychology We were trying to attract as little attention to ourselves as possible. So I – and the RFC had a very small engineering division. They would use them, and sometimes they would get out – a small loans business would get out and inspect a plant that wanted to borrow a little money, and the accounting division was largely keeping up with the RFC’s records. We had a [ ? ? ] and one or two more from the accounting division.

But I talked to a member of the staff working with me. I said, “Okay, we’ve all got our necks stuck out on this thing – millions and millions of dollars we’re handing out. We’ve got to move fast and without too much overhead. But I think the manufacturers in the traditional sense of the term are honest because it’s their – to their interest. Petty chiseling is not their style. If they want to – it’s at the policy level where you got to watch it. And so negotiating the contracts, you got to watch that and be pretty tough about it.” But I said, “Once the contract is negotiated and the responsibility is put on them to see that the construction is conducted decently without stealing, insurance is on everything, then say, ‘This is your responsibility. You’re doing it for our account, but it’s your responsibility’.”

So, the dispersal: the Federal Reserve would disperse the money against certificates from time to time as the project increased, and we would – we authorized the Federal Reserve to disperse it on the certificate of one of our auditors and one of our engineers. One auditor. One engineer. But many of those guys were riding – trying to ride herd on as many as half a dozen plants. So they could only give it the most superficial check. And that’s all the overhead we had.

Now when the government arsenal was – when the government – I mean the military was building these plants, they had the most elaborate set of – the overhead in their operations was something terrific, just for inspection. They had insurance experts and cost experts and everybody, but case after case of fraud caught some guy getting a payoff on insurance, and as far as I know, while I was there we had no fraud at all of that kind. The kind of people we were dealing with, that’s what I call respectable stealing. They don’t resort to the petty stuff. You can count on them on the petty stuff, but it’s the policy making. So we did work it – began to get more people in later, and I think the overhead increased, but our overhead on those early plants was negligible.

Imhoff: There’s one thing I wanted to get into a little bit. How long were you associated with Hans Klagsbrunn.

Durr: I’d been associated with Hans about four or five years before the Defense Plant Corporation started. I was in the banking side of it, the bank recapitalization, and then when that job was over and settled down to more or less a supervision of the investments we’d already made, Livingston had been my second in command, and I was asked to set up the litigation section of the RFC. The litigation – that was more of an administrative job, because we worked through agents of counsel, but it was to supervise – ride herd on it and then keep policy in line. But there was a nucleus of an organization. Senator Barkley’s nephew had the title of General Solicitor, and he had all kind of troubles, but I found that was – he had about two men working for him and one of them was Klagsbrunn. So when I took over that, Klagsbrunn was in that section, and I saw he was a pretty competent guy, and so we built – began to build up the organization a little bit, and Klagsbrunn became my second man in the litigation section. So I’d been working with him on that, and when the Defense Plant came along – that litigation section must have been set up about 1936, ’37, and we’d been working together . . .

Imhoff: You didn’t – you never – you haven’t said much about him in regard to Defense Plant. How would you characterize your relations during the time you were working – getting together on Defense Plant?

Durr: Who, Klagsbrunn?

Imhoff: Yeah.

Durr: I thought I did that. I haven’t mentioned it, because I thought I mentioned that in this article carried in the book. To a certain extent Klagsbrunn [?] – I mentioned the personalities involved.

I wanted to – right from the very beginning, I realized that we were in trouble if the examining type of mentality got in the thing, and there were some of the people around the legal section that thought the same way. But here were the two sections that had been my sections, and I knew all of the fellows in there, so when I conceived the idea – as I said before, I just got [ ? ? ] at breakfast, turned it over in my mind driving in the car pool, and then I – Klagsbrunn was – his office was right next to mine, and I called in once. Said, “Look here, here’s this defense program shaping up, and we’ve got to do something about it. Somebody has. So I – we began to – I gave him my ideas, and we began to bat around the ideas, and then Livingston, we called him too, he had some contributions. Then it was a question of selling the thing. We worked out the ideas of what we wanted to do, and then to get the legislation through. It extended from the Defense Plant, just to manufacture plants, but to set up these subsidiaries to stockpile rubber and tin and those critical materials too. We put that in the Act. And I sort of stayed in the background, because – and worked through Claude Hamilton, who was a general counsel. There – see, Claude was from Alabama, and he and I had – knew each other quite well. In fact he used to work with me and he was promoted over my head to a general counsel, rather than using – Jesse Jones called me in. He was very apologetic. I wasn’t looking for the job. I liked what I was doing, and I knew what the general counsel had to do. He said, “I just want to explain to you why I” – he got Klagsbrunn in. He says, “I think you’re the best lawyer we’ve got, and I’m going to keep on calling you on that, but I need somebody to work with congressmen on the Hill, and I think Klags” – I mean, “I think Hamilton is better at that than you are, so . . .” I said, “That suits me fine. Last thing I want is to work with these guys on the Hill.” In fact, there wasn’t any more pay. $10,00 was the top salary, whether you’re general counsel, assistant general counsel, director, or what have you.

I had – some examining division boys thought I was – every now and then I’d express some views that they regarded as a little wild, but I’d get Uncle Jesse to agree with me fairly often, when they wouldn’t. But I thought we better do that fairly discreetly, so we worked through Claude Hamilton, and he took the – he got the legislation worked out, and he goes to Jones with the idea, so we worked through Hamilton.

But again, on the publicity -- now this is sort of an after story. After I got over to the FCC, two guys showed up from Fortune magazine, and they were writing an article on Jesse Jones. Oh he had tremendous power. He had tentacles. They had on the picture – the cover story was Jones as sort of a Buddha/idol kind of thing with all the – is it Buddha that has so many arms? Or whatever. One of those Indian – with all of his various arms reaching out in all directions. So they were –got very much interested in the Defense Plant story. So I spent a good deal of time with them, and they got fascinated with the story. They went away and came back, and I told them how it all came about. Fortune had a policy at that time – I don’t know whether they still did – that when they write an article about somebody, they let him see his draft of the thing in its entirety. So they were telling me about the reaction of Jesse Jones to this story. I had said that the idea comes – Klagsbrunn, Livingston, and I had worked out this idea. So Jones right off says, “That’s not so at all. I thought – it was my idea all along, and I told them how to – what to do.” A lot of other things, and then they told me that – they said – one of them lived just outside of New York – that Jones got him on the phone one Sunday and had him on the phone for two hours putting pressure on him, trying to kill his story. But – so they changed it around. They said in that article, the origins of the Defense Plant Corporation are somewhat clouded in obscurity, but some people around Washington who seem to be pretty well aware of what was going on attribute the original idea for it to Durr, Klagsbrunn, and Livingston, three lawyers over at the RFC.

