The Orpheus Clock

by Simon Goodman

  Banking, like most businesses of the day, was taught on the job, and it was thought best for a young man to prove his mettle and aptitude removed from the father’s protective care. Therefore, Eugen began his banking career as an apprentice to a different private bank, Günther & Palmié, in Dresden. Next, so he could experience the commodity market firsthand, Eugen briefly worked in Budapest for Hungary’s largest lumber concern; but he soon returned to Dresden and to the family bank. Jewish banking families routinely traded sons for apprenticeships and, just as routinely, daughters for marriage. This practice of double endogamy—intermarriage among Jewish banking families—would create endlessly complicated interlocking family relationships and would later provide fodder for accusations of “conspiracy” against Jewish bankers.

  The Bankhaus Bernhard Gutmann, dominated by Eugen’s father, had become a prosperous concern, but it was far too restrictive, too conservative a stage for Eugen. At the same time, Germany was emerging as a powerful industrial nation. Energetic, ambitious, and in a hurry, Eugen had bigger plans, plans that revolved around his friendship with another, even more prominent Dresden banking family, the von Kaskels, who lived just down the street from the Gutmanns on the Bürgerwiese.

  The Kaskels had been among the original “court Jews” brought back to Dresden by Frederick Augustus I in the eighteenth century. The family later formed the private Bankhaus Kaskel and served as official bankers to the royal court. Unfortunately for the Kaskel Bank, but fortunately for my great-grandfather Eugen, Carl von Kaskel had only one son, Felix, who apparently was far more interested in music than running a bank. With Carl getting on in years, the Bankhaus Kaskel faced a dilemma. At the same time, Germany, now finally united as a modern nation-state after its victory over France in 1871, was awash in new capital looking for investment in more railways, factories, shipping, mining—and more banks. For Eugen, who was already a minority stockholder in Bankhaus Kaskel, it was a perfect alignment of opportunities.

  In 1872 Eugen put together a deal with the Kaskels and some of the other great banking families—among them were the Rothschilds of Frankfurt, the Bleichröders of Berlin, and the Oppenheims of Cologne—to create a public joint-stock corporation called the Dresdner Bank (Bank of Dresden). The bank opened its doors in the old Bankhaus Kaskel building in Dresden with thirty employees and an initial capitalization of 24 million marks. As Chairman of the Board of Directors, Felix von Kaskel was the titular head of the bank, but Eugen, then only thirty-two years old, was the driving force as the Dresdner Bank’s managing director. In 1873, less than a year later, it went public on the Berlin Stock Exchange and traded for nearly 110 percent of its initial value. Eugen became Chairman and would hold that position for almost the next half century. A famous financier of the day was quoted as saying, “Gutmann was not just the head of the Dresdner Bank; he was the Dresdner Bank.”

  Meanwhile, the Bankhaus Bernhard Gutmann continued as a successful private bank, under Eugen’s brother Alfred, until 1921. After Alfred became ill the bank was officially absorbed into the Dresdner.

  Over the next decade, Eugen launched a breathtaking series of mergers and acquisitions of smaller private banks and financial institutions. He helped pioneer the concepts of branch banking, opening smaller branches of the Dresdner in cities and towns throughout Germany. He also established individual deposit banking, allowing even the most humble of wage earners to open interest-bearing bank savings accounts—at the time a bold, even radical, innovation. Eugen famously maintained that “every civil servant, even every maid, should have a deposit account,” preferably, of course, with the Dresdner. Eventually, millions of Germans from all walks of life would do just that. But perhaps Eugen’s most farsighted business decision came in the early 1880s when he decided to make Berlin the headquarters of the Dresdner Bank.

  Before German unification, Berlin had been an elegant but somewhat isolated city of about four hundred thousand people, the administrative capital of the Kingdom of Prussia, but a poor relation to the great, glittering European capitals of Paris, Vienna, and London. After unification, as the capital of the new German Reich, Berlin experienced the same rapid expansion that swept across almost all of Germany. By 1880, its population had soared to over a million, and it had become the undisputed political and financial center of the new German empire. Just as the Bankhaus Bernhard Gutmann had been too small a stage for Eugen, now Dresden—a beautiful and culturally vibrant city, to be sure, but still only a provincial capital—was too small a stage for Eugen’s ambitions. Berlin was the key.

