The Warburgs

by Ron Chernow

  In the Jewish community, McCloy would remain a controversial figure because of his wartime record. As assistant secretary of war in 1943, he had opposed bombing raids against the railway lines that transported Jews to Auschwitz and other death camps, believing it more efficacious to pursue military targets and end the war quickly. It was also thought that any railway disruptions from bombing would only be temporary. Winston Churchill, who dissented vigorously from this view, was isolated on the issue. From misplaced fear that Jews would be killed, some Jewish groups had even concurred in the policy of not bombing the rail lines. Eric always supported McCloy on the issue and felt later attacks on him were malicious and unjustified.

  McCloy was also taken to task for his lenient treatment of Nuremberg war criminals in 1951, most notably when he granted clemency to Alfried Krupp and eight other Krupp directors convicted for exploiting slave labor from the camps. McCloy thought the real culprit was the senile Gustav Krupp, not his playboy son Alfried, and said he had acted merely to bring the Krupp sentence in line with those of Friedrich Flick and I. G. Farben executives. Telford Taylor, the American chief prosecutor at Nuremberg, vigorously disputed that Alfried was just a junior figure. At moments, McCloy was also heroic to Jewish groups. Responding to a personal appeal from Eddie Warburg and the Joint Distribution Committee, he passed a “General Claims Law” to compensate Nazi victims soon after his arrival in Germany.33

  When he dined with McCloy in August 1949, Eric advocated West German participation in European defense and closer scrutiny of war crime judgments obtained by unfair interrogation. But the opinion that enraged McCloy was when Eric pleaded for an immediate halt to the dismantling program. In internal Washington debates, McCloy had given qualified support to the Morgenthau Plan. Now he told Eric that, in antiquity, defeated German tribes had to smash their swords and spears. Eric nimbly replied that they weren’t talking about swords but plowshares—machines that could be applied to peaceful purposes. If McCloy persisted with dismantling, Eric warned, it would poison German relations with the Allies, foster nationalism, and possibly drive Germany toward Communism.34 McCloy was so irate that he nearly asked Eric to leave the room. By the end of the dinner, however, McCloy had cooled off and asked Eric to produce a list of plants he might save from demolition. He gave Eric forty-eight hours to provide names.

  On August 27, Eric addressed a letter to McCloy containing the requested list. To rally the support of German unions and politicians, Eric proposed that McCloy save ten steel, synthetic gas, and synthetic rubber plants. He never published the list of firms, but his papers show that they included the steel works of August Thyssen and the Krupp synthetic gas works.35 McCloy managed to save these facilities.

  This intervention with McCloy coincided with, and perhaps accelerated, a significant turn in American policy. When Eric’s close friend, Marion Dönhoff, told the new chancellor, Konrad Adenauer, about Eric’s talk with McCloy on dismantling, he simply couldn’t believe it.36 But by November, Adenauer had won agreement from U.S. Secretary of State Dean Acheson that dismantling would end in critical economic sectors, including certain forms of ship construction. Germany, in return, agreed to stay demilitarized and remain vigilant against any recurrence of Nazi thinking. Responding to cold war pressures, the Allies had decided to recruit their former enemies as their new friends. Adenauer would bring Germany into NATO and the European Community and firmly anchor his country to the West. As denazification gave way to amnesty, many personalities from the Third Reich were rehabilitated. Of 177 Nazis convicted at Nuremberg, only 12 were sentenced to death in the end.37

  By urging Eric to move back to Hamburg, McCloy gave official sanction and high moral purpose to an agonizing personal decision. Eric thought he had shown McCloy and his wife, Ellen, that it was dangerous to impute guilt to all Germans and that even prominent Jews could advocate forgiveness toward Germany. It was a view that would make Eric controversial in the Jewish community. In a letter to McCloy decades later, Eric recalled, “When you came to Germany as High Commissioner, you and Ellen, after those dreadful years of the Nazi rule, the Holocaust, soon found out that there was also another Germany, the brave forces of the internal German resistance, many of whom had given their lives in the fight against the tyranny.”38

  By the late 1940s, Eric’s German identity was again welling up from the depths. He was reverting to an older and wiser version of the debonair young man he had been before the Third Reich, the Holocaust, and the world war. The more he visited Germany, the more time seemed to rub away the superficial American persona, revealing underneath the youth who had so admired the German military and aristocracy. He was moving forward, as it were, into the past.

