The Jew Who Defeated Hitler Page 32
Morgenthau took his daughter, Joan, then a student at Vassar, to the funeral in Hyde Park. He said the flowers were like jewels, and he was overcome with emotion when a trumpeter blew taps. He was worried about Joan, who couldn't stop crying, so he took her back to the train and gave her tea and a sandwich.44
The Morgenthaus and Roosevelts slowly adjusted to the new life. Eleanor Roosevelt left the White House and moved into the Morgenthau apartment in New York for a short time. “You and Henry are good to let me go to your apartment and he made it seem so simple and easy,” the former First Lady wrote to Elinor on April 25.45 “What wonderful friends you both are.” She had not only to adjust to the grief of widowhood but also to the knowledge that she was now officially just another citizen. “I went out and did my first marketing this morning, thinking I had better acquaint myself with stamps and prices etc.,” she wrote. “The first time in 12 years I've actually been to market and enjoyed it.”46
Morgenthau held his first meeting with his new boss on April 14. The president opened the meeting by saying how terrible he felt and that he was sure he admired Roosevelt as much as Morgenthau had. “I don't think that’s possible,” replied the secretary.
Doing much of the talking, Morgenthau said Roosevelt had asked him to do jobs that were not strictly Treasury business and that he hoped to explain the Morgenthau Plan to him at some point. He warned he had difficulty working with some people lower down in the State Department and that “the big boys” on Wall Street would target him. “In my job, I am very vulnerable because we have moved the financial capital from London and Wall Street right to my desk at the Treasury,” he said.47
Truman said he wanted to maintain Morgenthau’s desk as the center of the financial world. “Now I want you to stay with me,” he told Morgenthau as he escorted him to the door.”
“I will stay just as long as I think I can serve you.”
“When the time comes that you can't, you will hear from me first direct.”48
Overcoming his grief, Morgenthau continued to work on major projects. The Bretton Woods agreement still had to be approved by Congress, so Morgenthau called on its disparate supporters to speak out in favor of the deal. He wanted to counter the opposition of the banking community, conservative media, and isolationists in the Senate. He launched an extensive public-relations exercise, persuading influential publications from the New York Times to Reader’s Digest to write complimentary articles. He tried to broker a deal with the American Bankers’ Association, but the talks proved difficult. Truman publicly supported the legislation as it worked its way through the House in mid-April.49
Morgenthau still had to raise money. In the seventh war financing, whose deadline was June 30, 1945, the Treasury set a target of $14 billion, of which it hoped $4 billion would come from wage earners. Morgenthau noted to Federal Reserve Chairman Marriner Eccles that World War II was the costliest war in history. From July 1940 to July 1945, they had raised $211 billion in interest-bearing debt, of which $122 billion came from nonfinancial lenders.50
In the final days of the war against Germany, three issues proved to be tortuous and created harsh conflicts with the staff Morgenthau so cherished.
