The Jew Who Defeated Hitler Page 22

  Morgenthau sent FDR a memo proposing a “spending tax.” It would be different than a sales tax because it would be progressive, escalating as the price of goods rose, and because there would be exempt items, such as food.88 He also urged Roosevelt to tell the country in a coming radio address that he had the statutory power to regulate the price of food and other necessities. “Take the bit in your teeth and announce it and get it over with. I know the public will like it,” he said.89 When Roosevelt delivered the fireside chat, he recited much of the Treasury policy but not the spending tax. When Morgenthau questioned him, FDR replied he never made tax recommendations to Congress while a bill was pending. Morgenthau said it completely took his breath away, so much so that he couldn't come up with an example to prove the president wrong. The president tried to joke his way out of it. “Well, you know, Henry, I always have to have a couple of whipping boys.”

  “Yes, I realize I am one of them and right now I am getting plenty of whippings.”90

  The Senate passed the revenue bill on October 10, producing only $7 billion in new revenue. Arthur Krock praised Senator George’s leadership and criticized the administration for not supporting the Ruml plan. “Yet at no time did the Administration, through the Treasury or any other spokesman, give to Senator George any sound assistance in devising a measure that would siphon back into the public funds enough of the swollen payroll billions to turn the fiscal tide strongly against inflation.”91

  The media was criticizing Morgenthau more than it had previously, even when the Treasury Department raised a mammoth $4.1 billion in 1.5 percent notes and 2 percent bonds in October. Though it was as big as a whole year’s borrowing a decade earlier, the Treasury held the rate at 2 percent. Time magazine called it an “outstanding failure,” saying the Treasury had to beg banks to increase their purchases. “Mr. Morgenthau is very high-principled, very modest about his limited financial ability, very timid,” it said. The article added Morgenthau’s “New Deal advisers…are quite sure that the banks will continue to take Government offering, at almost any price, and that they do not have to worry about giving the banks what they want.”92 Marriner Eccles—the most unlikely of defenders—complained to the magazine that the article was unfair to Morgenthau and a disservice to the country.93

  With US forces slowly entering ground wars in the Pacific at Guadalcanal and in North Africa, the demands of the arms program increased and with them worries about inflation. Roosevelt created the Office of Economic Stabilization to hold down prices and told Morgenthau he was thinking of naming as its head James Byrnes, a former senator from South Carolina who was now on the Supreme Court.94 In late August, Sam Rosenman, a Roosevelt insider, asked Morgenthau privately if he would be interested in heading the Procurement Division if they could convince the president it was needed. “I insist on sitting at the left of the President where I sit now because I need prestige over the Army and Navy,” said Morgenthau, who discussed the matter in privacy with Harry Dexter White, Henrietta Klotz, Herbert Gaston, and Elinor Morgenthau. White warned he would have to be prepared for bad press and powerful enemies. Elinor said the job would be tough, even with the proper authority over loans administrator Jesse Jones. She said Morgenthau would have to continue to align himself with labor because he would be in constant battles with big business.95

  To escape the endless battles, Morgenthau won the president’s approval to visit the United Kingdom. He was still a key player in financing the British war effort, and the British treasury had revealed in August that it too was planning a stabilization instrument. John Maynard Keynes, the architect of the scheme, called it a “clearing union.” Though it had many points in common with White’s plan, the clearing union called for no capital from the participating countries. Instead, it would offer the members overdraft facilities that they could draw on when they needed it to stabilize their currency.96 Traveling with White, Morgenthau met in October with Treasury officials, Winston Churchill, and King George VI and was wowed by British courage and the aerial domination of the Royal Air Force. He predicted the war would end in 1943 or 1944 because the British were more advanced than he had thought previously.97 Sir Kingsley Wood, Chancellor of the Exchequer, introduced him to the Commons on October 20 and said the visit was “a good augury” for confronting current and postwar problems together.98 The highlight was Churchill taking him and South African prime minister Jan Smuts to Dover to view the coastal defenses. Standing before thousands of cheering British soldiers, Churchill introduced Morgenthau as “the man who gave us 1 million rifles in 1940.”99 When he came home, Morgenthau let the media know the British and Canadians were paying about twice the taxes that American were. (Over time, this statement was disputed. Noting that the two systems were difficult to compare; journalist Godfrey N. Nelson said that the British budgetary expenditures were about 57.5 percent of national income while those of the United States were about 75 percent.100) Morgenthau also noted that the Treasury raised $6.84 billion in October, a record, including $814 million in the sale of war bonds, well above the quota of $775 million.101

