March 26, 1979 12:00 PM

Secretary of the Treasury Michael Blumenthal had reason for satisfaction when he returned from his dicey diplomatic mission to China earlier this month. He had elevated the U.S. liaison office to embassy status, officially admonished Peking to back off from a “wider war” in Vietnam and settled $196 million in claims for U.S. property seized in 1949, which opened the way for trade negotiations. There was one other, quite private reason to be pleased: For Blumenthal the visit was a poignant homecoming.

His family had fled to Shanghai in 1939 from Nazi Germany, only after his mother had bribed his father’s way out of Buchenwald. (The elder Blumenthal was a non-practicing Jew.) Mike was then 13, and for the next eight years, until he emigrated to San Francisco, life was a bitter struggle. Out of nostalgia, Blumenthal got permission from his boss, the President, to spend an extra two days in Shanghai. He also admits to a second motive: to dramatize the fate of some 8,000 stateless persons who like himself survived the Japanese occupation of Shanghai in World War II and then came to the U.S. “For us, it was the central experience of our lives,” he points out. “But the story has never been told. We didn’t have a good novelist in the crew.”

Back in Washington, Blumenthal reminisced about his visit. “Things have not changed totally. The buildings look a little bit more run-down, and there are a lot more people in the street. I was able to find the houses where we lived and the old movie theaters. But there was little to show how hard living used to be.” The search for food was unending, he added. “It was hot and humid in the summer. You couldn’t have a fan—the electricity cost too much. You had to live with bedbugs; there was no way to get rid of them. You had to learn how to defend yourself against rats. All the water had to be boiled, because you couldn’t afford bottled water.”

Along with hardship was the freedom that quickly made Mike a street-smart kid, with a shrewd bargaining sense. “I was a very well-guarded child until I got to Shanghai,” he recalled, “but then I was on my own—my mother and father were terribly preoccupied, scratching around to make enough to eat. I learned a lot: there were opium smokers; gambling casinos were everywhere; prostitution was rampant.”

In the Shanghai streets, Blumenthal picked up a working knowledge of Russian, Chinese and English (mostly from movies like Gone with the Wind). In 1943 the Japanese army forced Blumenthal’s family to move to an immigrant ghetto. For two years he delivered sausages, tried unsuccessfully to learn to run a knitting machine and served on a first-aid squad during U.S. air raids. On his own he began reading voraciously, learned about Beethoven from warped phonograph records and listened to the elders discuss great books.

“It had a great impact,” Blumenthal now concludes, “observing what happiness is and what strengthens a person, knowing you’ve got only yourself to rely on—no other connections, no money, nobody to help.” Later he would put himself through Berkeley (where he met his wife, Eileen), get a doctorate at Princeton and become chairman of Bendix Corp.

What Blumenthal calls “one of the proudest moments of my life” occurred in April 1961, when President Kennedy appointed him Deputy Assistant Secretary of State. His first act was to thumb through the State Department directory, dial John Stutesman and invite him to lunch in the Secretary’s own dining room.

“Do I know you?” asked a puzzled Stutesman. Blumenthal pulled out a tattered document, dated Shanghai, July 1947, bearing his name. On the back was the U.S. visa stamp—and Stutesman’s signature. “Well, I’ll be damned,” the diplomat gasped. Blumenthal grinned. “That is just to show you that not everybody you let into the country turned out to be a disaster.”

The Secretary of the Treasury today reflects back over the 32 years since he landed in San Francisco with his sister Stephanie—and $60 between them. “I think my roots are in China,” he observes. “But my home is here.”

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