The Warburgs

by Ron Chernow

  As the crown prince in Hamburg, Eric was inevitably likened to his father and found wanting. Yet Max groomed him to head the bank, which was a blow to the talented, precociously wise Siegmund. Whenever Eric daydreamed about becoming a farmer, military officer, diplomat, or shipowner, Max directed his thoughts back to banking. Eric knew that, in the end, his career choice was a foregone conclusion. Awed by his autocratic father and always seeking his approval, Eric only slowly developed self-confidence. He talked of his father reverently but feared him. “When he was younger, Eric was very shy and didn’t believe in himself as much,” said his sister Anita.1

  Max talked about Eric with the wry humor reserved for the lovable but slightly ne’er-do-well son. Their relationship was friendly and correct, but seldom warm, and Max appreciated Eric more with the passage of time. Offsetting the remote father was the warmth of four worshipful sisters and numerous cousins. Eric developed a shy, flirtatious manner with women that lasted a lifetime. Once again, the genes skipped a generation, for Eric was in the mold of grandfather Moritz, genial and charming and endowed more with social than business gifts.

  After Eric’s military service, Max sent him to apprentice with banks in Berlin, Frankfurt, and then London, where hostility still lingered toward Germany. Eric couldn’t read a German paper on the London underground without attracting unwelcome attention. During his year there, Eric trained at the metal trading house of Brandeis, Goldschmidt, run by his uncle Paul Kohn-Speyer (husband of Aunt Olga, who committed suicide). He enjoyed hunts at the Kohn-Speyer estate in Surrey, but proved too blithe a spirit for his strict uncle. At lunch one day, Eric was joking with the secretaries and trying to impress them. He bet he could vault over several low partitions that separated the work areas. Taking a running start, he flew over the hurdles and landed smack on Paul Kohn-Speyer’s desk—who walked in at that very moment and sent Eric packing. He then moved to N. M. Rothschild and was a frequent visitor at the Southampton estate of Baron Lionel de Rothschild. By this point, the Rothschilds and the Warburgs regularly traded trainees.

  In 1923, Eric sailed for New York, planning to spend a year in America. At Ellis Island, a seemingly trivial event occurred that would profoundly affect the Warburgs in the future. By chance, an immigration officer placed a stamp in Eric’s passport that gave him residence status. In the future, he merely had to renew this visa at six-month intervals to maintain his status. Interpreting this as an omen, Eric would keep returning to America so that in 1938 he managed to obtain U.S. citizenship in a week while hordes of German Jews futilely struggled to get in.

  Always an admirer of Uncle Paul, Eric worked at the International Acceptance Bank and trained with Piggy. Several times weekly, he and his uncle saw John Foster Dulles of Sullivan & Cromwell, who performed legal work for the bank. Living at Woodlands, Eric took ski trips to New England and joined Felix for summer sails to Maine. He had a chameleon’s adaptability in foreign countries that made him seem at home everywhere. After his puritanical German upbringing, Eric loved his exuberant, irreverent American cousins, who teased him mercilessly. Still timid about sex, he liked the swinging style of cousin Freddy’s bachelor group. At parties, ogling a pretty young woman, he would whisper, “Freddy, that one’s a peach. Please present me.”2 He was especially close to Paul’s daughter, Bettina. Their relationship evidently took a romantic turn when they traveled to Spain together one year. It was not the only such liaison between the German and American cousins.

  In 1924, Eric set off on a train tour of the United States with his oldest Hamburg friend, Wolfgang Rittmeister. Equipped with introductory letters, they received friendly receptions everywhere. Paul provided Eric with a letter to the president of the First National Bank of Portland, Oregon, who offered Eric a job in the foreign department. Delighted by the Oregon greenery—the rainy climate reminded him of Hamburg—he sold his return train ticket and worked at the bank. He rode horses, fell in love, and tooled about in an old Chevrolet Max bought him. It was a welcome respite from Hamburg, where every step in his life seemed predetermined by his father.

