Paul Moritz Warburg

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Paul M. Warburg (1868-1932)

Paul Moritz Warburg (born August 10, 1868 in Hamburg ; died January 24, 1932 in New York City ) was a scion of the wealthy German-Jewish banking family Warburg , which to this day with the banking house MM Warburg & CO and the private equity company Warburg Pincus is active in the financial market. Paul M. Warburg is considered to be the main initiator of the US central bank FED, founded in 1913 . His brothers Max Moritz Warburg , Felix Moritz Warburg and Fritz Moritz Warburg also worked as internationally renowned bankers and political advisors. Paul M. Warburg's brother Aby Moritz Warburg was an art historian and founder of the renowned Warburg Institute in London .

Life

Paul M. Warburg at a financial conference in Washington (1915)

Paul M. Warburg was the third of five sons in the family line of the Hamburg - Rotherbaum based middle -Warburgs born Moritz M. Warburg and his wife Charlotte Esther Warburg (born Oppenheim). His father managed the Hamburg MM Warburg & CO -Bank in the third generation. Paul M. Warburg's sister Mary Anna (1865–1865) died shortly after the birth. Other sisters were Olga Charlotte Kohn-Speyer (née Warburg; 1873–1904) and Louisa Martha Derenberg (née Warburg; 1879–1973). His brothers Max M. Warburg (1867–1946), Felix M. Warburg (1871–1937) and Fritz M. Warburg (1879–1962) became, like Paul M. Warburg, internationally influential and important bankers. Paul M. Warburg's eldest brother Aby M. Warburg (1866–1929) became an art historian and became known as the founder of the Warburg Library in Hamburg, which was newly founded in London in 1934 as the Warburg Institute .

After training as a banker in Hamburg, Paul M. Warburg worked for several years at Samuel Montagu & Co. in London and the Banque Russe pour l'Etranger in Paris . In 1893 he became an authorized signatory of the family-owned MM Warburg & CO-Bank in Hamburg. During a stay in the USA in 1895 he married Nina Loeb (1870-1945), a daughter of Solomon Loeb , co-founder and owner of the New York bank Kuhn, Loeb & Co. After his temporary return to Hamburg he was one from 1900 to 1902 the first Jews to become a member of the Hamburg citizenship . While his brother Max M. Warburg (1846–1946) continued the banking business in Hamburg, Paul M. Warburg and his brother Felix M. Warburg (1871–1937) went to Wall Street in New York , where in 1902 they became partners of Kuhn, Loeb & Co. were. In 1911 Warburg took on American citizenship.

Foundation of the US central bank FED

Paul Moritz Warburg, Addresses and essays , 1930

Upon his return to New York in 1902, Paul M. Warburg was stunned by the primitive state of the American banking system. As a clear expert in the field of national central banks in Europe, Warburg criticized the lack of a US central bank and proposed the establishment of a private American central bank based on the German model to take over monetary sovereignty from the state. In 1903 Warburg created a document entitled Plan for a Central Bank . Jakob Heinrich "Jacob" Schiff , Warburg's father-in-law and senior partner at Kuhn, Loeb & Co., took this expertise and presented it to his business partner James Jewett Stillmann, CEO of National City Bank (now Citibank ), the largest bank in the USA at the time. A few days later, Warburg and Stillman met and a conflicted conversation ensued. Stillman warned Warburg not to show his expertise to anyone else, as the American people would strictly oppose a central bank where few can control everyone's deposits. The question of establishing a central bank was part of the ongoing internal American conflict between proponents of centralized power who wanted to expand the rights of the state as a whole ( federalism ) and those who wanted to leave compliance with and observance of the laws to the individual US states ( anti-federalists ). Warburg advised Stillman that if there was a panic in the financial markets, Stillman would regret the lack of a central bank, whereupon Stillman left the meeting with resentment.

