The New Deal: Two of a Kind

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In the stormiest days of Depression and New Deal, few men other than The Chief suffered the sustained abuse, year after year, in peace and war, that buffeted Henry Morgenthau Jr. On his appointment as Treasury Secretary at age 42, his own sister commented: "Henry knows nothing about finance." Cheap-money advocates attacked him for dispensing federal funds too parsimoniously, while fiscal conservatives bitterly condemned his calculated program of inflation. His own subordinates questioned his competence. Harry Truman later opined that it was Franklin Roosevelt, not Morgenthau, who had dictated U.S. monetary policy all along.

Yet for Morgenthau, who died last week at 75 of a lifelong heart ailment and a kidney condition, the only appraisals that really mattered came from the man he revered, and occasionally preached at. And to F.D.R., the tall, dour gentleman-farmer who peered frostily at the world through pince-nez was sometimes "Henry the Morgue," but also "one of two of a kind"—the other being Roosevelt himself. Eleanor referred to him as "Franklin's conscience." In exchange, Morgenthau was the only Cabinet member to address the President regularly as "Franklin."

Eggs & Numbers. Morgenthau needed all the presidential support he could muster. During the '30s, the Administration undertook intricate monetary manipulations, initially to induce reflation at home and later to stabilize the dollar. By reducing the gold content of U.S. currency, Roosevelt and Morgenthau hoped to raise domestic-commodity prices. They bought gold both at home and abroad, gradually increasing the dollar price while seeking to outwit gold speculators.

In his diaries of the era, Morgenthau described the scene in Roosevelt's bedroom at daily meetings to set the bidding price for gold. The reclining President "would eat his soft-boiled eggs" while aides discussed the price the U.S. should pay. Once, when Morgenthau was gloomier than usual, Roosevelt decreed a 21¢ increase because "three times seven is a lucky number." Only later did Morgenthau realize that The Chief was joking. Thanks largely to Morgenthau's stewardship, the dollar by 1939 was the world's strongest currency.

Spam & Destroyers. A German Jew by descent (his grandfather settled in the U.S. in 1866), Morgenthau recognized sooner than most the threat posed by Hitler's rise. He advocated and largely directed the American effort to gear for war. At the end of his career, he looked back with justifiable pride on the days when he helped procure everything from Spam to destroyers for Britain, and drafted the Lend-Lease Act. Then he had the tasks of financing the U.S. war effort—the biggest budgets in the nation's history up to that time—and of making plans for postwar measures to restore a viable international monetary system.

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