  As early as July 1942, the Allies had begun planning for the American-British invasion of North Africa, and General Dwight Eisenhower, the head of the invasion force, asked Morgenthau whether the invading troops should use sterling or dollars once they had secured the territory. International law dictated that the invading force would form the government of the occupied territory but that the conquered land’s inhabitants must pay for that government. Therefore, Allied armies would need a currency that could be used to pay their troops, and that would become the official currency of the indigenous people. Morgenthau immediately ruled out sterling because it would make US soldiers look like mercenaries, and the Treasury was working to make the dollar the dominant international currency after the war. What’s more, European governments in exile had told him they wanted dollars after liberation. White also said liberated jurisdictions like France or the Netherlands that were recognized by the United States should revert to their own currency as soon as possible, but the dollar—or a special currency linked to the dollar—should be used in captured Axis zones, like Germany or Italy.

  In August, Morgenthau proposed a US committee to oversee the administration of liberated jurisdictions, and Roosevelt approved, saying it should include the Treasury, War, and State Departments. Morgenthau told his staff that in occupying Germany, “I think it had better be the United States that decides that all of these munitions factories will be leveled to the ground and destroyed, and the munitions machinery, airplanes that can't fly more than two or three hundred miles, all the rest of that stuff.”102

  The Allies landed in Morocco and Algeria on November 8, 1942, quickly establishing control of key seaports and airports. François Darlan, a senior Vichy official, happened to be in the area and the Allied forces recognized him as the head of French North Africa. In return, he ordered the French troops to cease all resistance to the Allies. The deal with Darlan absolutely disgusted Morgenthau, who didn't like the army setting foreign policy and hated the thought of the United States dealing with Nazi sympathizers. Over tea with Henry Stimson on November 17, he said lots of rich Americans would deal with Hitler tomorrow and it was wrong to have anything to do with Darlan.103 Later that day, he told Roosevelt this was a matter “that affects my soul.” Roosevelt was sympathetic during their forty-minute discussion. General Marshall had told the president the Darlan deal meant fewer US casualties in a campaign that would otherwise have taken six weeks. Morgenthau was heartened, telling FDR that he was satisfied as long as the president was in charge of everything.104 As with the issue of imprisoning Japanese Americans, Morgenthau had placed ethics ahead of expediency.

  Greater moral issues soon appeared—first in a tiny report on page 10 of the New York Times on November 24. It was a five-paragraph story, barely noticeable amid the reports of the war in Russia, North Africa, and the Pacific. It might have been buried because of anti-Semitism or because its contents
were so incredible, so disturbing, that editors could not believe it. The United Press report from Jerusalem said Hebrew papers had lined in black borders reports that the Germans were systematically killing Jews in Poland. It estimated 250,000 had been killed so far.

  There was more detail the next day, but the New York Times still relegated the reports to page 10. There was a large report on a press conference the Polish government in exile had held in London on the mass exterminations of Jews in their homeland. The report said Heinrich Himmler had organized extermination squads to kill as many as half of the Jews in Poland.

