The Warburgs

by Ron Chernow

  Though Paul gladly ceded client relations to Max and stayed behind the scenes, he wasn’t just a pliant, deferential subordinate, for his quiet intelligence commanded respect and Max listened attentively to his arguments. During their forty years of working together, Max treasured Paul as a pure, incorruptible, almost saintly, spirit. Of their early Hamburg days, Max said revealingly that Paul “always pushed me to the fore, not only without any envy, but pleased by every success that I had, even more than his own.”19 In a family with a boundless store of amour-propre, Paul conspicuously avoided all show of egotism.

  From the outset, Max and Paul had a perfect, complementary camaraderie. They functioned so harmoniously that Moritz complained they failed to consult him, but in the end, he was happily upstaged by his sons. Max said his father “took particular pleasure in driving with these two ponies in tandem.”20 By 1895, Moritz had such implicit faith in his magical boys that he began to bow out of the firm. Maintaining its strength in foreign exchange and commercial bills, Max and Paul now issued securities for Scandinavian countries as Germany evolved from a capital importer to a banker for other countries. In his ceaseless travels, Max strengthened Warburg links with two legendary bankers, Louis Fränkel of the Stockholms Handelsbank (later Svenska Handelsbanken) in Stockholm and Otto R. Henriques of Copenhagen, whose firm served the king of Denmark.

  Even as Max penetrated a broader political and business world than Moritz, he kept up his father’s standing in the Jewish community. Max wasn’t religious, but fully shared Moritz’s sense of noblesse oblige. What distinguished the Warburgs was that they were quick to embrace the future yet remained true to tradition—opposing impulses that created strains. They subsidized the Jewish community but floated somewhere in the ether above it, much as in their early days as “protected Jews.” It should be said that even as Bismarck enacted a wide range of social legislation in the 1880s, German Jews continued to maintain thousands of their own welfare agencies.

  Meanwhile, anti-Semitism’s potency was growing. In the 1890s, Hamburg newspapers sometimes told of meetings in dim, smoky basement halls at which strident, red-faced speakers decried “international Jewry” and called for stringent regulation of stock speculation or an end to Reichsbank dealings with private Jewish banks. In the Reichstag, too, the anti-Semitic bloc grew apace. Despite these menacing rumblings, German Jews felt secure in their position. They dismissed anti-Semitic agitators as a hysterical crackpot fringe and began to intermarry with Christians on a hitherto unimaginable scale. Jews began to identify more with German culture and less with their own religion. It was a measure of their confidence and success that they directed their philanthropy toward suffering Jews elsewhere. In 1891, for instance, Moritz participated in emergency efforts to end persecution against Russian Jews.

  That German Jews would ever require such charitable aid would have seemed inconceivable in those palmy days when they were the most prosperous European Jewish community and perhaps the foremost success story in Diaspora history. Recalling an 1893 trip to Germany as a teenager, Chaim Weizmann remembered “the assimilated Jews of Germany, then in the high summer of their illusory security and mightily proud of it.” Anti-Semitism existed but still in so subtle and shadowy a form that it could be easily overlooked. It seemed a confection of mad theories and ideological hocus-pocus. Benefiting from hindsight, Weizmann noted how anti-Semitism “was eating deep into Germany in those days, a heavy, solid, bookish anti-Semitism far more deadly, in the long run, than the mob anti-Semitism of Russian city hooligans and the cynical exploitation of it practiced by Russian politicians and prelates. It worked itself into the texture of the national consciousness.”21 But this latent nastiness was still obscured by the new and brilliant glow of German Jewish success.

  CHAPTER 4

  ––

  Tragicomic Brothers

  Endowed with surplus sons for the bank, Charlotte and Moritz steered their fourth son, Felix, elsewhere. It was hard enough for Théophilie to swallow Paul’s partnership; Felix would definitely have been de trop. So at sixteen, Felix went to learn the pearl and diamond business from grandfather Nathan Oppenheim in Frankfurt. Like Max, Felix was gay and affable, light-hearted and elegant, with bright, twinkling eyes. Also like Max, he was a mediocre student compared to Aby and Paul. He was free of the psychic shadows, the deep melancholy, that hung around other family members and had a lightness of soul, a buoyant spirit, that never deserted him.

