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  Henry and Elinor Morgenthau were known to enjoy a wonderful family life, as shown in this 1937 photo. Elinor (Fatman) Morgenthau was intelligent and level-headed, and she often advised her husband on Treasury business. Their children—from left, Henry III, Joan, and Robert—went on to enjoy great success in their own right. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  Henry Morgenthau Jr. and his family all adored First Lady Eleanor Roosevelt, shown viewing an exhibit of war art in Washington with Elinor Morgenthau in 1944. The affection was genuine, but it also buttressed Morgenthau’s standing with the president when the two men clashed. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  Until the late 1930s, the Treasury secretary relied heavily on the wisdom and connections of his esteemed father, Henry Morgenthau (center). The elder Morgenthau made a fortune in ethical real-estate development and was ambassador to Turkey during the Armenian Genocide. From the National Archives and Records Administration.

  Henry Morgenthau Jr.’s most trusted aide was his stalwart secretary, Henrietta Klotz. Having worked for Morgenthau years before he came to Washington, she revered him and was instrumental in his work for Jewish refugees as the war progressed. From the National Archives and Records Administration.

  The magnificent Treasury Building is adjacent to the White House, meaning Henry Morgenthau Jr. was always handy if the president needed him. The secretary’s office was at the left of this photo, from which he could see the windows of the Oval Office. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  Henry Morgenthau Jr. often spoke of the “Treasury family”—the senior bureaucrats with whom he worked so closely in his corner office. He assembled them for this group shot beneath the portrait of former secretary Salmon Chase when Morgenthau was profiled by Fortune magazine in 1934. To the left of Morgenthau (seated, center), in the light suit, is General Counsel Herman Oliphant, whom Morgenthau considered brilliant. From the Treasury Collection, US Department of the Treasury.

  Henry Morgenthau Jr.’s rivalry with Secretary of State Cordell Hull persisted throughout their time in government. The Tennessean believed—with some justification—that Morgenthau thought he could do a better job of setting foreign policy. From the National Archives and Records Administration.

  Henry Morgenthau Jr. and Under Secretary of the Treasury John W. Hanes Jr., who inscribed this photo shortly after joining the Treasury in 1938, tried to reform the US tax system before the war. They failed due to opposition from New Dealers, and Hanes left the government. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  Daniel Bell added a touch of good humor and moderation to the Treasury deliberations. The career civil servant had served as budget director before becoming under secretary of the Treasury. From the National Archives and Records Administration.

  As the world was enveloped in war, Henry Morgenthau Jr.’s main priority was to finance the most mechanized war machine the world had ever seen. Though he was never satisfied with the figures, government revenue grew more than sevenfold between 1938 and 1945 to $53.2 billion. Combined with the successful borrowing program, it financed a fifty-five-fold increase in defense spending, which reached $93.7 billion in 1945. Chart by the author. Based on data from Christopher Chantrill, “Government Spending in the US,” http://www.usgovernmentspending.com (accessed November 18, 2011).

  Like millions of American families, the Morgenthaus knew the pride, pain, and worry of having sons in active combat. Henry and Elinor Morgenthau revealed all these emotions when Henry III graduated from cavalry school in 1943. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  One aspect of the war financing that Henry Morgenthau Jr. took special pride in was the war-bonds program. He even discovered he had a genius for advertising when he persuaded citizens to buy bonds. Millions of Americans, including those shown here, responded to the call. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  The Morgenthau family kept this war-bond poster as a keepsake. It now hangs in the public restrooms at Fishkill Farms, the family’s apple farm in Hopewell Junction, New York. Photo by the author.

  Henry Morgenthau Jr. frequently criticized other cabinet members or White House insiders in his private sessions with Roosevelt, but never Harry Hopkins. He obviously knew the president thought too highly of the man who moved into the White House during the war. Morgenthau dismissed Hopkins as being merely flamboyant. From the National Archives and Records Administration.

  Henry Morgenthau Jr., more than any other cabinet member, worked to prevent this sort of ghastly scene, from the Auschwitz death camp. Having witnessed his father’s work during the Armenian Genocide, Morgenthau had no trouble understanding the enormity of the Nazi’s extermination program. He was the driving force behind the War Refugee Board, which is estimated to have saved 200,000 lives. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  The Treasury family changed over the war years, though Henrietta Klotz (seated, third from right) remained on the Morgenthau team. The man whose star rose the highest was Assistant Secretary Harry Dexter White (seated, second from right). He received huge acclaim as the architect of the Bretton Woods Conference, then infamy when he was accused of being a Soviet spy. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  In 1938, there were fears that Germany had such a vast lead in the production of aircraft that the Allies might have difficulty catching up. Henry Morgenthau Jr. played two key roles in ensuring the United States won the aircraft race. He was Roosevelt’s “aircraft czar” in 1939 and 1940, and his financing ensured America could afford to out-manufacture the Axis. In this six-year period, the United States manufactured 304,000 aircraft, compared with 120,000 by Germany. Chart by the author. Based on data from David M. Kennedy, ed., The Library of Congress World War II Companion (New York: Simon and Schuster, 2007), p. 202.

