The Jew Who Defeated Hitler Page 26

  Morgenthau planned the fifth war-bond drive with a target of $16 billion for spring 1944 so as not to hold a loan drive when the presidential campaign would be under way in the fall. He lined up Orson Welles to host the launch program on June 12, featuring radio broadcast from the homes of soldiers fighting overseas. Gamble arranged broadcasts by four of the world’s leading women—Eleanor Roosevelt, Queen Elizabeth of Great Britain, Madame Chiang of China, and Polina Zhemchuzhina Molotov, the Jewish wife of Soviet foreign minister Vyacheslav Molotov.16 Morgenthau also convinced the reluctant president to launch the bond drive, which had Gamble and Smith “bubbling over with enthusiasm.”17 When the drive wrapped up on July 8, it had netted a total of $20.6 billion.18

  As the working groups proceeded with plans for the stabilization fund and world bank, Morgenthau knew he had to schedule an international conference on the plan, despite the woeful track record of such meetings. The Paris Peace Conference’s Treaty of Versailles of 1919 had never been ratified by the Senate. Nor were the Lausanne Conferences of 1923 and 1932 or the London Economic Conference of 1933 viewed as successes. Yet the time had come to call an international conference on Harry Dexter White’s two-track proposal, despite all the factions, competing interests, and disagreements. Secretary of State Cordell Hull and Roosevelt were working on a similar meeting to solidify plans for a postwar international organization to be called the United Nations, and Morgenthau must have known the success of his conference would have some bearing on the later meeting.

  Several factors were working in his favor: the State Department had assigned the file to Dean Acheson, with whom Morgenthau worked well; John Maynard Keynes and Harry Dexter White were close to an agreement on the structure of the bodies; and the new Soviet ambassador Andrei Gromyko voiced support for the plan. But Morgenthau, White, and their team had no guarantee a conference could produce a proposal that would win the support of the American, British, Soviet, and forty-one other governments, as well as the US banking community and Congress.

  Republican congressman Charles S. Dewey of Chicago served notice in April that he would introduce a bill outlining a rival plan to White's, adopting some of the details of the world bank and none of the stabilization fund. Dewey was a banker and joined much of the banking community in criticizing White’s plan. Benjamin Anderson, a University of California economist who previously worked at Chase National Bank, publicly said that White proposal would drain the US Treasury of billions of dollars.19 White urged Morgenthau to present the Treasury plan to Congress before hearings on the Dewey bill. Morgenthau couldn't move faster than the British and Soviets would let him, but he let them know nonetheless that he was preparing to testify before Congress about the plan.

  On April 12, Morgenthau learned that the White plan faced opposition from the Bank of England, some British cabinet members, and the London banking establishment because it would reduce London’s prominence as a banking center, diminish sterling in favor of the US dollar, and impact the economic relationships within the empire. And he still had not heard officially whether Moscow supported the plan. Three days later, the British Treasury agreed to support the proposal, assuming technical points could be ironed out and that the agreements on the bank and fund were part of a broader discussion on international cooperation.

  Finally on April 18, Morgenthau “took an awful chance.” He had W. Averell Harriman, the US ambassador in Moscow, advise the Soviets that the British had signed off on the American proposal. It was a stretch, but he needed the Soviets at the table. Harriman replied that the Soviets could not go along with White’s plan because it demanded members pay gold into the fund. However, Moscow agreed “to instruct its experts to associate itself with Mr. Morgenthau’s project.” On April 21, Morgenthau was able to announce a broad agreement by the Allies, though no binding commitments.20

  “Here’s where you get a medal, Henry,” Roosevelt said as he authorized the Treasury secretary to send out the invitations.21 On May 25, Roosevelt announced that he had invited forty-two countries and the French Committee on National Liberation to attend the conference in July, titled the United Nations Monetary and Financial Conference. The Treasury decided to hold the conference at a resort in Bretton Woods, New Hampshire, a ski resort whose cool mountain air would be a pleasant spot in the middle of summer. They originally hoped to hold the meeting in May, but it proved difficult to organize on such short notice and the British couldn't travel ahead of the tight security brought on by the Normandy invasion. Morgenthau would head the US delegation.22

