by Ron Chernow
For twenty years, Max was the best friend and protégé of this titan of world shipping. With a Christian wife and an adopted daughter, Ballin adopted the Warburgs as his second family. While Paul lived in Hamburg, he and Ballin, who had back-to-back houses, would converse across the garden hedge. Ballin stood as godfather to Max’s son and treated Max’s four daughters with special avuncular warmth. Once, when Ballin moved into a new home, Max placed his children in separate rooms to recite greeting poems penned for the occasion. Max and Alice attended ship launchings, receiving privileged previews of new ships. Before launching the stupendous Imperator, Alice toured the ship and told Ballin she had never seen such tasteful beauty. When Max and Ballin inspected the ship, however, the new Ritz restaurant vibrated so badly that glasses on the table shook, and the demanding Ballin flew into a rage. The vibrations were only eliminated at great expense.5
Despite his success, Ballin worried that “the social ambitions of wealthy Jews only increased anti-Semitism,” and his social world remained mostly Jewish.6 He seldom went to synagogue and tapped Max as a conduit for contributions. Although he subsidized Jewish causes, Ballin stood aloof from the Jewish community and never tried to imitate Max’s delicate balancing act. By working to reduce ticket prices to America, the two men helped to speed the tremendous exodus of European Jews to the New World before World War I.
In 1901, Kuhn, Loeb bought a few million HAPAG shares, and five years later M. M. Warburg joined the banking consortium that financed the firm. Aside from this profitable work, Ballin provided incomparable business contacts as he shepherded Max into the rarefied, exclusive, very snobbish world of German industrialists. At the time, a Jewish banker in Germany faced less discrimination with foreign bankers than with home-grown industrialists. Ballin brought Max into a sanctum hitherto closed to all but a handful of hand-picked Jews.
Under Moritz, M. M. Warburg had an ironclad policy of refusing seats on the supervisory boards or Aufsichtsräte of industrial companies. These board seats were pivotal positions and not the ceremonial posts of outside directors in Anglo-American business. German directors supervised managers, shared in profits, and stood liable for losses. In a momentous step, Ballin persuaded Max to drop Moritz’s long-standing policy and take board seats. Perhaps more than any other single decision, this lured Max from the invisible Jewish ghetto and into new, unmapped, and unpredictable territory. And he would handle himself, not in the tentative or obsequious manner of Bismarck’s banker, Gerson von Bleichröder, but with remarkable flair and self-confident poise. When he joined an elite dinner club, the Elektra, at the Chamber of Commerce, he was one of only two Jewish members.
Besides putting Max on HAPAG’s board, Ballin requested that he sit on the board of Blohm & Voss, the top shipbuilder in Germany. Ballin feared that a financially troubled shipyard could weaken his company and he asked Max to advise them. Through such maneuvers, Max became a central factor in the rapidly expanding world of German shipping and trade. By the 1920s, he and his partners held seats on eighty or ninety company boards, closely integrating them into Germany’s industrial elite on the eve of the Nazi takeover.
By the turn of the century, German Jews felt growing confidence about their place in society. When they formed the Hilfsverein der Deutschen Juden or the Aid Society of German Jews in 1901—Moritz was among its founders—its stated mission, again, was to alleviate Jewish suffering abroad. The Russian pogroms prompted Max’s maiden involvement in Jewish charity as he assisted emigration to America. Before World War I, ninety thousand Russian Jews arrived in Germany, and native Jews feared this influx would upset their own tenuous place. German Jews tended to see the Ostjuden as an uncouth, beggarly rabble and wanted to push them further west. German Jews were always a strange compound of almost arrogant confidence and the most frightful insecurity.
It was probably through his association with Ballin that Max first became a target for anti-Semitic attacks. For instance, one 1912 cartoon in a Berlin anti-Semitic newspaper showed Ballin and a Jewish banker—evidently Max—in a conspiratorial chat. In his trademark pince-nez, Ballin sniggers greedily, “The soul of the German worker is our toy. It has no secrets from us. But our Jewish ideas are our secret that we can’t allow any goy to get a glimpse into.”7
Later, Max would note that when he began mingling with non-Jewish society in the early 1900s, he wasn’t directly touched by anti-Semitism. Nevertheless, in hindsight, he saw that “the existence of this anti-Semitic current revealed itself in that one felt one’s special position.”8 When a Zionist Congress met in Hamburg in 1909, Max boycotted it, believing it would abet anti-Semites who claimed that Jews were loyal to “international Jewry.” Whenever Zionism reared its head, Max made ritual professions of his German patriotism—a reflex that became habitual with many fellow Jews. This constant reiteration of loyalty by the Jewish community would only embolden their tormentors, for it seemed to testify to underlying insecurity as well as genuine love of country.