  Beneath it was another story of a press conference in Washington held by Rabbi Stephen Wise, head of the World Jewish Congress. This five-paragraph story reported that Wise said the State Department, after weeks of badgering, had confirmed that the Germans had killed about half of the Jews in the areas they occupied. About two million people had been murdered, and the number was growing.105

  Though Henry Morgenthau Jr.’s aim in government was to serve all Americans and not just Jews, he was nonetheless the only Jew in the cabinet and therefore the administration’s link to the Jewish community. More than any cabinet colleague, he was called on by American Jews, which was a source of pride, heartbreak, and sometimes outrage to him. He knew the joy of reaching the top of society despite being a minority and the angst of being targeted as a minority in spite of his success.

  At one point in 1942, Alien Property Custodian Leo Crowley told Morgenthau the president had recently said to him out of the blue, “Leo, you know, this is a Protestant country, and the Catholics and the Jews are here on sufferance. It is up to both of you to go along with anything that I want at this time.” Crowley, a Catholic, was shocked, and Morgenthau was appalled his best friend could say such a thing.

  “Leo, what are we fighting for?” Morgenthau asked. “What am I killing myself for at this desk if we are just here by sufferance?”

  “That’s what I want to know,” replied Crowley.1

  The statement was out of character for Roosevelt, whose administration was known for its advancement of Jews. Morgenthau worked closely with the president on refugee matters and knew that FDR wanted deeply to help the persecuted European Jews. That work intensified as the administration became aware of the Nazis’ extermination program. Morgenthau was becoming more sympathetic to Zionism and was trying to convince Roosevelt to pressure Britain to let more Jews emigrate to the Holy Land. (The British were worried about an Arab uprising in their Middle Eastern colony, especially at a time when their military was already fighting on three continents.) On July 7, 1942, Morgenthau tried to convince Roosevelt that Jews themselves would make “magnificent fighters.” The president said Zionist leader Chaim Weizmann had recently asked him for sixty thousand rifles and ten thousand machine guns, but the Allies simply could not spare them.2

  The news that the Nazis were exterminating millions of Jews changed Morgenthau’s feeling of responsibility. Having witnessed the Armenian Genocide by Germany’s ally Turkey during World War I, he had less trouble than his colleagues did believing the reports. Even his wife, who had strongly coaxed him to work for all Americans, could not help but be affected by the plight of the European Jews. After war broke out in Europe, Elinor began to interact with Jewish refugee groups, receiving information from experts on settlements in the Dominican Republic and on the Refugee Economic Corporation.3 She did what she could, even though she was weakening dramatically. (In May 1943, she would enter the hospital for a hysterectomy. “She had a very bad night but each day she is better, and it is what you would call a successful operation,” Morgenthau wrote FDR on May 25. He added she would be in the hospital for three weeks and it would be six months to a year before she would feel like herself again.4)

  Elinor Morgenthau received a call in November from Mrs. David de Sola Pool, the National President of Hadassah, the Women’s Zionist Organization of America, telling her of five hundred to eight hundred Polish Jewish children stranded in Tehran. Half of them were starving and in need of clothing and medical aid. The children would be admitted to Palestine as long as the Americans paid for their transportation, living costs, and education. Elinor and Morgenthau both agreed to ask Eleanor Roosevelt to convince the president to help the children. She immediately wrote Eleanor, beginning the letter with a statement that this was not a customary request. “The case of these children is desperate and Palestine can take care of them,” she wrote on December 2. “The things that are happening to the Jews in Europe, executions that no longer are in thousands but now mounting to millions, [are so] horrible, that to save 500 children’s lives is at least a step in the right direction.” She signed the note, “Devotedly always, Elinor.”5

