The Warburgs

by Ron Chernow

  Before 1937, most Aryanizations were undertaken by small-time Nazi opportunists. Now large industrialists saw they could buy major businesses cheaply and receive government support to extract giveaway terms. Spurred on by Göring, Flick resumed his assault on Lübeck Blast Furnaces in a campaign later dubbed “a form of industrial piracy” by one Nuremberg prosecutor.10 Instead of bidding directly for the firm, Flick stalked the weakest of the three owners: Rawack & Grünfeld.

  To terrify the Jewish owners, Flick drew upon the services of Alfred Rohde, who had managed his operations in Upper Silesia. Terror formed an indispensable part of Aryanization campaigns because the Nazis at first feared that formal confiscation of Jewish property might trigger legal reprisals abroad, including the attachment of German assets. So the owners had to be psychologically stampeded into selling. Rohde went to see Dr. Ernst Spiegelberg, an M. M. Warburg partner and the bank’s Berlin representative after Siegmund fled. The meeting curiously intermingled civility and blackmail. Speaking as a supposed “old friend,” Rohde advised Spiegelberg to do his best to have Rawack & Grünfeld sold to Flick quickly. “Otherwise the entire group will get into trouble,” said Rohde.11 Rohde hinted that R&G had violated German foreign currency rules and “this matter has already been investigated by the responsible government authorities.”12 In November, Flick told Spiegelberg that high authorities were pestering him to deal with the Lübeck “problem.”13

  With Schacht’s downfall, Spiegelberg knew that Flick wasn’t bluffing. To expedite matters, Flick turned to Göring’s Four-Year Plan office. The head of its iron and steel division, Herr Oldewage, invited Spiegelberg to his office and informed him that the German General Staff wanted to see R&G Aryanized. For this chat, Oldewage set curious ground rules, permitting Spiegelberg only to answer “yes” or “no.” Spiegelberg wouldn’t abide by those terms. Finally, Oldewage said that R&G would lose its license to import ore from Scandinavia and the Soviet Union until Flick got his majority of shares. This was equivalent to a death sentence for the company, and Oldewage noted that Spiegelberg was “strongly impressed” by this threat.14 In internal memos, the Flick people gloated over the alarm created in the Hahns and Warburgs by menacing speeches issuing from the Nazi brass. By mid-November, Flick had amassed 25 percent of R&G’s shares. A few weeks later, Spiegelberg negotiated the final sale to Flick, who agreed that M. M. Warburg would remain R&G’s banker. He also said that Dr. Fritz Warburg would remain head of the supervisory board or would be succeeded by Dr. Rudolf Brinckmann.

  Flick now proceeded to his real target: Lübeck Blast Furnace. Backed by Göring, Flick applied pressure far more flagrantly than he had with Rawack & Grünfeld. This time, Flick bought just half the target company—the bare minimum needed—to save on cash. He no longer needed to waste even a penny. As Rudolf Hahn later testified at Nuremberg about Flick, “He threatened us with arrest and internment in a concentration camp.”15

  In January 1938, Friedrich Flick bought, at a 50 percent distress-sale discount, the shares in Lübeck Blast Furnace owned by the Hahns and M. M. Warburg, with the remaining shares sold to Mannesmann. In these transactions, the Hahns took payment in foreign currency, payable in London, which would allow Rudolf and Lola to resume life abroad.16 At Nuremberg, Telford Taylor contended that this rapacity only stimulated Flick’s appetite for further plunder of Jewish businesses. “The acquisition of the blast furnaces opened wide Flick’s eyes to the interesting and profitable possibilities of ‘Aryanization,’ ” said Taylor.17

  Rudolf and Lola had stayed in Germany from many motives. Like Max, they had thought it cowardice to desert the Jewish community. They also suffered from the upper-class Jewish mythology that they were somehow immune to the abuse being meted out to poorer Jews. They never imagined it could happen to them.

  For five years, Lola had worked with Youth Aliyah in Berlin and placed hundreds of German-Jewish children in foreign homes. Along with Weizmann, she lobbied Britain to boost the quota for Jewish children admitted to Palestine. She knew she stood in growing danger in Berlin. After Fritz’s daughter Ingrid made a speech in Sweden relating horror stories about Nazi treatment of Jews, Lola was summoned to Gestapo headquarters. Though she escaped harm, she now knew that the Gestapo tracked her activities. She also learned that her name appeared on a Nazi blacklist of vocal Zionists. As if Lola needed more trouble, she was also suffering from a kidney ailment.

