The Jew Who Defeated Hitler Page 4

  The deteriorating international situation also added to Morgenthau’s stress level that year, as he thought the State Department was handling it badly. In particular, the two departments were at odds over the nationalist government of General Chiang Kai-shek in China, which had been asking for financial aid for years. On December 10, 1934, Morgenthau received a letter from H. H. Kung, China’s minister of finance and Chiang’s brother-in-law, asking the United States for various forms of aid, including financial assistance to support his currency reforms.48 Morgenthau had long sympathized with Chiang, whom he grouped with the band of democratic leaders threatened by the aggressor nations, even though Chiang had never stood in an election. The Chiang clan continued to request aid over the years and, in late June 1938, asked for a loan so it could purchase US flour and cotton. Morgenthau worked hard to agree to the request, but he needed State Department approval to extend the loan. Secretary of State Cordell Hull refused, insisting that the United States under the Neutrality Act could lend money to China only if it made the same offer to Japan. Morgenthau—as he had done for years—helped out the Chinese by buying silver from them, but the situation was deteriorating rapidly in China and the country needed American help. Roosevelt told Morgenthau he supported the loan but wanted him to secure State Department approval before the government granted it. Oliphant proposed ways to issue the loan using such agencies as the Commodities Credit Corporation and the Export-Import Bank, but Hull could not be convinced.

  The request dragged on and represented one of the low points in Morgenthau’s often-troubled relationship with Hull. He had railed against Hull in staff meetings and had pressured State Department underlings. He'd even badmouthed the secretary of state to Roosevelt himself. During a private discussion on September 19, Morgenthau slipped this into the conversation: “You know, Mr. Hull, as represented to the public, is about one-hundred percent different than the real Mr. Hull.” The president knew Morgenthau was referring to Hull’s image as an honorable Dixie aristocrat, yet he agreed readily. Encouraged, Morgenthau ventured further by saying, “You know last June or July you put up to him this question of assisting the Chinese and he followed his usual policy by trying to wear us out and then do nothing.” Again, FDR agreed, saying, “That is right.” Yet another three weeks passed after that, and still the State Department had not approved the loan to China.49

  As the Sudeten Crisis reached its climax, Morgenthau wanted more and more to help China, but he was unable to circumvent the stubborn secretary of state. “We might just as well recognize that the democratic form of government in my lifetime is finished,” he told his staff with an air of exhaustion on September 22. “There is a bare chance we may still keep a democratic form of Government in the Pacific, but only a bare chance.” When his staff pressed him to push the president harder to force Hull to approve the loan, Morgenthau declined. “In the first place [Roosevelt]’s in no frame of mind and physically I am not in shape to go to him,” he said. In closing, he added, “I'm all played out.”50 A week later, Neville Chamberlain of Great Britain and Édouard Daladier of France gave in to Hitler at Munich, and Morgenthau was crippled by a wave of migraine headaches. The matter of the loan to China—like so many other Treasury efforts to battle the aggressors—had yet to be resolved.51

  Henry Morgenthau Jr.’s close relationship with Franklin Roosevelt was complemented by his proximity to the president. The neoclassical Treasury Building—an imposing structure with a towering, eight-columned portico facing Pennsylvania Avenue—lies adjacent to the White House. The president could call his confidant at a moment’s notice. The president was rumored to make a practice of phoning Morgenthau and yelling, “Henry, come hold my hand,” and hanging up.52 No other secretary’s office was so close to the Oval Office, giving Morgenthau an advantage over his rivals during cabinet disputes. Other members of the Roosevelt inner circle suspected Morgenthau went behind their backs to snitch on them to the president. As often as not, their suspicions were correct. If that wasn't enough, Fishkill Farms was about an hour’s drive from Springwood, the Roosevelts’ Italianate mansion in Hyde Park overlooking the Hudson River. Henry Morgenthau would often drive through the birch and maple forests to visit the president when they were both at home.

  On the evening of October 17, 1938, with the autumn colors turning, the Treasury secretary made the short jaunt north to Hyde Park to meet the president. It was the time of year Morgenthau adored, for he loved to ride horses amid the trees bearing ripe apples on his hilly farm. But on this evening he was nervous, as he had to show the president the letter that Harry Dexter White had crafted. White had written an eleven-page version, then expanded it to eighteen pages, and finally whittled it down to three pithy pages.53 As he traveled to Springwood, the secretary wondered what the president’s reaction would be. Would he dismiss the message and, with it, the plans to take a stand against the aggressor nations? Would he keep the letter? Would he throw it away?

