The Warburgs

by Ron Chernow

  What Schilling did next scandalized Eric. Without informing Eric or Brinckmann, he took the memo and convened a secret meeting of the bank’s shareholders—at least, those upset by Eric’s prospective return. On October 20, 1952, this rump group circulated, sub rosa, a manifesto that reached Eric in a roundabout manner. The document must have reawakened Eric’s every unspoken anxiety about latent anti-Semitism in Germany. It stated bluntly that in earlier years, when the shareholders wanted the Warburg name, the Warburgs had refused. Now, it continued, “it seems quite doubtful whether the old name still represents ‘goodwill’ and the Warburg family therefore must expect that their business associates won’t make further sacrifices.”13 Suddenly, the Brinckmann name was a sterling asset, the Warburg name a dreadful liability. “Today, the bank, under its current name, has achieved worldwide prestige through the tireless efforts of its partners.”14

  What made this memo so offensive was its palpably anti-Semitic flavor. At moments, it had the gloating, sniggering tone of the most vicious Der Stürmer diatribes. “For the limited partners, the achievements to date have already meant a considerable sacrifice—unlike for the Warburg family—in terms of the heavy damage to their wealth that they have already suffered during the war and its aftermath.”15 When he read this, Eric told Brinckmann, in horror, that the author apparently didn’t know that the Nazis had stolen the Warburg money and that they had no wealth left to suffer wartime damages. He caught the nauseating whiff of Nazism. Referring to the phrase “unlike for the Warburg family,” he said that the author “apparently believes that he either still lives in the Third Reich, where such a comment seemed necessary and appropriate, or else he still has such an attitude today.”16 Having recently arranged a very large line of credit for Brinckmann, Wirtz with N. M. Rothschild in London, Eric keenly felt the ingratitude of this mutiny.

  Brinckmann maintained innocence of the secret meeting and said that he personally favored restoring the name—but of course, he added helplessly, his hands were tied. Had he covertly instigated Schilling and his cabal? Siegmund and Spiegelberg thought Brinckmann played a mischievous game, while Eric and Fritz reserved their anger for Schilling and tended to exonerate “Rio.” As Eric told Fritz, “as to loyalty, good will, and a feeling for tradition, in spite of all the failings familiar to us, there can be no doubt about Rio.”17 Brinckmann reminded Eric that he had offered to restore the name in 1945, but that Max had found the moment inauspicious.18 Brinckmann also warned that if he ever left the bank, it would be lost to the Warburgs forever.19 In this way, Brinckmann kept suggesting that he was saving the Warburgs from a more ignominious fate.

  The October 20, 1952, revolt was the opening shot of a protracted battle between the Warburgs and the shareholders from the “friendly” 1938 Aryanization. It would look a lot less friendly in retrospect as things began to get bloody. Fritz despised Schilling, whom he thought ignorant of the firm’s venerable history. Schilling warned Fritz that if he were forced out of the firm, it would cost several million marks.20 Having thus far refrained from legal pressure, Eric had a lawyer explore measures to force restoration of the old name.21 Taking off the kid gloves, in turn, Schilling told this lawyer that unless Eric left Hamburg right away, he would summon a shareholders’ meeting, precipitate a break with the Warburgs, and buy them out.22 Doubtless enjoying this circus, Brinckmann threw up his hands with Eric, saying he had tried, in vain, to reason with Schilling.23 Schilling kept saying he wouldn’t resign or let Eric back into the firm.24 He grew so venomous that the Warburgs wondered whether Eric, even in victory, could ever share the same office with this foe. The revolt scuttled a tentative agreement to restore the M. M. Warburg name.

  Brinckmann also squabbled with Schilling, whom he used to block the Warburgs, while using the Warburgs to block Schilling. In this mad, surreal fracas of warring personalities, Brinckmann wouldn’t let the Warburgs speak directly to the bank’s shareholders, portraying the latter “as the black men, while in reality he himself was the most petty of them all,” Ernst Spiegelberg noted. “And now his true nature and the loyalty he wears for show toward the Warburgs is of the greatest help to him in his previously launched battle against Schilling.”25 Meanwhile, Spiegelberg thought Brinckmann, who had two sons, was hatching plans to erect his own banking dynasty on the ruins of the Warburg fortune.26

