The Warburgs
Page 76
The battle over the Hamburg bank would, at first, cause them to join forces. In retrospect, it seems amusing that Eric should have invited Siegmund into the fray. Eric wanted Brinckmann to restore a 30 percent share of the bank to the Warburgs and he needed Siegmund’s steely will to toughen his own resolve. In early 1947, Siegmund met with Brinckmann in Zurich to thrash out a restitution plan for the former Warburg partners. At once, they entered a thicket of thorny legal, financial, and ethical questions. At this point, Siegmund still revered Brinckmann for his anti-Nazi attitude, telling Eric that “Rio” has “acquired an attitude of philosophical detachment and mature wisdom which is quite remarkable—Brinckmann more so than any other man I met in recent years.”8 Because the Warburgs viewed Brinckmann as a savior, not a scourge, they were eager to strike a friendly agreement and not resort to pressure from occupation authorities.
In his talks with Siegmund, Brinckmann elaborated his own revisionist history and brazenly denied that the 1938 transfer had constituted a true Aryanization. Noting Max’s brush with bankruptcy in 1931, he said the firm had mostly crumbled away (abgebröckelt) by 1938. When Siegmund replied that the old partners were never paid for goodwill, Brinckmann denied that the bank had any goodwill left in 1938 and claimed he had saved the remnants of a failed institution. He waved away the 150-year history of the firm as a petty matter of no account. Touting his own contribution, Brinckmann suggested a 10 percent instead of a 30 percent restitution. Siegmund was tactful but firm. “I said that whilst he and Wirtz had without any doubt been motivated by the highest considerations at the time of the Aryanisation of the firm and even thereafter, the way in which the Aryanisation had taken place had been largely influenced by Nazis pressures and Nazi habits.”9 In an interesting aside, Brinckmann revealed that the bank derived important income from his directorships at Beiersdorf, HAPAG, and other seats he had assumed when the Warburgs were pushed off those boards in the 1930s. Rudolf Brinckmann had been created as a Warburg front man in the Third Reich, but now, with his new, suddenly inflated sense of self-importance, he refused to admit it.
A caustic perspective on Brinckmann was provided by former Warburg partner Ernst Spiegelberg, now working for Siegmund in New York. Spiegelberg noted the remarkable fact that Brinckmann had not paid a single mark to take over one of Germany’s leading private banks! What, he asked tartly, had happened to the one million reichsmarks in hidden reserves left behind with the old assets?10 In Spiegelberg’s view, Brinckmann had grown giddy and drunk with power from the praise Eric heaped upon him after the war. Arguing for speedy reparations, he told Fritz, “I don’t believe that time will work to our advantage, if we wait. The human conscience tends to weaken rather than to sharpen.”11
It had never been easy to deal with Brinckmann, who was a strong, cold, and humorless man. His very face was fearsome, with its dark, beetling eyebrows and sloping, slightly Oriental eyes. Brinckmann had fought so much with his partner, Wirtz, that the latter had threatened to quit. Thrifty, industrious, Brinckmann was a solid but unimaginative banker. One strongly suspects that an element of class revenge lay behind his obduracy. What old resentment lurked in the mind of this longtime Warburg retainer, who used to flirt with Max’s daughters at parties? How could Brinckmann have respected Eric after watching Max bully and demean his poor son for many years?
After Wirtz’s death, Eric knew that Brinckmann needed help and urged him to appoint another partner. Brinckmann chose Hermann Schilling, formerly of the Prussian State Bank in Berlin. Eric got wind of unfavorable news about Schilling, but by the time he told Brinckmann, it was too late, and in 1947 Schilling became the second partner. Schilling boasted of his involvement with the German Resistance. He had worked with Dr. Johannes von Popitz, the Prussian finance minister, who was arrested and executed after the 1944 plot against Hitler. Spiegelberg suspected this was a fig leaf for Schilling’s earlier support of the Nazis.12 But Eric credited Schilling’s story and passed along the latter’s memo on the July 20 bomb plot to Allen Dulles for his book on the German Resistance.13 Schilling was a very dynamic but difficult man, whom one employee likened to a Prussian thunderstorm.14 His advent greatly complicated matters, for he emerged as an implacable foe of Eric’s return to the firm.