  Once they were settled down, Morgenthau began reading the letter to the president, who listened intently. “I know you are firmly convinced as I am firmly convinced that the forces of aggression must be stopped,” he read. “By whom if not by us?”54 White’s words began to hit home. The president was soon interrupting Morgenthau with interjections like, “Grand,” “Fine,” and even “Bully.” Then the president took the letter, read it carefully for himself, and kept the document—a point Morgenthau thought significant.55 The secretary’s timing was splendid. Other advisers, such as Bernard Baruch, had been urging a rearmament program. So Morgenthau caught the president just as he had been mulling over the country’s military requirements and discussing the need for increased aircraft production. “Certainly, I got the most hearty reception from the President,” he told a dozen staff members two days later.56

  Though the United States was woefully under-armed and understaffed on all fronts, aircraft production was a high-profile item in the arms program, largely because no one completely knew its military potential. The last time the United States Army (the air force would not be a separate service until 1947) had fought air battles was the Great War, in the days of Sopwith Camels and Fokker Triplanes. Aerial technology had advanced several generations in the ensuing two decades, so military aircraft were now made of metal, able to reach speeds of 250 miles per hour, and drop devastating payloads of bombs with some accuracy. In Spain, the German air force of Hermann Göring had displayed the brutal power of aerial bombardment, most famously at Guernica. But the Spanish Civil War was a small, land-based conflict and held only clues of the potency of air power. Military experts were divided on several aspects of aerial warfare: how effective air power could be in supporting an advancing tank battalion; whether air power could render naval power obsolete; whether aerial bombing could sink a battleship; and whether a civilian population could be bombed into submission. What was indisputable though was that the United States’ air power was lagging behind most of its potential allies and enemies.

  Just that week, Time magazine reported that naval experts had estimated the air fleet of the seven largest powers, and the United States placed sixth in terms of number of aircraft with 2,700 to 3,000. The Soviet Union led with 5,000 to 6,500 planes, including bombers, fighters, transports and reconnaissance planes; followed by Germany (4,000–4,500); Italy (3,700–4,200); France (3,200–3,500); and Great Britain (3,000–3,500). The United States exceeded only Japan, which was estimated to have something more than 2,500 aircraft. No one knew who had the most-advanced aircraft, though the average Soviet plane was believed to perform at about 30 percent the rate of its US counterpart. And it was understood that the German air force was becoming the most advanced in the world because it was producing about one thousand planes per month. That compared with fewer than three hundred per month by the United States and a combined total of one hundred per month for France and Britain. “Göring has been to the European war plane what Ford was to the car,” wrote Time.57

  What was shocki
ng was that Time’s figures were more optimistic than those of the government. The White House secretly estimated the number of military aircraft ready for battle in Europe to be 1,500 to 2,200 for Great Britain and less than 600 for France. It believed Germany had 5,500 to 6,500 first-line planes and 2,000 second-line planes, while Italy had 2,000 first-line and 1,000 second-line planes. The army agreed with the White House’s figures, though it estimated the Germans had 1,000 to 2,000 more airplanes than the administration’s estimate.58

  Now Roosevelt was ready to act to narrow the gap and even exceed the German program. Though officially neutral, it was becoming obvious the United States had to rearm in an increasingly bellicose world simply to defend itself. Convening a meeting at the White House a few days later, he told Morgenthau and other insiders he wanted to raise US aircraft production to a previously unthinkable number—15,000 planes per year. To achieve that, the United States would have to almost quintuple its aircraft-manufacturing capacity. With Morgenthau struggling to grasp all the implications, Roosevelt began to reveal the broad outlines of a plan. Private industry could continue to produce about 3,000 units per year, and the government would manufacture about 12,000. The president estimated it would require eight factories to be built around the country, operating around the clock. They'd be built on the outskirts of major cities where the government could find personnel with the needed trades. He figured the program would create employment and reduce relief payments by about $900 million. The Treasury would need about $3 billion to pay for the aircraft program, and $2 billion of that could be covered by a special national-defense tax.59

  The numbers seemed suspect to Morgenthau, who believed Roosevelt was greatly underestimating the cost of each airplane. It didn't really matter. What he was absolutely euphoric about was that the president was ready to rearm America—and that Morgenthau and his Treasury would be a key component in FDR’s war machine.

  Within days, Morgenthau sat down with Budget Director Daniel Bell and Under Secretary of the Treasury John W. Hanes Jr. to examine the budgetary implications of the airplane program. He explained that the country now had a production capacity of about 3,600 airplanes a year, and the president wanted to more than quadruple it to 15,000. About 80 percent of the total would be manufactured at eight new, government-owned plants built near large cities like Philadelphia, Boston, and New York. The president proposed spending $3 billion on the airplane program, supported by $2 billion gained from a new defense tax. Total federal-government expenditures for the year were $8.4 billion, so the expenditure was substantial. But the president also assumed the project would create about 100,000 jobs, so the $1.45 billion funding for Harry Hopkins’s Works Progress Administration would fall to about $500 million.1

