BATTLING THE AGGRESSORS

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Henry Morgenthau Jr. was growing frustrated that his two most brilliant aides just didn't understand what he was hinting at. It was late on Tuesday, October 11, 1938, and the Treasury Department's chief counsel Herman Oliphant and Harry Dexter White, the director of monetary research, had come to Morgenthau's wood-paneled corner office to persuade him once again to recommend that the president impose countervailing duties on Germany and Japan. They knew Morgenthau supported such a policy. All senior Treasury officials hated the rightist aggressors, and nobody more so than the Treasury secretary himself. Even Morgenthau's secretary, Henrietta Klotz, who was silently taking notes at the meeting, hoped the department could do something to halt the extremists' steady advance. And yet as Oliphant and White outlined their plan, the secretary kept suggesting there was a problem, obviously hoping that they would pick up on what he wanted.

Oliphant told the Treasury secretary that the president had the authority to impose a 50 percent duty if he found a country discriminated against the commerce of the United States. And under section 338 of the Tariff Act, he reminded Morgenthau, the Treasury had already found eleven to thirteen instances of Germany discriminating against the United States. Morgenthau heard him out and focused on one question: Why? Why impose these duties on Germany and Japan and not on other countries? The two men across the desk from him fumbled for a response, even though they were widely considered to be intellectual heavyweights compared to their boss.

Morgenthau perplexed many in Washington because he seemed dimwitted but ran arguably the most efficient department in the capital. Historian Arthur Schlesinger Jr. was not alone when he pondered how the man could possess such a simple mind yet be such an able administrator. The forty-eight-year-old Morgenthau was six feet one inch tall and bald; his pointed nose and pince-nez glasses gave him a birdlike appearance. He had gained a moderate girth in adulthood, despite walking two miles to work each day. "He is slow-thinking and slow-speaking," wrote Joseph Alsop and Robert Kintner in the Saturday Evening Post. "He has an exasperating habit of repeating statements which he thinks important, occasionally stutters and is always forgetting names. When his memory fails him, he snaps his fingers and utters a sort of low cry, intended as an appeal to his companion to supply his deficiency. He is self-conscious without being self-confident, a born worrier and inclined to be suspicious." In the middle of World War II, Time would write: "His eyes light up behind his pince-nez when he shakes a stranger's hand. But his shyness is so painful that he can never relax. Only a few men like Franklin Roosevelt have known the human warmth that lies behind Morgenthau's deaconish mien. Most others have decided, after a time, that he is suspicious, autocratic, a real cold fish." Former National Recovery Administration head Hugh S. Johnson tagged Morgenthau with the nickname "Henry the Morgue," accentuating the secretary's lugubrious features. (Johnson assigned similar nicknames to most members of the Roosevelt circle, so Frances Perkins became "Franny the Perk," Harry Hopkins "Harry the Hop" and Harold Ickes "Harold the Ick.")

Yet Morgenthau was a forceful character, rarely backing down from a fight with a peer. He often pouted if Roosevelt berated him, but he would also tell the president things the chief didn't want to hear. He was known for his ethics, largely because he refused to offer patronage positions to undeserving Democrats. He and his wife were known to have one of the soundest marriages in official Washington, and their children were universally admired. If Morgenthau did have a moral shortcoming, it was that he enjoyed the perks of high office. He was criticized in 1933 for spending $1,406 of public money to install a shower and a cooling system in his office when he ran the Farm Credit Administration. He would have the officers of the Secret Service (then a division of the Treasury) pick up his wife in New York and drive her to Poughkeepsie, and he liked the use of his twin-engine Lockheed coast guard plane to fly to Dutchess County on the weekends at a time when air travel was still the preserve of relatively few. Seven months after the attack on Pearl Harbor, he had the Treasury general counsel contact the Office of Price Administration, which oversaw war rationing, to explain that Morgenthau needed extra gasoline for the Plymouth station wagon on his farm because he used it, among other things, to visit the president. But these were mere bagatelles for a man whose ethical values were so strong that his staff often said they joined the Treasury because of its idealism.

Oliphant had been with Morgenthau longer than any of the other Treasury personnel (other than Klotz), so the lawyer was the one who now pushed the countervailing-duties issue. A shy, tireless man whom Time magazine described as "grey-locked, hollow-eyed," he suggested the president could draw a distinction between trade from Germany and Japan on one hand and the rest of the world on the other. He was supported by White, a compact, Harvard-trained economist who had joined the Treasury in 1934. White had a gruff manner that offended many colleagues, but he was known to have a profound intellect and was respected throughout Washington. "They're discriminating against our trade and possibly by the imposition of that additional duty ... [we] may help them to abandon that practice and thereby in the long run increase our trade," he suggested, trying to make Morgenthau see how the duties would benefit the United States. Though they had worked on this brief for years, Morgenthau still asked Oliphant and White why he should make such a recommendation to the president. The two aides came up with answers, and Morgenthau battled back, demanding better reasons for the recommendation.

Finally, the counsel stated the real reason they were having the discussion. Oliphant said he would like duties to be imposed against Japan because it would be decisive in helping China in its escalating Asian war. "And I would do it in the case of Germany because it might very well be decisive in the struggle between that grisly thing in Europe and the sort of institutions we know about."

Oliphant had said it. They were going after the two most potent aggressor states because the Treasury officials believed they threatened the entire world, including the United States. For the five years the Democrats had been in power, they had watched the right-wing dictatorships expand at a frightening rate. Just the day before, German troops had completed their occupation of the Sudetenland in Czechoslovakia, the result of the embarrassing acquiescence of Britain...