Max and Ballin inevitably drew close to a kaiser enamored of the sea and intent upon expanding German naval power. As a true Hamburger, Max adored sailing and won many Elbe regattas in his boat, the Alice. His bank even financed whaling expeditions. At their initial encounter in 1891, the kaiser told Ballin, “Just bring our countrymen to sea and it will bear rich fruits both for the nation and your company.”9 Amid bunting and warships, the kaiser opened the Kiel Canal in June 1895, linking the Baltic and North seas and stimulating a romance with things maritime. In Wilhelm’s mind, a first-rate merchant marine was inseparable from a strong navy, and he passed along equipment designs to HAPAG. He provided benevolent protection for the firm and was even rumored to be a large stockholder. As with any shipping firm, HAPAG vessels could be pressed into wartime service, and German police sometimes prodded emigrants to take German rather than British ships. In 1898, Ballin openly supported the naval buildup undertaken by Rear Admiral Alfred (later von) Tirpitz. “In the brutal struggle of nations for light and air, strength alone counts …” said Ballin.10 Because the enemy chosen to justify this buildup was England, the naval race always placed the anglophile pair, Ballin and Max, in a tense, contradictory situation.
When the kaiser started a Regatta Week in Kiel each June, it became the sacred duty of German businessmen to sail with brawny vigor. By 1899, Ballin began to host the kaiser at an annual HAPAG dinner before the festivities. This royal patronage for the races was designed to spur popular support for a huge and expensive fleet. For Hamburg businessmen, who enjoyed privileged contact with the kaiser at these outings, the summer tradition was a tremendous boon.
Social direction of the event fell to Ballin, who orchestrated it like an impresario. He would float an enormous HAPAG liner into the Kiel Fjord to put up the kaiser’s friends and retinue. HAPAG sometimes seemed an official arm of the Empire. A Ballin motto ran, “Everything for HAPAG, Ballin, Germany, Kaiser, Hamburg.”11 HAPAG ships had staterooms reserved for the kaiser, who sometimes chartered HAPAG liners for cruises. When Ballin negotiated an agreement with J. P. Morgan for a North Atlantic cartel, Wilhelm minutely reviewed the contract with Ballin.
Despite the fact that late Imperial Germany was the heyday of German-Jewish relations, the kaiser had uneasy social intercourse with the Jews. After 1905, he breakfasted every June at Ballin’s Hamburg house, jokingly called Little Potsdam. Yet Kaiserin Augusta Victoria, who shunned Jews, didn’t join her husband. For malicious Prussian aristocrats, men such as Ballin and Max Warburg only strengthened their impression that the Jews were acquiring far too much power.
Tragically, Max and other Jews drew close to the monarchy of the eve of its dissolution. Associating the kaiser with peace and prosperity, they grew nationalistic in their thinking. Max wasn’t blind to the kaiser’s quick resort to force or bluster to avenge an easily injured sense of honor. In July 1900, he composed a wistful, melancholy letter to his three-month-old son, Eric, lamenting how the world had become “a playground for self-deception
and lies; the Kaiser is sending his troops to China, where his missionaries are supposed to proclaim the religion of love, and is swearing to avenge the assassination of his envoy in Peking.”12 At least in retrospect, Max accused Wilhelm of “Theatrical superficiality, impatience, an over-estimation of his own power in spite of the best intentions …”13 He saw him as a weak, rash, impressionable blowhard who loved the sound of his own voice.
In 1903, only a decade after the green young banker had piloted the firm through the cholera epidemic, Max, age thirty-six, first met the kaiser. Brash and tactless, he nearly bungled the opportunity. Chancellor von Bülow thought the kaiser needed a lecture on financial reform and had Ballin bring Max to dine with the kaiser in Cuxhaven. When Ballin said he would have only ten minutes to lecture, Max refused to speak, saying the time was insufficient. His stubbornness bespoke extreme vanity and confidence, and he only submitted when Ballin got the allotted time expanded to thirty-two minutes.