I don’t know whether that story – it must not have been – Jones must have later seen this article I wrote with [?], with Dr. [?] because my relations with Jones were very close. He called on me. He was interested – two – the two programs of the RFC that he was most interested in from the beginning were the banking and railroads, and I had the banking connection. So I would see him quite a lot in connection with those provinces. As I said, he used his general counsel more or less as contact man with the Hill, so he began to call on me for advice and suggestions about all kinds of things outside of my section. He did seem to have real confidence in me. That was one of the things that bothered my conscience, as I was saying, my bureaucratic conscience was – and I really liked the man. I had no – he was a good man to work for in many ways, if you did it Jesse’s way.

When he wrote this book – I thought I’d given that to you. Maybe I’ll take a look at it – I am – this is one of those as-told-to books, some newspaper man. The title of it is 50 Billion Dollars, and he devotes quite a bit to the Defense Plant Corporation. His figures are generally right, but he says that the Defense Plant had its origins in the late ’30s when he sent Klagsbrunn and another lawyer over to the Treasury Department to talk about what could be done toward getting a little – few dollars for the British. Klagsbrunn and another lawyer. And then in an appendix, he mentions about every person that ever worked for the RFC above the stenographic level, but I’m completely excommunicated. I’m not even mentioned in there. So apparently it must have been later when that book –because when – came out, the Kline book, because the Time – Fortune story had come out. I don’t know whether he was aware of the fact that I had talked to them or not. Maybe not.

But he urged me not to take the FCC appointment and gave me some fatherly advice, as, “You are – you’re 49 now, and you go over there for 7 years” – no, “You’re 41.” I was 41 – 42 – “and you’ll be 49, and then if you’re reappointed you’ll be 56, and you’ll spend your whole time in government. When you get out at that age of life, it’s sort of hard sledding, and a government career is not a very lucrative kind of thing. You’ve got to think about your own future, and if you’ll just stay here with me, I’ll get you – see to it that you get a very good job with some bank or business corporation or something of the sort.” So I told him I thought it was time to go.

Imhoff: There was one other area that I’d like to get into now. I said – I mentioned before the matter of protecting the government’s interest. It keeps coming up in your thinking, in your approach to the Defense Plant Corporation, even more than for other people apparently, and I’d like to know the background of your thinking on this matter. How did you develop such a refined sense of the need to protect the government’s interest? What’s all of the intellectual or psychological background to that?

Durr: I was a lawyer and the government was my client. Maybe it was that kind of thing. But I just didn’t like the idea of government handouts and government subsidies. If the government put out the money, its money ought to be protected and it will get as much back. Maybe I got some of Jones’s psychology, the banking psychology: you loan the money and you get it back. That was before the days of Keynesian economics had taken over, and so you didn’t throw your money away. That was – we were operating – all my life I’ve operated on what you call the economy of thrift. We were – it was sort of a morality of thrift, really. You saved your money. I was raised on “neither a lender nor a borrower be,” “haste makes waste,” “a penny made is a penny saved.” I never knew whether that came from Holy Writ or Shakespeare . . .

Imhoff: Or Ben Franklin.

Durr: . . . or Ben Franklin, but nevertheless, that was sort of the atmosphere and the psychology in which I was raised really, and you didn’t cheat, cheat the government or anybody else.

Imhoff: Were these considered radical ideas among your colleagues. You mentioned that you’re often panned by your colleagues for having radical ideas.

Durr: No.

Imhoff: There’s nothing radical about what you said.

Durr: No. As a matter of fact, I was saying the few radical ideas I had, very frequently Jesse Jones agreed with me. He’d call in – he had a way of calling in Clausen and Husbands and myself to talk about some things. They were always – this was – I remember one of the issues was – I did some work on redrafting this Banking Act of ’35, I believe. That was [ ? ? ] and some provisions in there, and I was – I’ve forgotten what it was now, but some provision for – it did curb the power of the bank or limited the – they tried to – this interlocking directorship of banks, that directors, officers, and employees of the banks shouldn’t at the same time be directors, officers, and employees of public utilities or other things. That was – for that day and time, that was RFC that was radical. But Jones agreed with me.

Imhoff: What was it . . .

Durr: I remember the chain banking. This was – we’re moving into that more and more. This was not branch banking, where it makes sense at banks, but they had holding companies that owned a series of banks. I found that they were shifting around the assets from one bank to the other, and that created problems. A lot of them – some of the banks were being bled to the benefit of other banks that were favored. They’re going broke, and stockholders – this was before deposit insurance. So I [?] a strong [?] to put an end to chain banking, and Jesse agreed with me on that. Generally, we were – he thought I was going a little too extreme. I wanted to shut them up right now, and he’d say, “No more of them, but we’ll let those in existence take about five years to liquidate.

So they were – my ideas were radical only by, say, the Sam Husbands – Howard Clausen philosophy.

Imhoff: But wasn’t it . . .

Durr: And really, going back to it, I would say that – I’ve used that expression before – John Snyder, Emil Schram, and I were pretty much the left wing of the Reconstruction Finance Corporation.

Imhoff: I remember you . . .

Durr: Here was Snyder, a very conservative Secretary of the Treasury. When he went out he was executive – chief executive of one of the big St.. – was it? – St. Louis banks. And Emil Schram became president of the New York Stock Exchange. So that was the kind of radical company I kept.

Imhoff: Right. Wouldn’t it have been thought radical by a lot of people at the time to even envisage a government interest apart from the larger interests of the industrial-financial community?

Durr: I think so. This idea of a government – the government having title, even if it was an option, was very shocking, and as I said in this – I think that’s in the Stein chapter, that Knutsen said it was against his policy for the government to have title to these plants, option or no option. This was a shocking thing for the government to hold title to a manufacturing plant at any time. That was considered very wild by the conservative business interests.

Imhoff: Let’s drop that for the time being.

Durr: We had talked a little bit earlier about the differences – difference in the attitude of industry. Some of the old established industries being very hesitant about expanding and taking part in the defense program, and some of the smaller and newer industries, particularly aviation, seeing the opportunities to really become a big business, and they were not dragging their feet at all. They were raring to go.

I found a somewhat similar situation in the army – among the army people. I had very good dealings with a General {?Camel] of army ordnance. He seemed to be a little more imaginative than others, but I can remember a Colonel [?], in ordnance, who talked like Jesse Jones in his early days about putting out the money and getting it back. I was raised to appreciate the value of a dollar, and here all – I was throwing all this money away. Here was the military man that was being very pennywise.

But I found in the army, the people who were raring to go there were the air force officers. They wanted to go. And I found more imagination, more flexibility. Of course, like the aviation industry, they were sort of a new group, and they had been stepchildren. I don’t know whether you remember the – too young to remember the old battles with the – General Mitchell . . .

