Henry Morgenthau Jr. served as secretary of the Treasury from January 1, 1934, to July 22, 1945. Under the provisions of the original Federal Reserve Act, the Treasury Secretary was also ex-officio chairman of the Federal Reserve Board. This ex-officio membership ended on February 1, 1936, as a result of the Banking Act of 1935, which changed the makeup of the Board.
Morgenthau was born in 1891 in New York City. He studied architecture and agriculture for two years at Cornell University before dropping out in 1913 to become a farmer. He bought 1,000 acres of land in Dutchess County, New York, and it was at this time that he first met Franklin and Eleanor Roosevelt. In 1922, Morgenthau bought the American Agriculturist magazine, and in 1928 was appointed chair of the New York State Agricultural Advisory Committee by Roosevelt, who was recently elected governor of New York. In 1933 when Roosevelt became president of the United States, he appointed Morgenthau as governor of the Federal Farm Board. When Treasury Secretary William H. Woodin’s health forced him to resign, Roosevelt appointed Morgenthau to the post.
While in office, Morgenthau was instrumental in setting up the Works Progress Administration and the Public Works of Art Project in the 1930s. However, he believed in a balanced budget and opposed some of Roosevelt’s New Deal plans. While many of Roosevelt’s advisers where proponents of Keynesian economics and favored tax increases and savings programs to finance World War II, Morgenthau rejected this idea and preferred a war bond system. Under the War Bond Program, he arranged that the Federal Reserve would support Treasury borrowing and would purchase bonds not bought by the public at an agreed rate, a practice which rankled many Federal Reserve governors as a threat to the central bank’s independence.
Morgenthau was of Jewish descent, and became very involved in the rescue of Jews during the war. He pushed Roosevelt to establish the War Refugee Board in 1944.
In 1944, Morgenthau proposed a plan for postwar Germany that became known as the Morgenthau Plan, which would strip Germany of its industrial capacity so as to reduce the country to an agrarian state and also partition the country. The plan was ultimately rejected, but it did influence later policy, including that of the Potsdam Conference.
Morgenthau’s most significant and lasting impact on the world economy came at the Bretton Woods Conference in New Hampshire in 1944, where he served as chairman. The conference established the International Monetary Fund and the International Bank for Reconstruction and Development and pegged all international currencies to the dollar.
Morgenthau resigned shortly after Harry Truman became president and spent his time working with Jewish philanthropies. He also became a financial advisor to Israel from 1951 to 1954.
Morgenthau died in 1967.
Written by the Board of Governors of the Federal Reserve System. See disclaimer.