  The upshot was that in September 1938, Rudo and Lola decided to leave Germany and fly to London. In part, they managed to get out by selling their Berlin home to a Nazi Gauleiter. With Kurt now running the Gordonstoun school in Scotland—the Salem school would be evacuated to Wales during the war—England arose as a natural destination. Lola made a typically theatrical exit from Berlin. “She looked like a film star,” said her sister. “Everybody was crying. Lola’s arms were full of flowers.”18 At the airport, she was thoroughly searched by a guard who asked her name. When she said Warburg, the guard apologized. “Well, if you had told us that before, we wouldn’t have bothered you.”19 The Hahns, however, were treated to one last indignity. After the plane took off, they were approached by an unexpected passenger: Otto Steinbrinck, Flick’s lawyer, who was on a business trip to London. He couldn’t resist a last sadistic jab: “You’re lucky that you were still able to get out at all,” he told the Hahns.20

  —

  With M. M. Warburg evicted from the Reich Loan Consortium, Max hunted for friendly parties to buy his bank. The negotiations took place amid a stifling, intolerable gloom. In mid-March 1938, Hitler triumphantly entered Vienna to celebrate the Anschluss with Austria. After breaking into the Rothschild mansion, SS men emerged bearing silver, paintings, and other spoils. Baron Louis Rothschild was arrested and held hostage until his family sold off their properties at scandalously low prices. The Nazis carted off masses of Jews to the Dachau and Buchenwald concentration camps in an orgy of anti-Semitic excess. One of Max’s Viennese cousins, Richard Rosenbacher, leaped to his death from the third-floor window of his home. Jews in Vienna were committing suicide at the rate of two hundred per day.

  Returning from Austria, Hitler addressed a huge throng before the Hamburg Rathaus. The Führer also christened a new ship the Robert Ley, honoring Max’s old nemesis from the 1920s. The pace of Aryanizations quickened, as a quarter of the remaining forty thousand Jewish businesses underwent forced sales during the next year. This destroyed the last vestiges of the Jewish economic power that had figured so largely in Nazi cosmology.

  For a Jewish bank, the choices were simple. It could liquidate; sell out to an Aryan bank; or be Aryanized—that is, the Jewish partners could sell their stakes to non-Jews and preserve the firm. It was fully consistent with Max’s beliefs that he chose Aryanization, which kept alive the slim chance of someday returning to Germany. At first, the Warburgs hoped to bring in 51 percent non-Jewish partners and keep a minority stake for themselves. But on January 4, 1938, Göring issued a decree that classified those firms with even one-quarter Jewish ownership as subject to Aryanization. A wholesale transfer of the firm now became inevitable.

  Negotiations took place at the Berlin office of M. M. Warburg under the close scrutiny of the Reich Economics Ministry. On March 19, 1938, Dr. Gustab Schlotterer of the Foreign Economics department was told to keep M. M. Warburg intact to safeguard its foreign-exchange credits and overseas connections for the Third Reich.21 This government policy dovetailed with the Warburgs’ own wishes, for it permitted a moderately friendlier Aryanization to occur. Friendly was an extremely relative term in this terrifying atmosphere, and the Warburgs always viewed it as a de facto expropriation. As Max said, “In outer form ‘Aryanization’ was not supposed to be confiscation; in final result it was exactly that. It was accomplished in the form of an agreement, which was placed before one to sign with the threat If you do not agree, then.…”22

  The Warburg bank was no worthless corpse. Visiting Hamburg in January 1938, Siegmund, who still moved in and out of German
y with remarkable ease, was again astounded by the brisk pace of business.23 M. M. Warburg even turned a profit in 1938 as it benefited from a lengthening list of desperate Jews who transferred their assets there. It proved the value of a private bank that could ensure a high degree of confidentiality.

  The Aryanization of M. M. Warburg would be the biggest of a private bank. To complete the transfer, the bank was converted into a new limited partnership. To the family’s dismay, the Hamburg government, still wishing to capitalize upon the renown of the Jewish bank, insisted that it retain the M. M. Warburg name. The purchase price of 11.6 million reichsmarks was pure eyewash since the buyers paid nothing for goodwill. Of 6.4 million marks actually paid to the Warburg partners, the partners left a “silent participation” of 3 million in the bank. They wanted the bank to have sufficient operating capital, even though they had no voting rights.24 Of 3.4 million marks left, the Reich Flight Capital Tax took away a quarter, or 850,000 marks. The Warburgs then had to pay one million marks in bare-faced tribute for Third Reich approval of the Aryanization. Of 1.55 million marks remaining, the Nazi exchange rates confiscated another 90 percent, leaving 155,000 marks of the original 6.4 million.25 The silent participation was later converted into a bank balance and then confiscated outright by the Nazis at the outbreak of the war.