  During his six years in Frankfurt as a junior partner at N. M. Oppenheim & Company, Felix refined the social talents that would distinguish his philanthropy. He admired his witty, outgoing grandfather and adopted him as a role model. At Nathan’s prompting, Felix studied French, Italian, and English and acquired a taste for painting and woodcuts. A ladies’ man, he took girlfriends on excursions in a snazzy dogcart. Later on, he recounted the dubious business wisdom he imbibed from Nathan Oppenheim. “To sell a man pearls that you have got and that he wants, that is not business,” Nathan said. “To sell a man pearls that you have not got and that he does not want, that is business.”1 On gem-buying trips, Nathan sat with arms tightly folded to foil pickpockets. In later years, at charity meetings, Felix would strike the same self-protective pose and would remain an expert on emeralds.

  Even by Warburg standards, Felix was unusually responsive to music. At age ten, he had helped to drag a cumbersome cart loaded high with musical instruments around the Baltic resort of Travemünde. “I was so proud that I was permitted to help push the dirty thing that I felt like Beethoven,” he said.2 He thrilled to symphonic music under von Bülow’s baton and gladly joined in as his class sang during walking tours of Hamburg. He played the violin, had a fine voice, and knew the scores of many operas, including Gilbert and Sullivan. Years later, he wistfully evoked his boyhood as a time when “Germany was beautiful and full of inspiration.”3 In Frankfurt, he associated with pupils at the conservatory. “It was there that I very frequently had the joy of listening and talking to Clara Schumann.… It was there that I met Brahms and it was in that neighborhood, for a good many weeks that I heard the daily practice of Rubenstein. It was there also that the gypsy songs—quartets—of Brahms came out first.”4 He puzzled over the romantic themes of Richard Wagner’s new Tristan und Isolde, even though the composer had written a few years before that, “I regard the Jewish race as the born enemy of pure humanity and everything that is noble in it.…”5 Even in later years, Felix could sing virtually every part in the Wagner repertoire.

  The blithe Felix seemed an unlikely candidate to bolster the Warburg fortune and shore up its banking connections. Yet by marrying Jacob Schiff’s daughter, Frieda, Felix provided the critical link with the opulent German-Jewish banking families of New York, a group celebrated in Stephen Birmingham’s book, Our Crowd. The term came from the German phrase “Unser Kreis” (literally, “Our Circle”) by which these families knowingly referred to each other.

  A Frankfurt native and an Orthodox Jew (although he belonged to the Reform branch of American Judaism), Jacob Schiff came from a family that had befriended the Rothschilds and that counted six centuries of scholars, rabbis, and businessmen. Schiff visited the Warburgs frequently while managing the Deutsche Bank’s Hamburg branch and once brought the boys a memorable toy fort. In 1873, Schiff accepted an invitation from Solomon Loeb to join the new banking house of Kuhn, Loeb in New York. Although he left Germany for good, Schiff never lost a thick, sometimes impenetrable German accent and a sentimental fondness for his homeland. In May 1875, Jacob Schiff married Therese Loeb, Solomon Loeb’s daughter from his first marriage. With blue eyes, a short, dainty figure, and doll-like features, the sweet, yielding Therese would be dominated by Jacob and relegated to the role of affectionate pussycat.

  ——

  A classic “Our Crowd” tableau, From left: Jacob Schiff, Felix Warburg, Solomon Loeb, and Frederick Warburg as a baby.

  (Courtesy of Phyllis R. Farley)

  Kuhn, Loeb emerged from a Cincin
nati dry-goods and clothing concern started by German-Jewish immigrants. Cincinnati was then home to a large, bustling German population, mostly from Bavaria or north Germany. Many had come to America after the 1848 revolutionary upheavals in Germany and were known as “Forty-Eighters,” though most had simply sought economic betterment. These largely Reform Jews tended to be antislavery and Republican in their politics. The Civil War was a boon to some, including Abraham Kuhn and his brother-in-law, Solomon Loeb, who made a fortune selling uniforms for Northern troops and opened their first New York store as an outlet for men’s trousers. The colorblind Solomon seemed strangely placed in the textile trade. In 1867, flush with their wartime profits, Kuhn and Loeb inaugurated a New York banking house. Suddenly, these Cincinnati peddlers were strolling about in top hats on Nassau Street in lower Manhattan.

