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The Old Way

High Financier: The Lives and Time of Siegmund Warburg

By Niall Ferguson

(The Penguin Press, 548 pp., $35)

If one object of reading is to make ourselves at home in the world, or at least to diminish its somewhat minatory strangeness, then we should now be demanding very many books about banks and bankers. And yet there is a certain kind of seriousminded person who would give a ready welcome, say, to another biography of Heidegger, or another study of the Israeli-Palestinian impasse, or another book about the failure of liberalism, but would offer no hospitality to a business biography—indeed, who would pass over, without guilt, a review of such a work, even in a journal otherwise regularly and thoroughly read. To such a reader, for whose attention many books clamor hopelessly, on whom the demands of family and work press more insistently, the prospect of reading a five-hundred-plus-page life of a financier whose influence is no longer felt, and whose achievements have not survived his own passing, must seem very remote indeed.

This is unsurprising, not least because such a book is an instance of a genre itself familiar and widely despised. Airport and railway station bookstores are stuffed full of its latest iterations. Mostly non-books, even anti-books, these banal inspirational and cautionary tales—self-help manuals, secrets of business success revealed, scandals of business failures exposed, and so on—comprise the essentially undifferentiable matter against which proper books, books of real substance, invite definition. Or so it widely seems.

There is at least one work which demands to be excepted from, even gives the lie to, this unreflective reproof. Fritz Stern’s Gold and Iron, first published in 1977, his great study of the intimate and politically consequential late-nineteenth-century relationship between the statesman Otto von Bismarck and the financier Gerson von Bleichröder, is the business biography for people who do not read business biographies. Its themes—the foundation of the modern German state; the role of Jews in modernity; the connections between politics and finance, power and money; the struggle between democracy and authoritarianism, nationalism and imperialism—have an appeal far greater than the typical “life and business times” accounts of miscellaneous entrepreneurs and moneymen.

Niall Ferguson’s life of Siegmund Warburg invites comparison with Stern’s magnificent book. No, it is not a masterpiece; it lacks the full historical and intellectual resonance of Stern’s volume. But it is a work of great assurance and distinction. It should not be made a casualty of a commonplace philistinism. Banks matter—and therefore bankers matter, too.

Siegmund Warburg was born in 1902 into the Hamburg banking family whose surname he carried. It was a name that intimated of its holders both considerable financial acumen and a certain cultural sophistication. By his twenties, Siegmund had already proven possession of each, in full measure. When it became clear to him (earlier than to most) that Hitler’s Third Reich was going to become utterly intolerant of—and therefore utterly intolerable to—Jews, he left for England, where he thereafter made his home. By the time war broke out he was already a naturalized British citizen, and became comfortable writing to German colleagues of Germany as “your country.” His postwar success as the founder of the firm S.G. Warburg & Company was immense, principally because of his willingness to practice a kind of banking then unknown to British banks, which reflected his indifference to established “City” ways of doing business. He died in 1982, and is now little remembered, his bank having been swallowed up by larger institutions. His style of banking has been cast aside.

There are parallels between the subjects of the Stern biography and the Ferguson biography, though Warburg was no admirer of Bismarck. “The formation of the Bismarck Reich,” he wrote, “brought out the worst qualities of the Germans.” Still, like Bleichröder, Warburg was a German-Jewish financier, and even though most of his business life was spent in Britain, he remained to the end, according to Ferguson, an “uprooted German.” “I brought something to England which was a little bit different because I was a damn foreigner, a German Jew,” he once explained. Ferguson portrays him as a nineteenth-century German trapped in twentieth-century England. But it was decisive for both men that they were, and remained, Jews.

Like Bleichröder, Warburg played a part in the modernization of the financial center where he made his home. He, too, formed relationships with powerful politicians. He, too, understood political and economic issues to be inseparable, and analyzed them skillfully and often to considerable advantage. And he, too, ended his life with rewards and recognition. But Warburg retained a suspicion of the social elite of which he was both a member and an outsider. He was engaged in promoting the interests of Jewish communities, his own and others elsewhere in Europe. He was exposed to anti-Semitic prejudice. And although a person of immense accomplishment, he left nothing of any substance: there is no longer an independent S.G. Warburg & Co., just as Bleichröder’s bank was but a shadow of its former self within a few decades of the great financier’s death.

