Henry Morgenthau, Jr.

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Henry Morgenthau, Jr.

Henry Morgenthau, Jr. (May 11, 1891 – February 6, 1967) was the U.S. Secretary of the Treasury during the administration of Franklin D. Roosevelt.

The Jewish Morgenthau was involved in the harsh Morgenthau Plan for post-war Germany and the Vrba-Wetzler report regarding the Holocaust.

An influential associate was the Jewish Treasury official Harry Dexter White, a major Communist infiltrator, accused of having caused large-scale harm on a wide range of issues.

Contents

Early life

Morgenthau was born into a prominent Jewish family in New York City, the son of Henry Morgenthau Sr., a real estate mogul and diplomat, and Josephine Sykes. He had three sisters. He attended what is now The Dwight School. Later, he studied architecture and agriculture at Cornell University. In 1913, he met and became friends with Franklin and Eleanor Roosevelt. During World War I, he worked for the Farm Security Administration. In 1929, Roosevelt, as Governor of New York, appointed him chair of the New York State Agricultural Advisory Committee and to the state Conservation Commission.

New Deal

In 1933, Roosevelt became President and appointed Morgenthau governor of the Federal Farm Board. Morgenthau was nonetheless involved in monetary decisions. Roosevelt adopted the idea of raising the price of gold to drive down the value of the dollar, thereby raising the price of all goods — especially farm goods. The idea came from Professor George Warren of Cornell University, and despite the opposition to the idea, Morgenthau was willing to help him. When Roosevelt told Morgenthau he was thinking of raising the price of gold by 21 cents, his entourage asked him why. "It's a lucky number," Roosevelt said. "Because it's three times seven." As Morgenthau later wrote, "If anybody knew how we really set the gold price through a combination of lucky numbers, etc., I think they would be frightened." [1]

In 1934, when William H. Woodin resigned because of poor health, Roosevelt appointed Morgenthau Secretary of the Treasury (an act that enraged conservatives). Morgenthau was an orthodox economist who opposed Keynesian economics and disapproved of some elements of Roosevelt's New Deal. To finance World War II, he initiated an elaborate system of marketing war bonds.

Fiscal responsibility

Morgenthau believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment. The Wagner Act regarding labor unions met Morgenthau’s requirement because it strengthened the party’s political base and involved no new spending. Morgenthau accepted Roosevelt’s double budget as legitimate — that is, a balanced regular budget, and an “emergency” budget for agencies, like the Works Progress Administration (WPA), Public Works Administration (PWA) and Civilian Conservation Corps (CCC), that would be temporary until full recovery was at hand. He fought against the veterans’ bonus until Congress finally overrode Roosevelt’s veto and gave out $2.2 billion in 1936. In the 1937 "Depression within the Depression," Morgenthau was unable to persuade Roosevelt to desist from continued deficit spending. Roosevelt continued to push for more spending, and Morganthau promoted a balanced budget. On November 10, 1937, Morgenthau gave a speech to the Academy of Political Science at New York's Hotel Astor, in which he noted that the Depression had required deficit spending, but that the government needed to cut spending to revive the economy. In his speech, he said:[2]

"We want to see private business expand. … We believe that one of the most important ways of achieving these ends at this time is to continue progress toward a balance of the federal budget."

Amity Shlaes, in her book The Forgotten Man, records that "a laugh came from the crowd — someone's laugh of contempt." [3] In fact, it was hard for the business community to believe that Morgenthau, who had presided over the decline of the dollar and the rising federal deficit — really could believe in balancing the budget.

His biggest success was the new Social Security program; he reversed the proposals to fund it from general revenue and insisted it be funded by new taxes on employees. Morgenthau insisted on excluding farm workers and domestic servants from Social Security because workers outside industry would not be paying their way.[4] He is quoted in doubting the huge spending schemes in The New Deal that haven't reduced unemployment and only added debt:[5]

"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot."

Controversy surrounding the Morgenthau Plan

Main article: Morgenthau Plan

In 1944, Morgenthau proposed the Morgenthau Plan for postwar Germany, calling for Germany to be dismembered, partitioned into separate independent states, stripped of all heavy industry and forced to return to a pre-Industrial Revolution agrarian economy. The Morgenthau plan is thought by a few to have been devised by Morgenthau's deputy, Harry Dexter White[6], who was later accused of being a Soviet agent.[7] At the Second Quebec Conference on September 16, 1944, Roosevelt and Morgenthau persuaded the initially very reluctant British Prime Minister Winston Churchill to agree to the Morganthau plan, likely using a $6 billion Lend Lease agreement to do so.[8] Churchill chose however to narrow the scope of Morgenthau's proposal by drafting a new version of the memorandum, which ended up being the version signed by the two leaders.[8] The gist of the signed memorandum was "This programme for eliminating the war-making industries in the Ruhr and in the Saar is looking forward to converting Germany into a country primarily agricultural and pastoral in its character."

The plan faced opposition in Roosevelt's cabinet, primarily from Henry L. Stimson (see also his memorandum), and the leakage of the plan to the press resulted in public criticism of Roosevelt.[9] The President's response to press inquiries was to deny the press reports.[10] As a consequence of the leak, Morgenthau was in bad favor with Roosevelt for a time.

