High Financier: the Lives and Time of Siegmund Warburg
By Niall Ferguson
Siegmund Warburg, scion of the great banking dynasty, founded his own financial house with the aim o
The key to this bold and mighty biography is that word, high, in the title. The phrase "high finance" is generally taken to be synonymous with big money. It is high finance to lose billions, low finance to be a couple of hundred overdrawn. But Niall Ferguson means "high" in the sense of grand, fine or simply serious, not qualities typically ascribed to recent, merely big financiers, such as Fred Goodwin of RBS or Dick Fuld of Lehman Brothers. "If ever," Ferguson writes pointedly, "there was a time to learn from a true high financier, this is surely it."
Siegmund Warburg is thus an emblem of money as it ought to be and as it now isn't. But he is more than that. He is also important in a sense that Ferguson is fully aware he will have difficulty establishing. His subject, he acknowledges, is not well known today because he is a banker and "biographers prefer monarchs to money-changers, film stars to financiers". But, he adds, "finance has surely been as important as government or war in the evolution of western civilisation (and a great deal more important than the movie business)".
That last bit of his statement, I need hardly point out, is wrong-headed - art always comes first. But otherwise Ferguson, who has previously written a two-volume history of the Rothschild family, is absolutely right. Bankers, for better or worse, are important players in history. To understand them is to understand a crucial aspect of ourselves.
The Warburgs were, like the Rothschilds, a German Jewish dynasty. Unlike the Rothschilds, however, they functioned as such only sporadically. There was a family banking firm from 1798, but it was not until around 1900 that they emerged fully on the European financial scene. Under the leadership of Max Warburg, they grew rich on the back of the boom that preceded the First World War.
Siegmund was born in 1902. He was, from the first, an outsider. He was born to a relatively poor branch of the family tree. And as far as the dynasty was concerned, he never became an insider. The firm that made him famous - S G Warburg & Co - was founded in 1946. It had no dynastic predecessor and has no successor, having been absorbed into the global financial network. The company was his and his alone.
The family seemed to bore him and, after experiencing the war as a young teenager, he realised that the world the Warburgs represented had been obliterated. From its ruins, he hoped, something better, more global would emerge. Unfortunately, what emerged was Nazism and communism, plunging the world into slaughter on a scale never seen before. Nazism also flung Siegmund into exile. His natural second home would seem to have been the US. He admired American efficiency, energy and clarity, and despised British complacency and the clubbish world of the City. He described the typical member of the London elite as "that rather awful type" who enjoy "enormously to boast and to pose and who have neither brain nor heart, but only one asset, if that by itself is an asset at all, namely correct manners".
But it was, finally, to London he came. Here he virtually invented the modern merchant bank, with its network of contacts. "Highly qualified mediation activity" was how Siegmund described his stock in trade. This involved curious and subtle psychological analyses of customers and clients. The most curious, in Siegmund's case, was an obsession with graphology. He was obsessed with handwriting and sent samples from would-be employees to a graphologist in Zurich, the sonorously named Theodora Dreifuss. This embarrasses Ferguson: "I began to wonder if I was writing the history of a bank or of a cult."
In fact, Warburg's trustees checked out his own writing and gained pretty good insights, as Ferguson concedes. Nevertheless, he concludes that graphology is a "pseudoscience of the past" and speculates that the link between Siegmund and Theodora was, in fact, romantic.
Warburg's company dominated the City until well into the 1970s. He himself was a central figure in Labour's first attempt at modernising Britain under Harold Wilson. He was a man of the left, sympathetic to the grand industrial plans of the era and, after Wilson, to the Europhile dreams of Edward Heath.
How Warburg became so powerful will puzzle a contemporary imagination accustomed to the idea of the City as a tacky casino. Though he pursued efficiency, he did not pursue either profit or personal wealth. His personal living standards were modest - his estate was valued at roughly £2m on his death in 1982 - and the bank was never especially big, nor even very profitable.
The point was that he did not seem to see money as an end in itself as so many financiers do today. It was a tool, a means to various ends. Those ends might include getting a company or an industry going, but they also included fixing the world. The theme of globalisation using the mechanism of finance, combined with his own exalted sense of the function of business, was what made him the high financier of the title. He was well qualified for the role.
As Ferguson repeatedly notes, Siegmund's political analyses were acute. He saw exactly where Nazism was going quicker than most, forecasting that Germany would slide into “the class of pogrom countries". He was also unusually clear-sighted about the British predicament, trapped between increasingly well-organised labour and a bumbling ruling class in a spiral of post-imperial decline.
Like every innovator, he finally found himself out-innovated. He may have disliked the bumblers, but he would also have disliked their successors in the City. Siegmund was infinitely preferable to what came next - debt-fuelled, hard-faced profiteers, and opportunists selling incomprehensible financial instruments. Ferguson is right in his central contention: better with Siegmund than without.
Like many professionals, he longed to be acknowledged beyond his profession. Ferguson quotes a page and a half of his unpublished aphorisms. They are not very good - "Honesty towards oneself is even more important than honesty towards others" is a fairly typical example. But Ferguson sees what they mean: "A better expression of human deracination than these disembodied obiter dicta would be rather hard to imagine . . ."
Warburg was a "rootless cosmopolitan". Despite his foresight, he was, as someone remarked, "a 19th-century German trapped in 20th-century England". The global financial system of which he dreamed and his not very profitable bank were his only homes.
Beautifully paced, dramatically subtle and psychologically shrewd, this is Ferguson at his finest. He had access to 10,000 letters and a mass of previously unpublished material, and has turned it all into a testament to what the world lost when it embraced a colder, harder globalisation than any imagined by Siegmund. But then again, Siegmund was always a pessimist. He advocated living life as if the disintegrations of the 20th century had not happened. "There is an important sense," Ferguson notes with sudden poignancy, "in which Warburg did indeed have to live the rest of his life 'as if' the world were neither so dangerous nor so decadent as he inwardly knew it to be."
High Financier: the Lives and Time of Siegmund Warburg
Allen Lane, 584pp, £30