by Ron Chernow
At first Max Warburg seemed slow to fathom the full meaning of German defeat. As his nephew, Hans Blumenfeld, wrote, “In December 1918 I had run into Max Warburg at the door of the family bank.… He believed in the full restoration of prewar Germany in a postwar world.”15 By late March 1919, Max and Melchior were meeting with the financial delegation in Berlin. While they expected harsh terms at Versailles, the actual reparation figures dwarfed their direst estimates. In New York, Felix saw Max headed for sure disaster. “For him to go to Versailles, where he has had so many jolly dinner parties, as a supplicant for his country is a changed role indeed,” Felix wrote. “It can make very little difference what their opinions and their desires are—they will have to sign what is placed before them, perhaps under protest, if they are permitted to voice it. Whatever they sign, they will be blamed for afterwards.”16
When Max and his fellow delegates went to the peace conference, they had to travel past the cratered battlefields of northern France. Since nearly one and a half million of their compatriots had died in the war, the French thirsted for revenge. When the German finance delegates were taken to the Château de Villette near Compiègne, they at first had no idea of the identity of their plush prison. They had fine and abundant food, washed down by vintage wines. Like guests staying in a luxury hotel, they played golf and lawn games. All the while, they stood under the unceasing surveillance of two hundred heavily armed soldiers. They couldn’t use the telephone or receive visitors and inhabited a castle seeded with listening devices and spying servants. Max figured out their whereabouts when a butler confided that he worked for Baron Stern of Paris, a banker who had entertained Max at his balls during Max’s Paris apprenticeship. Gradually, the guards relaxed the tight security when they saw that the delegates weren’t plotting escape.
At the first plenary session of financial experts on April 4, Max perceived the intransigence of their Allied opponents. He approached Thomas W. Lamont, a partner of J. P. Morgan & Co. and a member of the Reparations Commission. With faith in Wilson’s idealism, Max nonetheless had grave doubts about the American president’s political skills, party backing, and European expertise. He suggested to Lamont that he meet with Wilson and Colonel House to lay the groundwork for a reasonable settlement—a stillborn overture. Lamont liked Max and spoke to him because he regretted the high-handed treatment of the Germans. Yet even he believed that Max was making inflammatory predictions about German collapse to induce a lenient settlement.
Max’s letters home to Alice leave no doubt that he was genuinely alarmed by the deteriorating situation. He feared that a “wave of bolshevism” would engulf Germany and then all of Europe. On April 5, he and Melchior took a guarded stroll through the Compiègne forest, savoring its violets, primroses, and wild strawberries. The contrast between the sylvan beauty and the dreary political prospect struck Max forcibly. Usually a figure of almost glandular optimism, Max grew panicky about German prospects. When a shortlived Soviet Republic was declared in Munich on April 7, he wrote Alice, “The world is mad! So what is to be feared is complete collapse there which will drag down the rest of the world.…”17 On April 15, “Easter Riots” broke out in Hamburg, as rampaging mobs cleaned out stores and prompted martial law. During this surreal period, Max and his fellow captive delegates golfed on the lawn of the sleepily beautiful castle.
After a meeting on April 16, Max buttonholed Lamont and they spoke briefly in furtive whispers. Though Max warned of mounting German unrest, Lamont said he couldn’t arrange a meeting with Wilson. The newspapers had previewed astronomical estimates of Allied reparation demands, and Max warned that no German delegation would sign such a document. Lamont offered no comfort, noting that the Allies were united and that American feeling toward Germany was exceedingly bitter.18
Lamont agreed to circulate to Wilson and House a memo Max had prepared. This ill-advised document throbbed with an intemperate sense of nationalistic grievance. Max couldn’t suppress his belief that Germany was, in truth, the injured party. Instead of admitting German guilt, he wanted a neutral arbitration court to decide the matter and railed against the Allied “crime” of starving Germany by a blockade. He tactlessly stated that the death rate among the eight hundred thousand German prisoners in France exceeded the wartime killing and that Germany’s food need should now assume paramount importance. “Time is wasted with useless discussions about the question of responsibility for the outbreak of the war.”