  Stephen Birmingham has noted that wealth only deepened the mania for things German among these American success stories. “New York Jews began, in the 1870’s, to say to each other, ‘We are really more German than Jewish,’ and were convinced that nineteenth-century Germany embodied the finest flowering of the arts, sciences, and technology.”6 They spoke German at home, cherished German music, and savored in their gilded exile the German culture they had left behind. These New York bankers often summered at German spas and scouted Germany for suitable wives.

  The gentlemanly Jacob Schiff had the fierce, uncompromising energy of the self-made man and ventured into financial terrain then terra incognita for Jews: railroad financing. The most lucrative part of Wall Street, it was also the turf most jealously guarded by gentile banks. Despite Solomon Loeb’s extreme discomfort with such daring, Schiff refused to yield, and Therese was caught in the crossfire between her imperious husband and her circumspect father. By 1877, Kuhn, Loeb won the Chicago & Northwestern Railroad as a client and by the 1880s Schiff had pushed his father-in-law into retirement. Solomon still reported to the office, but more to keep up appearances than to exercise any authority. The palace coup was now complete. By 1881, Schiff added the giant and prestigious Pennsylvania Railroad to the client roster and M. M. Warburg began to market Kuhn, Loeb’s railroad securities in Germany.

  When Felix met Schiff in 1894, the latter was already a prince on Wall Street, bested only by the great J. Pierpont Morgan—a truly astonishing feat for a self-made Jewish immigrant. Schiff was on intimate terms with two railroad barons, James J. Hill of the Great Northern railroad and Edward H. Hantaan of the Illinois Central, and his masterful 1897 reorganization of the Union Pacific with Harriman would be a landmark financial operation. In time, Schiff’s clients would come to include Westinghouse Electric, Western Union, U.S. Rubber, and American Smelting and Refining.

  Who could conceive a sharper contrast than between Jacob Schiff and the young Felix Warburg? Schiff had a pointed, silver beard and blue eyes that could sparkle with amusement, but more often flashed with scorn or indignation. He knew how to harness every atom of his being to the task at hand. His life unfolding with clockwork precision, he used every instant profitably. Every morning, at exactly the same time, he inserted a flower in his buttonhole and strode smartly down Fifth Avenue in frock coat and top hat, short, spiffy, polished, his step nimble, his carriage erect, his passage so punctual that shopkeepers set their watch by him. On principle, he answered every letter on the day received. He had a little tablet listing the day’s tasks which he methodically went through until the slate was wiped clean. Exemplary in charity, he never squandered time on frivolous entertainments. The puritanical Schiff never smoked, played cards, or engaged in sports. A sworn foe of waste, he saved string from packages and donated old newspapers to hospitals and prisons. Schiff lived according to clear, sharp principles whose truth was always self-evident to him. Trying to banish all unruly emotion from his life, he offered himself as a shining model to American Jews. Deeply ethical, he donated 10 percent of his income to charity. Sometimes he seemed to have more compassion for suffering in the abstract than in his immediate surroundings and he could be coldly dogmatic with his family, often inspiring more fear than affection.

  Felix Warburg, in contrast, thrived on dances, parties, tennis, sailing, golf. He was the big Warburg spender, the notable dandy and rake, the brother least self-conscious about exhibiting wealth and having fun. Unlike Schiff, Felix could laugh at himself and see the absurdity even in serious situations. Perpetually lighthearted, he sincerely believed that life was meant to be enjoyed. That Felix would later inherit Jacob Schiff’s philanthropic mantle is all the more remarkable in view of his easygoing, cavalier style and—from Schiff’s standpoint—shockingly wanton youth.

