The Jew Who Defeated Hitler Read online

  Morgenthau’s staff urged him to bring Cordell Hull in line, and he must have been tempted to target his old rival. But he resisted. “So far, whenever I have gone to him direct he has been very good,” Morgenthau told his staff. He launched into one of his rambling addresses, not angry so much as heartfelt. He told them he wanted the matter in the open as much as anyone, but sadly they were up against a generation of men who felt differently.

  “It is only by my happening to be Secretary of the Treasury and being vitally interested in these things, with the help of you people…that I can do it,” he told them sincerely. “I will do everything I can, and we will get it done, but don't think you will be able to nail anybody in the State Department…to the cross.” He told Paul, Pehle, and DuBois that they were forthright and courageous and that he would back them. “I will go just as far as you men will let me go.”88

  Paul drafted a letter urging Hull to help the refugees, and Hull replied on December 6 that the State Department sympathized desperately and listed the reasons why Leland Harrison was having difficulty. Then on December 17, the Foreign Office in London let Washington know it was concerned with the difficulty of settling Jews, should they be released from enemy territory. Therefore it was reluctant to approve the preliminary financial arrangements that the Treasury had devised to win the release of condemned Jews. “The letter was a satanic combination of British chill and diplomatic double-talk, cold and correct and adding up to a sentence of death,” Morgenthau would later write.89 The Treasury staff met and realized that the State Department could not do what was needed. They urged Morgenthau to recommend the president remove the file from the State Department.90 Oscar Cox, formerly of the Treasury and now of the Foreign Economic Administration, privately advised Morgenthau that Roosevelt needed a separate committee that could execute a policy of actively rescuing the Jews. That meant identifying neutral European countries that could provide a safe haven for refugees, finding other countries where they could settle, and arranging transportation between the two. He also thought the United States should relax its own immigration laws.91

  On December 20, Pehle and Morgenthau visited Hull’s office with a Treasury memo saying the British position went beyond the matter under consideration. “If it prevails, it means that we should give up on trying to rescue Jews in enemy territory,” said the report. The State Department was represented by Hull, whom Morgenthau thought looked tired, and Breckinridge Long, who had either opposed the Treasury or was dubious to the point of indifference. Long had great powers in issuing visas and ran twenty-three of the forty-two State Department divisions. At this meeting he seemed anxious to please. Before they started, Hull said he had discussed things with Ambassador John Gilbert Winant and replied to the British, striking down all of the British argument forcefully. His reply to the British said their message “has been read with astonishment” and the State Department was “unable to agree with the point of view set forth.”92 Long told them he had ordered Harrison to issue the license that the Treasury and Hull had asked for five months earlier. “Of course, the people down the line get hold of these things,” said Hull. “When I don't know about them, I just can't handle them.”

  Morgenthau then surprised them by asking to see Cable 354, and Hull, astonished by the request, asked Long to provide the cable to the Treasury.

  As they were leaving, Long asked to see Morgenthau privately and said he was troubled by rumors of anti-Semitism in the State Department.

  “Well Breck…we might be a little frank,” said Morgenthau. “The impression is all around you, particularly, are anti-Semitic.”

  Long said he knew that to be the case and hoped Morgenthau would use his “good offices to correct that impression, because I am not.”

  “After all Breck, the United States of America was created as a refuge for people who were persecuted the world over, starting with Plymouth…. That was the concept of the United States, and as Secretary of the Treasury for one hundred and thirty-five million people—I am carrying this out.”

  “Well my concept of America as a place of refuge for persecuted people is just the same.”

  “I am delighted to hear it.”

  Morgenthau later told his staff it was “Hull at his best,” doing the right thing forcefully and effectively. “But the tragic thing is that—dammit!—this thing could have been done last February.”93

  The State Department sent Morgenthau a mimeographed copy of Cable 354 in late December, but it deleted a cross-reference to earlier cables. Morgenthau immediately phoned Long to say he had asked Randolph Paul to get a copy of the original copy as it was sent. Long had to send over a copy of the original cable, which included the reference to a cable on January 21, 1943, and the Treasury’s case was now complete.94 The documentation showed Harrison had been appalled by Gerhart Riegner’s intelligence on the death camps and had transmitted the information to the State Department. But on January 21, 1943, the department had asked Harrison not to accept reports from Riegner to be transmitted to other parties except in extraordinary circumstances. That order had been signed by Sumner Welles, but he had no memory of signing it and the Treasury believed it had been slipped to him with a stack of documents he had to sign. The significant point was that the Treasury now had conclusive evidence that the State Department had been thwarting efforts to save European Jews.

