by Ron Chernow
To settle the matter, Paul told Colonel House that he would frame a letter to the president offering his resignation in such a manner that Wilson would feel free to make the right decision. The critical paragraph of his May 27, 1914, letter ran as follows:
“Much to my regret, Mr. President, it has become increasingly evident that should you choose to renominate me this might precipitate a harmful fight which, in the interest of the country, I wish to do anything in my power to avoid.… On the other hand, if for reasons of your own, you should decide not to renominate me it is likely to be construed by many as an acceptance by you of a point of view which I am certain you would not wish to sanction. In these circumstances, I deem it my duty to state to you myself that it is my firm belief that the interest of the country will best be served if my name be not considered by you in this connection.”72
There’s no doubt at all that Paul hoped Wilson would courageously defy his detractors and reappoint him. But the same president who had shown such brave resolution during Paul’s 1914 confirmation battle would now strike Paul as cravenly evasive. With Paul stretched on the rack, Wilson waited an unconscionable time to reply. In mid-July, when he still hadn’t heard and reporters got wind of his May letter, Paul broke down and contacted Joe Tumulty at the White House, asking why his letter hadn’t been answered. After checking, Tumulty told Paul that Wilson wouldn’t disclose the reasons for his delay. On August 3rd, Tumulty told Paul that Wilson was waiting to consult with McAdoo, who wouldn’t return to Washington until August 9—the expiration date of Paul’s term. So Paul waited ten weeks for a reply.
When it finally came on August 9, 1918, it was the dreaded death sentence. And Wilson didn’t especially sweeten the pill.
“My dear Mr. Warburg: I hope that my delay in replying to your letter … has not given you any impression of indifference on my part or any lack of appreciation of the fine personal and patriotic feelings which made that letter one of the most admirable and gratifying I have received during these troubled times.” He blamed the delay on McAdoo’s absence. “Your retirement from the board is a serious loss to the public service. I consent to it only because I read between the lines of your generous letter that you will yourself feel more at ease if you are left free to serve in other ways.
“I know that your colleagues on the Board have not only enjoyed their association with you, but have also felt that your counsel has been indispensable in these first formative years of the new system which has served at the most critical period of the nation’s financial history to steady and assure every financial process, and that their regret is as great as my own that it is in your judgment best now for you to turn to other methods of service.…”73
Paul griped at the letter as belated and niggardly in its praise. Thus ended the extraordinary crusade that had swept up the young, uncertain banker ten years before. His Washington career expired with stunning abruptness. The letters pouring in from his friends showed little awareness that he had wanted Wilson to refuse his resignation. Most applauded his noble, self-sacrificing stand; only a handful of more intimate and knowing friends disparaged Wilson’s move as false and sanctimonious.
The press reacted with enormous sympathy. Editorial commentary was almost worshipful, praising Paul’s statesmanlike resignation and asserting that nobody had done more to assure the lasting success of the new Fed. As several papers noted, Paul had been such a respected and knowledgeable figure that, as far as the outside world was concerned, Paul had been the Board. As The New York Times said, “The prestige and authority which the board now enjoys as a balance wheel in American banking during wartime is largely due to him.”74 Some newspapers noted the divergent treatment of Paul and Max. While Paul was banished from Washington, Max never encountered similar imputations of treachery in Berlin about his tie with Paul.
It was with profound sorrow that Paul cleaned out his desk in Washington. In government he had found his true métier and now had lost it. He and Nina set off for the Pacific Coast via the Canadian Rockies so that Paul could enjoy his “first loafing in four years,” as he phrased it.75 Although his salary had been much lower in Washington than on Wall Street, he had no interest in returning to Kuhn, Loeb despite encouragement from Felix. As he told Colonel House, “My mind is not bent on making money—certainly not in these times.…”76 While he already contemplated writing an authoritative history of the Fed’s founding, he said he would rather be making history than recording it.