  Not surprisingly, Jacob Schiff wasn’t thrilled when his sole daughter, Frieda, fell in love with the profligate Felix in Frankfurt in 1894. The year before, she had turned eighteen at a party at which Walter Damrosch stood in a tub and crooned a spoof of Wagner’s Rhine Maidens. Convinced that his daughter was now dangerously eligible and attractive, the overly protective Schiff decided to remove her from harm’s way and whisk her off to Europe. Even as a young woman, Frieda had a stately, aristocratic bearing, her hair drawn up in an elaborate pile on her head. Still very sheltered and unsophisticated, she also had a drily ironic wit. At fourteen, while mountain climbing at Chamonix, she fell and broke her collarbone. As she was being carted off to an nearby inn for emergency medical attention, she overheard a guide inquire, “Est-ce qu’elle est morte?”—“Is she dead?” From her stretcher Frieda sardonically assured him, “Pas encore”—“Not yet.”7

  Schiff was a strict, tyrannical father. When he was away, his only son, Morti, had to write him daily in German. On one trip, Jacob admonished him, “I notice you always write every morning. I would prefer that you write late in the afternoon, because then you could assure me that you’ve been a good boy and no trouble to your mother.”8 Morti endured a boyhood of excruciating sermons and eternal punishment, as if he grew up with an Old Testament God right on the premises. When he later inherited the parental mansion on Fifth Avenue, he sighed, “It’s wonderful to be the master of a house in which I have been spanked so often.”9 Even as a grown man Morti was dismissed from the table by his father for such minor infractions as tipping over a water glass.

  Schiff adored his daughter and protected her virginity as if it were a sacred treasure. This meant subjecting her to a suffocating, hothouse life. He minutely scripted her existence, from the French and fencing lessons to attendance at the exclusive Brearley School, where she was one of the first Jewish girls. (Even in 1912, Bernard Baruch was crushed when his daughter was refused entrance to Brearley.) The hovering father made Frieda tense, insecure, and always afraid of upsetting Papa. A dutiful daughter, she inherited her father’s parsimony, charity, intelligence, and seriousness. She even had his blunt, tactless manner, and never indulged in social lies. Frieda—as burdened with small cares and worries as Felix was blessedly free of them—would seem stiff and wooden amid the outrageous, almost vaudeville atmosphere of the Warburg family.

  Stephen Birmingham notes that Schiff’s concern for Frieda’s innocence had a touch of hypocrisy, for she had arrived eight months after Jacob’s marriage to Therese. He was stung when a friend gently teased him, “I want to congratulate you on the appropriate name you’ve given your baby—‘Frühda,’ ” or “there early” in German. Afraid of enduring an eternity of such unbearable jokes, Schiff demanded that Therese change the name, which she wouldn’t do. He never spoke again to the man who had hazarded the dreadful pun.10

  Frieda was naïve and Felix very worldly when they met in Frankfurt on May 5, 1894. Charlotte and Moritz were visiting the Oppenheims and were invited to a dinner given by the Dreyfus family for the Schiffs. Felix’s roguish reputation preceded him. When Frieda asked her cousin, Otto Schiff, if any interesting young men would attend, he mentioned Felix. “He was, they assured me, the most attractive young man in Frankfurt,” Frieda said.11 When Felix sat next to her, the chemistry was potent. Later that evening, he burst into hi
s parents’ room and exclaimed, “I have met the girl I am going to marry.”12 When Frieda learned of this years later, she observed, “What nerve.”13

  The next morning, Moritz decided that he had better shuffle off and pay a courtesy call on Jacob Schiff. They had antithetical fears: Moritz was alarmed that his son had fallen for an American girl while Schiff dreaded Frieda’s living in Germany. Despite profitable dealings between M. M. Warburg and Kuhn, Loeb, Schiff occupied a regal position in New York, while the Warburgs, despite their long pedigree, must have seemed provincial in comparison. For a patriarch of Schiff’s unbending severity, Felix undoubtedly seemed flashy and flip and not sober enough for a top-drawer bank. Felix’s apprenticeship in the jewelry business must have suggested to Schiff that he was being designated the family dunce. Before leaving Frankfurt, the Schiffs attended the horse races and when the grinning Felix again materialized, Jacob decided that Frieda wouldn’t see him again during their stay.

  After a Paris stay, the Schiff retinue visited the Warburgs en route to a Scandinavian cruise. Of that memorable dinner in Hamburg, Frieda wrote, “The charm of the Warburgs was deeply impressed on me that evening.”14 She seemed especially enchanted by Max. Funny and mercurial, the Warburgs had the warmth and wit for which Frieda had been starved. For a person raised in the claustrophobic Schiff household, the clowning brothers must have been irresistibly irreverent. As Frieda’s daughter later said, “The Schiffs were never strong on humor. The Warburgs were.”15