Only a few years after the Warburg / Stillman meeting , the severe financial crisis in the fall of 1907, triggered by the temporary insolvency of the Knickerbocker Trust Company , forced Stillman to resign from his position on the board of directors at National City Bank - and at the same time made Warburg's proposal to found a US central bank topical . As a result of the financial crisis, Warburg was appointed as unofficial advisor to the National Monetary Commission , which worked out proposals for reform of the US banking system. Warburg also published numerous newspaper articles and gave speeches on the need to establish a central bank. Another milestone in Paul M. Warburg's efforts was a 10-day meeting at the extremely elite Jekyll Island Club on Jekyll Island off the coast of Georgia in November 1910. Warburg met three other US bankers here (Frank Vanderlip, Henry P. Davison , Arthur Shelton), influential Senator Nelson W. Aldrich, and Andrew Piatt, a leading economist from Harvard University. The five other participants were initially skeptical of Warburg due to his status as a foreigner and Jew, but Warburg was ultimately able to convince with his brilliance. In the course of the next few days, a detailed and comprehensive plan for the establishment of a US central bank was worked out, which, as the Aldrich Plan, initially resulted in the establishment of the National Reserve Association . The secret of the participants and any information about the meaning and purpose of the meeting on Jekyll Island, which took place between November 20 and 30, 1910, was closely guarded until the 1930s.

After Woodrow Wilson's election as US President, the result of Warburg's efforts was the Federal Reserve Act of December 23, 1913, which sealed the founding of the US central bank FED on the same day. As a recently naturalized German Jew, Paul M. Warburg declined the offer to chair the Central Bank. Instead, Warburg became a member of the first supervisory board in the history of the FED. During World War I, Warburg was appointed Vice Chairman of the Federal Reserve Board of Directors on August 10, 1916. He fulfilled this function until August 9, 1918. As a member of the Federal Advisory Council , Warburg remained connected to the US central bank between 1921 and 1926.

More functions

In 1921 Paul M. Warburg became the founding board member of the Council on Foreign Relations , a private think tank with a focus on international relations that is still influential today . He held the position of board member at CFR until his death in 1932. From 1922 to 1927 Warburg was a curator for the Institute of Economics and continued this activity after the Institute of Economics merged with the Brookings Institution think tank in 1927. When Paul M. Warburg died in New York in 1932, he was chairman of the Manhattan Company and a board member of the Bank of Manhattan Trust Company , Farmers Loan and Trust Company of New York and the First National Bank of Boston .

Publications

  • American and European banking methods and bank legislation compared. Columbia University Press, New York 1908
  • A "United Reserve Bank of the United States": a plan and a reply. Academy of Political Science, New York 1910
  • The discount system in Europe. National Monetary Commission, Washington, 1910
  • The Owen-Glass Bill as submitted to the democratic caucus: some criticisms and suggestions. Boston, Mass. 1913
  • Essays on banking reform in the United States. Proceedings of The Academy of Political Science Vol. 4. 1913/14, No. 4, New York 1914. Reprint Kraus Reprint, New York 1968
  • The federal reserve system and the banks. New York State Bankers Association, New York 1916, online at archive.org
  • ?? The ?? federal reserve system: its origin and growth; reflections and recollections; 1. Macmillan, New York 1930
  • ?? The ?? federal reserve system: its origin and growth; reflections and recollections; 2: Addresses and essays 1907-1924. Macmillan, New York 1930

literature

Web links

Commons : Paul Moritz Warburg  - Collection of images, videos and audio files

Individual evidence

  1. ^ Eckart Kleßmann : MM Warburg & Co 1798-1998. The story of a banking house. Festschrift MM Warburg & CO, o. O. 1998, p. 36
  2. ^ Roger Lowenstein: The US Federal Bank Reserve's Jewish Origins. Haaretz, November 30, 2015
  3. ^ Biography of Paul M. Warburg. Official Federal Reserve History Paul M. Warburg biography
  4. ^ Gary Richardson, Jessie Romero: The Meeting at Jekyll Island. Federal Reserve Bank of Richmond / Official Journal of the Federal Reserve History
  5. ^ Biography of Paul M. Warburg. Official Federal Reserve History Paul M. Warburg biography
personal data
SURNAME Warburg, Paul Moritz
BRIEF DESCRIPTION German-American banker and politician, Member of the Bundestag
DATE OF BIRTH August 10, 1868
PLACE OF BIRTH Hamburg
DATE OF DEATH January 24, 1932
Place of death new York