The history of the Warburg family

(I lately came across this intriguing piece in my own email magazine, “The Kaleidoscope of Civilization”. Let me post this for fun.)

. Akio KAWATO

There are several banks around the world bearing the name Warburg. They form part of a global financial network connected to the Jewish Warburg family.

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One member of the family, Paul Warburg, moved to the United States in the early twentieth century as an executive of the German-Dutch banking house Warburg & Co. He established himself through cooperation with Kuhn, Loeb & Co., then America’s most powerful investment bank. (Its head, Jacob Schiff, famously helped Japan by underwriting Japanese government bonds during the Russo-Japanese War.)

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Only nine years later, in 1910, Paul Warburg became one of the principal architects behind the creation of the Federal Reserve, the central bank of the United States. In 1921, he also became the first chairman of the Council on Foreign Relations, publisher of Foreign Affairs.

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Origins in Medieval Venice

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What makes the Warburg family truly fascinating, however, is that its origins can reportedly be traced back to the banks of medieval Venice. Medieval Venice stood at the great junction linking Western Europe with Constantinople, the capital of the Eastern Roman Empire, where goods from the Silk Road poured in. It was also the gateway to the Alpine trade routes leading into Western Europe, many of them following old Roman military roads.

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Banking naturally flourished in Venice. Jews were permitted to charge interest on loans—while in the Middle Ages, much as in parts of the Islamic world today, Christians themselves were forbidden to take interest. Making use of family networks spread across the Mediterranean trading world, Jewish merchants became deeply engaged in finance. (Ironically, Jews were later pushed out of Venetian banking.) That is why a Jewish banker like Shylock appears in The Merchant of Venice.

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Among Venice’s prominent banking families was a Jewish clan bearing the surname Del Banco—a rather amusingly direct name, since it literally means “the banking people.” In 1513, according to sources such as Wikipedia, they received official permission from the Venetian government to lend money at interest.

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Later, when Jews were gradually excluded from Venetian banking, the family dispersed across Europe and eventually settled in the German town of Warburg during the sixteenth century, adopting the town’s name as their surname.

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Warburg lies roughly midway between Cologne and Leipzig, near the geographic center of northern Germany. It was a transportation crossroads located along the trade route connecting Venice with the great Hanseatic ports of Hamburg and Bremen. Around the fifteenth century, the Mediterranean commercial sphere and the Baltic commercial sphere became increasingly integrated. The Dutch grew rich by linking them by sea, while families such as the Warburgs, the Fuggers, and the Welsers amassed fortunes by connecting them overland.

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In other words, the capital that originated in Venice—one might call it the lingering afterglow of Roman imperial wealth—gradually migrated to Germany, Spain, the Netherlands, then Britain, and finally the United States, helping fuel the rise of each successive power. At the forefront of this movement stood Venetian bankers and Jewish financiers, among them the Warburg family.

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Over the course of more than six centuries, the members of the Warburg family were repeatedly tossed about by history. They established themselves in Altona, then a suburb of Hamburg. The name Altona reminds me of Sartre’s play The Condemned of Altona, later adapted into film. It tells the story of a man—depicted as the son of a powerful German industrialist—who descends into madness under the weight of guilt for abusing prisoners during the war.

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Speaking of such wounds, one cannot avoid mentioning Max Warburg, who likely lived in Altona and served as head of the family. Under the Nazi regime, Max simultaneously sat on the policy council of Germany’s central bank while also serving as a director of IG Farben.

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IG Farben financially supported the Nazi rise to power and produced the poison gas later used in the gas chambers. This has fueled persistent rumors that “Jews overlooked the extermination of Jews.”

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In reality, however, most of the German Warburg family—including Max himself—had emigrated to the United States or Britain by 1938. Two cousins who remained in Altona, together with their mother and two daughters, were murdered in concentration camps in 1940. One can only imagine the terrible inner conflict this must have left in Max’s mind. His son, Eric Warburg, later returned to Germany after the war. The history of the Warburg family is a sweeping six-hundred-year historical epic stretching across Europe and America alike.

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And speaking of dramas involving Jewish financiers, one cannot avoid mentioning the American railroad magnate E. H. Harriman. After extending massive loans to Japan during the Russo-Japanese War (in 1904), Harriman demanded railway concessions in South Manchuria and was rebuffed by the Japanese government. The afterstory of his ambitions, in one way or another, leads forward into the Sino-Japanese War and the Pacific War, and even eventually to the postwar establishment of the American air cargo company Flying Tiger Line……