  Not a single tank was produced in the United States in 1939, and only 247 tanks and self-propelled guns rolled out of the factories a year later. But the US arms program ramped up quickly and produced almost thirty thousand units in 1943—more than twice the German output. Chart by the author. Based on data from David M. Kennedy, ed., The Library of Congress World War II Companion (New York: Simon and Schuster, 2007), p. 203.

  Henry Morgenthau Jr. knew his friend, mentor, and president was in failing health late in the war. After this final tour through New York State in the 1944 campaign, Roosevelt’s physical abilities and mental awareness both faded. Courtesy of the Franklin D. Roosevelt Presidential Library and Museum, Hyde Park, New York.

  Henry Morgenthau Jr. donated his papers, comprising more than one million pages of documents, to the Franklin D. Roosevelt Presidential Library and Museum in Hyde Park, NY. These documents, which are the principal sources of all Morgenthau studies, are classified in three different sets:

  The Morgenthau Diaries, which comprise Morgenthau’s correspondence, Treasury reports, and transcripts of phone conversations and meetings during his tenure as secretary of the Treasury. The Morgenthau Diaries are classified by the book and page number.

  The Morgenthau Papers, which comprise the family’s personal papers. The Morgenthau papers are classified by the box in which the documents are contained.

  The Presidential Diaries, which are a condensed grouping of many of the most important documents of Morgenthau’s tenure as secretary of the Treasury. The Presidential Diaries are classified by the date on which the document was written.

  As well as the Morgenthau documents, this work has relied extensively on the papers of Eleanor Roosevelt, which is also found in the Roosevelt Library. Like the Morgenthau Papers, they are arranged according to the box in which the documents are found.


  PROLOGUE

  1. Henry Morgenthau III, Mostly Morgenthaus: A Family History (New York: Ticknor and Fields, 1991), pp. 286–90.

  2. Morgenthau Papers, box 829.

  3. Elinor Morgenthau, letter to her parents, August 10, 1938, Morgenthau Papers, box 452.

  4. Henry Morgenthau Sr., letter to Henry Morgenthau Jr., July 24, 1938, Morgenthau Papers, box 442.

  5. Henry Morgenthau Jr., letter to Henry Morgenthau Sr., August 2, 1938, Morgenthau Papers, box 442.

  6. Robert Morgenthau, interview with the author, October 1, 2013.

  7. Morgenthau Papers, box 829.

  8. “Rome Irked by Jewish League,” New York Times, October 19, 1938, p. 10.

  9. Conrad Black, Franklin Delano Roosevelt: Champion of Freedom (New York: Public Affairs, 2003), p. 344.

  10. Paul Kennedy, The Rise and Fall of the Great Powers (New York: Random House, 1987), p. 355.

  11. Harry Dexter Whiter, letter to Henry Morgenthau Jr., May 1, 1941, Morgenthau Papers, box 453.

  12. “Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits, 1789–2009,” Office of Management and Budget, http://www.whitehouse.gov/omb/budget/historicals (accessed July 21, 2014).

  CHAPTER ONE. BATTLING THE AGGRESSORS

  1. Morgenthau Diaries, book 145, p. 259.

  2. Arthur M. Schlesinger Jr., Journals 1952–2000 (New York: Penguin, 2007), p. 160.

  3. Joseph Alsop and Robert Kintner, “Henny Penny: Farmer at the Treasury,” Saturday Evening Post, April 1, 1939, p. 8.

  4. “$51,000,000,000-a-Year Man,” Time, January 25, 1943, pp. 18–20.

  5. John Kennedy Ohl, Hugh S. Johnson and the New Deal (DeKalb: Northern Illinois University Press, 1985), p. 291.

  6. “Stands by His Shower,” New York Times, December 15, 1933, p. 7.

  7. Morgenthau Papers, box 519; Henry Morgenthau III, Mostly Morgenthaus: A Family History (New York: Ticknor and Fields, 1991), p. 297.

  8. Morgenthau Papers, box 99.

  9. Morgenthau Diaries, book 145, p. 260.

  10. Ibid., p. 262.

  11. Morgenthau Papers, box 673.

  12. “President Sounds Cabinet on Crisis,” New York Times, September 17, 1938, p. 2.