  When Max grew alarmed that the crown prince might abdicate and stay in Oregon, he ordered him home. Eric wouldn’t leave and suggested that his father train the brighter Siegmund as the future senior partner. (In later years, Eric would laughingly claim credit for Siegmund’s success.) Instead, at Max’s behest, Paul laid down the law to his nephew. “My dear boy,” he wrote, “there are those so unable to help themselves that they can only get out of a bath when they have pulled a plug. Others can’t bring themselves even to pull the plug. So I am going to pull the plug for you. Come back to New York.”3 Thus ended Eric’s western adventure. Back in New York, he worked for the American and Continental Corporation, the IAB subsidiary that was granting credits to Europe.

  Returning to Hamburg in 1926, Eric moved into the original Kösterberg house called Noah’s Ark. He and Wolfgang Rittmeister bought an old Danish customs cruiser, which they converted into a fast, seaworthy yacht called the Kong Bele. It would be Eric’s form of escape, his floating sanctuary, during the Third Reich. A social butterfly, Eric often sailed with his aristocratic companions and had few Jewish friends. Like Max, he identified with Judaism for its social and ethical values, not for its spiritual essence. In the late 1920s, Eric fell in love with a non-Jewish girl named Beatrice Blohm whose father came from an old Hamburg merchant family in the Venezuelan trade. Max was ready to let Eric marry her, but Alice firmly opposed it. Apparently, Malice had to break up other affairs as well, and Eric would remain a bachelor until the late 1940s.

  Eric was conscientious at work, but not strongly motivated. At noon each day, he trooped to the stock exchange and watched the traders shouting at each other. Specializing in Scandinavia, he got to know the Wallenbergs and the other influential families. Already Eric gravitated toward charity work, serving as treasurer of Aby’s library. Despite lukewarm enthusiasm for banking, Eric advanced at M. M. Warburg with the magic speed of the heir apparent. In January 1927, less than a year after returning from America, he was named Einzelprokurist, or a holder of the power of attorney. Siegmund wouldn’t attain this distinction for two more years and never forgot the snub from Uncle Max. It converted him into a lifelong militant on the subject of nepotism.

  With some conspicuous exceptions, such as Paul and Jimmy, Warburg boys tended to fall into one of two patterns: they were either weak sons cowed by strong fathers or strong sons emboldened by weak fathers. Siegmund fell into the second category. His father, Georges, was something of a family misfit. Even as his celebrated cousins attained dazzling success, Georges led a troubled life. He was a poor student who suffered from dreadful headaches, hiccups, and a crippling stutter that he only cured with difficulty. Kind, warm-hearted, spontaneous, he also had an ungovernable temper.4 The thin, excitable Georges grew so gaunt that the doctors had to recommend a high-calorie diet.

  When a doctor blamed steam heat for Georges’s headaches, Théophilie dispatched him to a coal-heated school near Stuttgart. An avid reader, Georges excelled in history, but doctors thought a historian’s career too strenuous for him and urged a tranquil life as a gentleman farmer. So Théophilie bought him an estate, Uhenfels, in the Swabian Alps near Urach, not far from Stuttgart, which had been owned by the royal marshal of the king of Württemberg. Set in a beautiful rocky spot with soaring vistas, the house sat on a steeply wooded hillside fed by streams and overlooking a small valley. Uhenfels was a curious blend of the rich and rustic. A place of Spartan comforts often snowbound in winter, it had unheated hallways, lacked running water, and was lit by kerosene lamps. Instead of renting out the tiny storybook castle, Georges saved it for the overflow from family visits. This pastoral corner of Germany was the antithesis of bustling Hamburg and gave Siegmund an entirely different upbringing from his cousins.

  In December 1901, Georges married Lucie Kaulla, the daughter of a Stuttgart lawyer. They met through Otto Kaulla, who married Georges’s sister, Lilly, earlier in
the year. The following September, Lucie gave birth in Tübingen to their sole child, the receptacle of their dreams, Siegmund George. The infant’s grandfather of the same name had died thirteen years before and thirteen would be this Siegmund’s lucky number.

  In southwest Germany, Kaulla was a name to conjure with, surpassing that of Warburg in prestige. As Court Jews to German and Austrian courts, the family was ennobled and intermarried with other banking clans. During the Napoleonic Wars, they provided credit, horses, and other commodities to the Kingdom of Württemberg and even shared a salt monopoly with the prince. They cofounded the Württemburgische Hofbank, the outstanding regional bank. The Kaullas belonged more to the grand world of the court than to the Jewish community.