  ——

  Jimmy Warburg. (Warburg family, Hamburg)

  CHAPTER 40

  ––

  Itinerant Preacher

  Jimmy Warburg didn’t have to deal with the apocalyptic upheavals experienced by his cousins Eric and Siegmund, but he had suffered his own political exile. Having started out in the upper reaches of Washington and Wall Street, he had operated in the world of the possible and doable. He tried on careers the way other men tried on suits, but succeeded too quickly and then blundered badly. He lacked patience for the sordid compromises of politics. Too headstrong and mercurial to fit into any establishment, he described himself to a friend as “one whose function in life seems to be to swim upstream against the currents of prevailing prejudice and opinion.”1

  In the postwar years, a messianic streak surfaced in Jimmy as he shifted into a fringe political world. Reversing the customary course of things, with age he became a liberal dreamer who advocated idealistic causes. In a rite of self-purification, he cut himself off from the banking world and resigned from corporate boards. He stayed on the Polaroid board, however, making a mint from Edwin H. Land’s invention of instant photography for black-and-white and then for color film. Jimmy said his role at Polaroid was to shoot down the more impractical ideas that streamed from Land’s fertile mind.

  Freed from financial worry by Polaroid and several other shrewd investments, Jimmy could indulge his preferred maverick role of producing unsparing, irreverent opinions that would provoke and even scandalize Washington. He became a freelance crusader, a wandering troubadour of Democratic liberalism, an “itinerant preacher” of a new foreign policy, as he told Adlai Stevenson.2 When Jimmy won the Gandhi Peace Prize in 1962, Stevenson would hail him as a “public citizen extraordinary” who worked “in the great tradition of the 18th-century pamphleteers.…”3 Jimmy published reams of policy tracts, set a record by publishing more than fifty letters in The New York Times after 1949, spoke at rallies, organized protests, and testified at congressional hearings. By the end, he would publish more than thirty books, as if he were a solo movement, a one-man ministry of state. For the World Federalists, he crisscrossed America, preaching free trade and nuclear disarmament enforced by a global police. For Jimmy, who no longer had to answer to anybody, it was an ideal life.

  He seemed perennially out of step with his time. First ostracized by Wall Street for his New Deal flirtation, he was then ostracized by the New Deal for reverting to Wall Street dogma. Now his liberal side emerged just as America slid into the somnolent conservatism of the late 1940s and 1950s. As a dissident and gadfly, he kept an uneasy relationship with friends who still prowled the halls of power. Clinging to the manners of the Washington insider, Jimmy wanted to have it both ways—to issue controversial opinions yet socialize with the mighty. He had a suave, insouciant way of pressing ideas upon friends such as Dean Acheson, but they backed off from him as too combative and independent and felt threatened by his alarmist, often messianic views.

  Jimmy was estranged from most Warburgs and regarded the Friedaflix clan as particularly shallow. His tensely competitive relationship with sister Bettina worsened when Jimmy saddled her with responsibility for Nina, who often seemed depressed in her last years. The wartime absences took a toll on Jimmy’s childless
marriage to the independent-minded Phyllis Baldwin. For twelve years, she had cared for his children, but she wanted to be more than Mrs. James P. Warburg. When the marriage ended, Jimmy wondered whether he was too self-sufficient ever to be happily married.

  After two failed marriages and an explosively uneven career, Jimmy, fifty-two, tried to start afresh. In 1947, he was scouting about for a new secretary when his daughter, Kay, suggested a twenty-five-year-old friend named Joan Melber, who had graduated from Simmons College and worked for a radio commentator. In Joan, Jimmy found the sort of bottomless adoration only an admiring younger woman can bestow. In September 1948, they got married by a minister in Bronxville and spent part of their honeymoon at the first World Federalist conference in Luxembourg. With no Warburgs left in Hamburg, they skipped Germany, but visited Fritz and Anna Beata in Stockholm.