In May 1948, the British military government in Hamburg announced a restitution law for the recovery of stolen Jewish property. A month later Economics Minister Ludwig Erhard replaced the old reichsmark with the stable deutschmark. This currency reform ended the black market, triggering an economic boom that doubled the gross national product in a year and wiped away German gloom. The stage was set for a robust revival, as well as for the final showdown between Brinckmann and the Warburgs.
While Fritz wanted the British authorities to prod Brinckmann into restoring the old M. M. Warburg name, Eric and Siegmund preferred a gentlemanly approach.15 Siegmund even allayed suspicions about Brinckmann raised by Britain’s Trading with the Enemy Branch, which investigated Brinckmann’s wartime takeover of Warburg & Co. in Amsterdam. Siegmund told British authorities that “Brinckmann had always been an extremely loyal and straight character, that he had been consistently anti-Nazi, and that as far as Nazi pressures had allowed him he had been considerate and faithful to the various members of the Warburg family.”16 Siegmund and Eric assisted Brinckmann in reactivating many foreign contacts for the bank.
The Warburgs so trusted Brinckmann that when they sat down to work out a restitution deal in 1949, Eric didn’t consult a lawyer or tax adviser. Rather, negotiating for himself, Fritz, Siegmund, and Spiegelberg, he treated Brinckmann as an honorable man. Under the final agreement, the Warburg group got 25 percent of the firm and eighty thousand deutsche marks in reparations, settling claims under the new law and compensating the Warburgs for goodwill and hidden reserves. (Siegmund put his portion straight into S. G. Warburg & Co.) The old partners also received a critical option: They could increase their stake to a controlling 50 percent during a five-year period, starting October 1, 1948.17 Significantly, the Warburg group didn’t have the money to exercise the 50 percent option, which would have averted the whole marathon battle that followed. Eric made two other extremely damaging mistakes. He didn’t insist upon the name change as part of the restitution package and didn’t ensure that he could someday return as a general partner.
With E. M. Warburg & Co. as its New York representative, Brinckmann, Wirtz became the first German bank to restore an American connection—no small matter in a reawakening Germany hungry for raw materials. Because Volkswagen needed Pennsylvania coal to operate, it became the bank’s number one client—even as Jews worldwide shunned its products. For all of Brinckmann’s overweening vanity, few foreign banks knew the Brinckmann, Wirtz name and the staff constantly had to explain that they were the old M. M. Warburg in disguise.18
In the early postwar years, the new German democracy was still fragile. Sometimes in Hamburg the Soviet Army seemed just over the hill. When Brinckmann and Schilling grew alarmed during the grim winter of the 1948–1949 Berlin Blockade, Eric advised them to imitate wealthy Germans and purchase a fully-stocked, seaworthy ship for a quick getaway in case of trouble. In a Hamburg canal, Eric’s old pal, Wolfgang Rittmeister, found a rusting hulk called the Atalanta, which had been damaged by Soviet bombs in the Baltic. The bank bought and refurbished the three-masted schooner, which became one of the first German yachts seen in England after the war. It was later used not to evacuate employees, but to entertain hundreds of prominent guests, including Chancellor Helmut Schmidt.19
With the restitution law, the Warburgs found themselves reliving unpleasant events, including the rancorous battles with Friedrich Flick from the 1930s. Instead of resisting reparations for Lübeck Blast Furnace, Flick saw advantages in cooperation. He needed money to comply with a new law passed for conversion of the iron and steel industry. Through his associate, Alfred Rhode, Flick proposed to Spiegelberg that the Warburgs and the Hahns might want to pump additional capital into his firm in exchange for restorati
on of their shares. Spiegelberg, in turn, proposed that Flick might wish to revive the dormant account of Lübeck Blast Furnace at Brinckmann, Wirtz.20 Indeed, in 1950 Brinckmann, Wirtz floated a large bond issue to help Flick modernize the iron and steel operations of his Maximilianshütte, creating a curious community of interest between persecuted Jewish bankers and a notorious convicted war criminal.
To regain their lost place in the world, Eric and Siegmund found themselves in a paradoxical position: They possessed a competitive advantage mostly through their German connections. On postwar trips to Germany, they saw the economic miracle taking shape long before their Anglo-American competitors. They retained links with many German businessmen who were only too eager to tap Warburg money and assuage their residual guilt at the same time.