  Schilling’s wrath and Brinckmann’s guile encouraged Eric to invite Siegmund deeper into the melee. It would be another instance of Eric inviting Siegmund into a situation and then regretting it. Siegmund’s post-restitution stake in the Hamburg bank was small: 9 percent of the one-quarter Warburg share versus 56 percent for Eric and Max’s estate and 25 percent for Fritz. Nonetheless, Siegmund would henceforth play a role out of proportion to his investment. Eric revered his cousin’s ability. He needed the tactical genius of Siegmund, who was a match for the toughest and craftiest adversary. While Eric was often indecisive, Siegmund had the settled convictions that could sustain him through long, rough battles. When it came to Warburg family honor, Eric and Siegmund were of a piece. Later on, Time magazine contrasted the two but noted their common desire: to “restore all the past glory to a many-faceted clan.…”27 After the humiliating October 20 revolt, Siegmund displayed genuine compassion for his embattled Mittelweg relatives. “These last few weeks must have been absolute hell, particularly for you and Eric,” he wrote to Fritz.28

  The problem with tapping Siegmund’s talents was that it encouraged his designs on the Hamburg firm. However often he categorically denied any wish to take over Brinckmann, Wirtz, Eric never trusted him. Even as they fought Brinckmann and Schilling, Eric never knew whether Siegmund was helping him or manipulating him as a cat’s-paw. If he and Siegmund pushed Brinckmann aside, would Siegmund then push him aside? Siegmund’s associates today confess that Siegmund indeed saw Brinckmann, Wirtz as a superb potential vehicle for his reentry into Germany—that Eric wasn’t just paranoid. As one S. G. Warburg & Co. executive admitted, “If Siegmund and Eric had succeeded, Hamburg would have become effectively a subsidiary of London. The ‘child’ firm would have become father to the father.” Eric and Siegmund might scorn each other, but in the last analysis they needed each other and didn’t hesitate to use each other. Their alliance would exacerbate tensions in their relationship. Siegmund would feel that Eric hadn’t acted with sufficient courage and decision, while Eric would feel that he had merely functioned as a tool in the hands of his overbearing cousin.

  Adding another layer of complexity to this psychodrama was the fact that Siegmund trusted Schilling, while Eric trusted Brinckmann. The Warburgs warned Schilling that he shouldn’t try to drive a wedge between them.29 A disgusted Fritz thought the Warburgs should just sell out and walk away.30 But the whole affair had now become a question of principle, something far beyond legal wrangling or commercial calculation. It came down to the effrontery of two people, Brinckmann and Schilling, who dared to elevate their real but short-lived achievements above the 150-year efforts of the Warburg family.

  The fatal blow to the Warburg group was a sudden feud that erupted between Eric and Siegmund. In June 1953, Siegmund met with Schilling to mediate his dispute with Eric. Eric expected Siegmund to read the riot act to Schilling, to probe his Third Reich behavior and demand justice for the Warburgs. Instead, Siegmund came away with a positive impression of Schilling and blamed the duplicitous Brinckmann.31 Eric felt deeply betrayed by Siegmund’s kid-glove approach. In a rage, he questioned Siegmund’s motives in not abiding by their agreement. Siegmund, in turn, became angry and said he was only involved, not from any personal agenda, but from family sentiment. Siegmund always made much of the fact that Eric dealt too gingerly with the Hamburg situation, yet it was Eric in 1953 who favored a confrontational approach, while Siegmund urged tactical patience.

  Had Siegmund acted in good faith or sabotaged a situation that would have put Eric back in control? We’ll never know. What is certain is that Siegmund now refused to exercise the option, say
ing he no longer fit into the Warburg group and asking to withdraw from all matters related to Brinckmann, Wirtz & Co.32 Disgusted by the whole rowdy spectacle, Fritz decided against exercising the option. And Eric lacked the money to do so alone. So the Warburgs let the 1953 deadline elapse without exercising their option to boost their stake to 50 percent, which would have ended the marathon feud. By squandering this opportunity, the Warburgs also strengthened Brinckmann, who could now savor their lack of internal cohesion.

  —

  As the German economy thrived, the Hamburg bank posted impressive profits. Visiting Germany in early 1954, Siegmund wondered at the “monstrous industriousness of the people,” the tonic effect of low wages and tax incentives. Hugely attracted to the aggressive Deutsche Bank, he noted nonetheless that German businessmen automatically assumed he was allied with Brinckmann, Wirtz. So he couldn’t drop a proprietary regard for the Hamburg bank.