  “Henry Morgenthau, who has now been Secretary of the Treasury almost as long as Andrew Mellon, has suffered a heart attack and may have to resign,” columnist Drew Pearson reported on his radio show on February 13, when the budget battle was near its climax. “He will take a month’s rest to try to recuperate.”23 The report was complete baloney. Morgenthau was in fact exhausted but healthy in the winter of 1944. With the battles over the budget, the conference at Bretton Woods, the occupation currencies, and the War Refugee Board, the pressures on him continued unabated. His battles with Jimmy Byrnes faded away, but he was annoyed by other Roosevelt insiders. He said Paul McNutt, chairman of the War Manpower Commission, “talks at cabinet the way he would talk to an audience of ten-thousand people.”24 In April, Morgenthau received a document showing that Leo Crowley, the left-leaning head of the Foreign Economic Administration, had been telling people that Roosevelt was abandoning his partnership with Churchill in favor of a closer alliance with Stalin. Morgenthau showed the document to Roosevelt, who encouraged him to bring him more dirt if he heard any.25

  At home, Elinor was withering away as her heart weakened. (Yet she still worked to further her husband’s career. When she heard FDR say at a dinner he'd been unable to find out how much gold the Russians had, she immediately told her husband the president would like him to find out.26) Robert Morgenthau, who'd gotten married in December, was sailing the perilous waters of the Atlantic, and Henry III would soon join the invasion force in Western Europe. The greatest shock came when they learned that the USS Lansdale, Robert Morgenthau’s destroyer, was sunk off the coast of Algeria on April 20. It had just escorted one convoy across the Atlantic and was joining another when it was attacked by Luftwaffe Junkers and Heinkel bombers, striking in two or three waves. Forty-seven seamen lost their lives. The Morgenthaus had anxious hours until the president called on April 21 to say that Bob Morgenthau was among two hundred survivors rescued by nearby ships.27 Three days after the sinking, Vice Admiral H. K. Hewitt wrote the secretary to say Robert was safe and well. “Not only did he come through it safely, but he demonstrated his fine qualities as a man and an officer,” said the letter, which Morgenthau shared with the First Lady. “Since his captain was temporarily hospitalized, it fell to him to report his experiences to me, and also to be in charge of the other officers and the crew. He has been indefatigable in looking out for their welfare. I did not know him before, but I was immediately impressed by him. You have every right to be proud of him.”28

  Morgenthau himself now openly identified himself with the Jewish cause. It would be wrong to say that he'd shown no concern for the Jews before the Holocaust, but the events in Europe created a deeper understanding of his own Judaism. His eldest son called the battles over the refugee issue in 1943 the “initial breakthrough to my father’s conscience.” Robert Morgenthau said his father at this time began to attend synagogue in Poughkeepsie on the weekends, and he often had to be elbowed awake when he fell asleep.29 His first effort in furthering the lives of his coreligionists was working with John Pehle on the War Refugee Board.

  The task facing Pehle—locating refugees, transporting them to safety, and finding temporary and permanent homes for them—was absolutely staggering. The surviving Jews were, for the most part, in territory occupied by the Nazis or their allies, and the Western Allies at first had only one European beachhead in southern Italy. Working with a small staff in Washington, Pehle often had to negotiat
e with hostile or indifferent governments. Then he had to find at least one more government to offer refugees sanctuary, often a temporary haven, which meant another country would have to be found for a permanent home. He had to use American influence to persuade foreign governments to cooperate, even though all parties knew the American government itself was not accepting many refugees. And he had to arrange financing to pay for the transportation and initial support. Pehle and his staff knew they were combatting one of the most heinous crimes in human history, yet society as a whole and the media in particular seemed almost oblivious to the enormity taking place in the Nazi territories. Even when Roosevelt created the War Refugee Board, the New York Times ran only a small story on page 11. That prompted Morgenthau to phone Arthur Sulzberger on January 29 to complain about the coverage. Sulzberger was sympathetic, and a front page story on the War Refugee Board appeared the following day.30