First, the government had to decide what to do with lend-lease shipments for the United Kingdom because the victory in Europe was changing the dynamics of the special relationship. The Joint Chiefs of Staff were now saying they believed the military requirements for Britain were different than what they had estimated just five months earlier. Morgenthau told Truman the whole lend-lease system had to be overhauled, and the president agreed.51
Second, the mendicant family of Chiang Kai-shek said they were still owed a massive gold shipment—$240 million of a previously approved $500 million. But Treasury officials believed that $27 million already shipped to China had been horribly wasted to the benefit of speculators. Frank Coe, a monetary-unit official, said the main beneficiaries of Soong’s request would be speculators close to the Chiang clique. Morgenthau was conflicted. The State Department told him the Chinese were now fighting the Japanese, and the army wanted the Treasury to support a stabilization program, even though the Chiangs, Kungs and Soongs couldn't be trusted.52
Finally, the entire policy toward Germany was dogging the administration. There were disagreements over reparations and whether German authorities should control prices and wages. Morgenthau continued to press for tough policies, and he still wanted to publish a book on Germany. He even showed a few draft chapters to Truman. Morgenthau had told his diary several times that Truman seemed to have confidence in him. But on May 4 the president asked him to stay after a cabinet meeting and said he was uneasy about Morgenthau’s book. He asked him not to do anything with it for the time being.53
Adolf Hitler shot himself after his lover, Eva Braun, poisoned herself with cyanide on April 30. He had come to power thirty-four days before Roosevelt had taken office and outlived the president by eighteen days. In the same compound, Josef Goebbels, who had so publicly vilified Morgenthau over the years, and his wife poisoned their six children before taking their own lives. On May 7, the Nazi government finally declared the unconditional surrender that Roosevelt had insisted on. In Washington, Morgenthau interrupted his hectic schedule to assemble his staff in the corner office. “I think that those of you who have been associated with me since Pearl Harbor or before…can all feel we have had a little share of this victory,” he said, obviously understating his message. He noted the French orders for airplane engines advanced the air force’s development by at least a year and the Treasury’s role in developing lend-lease and writing the legislation. “Certainly we have raised the money that the war cost from the people. It has been the people’s financing.” He noted that they still had an extremely tough opponent in the Japanese. “And when the last phase is through and the Japanese quit, then I think for the first time in my life—I have never really been drunk—I think I will get drunk then.”54
The celebration was short-lived. Within twenty-four hours of the armistice and without consulting the Treasury, Truman signed an order cutting back the shipment of supplies to Great Britain under lend-lease. And T. V. Soong held a meeting with several US officials, including Morgenthau, protesting stridently that the Treasury was not letting China have gold it had previously been promised. Focusing his wrath on Morgenthau, he said the Treasury had not honored an April 27, 1943, commitment to deliver $200 million in gold. He produced and read the letter aloud for all to hear. Morgenthau was unprepared for the request and didn't even remember signing the letter. He was furious his staff hadn't prepared him better, and he scolded them in one of his disjointed rants the next day. “Look, you people, I think, should be severely criticized for letting me go into court and try my case before T.V. Soong, and the letter…where I gave the Chinese Government a firm commitment…I think it’s inexcusable.” He railed at them for putting him in a dishonorable position and ordered them to make sure the Chinese got the gold they were owed.55
Morgenthau was working hard to develop a working relationship with Truman. On the day he scolded his staff, he went to the Oval Office to once again explain the Morgenthau Plan. He noted the president was surprised to learn that Germany was among the world’s top four producers in several food categories. Asked if he supported the plan, Truman said he was “by and large” for it. But when Morgenthau said he could help in negotiations with the Soviets, the president was noncommittal. “I went away with the distinct feeling that the man likes me and has confidence in me,” he told his diary.56 He had always highlighted in his diary how Roosevelt had treated him during their meetings, but now Morgenthau spoke as a man trying to convince himself that he had the new president’s support. He was pleased the next day when the president signed the revised version of JSC 1067 and the documents outlining a policy on reparations.
The angst over China did not let up, largely because the staff resented Morgenthau’s blaming them for the difficulties with a corrupt administration.
Coe on May 15 recommended Morgenthau write the new president, outlining the Chinese gold scandals and advising that the United States should ask China to withdraw its request. White reminded Morgenthau that the 1943 negotiations had stipulated that gold shipments would depend on their being used prudently. “These people own this gold,” Morgenthau reminded them harshly. In another meandering diatribe, he said the Chinese were beginning to fight and must be given support to carry on the war. What’s more, he had given written assurances that the gold would be shipped to Chungking. What was at stake, he said, was “my written word and the promise of Franklin Roosevelt.”
