The Warburgs

by Ron Chernow

  Felix belied the image of the philanthropist as a rich, complacent dilettante throwing sops at the poor. He was extraordinarily generous despite a constant fear that people wanted to con him—suspicion he expressed by a running gag. From his boyhood, Felix remembered that as the kaiser’s car flashed by, its horn would sound a musical four-note chime. The kaiser’s subjects supplied lyrics to this tune: “Mit unserem Geld”—“with our money”—they would sing. Sometimes, when approached for a donation, Felix hummed this ditty as his family laughed.37

  If he was the most generous Warburg, Felix, as Schiff’s son-in-law, was also the richest. Philanthropy saved him from being just a rich idler, giving him an identity he couldn’t have found in business. After thirty years as a Kuhn, Loeb partner, Felix was still mystified by basic financial mechanisms. He once gave Edward some American Express checks he had already countersigned, unaware that his son then couldn’t cash them. Later, he secured for Kuhn, Loeb a large securities issue from Kodak; it was his sole business coup.

  Felix dedicated himself to philanthropy with a deep, sustained commitment. Inverting the natural order of things, he was a dilettante at work, but pursued his hobbies in earnest. At night, seated at a desk overlooking the Central Park Reservoir, one fist pressed to his forehead, he pored over charity reports. He ended up a philanthropic colossus, a one-man social welfare agency, to the point that even Schiff chided him, saying, “Felix, one can be over-generous, even in charity.”38

  On his desk, Felix kept a favorite quote, variously attributed to William Penn and Etienne de Grellet, that governed his good deeds. “I shall pass through this world but once. Any good thing therefore that I can do, any kindness I can show to any human being, let me do it now; let me not defer it nor neglect it, for I shall not pass this way again.”39 Where Schiff brought moralistic fervor to his vast charitable works, Felix did good deeds with a more spontaneous gaiety. If he couldn’t do it with a smile, he said, he simply wouldn’t do it. He never put on airs or assumed a tone of self-importance. Once asked why he donated so much, he replied, “I suppose that it is because of my confounded good nature.”40

  By the Civil War, America had only 150,000 Jews, many of them from Germany. But starting in 1881 with the Russian pogroms, an enormous tide of 600,000 Jews from Eastern Europe poured into Manhattan’s Lower East Side by the century’s end. Though they had little in common with these poor Ostjuden, Schiff and other German-Jewish leaders lobbied to keep the doors open to these impoverished masses. Already Americanized, the German-Jewish bankers stood atop the social heap while their eastern brethren came in steerage, panting and sweating at the bottom. Many German Jews were embarrassed by these tenement inmates, who seemed like crude, unpleasant reminders of their own past. Where the established uptown Jews tended to be highly conservative, the Lower East Side teemed with new ideas and social protest. Not only did the streets abound in pushcarts and peddlers, but in trade union organizers, muckraking pamphleteers, revolutionary orators, and millenial prophets.

  The Russian and Polish Jews often found the German Jews arrogant, cold, and condescending. Defiantly proud, these poor Jews resented their assimilated brethren who tried to hide or transcend their Judaism and they often suspected their motives. In 1909, when Jacob Schiff and other leaders tried to introduce a kehilla or Jewish community structure under a dynamic Reform rabbi named Judah Magnes, the radical elements on the Lower East Side spied an insidious plot to pacify and subjugate them.

  The German Jews were natural leaders in communal affairs, because they had the money to finance welfare schemes and the political alliances to effect them. There were no mass fund-raising organizations to elect democratic leaders, no pool of savings to tap. In those days, the people who provided the money dictated its use, plain and simple. No less than in Germany, the direction of Jewish affairs fell to a stratum of wealthy bankers who mingled in business and politics with the gentile establishment.