Imhoff: Yeah, I’m familiar with that.

Durr: . . . was originally an air force man, and he battled for the – more air force and bigger planes. I think he was – became a very controversial figure. I think they ultimately cashiered him or at least maybe they retired him pretty soon. But I never found any reluctance in the air force personnel to go ahead with the programs. In fact they were pretty eager in ferreting out people who were competent to produce. They were very good in that job, pshing as hard as they could and getting some things going.

Imhoff: This is kind of odd, really, it seems to me, because the ranks of the regular army were just as depleted at this time as the ranks of the air force. There wasn’t much of an army. They didn’t really have that much equipment or that much modern equipment. Didn’t they see this as an opp – real opportunity to pursue . . .

Durr: There is no occupation I can think of – ever since World War II we’ve been on a war, and the situation’s a little bit different, but the peacetime army was about as dull an operation as you can conceive of. There was absolutely nothing to do. And these guys, they get ingrown and sluggish. Maybe the Corps of Engineers had to use a little imagination. They had the rivers and harbors and things of that sort. But in general the army in peacetime was just around for parades. That was all. Nothing to challenge their imagination.

But aviation, to be in that, you – here was something entirely new. New types of planes coming along constantly. New developments, and you had to be on your toes constantly in – nothing stagnated – stagnating about the life of an air force officer in the earlier days before the air force became as big as it is, because they were both fighting for a place in the military sun. And also, you couldn’t have too much incompetence in dealing with the modern – lives were involved. They wanted good planes. They knew planes, and they had to. So they were a more imaginative crowd on the whole, and I’m referring now just in imaginative in a limited sense, but certainly were imaginative about the needs of the air corps itself.

Imhoff: Did you sense . . .

Durr: It was air . . . I believe it was the – it was air force then, wasn’t it?

Imhoff: Yeah, army air crops.

Durr: They were called the air corps. They were just part of the army. You had the Secretary of War and the Secretary of the Navy, before you had the defense commission with the three branches.

Imhoff: Did you sense much division between the civilians at the Defense Department – or at the War Department, like Patterson, and military people at this time, or were their interests running parallel? Or did the army tag along where the civilian War Department took them? Or just what was the relationship that you sensed there?

Durr: You had some higher-ups over there. You had McCoy and people of that sort. But a lot of people began to move in. The same type of people that had moved into the government generally, beside the real production people. They needed them out at the plants. So you got the manipulators. And there were a very substantial number of people in banking and investment banking who began to get in – tried to get in strategic positions in government. They were going to help in the war effort, but you can be sure that they were not overlooking their business interests.

I would think on the whole, Patterson’s office – of course he had a small group of civilians right around him, after he got rid of Proctor and [?Egian], this other crew came in, and they all wanted to do a job. I don’t know what the others were doing over there. It was – didn’t find them doing much in the way of getting production going. Maybe they were doing some things I didn’t know about.

Imhoff: So then you had very little contact really with the actual – with real military people. You most – all of your contacts were with the civilian defense apparently.

Durr: I had a good deal of contact, I say, with General [?Camel]. We were on the phone to each other very constantly. And I can’t even remember their names now, but they were less officers in the air corps, the ones that I had contact with. But I – my contact with them went through Patterson’s outfit. But I would see them and talk to them about specific problems in specific plants, and occasionally we would have lunch together and bat around ideas.

Imhoff: How much contact was there in your experience between the army air corps people and the people from Wright and Bendix and the other aircraft – these fledgling aircraft . . .

Durr: There was a contact, but certainly not the pals spirit that you have between the air corps and industry today.

Imhoff: I was wondering.

Durr: You didn’t have retired colonels and generals working in top positions in Wright Aviation. That was not one of the things that you did in those days. [end of side A]

Durr: Let’s make sure that this side is recording. 1, 2, 3, testing.

In speaking of the relationship between the air force people and the aviation industry, I think they did know each other pretty well, and there were experimental contracts, as they were called in that day and time, given to the industry to develop new types of planes and try to make improvements. Rather interestingly, the stage of development when our program began, we were so desperate for any type of plane at all. And here was one plane called the P40. That was the plane that Chennault used out in China.

Imhoff: The Flying Tiger?

Durr: Yeah. It was made by Wright, but they were ready to go, so they wanted to turn out P40s at a terrific rate, just because they could get any kind of plane. I remember going up to the Wright plant up at Buffalo and watching some of the construction, seeing some of the prototypes. In the first place I think the maximum altitude of the P40 was about 18,00 feet, and they were very uncertain up there. The fighting level was more 12- to 14,000. It was pretty much tops. And no armament. About the only thing they had in the way of protection was a sheet of steel right behind the pilot’s seat, a very narrow sheet of steel. And I asked if they thought it was – taking me around, showing them to me, I said, “This looks like it’s pretty thin.” I said, “Is this any kind of protection for the pilot?” He sort of shook his head. He said, “I put a .22 long rifle through that sheet at 20 yards.” But he says, “We can’t have the weight. It’s just a question of weight they can carry.”

Here was the plane we were desperate for, and within a year or so you had fighter-bombers. Fighter planes were far more agile than the P40, and maybe carrying along with it 500 pounds of bombs. So the development of planes was terrific.

One of the things that would – that was – there were really some fantastic production jobs. We were in close touch with the British, and they would discover in combat weaknesses of the planes, or strong points, and they were learning these things. After a plane got on the assembly line, it had all been designed, changes would come through to meet some of the – meet the experience they’d had – the British had had in battle. So you had to have a pretty close relationship between the air force people and the aviation manufacturers in technical problems of that kind. But certainly not the relationship you have today where several of the retired generals and admirals and so on go right to top jobs in the industry.

Imhoff: What did the army air corps men want from you in terms of a Defense Plant contract, or didn’t they care? Did they – you say they tended to be production oriented. Did they just want to get [?] out . . .

Durr: Yes.

Imhoff: . . . and leave the means up to you?

Durr: You see they would certify to the need. They would say, we need a plant capable of producing so many thousand airplane engines of a certain type per annum, and we think such and such a corporation is competent to set up and operate that plant. Now, you see, we didn’t buy supplies. We just set up the plant. The military had their contract for the engines or planes or airplanes or whatever they’re flying, or the parts. So they didn’t – all they wanted was results. They wanted planes, and they wanted them in a hurry. [ ? ? ], for these change orders, they were very conscious of what was going on. Of course their own necks were at stake in a lot of these changes they wanted to make, but that was largely a contact between them directly and the manufacturers. They would – they’d give the manufacturer a free hand. Occasionally it might happen that we might have to change the contract a little bit to get a manufacturer to make a few more of a same type of thing, or some kind of a change order might result in an increased cost of machinery. That didn’t happen very often.

