Henry Morgenthau, Jr. was an American politician. He was the United States Secretary of the Treasury during the administration of Franklin D. Roosevelt.
Background
Henry Morgenthau, Jr. was born on May 11, 1891, in New York City, the son of Henry Morgenthau, a German immigrant who prospered in real estate, and Josephine Sykes. Morgenthau grew up in a wealthy Jewish family that was dominated by his strong-willed father.
Education
He attended private schools in New York, Phillips Exeter Academy, and Cornell University. An indifferent student, he left Cornell after three semesters and served an apprenticeship at the Henry Street Settlement.
Career
In 1913, to escape the authority of his father, he purchased several hundred acres, much of it orchard, in East Fishkill, Dutchess County, New York, and became a farmer.
From 1922 to 1933 Morgenthau, Jr. published the American Agriculturalist, a farm weekly, which sought to influence agriculture throughout the state.
Morgenthau, Jr. took an active part in the political affairs of Dutchess County. He became friends with their neighbors Franklin and Eleanor Roosevelt, and after his election as governor of New York in 1928, Roosevelt appointed Morgenthau, Jr. chairman of the new Agricultural Advisory Commission.
In 1930 Roosevelt made him state conservation commissioner. In both posts Morgenthau, Jr. managed innovative programs for land reclamation, reforestation, and conservation. He received the kind of reward he most desired when Roosevelt, as president-elect, named him chairman of the Federal Farm Board and, in May 1933, governor of its successor agency, the Farm Credit Administration (FCA).
By 1933, Morgenthau, Jr. had developed distinctive personal and administrative characteristics. As an administrator, Morgenthau, Jr. compensated for his limited understanding of finance, economics, and law by surrounding himself with able experts in these fields whose judgment he trusted. Still, when he disagreed with them in matters of large policy, he trusted his own intuition - "my educated elbow, " as he called it. On the Federal Farm Board and as governor of the FCA, Morgenthau, Jr. presided over new programs that provided farmers strapped by the Great Depression with low-interest long-term loans to refinance their mortgages and with easy credit for purchasing machinery and seed. In saving thousands of farms from foreclosure, the FCA also restored liquidity to hundreds of banks and insurance companies that exchanged mortgages they could not collect for instantly negotiable federal securities.
In 1933 Roosevelt asked Morgenthau, Jr. to help negotiate recognition of the Soviet Union. The president also directed Morgenthau, Jr. to arrange large purchases and sales of grain to squeeze out speculators. That effort constituted a precedent for the program, executed by Morgenthau, Jr. in 1933, to buy gold for the purpose of raising commodity prices, then depressed far more than industrial prices. The policy rested on the fallacious hypothesis of George F. Warren, a Cornell agricultural economist whom Morgenthau, Jr. knew. Contrary to Warren's predictions, buying gold at increasing prices did not lift commodity prices, but it did satisfy much of the strong congressional demand for currency inflation.
Roosevelt made Morgenthau, Jr. undersecretary and acting secretary of the Treasury in November 1933, and secretary in January 1934. In the latter month Roosevelt stabilized the price of gold at $35 an ounce, 59. 01 percent of the metal's pre-1933 value. Since gold had been nationalized the previous April, much of that profit went to the federal government. It was placed in a stabilization fund that the Treasury used to manage the international exchange value of the dollar, an awkward venture at best, and to sustain the value of federal bonds and notes at low interest rates.
In performing this function, Morgenthau, Jr. became the chief agent of the administration's easy-money policy. In exercising his new authority, Morgenthau, Jr. continually came into conflict with other New Dealers who were jealous of their prerogatives, especially Secretary of State Cordell Hull; the Federal Reserve governor, Marriner Eccles; and the director of economic stabilization, James F. Byrnes. Eccles particularly objected to Morgenthau's fiscal conservatism. Morgenthau's advocacy of restraint in federal spending did exempt funds for relief and for humanitarian purposes. He also supported tax reform both to increase revenue and to shift the burden of taxation to the wealthy. The Treasury drafted the "soak the rich" revenue bill of 1935, which Congress weakened by reducing proposed rates on individual and corporate income taxes and on estates. In the absence of a deliberate countercyclical spending policy, the Revenue Act of 1935 (as supplemented in 1936 and 1937) retarded recovery, but once the economy returned to full employment during World War II, it helped redistribute income.