Warburg, like Bleichröder, adopted business practices that were eschewed by a later generation, to its detriment. The financial crisis through which we are still living was in large measure caused, in Ferguson’s view, by a generation of bankers who deliberately abandoned Warburg’s ideal, which preferred the client relationship over the speculative transaction and the secured loan, generating income through fees for advice, rather than a participant’s profits on deals, or the interest charged on lending.

In certain respects, then, Warburg’s career was the equivalent of Bleichröder’s, though transacted in a minor key. Personally, however, the two men could hardly have been more different. Bleichröder shared neither the extreme bookishness nor the intellectual snobbery that were such distinctive features of Warburg’s character. Bleichröder was a household name to his contemporaries; Warburg’s name was well known only in financial and political circles. Though he was a “key insider in 1960s politics” (Ferguson’s words), he held no government office or appointment.

As with politics, so with philanthropy. Bleichröder labored for ten years to orchestrate the influence of Western European Jewry on behalf of Romanian Jewry. His immense objective was to persuade the great powers to compel Romania to grant civic equality to its Jews. He failed, of course—but what an undertaking! Warburg, by contrast, confined himself to generous individual acts of philanthropy. He maintained a cool distance from the new state of Israel. Troubled—in 1942, of all moments—by the fear that Jews were becoming infected by “that worst modern epidemic of folly called nationalism,” Warburg reconciled himself to Jewish nationalism only following Israel’s foundation, and for a short while was ready to celebrate “that brave, young State of Israel.”

As for the question of anti-Semitism, it was for Bleichröder, Stern explains, a demoralizing constant in his life, “mean and omnipresent.” He was the repeated victim of extortion and blackmail attempts: the anti-Semitic press in his day was relentless. He had the misfortune, a friend consoled him, to collide with the worst rabble of the world. Public innuendos polluted Bleichröder’s life to the end. He suffered in full measure, Stern concludes, the anguish of assimilation: a life with immense honors and many rewards, but lived in constant need of the state’s protection, and without any settled sense of acceptance or security. The problem of reconciling Jewish ancestry with a passion for assimilation dominated and ruined the lives of whole generations of German Jews.

But Warburg suffered no such horrors. Once extruded from Nazi Germany, he lived his life largely free of the constraints of anti-Semitic hatred—though he attracted, inevitably, the prejudiced attention of Bank of England officials. “He has established himself,” one of them wrote,

... as a leading Jewish financier of international standing ... he is an international Jew to whom no bounds of country or circumstance are known. He employs Jews in his many operations which have often been askance to the Authorities. He employs people of brains and Jewish acumen ... and has climbed high on their shoulders. He can be ruthless with his employees but never falls foul of those of his own persuasion who have helped him ... to obtain his present position.

Such prejudices, Ferguson observes, were “remarkably” widespread in the British establishment of the postwar era. In the City’s “most incorrigibly snobbish enclaves,” Ferguson adds, Warburg and his employees were known simply as “those shits.” In the 1970s, the Arab boycott hit Warburg’s bank especially hard. Warburg’s response was characteristically tough: “I would ring up my friends in the important European banks and say, ‘I hear you seem to be giving in to this blackmail of the Arabs. I think that is very unfair to us and it’s wrong in itself. Shall I interpret that as meaning you sympathize with anti-Semitism?’”

Stern’s embrace enfolds a whole nation, an entire period. Bleichröder, he concludes, was a part of the great transformation of German society; his life—his successes and his sufferings—mirrored the dynamism and the flawed character of that society. The multiplicity of his public roles made him a leading figure of his time, while his private life was dominated by his confused struggle with a society that was both hostile and enticing. He was both master and slave in his society. These are the lessons in his life, far greater than his influence and fortune ever were. Ferguson attempts a similar expansiveness, quoting with approval the view of George Steiner, who conducted a series of interviews with his subject: “Warburg’s background and career enacts one of the crucial chapters—at once brilliant and profoundly tragic—in the history of the Diaspora, and of German Jewry in particular.”