Imhoff: It seems to me that in the early years – in ’39, ’40, ’41, that the navy would have had great need. We talked about the army air corps, but in terms of ships for Britain and this sort of thing, did they – were they pushing you? Were they pushing Defense Plant Corporation? Were they anxious to use your . . .

Durr: We did some in the way of shipyards, but we didn’t do too much of that. They did that more directly. Of course a lot of them were built by the navy itself. And then – I’m not sure. Kaiser was building the Liberty ships. They were trying to – they were desperate for cargo ships and anything. Kaiser had this setup, putting these ships on the assembly line and grinding them out. I don’t think – he hadn’t when I was there, and I don’t think where we – we worked with Kaiser on some mag – a magnesium plant, but I don’t re – when I was there, we didn’t do anything about the shipbuilding, but I – how he got his financing, I don’t know about that. But we did – and of course the navy was very much interested in naval aviation too. They were interested in plane production. As I recall, the Grumman was one of the popular planes with the navy. And I think there was some interchange between the – not too much jealousy at the time between the army and navy aviation. They would work together on types of planes, but the navy might – for the carriers, it might need something entirely different that wouldn’t fit in with the army operations, because you’ve got to land on these short runways, the decks, and you have to have the launching – catapult launching, and things of that sort.

Imhoff: How about the building of carriers? Is that something that you got involved in at all?

Durr: No. No, we didn’t get involved in that. No, that was – they did that directly. I suppose they had contractors to do it, but basically it was a navy job with the subcontracting of different parts of the operation. I think that’s the way they operated.

Imhoff: Why – this is kind of puzzling, why the army air corps, with essentially new needs – new types of fighting aircraft – would have, through Wright and Bendix and other companies, used the Defense Plant contract, but the navy, also with essentially new needs – aircraft carriers, this type of thing – why they didn’t? What was the difference there?

Durr: Of course the building of a carrier, it was a – it wasn’t a supplies contract. They wouldn’t have set up a plant that might – would turn out hundreds and hundreds of engines. Here was – a carrier was like building a plant in itself. A carrier cost as much as a – as one of the biggest aviation plants, and for one piece of equipment. It’s a very complicated job, so that was handled very differently.

In general, again, this thing sort of developed – the army ordnance continued to do a lot of the traditional types of things. Traditionally they had made high explosives, and they still – a lot of the power plants and high explosive plants were built by army ord – the army ordnance. I think they did expand some of their own plants for making small arms ammunition, things of that sort. But we were in the – largely the – what we call the multiple purpose type of plant, the plant that was capable of producing wartime or peacetime production, and the – a plant making, say, airplane engines, it could easily be converted over to making something entirely different. It’s just a question of changing around the jigs and dies and fixtures, and realigning the machinery, so it can make peacetime or wartime goods.

Imhoff: That goes – that follows up on something that Klagsbrunn mentioned in his article. He thought that one of the principle problems that RFC could deal with, in terms of financing wartime industries, was this business of minimizing postwar dislocation, providing for plants that could easily be retooled or slightly redesigned to do another job.

Durr: You – I think you’ll find something of that. This memorandum I wrote for Jones. I ran across a carbon [ ? ? ]. I showed it to you. I don’t think you had time to read it.

Imhoff: No I didn’t.

Durr: But this was before the program really got underway, and I was making the arguments for our type of operation and the best way to do the things. I did mention the problems of dislocation and what you did with the plants when it was all over, and so on. You might find that interesting to read. I was just theorizing and speculating and making a little argument for our setup.

Before we move on to other things, I want to come back to that question you asked just a little bit earlier, why I was concerned with protecting the government’s interest. I answered that as best I could at the time, and it seemed to me that the answer to the question was rather obvious. But I’ve been thinking about it, and it occurs to me that the question was prompted by something that has taken place to our society as a whole, a deterioration in the morale climate. Somehow it is not expected that government officials would be entirely honest, if you want to use that expression. And I think the climate has deteriorated. I don’t regard myself as having been an exceptionally scrupulous public official at the time we were talking about. I think I was, at least from that standpoint, not trying to feather my own nest. I was acting rather traditionally. But I got to thinking about your question, and I find it rather disturbing from the standpoint of what it might reflect in the way of a declining confidence in government. I think the early days of the New Deal – in fact the days of the New Deal – government during that period was quite honest. I don’t say that you didn’t have some people around who were trying to feather their own nests, but they were exceptions. It was true, politics wasn’t suspended during that period, but the politics operated within certain recognized limits. There were just some things that you didn’t do.

But I think back on your question – I remember a conversation I had only about a couple of years ago with a friend who I would regard as a very honest man. He was reading some magazine article in which – which was dealing with the government contractors and listed some of the top contractors for the government in relation to the amount of their contracts, and high up on the list – I think it was about – it wasn’t first. It was in the first third – was McDonnell aircraft. I believe that has now become McDonnell-Douglas. I told my friend in effect that we put McDonnell in business with the – in the early days of the Defense Plant Corporation. And I went on to tell the story that somebody in the military, I think, discovered him. He was operating out of little cubby-hole leased from the St. Louis airport, making some kind of airplane parts, and they recommended him for a small plant to be set up by the Defense Plant Corporation, so that he could extend his operations. They said he was a very good manufacturer. So I negotiated the contract with him, with McDonnell, and as I recall, this was about 2 1/2 million dollars for his plant. I also mentioned the fact that we had expanded Douglas from a very small operation into the giant that it later became.

His response to that was, “You knew what was going on. Why didn’t you get in on the ground floor, get some of the stock?, which you could have been – picked up cheaply, and you could have been well healed by now.” My response was, “Look here. There’s such a thing as a conflicting interest. When you’re working for the government, you’re working for the government.” This is just one of those things that wasn’t done. But his response to that was not that I had been a reasonably honest public official, but that I was a plain damn fool.

So I think that there has been a very serious deterioration in the moral climate. I think I can mark the turning point. I think that this deterioration began when the – I think it began when the businessmen were brought into government to help with the defense program or the war program. They brought into government an entirely different sense of values. Government, I think, at that time, we, without mouthing it, I think most of us went along with the old cliché that a public office is a public trust. The – in equity, the responsibilities of a trustee are pretty exacting. The trustee not only can’t pocket any of the money of the trust, but he can’t use his trust position in any way for his own personal benefit. He’s got to account exactly to the beneficiary of the trust. At least that’s the way the law used to be, and theoretically it’s still that way.

But I think that that was an attitude that most of us during the New Deal days had about our responsibilities in government. Here was the RFC, which was a conservative agency. It certainly was never thought of as being the enemy of business. But I can remember quite early there was a character who was or had been chairmen of the Democratic National Committee, and he began to represent a lot of clients using his political position, and the word came down right through Jesse Jones – I think it originated in the White House – if this fellow comes around representing his clients, you send him away and tell him to get them another lawyer. We just can’t have him in this position, a man in this position using his position to pressure government agencies.