For the rest of his life, Paul would be wistful. He went from a singularly favored life to a tragic fall. Like other incorruptible young idealists, he reacted to keen disappointment by becoming cynical and pessimistic. He and Nina returned to their house at 17 East 80th Street. For a time, he flirted with becoming a consultant. But he knew the United States would emerge from the war as a global power and he already mulled over plans for restoring German-American ties.
Paul’s Washington career underscores a fundamental tension in the old European banking dynasties. They specialized in international business and planted family members in different financial capitals. This internationalism only worked well in an age of peace, free trade, and unfettered capital flows, such as existed before World War I. Between the world wars, the Warburgs’ country-spanning alliances would be harshly challenged in a savage new era of nationalism, protectionism, exchange controls, and hateful racial ideologies. Before long, Max would face the same dilemma in Germany that Paul had in America, as it was alleged that his true allegiance resided, not with the Fatherland, but with shadowy Jewish interests abroad. Far from being seen as advantageous to Germany, the Warburg connections would breed an injurious new mythology.
CHAPTER 14
––
The Collapse
Fate, with perfect cruelty, had positioned the German-American Warburgs on opposing sides of the Great War. Yet even as it became a private civil war, setting brother against brother and cousin against cousin, the family maintained a touching fidelity that transcended politics. In February 1917, Max’s son Eric wrote to his pro-Allied cousin Jimmy about the hardships of the frigid Hamburg winter. In a bitter cold snap, the Alster had frozen over, blocking coal barges and forcing the authorities to commandeer freight trains, horses, and carriages to haul coal. In the harsh winter weather the poor huddled in public warming halls. Bicycles disappeared with the confiscation of rubber, and even bandages were made of paper. Fresh food was extremely scarce.
Eric, sixteen, told Jimmy that his hour of military service fast approached and that he could see recruits drilling in the schoolyard below. With the government frequently raiding the teaching corps for soldiers, classes operated on reduced schedules. Eric bid a poignant farewell to his American cousin, who had so avidly exhorted his Harvard classmates to fight Germany. “Now America has also broken off diplomatic relations and I fear that means war, for American life will perish because of it. I won’t write more about this. Our personal friendship shouldn’t be impaired by politics! Auf Wiedersehen in peace!”1
A happy boy who had grown up surrounded by adoring sisters and female cousins, Eric was short and blond, frail and slightly lazy. At one point, Alice had secretly visited his school and asked that he be kept back for half a year to correct his laziness. With no time to help Eric in school, Max shipped him off to Uncle Aby, who would listen to his essays, take out an enormous pen and scrawl scathing comments in the margins. But despite these strict tutorials, Eric always retained great affection for Aby’s warm merriment. Eric had inherited only his father’s superficial traits. Charming and gregarious, with a sly twinkle in his eyes and a sunny nature, he lacked Max’s deep, driving ambition. Eric was dominated by his father, who decreed that his son must enter the bank. The family mocked how Eric began sentences, “Well, as my father says.…” Max would unashamedly open Eric’s love letters. This regimented upbringing would produce a young man with a powerful wanderlust and a craving for freedom and adventure.
Already an ardent patrio
t in Max’s mold, the teenage Eric worked with his aunt, Dora Magnus, at the Hamburg War Aid society.2 Foreseeing that he would be drafted in 1918, Max tried to toughen up the boy with manual labor. On April 15, 1917, his seventeenth birthday, Eric and three classmates boarded a train for east Mecklenburg to perform volunteer farm work on an estate. Before he left, Alice solemnly instructed him to kiss the hand of the landowner’s wife. When Eric and his friends arrived, the large, brisk chatelaine rushed to the coach door to greet them. When Eric kissed her hand, she cuffed the poor boy’s forehead with “tremendous fists,” as Eric remembered, leaving a large red bruise.3 (In later years, Eric would be careful to take both her hands at once.) Eric and his friends performed brutal harvesting labor while also supervising older Polish laborers. During ten-hour days, they squatted on their knees and grubbed up sugar beets, then slept in a barn hayloft swarming with mice and rats.
