“In contrast, my own father is a very cautious and therefore very successful business man. What many people do not realize is that most business men are patient and very careful—it’s their own money after all. So when the naive and feckless attempt to mimic the success of a business man, they take wild and sudden gambles, just like what they see on the silver screen at the talking pictures. But the Hollywood image of rapacious business men is mostly fiction. That’s not how successful business men operate. All of them that I know are far more careful than the average man on the street. They hate risk, especially risking their own money. Now while Franklin is a great leader, what I find most disconcerting is his ability to fly off on a tangent. He is dangerously impulsive and too much of a gambler. This is especially true when his so-called Brain Trust is present. No idea seems too outlandish. He also has a very dangerous sense of luck.”
Louise turned her head to one side, as if to ask a question.
“Well here’s an example: he and I were in the White House setting the price of gold one morning and I told Franklin it had to increase by between 18 and 22 cents, so Franklin said, ‘OK, make it 21 cents’. I asked him why, and he said, ‘well that’s one of my lucky numbers, it’s three times seven.’ I thought to myself what would happen if the world knew that the price of gold in the United States was set by one of the President’s lucky numbers. And he has lucky shoes and lucky hats and lucky dates. As my father taught me, true business men never believe in luck—many of them don’t even buy lottery tickets. Also, Franklin’s sense of the truth is a little hazy at times. He said when he was campaigning in 1920 that he had personally written the Haitian Constitution. The truth is that he had nothing to do with it.”
Louise gave Morgenthau a taste of her sophistication and elegance by uncrossing and re-crossing her long, long legs. Not to suggest anything, but she knew that while the Treasury Secretary was a devoted man of the people he was also a man.
“Like most politicians, especially those with lots of power here in Washington, Franklin has a very hazy sense of money—he seems to think money comes out of thin air. So when he creates yet another of his jobs programs that costs say 100 million dollars, the money has to come from taxes, but Franklin thinks I just have to run the printing presses a little longer. And that is a major problem. Here’s an example for you. Let’s assume that all of the 100 million dollars in tax comes just from taxing Mr. Ford. In other words, Mr. Ford had to give up that 100 million dollars of his own money in taxes to fund the jobs program.”
Louise frowned, “So what is the problem with that… Henry?”
“Well let’s say Mr. Ford gave up 100 million dollars to create a government jobs program. Now if it was still Mr. Ford’s 100 million, do you think Mr. Ford, who is known to be a scrooge, would watch his—his—100 million dollars very, very carefully? Of course he would, it’s his own money after all. But if it is assigned to Rex’s old agency, or another bureaucrat’s agency, do you think they would look after it so carefully? No. All these government people think I create the money with a printing press. You see, government never really creates value or worth, it simply re-distributes wealth generated by the real creators, like Mr. Ford. Government simply taxes, it does not go into the marketplace and battle with competitors. It just makes pompous laws made by government people who see themselves as superior beings to the roar and rabble of the business men, who they see as poorly educated, crude, and vulgar.”
“Yes, but Henry these people in the job’s program spend money, which is good for the economy, right?”
“Of course, but the same would be true if Mr. Ford paid them.”
“So what is the difference? Both Mr. Ford’s people and the job’s program people spend the 100 million, so that is the same?”
“Actually my dear, it is not the same. Let’s assume the 100 million dollars is used to make cars, cars made by Mr. Ford or cars made by government factories using the 100 million in tax money that was extracted from Mr. Ford. Now in the case of Mr. Ford, he can produce let’s say 100,000 cars, while the government with its red tape, and political appointments, and inherent inefficiencies would only produce 50,000 cars.
“Here’s an example: I know for a fact that Mr. Ford sends his mechanics and engineers to scour junk yards around the country to minutely examine his old junked Ford cars. And these men all have to tell Mr. Ford what parts and components are still in good condition, so Mr. Ford can reduce the cost of those over-built and wasteful components. You see, my dear, Mr. Ford’s goal is to have all the car wear out at the same time. By doing this he can reduce the price of the car to the customer, as it is cheaper for Mr. Ford to make these cars. Now that is pure American genius at work—no government official would ever have the imagination to consider such an idea—not in a thousand years. All these bureaucrats think of is the pecking order in their department and how they can get to the next rung on the bureaucratic ladder. And because Mr. Ford is a skin flint, and because it is his money, he watches it carefully, and he fires lazy and incompetent and inefficient workers. But Rex and his brethren will simply smile benevolently and will indulge the lazy and slothful, rather than fire them. Do you know that no CCC or WPA worker has ever been fired?”
“So you mean Mr. Ford will make the 100 million dollars work harder?”
Morgenthau smiled, nodded, and leaned back in his chair.
Louise’s elegant eyebrows rose.
“You see, it is not just in Germany that politics is a dirty business. I know for a fact that without WPA workers, the ’36 race would have been extremely tight. Two Gallup polls as late as July, 1936, had Landon—he was the Republican candidate—winning the Electoral College. But then Tugwell, Hopkins, and the other Brain Trusters opened the spigot. And the results were that Franklin carried the Electoral College by 523 to eight—one of the greatest landslides in American history.”
He opened his jacket pocket and removed a cigar, “Do you mind?”
“Of course not.”
Smoking made Morgenthau more reflective. He said pensively,
“Actually I think the election of ’36 has changed the country permanently and I am not sure for the better. I’ve spoken to both the Democratic National Committee chairman, a man named Farley, and his right-hand man at the DNC, Emil Hurja, and they both actually boast about spending money for votes—they boast about buying votes; they’re worse than the late Louisiana Kingfish ever was. Now you may call me old-school, but I think that is wrong. What these two did was to promise projects to marginal states. So if a state was borderline and especially if it held a lot of electoral college votes, then—hey presto—lots of additional New Deal projects were announced in the five months leading up to the November general election.
“The worst of it is that now the average person thinks government money is simply printed by my department. Unfortunately all I print is little bits of paper with some ink on them, bits of paper that have no value. What gives these bits of paper value is the guarantee that the U.S. government will honor the bits of paper. And the only way any government does this is by being solvent, and the only way to be solvent is to increase its own income by taxes. You know that is the reason the President repealed Prohibition, so he could tax booze. And if you want an example of what happens when a government is not solvent, look no further than what happened in your country when the bloody-minded French invaded the Ruhr in 1923. So that is why I see the prior election in 1936 as a watershed.”