  At first, Fritz and Max planned to stay in Hamburg, tending to their charities and overseeing the bank’s transfer. Max, in particular, still couldn’t sever his emotional ties to Germany or admit that his kaleidoscopic journey through the Third Reich had come to a sudden end. He and Fritz negotiated an unusual arrangement with the authorities by which they received the right of dual residence, allowing them to enter and leave the Third Reich unimpeded and retain a private secretary’s office in Hamburg.26 Max told Jimmy that this passport matter was so important to the partners that the Aryanization plan hinged on it.27

  The Nazis wanted to bar foreigners from the Aryanized bank and prohibited the Warburgs from selling stakes to overseas firms. This torpedoed a Wallenberg plan to buy shares for their Enskilda Bank in Stockholm.28 The new head of the bank would be the Warburgs’ all-purpose Aryan and general manager, Dr. Rudolf Brinckmann, a man who shall figure largely in our story. He had a broad face with tufty eyebrows and a rather Oriental cast. Born in Turkey and of Turkish-Greek extraction, he had emigrated to Germany as a teenager, studied law and economics, and learned six languages. After working for E. Ladenburg in Frankfurt and Deutsche Bank in Constantinople, he was hired by M. M. Warburg in 1920. He had fully inhabited the Warburg universe. Not only had he rotated through every department at the bank, but had even worked with Paul at the IAB in the 1920s. He didn’t become a partner until 1938 even though he occupied many corporate board seats vacated under duress by Warburg partners.

  The other new chieftain was Paul Wirtz, a Hamburg exporter with a long, pointed nose and piercing eyes. From an old local family, he was former head of the Anglo-Chilean Nitrate Syndicate in London. He took the position with M. M. Warburg out of a feeling of Hanseatic duty. Both Brinckmann and Wirtz were not only longtime Warburg associates, but staunch anti-Nazis. Although the Warburgs picked Brinckmann and Wirtz, they had no written agreement from them as to what would ever happen if the Nazis fell from power. It was assumed, however, that these custodians would loyally return the bank to the Warburgs.

  The partnership stakes were scattered among eleven investors so that no single group could seize control. Large stakes went to the partially state-run Bank für Deutsche Industrie Obligationen in Berlin, the Industriekreditbank in Düsseldorf, and that Warburg ally for several years, the Berliner Handels-Gesellschaft. Both the electrical giant, Siemens (through Siemens & Halske and Siemens-Schukert) and the Good Hope Steel Company (Gutehoffnungshütte) also took shares. There was a further sprinkling of old-line Hamburg and Bremen trading firms in the shipping, coffee, and Latin American trade.

  On May 30, 1938, Max Warburg reported as usual to the handsome neoclassical palazzo he had built on the Ferdinandstrasse. He assembled the bank’s two hundred employees in the canteen, a room of dark wood paneling with a view of the slim verdigris spire of St. Jacob’s church. For forty-six years, Max had ruled the bank with his own characteristic mix of charm and autocratic paternalism. Today, not trusting his own emotions, he smiled wanly as he greeted the staff.

  His youngest daughter, Gisi, came for the farewell ceremony. She still worked for Youth Aliyah in Berlin, where the phones were now tapped and things had grown impossibly tense. When she arrived at the bank, she came upon a grotesque scene. The Nazi party had just delivered a gigantic oil painting of Hitler, to be hung in Max’s office after the portraits of all Jewish partners were removed. Staring gloomily at the picture, the concierge wouldn’t touch it. “They’ll have to get another fool to hang it up,” he told Gisi.29

  Age seventy-one, Max wanted to leave in dignity and prove that the Nazis hadn’t extinguished his spirit. Having forgotten his trademark white carnation, he asked Gisi to fetch a fresh one for his lapel. An almost legendary figure among Hamburg Jews, he now seemed all too mortal and fallible. He had wanted Eric, as a member of the fifth generation, to deliver the speech, but his son was in New York on business. So Max read aloud a communiqué that would appear in the press the next day, announcing that he, Fritz, Eric, and Dr. Spiegelberg were leaving the bank. Max explained that they had weighed two options: either abolish the bank outright or (and he never actually mouthed the hated word) Aryanize it by transferring control to friendly, non-Jewish hands. “We chose the second path because we did not wish this firm, which has been our life’s work up till today, to be destroyed. Above all, we did not wish your community, in which you grew close in decades of work, to disintegrate.”30

  With great pride and ineffable sadness, Max introduced the two men who would henceforth steer the firm. Dr. Brinckmann delivered a paean to the bank’s tradition. “I promise you that the tradition of trust and the spirit of camaraderie and helpfulness, which we have always upheld in this house, will be preserved in future.”31 Paul Wirtz promised to be a fatherly figure. A grateful Max extolled both as wise, fair, and far-sighted men.