  Early in 1944, the Treasury learned the British were protesting that the movement of refugees might prove embarrassing to both governments. The Treasury believed they were placing diplomatic niceties ahead of matters of live and death. White wanted Morgenthau to push the president directly to solve the matter, but the secretary continued to work through Hull. When they met on January 12, Morgenthau once again thought his old rival “bewildered,” “weary,” and badly briefed, not even knowing the names of some staff members who attended the meeting. But Hull agreed with Morgenthau that the record on refugees was shocking.95

  By the middle of January, Paul presented Morgenthau with a report on refugees to give to the president. Its title was Report to the Secretary on the Acquiescence of This Government in the Murder of the Jews. The first sentence read: “One of the greatest crimes in history, the slaughter of the Jewish people in Europe, is continuing unabated.” It said State Department officials had willfully failed to act to rescue them.96 The senior Treasury staff were foursquare behind Paul in presenting it to Roosevelt. DuBois told Morgenthau to tell FDR that if there was no action on the report, he would quit and release it to the press.97

  Morgenthau changed the title to Personal Report to the President, but the document that he, Paul, and Pehle presented at the White House on Sunday, January 20, was nonetheless explosive. It said the State Department utterly failed to “prevent the extermination of Jews in German-controlled Europe.” The paper condemned the department’s “gross procrastination” and said it had suppressed for two months reports on German atrocities after publication of similar reports intensified public pressure for action. “The matter of rescuing the Jews from extermination is filled with difficulties,” read the last paragraph. “Only a fervent will to accomplish, backed by persistent and untiring effort, can succeed where time is so precious.”

  The president received the report sympathetically. He brought in Edward Stettinius, who had replaced Sumner Welles as under secretary of state and who said he wasn't surprised by the performance of the State Department. Yet he said Long probably wasn't anti-Semitic so much as old and tired.98

  Within days, the bureaucracy was working on the special agency outside the State Department envisaged by Oscar Cox and Morgenthau. Hull thought it was a great idea.99 Roosevelt announced the establishment of the War Refugee Board on January 22, 1944. It was created by an executive order, so it would not need congressional approval. The members were to be the secretaries of state, of the Treasury, and of War, and its executive director was to find havens for the refugees. John Pehle was named acting executive director until they could find a higher
profile person to run it. Like Morgenthau in 1933, he performed so well that he retained the post.100

  At the first meeting, Morgenthau congratulated Hull on the “magnificent” cable he'd sent to all embassies instructing them to cooperate with the board.

  “What you mean is you are congratulating yourself,” said Hull with a smile.

  Seeing the two combatants complimenting one another brought a laugh from Stimson. “That is better than throwing brickbats at each other, anyway,” he said.101

  The War Refugee Board was established too late to save the Jews of Romania, yet there was still time to rescue Jews in Hungary and other European countries. And its creation would never have happened without Morgenthau. “Thousands upon thousands will have the cruel hand of suffering and death lifted from them by what you have done,” Oscar Cox wrote him on January 22. “To feel with as humans whom you haven't seen in the lands of persecution is one of the marks of your human depth and greatness. Deep in my heart I am warm. Rare individuals like you are what give me, at least, the driving hope to carry on with the war and what comes after.”

  Eight days later, the senior Treasury staff assembled once again in Morgenthau’s office. They presented him with a single sheet of paper, which they had all signed.

  Feb. 2, 1944

  You have been generous in your praise of the part we played in getting this government to take action designed to forestall Hitler’s plan to exterminate the Jews and other persecuted peoples of Europe.

  We who have worked toward this goal for months and are intimately acquainted with the facts regarding its achievement take this opportunity to express our deep admiration for the truly great contribution which you and you alone made to this cause—a contribution of courage and statesmanship.

  The change which has been brought about in this Government’s attitude toward saving the Jews and other persecuted peoples of Europe from extermination as the result of your efforts is, we know, more than sufficient reward for you. Nevertheless, the fact is that the courage and statesmanship you have displayed will live always with those who know what you really did.

  Herbert Gaston

  Randolph Paul

  John W. Pehle

  Harry D. White

  Ansel F. Luxford

  Josiah E. DuBois, Jr.

  Henrietta S. Klotz102

  In December 1943, Henry Morgenthau Jr. reached a dubious milestone: he had raised more in taxes during his tenure as secretary of the Treasury than all his predecessors combined. As of December 31, Americans had paid $93.7 billion during the term of the fifty-second secretary of the Treasury, whereas his fifty-one forebears had raised $93.2 billion in total taxes. It was a stunning statistic, given that Morgenthau believed Americans were undertaxed in light of the task at hand. Of course, constitutional authority for taxation rested with Congress, so he had to share the credit or blame, but Morgenthau could claim another record on his own. He had now sold more than $30 billion in government bonds, which meant he had authorized the borrowing of more than any person in the history of the world.1 He raised this fortune at interest rates of less than 2.5 percent and was intent on raising more. By the end of 1943, he had set the target for the fourth war-bond drive at $14 billion—$3 billion less than the third loan drive—and planned to enlist five million store owners and employees to help sell the securities. He said publicly he hoped for $5.5 billion from individuals—a lofty goal given that $17 billion had been raised in this class since May 1941.2

  At about this time, Morgenthau began to tell people privately that Wall Street disliked him because he had moved the center of the business world from New York to his own desk. The data justified the claim. The Securities and Exchange Commission in the fiscal year ending June 30, 1944, registered the issuance of securities worth a net $1.8 billion.3 But in just about the same period (the fifth war-loan drive would end on July 8), the Treasury raised more than $45 billion in just three war-loan drives.

