The Quiet Crusader

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In chancelleries around the world, U.S. diplomats were explaining to foreign governments last week that the U.S. is in the midst of a major change in foreign policy. The outflow of dollars from the U.S. would exceed the inflow by some $4 billion this year; the end of the Marshall Plan period of unrestricted overseas spending had come. No, the U.S. did not intend to cut out foreign aid where it was needed, nor to retreat into "Buy American" protectionism, nor to cut dangerously its overseas military forces. But it might have to do all these things if such industrially strong nations as West Germany, Britain and Japan did not take over part of the aid to underdeveloped nations, drop trade barriers and get on with the business of working out a long-range program of stable free trade for the world.

Meanwhile, in his office above the pro's shop at the Augusta National Golf Club, President Eisenhower began hammering out the domestic budget for fiscal 1961 with his top Cabinet officers. "Gentlemen," he had told them at a session fortnight before in Washington, "you are going to have to prove each item to me." Despite pressures of rising prices and cries for ever more costly military hardware, the President was determined to make a balanced budget his top domestic priority.

Beneath this wide sweep of policy was a bedrock Administration decision to make the sound dollar the basis for the U.S. economic system, and to make a sound U.S. economic system the keystone of a free-world economic policy based on growing prosperity through freer trade. The drive was the President's own. But the man behind the drive was a tall (6 ft. 2 in.), mild-mannered Texan with a lingering touch of the prairies in his soft twang: Robert Bernerd Anderson, 49, Secretary of the Treasury and the strong man of Dwight Eisenhower's Cabinet.

The Velvet Glove. In any Cabinet under any President, the Secretary of the Treasury wields great power and carries grave responsibilities. He oversees the vast, intricate flow and ebb of the billions of dollars that the U.S. Government takes in and pays out. He is charged with managing the $290 billion national debt, a task in which small errors can be costly. But Robert Anderson's power and influence extend far beyond the statutory scope of his office, broad as that is. By force of mind and personality, Anderson molds politics that reach into every niche of the U.S. Government, every place of business, ultimately every home.

In the 28 months since he took over from George Magoffin Humphrey as Treasury Secretary, Anderson has proved himself a man of iron determination, but he softens its rub with the gentlest velvet glove in Washington. He may well be the most unanimously admired man in the capital. A Democratic Representative who has clashed with him on economic policies freely concedes that he is a "very great American." A fellow Cabinet officer whose department has felt the paining pinch of Anderson's insistence on balanced budgets calls him "one of the very ablest men in public life during the past 20 years." Adds another Cabinet member: "In this Washington scramble, the most refined form of cannibalism ever devised, it's just about impossible to find anybody who has anything nasty to say about Bob Anderson." Says Economist Gabriel Hauge, White House economic adviser from 1953 until last year: "Intellect, character, dedication--these are words that it is almost embarrassing to use today. Cynics have all but destroyed them. But I have to say them about Bob Anderson. He is a man whom the old-fashioned words fit."

For a man so intimately involved in shaping the future, Anderson has an old-fashioned aura about him. He wears sober blue suits and a vest. He shuns Washington social life, preferring to spend his time with his family (Wife Ollie Mae, two sons, 23 and 19). He still treasures and quotes the faded poets, including Poe, Kipling and Edwin (The Man with the Hoe) Markham, whom he loved in his boyhood. In an age when public men tend to hedge their affirmations, he speaks out forthrightly for such notions as "the integrity of the dollar" and the value of individuality. A devout, Bible-reading Methodist, he last year kept a speaking date by unabashedly reading a 200-line poem he had composed to remind his audience that

A nation needs to pray:

For things it has--for things it has not earned,

For gifts from men now dead, some dead

So long ago we never knew they lived . . .

A nation needs to pray;

That in humility we see that greatness

Is not measured by industrial grandeur . . .

Nor by any other things that man may proudly say

Were made by mind or hand.

