The Weimar Republic

Jewish_domination_of_weimar_Germany1

‘Those who do not learn history are doomed to repeat it.’

The quote is most likely due to writer and philosopher George Santayana, and in its original form it read, “Those who cannot remember the past are condemned to repeat it.”

Santayana was known for aphorisms, and for being a professor in philosophy at Harvard which he abandoned. Prior to that, Santayana attended Boston Latin School and Harvard College, where he studied under the philosophers William James and Josiah Royce.

According to Santayana’s philosophy, history repeats. The phrasing itself certainly is catchy. It’s a big one, not only because it is so common, but also because if it is true and if history, driven by human nature, is ugly (hint: it is), then this saying ought to guide our public and private policy.

Jews in German Society

Anti-Semitism, or the fear of it, comes up repeatedly in this book an as explanation for action or inaction on the part of the Warburgs. In spite of this, though, the Warburg family itself did very well for itself in Germany until the mid-1930s. Indeed, Germany’s Jews generally prospered until the collapse of the Weimar Republic and the National Socialist coming to power in 1933. During the interwar era, three-quarters of German Jewry was middle-class or richer. There were no legal barriers to Jewish advancement in any field, and Jews were rapidly assimilating through intermarriage. In the year just before Hitler came to power, Chernow reports, more than half of Jews who married took non-Jewish spouses.

None of this means, of course, that there weren’t barriers to social mobility for Jews. But similar restrictions affected many non-Jews as well. Class barriers were a major feature of pre-Hitler Germany.

International Network

What is remarkable is not the degree of intolerance, but the extent to which Jews were tolerated and even encouraged in Germany. Jews were permitted to wield tremendous power and influence even though so many of them — with the Warburgs at the forefront — were part of a mighty, supra-national Jewish network that was dedicated above all to its own particular interests.

Members of this international Jewish elite cemented its ties through marriage. For example, Felix Warburg married Frieda Schiff, daughter of probably the most powerful Jew in America, the German-born Jacob Schiff. Felix’s brother Paul married Nina Loeb, daughter of another prominent Jewish banker, Solomon Loeb.

An international network of Jewish organizations and charities devoted to the well-being of Jewish communities around the world operated as a shadow government for this scattered, stateless population. As leading members of the “Jewish royalty,” the Warburgs played an important role in resettling hundreds of thousands of Russian and eastern European Jews in the United States during the late 19th and early 20th centuries, underwriting the development of a Jewish cultural center in Palestine, and other projects. They also played an major role in domestic and international politics. During the Russo-Japanese war (1904-1905), Felix Warburg’s father-in-law, Jacob Schiff, a fierce enemy of Tsarist Russia, helped finance the Japanese war effort. Driven by intense hatred of Russia’s conservative, anti-Jewish government, Schiff kept Russia from obtaining Wall Street financing prior to the overthrow of the Tsarist regime and American entry into World War I.

A little-known but very ambitious Warburg project between the wars was the “Agro-Joint.” Established in 1924 and financed by Felix Warburg, Julius Rosenwald (of Sears, Roebuck), and John D. Rockefeller, Jr., the “American Jewish Joint Agricultural Corporation” funnelled millions of dollars into Soviet Russia to transplant hundreds of thousands of Jews to 215 farming colonies on two and a half million acres. “Agro-Joint” money purchased land, livestock, agricultural machinery and more than a thousand tractors. Four hundred trade schools were established to train Jews in metal, woodworking, printing and other skills. (Regrettably, Chernow provides little information about the Soviet officials who dealt with the Warburgs in this venture.)

In 1927 Felix Warburg toured the Soviet republic, visiting 40 of the Jewish agricultural colonies in Ukraine and Crimea (including two named after him). At meetings in their community halls, an elated and inspired Warburg praised the colonists and their pioneering work. Back in United States, he responded to critics with a vigorous defense of the Communist regime. Felix Warburg was, writes Chernow, “quick to note that the Soviet government was improving the economic lot of the Jews.”

The utopian scheme lasted until 1937 when the Soviets double-crossed the American capitalists and absorbed the Jewish colonies into local Soviet agencies. The last “Agro-Joint” assets were transferred to the Soviet government in 1940.