  Pehle worked especially closely with missions in neutral European countries, like Spain, Sweden, Switzerland, and Turkey, which were key in the initial stages of bringing refugees out of harm’s way. He established contacts with the International Red Cross and the Vatican, and in the early months he secured private contributions of $100,000. Within days of its establishment, the board agreed with the World Jewish Congress on a program to remove Jews from Vichy France to transport them to Spain, Switzerland, and North Africa. Soon there was an agreement to remove five thousand to six thousand Jewish children from France. The board also initiated plans to remove Jews from Poland (which had had the largest Jewish population in Europe) and Hungary (a Nazi puppet whose Jewish community was the last in Europe to face mass deportation to the death camps).31

  By mid-March, the American administration began to succeed in placing more Jewish refugees in Palestine, largely at the behest of Roosevelt himself. During a March 7 meeting with Morgenthau, Roosevelt repeatedly said he wanted to pressure the British to state publicly they would allow Jewish refugees into Palestine. “I want them to say it now that any Jews that we are successful in getting out, they will let them go to Palestine,” Morgenthau quoted him as saying later.32 In the middle of the month, the board began to transport 150 Jewish children every ten days from Bulgaria, through Turkey, to Palestine. The British said nothing about it.33

  Both Pehle and Morgenthau felt there should be at least one United States safe haven for Jews and other persecuted people, though that was impossible under existing quotas for immigration. Their first line of opposition was War Secretary Henry Stimson. “I pointed out the dangers,” Stimson wrote in his diary after a March 21 meeting at the White House. He detailed “how it was impossible to be sure they would be taken back and that, if they weren't, it would be a violation of our quota policy, which I support.”34 At the very least, he wanted the president to consult Congress on the matter.

  Pehle, Stimson, Morgenthau, and Hull pondered a range of options, from establishing a “free port” for refugees by executive order, to an executive order with some consultation, to asking Congress to frame legislation allowing the free port. Morgenthau and Hull warned executive action could jeopardize the president’s standing with Congress. Pehle presented his plans to Roosevelt on May 16, and the president liked the proposal, though he wanted the name of the camps to reflect the temporary nature of the refugees’ stay in America. He was willing to sidestep congressional approval as long as they began slowly, by admitting five hundred to one thousand refugees on a temporary basis, and then explaining to Congress the reasons.

  Pehle didn't believe there was time for Congress to debate the matter. On May 18, they learned of overcrowded camps in southern Italy, where an estimated 1,800 refugees were arriving each week. Roosevelt instructed the War Department “under no circumstances to turn these people back.” As they examined the issue, Pehle furnished Roosevelt with evidence that 70 percent of the American public supported temporary havens, as did a range of religious groups and newspaper editorial boards. Roosevelt was ready to move forward with “Emergency Refugee Shelters,” and John McCloy, under secretary of the War Department, told Morgenthau on June 2 that he might have a perfect site for a pilot project—Fort Ontario, a former army base at Oswego, New York. Roosevelt ordered that arrangements be made for about one thousand refugees to be housed at the camp beginning that summer.

  Working with other departments, the Treasury had to plan occupation currencies in the liberated countries that met the approval of these countries’ governments in exile while ensuring an efficient occupation by the Allied armies. Then it would have to work with the conquering Allies, including the Soviets, at a functional occupation currency for Germany. Each created complexities for the Treasury, and any diplomatic misstep would have jeopardized the outcome of the monetary conference.

  In January, Morgenthau was facing domestic pressure to cut aid to Britain, but he and Dean Acheson both believed it was not the time to create conflicts with Allies. The Treasury had wanted to cut about $500 million in lend-lease payments but ended up cutting $288 million—a move that enraged Churchill. Throughout the winter and spring, the US government had negotiated with the Chinese on the exchange rate that should be paid for the airfields and other military installations that Americans had been financing in China. The official rate was still twenty yuan to the US dollar, though the true rate had deteriorated to a level closer to 220 to 1 because of Chinese hyperinflation. The official rate greatly favored the Chungking government—and therefore the Chiang clique—so Roosevelt suggested in January that they renegotiate the rate. The Chinese flatly refused. The two governments negotiated in the lead-up to the Bretton Woods Conference, and the Chinese would lower the rate only to 60 to 1. The matter was unresolved in June, when United States officials faced the unsettling prospect of not only Finance Minister H. H. Kung but also his excessively demanding wife coming to the United States.35