  In 1881 Eugen opened a branch office of the Dresdner in Berlin and a few years later moved the bank’s corporate headquarters to the new capital city. Obviously, a powerful bank must have a powerful and imposing headquarters, and here, too, Eugen thought in grand terms. The headquarters building had originally belonged to the family of Bismarck, whom he admired so greatly. Many even said that Eugen resembled the “Iron Chancellor.” In 1887 Eugen commissioned a richly decorated, three-story neoclassical renovation of the building, on the square known as the Opernplatz, conveniently close to the Opera House. Along with other flourishes, the building featured ornate marble columns, mosaic terrazzo floors, and coffered ceilings embellished with roses. Chancellor Bismarck and Kaiser Wilhelm II were among the many distinguished guests at the building’s grand reopening in 1889.

  The Dresdner Bank, new Berlin headquarters, in 1884.

  The building functioned as both a testament to the prominence of its occupant as well as a working financial institution. Eugen’s office on the director’s floor looked out over a massive “banking hall” with a thirty-foot-high glass ceiling, where ordinary Berliners—every civil servant and maid—lined up to entrust their money to the good offices of the Dresdner. The downstairs vault area also featured a “jewel room,” where the haute bourgeoisie would store their valuables. Eventually, the Dresdner Bank building covered an entire city block.

  Perversely, after World War II the building was used as the district headquarters of the East German Communist Party, which in good proletarian fashion covered the terrazzo floors with honest workers’ linoleum and painted over the beautiful marble columns in drab Stalinist gray.

  Today the building is the rather fancy Hotel de Rome. Not much remains from the original. The mosaics from the floor of the great banking hall were refurbished into what is now a ballroom. The director’s room upstairs is now the dining room, and the vaults downstairs have been converted into a spa and sauna rooms. While my wife and I enjoyed coffee and cakes on a sunny morning, in 2007, I was still able to visualize my great-grandfather sitting at his impressive command post, directing an aggressive expansion of the Dresdner.

  Eugen first opened branch offices across Germany and then, in 1895, the first office abroad in London—an event that would later have a profound effect on my own destiny. Eventually, the Dresdner would directly employ several thousand people, while indirectly controlling the lives and fortunes of millions more. In assets it had become the second-largest bank in Germany, behind only the Deutsche Bank.

  By 1900, the Dresdner would have the largest branch network in all of the Reich. Around this time and at the height of his power, Eugen had another portrait painted by the great German Jewish Impressionist, Max Liebermann. Many decades later the Liebermann portrait would be afforded a place of honor between portraits of Albert Einstein and Walther Rathenau in the postwar Jewish Museum in Berlin.

  One of the ultimate ironies in my family history is that the mighty Dresdner Bank became a major financier of the newly unified Germany and its astonishing rise as a military and industrial world power. It invested heavily in the railroad, oil, mining, pharmaceutical, and electrotechnical heavy industries that were transforming Germany into a world economic power. Krupp armaments, Bayer chemicals and pharmaceuticals, Thyssen steel and iron, Siemens electric—the Dresdner had a hand in financing expansion projects for all of them.

  The Dresdner’s major foreign interests
would ultimately include the Deutsche-Orient Bank, with offices in Istanbul, Cairo, and Casablanca, Victoria Falls Power Company in South Africa, Russian Union Electric in St. Petersburg, Mexican Electric Works Ltd., the German Asiatic Bank in Shanghai, the German South American Telegraph Company, and the Baghdad Railway Company—among many other powerful entities. In the United States, the Dresdner maintained a close working partnership with J. P. Morgan & Company. Additionally, Eugen served as a director on the boards of thirty-four major corporations, while his Dresdner surrogates served as board members of two hundred other companies.