Endorsing the League of Nations, Max yet resisted the idea that Germany required political reform and he reiterated the paean to German democracy that he had urged upon Jacob Schiff during the war. He insisted that “it has to be borne in mind, that even before the war Germany had the most democratic electoral system in the world, more democratic than the British system.” Lamont found this assertion so astonishing that he jotted in the margin no fewer than four question marks. As to the notorious passivity of the German populace, Max saw this not as a vice, but as wise acquiescence to a perfect state: “The German people were under the impression that their administration was good and honest and therefore it did not worry much about politics.”
In a manner that must have infuriated the Allies, Max equated German suffering with that of France and Belgium. “Certainly France and Belgium have suffered visibly the most in this war. But the question remains open, whether the sufferings of the totality of the German people on account of the terrible privations they had to endure were not at least equally severe.” He dismissed any future threat from German militarism, saying it would only return if reawakened by Entente militarism. In a final gratuitous swipe, he said it wasn’t Allied military cunning, but sheer superiority in soldiers and war materiel “and the raw weapon of starvation” that had produced Allied victory.19
Thus in one stroke, Max had confirmed every stereotype of the whining, unrepentant, self-pitying German. In passing the memo along to Bernard Baruch, Lamont commented, “The nerve that these boches have is something terrible. I think you will agree with me that they are utterly lacking in insight into the real situation.”20
On the eve of the German delegation’s move to Versailles, Max wrote Eric in a philosophic vein, trying to peer beyond the troubled present. Noting turmoil at home, he observed that revolutions, at the beginning, always smash beautiful monuments, but that one shouldn’t despair. In an image that strikingly foreshadowed his Pollyanna views of 1933, he wrote, “We may regard that as a mere token of a temporary political fever. It will pass away.”21
At four-thirty the next morning, Max, Melchior, et al., were roused from bed and taken to Versailles. Their train entered a station ringed by French troops. Max got into the backseat of a car that would take them to the hotel, but, as a little dig, he was ordered into the jump seat by his “overseer,” a Lieutenant Henry. At the Hotel des Reservoirs, the German delegates were greeted by soldiers brandishing fixed bayonets. This hotel, too, was honeycombed with spies and listening devices. The Germans found they could leak positions to the press simply by leaving notes strewn about on tables. “After the golden cage of the Château de Villette,” Max wrote Alice, “the hotel seems quite uncomfortable.”22
At Versailles, the Germans were subjected to many petty indignities and denied permission to stroll after lunch. A police prefect told them, with heavy sarcasm, “Your wishes have been anticipated by the French authorities. Follow me.” Marched down to the Bassin de Neptune behind the château, they were given a narrow space of sixteen meters by four meters for pacing. As the others grew indignant, Max advised calm. “Isn’t it better to leave ill alone?”23 Later on, they could roam freely in the park.
On May 7, the Allies presented their terms. When Clemenceau rose to deliver his speech, Count Brockdorff-Rantzau asked Max and Melchior whether he should remain seated. They advised against any discourtesy. The count, ignoring them, was roundly criticized for rudeness. The Germans were shocked by the exorbitant Allied demands, which stipulated that Germany would lose 13 percent of its
prewar territory, including Alsace-Lorraine and parts of East Prussia. Germany would have to yield its colonies, overseas investment, and much of its merchant navy. The Rhineland would be occupied, the German army reduced. The controversial “war-guilt clause” made Germany acknowledge that it was the aggressor responsible for the war.
The Germans had until May 17 to reply, a period Max described as the most depressing of his life. Within two days, the financial delegates had concluded they could never sign such a document and debated whether to leave. Only the confusion in Berlin deterred them. Max felt trapped in a nightmarish phantasmagoria in which high-sounding rhetoric of world community masked base, sadistic motives of punishment. Max unburdened himself to Alice: “But to announce a new world era, to speak of loving kindness and justice, and then to set out on an expedition of world banditry, to plant the seed of new conflict and murder faith in a better time to come, that surely is to commit a sin of world proportions, and to see that done with one’s own eyes fills one with horror and with dread.”24 The comment is notable for its grasp of the magnitude of the Allied blunder, yet also shows how quickly Max shifted blame away from Germany.
