August 29, 1977 12:00 PM

He is head man at the U.S. Treasury Department. But, like countless others, he finds managing his personal budget an odious chore. “Don’t get into a position,” he once advised business colleagues, “where you have to worry about what’s happening to your own money.”

Next month the Bureau of Engraving and Printing begins issuing new currency bearing his signature on every crisp new bill. Yet recently a New York tailor refused to accept his personal check for some alterations.

Last year, in private industry, he earned $473,000 in salary and benefits. This year, as a member of the Cabinet, his salary is only one-seventh of that ($66,000). But far from being dismayed, he’s rather pleased with himself. “Not bad,” he chortles, looking around his huge Washington office, “for a boy from Shanghai.”

In philosophy, Secretary of the Treasury Mike Blumenthal holds the middle position in President Carter’s economic triumvirate. The other members are the more conservative (and now seriously embattled) Budget Director Bert Lance and the more liberal Economic Council Chairman Charles Schultze.

The deepening controversy last week over Lance’s banking practices in Georgia has put Blumenthal in an uncomfortable position. Although his department is conducting the Lance investigation, Blumenthal is trying to maintain an appearance of absolute neutrality. But some of Lance’s friends in the Administration complain that Treasury press leaks are undermining the budget director. In any case, if Lance resigns, Blumenthal’s position will be strengthened considerably.

W. Michael Blumenthal—Werner to his father, Mike to his friends—has lived with abrupt transitions all his life. Born to Jewish parents 51 years ago in Germany, he grew up in wartime China and later was baptized a Presbyterian. Arriving in the U.S. at 21 as an immigrant, he became an academic star, a first-rate diplomat, a millionaire corporate executive and now the nation’s top financial officer—all in unswerving pursuit of American-style success.

Those who deal with him day to day note a central fact about Mike Blumenthal: he is compellingly believable. When he says he hopes to reduce taxes and simplify returns, he can make those impossible dreams sound as attainable as he makes his own life story sound commonplace. Almost.

On one wall of Blumenthal’s office at Treasury is a framed page from a German newspaper. “A BERLINER IS TO BECOME CARTER’S NEW MINISTER OF FINANCE,” the headline blares. Mike Blumenthal finds more than a touch of irony in that note of civic pride.

“My earliest recollection is January 1933, when the Nazis came to power, and they had those mammoth torchlight parades,” Blumenthal says with little apparent emotion. “I was 7.” His forebears had lived in the Berlin suburb of Oranienburg since the 16th century. His father, a nonpracticing Jew, owned a ladies’ dress shop in the German capital. “I clearly remember November 9, 1938, called Crystal Night, when they came and smashed all the Jewish stores,” Blumenthal continues. “I remember seeing the largest synagogue in Berlin burn, and I remember being beaten up by kids in uniform.”

The Nazis came for his father at 5:30 one morning. “My mother was frantic. ‘What are you doing, where are you taking him?’ My father dressed hastily, his tie not quite right. He threw on his coat, left and that was it.”

After selling their household goods, however, the resourceful Frau Blumenthal bribed her husband’s way out of Buchenwald concentration camp. She even managed to obtain ship’s passage for the family—the parents, Michael and his sister, Stephanie—to Shanghai, chosen as a refuge because no entry visas were required. They hoped that Shanghai was only a stopover to somewhere else. But with the outbreak of war in 1939, they became trapped in China for eight years, two of them in Japanese internment.

Blumenthal recalls the starvation diets, the corpses in the Shanghai streets. “It was a cesspool,” he says. Though a good student, he was forced to interrupt his haphazard schooling to take a job cleaning lab equipment in a chemical factory for $1 a week. The scrabbling for survival took a toll on his family. His parents divorced.

Somehow, young Blumenthal’s confidence in himself blossomed. He now explains, “I don’t know whether it was the Nazi experience so much as the experience in China, but I came to this country feeling that I had capabilities and talents. I read a lot. I talked to people. I wanted to do things. I found out that I can cope reasonably well.”

His long-awaited visa from the American consulate in Shanghai was issued in 1947. Blumenthal landed in San Francisco with $60 and strong ambitions. Until then, he recalls, “I never had a chance to show what I could do. I was a stateless refugee. I didn’t have an education. I had been treated on the basis of who I was, a nobody. Now I wanted to be recognized, based on what I could do.”

Opportunity came first as a $40-a-week billing clerk for the National Biscuit Co. “I sat for three months in a big bull pen at a table,” Blumenthal says, “and we would prepare the bills for the drivers. They would say, ‘Six dozen Lorna Doones, 17 cents a dozen,’ and we’d multiply 17 times six. There were 50 people doing that, and it didn’t take me long to figure out that I could save the National Biscuit Co. one hell of a lot of money. Even if we didn’t have adding machines, we could have prepared charts to look at. So I learned something about bureaucracy and inefficiency.”