Max rehearsed a twenty-five-minute speech and budgeted seven minutes for questions. The kaiser was a spoiled, peevish, and impetuous man who at once foiled Max’s plans by blurting out: “The Russians will soon go bust.”14 Not yet a smooth courtier, Max retorted, “No, Your Majesty, the Russians aren’t going bust.”15 He noted that Russia had recently taken a loan to retire an earlier one, not to enlarge its debt. Accustomed to sycophantic acquiescence, the kaiser fumed. “The Russians are too going bust,” he thundered.16 With a menacing lift of his eyebrows, the kaiser then spun about and walked out. “Thus my audience, which was supposed to last 32 minutes, ended after three minutes,” Max said.17
It was revealing that Max, far from groveling, tried to impress the kaiser with his independent ways. When he got another chance to redeem himself, he nearly fumbled it again. During Kiel Week the next year, the kaiser proposed a toast to Max, saying he was ready for his long-postponed lecture on financial reform. In a surprisingly conciliatory gesture, Wilhelm confessed, “Incidentally, the Russians aren’t going bankrupt.” Instead of accepting this graciously, Max replied, “I already told you that then.” The kaiser pounded his fist. “Must you always be right?”18 Max apologized, then gave a successful talk on financial reform. Henceforth, Max met the kaiser every June.
This access exposed Max and Ballin to double jeopardy, for it attracted the wrath of anti-Semites and the scorn of Jews who feared assimilation. Chaim Weizmann would refer bitingly to “the usual type of Kaiser-Juden [Kaiser Jews], like Albert Ballin or Max Warburg, more German than the Germans, obsequious, superpatriotic, eagerly anticipating the wishes and plans of the masters of Germany.”19
To some extent, the Kaiser-Juden exaggerated their own influence at court. While Ballin and Max met the kaiser for Kiel Week, they were excluded from his inner social circle. Max’s dealings with the kaiser can be too easily summarized in several anecdotes to suggest deep or lasting influence. Though Wilhelm consulted Ballin more than any other Jew, they only met six times a year—a notable advance for Jews, but hardly full acceptance. Max’s tie to the kaiser never approached Bleichröder’s labyrinthine relationship with Bismarck. Whenever Max thought he had finally persuaded the kaiser of a position, the next visitor would at once persuade him of the exact opposite.20
The kaiser’s ambivalence toward Jews was typical of his compatriots. As a young man, he criticized Bismarck’s relationship with Bleichröder, heaping invective upon Jewish journalists and politicians. Yet he later maintained relations with Jewish bankers and industrialists in the face of hostile whispers. He did this by redefining Court Jews as non-Jewish. As a Prussian official recalled, “Once midway in a diatribe by His Majesty against the Jews, Schmidt dared to remind him of his Semitic friends, Ballin and Franz Mendelssohn, whereupon William declared that he did not consider them to be Jews at all. And after his abdication, the kaiser even alleged that he had been unaware that Ballin had in fact been a Jew.”21 Ballin was consistently vetoed for cabinet positions and when offered the job of railway minister, he declined, telling Wilhelm that His Majesty seemed to forget he was a Jew.22 Later, the kaiser said that in 1909 he would have named Ballin Billow’s successor as chancellor had it not been for Ballin’s religion.23
Even this limited access of Jews to the kaiser provoked grumbling among anti-Semitic military officers and Prussian landholders. As old money, they resisted and feared the inroads of new money, rejecting liberated Jews as social upstarts. This anxious snobbery was paralleled by political feuds. Junker landlords wanted to prop up farm prices through import duties, while shipping companies and Jewish bankers in foreign trade strongly opposed protectionism.