Morgenthau, Jr. acquired his reputation as a conservative because of his resistance to Keynesian economic theory. He was dismayed when Keynesians persuaded Roosevelt in 1938 to embark on a spending program to counter the deepening recession. Yet Morgenthau, Jr. soon advocated spending for defense, which restored full employment and gave Keynesian theory the primacy it enjoyed for two decades. For his part, he continued to believe that a balanced budget would also have achieved recovery. The international responsibilities of the Treasury and the extra duties imposed by the president brought Morgenthau, Jr. into foreign and military policy. Convinced of the threat to America posed by the Nazis, he tried continually to make common cause with Great Britain and France and to devise obstacles to Germany and its allies.
To that end he negotiated, with Roosevelt's approval, the Tripartite Stabilization Pact of 1936. In that pact, the American, British, and French treasuries agreed to cooperate in the management of their currencies, a decision that permitted France's anti-Nazi Socialist government of Léon Blum to devalue the franc without fear of reprisals.
Morgenthau, Jr. also combated German export subsidies through his use of the Tariff Act of 1930, and he proposed economic sanctions against Japan after the Panay episode of 1937 and against Germany after the dismemberment of Czechoslovakia in 1938. But the Tripartite Pact represented the inadequate best that the administration could achieve, given public and congressional opposition to American involvement abroad. The pact set a precedent for postwar international monetary policy. Morgenthau, Jr. undertook crucial assignments that Roosevelt could not entrust to the War Department until Henry L. Stimson put it on an effective footing in the summer of 1940.
In 1939 Morgenthau, Jr. assisted the French and British in their attempt to procure the modern American military aircraft necessary to balance superior German air power. The resulting increase in investment in American productivity greatly benefited national defense. After the fall of France in 1940 Morgenthau, Jr. managed the administration's program to sell surplus war matériel to the British.
In 1941 he oversaw the drafting of the Lend-Lease Act and later expedited lend-lease aid to Russia. During World War II, Morgenthau, Jr. , with Roosevelt's support, devised and defended a Treasury program to finance the war partly by the sale of small-denomination bonds to private citizens, which he thought would improve civilian morale. His related hope to stem inflation by large tax increases foundered for the most part on congressional resistance. His most enduring wartime achievements were the agreements reached in 1944 at Bretton Woods to establish the International Monetary Fund and the World Bank. In that year Morgenthau, Jr. also persuaded Roosevelt to set up the War Refugee Board, the only American public endeavor to assist European Jews. Morgenthau, Jr. was best known for his plan to convert postwar Germany into a pastoral country, a plan that Roosevelt and Churchill embraced. His belief in the benefits of rural life partly explained this otherwise vindictive and economically impractical scheme.
Roosevelt's death in April 1945 cost Morgenthau, Jr. his mentor and closest friend and ended his interest in further public service. In July he resigned and returned to his farm. For several years he raised funds for the United Jewish Appeal and Bonds for Israel. He died on February 6, 1967, in Poughkeepsie, New York.
Achievements
Politics
Basically a fiscal conservative, Henry Morgenthau, Jr. went along with mounting federal deficits as the Roosevelt administration struggled to meet the nation's relief needs and to revive the economy.
Views
Quotations:
"Never in the history of the world has there been a situation so bad that the government can't make it worse. "
"I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. "
"We [Federal Government] have tried spending money. We are spending more than we have ever spent before and it does not work. "
Personality
Henry Morgenthau, Jr. was tall, bald, and near-sighted (he squinted through pince-nez), an appearance accentuated by his often lugubrious mood. Roosevelt, in a teasing but affectionate phrase, called him "Henry the Morgue. " Yet the president sometimes resented Morgenthau's voice when it functioned, in Eleanor Roosevelt's words, as "Franklin's conscience. "
Connections
On April 17, 1916, Henry Morgenthau, Jr. married Elinor Fatman, whose mother was a member of the wealthy Lehman family. They had three children.
On November 21, 1951, Morgenthau, Jr. married Marcel Puthon.