More specifically, through the study of Warburg’s life, Ferguson believes answers can be given to certain critical questions concerning postwar British financial history. Why was it that bankers of Jewish origin played a leading role in British financial history? Did the gentlemanly capitalism of the City of London undermine the performance of the British economy, and accelerate Britain’s decline as a manufacturing power? Did the City assist in undermining the ambitions of the Labour Party to modernize the British economy in the 1960s? Why did financial deregulation end up benefiting foreign banks more than British banks in the period following Warburg’s death?

To these questions, Ferguson only hints at answers—a frustrating deficiency in what is otherwise a very thoroughly argued book. I infer his answers to be (in the order in which he poses them): the prominence of Jewish bankers in Britain was owed in part to the exodus of Jews from Hitler’s Germany, and in part to the City’s anti-Semitism, which kept Jews at a distance and thereby equipped them to respond more imaginatively to new financial demands and opportunities. The gentlemanly capitalism of the City of London did indeed undermine the performance of the British economy, and the City did indeed assist in undermining the ambitions of the Labour Party to modernize the British economy in the 1960s. And British banks were too small to compete on equal terms with their foreign rivals, and so they lost.

Siegmund Warburg may not have been famous, but he was important. This importance has three aspects. First, he was representative of a certain estimable type, both in his prejudices and his perspectives, and in the trajectory taken by his career. Second, he was a privileged witness to certain important individuals, and to certain historic events and processes. And third, he was a person whose achievements had an impact on his society, on his times.

Warburg had many estimable qualities—and, of course, a ration of less estimable ones, such as workaholism, obsessive perfectionism, and a certain fickleness and occasional brutality toward employees. But he had an admirable capacity for admiring others. He also was a man of good judgment, possessing an “unrivaled prescience,” as well as the equally useful ability to accept the good judgment of others. He was the very model of the cultivated banker: he would seldom go on business trips with fewer than three books in his attaché case. Freud and Nietzsche made religion impossible for him. In Steiner’s admiring assessment, Warburg had a nose for vulgarity and was “wonderfully ascetic.” He had “an integrity so absolute that the merest hint of slipperiness or sleaze left him utterly disgusted.”

He did not die an especially wealthy man. “Throughout his life,” concludes Ferguson, “Siegmund Warburg had other motives than the profit motive.” In conformity with the then-fashionable deprecation of family, it was his firm view that “the desirable relationships are what Goethe called Wahlverwandschaften, that is, selected relationships in contradiction to blood relationships.” This was a view that explained his tendency—from which his wife had often to protect him—to fall in love, unguardedly and impetuously, with many of the people he met. While unconditional fatherly love toward his own children, notes Ferguson, was not Warburg’s “strong suit,” following his death many of his colleagues and business associates paid tribute to the “fatherly” role he had played in their own lives.

His life, too, had something of the character of a model, or an ideal type—the kind of Central European figure, almost always a man, who managed to survive world wars and migrations, all the while moving forward and maintaining certain standards and a certain level of personal cultivation. This sense of fixity, of an unwillingness to bend, is intimated in Henry Kissinger’s observation that Warburg “was an easy person to get along with if you just said ‘yes.’” Ferguson drives hard the theme of representativeness in Warburg’s life, even in its earliest years. He believes that Weimar’s larger generational conflict played itself out in microcosm in the Warburg generational conflict over control of the family business. Or consider Warburg’s own stance during World War I: he was, in conformity with his schoolmates, an intense German patriot, holding Ludendorff and von Hindenburg to be splendid and heroic fellows, admirable in every way.

