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Niall Ferguson

The Globe and Mail

In Niall Ferguson's superb biography of German-Jewish banking anglophile Siegmund Warburg (1902-1982), two moments stand out emphatically. Each points to the essential tension that marked, indeed defined, his life and times.

The first arrives early on in the preface, when Ferguson notes: "On the whole … biographers prefer monarchs to money-changers, film stars to financiers. This preference may be intelligible in the sense that the activities of a banker are less exciting to write or read about than the antics of a demagogue or a diva. Whether he is making a loan or taking a deposit, buying a stock or selling a bond, declaring a dividend or counselling a client, the banker is not a man of action in the conventional sense. There may be battles, but they take place in the boardroom and lack the pandemonium and the pathos of real warfare."

That said, Ferguson hedges this deprecation by pointing out that "the neglect of bankers by biographers cannot be justified on the basis of their relative historical unimportance. In any serious assessment of the way the world works - and especially the modern world since the Italian Renaissance - finance has surely been as important as government or war in the evolution of Western civilization … bankers may not be famous but they are important."

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It's fair to say no one in the contemporary era is better equipped to make this judgment than Niall Ferguson. And it's only a slight exaggeration to suggest that, as a historian, he is to the ascendancy of finance as Edward Gibbon was to the decline of the Roman Empire. While this is his first pure biography, Ferguson has written an exhaustive two-volume history of the Rothschilds and, lately, a book/television series on the history of finance titled - quelle surprise! - The Ascent of Money.

It's interesting, then, that later in this book, Warburg himself echoes Ferguson's earlier caveat. In a letter on the subject of European monetary and economic union, dated October, 1972 (it was then still something of a dream in the offing), he wrote: "I think it was Bismarck who always talked about das primat der politik ueber die wirtschaft [the primacy of politics over economics]and this is as true today as it was in his age."

Ferguson couldn't have picked a subject who more neatly encapsulated the complications that the rise of capitalism forced on to the modern liberal democratic state. For while Warburg was an ardent and massively successful capitalist, he also recognized in himself the contrary quality of an enlightened, politically aware intellectual - who also happened to be the scion of one of the great German-Jewish banking families.

For example, before his self-imposed exile to Great Britain, even in the face of National Socialism's virulent anti-Semitism, Warburg was, as a capitalist, initially impressed by the prospect of a new regime. He admired the Nazi efforts at cleaning out Weimar's deadwood and plans for economic reforms aimed at unleashing the financial and industrial power of a new generation of Germans.

"In his private diary (October, 1930)," Ferguson writes, "he lamented what he saw as 'patently obvious degeneration in the intellect and above all the character of the German bourgeoisie. The middle is too moderate. … National Socialism has by contrast the strongest radical will, combined with an equally large lack of insight and subtlety. How well the middle ground and fascism could complement one another, and yet how much they block one another's way!' His dissatisfaction with the shortcomings of the older generation had led Warburg to underestimate disastrously the 'radical will' that was Adolf Hitler."

Ferguson reports that there would be another four years of ambivalence toward the Nazis before events overcame Warburg's sanguinity and he decamped for London. What's pleasing in his telling of this episode is his absence of moral piety. Warburg wasn't exactly Dietrich Bonhoeffer, but few were - and that's the point.

Once established in London, Warburg rose pretty much continuously through the war and on into the postwar prosperity, ascending to the highest strata of what he called the haute banque of London, alongside names like Hambros and Barings. And all the while having to navigate the polite anti-Semitism that pervaded the City well into the latter half of the 20th century.

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By the 1960s, Warburg was advising prime ministers, acting as an informal though much-trusted counsel to Labour leader Harold Wilson. Warburg's prewar experience in Germany led him toward what by City standards amounted to a leftist approach, with an emphasis on collective European security rooted in common markets and common monetary policy. Ferguson does a terrific job of drawing Warburg as a character forged as much by events as informed by intellectual principle - the quintessentially thoughtful man of action.

This, Ferguson makes clear, renders Warburg was an odd sort of capitalist maven. Money was never the end, but always a means to a more abstract intellectual purpose. Ferguson puts it plainly when he writes: "Throughout his life Siegmund Warburg had other motives than the profit motive."

And while this made him something of an eccentric, if not an outright pariah, in City circles, Ferguson asserts that Warburg's life points to a more enlightened form of economic life than the band of Veuve Clicquot-popping, Hooray Harry materialists that gave us the most recent financial catastrophe. Above all, Ferguson writes, "we must regret that the appetite for making money from 'handling risk in scale in the securities market' - piling on leverage and trading at the highest possible frequencies - supplanted Warburg's passionate attention to the psychological factor in financial relationships … we still have much to learn from his lives and times."

Whether this is a lesson orthodox financial marketeers are willing to learn remains to be seen.

In a previous life, Douglas Bell was an editor at Canadian Business magazine

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