Under duress, the German delegates formulated counterproposals. Max was stunned when the usually conservative Melchior suggested that they offer a stupendous one hundred billion gold marks. Melchior thought it better to make a reasonable offer, however steep for Germany, than an unrealistically low one which would be rejected out of hand. After Melchior cited that figure, Max couldn’t sleep the whole night. A member of the French finance ministry asked Max what would happen when Germany finally caved in to French demands. “We’ll go bankrupt,” Max said. “And France?” “France will go bankrupt the day after we do.” The Frenchman was so flabbergasted by this remark that he demanded Max’s removal from the delegation. “Celui-ci est trop impertinent.”25
The one hundred billion gold mark offer was rejected by the Allies as too paltry. Nevertheless, in Nazi propaganda, that figure would stick to both Max and Melchior like a burr. The Germans warned that stiffer terms would be rejected. When Keynes left Versailles, Melchior said to Max that he must have concluded that the Allies were imposing impossible demands. Departing for home to set the matter before their government, the Germans suffered one final humiliation. As they got into their car, a mob jeered them and pelted them with rocks. Melchior caught one in the neck, but wasn’t seriously injured. Max’s cousin, Dr. Hans Meyer, got a glass splinter in his eye that he removed. One secretary was hit in the head by a stone and suffered a cerebral hemorrhage.
The Allies had hoped that German businessmen would be more amenable to a large reparations bill—a major miscalculation—and placed especial faith in Melchior. Woodrow Wilson thought that if only the case were patiently explained to Carl Melchior or Max Warburg, the Germans would see the light. Instead Max lobbied Colonel House for leniency. Contrary to Allied hopes, Max and Melchior remained dogged foes of the peace treaty.
The German financial delegates took a special train to Weimar and, en route, drew up a report for the government. Engaged in intensive discussion, the busy delegates moved from one compartment to the next and scarcely noticed the landscape flickering by. By the time they arrived in Weimar on June 18, they had unanimously decided to recommend rejection of the treaty, with Melchior taking a major hand in writing up the report.
Weimar proved a scene of tragicomic confusion that foreshadowed the Republic’s fate. The delegates were greeted at the castle vestibule by a shuffling, pipe-smoking man in slippers, who proved to be not the porter, but the Reichstag president, Fehrenbach. As they waited for interminable Cabinet meetings to end, the financial experts never even had a chance to defend their recommendation to reject the ruinous treaty. On June 20, when the Cabinet resigned, Max wrote to President Ebert, tendering his resignation. He said he thought it best if the government had advisers who were in agreement with its policies.
The new Cabinet consented to the Allied terms, and on June 28, 1919, a new German delegation signed the infamous treaty in the Hall of Mirrors at Versailles. For all his vehement opposition to the treaty, Max knew that Germany could reject it only at its peril. “Whatever one chose, one chose hell,” he said. “It was simply a question, which hell promised to be of shorter duration.”26 Max believed that Versailles had encumbered the German democratic parties with an unpopular treaty while allowing right-wing parties to feed freely off the misfortune.27 Besides coping with the Versailles stigma, Max also had to defend his November 1918 conduct with Prince Max in the waning days of war. In 1919, Hindenburg alleged that the German Army had been “stabbed in the back” by the politicians. Soon the Nazis would seize upon the issue of Versailles and the “November criminals” and Max would suffer, quite unjustly, from his blameless association with both controversial episodes.
After a nearly four-month absence, Max returned to Hamburg that June at a time of mayhem. The local citizenry was in an uproar over charges that a local meat packer, Herr Heil, had adulterated jellied meats with animal parts. On June 24, waving dog heads, dead rats, cow tails, and other parts that supposedly flavored his meats, protesters rolled Herr Heil to the Alster Lake on a wheelbarrow and dumped him in. After the military commandant ordered a crackdown, riots broke out and exchanges of machine-gun fire and grenades left dozens of soldiers and demonstrators dead. By June 27, with martial law declared, nearly ten thousand soldiers blanketed Hamburg.
The Versailles Treaty produced a search for homegrown culprits. In the Jews, right-wing zealots found a vulnerable domestic group whom they could use as a proxy for those foreigners whom they couldn’t touch. In 1919 Adolf Hitler began to proselytize among angry veterans in Munich beer halls. At Berlin University, Eric Warburg heard Albert Einstein deliver lectures on relativity amid repeated heckling from anti-Semitic students.