  As a vocal critic of anti-Semitism, Jacob Schiff had a paternalistic but authentic regard for these newcomers. He subsidized a man named Adolph Benjamin who combatted the work of Christian missionaries in the slums. At the same time, he and other German Jews felt their own status in America threatened by any untoward publicity about the Jewish poor. In 1908, New York’s police chief, Theodore Bingham, published an article entitled “Foreign Criminals in New York” which contended that Jews accounted for 50 percent of criminals in the city, although they comprised only a quarter of the population.41 A survey that year also found that three quarters of the prostitutes hauled before the New York City Magistrate’s Court were Jewish. Thus from a mix of fear, concern, and undeniable embarrassment, Schiff and other leaders tried to cure the abundant social ills among the Jewish immigrants.

  Felix scorned the “silly layer cake” that separated the toplofty German Jews from the Russian shtetl Jews down below. “And the German Jews thought they had all the wisdom,” he would say laughingly.42 On the Lower East Side, he met the same desperate immigrants he had seen as a boy slumped over bundles at Hamburg’s port, waiting to embark for America. Already in the 1890s, Felix toured the tenements and “saw parents at their machines, working until midnight so that their children might have the advantage of an easier life and education.”43 This glimpse into a very different Jewish reality became the impetus for his first charitable efforts. Frieda would be very much his companion in charitable work. Already in her early twenties, she had chaired the Building Committee of the YWHA and raised the money for a new building on Fifth Avenue and 110th Street.

  Even before Felix moved to New York, Jacob Schiff and Betty Loeb had sponsored a young nurse named Lillian D. Wald, who came from a well-heeled, German-Jewish family in Rochester. She moved into the East Side slums, tending the poor for a pittance, and the rent for her Jefferson Street apartment was paid for by the Schiffs and Loebs. Thus began the Henry Street Settlement in 1893. Armed with more money from the Schiffs and Loebs, Wald merged three settlement operations into the Educational Alliance, which offered educational and recreational services for the poor; Felix later became a board member and it was his first major institutional affiliation. Schiff donated the money anonymously, only stipulating that Wald furnish him with a detailed monthly report. The left-wing Yiddish press attacked the Educational Alliance as a plot by uptown Jews to turn the slum dwellers into bourgeois Americans.

  Wald also pioneered in sending nurses to the bedsides of the poor, a successful experiment that led to the Visiting Nurse Service of New York. For Felix and Frieda, Lillian Wald would be more than a friend and consultant—she was a direct human link with the lower end of the social ladder. She brought slum children to Woodlands for picnics on the polo field—Frieda would send down picnic lunches in a wheelbarrow—in what must have been sometimes awkward but moving confrontations of poor and rich Jews.

  In the slums, Felix noted the squalor and absence of open-air playgrounds. On a block near Seward Park where a tenement had been razed, he and Lillian Wald cleared the ground, borrowed gym equipment from the Educational Alliance, pounded in a flagpole, and opened the East Side’s first playground. For a generation of beleaguered Jewish immigrants, jammed into filthy, poorly ventilated tenements, Felix Warburg’s name became mythical and synonymous with good deeds. He was the benevolent mystery man, operating unseen behind a maze of organizations. In a typical testimonial, comedian Eddie Cantor said, “As a young boy I was a recipient of Mr. Warburg’s charity. He made it possible for me to enjoy a summer in the country, away from the filth and sidewalks of New York. What I know of helping my fellow men I have learned from this great Jewish leader.…”44

  Through the Educational Alliance, Felix met another social activist, Julia Richman, who spurred his interest in educational reform. Felix was a very visceral man, and once again simple images of distress guided him. He was horrified by a visit to a dark, dingy school for truants on 19th Street where teachers meted out harsh punishment with rods and chains and made recalcitrant students
sit in dunce caps—medieval forms of punishment. In 1902, Mayor Seth Low appointed Felix to the New York City Board of Education. Because he had been a mediocre student, he had to endure some family mirth. “Congratulations,” Max telegrammed to Felix, “you will be relieved to learn that I have burned all your report cards.”45

  In his three years on the board, Felix pushed through lasting reforms. Inspired by Wald, he persuaded the board to assign nurses to public schools. He instituted special programs for mentally retarded children and eliminated the stigma against blind children by enabling those who read Braille to be placed in regular classes. Noting that young criminal offenders lacked follow-up from the courts, he recommended that social workers from the Educational Alliance check up on them periodically. This gave a fillip to the nascent probation movement and in 1907 Felix and Homer Folks were appointed to the first State Probation Commission in New York. Already, Felix’s philanthropic interests were becoming so diverse as to defy easy summary.