A day later, May 16, he bawled his staff out again, this time because he had just been told that Soong and Kung had not profited directly from gold sales. “You boys have been telling me right along that Soong owns most of this stuff, and that’s misleading,” he told them bluntly. Morgenthau assured Soong that day that the gold would be shipped, though the United States wanted assurances there would be none of the mistakes made in the past—a diplomatic reference to the profiteering off speculative sales. The Treasury secretary even persuaded the State Department to write a letter supporting the sales. Yet Ambassador Hurley in Chungking was livid when he heard about the shipments. He said the gold sales were useless in preventing inflation, and he was upset by the “vicious speculation” and the “so-called gold scandals.” Above all, he was upset the United States had “reserved no power to control the situation in its gold commitment to China.”57
As friction with his staff mounted, Morgenthau’s relationship with the new president began to strain. Truman made it clear that Morgenthau would not be the main person interpreting American commitments agreed to with Britain at Quebec. “I don't want to give them everything they ask for,” Truman told him.
“I never have,” Morgenthau responded. “In fact, they have complained about it.”
Morgenthau recommended an interdepartmental committee examine the matter; Truman said he would think about it but never approved it.58 The British, naturally, were distressed that American support was being reduced, and Churchill cabled Truman to complain on May 28. Morgenthau declined a British request for his help. “I am waiting for the President to tell me whether he wants me in on it,” he told his staff—the same men he'd chastised over the Chinese file days before. He said he wanted it stated publicly in writing that he was involved or he wouldn't do it. He was tired of being blamed for all the problems in foreign affairs. “The French are starving and freezing, and I'm the one who is holding this up?” he asked sardonically. “And this is wrong and that is wrong, and Churchill gets on the floor in Parliament and thanks Lord Keynes for the wonderful job he did, and I never get a line. I'm not going to take it. I was willing to take it from Roosevelt because I was his friend, but I want a little more now.”59
Rather than Morgenthau, Truman asked Fred Vinson—Jimmy Byrnes’s former deputy and now the head of the Office of War Mobilization—to head the dealings with Britain. Vinson’s team—which included Treasury representative Frank Coe—drafted a letter for Truman to send to Churchill explaining that the Quebec decision was based on many strategic and economic assumptions that no longer held true. It asked for the British government to relax its position on certain items.
“I am not going to go along with that,” Morgenthau told White and Coe in the sanctity of the corner office. He complained that Vinson’s letter gave no reason for “welching,” and the United States and Britain should both honor their obligations made at Quebec. He ordered Coe to write another draft letter saying the United States would honor its commitment, which Coe did and gave to Vinson. In June, Morgenthau again overruled Harry Dexter White and refused to back a State Department plan to lend—not give—the United Kingdom $3 billion with a 2.5 percent interest rate during phase 3 of lend-lease.60
When he heard that Byrnes would be named secretary of state, Morgenthau asked Truman if the rumors were true, warning, “I can't get along with him.” Truman would say only that he was studying the situation.61 While Morgenthau wanted to focus almost exclusively on postwar Germany, Truman wanted him to concentrate on economic matters and leave Germany alone. He told Stimson that neither Morgenthau nor Bernard Baruch could keep his hands off German policy. And when Stimson heard that Morgenthau would be attending the Potsdam Conference and checked it with the president, Truman replied, “Neither Morgenthau nor Baruch nor any of the Jew boys will be going to Potsdam.”62
In mid-June, the French government invited Morgenthau to open an exhibit of war bonds in July. (The seventh war-bond drive—known in the Treasury as “The Mighty Seventh”—would wrap up June 30 and bring in $26.3 billion. Investments by working people came in just below the $4 billion target. Overall, it was the most successful drive yet, exceeding the target by 88 percent even though the population knew the war was won.63) One of the authors of the invitation was Jean Monnet, the colorful businessman who had created so much controversy with his plane-engine purchases in 1938. Morgenthau told Truman of the invitation and mentioned to Joseph Grew of the State Department that he hoped to visit the Ruhr and Saar after Paris to “see what is going on.”64
Morgenthau sat down with the president to discuss the invitation on June 13, and Truman seemed to search for the right response. He was unable to sit still and constantly paced around the Oval Office. “Well, the French feel that it would help to teach democracy to their people, and that is important to them,” said Morgenthau. Truman kept repeating that he needed time to think about it.65 Five days later, Truman told Morgenthau he did not want him to go to Paris. The president would be at the Potsdam Conference, and he didn't want them both out of Washington. Morgenthau eventually understood that Truman was worried Morgenthau might “mess around” in European affairs while the president was negotiating with Churchill and Stalin at a conference from which the French had been excluded. Truman also told Morgenthau he was like a brother to him and hoped the secretary felt the same way.66
Morgenthau’s feelings were less than fraternal when the president named Jimmy Byrnes secretary of state in early July. Byrnes would be the one to accompany the president to Potsdam. He would determine foreign policy as the war with Japan wound down. Worse still, Washington was abuzz with rumors that Morgenthau would soon be replaced by Fred Vinson.