  13. Cordell Hull, The Memoirs of Cordell Hull (New York: MacMillan, 1948), p. 207.

  14. Morgenthau Diaries, book 145, pp. 263–67.

  15. Ibid.

  16. Ibid., pp. 275–85.

  17. Ibid., p. 288.

  18. Morgenthau, Mostly Morgenthaus, p. 214.

  19. Ibid., p. 47.

  20. “High-Priced Real Estate,” New York Times, May 27, 1891, p. 8.

  21. “Big Realty Merger Plans Developed,” New York Times, August 1, 1902, p. 1.

  22. Henry Morgenthau Jr., letter to parents, January 28, 1906, Morgenthau Papers, box 442.

  23. “One of Two of a Kind,” Fortune, May 1934, pp. 61 ff.

  24. Morgenthau Papers, box 979.

  25. Morgenthau, Mostly Morgenthaus, p. 257.

  26. Morgenthau Papers, box 979.

  27. Morgenthau Papers, box 442; “Hatry Group Held in $50,000,000 Crash,” New York Times, September 22, 1939, p. 6.

  28. Henry Morgenthau Sr., letter to Henry Morgenthau Jr., January 1, 1939, Morgenthau Papers, box 442.

  29. Morgenthau, Mostly Morgenthaus, p. 250.

  30. Morgenthau Papers, box 513.

  31. Frank R. Kent, The Great Game of Politics, Wall Street Journal, March 6, 1939, p. 4, and March 28, 1939, p. 4.

  32. Morgenthau Diaries, book 155, pp. 84–85.

  33. John Morton Blum, From the Morgenthau Diaries: Years of Crisis, 1928–1938 (Boston: Houghton Mifflin, 1959), p. 49.

  34. Ibid., pp. 69–70.

  35. “One of Two of a Kind,” p. 61.

  36. John Boettiger, “Morgenthau Jr. Will Be Acting Treasury Head,” Chicago Tribune, November 16, 1933, p. 1.

  37. “$51,000,000,000-a-Year Man,” pp. 18–20.

  38. Chicago Tribune, January 7, 1934, p. 5.

  39. Carlisle Bargeron, “Along the Potomac,” Washington Post, November 22, 1933, p. 6.

  40. Presidential Diaries, November 13, 1938.

  41. Harold L. Ickes, The Secret Diary of Harold L. Ickes, Vol. II: The Inside Struggle 1936–1939 (New York: Simon and Schuster, 1954), p. 272.

  42. “Levy on Profits Halts Expansion,” New York Times, August 27, 1937, p. 24.

  43. “Herman Oliphant of Treasury Dies,” New York Times, January 12, 1938, p. 19.

  44. Joseph Alsop and Robert Kintner, “The Great World Money Play,” Saturday Evening Post, April 8, 1939, p. 74.

  45. Bernard Kilgore, “Secretary Morgenthau,” Wall Street Journal, November 20, 1937, p. 4.

  46. Blum, From the Morgenthau Diaries: Years of Crisis, pp. 420–21.

  47. Presidential Diaries, April 13, 1939; see also ibid., pp. 424–25.

  48. Blum, From the Morgenthau Diaries: Years of Crisis, p. 205.

  49. Morgenthau Diaries, book 141, p. 115.

  50. Ibid., pp. 176, 182.

  51. Morgenthau Diaries, book 146, p. 284.

  52. Jim Bishop, FDR’s Last Year, April 1944–April 1945 (New York: William Morrow, 1974), p. 40.

  53. Morgenthau Diaries, book 146, pp. 108–37.

  54. Ibid., p. 106.

  55. Ibid., p. 254.

  56. Ibid.

  57. “Britain-Germany: Tit for Tat?” Time, October 28, 1934, pp. 18–20.

  58. Morgenthau Diaries, book 150, p. 337.

  59. Morgenthau Diaries, book 146, p. 279.

  CHAPTER TWO. THE FRENCH MISSION

  1. Morgenthau Diaries, book 146, pp. 279–80.

  2. L. H. Robbins, “Financial Guide of Our Recovery Tsar,” New York Times, January 14, 1934; Henry Morgenthau III, Mostly Morgenthaus: A Family History (New York: Ticknor and Fields, 1991), p. 299.

  3. Morgenthau Diaries, book 146, pp. 282–83.

  4. Ibid.

  5. Morgenthau Diaries, book 151, p. 353.

  6. Ibid., p. 166.

  7. Corinne Reid Frazier, “Two Wives of Cabinet Members,” Christian Science Monitor, found in the Morgenthau Papers, box 511.