  Soon they were engaged in a discussion typical for this wood-paneled office on the southwest corner of the Treasury Building—a penetrating examination of economics and geopolitics, peppered with occasional pinches of Washington gossip. Morgenthau habitually assembled his staff here for this sort of analysis and banter, with the faithful Henrietta Klotz taking notes. He called it the 9:30 Group, because they met daily at 9:30 a.m. The office was the central nervous system for the biggest financial organization in the world, the US Treasury, and the secretary’s desk was usually littered with documents on the department’s various endeavors sent in from every corner of the globe. Portraits of two previous secretaries of the Treasury, Albert Gallatin (who served from 1801 to 1813) and Roger Taney (from 1833 to 1834) gazed down on the proceedings. To the right of the desk was a broad window from which Morgenthau could see into the Oval Office. Visitors often noticed they could see silhouettes passing before the window of the president’s office or flash bulbs popping if an event was being photographed. Morgenthau’s windows were adorned with elegant curtains, and he'd installed blackout blinds, obviously so he could darken the room when he suffered a crippling migraine headache. Behind him was a door to his private toilet. If an important phone call came in during a staff meeting, he would extend the cord into the washroom and take it in private.2

  Indulging in a touch of gossip, Morgenthau said Harry Hopkins, the administration’s top relief organizer who was soon to be secretary of the Department of Commerce, was in Hyde Park discussing the airplane program with the president, even though the army and navy secretaries hadn't been told of it yet. A favorite of the president, Hopkins was witty and affable, and his record in job creation made him one of the bona fide New Dealers. Though they had rarely if ever clashed, Morgenthau considered Hopkins “flamboyant,” by which he meant slightly shallow and shifty. The uncharismatic Henry the Morgue always seemed a tad jealous of his colleague’s charisma, and the members of the Treasury believed their department deserved more credit than it got for financing the government’s social programs. Now Morgenthau told his underlings Hopkins’s main aim was to reduce the unemployment rolls before the next election, though he didn't want anyone to say he was playing politics with the unemployed. Turning to Klotz, he said Hanes and Bell were the ones responsible for funding work programs before Christmas in the previous two years, whereas Hopkins was the one who would lay the people off later.

  “The fellow that’s always taken the initiative the last two years to lay the people off is Hopkins,” he said. “Mrs. Morgenthau said last night, ‘It never enters his mind, what about these poor devils on the rolls, do they need work or don't they?’”3

  “He’s never thought in the last two years about the people, always in terms of projects,” agreed Bell, an Illinois native who'd been running the Bureau of the Budget since September 1934.4

  They debated whether the airplane program costs were realistic, and Morgenthau told them he was excited about the program. He felt he'd gotten his health back after feeling worn down around the time of the Munich Agreement and that he would soon be meeting with Army Chief of Staff Malin Craig to discuss the military’s needs. It was part of Morgenthau’s effort to nurture relations with the military and understand their spending needs. He told his staff he was “going to school” with General Henry Arnold, known as “Hap,” the head of the air force, and he felt he'd grown especially close to General Craig. Morgenthau was flattered at one recent dinner party when Craig gestured to the Treasury secretary and told his wife, “In my old age I have finally found a man who is thoroughly honest and whom I love.”5

  Before the staff meeting broke up, Morgenthau broached a subject that had been on his mind, asking the advisers to keep it within the confines of his corner office. A few days earlier, the president had told him that the French government was sending a mission led by businessman Jean Monnet to build an airplane plant in Montreal, Canada. The French were worried about their arms factories being destroyed or captured by the Germans in the event of a war, so it made sense to establish their plants in Canada. They would need some help—certainly technical, possibly financial—from the US government and had enlisted the help of US ambassador to France William Bullitt to open doors in Washington. Morgenthau had agreed to meet with Bullitt and Monnet the coming weekend.

  Suspicious by nature, Morgenthau had asked Harry Dexter White to look into the Monnet proposal, and White reported back: “On economic grounds, the proposal has very little merit.”6 Morgenthau had also checked with two other people whose opinions he valued immensely—his wife, Elinor, and his nineteen-year-old son, Robert. His son, still a college student, had seen one weakness with the plan, saying it was fine that Canada and Britain were now US allies, but there was no guarantee it would always be the case. Morgenthau did not say what his wife’s reaction to the plan was (he rarely revealed his wife’s opinions). But it’s a fair bet he took her advice to heart. Their eldest son, Henry III, claimed that Morgenthau’s closest advisers were his father and his wife. And if people underestimated the intelligence of Henry Morgenthau Jr., few did that of his wife. Her brilliance was recognized throughout Washington. “To sit and chat with Mrs. Henry Morgenthau is to enjoy a rare mental treat,” wrote a reporter f
or the Christian Science Monitor early in the Roosevelt administration. “She possesses one of the keenest feminine minds in the country today.”7

  Born within a year of each other, Elinor “Ellie” Fatman and Henry Morgenthau Jr. grew up in the same New York neighborhood on West Eighty-First Street. Like the Morgenthaus, hers was a prosperous German Jewish family, though the Fatmans had nowhere near the wealth of Ellie’s maternal cousins, the Lehmans of banking fame. Henry III said one reason his mother was so ambitious was that she had been raised in the financial shadow of her wealthy relatives. In fact, he said she bore a “lifelong resentment” of the Lehmans, though she was devoted, especially as a girl, to her cousin Herbert Lehman, who would succeed Roosevelt as governor of New York.