  Though twice Joan’s age, Jimmy didn’t think it fair to deprive her of children, and they had two sons and two daughters. Still trying to escape his past, Jimmy didn’t tell the new set of small children about the previous ones until it came out by accident—an extremely painful revelation for all concerned. The ever-censorious Bettina chided her brother for being an overly strict father, preoccupied with his sons. “It was he who set the standards for the children and constantly set them too high, making himself the ultimate authority, which they resented but could not openly oppose.”4 To mark a final break with his rambunctious early life, Jimmy moved full-time to Connecticut around 1950. He turned the town house on East Seventieth Street, which had witnessed the glamorous Gershwin parties, into a small apartment house, keeping the top floor as his pied-à-terre. He was finally an authentic family man.

  —

  Even as he parted company with other Warburgs, Jimmy evinced a very Warburgian concern for Germany. Toward the end of the war, he issued a scathing critique of the Morgenthau Plan and opposed the partition of Germany, its surrender of eastern territory, or anything that suggested a victor’s peace. Soon after the war, he spent three months in the occupation zones, writing a series of articles for the Chicago Sun syndicate. At the time, civilians couldn’t travel in Germany, and Jimmy enlisted the aid of John J. McCloy and Dean Acheson, who favored the project. The series established him as a leading voice on Germany and when he returned Edward R. Murrow telephoned and invited him to do a half-hour CBS radio broadcast on the subject.

  In Germany, Jimmy was shocked by the economic devastation. “Everywhere, the people had a gray, haunted look. Most were living on a near-starvation diet.”5 He was appalled by the general evasion of responsibility for Hitler and found virtually no acknowledgment of guilt. “The Germans were sorry for themselves and seemed to feel that they had been in no way responsible for what the Nazi regime had done.”6 People kept telling Jimmy, “But I was only a little man. What could I do?”7 The Germans cast themselves as innocent victims, dwelling on Allied raids against them instead of their bombing of London, Coventry, Rotterdam, and Warsaw. In a 1946 study by the U.S. Military Government in Germany, more than a third of Germans polled still styled themselves a superior race and thought Hitler’s treatment of the Jews justified.8 A few years later, Jimmy was thunderstruck when Adenauer confessed to the Bundestag that 134 of 383 employees in his Foreign Ministry had formerly belonged to the Nazi party.9

  While alert to persisting Nazi tendencies, Jimmy also produced a balanced analysis of German society at a time when objectivity was still extremely difficult. Like Siegmund and Eric, he deplored any wholesale condemnation of Germans. “Is it correct to say that militarism, brutality, and aggression flow in the bloodstream of a German ‘race’?” For Jimmy, such racial theorizing smacked of Hitlerism. He thought hate and authoritarianism latent in all political cultures. In Germany they had been fed by an exaggerated nationalism and unquestioning obedience to authority. He shared Eric’s view that Germans should judge themselves and that the occupation should be brief. Yet he also wanted to see large numbers of Nazis, SS, and Gestapo members rounded up and prosecuted as war criminals and was irate at the squalid political compromise entailed in pardoning high-ranking Nazis.

  As often in the past, Jimmy ended up frustrated in his prescriptions for postwar Germany. In October 1949, the Soviets created the German Democratic Republic and the next year President Harry S Truman called for rearming West Germany and incorporating it into NATO. Jimmy managed to work out a position on Germany that infuriated just about everybody. He angered some by supporting a reunified Germany and others by arguing that Germany should remain neutral and unarmed instead of being drawn into NATO. He won Einstein’s support for a neutral, demilitarized Germany. Where Jimmy had hoped that his birthplace would be purged of evil elements and provide a laboratory for social change, he saw his fond dreams falling victim to anti-Communist hysteria in America, as cold war imperatives superseded justice. As he told Milton Eisenhower, “I have been a persistent and outspoken, though rather lonely critic of a policy which has led … to the dangerous business of making a wholly unregenerate and unreliable West Germany the keystone in the arch of Western defense.”10

  Throughout the 1950s, Jimmy remained a lonely soldier of lost causes as he proselytized for an alternative foreign policy. He was outraged by the cold war zealotry that led to witch-hunting campaigns against his friend Joseph Barnes and others. Starting with the 1952 presidential campaign, Jimmy was a foreign-policy adviser and speech writer to Adlai Stevenson. He kept trying to get Stevenson to attack cold war shibboleths and the bipartisan foreign-policy consensus of the 1950s. Though Stevenson admired Jimmy and enjoyed his comic rhymed couplets, he generally ducked his controversial advice and focused on domestic issues. By 1954, Jimmy was suffering from a heart condition and angina and gave up tennis and other strenuous activities, although he worked for Stevenson again in the 1956 campaign. As he cranked out endless books and position papers and issued his urgent appeals to reason, he remained peripheral to the real political action of the decade. Jimmy had ended up the way he was destined to: as a king without a court.