  8. Morgenthau, Mostly Morgenthaus, pp. 220–37.

  9. Morgenthau Papers, box 452.

  10. Morgenthau Papers, box 512.

  11. Morgenthau, Mostly Morgenthaus, pp. 257–60; Morgenthau Papers, box 512.

  12. “On the Distaff Side of Cabinet,” New York Times, January 9, 1938, p. D5.

  13. Ibid.

  14. “Morgenthau Hits Liberty Ban Here,” New York Times, June 17, 1938, p. 22.

  15. Morgenthau Diaries, book 171, pp. 13–14.

  16. Morgenthau Diaries, book 149, pp. 213–14.

  17. Morgenthau Diaries, book 215, p. 33.

  18. Morgenthau Diaries, book 147, pp. 185–204.

  19. Ibid.

  20. Ibid.

  21. Morgenthau Diaries, book 150, pp. 10, 28.

  22. J. Fred Essary, “Roosevelt Denounces Nazis,” Baltimore Sun, November 16, 1938, p. 1; Bertram D. Hulen, “Roosevelt Condemns Nazi Outbreak,” New York Times, November 16, 1938, p. 1.

  23. Robert N. Rosen, Saving the Jews: Franklin D. Roosevelt and the Holocaust (New York: Thunder’s Mouth Press, 2006), p. 440.

  24. Sander L. Gilman and Steven T. Katz, eds., Anti-Semitism in Times of Crisis (New York: New York University Press, 1991), p. 221.

  25. Adam Cohen, Nothing to Fear: FDR’s Inner Circle and the Hundred Days That Created Modern America (New York: Penguin, 2009), p. 520.

  26. Henry Morgenthau Sr., letter to Henry Morgenthau Jr., September 29, 1937, Morgenthau Papers, box 442.

  27. Morgenthau, Mostly Morgenthaus, p. xiv.

  28. “Former State Employee Raked over the Fire,” Troy Observer, December 20, 1931, found in Morgenthau Papers, box 452.

  29. John Morton Blum, From the Morgenthau Diaries: Years of Crisis, 1928–1938 (Boston: Houghton Mifflin, 1959), p. 241.

  30. Morgenthau Diaries, book 151, pp. 32–
34.

  31. Morgenthau Diaries, book 152, pp. 21–22, 88; Morgenthau Diaries, book 155, pp. 41–44.

  32. Morgenthau Diaries, book 150, pp. 338–41.

  33. Ibid., p. 347.

  34. Morgenthau Diaries, book 146, pp. 394–98.

  35. Morgenthau Diaries, book 147, p. 436.

  36. Morgenthau Diaries, book 150, p. 200.

  37. Morgenthau Diaries, book 172, p. 65.

  38. Morgenthau Diaries, book 180, p. 223.

  39. Morgenthau Diaries, book 150, p. 47; Morgenthau Diaries, book 151, p. 123; Morgenthau Diaries, book 153, p. 364.

  40. Morgenthau Diaries, book 172, pp. 12–15.

  41. Ibid.

  42. John Morton Blum, From the Morgenthau Diaries: Years of Urgency, 1938–1941 (Boston: Houghton Mifflin, 1965), pp. 68–69.

  43. Morgenthau Diaries, book 172, p. 12.

  44. Ibid., p. 16.

  45. Morgenthau Diaries, book 157, p. 230.

  46. Morgenthau Diaries, book 172, p. 27.

  47. Ibid., pp. 31–32.

  48. Ibid., pp. 38–54.

  49. Ibid.

  50. Ibid., p. 57.

  51. Ibid., p. 62.

  52. Ibid., pp. 78, 80.

  53. Ibid., pp. 80–87.

  54. Morgenthau Diaries, book 159, pp.7–11.

  55. Ibid., pp. 102–20.

  56. “Daniel Bell, 80, Retired Banker,” New York Times, October 5, 1971, p. 44.

  57. “Big Increase in the National Defense Program Marks the New Roosevelt Budget,” New York Times, January 6, 1939, p. 13.

  58. Paul Fredericksen, “Hanes—Student of Taxes,” New York Times, April 9, 1939, p. SM2.

  59. Morgenthau Diaries, book 159, p. 219.

  60. Morgenthau Diaries, book 160, pp.1–17.

  61. Morgenthau Diaries, book 173, pp. 9–10.

  62. Ibid., pp. 11–22.

  63. Ibid., p.39.

  64. Ibid., p. 46, 49.

  65. Ibid., pp. 62, 76–142.

  CHAPTER THREE. THE GATHERING STORM