In spring 1918, Eric volunteered for the Prussian Field Artillery Regiment in Berlin, receiving a memorable martial farewell from Uncle Aby.4 When Eric announced his departure, Aby unearthed his old pearl-handled revolver and a gigantic saber, broad and curved as a pirate’s. Aby insisted that such a dashing sword was de rigueur for a proper young soldier. Eric protested—to no avail. En route to his barracks, he ditched the saber in a streetcar rather than risk the mockery of fellow recruits.
Aby’s hair and mustache were now speckled with gray. He strolled about town with a troubled air, moody and restless, a self-described “tortured neurasthenic.”5 Finding wartime Hamburg desolate, he thought vaguely of taking a teaching position elsewhere. People noticed that he was impossibly touchy and irascible. After visiting Kösterberg, Jim Loeb told Nina, “Aby is growing more intolerable as he grows older … and a womanish squeamishness, coupled with direct boorishness of behavior” made him “more a source of irritation than joy to us.…”6
——
Aby Warburg and his son, Max Adolph, August 14, 1925.
(Warburg Institute)
Ever the dark mirror of the historical moment, Aby’s psyche reflected Germany’s deteriorating situation. The prospect that the coarse, grubby Anglo-Saxon culture might prevail tormented him. The whole universe seemed disordered, a grisly projection of his apocalyptic nightmares. Aby’s friends saw him spinning out of control during the war. As city planner Fritz Schumacher said, “With Warburg one could see, full of care, a growing pessimism, which uncontrollably seized his mind.”7
From the early days of conflict, Aby periodically checked into the Waldpark Sanatorium in Baden-Baden as he grew morbidly afraid of illness. He had a running, mirthless gag that he was off to the repair shop and would emerge brightly lacquered. But his mood swings sharpened. He worked with blazing intensity then descended into a state of anxious jitters that rendered him unfit for work. The doctors prescribed evermore potent medicines to counteract this progressive depression. Before entering the Waldpark Sanatorium in September, 1917, Aby drew up a last will and testament. Again displaying his deep streak of Jewish self-hate, he asked to be buried not with the Warburgs, but with his non-Jewish Hertz in-laws.
As Aby slid into madness during the war, his dependency upon his family expressed itself in growing anger. He always had lived in childlike dependence upon his brothers, who had indulged him with a stupendous two hundred thousand marks by 1917. Yet he rewarded their generosity with increasingly truculent demands for money. As his illness advanced, Aby’s rage at them became ungovernable—perhaps an inverted form of guilt. He bitterly attacked Paul and Felix for not making more Loeb and Schiff money available for his library. Aby was a complicated man and this indignation by no means reflected the full range of his feelings toward his brothers. He expressed great warmth for Paul and his achievements, and Felix often had a soothing effect on him.
During the war, Aby seemed preoccupied with his Jewish identity, or lack of it. Irate over Anglo-Saxon propaganda, he embarked on a study of political pamphleteering during previous eras of turbulence in Germany, concentrating on the Reformation and Martin Luther. He increased his purchase and reading of books on religion. For most Jews, it was hard to see beyond Luther’s anti-Semitism, his portrayal of Jews as demonic creatures, miserable vermin and vampires. Luther thought Jews had “enslaved” Christians through usury and well-poisoning as well as by draining blood from Christian children for use in secret rituals. In flaming, violent language, Luther thundered that Jewish schools, prayer books, and synagogues should be torched; Jewish homes destroyed; and their inhabitants hounded from the land. In 1935, the Nazis would rush out a popular new edition of his inflammatory pamphlet, On Jews and Their Lies.
And how did Aby view Luther? As “one of the great liberators of mankind, a heroic figure fighting for enlightenment and the emancipation of faith from the shackles of a narrow dogma,” in the words of E.H. Gombrich.8 He was drawn to the noble Luther who had emancipated Europe from the primitive magic of astrological thinking by stressing free will. The Warburgs evidently were distressed by Aby’s fascination with Luther, for he felt obliged to defend his interest to Fritz’s wife in 1917. He pointed out that his admiration for Luther dated from adolescence. Praising him as intellectually fearless, Aby stated that Luther had helped to free him from a Jewish orthodoxy that had tried to enslave him.9
If Aby was heartened by Luther’s triumph over superstition, the study of his era also transported him to a time of baleful omens and dark doomsday prophecies. His mind seethed with images of black magic, the occult, astrology. These irrational arts must have leaked corrosive acid into his unconscious mind even as his conscious mind celebrated Luther’s rationalism. It required the assistance of Fritz Saxl—back in Hamburg after serving as an Austrian artillery officer in Italy—for Aby to prepare his April 1918 speech on prophecy in the age of Luther.