More than that, he learned “it pays to have an education.” Lacking cash or even a high school diploma, he took odd jobs to finance his studies. He worked as a guard on an armored truck: “You learn how different people look at life.” One experience he recalls with special distaste was a job in a wax factory. “I filled little paper cups with wax from midnight until 8 a.m. Wow, that stuff was hot! It was miserable, and there were people who had worked there 20 years!”

He sampled life at the bottom in more than 20 jobs (even shilling for a Lake Tahoe gambling parlor). Each experience gave impetus to his classroom strivings, which began at San Francisco Community College and continued at Berkeley. Blumenthal graduated Phi Beta Kappa while courting schoolmate Margaret Eileen Polley. He convinced her to marry him by sending out wedding invitations to their friends even before she had said yes.

The newlyweds journeyed across the country to Princeton, N.J., where he earned three advanced degrees, ending with a Ph.D. in economics. He taught at Princeton until 1957. (Blumenthal once told a friend he knew he had made it when he was asked to join the Princeton faculty.)

Then, deciding to try a more active life than the one he found on campus, he joined Crown Cork International, a manufacturer of bottle caps, and rose rapidly to a vice-presidency. But with John F. Kennedy’s inauguration in 1961, Blumenthal, a registered Democrat all his adult life, heeded a call to Washington as Deputy Assistant Secretary of State for Economic Affairs. Two years later he was tapped as chief U.S. negotiator at the Kennedy Round of trade and tariff talks in Geneva. On occasion his European colleagues accused the blunt-talking Blumenthal of undiplomatic behavior. But he was also admired as a tough bargainer.

When the trade negotiations ended in 1967, Blumenthal reentered the business world through the Bendix Corp. (auto parts, electronics, aerospace), eventually to become chairman, president and chief executive officer of the parent firm in Southfield, Mich. Wall Streeters regarded Bendix as faltering when Blumenthal took over. In five years it nearly doubled its sales (to just under $3 billion) and by 1976 Dun’s Review was rating Bendix one of the five best-managed companies in the U.S.

Blumenthal was not one of Jimmy Carter’s early backers (he favored Sen. Henry Jackson), but White House talent scouts were appropriately impressed with his record. Though he reportedly would have preferred either Defense or State, Blumenthal understands why he wound up at Treasury. “The list of top Democratic businessmen,” he notes wryly, “isn’t very long.”

Due to similarities in their background, Blumenthal is often compared to Henry Kissinger. It is not Blumenthal’s idea of a compliment. For one thing, he is proud that he speaks with only a barely perceptible accent—remarkable for a person who went through German, French, Spanish and street Chinese before he mastered English.

“I’ve never worked with Kissinger, but my impression is that he’s a man who doesn’t hide the fact that he thinks very highly of himself,” says Blumenthal. “I don’t know if my colleagues would say that is true in my case, only more so. I would hope not.”

Often impatient and frank to a fault, he is pained nonetheless by his reputation as hard driving, intimidating and unusually frugal. He smokes a dozen or so $1.25 Dunhill cigars a day and has reputedly never offered one to anyone else. His friends see that as a sin of omission rather than commission. “He’s never gotten used to the idea that he has money,” says one. They add that he does not try to cut corners with tax shelters. “I never went in for oil things or farms or any of that stuff,” Blumenthal says, “because I felt, what the hell, I’m making it, I ought to pay my share.”

Once a more gregarious spirit, Blumenthal has become subdued since he separated from his wife in June. Their announcement, which astonished friends, said they were splitting up “by mutual consent after long and searching thought.” He refuses to talk about it, shifting the conversation to his three daughters, Ann, 24, a schoolteacher in Washington; Gillian, 21, a graduate student at the University of Michigan; and Jane, 19, a junior at Princeton. “They are my friends,” he says proudly. “We went through all the problems of rebellion and Daddy doesn’t know anything. Now they really like their mother and father.”

At present the location of Blumenthal’s apartment is one of Washington’s better-kept secrets—only his family and aides seem to know for sure. (He is almost paranoid about having his name linked romantically with anyone else.) Since his ineptness in the kitchen is legendary—”Daddy does a good ice cube,” quips a daughter—he eats mostly in and around his office. He reads voraciously (from economics to thrillers), enjoys a Scotch and soda in the evening and rises at 6 a.m. twice a week to work on his tennis game, self-described as “average mediocre.”

The passage of years has not impaired his capacity for work in the slightest. It has—at the urging of friends—made him more conscious of his appearance, although, as one of them remarks, “Mike’s the only person I know who can put on a $500 custom-tailored suit and make it look like $100.” Blumenthal seems also to have mellowed in recent years. He goes to some pains to insist that he is a man racked by doubts.

“I have doubts about whether I do the right thing in my work,” he says. “About whether I treat those near and dear to me in the right way, whether I’m leading the right kind of life. But having doubts is one thing,” Mike Blumenthal adds, “and not resolving them from day to day or year to year is another. I do the best I can, and I won’t look back.”

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