  —

  Unlike Jimmy, Eric thought a neutral Germany would simply invite Soviet domination of the country. The antithesis of his cousin, Eric was a consummate insider, who enjoyed attending meetings of the Council on Foreign Relations and other elite organizations. In the early 1950s, he remained an Air Force Intelligence Reserve officer, lecturing at the CIA and training a future generation of interrogators.

  Despite his fears of Soviet intentions, Eric increasingly leaned to going back to Hamburg. In 1951, he competed with Siegmund for a Kuhn, Loeb partnership and lost out. Aside from Siegmund’s superior talents, Kuhn, Loeb preferred his British connections to Eric’s German ones. Because he was so close to the second-richest partner, Freddy Warburg, Eric was crestfallen that he had still lost out in the competition. The setback made him face squarely the lackluster performance of E. M. Warburg & Co. and he turned his attention more to Hamburg. Starting in 1952, Eric and Dorothea began spending summers at Kösterberg with their three children.

  Outwardly respectful to Brinckmann—Eric called him Senior—Siegmund and Eric saw a new vanity emerging in the former office manager. In June 1950, with Warburg help, Brinckmann was named to the management advisory board of the Bank for International Settlements. Suddenly fancying himself a financial statesman, Brinckmann enjoyed strutting about at international monetary conferences and he traveled so much that Eric, behind his back, dubbed him John Foster Brinckmann. Brinckmann discovered a new sense of self-importance, as his identity became entangled with the Brinckmann, Wirtz name.

  As Eric began spending part of the year in Germany, Siegmund warned him against sharing a partnership with the autocratic Brinckmann, whose one-quarter stake matched that of the combined Warburg group. Siegmund no longer saw Brinckmann as a brave anti-Nazi, but as a pompous, vain, pigheaded man. As he told Eric, “During the last few years, I’ve found Brinckmann extraordinarily arrogant and egotistical, but during my last discussion in Hamburg I found that his
arrogance and his egotism had gradually reached a point where they are scarcely bearable any longer.”11 Since Brinckmann knew Eric would shrink from working in a bank named Brinckmann, Wirtz, the issue of Eric’s return elevated the touchy name question to the top of the agenda.

  Eric indeed felt demeaned working in a bank that still had the Aryanized name. No less romantic than Siegmund, Eric would convert restoration of the M. M. Warburg name into a sacred crusade. As the Warburgs began to challenge the legitimacy of the Aryanized name, Brinckmann must have felt rudely cheated of his miraculous gift. In the rubble of 1945, Eric had turned down his offer to return the bank. Now, with the German economic miracle under way, Eric was back on his doorstep. Brinckmann decided that an ethical statute of limitations had elapsed, that he now had a fair moral claim to the business, a view upheld by several shareholders, who insisted that Brinckmann oppose any further concessions to the Warburgs.12 He was spared the need to wage the battle alone when his new partner, Hermann Schilling, developed a fanatical opposition to Eric’s return. This allowed Brinckmann to pose as the Warburg savior, a statesman above the hurly-burly, while Schilling did the dirty work.

  More than Siegmund, Eric dreaded unpleasantness. Both in business and society, he excelled in persuasion, not confrontation. To win over Schilling, he drew up a memo, outlining his position. Then he went to discuss it in a friendly manner with Schilling, who was vacationing in Bad Kissingen. During their talk, Eric noted that Hermann Abs was settling the German foreign debt in London, which would set the stage for an economic rebound. It seemed a fitting moment to restore the M. M. Warburg name, Eric said. Expressing no sharp dissent, Schilling asked for time to reflect upon the memo.