Aby wanted to see the more backward Jewish culture subordinated to advanced German culture. In one interesting 1915 episode, this Aby (M.) protested to his cousin, Aby. S., about the latter’s posting of a death notice for a Jew in the newspaper. Aby M. was indignant that the ad didn’t carry the Iron Cross in the upper left-hand corner. “That is no sign of faith,” he said of the Iron Cross, “but an honorary symbol under which all of Germany (finally!) unites.” Aby ended the letter by bluntly demanding that his cousin, in future, be sure to sign his name Aby S. Warburg.10
Aby M. supported the war unreservedly to the end and believed that Germany’s cultural superiority guaranteed the country’s triumph. He and Mary invested in German Treasury bills and bought some more for the children. He grew more vindictive toward Germany’s foes, saying, “Without punishing the Italians, the war will have no appropriate finale!”11 Aby was revolted when America declared war. Even though Paul and Felix were American citizens, Aby lashed out at America as a “pimp of the war fury” and said “this new enemy perhaps brings us to the highest degree of loathing.”12 In his September 1917 will, he specified that his library, now nineteen thousand volumes strong, should definitely remain on German soil, ideally forming the basis of a cultural institute at the projected University of Hamburg. Aby saw his world of high German culture being devoured by the war, which he viewed as “a bloody, endlessly dripping propeller.…”13
Leonardo-like, Aby fantasized about strange, exotic weaponry that might magically turn the tide of battle. In 1916, he tried to sell people on a science-fiction weapon he had devised on paper that would shoot out streams of electrical sparks at captive balloons that floated above London for defensive purposes.14 Toward the war’s close, he envisioned a massive Allied air attack against Hamburg. One day, he rushed breathless into Gustav Hillard’s office and began unfolding blueprints for a futuristic air-defense system, complete with shelters and observation towers.
Recalling the episode years later, Hillard credited Aby’s clairvoyance: “Such an attack was then a technical Utopia and for such a defense all the defense batteries of the German Army wouldn’t have sufficed. Exactly a quarter-century later the destruction of the cit
y was accomplished in the form of Warburg’s vision.”15 It was not the last time that Aby’s imagination would seem to have a special foretaste of future devastation.
—
When Germany’s unrestricted U-boat warfare brought America into the war, strengthening the Entente, Max Warburg felt a joyless satisfaction in the precise fulfillment of his prediction. For all of Germany’s military braggadocio, he knew the war was lost and thought it should have been ended sooner. But popular fury against the enemy had now been screwed to such a pitch that German politicians feared speaking the bitter truth. “Our opponents couldn’t imagine that statesmen could be such fools as to persist in a senseless war, always hoping for something that had long been hopeless,” Max wrote.16
After the American envoy at the Hague, Garret, intimated that he might be willing to talk with an influential German, Max was recruited for a last, fruitless peace mission in March 1918. Having American brothers, Max seemed well suited for the job. The new chancellor, Count Georg von Hertling, summoned Max to Berlin and asked him to sound out Garret on peace terms. Max traveled to the Hague with Dr. Kurt Hahn, a brilliant, mercurial, Oxford-educated man, who had monitored the British press for the German Foreign Office. In the Hague, they ended up playing an elaborate guessing game for several days. Sensing reluctance on the American side, Max hesitated to take the initiative while Garret, in turn, waited for Max to make the first move. They never met and Max returned quite dispirited from Holland. Later, when General Erich Ludendorff accused him of trafficking with the enemy, Max pointed out that Count Hertling had sent him.