Henry Morgenthau, Jr. was the second and final Treasury Secretary to serve under Franklin D. Roosevelt. The son of a prominent Jewish real estate mogul and diplomat, Morgenthau was born in 1891 in New York City. He studied at Cornell University, befriended Roosevelt in 1913 and afterwards operated a Christmas tree farm near Hyde Park. During the Great War he worked for the Farm Security Administration and after it ran American Agriculturalist magazine. He chaired the New York State Agricultural Advisory Committee during Roosevelt’s term as governor of that state.
After his election to the presidency, Roosevelt naturally turned to Morgenthau to head the Federal Farm Board and tapped him to take over at Treasury following Secretary William Woodin’s resignation. As a fiscal conservative, Morgenthau favored balanced budgets over the fiscal stimulus program advocated by British economist John Maynard Keynes and his followers. Nevertheless, continued economic weakness and anemic government receipts combined with hefty New Deal expenditures to create chronic deficits that averaged almost 4% between 1933 and 1940.
By 1941, the economy was humming, but government receipts could not keep up with wartime expenditures. Revenues increased from $8.7 to over $45 billion between 1941 and 1945, but expenditures soared from almost $13.7 to $92.7 billion over that same period, leading to deficits greater than 20% of GDP in 1943, 1944 and 1945 that Morgenthau financed through the sale of bonds to individuals and institutional investors like banks and insurers.
In 1944, Morgenthau chaired the Bretton Woods Conference that created an international monetary system that established the World Bank and the International Monetary Fund and that enshrined the US dollar as the free world’s postwar international currency.
Morgenthau resigned from the Truman administration just months after Roosevelt died, and soon after published a book calling for harsh postwar treatment of Nazis and the deindustrialization of Germany. He also became active in Jewish philanthropies and was a financial advisor to the new state of Israel. Morgenthau died in 1967 in Poughkeepsie, New York.
(Click images for more information)
“US Congress House Servicemen’s Federal Income Taxes Questions and Answers Explanatory of the Federal Income Tax Laws with Respect to Members of the Armed Forces of the US in World War II,” House Doc. 379, 1945.