  This Jewish establishment reached its zenith during the lives of Jacob Schiff and then Felix Warburg. The same small group of German-Jewish bankers stood at the apex of a bewildering array of charities, whose names and duties might differ, but whose letterheads and sociological composition sounded suspiciously alike. As one observer said of the Schiff era, “hardly any enterprise of a Jewish philanthropic or educational nature was launched … without first consulting that dominant figure in the leadership of American Jewry.”46 When the commanding Schiff strode into a charity meeting, a respectful silence fell over the room; he was always first among equals.

  The influence of these Jewish bankers grew in tandem with the prosperity of America. Just as Wall Street took over from London as the world’s banker in the early twentieth century, so American Jews assumed responsibility from the Rothschilds and other European Jews for suffering Jews everywhere. The watershed event was probably the Kishinev pogrom of April 1903, in which the czarist government conspired. This massacre—ruled by blind mob fury—by the Romanian border near the Black Sea left forty-five Jews dead, more than five hundred injured, and two thousand families homeless. These numbers terrified a Jewish community whose senses weren’t yet dulled by the unutterable horror of the Holocaust. From a selfish standpoint, American Jews feared that the massacre might stimulate an unwanted flood of destitute Russian Jewish immigrants to the United States, with an attendant backlash.

  Jacob Schiff mobilized the American Jewish Community and got President Theodore Roosevelt to protest to Russia, which was Schiff’s implacable foe. He unashamedly used his financial influence to thwart the czar at every turn. As he boasted to Lord Rothschild in 1904, “I pride myself that all the efforts, which at various times during the past four or five years have been made by Russia to gain the favor of the American market for its loans, I have been able to bring to naught.”47 At one point, Schiff pressed Teddy Roosevelt to conduct a Rough Rider assault, patterned after the American invasion of Cuba, against Russia.

  In 1905, another set of deadly pogroms left two thousand Russian Jews dead, injured, or homeless. This led Jacob Schiff, Cyrus Adler, and others to create the American Jewish Committee a year later. It was the first group to coordinate the action of American Jews and the first American organization to support Jews worldwide. Drawn predominantly from the German-Jewish grandees, it reflected their stress upon assimilation and American patriotism instead of worldwide Zionist loyalty or anything that might smack of radicalism or “dual loyalty.” Inevitably, they were accused by poor Jews of being latter-day “Court Jews,” who wished to curry favor with the non-Jewish world.

  Schiff and other Jewish merchant princes felt alarmed by Zionism because it claimed a universal Jewish loyalty while they were strenuously asserting their primary loyalty to America. They saw no necessary incompatibility in being both patriotic citizens and pious Jews. When Schiff and Felix financed the Jewish Theological Seminary of America to train teachers and rabbis, Schiff installed a bronze tablet in the main auditorium that contained, not a quote from Jewish scriptures, but one from Lincoln’s Gettysburg Address. At a speech, he once said, “I am divided into three parts; I am an American, I am a German, and I am a Jew.” Shmaryahu Levin, a Zionist, rose and asked Schiff if he divided himself horizontally or vertically and, if horizontally, which part did he leave for the Jewish people?48

  Though not a Zionist, Schiff supported many projects in Palestine, including the Jewish Agricultural Experiment Station and the Hebrew Technical Institute in Haifa. He and Felix Warburg would regard Palestine as a spiritual home for Judaism rather than a future nation-state, but would be no less active or involved for all that. In 1906, Schiff warned in The New York Times, “It is quite evident that there is a serious break coming between those who wish to force the formation of a distinct Hebraic element in the United States, as distinct from those of us who desire to be American in attachment, thought and action.…”49 Indeed, the break would be deep, bitter, and protracted. But it would be Felix, not Jacob Schiff, who would feel the full force of these contending factions within the world of Judaism and he would end up a tragic casualty of them.

  ——

  Max Warburg proudly holding his infant son, Eric, 1900.