This channeling of money to Soviet Russia greatly upset Zionist leaders such as Stephen Wise and Chaim Weizmann, who grumbled that the millions should have been directed instead to building a Jewish presence in Palestine. Weizmann worked very hard to win Warburg family support for the establishment of a Jewish state there. The Warburgs were skeptical of Zionism, though, fearing that a Jewish state would supplant the traditional organizations, which they headed, as the nexus of Jewish political power. To reassure the reluctant Warburgs, Weizmann told them that the term “Jewish state” was only meant metaphorically.

Hitler Comes to Power

Back in Hamburg, Max Warburg was even less impressed than his American relations with Weizmann’s efforts. Regarding himself as a German patriot, he felt that Germany’s Jews should stay put, even though World War I had crippled his business and the ascension of the National Socialist party was driving away many of his clients. As the secular head of German Jewry (he once referred to himself as the “god” of the Jews) much of his social status would be lost if the Jews emigrated.

Even the Warburgs were not entirely immune from the infectious enthusiasm of Hitler’s movement. In 1930 Siegmund Warburg told his cousin Karl that, the anti-Semitism aside, he saw some redeeming qualities in the National Socialist cause. “The Nazis are doubtless in part dreadfully primitive in human and political terms,” he wrote in a letter. “On the other hand, one finds among a large part of them valuable, typically German strengths, which are indeed incredible in a political connection, but show strong feeling for social and national duties …”

When Hitler came to power in January 1933, Max Warburg was Germany’s most prominent Jewish banker. He headed the most important private banking firm and was a member of the “general counsel” of the nation’s central bank. In March 1933 he approved Hitler’s decision to name Dr. Hjalmar Schacht as president of the Reichsbank. The document naming Schacht to this post is signed by Chancellor Hitler and President von Hindenburg as well as the eight members of the Reichsbank “general counsel,” including the Jews Mendelssohn, Wassermann and Warburg.

Schacht’s skill during the 1920s in curing runaway inflation and getting the German economy back on an even keel earned him world renown as a financial wizard. A conservative, old-school banker, he never joined the National Socialist party. (Tried by the Nuremberg Tribunal as a “major war criminal,” he was acquitted.)

At a meeting in July 1934, Hitler asked Schacht if he would also head up the German Economics Ministry. “Before I take office I should like to know how you wish me to deal with the Jewish question?” Schacht asked. “In economic matters, the Jews can carry on exactly as they have done up to now,” replied Hitler. And so it was — at least for a few years.

In 1936, for example (three years after Hitler took power), the M. M. Warburg bank in Hamburg was still profitable. Among other lucrative connections, it was still disbursing interest payments to bondholders for the giant Friedrich Krupp company of Essen. As Siegmund Warburg wrote in July 1936: “M. M. W. and Co. are still remarkably untouched by the Nazi situation and the business is doing well.” Even in 1938, notes Chernow, the Warburg bank was turning a profit.

Max Warburg opposed the international Jewish boycott of German goods, particularly because his bank derived most of its income from international trade. Regrettably, Chernow fails to name the Jews behind this anti-German campaign, nor does he mention that the infamous 1933 Nazi boycott of Jewish businesses was a limited, one-day response to the sustained worldwide Jewish boycott against Germany.

M.M. Warburg and Co. played an important role in facilitating the “Haavara” or “transfer” agreement. Through this remarkable arrangement, concluded in 1933 between Hitler’s government and the Zionist leadership, property of Jews emigrating to Palestine was used to purchase German-made goods, which were shipped to Palestine and sold there. Money from the sale of these goods went to the migrating Jews. About ten percent of German Jewry emigrated through the “Haavara” deal, which benefited Jewish emigrants, helped overcome the anti-German boycott, and immensely strengthened the Zionist community in Palestine. Moreover, it enriched Max Warburg’s bank, which served as a conduit for three-fourths of “Haavara” funds. [See “Zionism and the Third Reich” in the July-August 1993 Journal.]

Until 1938, Max Warburg benefited from his cordial personal relationship with Dr. Schacht. But as Schacht’s influence with Hitler waned, so did Warburg’s position in German business. As German corporations were “Aryanized,” Warburg was forced to substitute a trusted non-Jewish company employee for himself on the hundred or so corporate boards on which he held a seat.

When the Warburg bank itself was Aryanized in May 1938, an era that began in 1798 came to an end. The firm was turned over to a non-Jewish employee, Rudolf Brinckmann, and Max Warburg left his Hamburg office for the last time. (A short while later he left Germany forever, dying in 1946 in the United States.) The firm’s traditional name lingered until 1941 when it was changed to Brinckmann, Wirtz, and Co.