On the morning of July 5, Morgenthau sat with the president again and asked flatly where he stood. Was he being replaced? Would he be able to stay through the victory over Japan? How could he exercise authority in Washington while Truman and Byrnes were in Europe?
“Well, I don't know,” said Truman, after a few minutes without assuring or dissuading Morgenthau. “I may want a new Secretary of the Treasury.”
“Well, Mr. President, if you have any doubts in your mind after my record of twelve years here, and after several months with you and when I have given you my loyal support, you ought to know your mind now, and if you don't know it, I want to get it out now.”
“Well,” said the president, “Let me think it over.”
Morgenthau took matters into his own hands and offered to write a letter of resignation and a draft response by the president. Truman wanted him to remain during the Potsdam sojourn, and Morgenthau said he was willing to stay only until the president returned. Truman told him several times, “You are rushing it.”
Though the president wanted time to think about it, Morgenthau was fed up and simply said either Truman wanted him or he didn't. “After all, Mr. President, I don't think it is conceited to say that I am at least as good or better than some of the five new people you appointed in the cabinet, and on some of them I think you definitely made a mistake.”67
He offered to break in Vinson—whom he generally liked—while the president was away, but Truman said Vinson would be traveling with him to Potsdam. They parted amicably, and Truman reassured him that he liked and agreed with the Morgenthau Plan. Back at the corner office, Morgenthau told what had happened first to Henrietta Klotz, Daniel Bell, and Herbert
Gaston and then to the broader staff, including Harry Dexter White, Frank Coe, John Pehle and Ansel Luxford. He then wrote both the letters he had proposed to the president and dated them July 5.68
Truman set sail for Europe the next day, but first the White House issued a statement saying Vinson would be appointed secretary of the Treasury, though it did not say when. The White House was starting to feel pressure from its supporters to replace Morgenthau because of worries about succession. There was no vice president, so if the president and secretary of state were killed in still-perilous Germany, then Morgenthau, a Jew, would become president. (The succession order changed with the 1947 Presidential Succession Act.) On July 11, Truman asked Sam Rosenman to sound out Morgenthau about resigning immediately. In an easygoing chat at the Treasury, Rosenman suggested Morgenthau could be appointed the governor of the new World Bank. Morgenthau said he would think things over and then got together with Rosenman two days later.69 He wrote a new letter of resignation and two possible replies from the president. One thanked Morgenthau for his service, and the other added that the president would like him to become the governor of the World Bank and International Monetary Fund. Rosenman was leery of sending the second letter because Byrnes might try to dissuade the president, but Morgenthau thought it was as good a time as any to see where Byrnes stood. Morgenthau wanted Vinson to approve the letters, but his successor—who had ended up staying in Washington rather than going to Potsdam—wanted nothing to do with the discussions, in spite of pressure from Morgenthau.70
Rosenman cabled the letters to Truman, who accepted the resignation. He sent Morgenthau the letter thanking him for his service, which was how Morgenthau learned he would not be the governor of the institutions he had helped to create.71