  Everywhere Siegmund heard that Schilling was the proficient, hard-working partner, while the vainglorious Brinckmann gallivanted about the world, neglecting business.33 He kept warning Eric that instead of being fooled by Brinckmann’s “sentimental words,” they should hitch their fortunes to Schilling. Early on, Siegmund spotted Brinckmann’s dynastic ambitions, noting that he wanted a partnership for his son Christian as a precondition for naming any additional partners.34 Repeatedly warning him against Rio’s obstinacy, Siegmund advised Eric against moving back to Hamburg and said it was easier to take the fortress from without than within.35 The final member of the Warburg group, Ernst Spiegelberg, also warned Eric that he could never be happy working with Brinckmann in a place called Brinckmann, Wirtz & Co.36

  Despite all these valid reservations, Eric yearned to return to Hamburg. His Wall Street business was sluggish while Hamburg was active. In 1954 he told Brinckmann that he was willing to move back and become a full-time resident partner. But so long as Schilling remained, Eric couldn’t implement his plan. Then, in September 1956, something unexpected happened: Schilling, weary of the long tussle with Brinckmann and Eric, decided to quit. So on October 1, 1956, Eric became a full-time partner in a firm still bearing the odious Brinckmann, Wirtz name. Brinckmann, shameless, told Eric that he should be grateful to be accepted back into the firm as a partner.37 It is unclear whether Eric realized that Brinckmann despised him as both a person and banker.38

  After his tiny Wall Street office, Eric felt at home again at the Ferdinandstrasse bank, with its mahogany wainscoting and brass doorknobs. He arrived early, worked late, and won back many old clients. He performed many acts of homage. Hanging family portraits and engravings on the walls, he wrote explanatory legends beneath each one. Nothing pleased him more than to give visitors historic tours of the bank and he became the repository of Warburg lore and legend. The marble stairwell at the entrance had a plaque listing employees who died in World War I. Eric was the sole employee to have fought on the Allied side in World War II. Soon after returning, he put up a plaque listing the six Jewish employees and one Resistance fighter murdered by the Nazis, as well as people who had died in prison camps or in air raids on Hamburg. There would be no tablet commemorating those employees who died as German soldiers.

  From the outset, Eric suggested that the firm be renamed “Brinckmann, Warburg & Co.” or “Warburg, Brinckmann & Co.” In his glowering, moody style, Brinckmann bristled every time Eric broached the subject, saying the topic should be postponed to an appropriate moment. The bank, he claimed, would lose enough customers with Schilling’s departure and couldn’t risk a name change as well. Then he cited a possible loss of Arab business if the Jewish name were restored.39 Then he said that the time for the name change had passed, that it should have been done within six to eight years after the war, if at all.40

  After balking, Brinckmann accepted a third partner, Dr. Friedrich Priess, a former judge. Because of Brinckmann’s intransigence on the name issue, Eric brought Siegmund onto the Finance Committee in late 1957. The Warburgs even sent Kurt Hahn to confront Brinckmann in a blistering 1959 exchange. (It was Eric who had brought Hahn back to the Salem school after the war.) Hahn said he had heard “ugly talk” to the effect that Brinckmann refused to restore the Warburg name because of “latent fear” of the Nazis. Of course, Hahn added quickly, he himself didn’t believe such slanderous talk, but that was the rumor. Brinckmann exploded at the insinuation, conveniently blaming Schilling for opposition to Eric and repeating how he himself had brought the bank its postwar renown. Proposing that the name become M. M. Warburg, Brinckmann & Co., Hahn confided to Brinckmann, “Eric Warburg has lost caste by entering the firm before this debt of honour had been paid.”42 When Brinckmann contended that other shareholders would never accept the name change, Hahn said that Brinckmann could have his way in the matter.43

  In returning to Hamburg, Eric had to deal with the shocked incredulity of his own family. To many of them, it seemed he had failed to learn the historic lesson about the folly of German-Jewish assimilation. The American War-burgs were especially horrified by this apparent sacrilege. As for the German-born Warburgs, some thought Eric returned too soon, while others were stunned that he returned at all. Some Jewish Angst was absent in Eric. A pragmatic man, he didn’t see Germany as a haunted place full of sinister memories. Although he had seen many atrocities up close, he didn’t succumb to the paralyzing horror that understandably afflicted other Jews. Nor did Siegmund, for that matter.