And I remember one senator, whose name I won’t call, whom I knew pretty well. He was pretty bad about using – bringing political pressure to bear. There was no – there was some concern that he wasn’t faring too badly himself. He was getting a little more prosperous than a senator’s salary – which was then $10,000 – would suggest, so word just went down the line, that whenever you get a call from this senator, or whenever his son shows up – his lawyer representing an applicant for RFC loan, you watch out. Be sure that you be on your guard and be sure that he doesn’t get any treatment that anybody else wouldn’t get.

But so many of the – the business ethic began to creep in, and so many of them working for the government were going back to business, and they couldn’t shift their loyalties. That’s about all I want to say about that right now, but it’s – I think there has been a deterioration in the moral climate, as I’ve said.

Imhoff: You mentioned in those remarks that you felt the deterioration of the public service ethic was a result of bringing business men into the government. I gather of this in and out flow that we have between government and business now, it’s quite a common thing. I was wondering if you thought that was true even during your years with the Defense Plant Corporation. Did you see that happening then, and could you give examples?

Durr: I can give examples. We did not at that time have any of the business people within the structure of the Defense Plant Corporation itself. I told you earlier, I believe, of the battle we had to even keep it clear of the Jesse Jones boys, to try to get some who were independent of his influence. We were a very small group of more or less the old type of government employee, the New Deal type of government employee. But I saw this not within the Defense Plant Corporation, but in other agencies that we had to deal with. See, we did not initiate projects. It’s not for us to say how many airplanes the country needed . . .

Imhoff: Oh yeah. So you were insulated from the worst of this sort of thing.

Durr: No. I wouldn’t say that we were insulated particularly. We would finance these plants on the recommendation either directly of the military or of the Defense Commission, as it was early, although that went through several transitions – the Office of Production Management. I think it was another one intervening. It was sort of a continuation and reorganization of the early organization. But it was the resistance to the program that we ran into, and I believe I did tell you – you’ve gotten that from reading this Stein book of Knutsen’s attitude, saying it was against his policy for the government to have title to plants, notwithstanding the fact that Congress had authorized it. He was the one – he was the businessman and felt he was called on to set the policy. Knutsen’s lawyer – this was before I ran into this conflict with Knutsen. [?] was being set up. A man named Fred Eaton, who came from a Wall Street law firm that represented General Motors, and Knutsen had brought him in as sort of a legal advisor. Whether Knutsen brought him in, or whether General Motors just said, “We’ll let you have this man,” I don’t know. So I tried to – knowing that we would have to work together a little, I got in touch with him and asked him to have lunch with me, so we could more or less coordinate our work. So I asked him the question. I said, “Now exactly what is your job?,” wanting to know exactly what phase of the defense program, what particular activity would fall under his responsibility. But his reply to that, “As I understand my job, it is to see to it that the rights of industry are protected.”

Imhoff: I remember that story.

Durr: I think I told you that story, but you . . .

Imhoff: Did you find that typical of the attitudes of people that you worked with in the Defense Commission and other agencies of government?

Durr: You found very many.

Imhoff: Would you say it was typical for the great industries to have a man like Eaton representing their interest in government?

Durr: I think it was fairly common.

Imhoff: Could you give some other examples of individuals and which industries that they would be representing?

Durr: I can only talk about those that I directly had a conflict with. Now here was – I mentioned Proctor, who was over in Patterson’s office. Exactly who he represented, I don’t know, but there were few occasions after Patterson began to back us up. He protected us from a lot of things. But people like McCloy, who is given credit for doing a great job there. Every now and then I felt like he was trying to lick us on what we were trying to do.

Imhoff: This is John J. McCloy?

Durr: Yeah.

Imhoff: What was he doing at this time?

Durr: He was – I don’t remember But he was working in the War Department at the time. This was . . .

Imhoff: This was before he got with Strategic Services? He was with OSS, wasn’t he?

Durr: I don’t know whether he ever went in there later or not. But he was the big banker. That’s John J. McCloy. I believe that is who it was. I didn’t know he ever got in the Strategic Services. Maybe . . .

Imhoff: Yeah, because he went to the CIA. He was the – he was involved with CIA. He followed Allen Dulles as Secretary of the CIA

Durr: I didn’t follow his career too much.

Then here is the situation you had. Now let’s talk about the aluminum program, without calling specific names there, because I don’t know who they were. Here was this dependence on business.

So, there was a concern that we would need a tremendous amount of aluminum, for example, and maybe magnesium metal too. So the Defense Commission set up an advisory committee on light metals. Who advised us? All the ingot aluminum in the North American continent was made by Alcoa. Reynolds was beginning to try to fight its way in, but it hadn’t gotten anywhere at the time. Dow Chemical Company was about the only manufacturer of magnesium, and they were a rather small operation at the time, but the – Alcoa was the dominant one.

After the study, they came out with a report which said in effect – and I don’t – don’t hold me to the exact figures, but as I recall them – that 400 million pounds capacity of aluminum is all this country will need, whether it gets into the war or not, and Alcoa already can provide that through plants that it already has in operation or under construction, so we needn’t get concerned about expanding the aluminum manufacturing capacity. Of course, that was – that sort of outraged the congressional delegation generally. That was so outrageous, so this commission was abolished and later another set up – others brought in to do the job.

But you ran into quite a bit of that kind of thing, and when we finally did try to get the aluminum program going – maybe I better not get into that in any detail. It’s a different story.

Imhoff: I’d like to get into the aluminum business a little bit. I made some notes here in reading Jesse Jones’s book. I was going to ask you, why did Jesse Jones – why was Jones so reluctant to deal with Reynolds Aluminum? Did not –did Jones not see the need for increasing production of aluminum ingots?

Durr: He – here – earlier . . .

Imhoff: It all seems sort of [ ? ? ].

Durr: . . . he didn’t see any need for the expansion of production at all. I think I’ve said earlier, and I think I said it in the Stein – the chapter in Stein’s book – that he was the banker and prided himself on the RFC’s profit and loss statement. He loaned the money, and he got it back with interest, and he could not see the danger in Europe. I made some remark, and he said, “Suppose this guy does – Hitler does take all of Europe, that’s no skin off of [?],” and so on, “and I think I could horse trade with a guy like that.”