  Aside from a notable lack of bitterness, what made Max’s valedictory address so remarkable was its hopefulness. It tacitly foresaw a post-Hitler Germany in which the Jews and M. M. Warburg & Co. would again flourish. Far from being elegiac, it was positive, forward-looking, as if Max were just going into a temporary exile. In retrospect, the speech seems prophetic and escapist in about equal measure.

  Max tried to condense all his accumulated banking wisdom into his talk. He urged the staff, in his absence, to pay close attention to each transaction, to provide professional service of uniform excellence, to spread risk and assist troubled clients, and to be constantly alert for adverse events. Warmly thanking the staff, he noted that he might never walk through the office again. “We wish you success in your work,” he said in closing, “for the benefit of the Hanseatic city of Hamburg and for the benefit of Germany!”32 This final apostrophe to the Fatherland, just when it had so sorely betrayed him, was vintage Max. Thus ended centuries of continuous Warburg activity in Germany.

  Many employees stood misty-eyed as they listened. By the end, dozens wept in an emotional outpouring as they surged forward to shake Max’s hand. He later said he felt as if he stood before his own coffin, for they sobbed as if it had been his funeral. The image was apt, for expulsion for Max Warburg was death-in-life. The Warburgs’ fairy-tale existence had been blown away as if it had never existed.

  After shaking every hand, Max returned to his office and signed a last message to the staff, urging them to preserve the bank’s spirit. Then he left the building that had been a monument to his effort and never returned, even though he didn’t sail to New York until late summer. Fritz and Anna Beata soon departed for Sweden. In the weeks that followed, Max received many expressions of sympathy from business friends.

  Meanwhile, the campaign against Jewish businessmen
went forward unmercifully. On June 20, the Economics Ministry banished Jews from stock and commodity exchanges and two weeks later prohibited them from serving as agents or brokers, completing the rout of the Jewish financier. Increasingly that summer, the Gestapo shipped off “asocial” Jews to concentration camps.

  Outside Germany, press reports of the Aryanization produced an electrifying effect. As The Times of London said, “The transformation of M. M. Warburg and Co. is one of the more spectacular incidents of the present energetic drive against Jewish influence and participation in financial and business activity in the Reich.”33 The paper noted that financial circles estimated the bank’s capital at forty million marks, while it had changed hands at only twelve million marks. In other words, even at this fictitious official price, the Warburgs had surrendered a fortune; at the actual price, they were effectively wiped out. It was ironic that the firm that had saved the capital of so many Jews had forgotten, in the end, to save itself.

  In their final days in Germany, the Warburgs lingered on in a ghostly limbo. Though evicted from the bank, Max didn’t know when he would leave, having obtained the special right to dual residence. The Warburgs maintained a superficial aura of comfort that couldn’t disguise their enormous sadness. On July 15, 1938, a woman named Bertha Ehrenberg visited Kösterberg and in her diary poetically captured the Warburgs’ despair. She arrived in a lovely twilight, against which the Warburgs seemed spectral figures, relics of a dead world:

  “Everything in that twilit evening was so remote and as if already forgotten by the world. Enormous, unreal trees, such as those that only in Hamburg or England take root in the landscape, afforded glimpses of a distance in which the broad, still river flowed toward the horizon opposite. Everything was quiet and almost unreal—another world—and in this quiet and remoteness I met the men whom I had met years before at the height of their power, their influence, their prestige intact. They sat there together, the Warburgs, Erich, Hans Meyer from Paris, Spiegelberg and Liebmann, once the heads of the bank, now stripped of their rights, denounced as ‘rogues’ and ‘scum,’ their estate no longer cheerful and the only thoughts in their minds, how to get out of this captivity.… Outwardly everything calm and friendly and cheerful, ‘composed,’ but I sensed intensely the dreadful and tragic tension which lay over these uprooted, obliterated people.”34