  (Warburg family, Hamburg)

  CHAPTER 8

  ––

  The King of Steerage

  Each afternoon in the early 1900s, Max Warburg sauntered around Hamburg’s smaller downtown lake beside an ugly little man, who had a balding head, mustache, bulbous nose, and pince-nez. The man’s shrewd, watchful eyes peered from behind heavy pouches. Smart, sarcastic, and irascible, he was no less funny and charming than Max himself. Walking in top hats, the two men reviewed politics and business as they proceeded to the stock exchange. They chatted so often by phone that they hooked up a special private line, despite the short distance between their offices.

  This pint-sized figure of colossal energy was Albert Ballin, managing director of the Hamburg-American Line—always referred to by its acronym HAPAG—which he had boosted into the world’s foremost shipping concern. Its lakeside palace, hard by the Warburg bank, was the hub of the shipping universe. Born in 1857 by the port into a lower-middle-class Jewish family, Ballin worked as a teenager in an emigration agency, lining up passengers for transport to America. By twenty-two, this business prodigy owned the agency and by twenty-nine he managed the HAPAG passenger department. In 1899, age forty-two, he emerged as the company’s chief executive, presiding over a 175-ship armada that surpassed in size the merchant marine of any Continental power save Germany itself. This spectacular rise made Ballin one of the few Jews in the upper echelons of German shipping.

  The steerage king revolutionized the business. Even before joining HAPAG, he had introduced cut-rate fares for emigrants that drove down the cost of Hamburg-to-New York travel from 120 to 80 marks. At HAPAG, he inaugurated direct weekly service from the Baltic to New York, set up freight service to the Orient, and dispatched liners to South America and Africa. He adopted the Hanseatic motto, “My field is the world.”1 Ballin made Hamburg a premier embarkation point for New World pilgrims, and probably more hopeful, petrified souls crossed the North Atlantic under his personal aegis than that of any other human being. To serve the swelling tide of passengers, he threw up enormous halls to house them, a veritable self-contained village of stores, churches, synagogues, and hospitals. This spared Hamburg contact with potentially contagious transients while passengers were shielded from venal local merchants. By undergoing medical inspections in Hamburg, travelers were also spared later trouble at Ellis Island. To keep his fleet busy when winter traffic slackened, Ballin dreamed up Mediterranean cruises. When he launched this luxury service in 1891, Kaiser Wilhelm II came aboard the cruise ship to confer his imperial blessing.

  Ballin launched huge new ships, emblems of German might and global ambition, that dwarfed the Lilliputian people who lined the slipways at festive christenings. The scale of the enterprise was superhuman. Even at night,
the shipyards echoed with hammers and presented gaslight vignettes of fumes arising from blacksmith fires. New machinery made possible ships of staggering capacity, permitting HAPAG to stow as many as 2,500 people at a time in steerage. The shipping concern also burgeoned into a major German employer, with over 20,000 people on its payroll by World War I. By 1910, Hamburg would be the world’s second busiest port after New York.

  It was Ballin who alerted Max to the opportunities open to enterprising Jewish businessmen in the Reich. Jewish financiers had a chance to serve as catalysts of the great new industrial ventures in the making. The prosperity of the late 1890s had caused religious barriers to recede, commencing the era of the so-called “German-Jewish symbiosis.” During this tolerant, hopeful interlude, Ballin and Max exemplified the rapid advancement suddenly open to Jewish businessmen. Max knew Ballin was no choirboy, but a tough, cynical, wise-cracking boss and he even faulted Ballin’s first biographer for omitting the man’s “demonic, ruthless” side.2 A convinced monarchist and uncompromising foe of trade unions and Social Democrats, Ballin practiced a bare-knuckled brand of management. During strikes, he imported English scabs whom he housed on boats on the Elbe, leading unions to denounce him as a “capitalist beast.”3 Max loved how Ballin fought bitterly, then forgave and forgot. Above Ballin’s desk hung an English saying, “One damn thing after the other,” which expressed their common joy in battle.4 If both were suave and genial, Ballin had a more volatile temperament than Max and was certainly more prone to depression.