  Although nominally a public corporation, Eugen ran the Dresdner more like a private bank, carefully packing the board with trustworthy friends and even some family members as directors, including his younger brother, Max. One high-level Dresdner employee later wrote, with a clear sense of exasperation, “Eugen Gutmann was full of plans, but the board only heard of them after the decisions were already made. One day he was interested in mining in South Africa, the next in large construction projects in Berlin. Everything depended on his personal whim.”

  Eugen’s management style was both vigorous and personal. He was known for peppering his people with exhortatory notes and letters, most often after the bank experienced some minor setback. “Especially in troubled times, you must keep your head up and pass the test of strength!” said one such note. “Fight on! Perhaps victory still clings to our heels!” said another.

  Eugen was also known as a patriarchal and benevolent employer who greeted his employees each morning by name; if he was sometimes quick to criticize, he was also quick to reward. One of those employees was Hjalmar Schacht, later infamous as economics minister for the Nazi government; he would eventually wind up in the dock at Nuremberg. Schacht recalled in his memoirs how Eugen had once slipped him a thousand-mark note (over $5,000 today) as a personal, unofficial bonus for concluding a profitable stock deal.

  A contemporary journalist described Eugen this way: “Gutmann had a personality that fascinated you right away, but he was also someone whose congeniality made people genuinely wish to engage with him. If nothing else, it was his physical appearance, his well-proportioned figure, his taut bearing in walking with his head held high, but also his wonderfully distinctive features, bearing an astounding similarity to those of Bismarck, and above all his kind blue eyes that made him stand out from all the rest.”

  Eugen could also be autocratic, dictatorial, and more than a bit ruthless in his business dealings, as evidenced by his role in the so-called Hibernia Affair, a now forgotten but then quite notorious 1904 financial scandal. It was a clash between private enterprise and the Prussian state, and much to the consternation of many of his peers, Eugen took the side of the state. By doing the government’s bidding, he had seen an opportunity to make a fortune. Berlin had decided it wanted to control a section of the coal industry. To avert an impending cartel, the Prussian cabinet had decided it should secretly nationalize the Hibernia Coal Mining Company.

  Discreetly, the minister of commerce asked Eugen to form a consortium to buy Hibernia. The minister assumed Eugen would include Bleichröder, Bismarck’s personal banker. However, Eugen started to buy up all the shares he could on his own, and the stock price rose quickly. Unfortunately rivals learned of this strategy and planned a successful defense. Ultimately Eugen’s ploy failed, along with the government’s attempt at nationalization. Apparently the Dresdner came out of the whole affair about even, but its good standing with the coal industry and the Ruhr was considerably set back. Outwardly unruffled, Eugen shrugged off the whole business with an “all’s fair in love and war” attitude.

  Politically, Eugen supported the National Liberal Party, which was not particularly liberal, but backed big business and the Grossbürger, or economic elite. Then, after World War I, at the beginning of the Weimar Republic, Eugen joined the Deutsche Volkspartei (German People’s Party) at the request of Gustav Stresemann, later Chancellor of Germany and a Nobel Peace Prize winner. Almost all the great Jewish bankers did the same, including Max Warburg.

  Henry Nathan, Eugen’s close confidant and later chairman of the Dresdner board, described him as “simple and modest” and “reluctant to make public appearances.” In a rare press interview, referring to himself haughtily in the first-person plural, Eugen said, “We don’t pretend to have opinions upon what does not directly concern us. Politics are the affair of the government.” This may have been a bit disingenuous; in a French interview Eugen went so far, with considerable vision, as to foretell a form of European union.

  Without a doubt, Eugen remained a man of considerable influence, part of a network of industrialists and bankers who worked hand in hand with the German state to further Germany’s interests as well as their own. They financed not only Germany’s industry, but also its growing and far-flung imperial interests in Africa, the Middle East, and South America. Like Eugen, many of these key players were of Jewish origin, including Carl Fürstenberg, the Arnholds, the Rathenaus, the Warburgs, and Albert Ballin, director of the Hamburg-America Line. They came to be known derogatorily as the Kaiserjuden, or the Kaiser’s Jews.