Again, Warburg, as with many other German Jews in the earliest years of Hitler’s rule, at first underestimated the Nazi threat (“it was incomprehensible to me that he would have such a following”), and again, as with many other German Jews in the years that followed, he was at first unimpressed with, but thereafter passionately admiring of, Britain and the irenic habits of its political classes (though he was among the City’s most outspoken opponents of appeasement). As for his views on Americans, in the pre-war years at least, they reflected the commonplaces of an entire continent. The American branch of his family and their circle, he wrote before the war, were “so boring, vacuous in both spiritual and human terms and suffocating in money.” There has seldom been, he added, “as big a collection of mediocre hearts and minds, or as big an oversupply of philistines as there is among the present younger generation in America.” They were primitives who had “jumped straight from trees into motor-cars”; their stock market was like “Monte Carlo without the fun of it.”

One can overstate this representativeness, of course. Unlike many of his schoolfellows, Warburg’s political leanings were slightly to the left. And in his business life in London, he cultivated relations with a broader range of political friends than might perhaps be expected of a banker. Following the landslide victory of the Labour Party in 1945, Warburg wrote to a family member: “Most people in the City are frightened of the new Labour Government, and it gives me particular pleasure to shock them by telling them the new government will probably bring a lot of fresh air into many frustrated channels.” The pleasure that he took in posing as the solitary socialist in the City, the “red financier,” lasted until the end of his life.

What, then, of Warburg the privileged witness? Here is an account he gave to a correspondent of his first meeting with Keynes:

It was after 11 a.m. and he received me in red slippers—for a conventional German this caused me much surprise. I had heard that he was a very great man but I did not like him at all at our first meeting. There was something effeminate, something “schnoddrig” [irreverent] about him. He dealt with serious matters in what seemed to me a facetious way.... [He] personified for me a rather typically English combination of intellectual cynicism and ... [the] highest standards in evaluating human thoughts and actions. Keynes could be almost sadistic in demolishing the arguments of people, however well-meaning they might be, if he could detect the slightest flaw in their thought processes.

This is acute enough, if unsympathetic. He wrote rather more enthusiastically of Israel’s first leaders:

When I think of the many admirable things I have noticed in Israel, the most admirable one is that the leaders of a people who are ... in a state of war and faced with such immense problems, can maintain a completely relaxed and peaceful spirit.

But Begin he found chauvinistic, the personification of “militant territorial expansionism.” Sadat was quite another proposition:

I was particularly struck by what I would call a very significant Jewish rhythm in expressing his views and in showing his reactions both by words and physical movements. I found him definitely “sympathisch” as a human being while from an intellectual angle I observed in him a strange combination of directness and shrewdness on the one hand and a lack of sense for nuances on the other hand.

All this is of some historical interest, but it would be hard to credit Warburg with any special insight into the minds of the many extraordinary people he encountered.

It is to one particular failure, rather than to any of his achievements, that Ferguson points when assessing Warburg’s contemporary significance. In his view, Warburg represents the road not taken, or perhaps more precisely, the road abandoned. Warburg proved unable to construct an institution strong enough to sustain in his absence the values that he imposed on it in his lifetime. These were the values associated with his ideal of haute banque: a high-quality financial consultancy troubleshooting for corporate clients, or “highly qualified mediational activity,” in Warburg’s phrase. It was by the application of this business model—which made possible, among other good things, the first-ever hostile takeover in British financial history—that Warburg more than anyone else, writes Ferguson, was able to save the City.

The City of London, the world’s pre-eminent international financial center, had been economically stagnant, and Warburg revived it. It is now morally deficient, and with any luck Warburgian standards may revive it again. It once was timid and un-entrepreneurial (capitalists are rarely adventuresome); it is now reckless and imprisoned in the perspective of the short-term (capitalists are rarely far-sighted). Warburg, Ferguson concludes, had the energy and the imagination to address both vices, though he lived long enough only to address the former kind. From where, then, will the new Warburg come to save today’s banks?

Anthony Julius is the author, most recently, of Trials of the Diaspora: A History of Anti-Semitism in England (Oxford University Press).

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