Not having lost family members in the Holocaust, the Warburgs didn’t have insuperable mental obstacles about doing business with Germany. When news of the death camps first reached London, Siegmund attended a solidarity service at a synagogue—the only time he went in those years—but he didn’t suffer actual family losses. In 1945, a suicide wave swept London as Jewish families learned of lost relatives. At New Trading, Henry Grunfeld and Eric Korner had many relatives who had died. (Interestingly, both refused to demand postwar reparations, believing life too short for legal action.) A postwar uncle in the investment department, the Austrian Charles Sharp (born Karl Spitz), lost his mother’s Hungarian relatives in the Holocaust and refused to go back to Austria. He never sought restitution for his old house in Vienna, which would have meant dealing with the Austrians. Another uncle, thin, gaunt, meticulous Ernest Thalmann, a former Berlin banker, also never returned to Germany.
Siegmund respected the reluctance of some uncles to visit postwar Germany, but felt no such scruples himself. As Charles Sharp recalled, “Siegmund Warburg had no qualms to travel to Germany after the war and to contact and be contacted by former personal and business friends. He would meet even those who had prominent positions under the Nazis, though he did so in the first place for business reasons.”21 Siegmund refurbished these contacts even as the provincial British banks dozed. He envisioned London as the hub of a new United States of Europe—a visionary position that won him few plaudits at the time. “All I got was a shaking of heads from such people as Mr. Anthony Eden, who was a friend of mine, and Ernest Bevin, who was not a friend of mine,” Siegmund said.22
With his strong Swabian accent, Siegmund remained very German in his thoroughness, attention to detail, sense of duty, and hard work. His desire to reestablish the Warburg name in Germany exercised a romantic claim on his imagination. He regarded Germany as the land of Goethe and Heine as well as a breeding ground for Hitler and Göring. Where Henry Grunfeld disliked the subservience and exaggerated respect for authority common in German banks, Siegmund seemed more forgiving. A few years after the war, he attended an alumni reunion at his old Gymnasium and enjoyed returning to the Swabian Alps of his boyhood where he still felt “at home.”23 After the war, Uhenfels was broken up, its little castle bought by a Stuttgart jeweler and its house and farm taken over by the local municipality. Soviet prisoners of war had been dumped in the burial grove of Siegmund’s father and he had the bodies removed. Siegmund always retained a distinct partiality for southern Germany and faulted Bismarck for having forged a German Reich. From 1949 to 1959, Siegmund’s friend and old Swabian neighbor, Theodor Heuss, was West German president.
Siegmund didn’t believe in collective guilt, whether of Germans, Bolsheviks, or Jews, and grew furious at loose talk that all Germans were Nazis. He grew irate with one Kuhn, Loeb partner who, as he said, “used to make every single German responsible for every crime committed under the Hitler regime!”24 Like Eric, Siegmund tended to blame the cowardice of the German middle class for Nazism. “Siegmund knew that not all Germans were Nazis because he knew many minor aristocrats who were against Hitler,” said his friend Dr. Carl H. Goldman.25
In December 1949, Siegmund made his first trip back to Hamburg, having recuperated from a small operation in Germany that summer. From the affecting moment when his train crossed the Elbe bridge, he marveled at how well the city had survived, how fast it was being rebuilt. Staying at his old haunt, the Hotel Atlantic, he sauntered through the streets nostalgically, poking his head into bookstores, and had poignant reunions at Brinckmann, Wirtz. As he wrote Uncle Fritz, in Germany “the mixture of good and bad and of light and shade has at all times been great and is to-day greater still.”26 When he and Eric dined at their favorite restaurant, the Ehmcke, sitting beneath portraits of Bismarck and Moltke, Siegmund discerned at once that Eric was back in his element. “I was rather struck to find him so much happier in Hamburg than at any of the other places where I had met him during the last few years.”27
For other Warburgs, the idea of visiting Germany was a vexed matter. Most stayed away for years. Carola wouldn’t set foot there, and Gerald wouldn’t play his cello there. Of course, the family couldn’t resist the odd twinge of sentimentality. From the vantage point of postwar exile, the memory of Kösterberg had an unreal shimmer. After the war, Eric’s sister Anita helped to organize a search bureau in London under the aegis of the British Red Cross. Heading a staff of sixty people, she reunited thirty thousand stateless families in central Europe. After her divorce from Max Wolf, she would end up in New York, a single woman, taking care of Alice and starting again, working in the gift department of a department store and in a Madison Avenue specialty shop.
