(part 1)

Hindsight gives an incontestable verdict on the impact Hitler had on history, at the same time things might have been looking very different for the people who were direct witnesses of the German political scene of the early 1930s. Excellent illustration are the apprehensions of Siegmund Warburg, a highly educated German Jew, in the years before he decides to immigrate. For us, from the vantage point of time, what he did seems obvious. Why didn't many others see what was coming and do the same?

History teaches us that events of great consequence take place on a certain date, but things are not black and white. With respect to this consider that in 1933 a viciously anti-semitic political party, which had paraded outright violent confrontation, comes to power. At first glance after the date of the elections Siegmund should have immediately considered leaving Germany. Yet he didn't.

His observations, as recounted in his diary, tell us why it took him 2 years to finally decide that there is no way back. It is a record of the deep uncertainties felt by the contemporaries of Nazi's ascent into power.

The chapter "Exile" recounts crucial days of early 1930s and the evolution of Siegmund's thinking. The electoral victory of the Nazis energized Germany's youth so much that even some Jews, him included, heralded the outcome as a validation of the dynamic forces of renewal. Siegmund argued that radical elements in the Nazi party will be moderated once they get into government. "Mein Kampf", which he read, he considered to be inviable as a political program but more of a recruiting instrument.

The snowball of dramatic events -- the fire in Reichstag, the state of emergency that follows, and the appointment of Hitler as a chancellor -- crystallizes a new awareness and approaching the end of March 1933 Siegmund Warburg had an epiphany about the true nature of National Socialism! The realization was sudden. He asked himself one fundamental question, is fascism, as a powerful force of change, pushing Germany in the direction of order and prosperity, or it is a political system close to that of Moscow, that leads to arbitrariness, brutality and intolerance. This fermenting thought was helped by the events. The brown-shirted members of SA used the electoral victory to set scores with their rivals of the political left and with the German Jews. This manifested in torch-lit parades with chants of "Death to the Jews".
Siegmund did not in fact leave Germany for another year.

Siegmund becomes resident alien in UK in April 1934. Many more left but even more staid in Germany to face their ultimate decimation.

Human thinking fatally misses to recognize the bigger arch of development. A sequence of events, of even incontrovertible adversity, when brought in by incremental political changes confound individual decision making. All the time people expected that each of the gradually introduced acts is the last, that it wasn't possible to get worse. It got worse.

(part 2)

Learning about Warburg's role in the invention of Eurodollars denominated bond market was for me a pleasant discovery in this book.

Bulgaria, late 1980s, I was in high school. I fondly remember the only TV program devoted to world economy that I used to follow. Not infrequently a topic, apart from others I didn't understand, was the Eurodollar. There was nobody around to explain to me what Eurodollar was but surprisingly the word got stuck in my mind. A dormant curiosity until I stumbled upon the topic for a second time in Ferguson's book.

Europe after the Second World War was clogged by frustratingly regulated capital and currency markets. A British citizen, for example, could purchase foreign securities only as part of a currency pool entirely controlled by the government. At the same time Europe was flush with dollars. They were limited to earn paltry 1% if deposited in US, as mandated by a regulation from the time of the Great Depression. What if a bond is denominated in dollars, thought Warburg -- it evades strict currency exchange rate regime on one hand, and mops up the excess of savings denominated in it.

For some humor, Warburg imagined the typical investor to be the mythical figure of the Belgian dentist -- a high-earning individual, living in a country with a bureaucratic tax system where domestic bonds were liable to tax at source, and where there was a limited choice of investment opportunities. Thus the first postwar continental bond market was started -- Eurobonds denominated in Eurodollars.

Educational but this part of the book is much weaker than the story of his formative years and the ascent of Hitler.

(part 3)

The book, at places, fawns a bit too much to the life and principles of Warburg. Some times very inspiring quotations from his letters and notes seemed detached, like an abstract philosophical construct, wisdom which I couldn't pin directly to events in his life. For me that was one of the book's weaknesses. ( )

As an City person, a history graduate (I remember popping into one or two of the Fergusons undergrad lectures back in the day) and (briefly) a Warburgs employee I was looking forward to this book. Particularly after all the laudatory press coverage (Economist, FT, Guarniad).

It's OK, but not that good.

Ferguson is good on Warburg's early years and the formative influence of Weimar and his wartime career. Clearly his previous work (Paper & Iron, Rothschilds) serves him well and he knows his ground. The book is also strong on the wider economic perspectives for some of Warburg's economic innovations e.g. the Eurobond.

The second half, dealing with the rise (and fall) of SG Warburg the firm is, to put it bluntly, weak. It lacks narrative structure and Ferguson fails to put the story into perspective. He simply takes it as read SGW was a blazing success without setting it in the wider context. What was the competition doing differently? What did SGW did better? Instead we get disjoined vignettes on Warburg's counselling of Wilson, his foray into Eurobonds, his ferocious work ethic. Good reportage but poor history.

The books conclusions feel hurried. It wraps up with a rather rushed recap of the fall of the house of Warburg (largely cribbed from Augar - cf footnote 144) which adds little insight. It finishes with a banal jeremiad about the value of relationship banking over transaction banking. True but hardly a devastating insight in this day or age. Commentators have been bemoaning the death of relationship banking since well before JPM took on Caz. What's new?

Other things do not feel right. Maybe Warburg was a political genius but the number of times Ferguson namechecks his fantastic foresight on global geo-politics (almost always right, it seems) it feels a bit like hagiography. Also the discussion of graphology is uneasily bolted onto an appendix. The fact that Theodora Dreifess, clearly an influential character, is largely sequestered away in the endnotes epitomoses the haphazard nature of the book. ( )