  At the turn of the century, Lucie seemed destined for life as an old maid and didn’t marry until age thirty-five. A short, quiet, tidy woman who was quite well educated, she often dressed in black. She was modest, slow-moving, and conscientious in everything she did. Weak and sickly, Georges was five years her junior. Lucie had been a delicate child, too, and was considered too frail to marry. Georges and Lucie would be totally devoted to each other, achieving a collective strength that neither could have managed alone.

  Lucie’s fragility covered an iron tenacity. (Perhaps inherited from her mother, who at age eighty startled a burglar by hollering, “Get out of my house at once!”5) Lucie was very musical, played the piano, and composed waltzes, marches, and minuets. Like many German Jews, she had absorbed classical culture from Goethe to Beethoven and was highly patriotic. Her ideals, values, and biases were passed on to her son. Lucie appreciated smart people and lacked interest in high society with its superficial striving. Totally unsnobbish, she schooled Siegmund to disdain the frippery he would find rife among his Hamburg relatives. Instead she inculcated in him a deeply puritanical sense of service, and he always retained something of his mother’s critical reserve toward splendid people.

  Lucie had signed on for a loving but trying marriage. Her poetry and music hadn’t exactly prepared her for running a large, backward estate, with fields, orchards, stables, and eighty-four hundred sheep. Every day Georges strode the fields and ably managed the books, yet he squabbled with the estate steward, forcing Lucie to arbitrate. The first fifteen years of their marriage were reasonably happy. Georges served as the town’s deputy mayor and presided over Social Democratic rallies, buying kegs of beer to woo thirsty voters.

  The war shattered this life. During this bleak time of extreme poverty, starving Swabian peasants scrounged for food at Uhenfels while the Warburgs tended wounded soldiers. Extremely patriotic, Georges invested his fortune of six million gold marks in war bonds that depreciated to virtual worthlessness in the postwar inflation. The teenage Siegmund supported the war and engaged in heated arguments with his skeptical father. This boyhood chauvinism would leave him with a permanent mistrust of patriotism, planting the seeds of the future world citizen.

  In 1916 Georges’s mental state worsened. His headaches intensified, his temper flared more readily, he exhibited symptoms of severe manic-depression. He had a disturbed look in his eye. Later, Siegmund scarcely talked about his father, as if the memories were too painful, though he always kept a photo of Georges by his bed. “My father was of the most spontaneous and warm-hearted nature, but the more his suffering increased, the more difficult it became to protect him from deep depressions and shattering agitation,” he said.6 Henceforth, Lucie both nursed her husband and cared for the estate, which she did in stoical, uncomplaining style. To avoid jarring Georges’s nerves, she made the ultimate sacrifice: she ceased playing her beloved piano.

  A photo of Siegmund during the war shows a serious little boy in knickerbockers, with a faraway look in his eyes. He had little contact with other local children. To fill this solitude, he read an enormous amount, and books piled up in his corner room. He grew accustomed to creating imaginary worlds and extravagant dreams. He attended the Humanistisches Gymnasium in Reutlingen and enjoyed the classical languages, but he hated absences from home. So that he could stay home with Lucie and read, he learned how to fake illness by manipulating the thermometer, and Lucie turned a blind eye to her son’s trick. He had a far more positive experience at the Evangelisches Seminar in Urach, where he was the first Jewish student to be admitted since its 1479 founding. In photos with classmates, Siegmund stands out as a slight, dark boy surrounded by tall blond young men. Already he seemed marked out as someone apart from the crowd. He earned excellent grades and wanted to become a teacher.

  The supreme influence upon Siegmund’s life was Lucie. She was his all-purpose sage, his inexhaustible fountain of epigrams. Their relationship was deepened by the isolated estate; the troubled, infirm father; Siegmund’s status as an only child; his extraordinary precocity; and his unusual sensitivity to adult concerns. One suspects that Siegmund’s career was first conceived in Lucie’s mind, just as Charlotte and Sara had implanted ambition in their sons. Lucie passed on to him her own perfectionism. She had been taught to prepare for things meticulously, execute them thoroughly, and then criticize her own performance. It was a chess master’s approach to life, with chance reduced to a minimum by premeditation and postmortems. Treated like a little adult, Siegmund had no governess or sibling to offset Lucie’s training.

