The Warburgs

WESTERN EUROPE

Older than the Rothschilds, more versatile than the Barings or the Hambros, Europe's Warburg-family banking dynasty has prospered ever since it started changing money in 1559. Along with bankrolling potentates and private tycoons, the Warburg family has bred many of its own philanthropists, scientists and scholars. In 20th century Germany, members of the family or their partners were friends to Kaiser Wilhelm, represented their country at Versailles (and refused to sign the treaty), sat on 100 corporate boards. After Hitler came in, the Warburgs--being Jews --were forced out. Now, however, the resilient Warburgs are returning with a rush.

In Germany, Eric Warburg, 66, a naturalized U.S. citizen, has helped make his family's Hamburg investment bank one of the fastest-growing financial houses on the Continent. His cousin Siegmund Warburg, 63, has become the most rapidly expanding merchant banker of London's City. Increasingly, the two men are uniting. Siegmund holds an interest in Eric's Hamburg bank, and Eric has a stake in Siegmund's recently started Frankfurt branch.

One Desire. Though they are disparate personalities--Eric is athletic and uncomplicated, Siegmund is intellectual and rather mysterious--the two have much in common. Both specialize in international finance, and both have shaken encrusted bankers by putting their trust in modern methods and young associates. And both are driven by a desire: restore all the past glory to a many-faceted clan, whose current members range from Berlin's Otto Warburg, a Nobel-prizewinning biochemist, to Connecticut's Economist-Author James Warburg (The West in Crisis).

Eric Warburg in 1944 went back to Germany in unusual style; an Air Force officer, he was the chief U.S. interrogator of Hermann Goering. He also persuaded the Allies to let his family firm quickly resume operations, then left it in the hands of associates to whom the family had entrusted it in 1938. It still carries their names, Brinckmann, Wirtz & Co. In 1956 he returned full time, now shares authority with the Brinckmanns and other partners but the Warburgs own the largest share of the business. (Eric also owns a substantial part of the Wall Street investment-banking firm that he founded, E. M. Warburg & Co.) By making faster decisions than bigger, bureaucratic German banks were able to, Warburg rebuilt a substantial business in international underwriting and financing foreign trade. Today bankers throughout Europe send their bright young men to train at Brinckmann, Wirtz, and members of the firm are directors of two dozen German corporations.

Sober Nightclub. Even more influential is London's Siegmund Warburg. He fled to Britain with less than $25,000 in 1933, later stormed the City's tight inner circle by investing in growing companies, reorganizing sick ones and exploiting his best asset: savvy in world finance. As a master strategist of Reynolds Metals' 1958 battle for control of British Aluminium, Warburg fought most of the British banking Establishment--and won. His S. G. Warburg & Co. also plotted most of the press takeovers by both Lord Thomson and Cecil King, helped Chrysler buy into Rootes Motors, arranged financing for Italy's autostrada, managed the first U.S. corporate bond issue in Europe, for Socony Mobil last year.

Prime Minister Wilson, an admirer of Warburg's modernizing influence in British banking, has taken Siegmund in as a close adviser. Warburg has shaken up what he calls the City's "ingenious sloppiness" by introducing Germanic organization and discipline; he even plots the seating at his business lunches with military precision. His officers often work so late that competitors call Warburg's bank "the nightclub." Secretaries transcribe every important meeting in the place, rush out a daily precis to all the directors--many of them trekking about the world on business. For his tight ship, Warburg has recruited a highly diverse and individualistic crew, including former Reuters Correspondent Ian Fraser, former Ambassador to France Lord Gladwyn and former KLM President E. H. van der Beugel.

Yet in his ambition to reassert the dynasty, Siegmund Warburg faces a frustration. His only son left the firm to start his own accounting business, and the two men are not close. The War burg future seems to depend on the smaller branch in Germany, where Eric Warburg is carefully bringing along his 18-year-old son, also an American.

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