So he was – it was lack of imagination, but strangely I don’t know exactly what the political pressures were, but the – I didn’t have anything to do with this. This was before the defense program got going. A loan was made, as an RFC loan – one of these that had to be fully and adequately secured, you know, under the RFC act, for an aluminum plant in north Alabama, in the TVA area, at a place they set up called Lister Hill, in honor of Senator Hill. The RFC and Jones – I wasn’t in on that deal. I didn’t know what was going on. But he did go along with that loan. There might have been political reasons for doing it, but of course when the Reynolds Metals, which was not a large outfit at the time – when it had met the RFC requirements for providing full and adequate security, not just – they had to put a lot of their money in themselves to back up the loans, to cushion the loan, and they were pretty well hog-tied as far as capital was concerned. They got this one plant, but they would have had a hard time on their own, setting up any more, while Alcoa was an extremely well-healed outfit.

We started dealing with the aluminum company through – as I recall, the first thing we – the Defense Plant did in the way of expanding the production of aluminum was not in the field of making ingot, but in fabrication. As I said, Reynolds did have a smelter, but no facilities to turn out the finished product. So I got a call one day from a lawyer named Marbury. He was another one that Patterson had brought in. He came from a Baltimore law firm, but apparently was a younger fellow, not committed to any industry. He called me up and said, “We got an emergency situation here, that Marion Kasky” – and I remembered Kasky from the earlier days. He used to be secretary of the Chamber of Commerce in Montgomery. He rose to be executive vice president of Reynolds Metals. And he says the French had some rolling mills that they had had built in this country, and these rolling mills were ready for shipment on the docks in New York, and France fell. And they were there. Of course, to produce these rolling mills was a year or two’s work in making. It was quite a tremendous – a lot of machinery in there. So he said, “We’ve got to get our hands on that, and Marion Kasky’s in the office right now, and I’m going to send him over to talk to you about it.”

We renewed acquaintances, and he told me the story pretty much as Marbury had over the phone. So I called Marbury back. I said, “Give us a letter” – what we call those letters, I’ve forgotten now – of – “We’re get ready to go ahead with it. You send this letter by messenger directing us to do it.”

Imhoff: The letter of necessity?

Durr: A letter of necessity, whatever it was.

So I got busy with Marion Kasky, and in a couple of hours, why we had a contract drawn and a telegram to the Federal Reserve Board to let Reynolds have the money for this rolling mill. So in just a matter of a few days, why that rolling mill was on its way to Alabama to be set up as part of the operation there.

So we set up some other smaller plants for Reynolds – what they call extrusion plants, where they run this – they fabricate the aluminum, press it into forms for airplane wings and structural aluminum and things of that sort. We had set up a plant for them in Kentucky, right outside of Louisville. It was a small operation, and I think it was about $3,000,000.

Again, the kind of pressure you would get into. We began to get telephone calls – and nobody would go on record – from some people over in the Defense Commission, saying that this Reynolds is doing a messy job down there. There’s a – they definitely don’t know how to do the job, and this is – these extrusions are very vital in the defense program, and you’ve just got to put – cancel out that contract with Reynolds and turn it over to Alcoa if you want to get some results, because Reynolds just doesn’t have the personnel, and they don’t know how to do it.

Now these were so-called experts. These were fellows who’d come in from the outside to advise us. We didn’t have much of an engineering staff, but we had some people – a few engineers around that were fairly good, so we sent one of them down to Louisville to take a look at the operation. He came back with his report. He says the trouble is not that they’re botching things or moving too slow. But it does look messy, because they’re moving too fast. He said they have go their extrusion plant set up, but they haven’t finished their finishing plants that smooth the stuff off, so they’re working all out getting that going, but meanwhile they’re throwing what they’ve got into production, and they’re just producing these extrusions at a terrific rate and sort of stacking them up so they’ll be that much ahead when the finishing plant is on.

So this effort to – right then and there to sabotage Reynolds as a customer. Then, there’s a whole lot of shenanigans.

Imhoff: You don’t know who within the Defense Commission was responsible for that?

Durr: I just don’t know, and I couldn’t call their names at that time. Obviously the Alcoa influence.

Imhoff: Yeah, right. I was just wondering if we could nail it down a little bit.

Durr: I really can’t.

Imhoff: Why did Jones – why was Jones so reluctant? He was under pressure from Roosevelt to break up Alcoa’s monopolies in aluminum.

Durr: You’ll just – you’ll have to just draw your own conclusions. I’ll go ahead with the rest of the story.

We had gotten – see, after this screwy report saying 400 million was all we need, this was turned over to another outfit. I believe that at that time the Defense Commission – that the role of the Defense Commission was being performed at OPM. We’ll have to look at the sequence of these organizations. And they had a different type of group in there to make a further study on the needs, and they would not be the military, but the OPM would certify this, because this would not be military contracts. The military contracts would be with the manufacturers. This was a raw material, and OPM would certify that.

So we had some – I had my contacts, and again, you ask me what the name of the individuals are. I don’t remember right now. But we worked very closely, and the general idea – we would see each other at lunch, and we’ve got to get some competition in here.

So finally they were ready to come out with their report and their recommendation. One of them called me - this was on a Saturday morning – and said, “I thought I’ll put you on notice that we’re going to issue our certificate of necessity” or whatever the title of that paper “it’s coming out Monday. We’re sending it over formally on Monday, but if you want to come on over here, I’ll show you the carbon. I’ll let you have a carbon of this.” So I went over and got it and saw this was – as I recall, this was recommended: about 600 million more pounds capacity. Alcoa was to have the biggest part of that, but Reynolds was given another – allocated another substantial plant, and, as I recall, [?Bond] Brass and Aluminum. Olin Corporation. There were about four or five newcomers being brought into the field, where they were authorized to build and operate these plants, and we would set up the arrangement.

So when I got that I immediately go to John Snyder. I said, “Look here, John. Here’s this thing’s coming over here, and if we want to get anything done and get any kind of a decent deal, we better start off with Reynolds. We’re working with those boys, and they’re – we know they’re competent, and we’ve got a working arrangement. So if we can work out a decent deal with Reynolds as a bellwether, then Alcoa’ll be in a hell of a position demanding more for themselves.” So he agreed, and we got Marion Kasky on the phone. He came over that afternoon. So Snyder and Kasky and I sat down together with the – we’re talking about how we’ll go about this thing. So I asked Kasky – I said, “What are your terms?” He said, “we’ll built this plant, or any other plants the government wants us to build, at cost. Not cost plus a fee, but at cost. We will operate the plant and produce the aluminum for the government’s account and let the government set the price on the aluminum.” He said, “You think we seem to be a [ ? ? ] institution. Don’t you – I thought you were surprised at that.” I said, “No, I’m not too surprised at it, but just tell me why.” He said, “Okay, I’ll tell you why.” He said, “We’ve been operating for years as a fabricator and dependent entirely on Alcoa for the ingot.” He said, “Alcoa doesn’t care whether it makes its profit out of upping the price of the ingot or on its finished product, so they can put us out of the fabricating business any time they want to, just by upping the price of the ingot. So what we’d like to see,” he said, “when this emergency is over, maybe we’ll arrange somehow to buy that plant, which would be nice for us to have some more ingot capacity, but whether we can get it or not, we’ll feel a whole lot more comfortable if there are about a half a dozen manufacturers of ingot, than only one.” He said, “This makes all the difference in the world whether we survive in the fabricating field.”