  Despite his own obvious ambivalence toward Jews, Wilhelm II, a vain and impetuous man, publicly treated these Jewish industrialists and financiers with respect, inviting them to sailing regattas, to stag parties at his hunting lodges, and, most important, to roundtable meetings for their economic advice. Unfortunately this kind of access to the monarch would invoke considerable suspicion among much of the population. Paradoxically, a generation later this service to the German empire by Jewish industrialists and financiers would count for nought in the fatherland, while in Britain and the United States it would be viewed with intense suspicion.

  Meanwhile, for Eugen’s services to the empire and despite his much-remarked-upon sense of personal modesty, he accumulated several awards and titles. In addition to being named a Privy Councillor to the Kaiser, he was also the recipient of the Order of the Red Eagle from the Prussian government, an honorary consul in Berlin for the Italian government, and among other things a Royal Commander of the Kingdom of Romania and a Knight Grand Cross of the Italian Crown.

  I think Eugen liked collecting these honors in the same way he collected gold boxes. However, when offered the title of baron by Bismarck and the Kaiser, he declined. Perhaps he felt he just didn’t need it. He was, after all, a modern man. According to the Annual of the Fortune and Income of Millionaires in Prussia—a sort of Forbes 500 of the day—Eugen was one of the wealthiest men in Germany.

  On the personal side, Eugen loved women and opera; he especially loved the combination of the two. I have no evidence concerning romantic encounters he pursued as a young banker in Dresden—Eugen was not a diarist, and no youthful love letters have been found—but I do know that one love affair was with an accomplished, albeit amateur, opera singer named Sophie Magnus. Family lore has it that he fell in love just hearing her voice as he passed a window. Sophie was my great-grandmother.

  For a family researcher, Sophie presents something of an enigma. A family legend—which my father believed until the day he died—claims Sophie was the daughter of an Edinburgh fur dealer named Hermann Magnus, but my research showed otherwise. Sophie, who was born in 1852, was indeed the daughter of a furrier, and he was named Magnus, but he was a Jewish wholesaler of furs in Leipzig and was originally from Hamburg, not Scotland. How this story began is a mystery. Perhaps it was because Hermann died young and his death left Sophie and her younger sisters dependent on the support of their wealthy cousins the Warburgs (the great banking family from Hamburg and Altona). This thrust Sophie into the role of surrogate mother to all her younger siblings—a role, I suspect, she did not relish. Her younger sisters resented her strictness, and this, no doubt, led to one of the feuds, I would discover, for which my family was famous.

  One of Sophie’s younger sisters, Alice, later married Max Warburg (who also turned down the title of baron). That distant, and then unknown
, family connection with the Warburgs resurfaced years later in the 1960s. Fresh out of high school and at my mother’s insistence, I reluctantly went for an interview at the London banking firm of S. G. Warburg & Co., only to be told by Sir Siegmund Warburg himself that, due to our family connections, hiring me might smack of “nepotism.” At the time I had no idea what he was talking about.

  Still, despite her family’s reduced fortunes, Sophie was able to study painting and opera, two appropriate subjects for young ladies of the day, and ones in which she excelled. The delicate watercolors I found among my father’s papers after his death were painted by her in a sure and obviously talented hand. She even studied voice at the Dresden Opera for a time with the famous soprano Marcella Sembrich. Sophie is described as a dark, imposing beauty—perhaps by modern standards a little plump—but a young woman of intelligence and refinement.

  Eugen and Sophie were married in 1872, just as the Dresdner Bank was getting started. With the increasing success of the bank, Eugen bought an impressive Renaissance-style villa on the Bürgerwiese in Dresden, just a short walk away from his parents’ home and right next door to the Palais Kaskel-Oppenheim. The following year Sophie quickly bore the first of their seven children, daughter Lili. She was followed by another daughter, Toinon, in 1876, and then, to Eugen’s relief, five sons in quick succession: Walther in 1877 (sadly, a sickly boy who would die young), Herbert in 1879, Kurt in 1883, Max in 1885, and in 1886 my grandfather Friedrich, known always as Fritz.

  Following the bank headquarters’ move to Berlin in 1884, the family had settled into a beautiful two-story villa at 10 Rauchstrasse in the Tiergarten quarter of Berlin, the most sought-after area among the emerging haute bourgeoisie.