  These were mere spats compared with the disagreements on occupation currencies, especially for France and Germany. Throughout 1943, Morgenthau had fought to issue the yellow-seal dollars as the initial currency when invasions began in Western European countries then to issue a supplementary military currency in each country until a government was in place. However, the British told him—quite correctly—that governments in exile would never agree to the United States or Britain printing money for their country. So arrangements were made for the governments in exile from Belgium, Norway, and the Netherlands to supply the US government with currency that could be used in the early stages of the advance into these countries.

  France was a special case—a big country, strategically positioned, with a large population and historic power. Most important, France had no government in exile. Northern France had been annexed by Germany, and southern France was overseen by the puppet government at Vichy, with which the Roosevelt administration had maintained diplomatic relations. There was the French Committee of National Liberation, a London-based quasi-government-in-exile headed by Charles de Gaulle, but none of its members, not even de Gaulle, had been elected to the committee. He personally believed his mandate was not only to liberate his country but also to restore its glory—a mission that often interfered with the mission of the Allies. The US Treasury, for example, wanted to set the franc’s exchange rate at about one cent to reflect its reconstruction, but the French committee shuddered at the thought of devaluing the franc. The committee wanted the words “La République Française” printed on the bills but had to bend to Roosevelt’s insistence that they say simply “La France.” By late May, they agreed the Americans would print francs—valued at two cents each—for the committee.36

  The planning for the German occupation currency began in early 1944 and required the cooperation of the three major powers that would invade Germany. The Treasury and War Departments both favored producing Allied Military Marks, a single currency used by all the occupation forces. The British and Americans wanted identical bills printed by the Allies and used by all occupation forces. By February, the Soviets supporte
d the broad terms of the plan but wanted to print some of them in the Soviet Union so they could deliver them to the Red Army. That meant the Soviets would need the list of available serial numbers, details of paper and color, and access to the plates to print the notes.37

  “To acquiesce to such an unprecedented request would create serious complications,” Alvin W. Hall, the director of the Bureau of Engraving and Printing, wrote Daniel Bell as soon as he heard of the proposal. It would make accountability impossible and violate the global practice of governments retaining the plates used to print their currency and bonds. Hall said his outfit used special papers and dyes to prevent counterfeiting, and the Treasury would lose any ability to prevent counterfeiting if it surrendered the plates. The Forbes Company, which was to print the notes, said it would not accept the contract if the plates were given to the Russians. Within the Treasury, Bell agreed with Hall, but Harry Dexter White forcefully supported the Soviets. Bell drafted a letter refusing the Soviet request, but Morgenthau declined to send it, preferring instead to discuss the matter personally with the Soviet ambassador. Andrei Gromyko stood his ground at the meeting on March 18. That deadlock lasted for the next month, the stakes raised by the Soviets’ advance in the east and the Americans’ need for an agreement in Bretton Woods. “In order to convince the Soviet Government of our sincerity in the desire to have the closest collaboration in these military operations against Germany, it becomes essential that we make every effort within our possibility to furnish the plates to that government,” said Morgenthau.38 Hall and Bell lost the battle. The Soviets received the duplicate plates. The Soviets would eventually flood occupied Germany with printed money, complicating the occupation.

  On the morning of June 6, American, British, and Canadian troops landed on the coast of Normandy, establishing the second front that Stalin had sought for four years. About 160,000 Allied troops landed that day, aided by almost 200,000 naval and merchant-navy personnel, making it the largest amphibious operation in history. The once-feared Luftwaffe was barely a factor. The Allies controlled the skies, partly because of the success of the Allied armaments program, aided by Morgenthau’s early work in the aircraft program. The American aircraft industry, which had barely produced 2,000 planes in 1939, had churned out 86,000 planes in 1943 and would build 96,000 in 1944, more than double the German production in both latter years.39 The Allies advanced steadily, and within days one million Allied soldiers were on French soil.