German Propaganda Minister Joseph Goebbels used the leaked plan, with some success, to encourage the German people to persevere in their war efforts so that their country would not be turned into a "potato field." [11] General George Marshall complained to Morgenthau that German resistance had strengthened.[12] Hoping to get Morgenthau to relent on his plan for Germany, Roosevelt's son-in-law, Lt. Colonel John Boettiger, who worked in the United States War Department, explained to Morgenthau how the American troops that had had to fight for five weeks against fierce German resistance to capture Aachen and complained to him that the Morgenthau Plan was "worth thirty divisions to the Germans." Roosevelt's election opponent in late 1944, Thomas Dewey, said it was worth "ten divisions". Morgenthau refused to relent.[13]

On May 10, 1945, Truman signed the U.S. occupation directive JCS 1067. Morgenthau told his staff that it was a big day for the Treasury, and that he hoped that "someone doesn't recognize it as the Morgenthau Plan."[14] The directive, which was in effect for over two years directed the U.S. forces of occupation to "…take no steps looking toward the economic rehabilitation of Germany".[15]

In occupied Germany Morgenthau left a direct legacy through what in OMGUS commonly were called "Morgenthau boys". These were U.S. Treasury officials whom General Dwight D. Eisenhower had "loaned" in to the Army of occupation. These people ensured that JCS 1067 was interpreted as strictly as possible. They were most active in the first crucial months of the occupation, but continued their activities for almost two years following the resignation of Morgenthau in mid 1945 and some time later also of their leader Colonel Bernard Bernstein, who was "the repository of the Morgenthau spirit in the army of occupation".[16] They resigned when in July 1947 JCS 1067 was replaced by JCS 1779 which instead stressed that "An orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."

Morgenthau's legacy was also seen in the plans for preserving German disarmament by significantly reducing German economic might.[17] (see also The industrial plans for Germany)

In October 1945 Morgenthau published a book[18] in which he described and motivated the Morgenthau plan in great detail. Roosevelt had granted permission for the book the evening before his death, when dining with Morgenthau at Warm Springs. Morgenthau had asked Churchill for permission to also include the text of the then still secret "pastoralization" memorandum signed by Churchill and FDR at Quebec but permission was denied.[19] In November 1945 General Dwight D. Eisenhower, the Military Governor of the U.S. Occupation Zone, approved the distribution of 1000 free copies of the book to American military officials in occupied Germany. Historian Stephen Ambrose draws the conclusion that, despite Eisenhower's later claims that the act was not an endorsement of the Morgenthau plan, Eisenhower both approved of the plan and had previously given Morgenthau at least some of his ideas on how Germany should be treated.[20]

Following his resignation, and in company of other prominent individuals such as the former first lady Eleanor Roosevelt, Morgenthau remained for several years an active member of the campaign group for a "harsh peace" for Germany.[21]

Bretton Woods

Morgenthau was a leading participant in the Bretton Woods Conference, which established the Bretton Woods system, the International Monetary Fund and the International Bank for Reconstruction and Development (the World Bank).

Later career and legacy

Morgenthau resigned in mid-1945, when Truman became President and Morgenthau's advice was no longer sought. He devoted the remainder of his life to working with Jewish philanthropies, and also became a financial advisor to Israel. Tal Shahar, an Israeli moshav (agricultural community) near Jerusalem, created in 1948, was named in his honor (Morgenthau means "morning dew" in German, and so does the Hebrew name "Tal Shahar").

Morgenthau died in Poughkeepsie, New York, in 1967.

He was also the father of Robert M. Morgenthau, who was the District Attorney of New York County from 1975 to 2009.

References

  1. Amity Shlaes, The Forgotten Man (2007), p. 163, 148
  2. Amity Shlaes, The Forgotten Man (2207) pp. 341-42.
  3. Amity Shlaes, The Forgotten Man (2207) pp. 342.
  4. Julian E. Zelizer; "The Forgotten Legacy of the New Deal: Fiscal Conservatism and the Roosevelt Administration, 1933-1938." Presidential Studies Quarterly. Volume: 30. Issue: 2. 2000. pp 331+.
  5. Patterico's Pontifications: A Quote to Start Your Day (March 2, 2009). Retrieved on September 6, 2009.
  6. J.M. Boughton. "The Case Against Harry Dexter White: Still Not Proven," IMF Working Paper 00/149, finds that White's proposals were much less extreme than Morgenthau's.
  7. FBI file: Underground Soviet Espionage Organization (NKVD) in Agencies of the United States Government, October 21, 1946, p. 78-79 (PDF pp. 86-87)
  8. 8.0 8.1 John L. Chase "The Development of the Morgenthau Plan Through the Quebec Conference" The Journal of Politics, Vol. 16, No. 2 (May, 1954), pp. 324-359
  9. The Policy of Hate, Time magazine, Oct. 02, 1944
  10. The Battle for Peace Terms, Time magazine, Oct. 09, 1944
  11. Office of Strategic Services Official Dispatch, Franklin D. Roosevelt Presidential Library and Museum, Marist College
  12. Report on the Morgenthau Diaries, p. 41ff
  13. Michael R. Beschloss, The Conquerors: Roosevelt, Truman and the Destruction of Hitler's Germany, 1941–1945, pg. 172-173.
  14. Beschloss, The Conquerors, pg. 233.
  15. Pas de Pagaille! Time Magazine, Jul. 28, 1947.
  16. Vladimir Petrov. Money and conquest; allied occupation currencies in World War II. Baltimore, Johns Hopkins Press (1967) pg. 228-229 OCLC 186795
  17. Frederick H. Gareau "Morgenthau's Plan for Industrial Disarmament in Germany", the Political Research Quarterly, Vol. 14, No. 2 (June, 1961), pp. 517-534
  18. Germany Is Our Problem. Harper and Brothers, 1945
  19. Beschloss, The Conquerors, p. 250
  20. Ambrose, Stephen, Eisenhower: Soldier, General of the Army, President-Elect (1893-1952), New York: Simon and Schuster, 1983, p. 422. ISBN 978-0671440695
  21. Steven Casey, "The campaign to sell a harsh peace for Germany to the American public, 1944–1948". History, 90 (297). pp. 62–92. (2005) ISSN 1468-229X
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