When she returned to Kösterberg right after the war, Anita felt like a ghost, an intruder. As she drove up the drive, a new tenant, the director of the Hamburg museum, the Kunsthalle, shouted from upstairs, “Please remove the car. We don’t allow people to park their cars here.”28 Things were soon straightened out and there were tearful reunions. But Anita could never forget the so-called friends who didn’t know the Warburgs after 1933 or only entered the bank by the side entrance. And there were still painful surprises to reckon with. When Anita entered the military officers club in Hamburg, she discovered vases and a Roman fountain swiped from Kösterberg by Nazi brass, which she had restored to the estate.
In 1949, Gisi got a letter from her former nanny and wept at the thought that she would never see her again. Her husband, Charles Wyzanski, suggested that she return to Hamburg, not to see Germany, but to see her nanny. Upon arriving, Gisi was met by the nanny and the old Warburg chauffeur, and they all burst out crying together. Driving through a city still clogged with rubble, they went to the Brinckmann, Wirtz building where the veteran employees showered Gisi with two dozen red roses.29 But she felt that postwar Hamburg was just the simulacrum of a dear place she had once known. She often talked of the Warburg love affair with Germany and likened their disappointment to the excruciating pain of being spurned by one’s lover.30
Instead of selling or renting the large Kösterberg houses of Max and Fritz, Eric decided to donate them for charity. In August 1949, Eric took Baroness Louise Sophie Knigge, vicepresident of the German Red Cross, to see the two houses, which she thought perfect for meetings and a new project for mothers with small children. To win the acquiescence of Fritz and Anna, Eric wanted to christen the place with a Swedish name, so it was called the Elsa Brändström House. Elsa Brändström, of course, was the daughter of a Swedish ambassador to the Soviet Union, who had been shocked by the savage treatment of POWs during the first world war and ended up a Florence Nightingale, saving tens of thousands of lives. When Hitler asked her to head the German Red Cross, she replied in one word: “Never.” As a close friend of Fritz and Anna, she was the perfect person to be memorialized at Kösterberg.
Keeping open the option of returning to Germany, Eric set aside for his own use the original building, Noah’s Ark. Already he was in the thick of efforts to rehabilitate Germany and bind it closely to the West. Along with Allen Dulles and Reinhold Niebuhr, he had formed the American Committee to Aid Survivors of the German Resistance. Countess Marion Dönhoff, a Prussian
aristocrat who aided the Resistance and later became publisher of Die Zeit, helped to screen the recipients for CARE parcels. Eric lobbied for an American-German chamber of commerce to promote West German exports to America. Alarmed by a possible Soviet invasion, he suggested to Allen Dulles that the American government begin contingency planning for the creation of a German government-in-exile, should the worst come.31
Like other Warburgs, Eric was horrified by the Morgenthau Plan to deindustrialize Germany. Its intention was to eliminate Germany’s capacity to make war, reducing it to a pastoral state. When a diluted version was adopted at war’s end, Eric considered composing a polemic against it, much as Keynes had done with the reparations issue after Versailles. The plan enacted in 1946 went beyond aircraft and ammunition factories to encompass everything from synthetic oil to tractor plants.
In Hamburg, Eric saw, firsthand, the dismantling program being directed by the occupation government. German shipyards could only repair ships, not build them, and this threatened the city’s future as a maritime center. As a former builder of U-boats, Blohm & Voss was a prime target for political retribution. In July 1949, occupation authorities began blowing up the cement slipways that had launched the gigantic HAPAG liners. Thousands of people lost their jobs, as dynamite explosions went on for sixty consecutive days. Newspaper photos showed a wilderness of broken cement slabs at the port. At a time of widespread unemployment, Hamburg’s industrial base was being sabotaged, breeding resentment against the Allies and hobbling German recovery.
A few days after signing his August 1949 agreement with Brinckmann, Eric dined alone with John J. McCloy, the new American high commissioner for Germany, at his villa outside Frankfurt. A short, balding, affable man, McCloy enjoyed hobnobbing with the rich and powerful, and his career had long been intertwined with the Warburgs. His mother, a hairdresser, used to do Frieda’s hair during summers at Bar Harbor. When McCloy joined the Cravath law firm in 1924, he performed legal work for Felix and Freddy at Kuhn, Loeb and for Paul at the International Acceptance Bank. Freddy often invited him to play tennis at Woodlands or ride at his horse farm in Virginia; he even helped persuade McCloy to head the World Bank in 1947.32 Because he was so close to Freddy, Eric had known McCloy since the 1920s.