Paul Warburg

Paul Moritz Warburg (August 10, 1868 — January 24, 1932) was a German-American banker and early advocate of the U.S Federal Reserve system.

Warburg was born in Hamburg, Germany, to a successful Jewish banking family. His parents were Moritz and Charlotte (Esther) Warburg. After graduating from the Realgymnasium in Hamburg in 1886 he entered the employ of Simon Hauer, a Hamburg importer and exporter, to learn the fundamentals of business practice. He similarly worked for Samuel Montague & Company, bankers, in London in 1889-90, the the Banque Russe pour le Commerce Etranger in Paris in 1890-91. ["Dictionary of American Biography", Vo. XIX, p. 412. New York: Charles Scribner's Sons, 1936.] ["National Cyclopaedia of American Biography", Vol. XXVI, p. 151. New York: James T. White & Company, 1937.]

In 1891 Warburg entered the office of the family banking firm of M.M. Warburg & Company, which had been founded in 1798 by his great-grandfather. He interrupted work there to undertake a world tour during the winter of 1891-92. Warburg was admitted to a partnership in the family firm in 1895. ["National Cyclopaedia of National Biography", op. cit.]

On October 1, 1895, Warburg was married in New York City to Nina J. Loeb, daughter of Solomon Loeb, founder of the New York investment firm of Kuhn, Loeb & Company. The Warbugs were the parents of a son, James Paul Warburg, and a daughter, Dr. Bettina Warburg. ["Dictionary of American Biography", op. cit.]

Although a major factor in German finance, after frequent business trips to New York Warburg settled there in 1902 as a partner in Kuhn, Loeb & Company where the influential Jacob Schiff, his wife's brother-in-law, was senior partner. Warburg remained a partner in the family firm in Hamburg, but he became a naturalized American citizen in 1911. He was a member of Temple Emanu-El in New York City. ["Dictionary of American Biography", Vol. XIX, pp. 412-413.] ["National Cyclopaedia of American Biography", Vo. XXVI, pp. 151-152.]

Warburg was elected a director of Wells Fargo & Company in February 1910. He resigned in September 1914 following his appointment to the Federal Reserve Board, and Jacob Schiff was elected to his seat on the Wells Fargo board. [Noel M. Loomis, "Wells Fargo", pp. 311, 315. New York: Clarkson N. Potter, Inc., 1968.]

Paul Warburg became known as a persuasive advocate of central banking in America, in 1907 publishing the pamphlets "Defects and Needs of Our Banking System" and "A Plan for A Modified Central Bank". His efforts were successful in 1913 with the founding of the Federal Reserve System. He was appointed a member of the first Federal Reserve Board by President Woodrow Wilson, serving until 1918.

In 1919 he founded and became first chairman of the American Acceptance Council. He organized and became the first chairman of the International Acceptance Bank of New York in 1921. International Acceptance was acquired by the Bank of the Manhattan Company in 1929, with Warburg becoming chairman of the combined organization.

He became a director of the Council on Foreign Relations at its founding in 1921, remaining on the board until his death. From 1921 to 1926 Warburg was a member of the advisory council of Federal Reserve Board, serving as president of the advisory council in 1924-26. He was also a trustee of the Institute of Economics, founded in 1922; when it was merged into the Brookings Institution in 1927, he became a trustee of the latter, serving until his death. ["Dictionary of American Biography", Vol. XIX, p. 413.] ["National Cyclopaedia of American Biography", Vol. XXVI, pp. 151-152.]

Warburg was notable on March 8, 1929, for warning of the disaster threatened by the wild stock speculation then rampant in the United States, foretelling the crash which occurred in October of that year. ["Dictionary of American Biography", Vol. XIX, p. 413.] ["National Cyclopaedia of American Biography", Vol. XXVI, p. 152.]

He encouraged German-American cultural cooperation, helping found the Carl Schurz Memorial Foundation in 1930 and serving as its treasurer from May 1930 until his death. He also made substantial contributions to the Warburg Library in Hamburg, founded by his family; gave to Heidelberg Uiversity one of its halls, known as the American House; and he made generous donations to the Academy of Political Science in Berlin. ["National Cyclopaedia of American Biography", Vol. XXVI, p. 152.]

Paul Warburg died at his home in New York City on January 24, 1932. At the time of his death he was chairman of the Manhattan Company and a director of the Bank of Manhattan Trust Company, Farmers Loan and Trust Company of New York, First National Bank of Boston, Baltimore & Ohio Railroad, Union Pacific Railroad, Los Angeles & Salt Lake Railroad, Western Union Telegraph Company, American I.G. Chemical Company, Agfa Ansco Corporation, and Warburg & Company of Amsterdam.

The cartoon character, "Daddy" Oliver Warbucks in the "Little Orphan Annie" series, was purportedly inspired by the life and times of Paul Warburg. The Paul M. Warburg chair in Economics at Harvard University was named in his honour, a title which is currently held by Professor Robert J. Barro.

His son James Warburg (1896-1969) was a financial adviser to Franklin D. Roosevelt in the first years of his presidency.

Notes

References

* Chernow, Ron. "The Warburgs". New York: Random House, 1993
* Kuhn, Loeb & Co. "Kuhn, Loeb & Co. A Century of Investment Banking". New York: Privately printed, 1967
* Kuhn, Loeb & Co. "Kuhn Loeb & Co. Investment Banking Through Four Generations". New York: Privately printed, 1955
* Warburg, Paul M. "The Federal Reserve System". New York: The Macmillan Company, 1930.

ee also

*Warburg
*Warburg family
*Council on Foreign Relations
*History of central banking in the United States
*Kuhn, Loeb & Co.

External links

* [http://minneapolisfed.org/pubs/region/89-05/reg895d.cfm Paul Warburg's Crusade to Establish a Central Bank in the United States]