Survivors

At least two family members remained in Germany throughout the Third Reich era. Marietta Warburg lived unmolested and in relative comfort in a suburb of Hamburg with her non-Jewish (and anti-Nazi) husband. “There were many such cases of Jews who eked out a subterranean life in Germany during the war,” comments Chernow. (In Hamburg alone, for example, 600 Jews survived the war years, “mostly those in mixed marriages.”)

More remarkable is the case of Otto Warburg, who was awarded a Nobel Prize in 1931 for physiology and medicine. In spite of his Jewish ancestry and outspoken hostility to the Hitler regime, he was permitted to continue his work at the Kaiser Wilhelm Institute in Berlin. Because of his Jewish ancestry, in 1941 he briefly lost his post at the Institute, “but a few weeks later received a personal order from Hitler’s Chancellery to resume work on his cancer research.” Otto Warburg’s decision to collaborate with the regime writes Chernow, “incensed colleagues outside Germany.” The scientist “justified his decision to stay in Nazi Germany by claiming that he was performing extremely important cancer research that would save lives and that he couldn’t transfer his research operation abroad.”

After the War

On this side of the Atlantic, Max’s son, Eric, played an important role in the American military. After joining the Army, Eric quickly became a Lt. Colonel. Upon spotting a map showing the dismemberment of Germany into occupation zones, he argued successfully to have his native Hamburg transferred from the Soviet zone to the British zone. When Hermann Göring was captured in May 1945, the critical task of interrogating the Reichsmarshall fell to Eric Warburg.

“Göring’s economic bureaucracy had spearheaded the Aryanization of M. M. Warburg, and now fate, with a commendably poetic sense of style, created a fine opportunity for revenge,” comments Chernow. “Eric would call it ‘the grand finale’ of his wartime work.”

Upon defeated Germany, the Americans imposed a version of the draconian “Morgenthau plan,” which kept the economy in ruins for several years. In Hamburg (where 118,000 people had perished in Allied bombing raids) people wandered the ruins of what had been one of Europe’s proudest and most magnificent cities. Food rations in occupied Hamburg dwindled to one thousand calories per person per day. As part of the occupation program, the Allies set about dismantling what was left of German industry. In mid-1949 occupation, authorities began dynamiting the cement slipways in Hamburg that had launched the giant HAPAG ocean liners.

Rudolf Brinckmann welcomed Eric back to a shattered Hamburg in 1945 and offered to hand the destitute banking firm back to the Warburg family. Eric refused. Following the implementation of drastic monetary reform in 1948, the German economy — and Brinckmann, Wirtz, and Co. — revived. With this turnaround, both Brinckmann and Warburg changed their minds about transferring control of the bank.

What followed was a decades-long battle between Brinckmann and Warburg for control of the firm. It ended in 1989 when the Brinckmann family withdrew, and two years later the firm’s name was changed back to M. M. Warburg and Co. By this time both Rudolf Brinckmann and Eric Warburg were dead. (Eric’s son, Max, now heads his grandfather’s business.)

This book also covers the lives of many other members of the Warburg clan. Like other prominent Jewish families, the American Warburgs wielded great influence not only in domestic and foreign politics but in cultural life as well. Feeling alienated from America’s WASP establishment and high society, some Warburg family members sought to displace the seemingly inhospitable traditional culture.

According to an art historian quoted by Chernow, Eddie Warburg (Felix’s son) and his wealthy Jewish friend Lincoln Kirstein “embraced modernism in part because, knowing that they were out of the mainstream anyway, they elected to foster rather than mitigate their sense of difference.” Along with Nelson Rockefeller, Eddie Warburg was the youngest trustee of the new Museum of Modern Art in New York City. He was also a patron of avant-garde sculptor Gaston Lachaise, and (together with Kirstein) imported “modern” Russian ballet choreographer George Balanchine to the United States.

All the same, with each new generation the American Warburgs become ever more assimilated into the country’s gentile upper class. This branch of the family has produced no one of note in the last generation. Jimmy Warburg, who made a mint off Polaroid, is the last American Warburg to build a fortune of his own.

Money is the engine of art, education, and politics, and the philanthropic and business endeavors of super-wealthy families dramatically affect all three. International banking depends on international trade, which in turn is dependent on international policy. Bankers with international ties work to influence political leaders for the benefit of their business and personal interests. This detailed history of the Warburg family shows how this relationship operates to produce both positive and harmful consequences.

Weimar Germany and the Rise of the Third Reich

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