  The Senate Finance Committee supported the House of Representatives’ budget that raised only $2.1 billion in new money—far short of the $10.5 billion the administration wanted. Senator Walter George told Morgenthau he simply could not muster the votes to back the secretary’s demands. Randolph Paul, Herbert Gaston, and Daniel Bell all wanted the secretary to urge the president to veto the tax bill. Morgenthau even consulted Jimmy Byrnes, who pondered the matter then supported a veto. Morgenthau ended up recommending that the president let the bill pass without a presidential signature, as he had in 1938.4 “I don't know of any time that the Treasury, as far as having influence on the Hill is concerned, was as low as it is right now,” he told his staff, attributing the weak standing to their courage in doing what was right.5

  Roosevelt vetoed the tax bill, which proved an explosive political move. The New York Times called it an “obvious blunder” that precipitated a crisis between Congress and the administration. The presidential address on February 22 stated that the bill did not even raise the extra $2.1 billion that Congress advertised. Because it canceled increased Social Security premiums, the real figure was closer to $1 billion. Claiming the bill provided relief “not for the needy but for the greedy,” the president said: “The bill is replete with provisions which not only afford indefensible special privileges to favored groups but set dangerous precedents for the future.”6 Alben W. Barkley, a Kentucky Democrat and former Roosevelt ally, resigned as majority leader in the Senate to protest the insult to Congress; but Senator Carter Glass said the president not only had the constitutional power to veto the bill but also the responsibility to strike down “a bill as inadequate as this one.”7 The New York Times called on the Senate to override the veto, which it did on February 25. It was the first time that Congress had ever overridden a veto on a tax bill.

  A few days later, Roosevelt asked Morgenthau at a cabinet meeting how he'd get the additional $8 billion. The secretary brushed him off by saying he was having productive discussions with congressional leaders, and they dropped the matter.8 In fact, the Roosevelt administration never again tried to persuade Congress to raise taxes. Morgenthau continued to gnash his teeth about the breaks given to the wealthy and to corporations, but the tax system was producing astonishing revenue gains on its own. In fiscal 1943, government revenues had increased 70 percent to $27.3 billion, and in the year ending June 30, 1944, they would rise a further 88 percent to $51.3 billion. Certainly borrowing increased just as dramatically, but the booming war economy produced enough government revenue to cover the rising borrowing costs.

  Meanwhile, the fourth war-loan drive exceeded its target and netted the government $16.7 billion, yet still Morgenthau was pilloried in some circles. “The plain fact is that Secretary Morgenthau is not the master of, he’s not even a very apt pupil in, the field of war finance,” said the columnist Walter Lippmann. “It is a credit to his modesty that he doesn't pretend to be and he has been, according to his lights, a devoted public servant.”9 Morgenthau was distressed to learn that a book called Washington Broadcasts, published anonymously under the pen name “The Man at the Microphone,” portrayed him as having nothing more to do than make public appearances with movie stars at war-bond promotions. It upset him so much that he asked the president to mention in public statements how hard it was to run the Treasury. Roosevelt howled with laughter at the book’s depiction of his friend.10

  Though conservative commentators had called for years for Morgenthau to hire bankers from Wall Street to manage the country’s finances, what he did do was recruit marketing men to work on the war-loan drives. He brought in Fred Smith, an executive with Young and Rubicon on Madison Avenue, even though Smith had organized the preconvention campaign for Wendell Willkie in 1940. He revered Morgenthau, calling him the second-best advertising mind in Washington, exceeded only by the president himself. The secretary’s strength, said Smith, was his ability to cut through distractions to the kernel of any matter. “Henry Morgenthau Jr., has handled more advertising in a shorter period of time than a
ny man in history; but even in the hustle and bustle, nobody gets past him with anything,” wrote Smith. “Perhaps the most important advertising decision he ever made was the decision to use bonds to sell the war, rather than vice-versa.”11 The other was Theodore Gamble, who played the larger role of the two, as he was named national director of the War Finance Division. Gamble was a self-made millionaire originally from Nevada who owned a chain of five movie theaters in Oregon.

  The addition of these two ad men was part of the glamorous aura that Morgenthau brought to the austere halls of the Treasury. He always respected the Treasury and insisted that radio broadcasts promoting war bonds convey the dignity and grandeur of that institution. Yet he dabbled with celebrities and used popular culture to promote the institution’s aims. When the New Yorker profiled him in two articles in early 1944, it listed the stars he had used to sell bonds: Bing Crosby, Fred Astaire, Bob Burns, Kay Kyser, Mickey Rooney, Judy Garland, and, of course, Irving Berlin.12 Smith and Gamble—casually called “Fred and Ted” within the Treasury—only added to the modernity of the program.13 With his own innate inclination for marketing, Morgenthau scoffed at a Senate plan to spend up to $15 million a year for war-bond ads in small newspapers. Morgenthau argued the papers were now promoting the bonds for free.14 The plan was soon shelved.15