Max loved to retail political gossip, hobnob with power brokers, and be privy to the mighty. Yet he was always a frustrated politician. Starting in 1903, he succeeded Paul in the Hamburg Bürgerschaft. At the time, local officials still resembled Rembrandt figures, wearing broad white ruffs and black robes with buckle shoes on official occasions. Max was a liberal member of a conservative party and his political positions were often similarly ambiguous. He wanted the Bürgerschaft to be elected, half by universal suffrage, half on the basis of professions—more meritocratic than the method in use, but still elitist. (During the 1906 suffrage debate, Aby ghosted Max’s speech on the subject.) In national politics, Max encountered many more religious obstacles than in Hamburg. As a result, he operated more in the dim wings and unseen corridors of official Berlin, a style that would be seized upon and exploited by anti-Semites who didn’t see that this low-profile approach was meant, ironically, to avert anti-Semitism.
Max so far conquered Moritz’s aversion for political activity that by World War I, M. M. Warburg & Co. qualified as Germany’s leading private bank in floating international loans. His partner Aby S. and the Alsterufer Warburgs feared this higher political profile would spark an anti-Semitic reaction. The more actively M. M. Warburg became engaged in German colonial adventures, the more its lending became subordinated to German foreign policy. As Max explained, “No one is so much dependent on his own government, as the so-called international banker. For no banker will conclude a loan transaction of any significance until he has been in touch with his own Foreign Office.”24
The byzantine financial intrigues of the early 1900s bound Jewish bankers tightly to the state. The diatribes against Jewish bankers actually stood reality on its head, for they didn’t exploit Germany so much as serve its imperial escapades to a fault. This very intimacy with the government would make it hard for them to react later on when persecution and terror came from the state itself.
The Kuhn, Loeb connection also implicated M. M. Warburg in more political work. Outraged by the pogroms against Russian Jews, Schiff made it a point of honor to finance Japan in its 1904–05 war against Russia and even paid for distribution of anti-czarist propaganda to Russian prisoners. In spring 1904, he shocked Japan’s financial commissioner, Baron Korekiyo Takahashi, by volunteering to underwrite half the ten-million-pound loan sought by the Imperial Japanese Government in London and New York. This first of five major Kuhn, Loeb loans to Japan was approved by King Edward VII at a luncheon with Schiff and Sir Ernest Cassel.
When Japan was ready for a third loan in 1905, Schiff thought New York was saturated with Japanese bonds and asked Max to open a German market. To ensure that such a step conformed to German policy, Max remembered, “I did what every upstanding banker has to do in such cases, I went to the Foreign Ministry in Berlin.”25 The Krupp firm had warned the Foreign Office that Germany would lose munitions contracts if the third Japanese loan were placed entirely in New York and London. So Under-Secretary of State Arthur Zimmermann endorsed the move and authorized Max to negotiate with Japan. Before proceeding with his second Japanese loan, Max met the kaiser aboard his yacht to get his official imprimatur. This second issue was ten times oversubscribed, strengthening Japan’s hand at the Portsmouth peace conference. That Max suddenly managed a major strategic transaction was a stunning achievement for a firm that just a few years earlier had
been a provincial power.
Max owed this breakthrough to his brothers’ presence at Kuhn, Loeb, but he had ably exploited the opportunity. He negotiated the first loan in London with Korekiyo Takahashi, later Japanese finance minister and prime minister. Takahashi never forgot the favor, later telling Max, if “I have distinguished myself in any way in my life, it is, to my great appreciation, due to your goodwill and friendship which you were kind enough to extend to me in old times.”26 After the war with Russia, Takahashi visited Hamburg, and in 1906 Schiff visited Japan. Schiff had a rare private lunch with the mikado at the Imperial Palace, where he was decorated with the Order of the Rising Sun. At one dinner, he sat beside Takahashi’s teenage daughter, Wakiko, and casually invited her to New York, but Takahashi took the invitation quite literally. To Schiff’s astonishment, Wakiko ended up going back with him and living with the Schiffs for three years.
The Japanese link produced several hilarious encounters for Max. When a Japanese delegation came to Hamburg, they stayed at the deluxe Vier Jahreszeiten hotel. By coincidence, Max and family were living there while their town house was being remodeled. The Japanese wanted to drop off their cards with the mayor and asked Max to accompany them. On the appointed day, he put on a round hat and trotted down the hotel steps, only to find them standing in the lobby in top hats. He dashed back up for a top hat. When he reappeared, the Japanese, having seen Max, had all switched to round hats. Max told them to freeze while he fetched his round hat and then they all proceeded in uniform garb to the mayor.