  The next night, a group of people met at the Morgenthau house at the suggestion of presidential adviser Sam Rosenman to discuss how to increase Jewish immigration into Palestine—another indication both Morgenthaus were growing more involved in the Zionist cause. When Morgenthau mentioned the meeting to the president, FDR told him to go easy on Palestine because he already had a plan. “First, I would call Palestine a religious country,” he said. “Then I would leave Jerusalem the way it is and have it run by the Orthodox Greek Catholic Church, the Protestants and the Jews—have a joint committee run it.” FDR added: “I actually would put a barbed wire around Palestine, and I would begin to move the Arabs out of Palestine.” He said he would provide land for the Arabs in some other part of the Middle East and each time a Jewish family moved in, an Arab family would be moved out, so in the end 90 percent of the residents would be Jewish. “There are lots of places to which you could move the Arabs,” he said. “All you have to do is drill a well because there is this large underground water supply, and we can move the Arabs to places where they can really live.” In the meantime, he had discussed with the government of Colombia the possibility of establishing settlements in the Andes. Morgenthau told him that when they got back to Dutchess County—their euphemism for retirement—he would like to be involved in helping the refugees. “I was surprised to find that the president was studying this thing with so much interest and had gone as far as he had in making up his mind on what he wants to do,” he dictated into his diary.6

  A turning point in Henry Morgenthau Jr.’s relationship with the Jewish community came in November 1942, when Rabbi Stephen Wise came to the corner office to tell the secretary what was happening in Europe. Morgenthau knew of the millions of deaths and the lampshades made from victims’ skin, and he asked Wise not to go into excessive details. But Wise went on to tell of the barbarity of the Nazis, how they were making soap out of Jewish flesh. Morgenthau, turning paler, implored him, “Please, Stephen, don't give me the gory details.” Wise went on with his list of horrors and Morgenthau repeated his plea again and again. Henrietta Klotz was afraid her boss would keel over.7 Morgenthau later said the meeting changed his life.

  On December 17, the White House finally denounced the slaughter and said the United States would punish anyone guilty of political or racial murder.8 But that was it. The Western Allies had no beachhead in continental Europe and could do little. The United States did not increase refugee quotas. The government did not work with neutral countries to protect Jews who had escaped from the Nazis and arrange transportation to safe havens. Morgenthau was certain the State Department wasn't up to the task. “The typical foreign services officer lived off paper,” Morgenthau would later state in a series of articles ghostwritten by historian Arthur Schlesinger Jr. “The horrors of Dachau and Buchenwald were beyond their conception. They dealt with human lives at the same bureaucratic tempo and with the same lofty manner that they might deal with a not very urgent trade negotiation.”9 The matter weighed heavily on Morgenthau’s conscience.

  At some point during the winter, Treasury staff member Josiah DuBois learned from a friend at the State Department, Donald Hiss (brother of Alger Hiss, who was spying for the Soviets), that the situation was worse than they had believed. Hiss copied k
ey documents that showed the State Department was not only too passive in its response but also that some key officers were actively working against rescue efforts.10

  As the anniversary of Pearl Harbor approached, Morgenthau issued a statement calling for Americans to pay more taxes. “Today, a year after Pearl Harbor, the nation is engaged in two wars—the war against the Axis and the war against post-war chaos,” he said. “Experience has taught us that military victory alone may turn to ashes. We who fight the war have also the duty of paying for the war.”11

  In twelve months, war-bond sales had reached the monthly target of $1 billion only in January 1942. Only 15 percent came from individuals.12 Roosevelt was growing impatient, and the wisdom of the voluntary program was being challenged by a new powerbroker within the Roosevelt circle, James Byrnes.

  For political and economic reasons, the Treasury needed to improve war-bond sales, and by late fall the group devised a plan based on the Liberty-loan drives of the previous war. These raised billions of dollars in brief, targeted campaigns that concentrated the efforts of volunteers, the media, and businesses. By late November, the Treasury was leaking to the media that the coming war-bond drive could exceed even the fourth Liberty-bond drive of 1918, which raised $6.9 billion. Working with its organizing committees in all twelve federal districts, the Treasury brought together 4,400 volunteers working for the Victory Fund committees, who in turn oversaw 300,000 frontline sales people. Through the American Bankers’ Association, it asked every bank in the country to contact every customer, asking them to buy war bonds. On November 19, 1942, the Treasury unveiled the Victory Fund drive, with the aim of raising a record $9 billion by the end of January 1943.13