Bookish Football. Robert Anderson had an old-fashioned upbringing in a close-knit, pious, hard-working family in Johnson County. Texas, just south of Fort Worth. His father (who died fortnight ago at 81) was a storekeeper in the little town of Burleson, later took up farming on a 120-acre tract in Godley. Stricken at three with an attack of polio that left him with a limp, Bob grew up a bookish, unathletic lad, but he did his farm chores right along with the four other Anderson children. "He was serious-minded," his mother recalls. "From the time he was a very small child he wanted to be a lawyer."

After graduation from a local junior college, Anderson taught Spanish, history and mathematics at the high school in Burleson for two years while saving money to go to law school. Assigned to coach the football team despite the fact that he had never played football, he bought a couple of books on the game, coached his boys to an undefeated, untied season.

By attending courses at the University of Texas law school right through the summers, he plowed through the three-year law curriculum in two years, graduated with the highest average in his class. Toward the end of his second year, mindful that jobs were scarce for young lawyers in 1932, he ran for the state legislature from his home district. Elected on graduation day, he took his place among his fellow Democrats in the Texas house of representatives as a gangly country boy of 22. "When he got up and spoke," a former colleague recalls, "things that were vague and misty would become clear. The fellows listened to him, young as he was."

Six-County Empire. Attorney General (later Governor) James Allred spotted Freshman Legislator Anderson as a promising young man, lifted him out of the legislature to serve as assistant attorney general. Moving along fast, Anderson became state tax commissioner at 24, head of the state unemployment commission at 26. In 1937 the W. T. Waggoner Estate, a 500,000-acre cattle, wheat and oil empire sprawling over six Texas counties, hired him away as general counsel. When the estate's general manager died in 1941, old Guy Waggoner called the clan together and said, "Let's let this boy run the business," meaning Robert Anderson, then 31. His pay as general manager: $60,000 a year, plus hefty bonuses.

Besides increasing the Waggoner empire's profits, General Manager Anderson succeeded over the years in transforming its local image from stone-hearted colossus to soft-hearted rich uncle. In Vernon, Texas, where his office was, Anderson headed fund-raising drives, got each drive off to a fast start by contributing a chunk of Waggoner funds. With Anderson's help, Vernon got a $1,000,000 Methodist church, a municipal auditorium, a recreation hall for teenagers, a Boy Scout camp.

Anderson's public services during his Waggoner years extended far beyond Vernon. He served as deputy chairman of the Federal Reserve Bank in Dallas, as chairman of the statewide board of education. In 1951 he sat on a commission set up by the president of Columbia University, Dwight David Eisenhower, to study manpower utilization during World War II. Ike was impressed. So was Anderson.

Rock Y. Brass. In 1952 Anderson wrestled down his longtime loyalty to the Democratic Party and backed Dwight Eisenhower for President. (Anderson finally changed his registration to Republican in 1955.) After the election, recalling Anderson from the manpower-commission days, Ike asked "Engine Charlie" Wilson, his nominee for Defense Secretary, to look Anderson over as a prospect. Wilson tapped Anderson to be Secretary of the Navy. "Charlie Wilson claims he discovered Bob Anderson," the President later told a Texas visitor. "Actually, I was the one who found him. If I had a dozen more like Bob Anderson, I could run this place."

High Navy brass found out the truth of a remark that former Treasury Secretary Humphrey once made about Anderson: "Don't be misled about him just because he doesn't shout and pound the table the way I do. He can be firm as a rock." Shortly after he took over as boss of the Navy, Anderson overruled a promotion board's decision to pass over abrasive Captain Hyman Rickover, nuclear submarine pioneer, for the second and final time (two failures to win promotion to rear admiral meant automatic retirement). Determined to keep Rickover in the Navy, Anderson ordered a selection board to promote to rear admiral one engineering captain experienced in atomic propulsion. The only man in the Navy who filled the bill was Hyman Rickover.

After little more than a year as Navy Secretary, Anderson stepped up to the Defense Department's No. 2 post. Deputy Defense Secretary. In mid-1955 he left the Administration to take over as president of Ventures, Ltd., a Canadian holding company with worldwide mining interests. When Treasury Secretary George Humphrey decided to go back to the steel business, he persuaded Anderson to return to Washington to succeed him. In mid-July 1957, outgoing Secretary Humphrey took incoming Secretary Anderson to the Bureau of Engraving and Printing to see the first dollar bills coming off the presses with Anderson's signature on them. They were also the first U.S. greenbacks to bear the motto "In God We Trust," long familiar on U.S. coins. Grinned Anderson: "This is pretty rugged. I no sooner take office than there is an expression of lack of confidence."