Max was shocked to discover that the Schutz-und-Trutz-Bündnis—the Defensive and Offensive Alliance—was distributing yellow leaflets at the stock exchange, blaming him for the “Warburg Jewish Peace” and the one hundred billion gold mark offer.28 One pamphlet warned, “The American Jew Baruch is Wilson’s financial expert.… The father of the 100 billion offer is the big, Hamburg-based banker, Max M. Warburg.… Away with the rule of this international power, foreign to our national traditions.…”29
Max was stunned at being blamed for a treaty he had so indignantly rejected. At this first postwar appearance of anti-Semitic bile, he was heartened by the sympathy he received and he grew feisty and combative. “On the stock exchange everybody condoled with me,” he told Alice, noting that one person distributing broadsides was beaten up. Of the one hundred billion mark offer, he said, “Well, they are not getting even that now. They have surprises awaiting them.”30
On July 31, 1919, the Weimar Assembly adopted a constitution. Germany was now a democratic republic, restoring the 1848 black, red, and gold flag. These new legal forms immediately had to contend with extremist violence. A Spartacist revolt in Hamburg was squelched as assassinations spread across Germany. In many respects, the Weimar government was less radical than alleged by the right. It didn’t alter many significant power relationships, allowing the Junker-industrialist coalition to retain its old influence. It also failed to prosecute right-wing murders with the same vigor as left-wing ones, reflecting its reliance on the military and the persistence of Wilhelmine judges.
For all his imperial nostalgia, Max Warburg would be a steadfast champion of the new republic, if skeptical of its comprehensive welfare state policies. In late 1918, he made an unorthodox move by joining the Deutsche Volkspartei (DVP) or German People’s party, whose most notable personality was Gustav Stresemann. Max felt at home in this conservative party, which stressed tax cuts and less state interference with business, but it also had an anti-Semitic wing that Max needed to check. He also assumed a position on the central committee of the historically anti-Semitic Reichsbank.31
In general, the Weimar Republic would fulfill Jewish hopes of greate
r civil equality, ushering in an explosion of Jewish cultural, political, and economic achievement. Jews would advance in the arts, universities, upper civil service, business, and mass media. Unbaptized Jews were finally elected to the Hamburg Senate. It was a golden age for German Jews, but one already shadowed by a sense of latent menace.
Unfortunately, the last barriers to Jewish integration fell on the eve of Nazism. Emancipation was completed right before its wholesale repeal, leading to great psychic confusion. For the Warburgs, the war’s end had started a long, dizzying downward trajectory. The family that had seemed Fortune’s favorites would now seem captives of a malevolent fate. The brilliant marriages, the transatlantic success, the ubiquitous political influence—all the family’s erstwhile achievements—would now begin to work against them in the hands of industrious Nazis, isolationists, and hardcore xenophobes.
CHAPTER 16
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The Murder Exploding Detachment
Separated by war and a news blackout, the Warburgs didn’t heal their transatlantic wartime breach until June 1919. While Max was away at Versailles, Charlotte was startled to receive through an intermediary a letter from Felix. Elated by this note, which seemed to flutter from the sky, she told the responsible gentleman, “Many thanks for passing along the letter, which shows me, after a long time, the handwriting of my beloved son Felix. Thank goodness, he assures me that all goes well with my children and grandchildren abroad.”1 Charlotte would die of a heart attack two years later, having seen her sons surpass her most immoderate ambitions.
After Germany signed the peace treaty in 1919, a backlog of musty mail also tumbled in on the amazed American Warburgs. Vacationing in Bar Harbor, Jacob Schiff suddenly got faded letters from Max Warburg, some waylaid by English censors in 1915. One letter from Max sent congratulations to Felix’s daughter, Carola, upon her 1916 engagement to Walter Rothschild. By the time this reached America, Carola and Walter had a two-year-old daughter. Max had enclosed a snapshot of his five children—all were now considerably taller. Hoping to bury their old feud, Schiff acknowledged Max’s patriotism, but told him it would perhaps be best to avoid the war issue. “I am sure you will agree with me that it will be better if we do not enter upon any discussion of these events.”2