So we talked in detail, and we sat down and just with a pencil sort of outlined the deal. And so we said come back Monday morning when we get this formal certificate and we’ll get the stenographers in here and knock out the contract.

Monday morning comes, and bright and early – I had hardly gotten to the office when Mr. Jones’s secretary calls and said, “Mr. Jones wants you to come up to his office.” So I go up there, and I found Mr. Jones is in a big conference room, beside a big table there. There already sitting around the table was Arthur Davies – Davis, the president of Alcoa; his chief engineer; as I recall, Oscar Ewing was in, their lawyer – later became first head of the Social Security; and Will Clayton; and quite an array of people from the OPM.

So Jones starts off. He said, “Gentlemen, I think the thing for us to do” – see, he had apparently gotten wind of the fact that Snyder and I were working with – I don’t know how he got the word, because we’d been very quiet about it, but somebody probably saw Kasky around the building. So he decided – I said – “I thought we better deal with the big boy first. That’s the way we’re going to go about this thing.” So he started out asking some rather stupid questions about what was Davis – how they made – what aluminum was made out of. And Davis started out telling the a-b-c’s. “Now you’ve got the bauxite, and it has to be of a certain richness, and then you reduce that bauxite to aluminar, and you get – if the bauxite is rich enough, you’ll get for every four pounds of bauxite, you’ll get about two of aluminar, and then you smelt the aluminar, and you’ll get about a pound of aluminum for every two pounds of bauxite.”

This goes on for 10 or 15 minutes, and then Jones says – he says, “There are too many people around here that negotiate a contract.” He says, “Arthur,” saying to Davis, “come on in my office and let’s you and myself get together and work this thing out.” So the rest of us are left sitting there. We thought maybe they might come back a little bit later, but they just – they stay in there, so finally we get the word and we just disperse and go on back to our offices.

About a week later, Jones calls me and Sam Husbands – asks us to come up to his office. He comes out, and he has a one-page memorandum. Jones always says that anything you can’t say in one page is not worth saying. He hands Husbands and myself each a copy of this thing. He says, “Here’s the deal I made with Arthur Davis” – it’s outlined, this thing – “and I want you two fellows to look it over and let me know what you think, but I’ve got to make some telephone calls. Sit out there, and I’ll be clear in about 15 minutes.”

So Sam and I sat there in our office and read the contract, and we go back in. So Jones says to Husbands – Husbands was an honest guy, basically, but whatever Uncle Jesse said, that was – “What do you think of it?”

Jones starts off by giving us a little line, that he thought the big boy, that would be the tough one and get that behind us, and he tells how he had to persuade Arthur Davis – he’d sell him on the idea that he must be smart and go in partnership with the government, and this was the product, and what do you think of it? Sam said, “Mr. Jones, I think you’ve made a mighty good deal. I think this is a good deal.” So he turned to me. He said, “Cliff, do you agree?” I said, “No, Mr. Jones. I don’t.” He says, “What’s wrong with it?” I said, “In the first place, you’ve given the entire 600 million – assigned the entire 600 million to Alcoa, when the OPM gives Alcoa not only” – I think 250 - 300,000 – might have been four. I don’t know. But it also allocates plants to Bond Brass and Aluminum, Reynolds, and so on. And I said, again, there was a provision in there that the government would put up 100% of the cost of the plant. It would lease them to Alcoa for five years with a right of – an option on Alcoa’s part to renew the lease for another five years under the same terms and conditions. If the demand for aluminum fell off so that there was not enough demand to keep all the plants going, then Alcoa would have the right to shift all production to the plants that it owned outright, and, in any event, the price of the aluminum produced in these Defense Plant plants would be the same price as that charged by Alcoa for its own plants.

At that particular time, the Justice Department – Thurman Arnold was head of the Anti-trust Division, and they had an anti-trust suit against Alcoa. I presented my objections as vigorously as I could to Mr. Jones orally, and so he told me to go ahead and draw up the contract and get in touch with Arthur Davis – I mean Oscar Ewing, who was the lawyer for this deal, and draft up the contract.

I was very deeply disturbed about this thing, but I’d had my orders, exactly what to do. So this is a Friday morning that we got to this point, and Ewing and I get together. I’m – things are pretty hectic, and my phone’s ringing every five minutes. So Ewing finally says, if I think it might save time, “if you will go along that way, I’ll go back to my office, and I’ll take some of your standard boilerplate from your standard contracts in this deal, and I’ll dictate a working draft of this contract, and then we can – we might have a little more leisure tomorrow, less interruption, and we can sit down together from that – and work from that draft.” I hesitated a moment at the idea of Alcoa drawing up the contract, but then I had something else in mind. I said, “That’s fine, Oscar. That would be a big help.”

So he takes it over, and he comes back Saturday morning with his working draft. He hadn’t pulled any fast stuff. He’d just taken the deal that Jones and Davis had worked out and folded it into some of the standard provisions that went along with the leases, but this gave me my chance of what I wanted to do. You know, sometimes a memorandum in the file can be very useful. But you know, you historians, you have to find something on the record, but who in the hell makes a record, and why? I may have refrained from . . .

Imhoff: Why not is more important?

Durr: . . . refrained from making them for reasons having nothing to do with the convenience of the historian. But the Truman committee is going in – the Truman investigative committee – and they were – there was a good deal of concern being expressed about the – Alcoa’s monopoly, and I knew that they would have a pretty healthy attitude toward continuing this monopoly. So if I just sat down, and after my oral – after my conversation with Jones, just put in a memorandum to Jones what I’d told him orally, it would be so obvious why I was doing it. When Ewing comes back, I don’t say, “Here’s what’s wrong with your deal,” but, “I’m sending you – you might want to look at this draft over the weekend,” and here’s what’s wrong with Oscar Ewing’s draft, and I say the same thing that I told him orally.