Texans Three. One big reason for Robert Anderson's success as Treasury Secretary is that, in vivid contrast with his outspoken, impatient predecessor, he stays on good terms with the Democratic majority on Capitol Hill. In this he has an accident of geography going for him: Senate Majority Leader Lyndon Johnson and House Speaker Sam Rayburn are both Texans. Rayburn, an old and trusted friend, was the first man to hear about Texan Anderson's painful decision in 1952 to bolt the Democrats and vote for Eisenhower. Anderson keeps in close touch with the leaders, tells them in detail about his plans and programs. He also has a warm friendship with Speaker Rayburn's top fiscal adviser, Arkansas' Wilbur Mills, able chairman of the powerful House Ways & Means Committee. These leadership contacts, plus his unflagging attention to every staffer and stenographer, give Anderson more support in Congress than a member of a Republican Cabinet has any right to expect from a Democratic majority.

The relationship was sharply tested in his first big battle after taking over as Treasury Secretary: his quiet campaign in early 1958 to head off both Republicans and Democrats who wanted to try to cure the recession by cutting taxes. Within the Administration, Vice President Richard Nixon and Labor Secretary James Mitchell argued that it would damage the Republicans in the 1958 elections, and beyond, if the Administration let the Democrats grab the credit for combatting the recession by cutting taxes. On Capitol Hill, Sam Rayburn responsibly held off the Democrats who wanted to cut taxes, but he wavered in the face of arguments that the party could not afford to let the Administration get the credit.

With one bold thrust, Anderson undercut the tax-cut advocates in both the Administration and Congress: he worked out with Rayburn and Johnson an informal understanding that neither side would push for a tax cut without first discussing it with the other side. That understanding, dubbed the "Treaty of the Rio Grande," effectively fenced off the tax-cut issue from partisan politics. Despite widespread clamor, there was no tax cut. The U.S. soon began to pull out of the recession. Anderson believes this was one of the key economic-policy victories of U.S. history.

"If we had taken massive government action and then business had improved." he says, "we might have convinced the people that this was the only way out of a recession. But by leaving it essentially alone, we established a basis for belief in the resiliency of the economy. In their economic decisions, people operate on the basis of belief--belief in what is going to happen. We must not impair their confidence in the future or in the capacity of their economic system to deal with most of the problems that will arise."

Fight Against Upcreep. As the economic indicators started climbing, Anderson's prestige climbed with them. That autumn he set off on another soft-spoken crusade: his fight to get the Administration firmly committed to balancing the fiscal 1960 budget that the President would send to Congress in January 1959.

To nearly everybody but Robert Anderson, a balanced 1960 budget seemed a hopeless undertaking. Over the prosperous Eisenhower years, the Administration had achieved a budget surplus only twice, in fiscal 1956 and 1957 (see chart), despite all the balanced-budget promises of the 1952 campaign. With the 1959 budget a gaudy $12.5 billion in the red, and the economy still convalescing from the recession, sober heads in the Administration argued for aiming toward a practical goal, e.g., holding the 1960 deficit down to a few billion.

But Anderson argued that a balanced budget was urgently needed for its symbolic value. If the chronic price upcreep of the mid-1950s came to be tolerated as inevitable, he warned, it could inflict severe damage on the economy by eroding the confidence in the future that is essential to the workings of a free economy. By taking a stand for a balanced budget, the Administration would show that it intended to fight against price upcreep.

Democrats, and some Republicans too, have charged Anderson with overstressing sound money at the expense of economic growth. A little inflation, the argument runs, is a cheap price to pay for rapid growth. But as Anderson sees it, price stability is the friend of economic growth, not its enemy. What counts, he holds, is "sustainable growth" (a favorite Anderson phrase), which requires capital investment out of savings. "A high rate of saving," he argues, "is indispensable in achieving a high rate of economic growth." And since inflation is the enemy of thrift, it is in the long run the enemy of economic growth.