  It is striking that the Warburg men were far more willing to make peace with postwar Germany than were the women. In part, a businessman’s practicality came into play. The men wanted to do business with postwar Germany and found it expedient to forgive, if not to forget. Siegmund and Eric also had the advantage of having dealt with many industrialists in the 1930s who weren’t Nazis. They found it hard to demonize Germans as a whole or believe in some irremediable taint in their culture. Because he had military and aristocratic friends who had worked in the Resistance, Eric could find a circle of people who were socially congenial and politically clean. For Eric—unlike for most Jews—there was another Germany to which he could return.

  Whether from guilt or genuine conviction, Eric exalted his return into a larger statement of German-Jewish reconciliation. “After the Holocaust, it seemed more important than ever that Jewish people should return, even if only a few, to Central Europe, considering that it was here they had truly contributed greatly in cultural, scientific and in commercial fields.”44 He didn’t feel that the Jews could write off an entire nation. A traditional man, he had never relinquished his past. A 1955 New Yorker article described him conducting “an investment-banking business downtown in a hive of family portraits and early prints of the town of Warburg.”45 For all his equanimity, exile in New York must have been bruising to Eric’s pride. How could one be heir to a noble tradition and rely upon family largess? The Warburg name might be honored in Hamburg, but it carried little weight on Wall Street in the early postwar years.

  When Eric decided to return to Hamburg, Dorothea was confused and perplexed. They had created a bilingual, bicultural home and had even hired a German governess to teach the children German folk songs. But after the Kösterberg summers, they had always returned to the protective air of Woodlands. For Dorothea, the Nazi terror was indelibly engraved upon her memory. She had seen that people, once given license to kill, turn it into a blood sport. She could never again share Eric’s easy trust in people. When he presented his decision as a fait accompli he didn’t know whether Dorothea and the children would join him. She didn’t want to take the three children from school and transplant them to Hamburg. Marie was then thirteen, Max twelve, and Erica eight. So at first, Eric lived alone at Kösterberg and spent summers there with his family, winter vacations with them in America, and he saw them at other times of the year.46 Between 1956 and 1960, Eric spent about six or seven months per year in Hamburg.

  After Frieda’s death in 1958, her children donated Hunt Cottage and Woodlands to the White Plains Boa
rd of Education while the Warburgs built a new house in New Canaan, Connecticut. Eric still wasn’t sure he wanted his children to go to school in Germany and wondered whether he would best Brinckmann in their contest. Dorothea, likewise, didn’t know if Eric’s move was permanent. In the end, their family life hinged upon Dorothea’s willingness to follow Eric. In 1960, in a tremendous act of self-sacrifice, Dorothea swallowed her fears and took her family to a Germany still visibly scarred by the war.

  After the rich, sleepy America of the 1950s, it was hard for the children to adapt. As small children, they had first visited Germany in 1952 when milk was still delivered in aluminum containers by horse and carriage and Hamburg was strewn with weeds and rubble. “I remember riding the bus or the train and seeing many invalids or people with badly burned and disfigured faces,” said Eric’s eldest daughter, Marie.47 While Eric exposed the children to members of the German Resistance, they realized these were exceptional cases. As Marie said, “it was unquestionably difficult to actually begin to consider Germany our new home, and to live in a society in which most adults over the age of forty had either been active supporters of National Socialism or at best followers.”48

  School was a great adjustment for the children, especially for the freewheeling, rebellious Max, who grew homesick for the more relaxed atmosphere of American schools. He disliked the military academy style of Salem under Kurt Hahn and was transferred to Louisenlund in Schleswig. After taking religious training in Bremen, he was bar mitzvahed in Hamburg—the first Warburg boy to have done this in thirty years.

  In their high school history classes, the children had to deal with the wide spectrum of postwar German responses to the Third Reich. Marie’s history teacher engaged in candid soul-searching and showed the class a film on the Holocaust. On the other hand, Max’s teacher was so afraid to venture anywhere near the 1930s that he safely ended his course with Bismarck. Eric’s infectious optimism helped to carry the family through many rough patches.