Morgenthau jun. was a close confidante and friend of Franklin D. Roosevelt. For Roosevelt he acted as a campaign consultant in 1932.
In 1933 Morgenthau became the State Secretary in the US Ministry of Finance. Like Roosevelt, Morgenthau was ceased to be conservative in terms of financial policy; However, he supported Roosevelt's New Deal policy. The goals of his financial policy included a balanced state budget and a deflationist policy, especially in the period of the recession 1937/1938. He gave up this attitude in the second quarter of 1938, as an improvement was still not in sight.