Anderson's case for a balanced budget left some of his fellow Cabinet members unconvinced. But by this time, Anderson had thoroughly won over the ally who really counted: Dwight Eisenhower.

Reawakened Zeal. "Of all the men in the Cabinet." says one Cabinet member, "the President feels closest to Anderson and relies on him more than on anybody else." Back in 1955 when Anderson was still Deputy Defense Secretary, the President told a White House visitor that Anderson was "big enough to handle any job in this country," and by that he meant the presidency (but both Ike and Anderson know that Anderson's quiet behind-the-scenes methods would be a handicap in politics).

Anderson's arguments for balanced budgets and sound money appeal to the President's basic conservatism, and they have brought into focus goals and principles that had become somewhat blurred. Result: last year's marked conservative shift by the President and his Administration. Ike committed himself to the balanced budget with reawakened zeal, threw his personal prestige into a public campaign against spending, and carried the country with him so decisively that he held the whip hand over the last session of Congress.

The World's Banker. If Secretary Anderson had done no more than fight and win his battles against a recession tax cut and for balanced budgets, he might well be ranked as a great Treasury Secretary. But his campaign to rebuild the U.S.'s foreign economic policies could turn out to be his greatest achievement.

Anderson's move into foreign economic policymaking has been widely misinterpreted. The prevailing image that emerges from Democratic speeches and newspaper editorials pictures him as an intruding bull amid fragile foreign-policy china, endangering foreign aid and freer trade policies in a narrow obsession with sound money. That image is wildly inaccurate. Anderson wants, as he has often made clear, to see world trade become freer, not less free; he wants to see the underdeveloped countries get more development capital from the West, not less. Far from viewing the U.S.'s economic relations with the outside world through a balanced-budget peephole, he views domestic economic policies in a global perspective.

One of the strongest motives behind his battle for a balanced 1960 budget was his conviction that a stable U.S. dollar is necessary to the economic health of the entire free world. After discussing international economic problems with foreign officials on a trip around the world in the autumn of 1958, Anderson came back to Washington profoundly impressed with the depth of the free world's concern about the stability of the dollar. "The U.S. has become the world's banker," says Anderson. "In every period of history there has to be some sort of international reserve currency. It used to be the British pound. Today it is the U.S. dollar." Preserving the stability of the dollar, he argues, is a basic U.S. obligation to the free world, just as important as helping underdeveloped countries with foreign aid.

Flowing Gold. As Anderson sees it, U.S. foreign economic policies in 1959 and beyond have to deal with two basic, inescapable realities, one old and familiar, the other comparatively new:

1 The underdeveloped countries of the free world, caught in an explosive ferment of rising expectations, need foreign development capital--not dollars, but capital, whether provided as dollars, pounds, francs, marks or yen.

2) The U.S. is running into the red in its international transactions, with the result that U.S. gold reserves are shrinking as gold flows overseas to balance the nation's accounts. If the gold outflow continues for even a few years, it could endanger the value of the dollar, with shaking results for the entire world.

The policy implications of these two propositions run in opposite directions: Proposition No. 1 suggests that the U.S. should give more help to the underdeveloped countries. Proposition No. 2 suggests that the U.S. cannot afford to give more, perhaps ought to give less. To resolve this clash of directions is the challenge of U.S. foreign economic policy, and the task that Robert Anderson has set for himself.

The Big Change. Besides the inherent difficulties of the task, Anderson has to contend with a widespread failure, at home and abroad, to grasp how radically the world economic picture has changed over the years since World War II. Back in the late 1940s, the U.S. was the principal source of the world's manufactured goods, exported far more than it imported. Result: even with U.S. tourists spending millions abroad, U.S. troops stationed around the world, U.S. Marshall Plan dollars pouring into Western Europe to rebuild shattered economies, and Point Four aid flowing to underdeveloped countries, the U.S. ran up a surplus in its overall international accounts. Gold trickled into the U.S. Treasury from abroad.