  A true daughter of the Enlightenment, Lucie believed in reason, discipline, and willpower. She repeated to Siegmund a maxim she learned from her father: “My child, when you must choose between two different paths, ask yourself which is the harder one for you, and once you are clear about it, choose the harder path; this will prove to be the right one.”7 That path had to be pursued with unflinching toughness, whatever the pain. Contrary to what one might expect, Siegmund found nothing grim about this upbringing. “I think the general view of people—that puritanism is something necessarily depressing, dark, shadowy—is wrong.”8

  To be sure, Lucie had a wry, subtle sense of humor and a quiet joie de vivre, but otherwise everything about Siegmund’s childhood seemed serious and weighty. He always carried the unspoken sorrows of this solitary boyhood, giving him a melancholy cast. In later years, he would lack small talk, easy chatter—the everyday currency of social intercourse. Lucie trained Siegmund, formed his work habits, and reasoned with him about everything. For five years, she helped him with his homework in a loving but unsparing manner. If he made a tiny error, he had to rewrite the entire page. “She would repeat the criticism of something I’d done, again and again, until she was certain I would not forget it,” said Siegmund.9 To improve his memory, he had to learn poems by rote and sometimes cried when he couldn’t reproduce them just as Lucie wished. Siegmund must have been very secure in his mother’s love that he wasn’t crushed by this rigorous training.

  Lucie instilled in him such a reverence for the higher life of the mind as to unsuit him for more mundane pleasures. When Siegmund was eight, he returned home with a chocolate bar that he had bought with his allowance money and Lucie reprimanded him for not spending it on something worthwhile. (By no coincidence, Siegmund would always struggle with a craving for forbidden chocolates.) When he left for his first dancing lesson, Lucie said, “If you see an ugly girl standing alone you should go and ask her to dance.”10 These sentiments were noble, but asked a lot of a young boy. Lucie’s world was cerebral, controlled. Everything seemed to unfold under the aspect of eternity.

  In her religion, Lucie was a prototypical German Jew, imbued with a sense of Jewish tradition shorn of mysticism. Her Judaism was an amalgam of rationalist philosophy and German classical culture. To Siegmund, she often quoted Schiller’s lines: “Which religion do I profess? None of those you name. And why none? From religious conviction.”11 At age fifteen, she had received a Jewish prayer book in German dedicated with a motto from Plato. She emphasized ethical obligations, often saying that happiness arose from duties fulfilled. Until Siegmund was thirteen, she joined him for bedside prayers each night, even if entertaining dinner guests. On the ev
e of his bar mitzvah (when he gave his speech in Latin) she told him that, henceforth, he must pray alone. “When you pray, the most important thing is to think very hard about all the wrong things you have done during the day. And if you cannot think of at least five or six or seven things you have done wrong, then something is wrong with you.”12 Discipline and self-criticism were stressed, not compromise or forgiveness. One can see here the clear overlap of German and Jewish culture, with their similar exaggerated regard for work and achievement.

  Siegmund’s relationship with Lucie set the pattern for others in his life. She so adored her son that it made him accustomed to unqualified loyalty and an absence of strong dissent from people. He would later transfer these often highly unrealistic demands to the world at large. Lucie also left him with extremely high standards, both for himself and others, that a messy, disorganized, and fallible world would always frustrate.

  Though exiled from Hamburg, Georges was an avid student of Warburg history and knew the family tree intimately. He tutored Siegmund about how his industrious grandfather Siegmund built up M. M. Warburg & Co. while the lazy, spoiled Moritz attended to Sara. After Paul became a partner with Max, the Alsterufer Warburgs felt entitled to a second partnership to even the scales. To this end, Georges was given the right to enter the firm with his brother, Aby S. Because he had waived that right, he and the other Alsterufer Warburgs thought Siegmund entitled to a partnership.