Bright and early Monday morning he calls me up to his office, and he says, “Cliff, you’ve said in this memorandum here that these other plants – Reynolds, Bond Brass and Aluminum, Olin, and so on have been approved to build the plants and let us operate them.” “Now,” he says, “I got one of these photographic minds.” He says, “I see something, I just remember it in detail, and I remember that certificate of necessity they sent over, and they did say that these other companies would operate the plants, but that Alcoa would build them all.” Of course that was one of the concerns that some of the Reynolds people expressed to me, is, if we’re going to operate these plants, we want to be darned sure we build them, because we don’t know what we’ll find ourselves trying to work with if Alcoa does that. So I said, “Mr. Jones, I think you’re wrong about this recommendation from the OPM. “Oh yes, sir, I have a photographic mind.” So I reached in my coat pocket and I pulled out my carbon. I said, “Here’s what it actually said.” Jones didn’t pull out – he had the original. He looked at it – looks a little unhappy, and then he said, “You – I’ll tell you what you do. You just take this 400 million pounds and draw up the contract with Alcoa, but say it in the contract, that Alcoa will build such additional plants as we request them to build under the same terms and conditions. So don’t go the full 600 million now. Just take the 400 million.”

So I get back with Oscar Ewing, who was then Chairman of the Democratic National Committee, and I said, “Look here, Oscar. You know, you and I may find ourselves in trouble.” I said, “You’re sort of vulnerable, Chairman of the Democratic National Committee, and you know they’ll likely be looking at your pretty carefully.” I said, “There is this Truman committee going, and they might get a hold of this thing, and I think it would be pretty embarrassing to both of us to try to justify this thing, particularly in view of this anti-trust action that’s pending,” and Ewing agrees with me. So we get together and re-draft the thing. It was still a pretty horrible contract, but we get around the anti-trust division – the anti-trust violations and we get a little more protection in there.

So Ewing and I go back together to Jesse Jones with our new draft. Jones takes a look at it. He calls Arthur Davis, who comes over, and Jones and Arthur Davis overrule their respective lawyers, and we’re told to put back – put it back like it was. So I think Ewing is – he’s getting pretty worried about this thing. He was a pretty decent guy, but he knew he was vulnerable in his position with the Democratic National Committee. So, what in the hell am I going to do with this thing? Now I got [ ? ? ] again. So I go ahead and work with Ewing, and we get it up just like Jones told. So I take it up it to him, and I said, “Now look here, Mr. Jones. You know the lawyer who does the thing is supposed to put his okay on it,” and I said, “In view of the fact that this anti-trust suit is already pending against them, I don’t want to take the responsibility for saying that this is all right as far as the anti-trust laws are concerned, and I think we ought to get a ruling from Francis Biddle,” who was then Attorney-General on those anti-trust [?]. Much to my surprise, Jones says, “I think we can work that out all right.”

The Cabinet meeting came through a couple of days later. He said, “I’ll see – talk to Francis about this.” So he comes back from the Cabinet meeting. Calls me up. He says, “I talked to Francis after the Cabinet meeting. He says he’ll give us an opinion that this is all right as far as the anti-trust laws are concerned, and you go on over there and see if you can help him, drafting up the opinion.”

I go on to Biddle’s office. Biddle was a very decent guy, not the strongest guy in the world, and he starts out looking rather unhappy, but saying that, “After all, it’s not for us to pass on the policies in the contract, but only the question of whether legally this constitutes a violation of the anti-trust laws, and after all, this is the government involved as a party to the contract, so this wouldn’t violate – the government couldn’t violate the anti-trust laws.”

Here’s a young lawyer named Hugh Cox who’s sitting there, and so I get a little concerned. I say, “Mr. Attorney-General, there’s one feature of this thing I think you might want to consider.” I said, “You know, after all, the Defense Plant Corporation is set up as a corporation, although it’s created by the government, and there is a general rule of corporation law that basic provisions of the law must be – are by implication incorporated in the charter, whether expressly or not, and maybe because we’re a corporation, that would – we took – instead of the direct [?] – the courts hadn’t made a distinction between government corporations and government departments, and maybe you want to go into that.” He said, “Oh no, sir. I think it’s [?].” He said, “You go up to Cox – you and Cox go back to his office, and you get together and draft up an opinion for me.”

So I go back to Cox’s office, and I see Cox is looking a little unhappy, and we sort of spar around briefly, and then Cox says – he says, “I know you’re sitting around here.” Said, “Why don’t you go on back to work.” Said, “I’ll draft up this opinion, and I’ll get it over to you tomorrow morning.”

So the next morning I got a phone call bright and early. “This is Cox.” He says, “We’ve been thinking more about this opinion, and I think we’ll give it to you, but – I think we can give it to you all right, but I wish you would – Thurman Arnold has gotten interested in this, and I – would you mind coming over and talking to Thurman Arnold with me about this thing?” My spirits go up, because Thurman was a trust-buster. He was quite a personality. He’s the kind that – I made the remark about Thurman, that he reminded me of one of these old-fashioned cars. You start the car – the starter when it’s in gear, and the motor and the car start going at the same time, and it’s the same way with Thurman’s mind and his tongue. So my friend [ ? ?] says, “His tongue gets going far faster than mine does.”

Thurman Arnold had an enormous big office there. It looked like these pictures of Mussolini’s office. He was sitting behind the desk. By the time I entered the door, walked towards his desk, Thurman has this draft of this contract, and he’s pounding it with his thumb. “It’s illegal. It’s illegal as hell. It’s illegal as hell.” So I went over there, and here he had a provision we’d put in it. It was just sort of standard boilerplate that would go into any kind of a lease contract. So I said, “Thurman, what in the hell are you talking about? Take another look. What is illegal about that?” He looked down there. He read it. Looked like – his face was troubled. Looked at it again. I said, “Aren’t you on the wrong page?” I flipped over a few pages, and I said, “Isn’t this the provision you’re worrying about?” He looked at that again, and he brightened, “Oh yeah, that’s the one. It’s illegal as hell.”

So Thurman moves in on the people, and Biddle begins to back down.

Imhoff: Which provision was it that he was most agitated about?

Durr: This was the provision giving Alcoa complete control over prices, and also I think this renewal provision that did an automatic renewal at their option for – so they could keep these plants tied up for 10 years and shut them down and throw production in their own plant.

So as a result of that pressure, the contract still was not too good. We could have gotten really government protection in this Reynolds deal, but Jones had moved into the thing, so I didn’t feel too badly about it. And Jones again was – he backed away from this insistence that Alcoa build all the plants and began to get – that was – this thing just got to going just about – that battle was over just about the time I left to go to the FCC. Now, what the relation was between Jones and Arthur Davis, I don’t know. I think Jones was impressed with him, because Jones was a big-timer and Arthur Davis was a big-timer, and I just don’t know.

Imhoff: Talk a little bit more about Biddle’s reaction to Arnold’s objection.

Durr: This was – I never talked to Biddle about Arnold’s objection. I just left it to Hugh Cox from then on, and he – after our conversation with . . .

Imhoff: Were adjustments made in that contract?

Durr: Oh yes.

Imhoff: Right away?

Durr: There were adjustments made right away before Biddle would give this opinion, so Thurman Arnold . . . [the recording ends abruptly, in mid-sentence, as the tape runs out.]