By the mid-1950s, Western Europe and Japan, their economies rebuilt with U.S. help, were briskly competing with the U.S. in foreign markets, even in the U.S. home market. By last year the U.S.'s international transactions were drastically out of balance: the U.S. ran $3.4 billion in the red in its overall international payments. Gold flowed overseas so briskly that the U.S. gold reserve shrank by $2.3 billion, a thumping 10%.

"Buy West German." Anderson was aware of the trend when he took office in 1957. In characteristic fashion he quietly set about shifting foreign-aid policies that had been backed by the full prestige of the Truman and Eisenhower Administrations. There were no dramatic sessions; at every opportunity he simply called attention to the problem. Last spring he began inviting Administration leaders to conferences and lectures. At first the State Department was horrified at the prospect of revising foreign-aid policy (and some of its staffers still are), but Anderson found a sympathetic listener in Under Secretary (for Economic Affairs) C. Douglas Dillon, longtime international banker both on Wall Street and in Government and a firm believer in the imperatives of a sound world economic policy. Gradually the President's statements on foreign aid began to soften. By last September, Anderson could bluntly tell the World Bank and International Monetary Fund meeting in Washington: "There must be a reorientation of the policies of the earlier postwar period."

Essentially there are two pillars to Anderson's policy, aid and trade:

AID. Anderson's goal is to make aid to underdeveloped countries a cooperative free-world undertaking. At the World Bank-IMF meeting in New Delhi in October 1958, Anderson sponsored a proposal to increase World Bank funds by doubling the member nations' commitments to guarantee World Bank bonds. At the same meeting, Anderson unwrapped a U.S. plan to set up an International Development Association (with the U.S. contributing one-third of the capital) to make loans that, unlike World Bank loans, would be repayable in the borrowing country's own currency, no matter how soft. At the World Bank-International Monetary Fund meeting in Washington in late September, Anderson pushed the plan, won over the World Bank's soft-loan-mistrusting board of governors.

To remind Western Europe and Japan that the Marshall Plan days were long since over, Anderson last month took the dust-stirring step of announcing that henceforth dollars lent to underdeveloped countries by the U.S.'s own Development Loan Fund (outgo: about $550 million a year) must be spent in the U.S. Protests rang out that Anderson was dragging the U.S. backward with a protectionist "Buy American" program (TIME, Nov. 9). But Anderson's essential purpose was to force Western Europe and Japan into providing loans to finance their own exports to underdeveloped countries. He would be happy to see Britain and West Germany set up their own development loan funds with "Buy British" or "Buy West German" strings attached.

TRADE. Anderson's drive to get other industrial nations of the free world to lower their trade barriers against U.S. goods has already brought dramatic results. At the late September meeting of the World Bank-IMF, Sweden's Per Jacobsson, managing director of IMF, agreed with Anderson that the "new situation' called for a "fresh examination" of international economic policies. The IMF executive board urged member nations with adequate gold and dollar reserves to end discrimination against U.S. goods "with all feasible speed." A few days later, the meeting of the 37-nation General Agreement on Tariffs and Trade in Tokyo echoed the same theme. Fortnight ago. Britain, France and Japan all set about complying with the spirit of the IMF and GATT meetings. Britain wiped out quotas on most U.S. goods. France pared some tariffs on U.S. imports, scrapped a batch of import quotas, promised to get rid of the rest within two years. Japan promised to cancel restrictions on a wide array of U.S. goods by early 1961.

The Greatest Challenge. In pushing toward broader aid and freer trade, Anderson is serving, as he sees it, not only the interests of the U.S. but the interests of all the free world. In his global view, his policies at home and his policies abroad are interdependent, just as the U.S. and the rest of the free world are interdependent. By fighting for sound money at home, he can encourage freer world trade by keeping the world's reserve currency, the U.S. dollar, dependably stable. By persuading Western Europe to assume a fair share of the foreign-aid burden, he can help to slow the outflow of U.S. gold reserves and thus help to keep the dollar sound.

"What we have to do," says Robert Anderson, "is to maintain a strong and expanding economy, to accept the position of world leadership, and in that role to contribute as significantly as we can to a strong and expanding economy in the free world. Only thus can we help the development of the underdeveloped countries of the world. And that is the great economic challenge of our time."

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